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19 B.R. 630 (1981)
In re David Joseph MAYO, Debtor.
David Joseph MAYO, Plaintiff,
v.
UNITED SERVICES AUTOMOBILE ASSOCIATION, Defendant.
Civ. A. No. 81-184-NN.
United States District Court, E.D. Virginia, Newport News Division.
December 10, 1981.
*631 Richard Hudgins, Hudgins, Neale & Brown, Newport News, Va., for David Joseph Mayo.
S. Randall McDaniel, Taylor, Gustin, Harris, Fears & Davis, Norfolk, Va., for defendant.
OPINION AND ORDER
MacKENZIE, Chief Judge.
This matter was heard by the Court on November 30, 1981 on plaintiff's appeal from a decision of the United States Bankruptcy Court.
The facts are not in dispute. On January 26, 1981, defendant United States Automobile Association (USAA) obtained a judgment against plaintiff in Norfolk General District Court. On February 3, 1981, an execution based on this judgment was delivered to the High Constable of the City of Norfolk, and at the same time a garnishment summons was issued which was returnable on April 20, 1981.
Pursuant to the summons, plaintiff's employer deducted the sum of $507.64 from his wages. On April 20, 1981, the employer reported to the State Court that this amount had been withheld, and the Court ordered that these funds be paid to defendant.
On May 21, 1981, plaintiff filed a voluntary petition under Chapter 7 of the Bankruptcy Code. He also filed an application to avoid the lien of the garnishment summons and to have the proceeds returned.
On September 9, 1981, the United States Bankruptcy Court entered an order denying plaintiff's application to avoid the lien.
The issue presented on appeal is whether with the enactment of the Bankruptcy Reform Act of 1978 the effective date of a garnishment summons for preference purposes has changed.
11 U.S.C. § 547 provides, in pertinent part:
(b) Except as provided in subsection (c) of this section, the trustee may avoid any transfer of property of the debtor
(1) to or for the benefit of a creditor;
(2) for or on account of an antecedent debt owed by the debtor before such transfer was made;
(3) made while the debtor was insolvent;
(4) made
(A) on or within 90 days before the date of the filing of the petition; or
(B) between 90 days and one year before the date of the filing of the petition, if such creditor, at the time of such transfer
(i) was an insider; and
(ii) had reasonable cause to believe the debtor was insolvent at the time of such transfer; and
(5) that enables such creditor to receive more than such creditor would receive if
(A) the case were a case under chapter 7 of this title;
(B) the transfer had not been made; and
(C) such creditor received payment of such debt to the extent provided by the provisions of this title.
. . . .
(e)(3) For the purposes of this section, a transfer is not made until the debtor has acquired rights in the property transferred.
*632 (f) For the purposes of this section, the debtor is presumed to have been insolvent on and during the 90 days immediately preceding the date of the filing of the petition.
Plaintiff argues that the Bankruptcy Code has broadened the definition of "transfer" to such an extent that the concept bears no resemblance to Section 60 of the Bankruptcy Act. Plaintiff views the definition of transfer as of primary importance in this case.
Section 60 of the Bankruptcy Act provided in pertinent part:
a.(1) A preference is a transfer as defined in this Act, of any of the property of a debtor to or for the benefit of a creditor for or on account of an antecedent debt, made or suffered by such debtor while insolvent and within four months before the filing by or against him of the petition initiating a proceeding under this Act, the effect of which transfer will be to enable such creditor to obtain a greater percentage of his debt than some other creditor of the same class.
(2) For the purposes of subdivisions a and b of this section, a transfer of property other than real property shall be deemed to have been made or suffered at the time when it became so far perfected that no subsequent lien upon such property obtainable by legal or equitable proceedings on a simple contract could become superior to the rights of the transferee.
. . . .
(4) A lien obtainable by legal or equitable proceedings upon a simple contract, within the meaning of paragraph (2) is a lien arising in ordinary course of such proceedings upon the entry or docketing of a judgment or decree, or upon attachment, garnishment, execution, or like process, whether before, upon, or after judgment or decree and whether before or upon levy. It does not include liens which under applicable law are given a special priority over other liens which are prior in time. (emphasis added)
Under the Bankruptcy Code which is now in effect, transfer is defined as
every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing or parting with property or with an interest in property, including retention of title as a security interest.
11 U.S.C. § 101(40).
Defendant does not view the transfer concept as being definitive. He argues that the creation and perfection of a lien under the provisions of state law is the relevant consideration. He states that the law on this point remains unchanged. Defendant argues that the Bankruptcy Act case law, as exemplified by In Re Acorn Electric Supply, Inc., 348 F. Supp. 277 (E.D.Va.1972) governs the disposition of this matter.
In Acorn Electric, Judge Hoffman held that Virginia law governed the fixing of the lien. Further, it was found that the Virginia execution lien or intangibles is perfected for bankruptcy purposes when the writ of fieri facias is delivered to the officer to be executed. Perfection is the key concept in this analysis. If the lien was thus perfected before the then four-month period before bankruptcy, it would not be preferential transfer.
If the case sub judice is in fact governed by Acorn Electric, then the lien would have been perfected on February 3, 1981. This would be in advance of the ninety day period of § 547, and there would be no preference problem.
If, however, defendant's argument that there must be a transfer of property in which the debtor has an interest, and the debtor has no interest in wages until they are earned succeeds, then the date of effectiveness of the summons would fall within the preference period.
Contrary to the decision of the Bankruptcy Judge, the Court finds that this case is governed by In re Cox, 10 B.R. 268, 7 B.C.D. 733 (Bkrtcy.D.Md.1981) rather than by Acorn Electric. In re Cox found:
A writ of garnishment may well be a duly perfected lien on wages yet to be earned such that a creditor on a simple contract cannot acquire a judicial lien *633 that is superior to the rights of the judgment creditor. Cf. 11 U.S.C. § 547(e)(1)(B) (Supp. III 1979). Nonetheless, the avoidance powers under § 547(h) extend to the avoidance of transfers rather than perfection of liens. Inasmuch as § 547(e)(3) establishes that a transfer does not occur until the debtor has rights in the collateral, the transfer of wages garnished pursuant to a writ of garnishment cannot occur until the judgment debtor has earned the wages garnished. Thus, a payment on the garnishment attributable to wages earned by the debtor within ninety days of the filing of a bankruptcy petition is a preferential transfer to a judgment creditor.
10 B.R. at 271, 7 B.C.D. at 735.
See also In Re Brengle, 10 B.R. 360, 361 (Bkrtcy.D.Del.1981).
Utilizing the reasoning contained in this opinion, the wages of plaintiff which were earned and subjected to the garnishment process within ninety days of the date of filing the petition in bankruptcy were preferentially transferred. Since the trustee did not act to avoid the transfer under § 547, plaintiff could properly bring such an action under § 522(h). See In Re Emery, 13 B.R. 689, 690 (Bkrtcy.D.Vermont 1981) (debtor's power to recover money earned during the preference period).
Accordingly, the decision of the United States Bankruptcy Court is REVERSED, and plaintiff's application to avoid the transfer of funds within the preference period is GRANTED.
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28 B.R. 663 (1983)
In re Terry Nick TUMBLESON f/d/b/a Tumbleson Manufacturing Company, Debtor-Appellant.
Civ. A. No. 82-K-2216, Bankruptcy No. 82 B 04170 J.
United States District Court, D. Colorado.
April 4, 1983.
Edward I. Cohen, Denver, Colo., for debtor-appellant.
Janet G. MacFarlane, Denver, Colo., Chapter 13 Trustee.
MEMORANDUM OPINION AND ORDER
KANE, District Judge.
This is an appeal from the bankruptcy court's denial of confirmation of a Chapter 13 reorganization plan pursuant to 11 U.S.C. 1321 et seq. Appellant contends that the court's refusal to confirm is in error, relying on 11 U.S.C. 1325(a) which mandates confirmation if six listed criteria are met. Appellant argues that his plan complies with all six elements and that to allow a court to require something in addition to what the code provides would amount to judicial legislation. The statute reads as follows:
(a) The court shall confirm a plan if
(1) the plan complies with the provisions of this chapter and with other applicable provisions of this title;
(2) any fee, charge, or amount required under chapter 123 of title 28, or by the plan, to be paid before confirmation, has been paid;
(3) the plan has been proposed in good faith and not by any means forbidden by law;
(4) the value, as of the effective date of the plan, of property to be distributed under the plan on account of each allowed unsecured claim is not less than the amount that would be paid on such claim if the estate of the debtor were liquidated under chapter 7 of this title on such date;
(5) with respect to each allowed secured claim provided for by the plan
*664 (A) the holder of such claim has accepted the plan;
(B)(i) the plan provides that the holder of such claim retain the lien securing such claim; and
(ii) the value, as of the effective date of the plan, of property to be distributed under the plan on account of such claim is not less than the allowed amount of such claim; or
(C) the debtor surrenders the property securing such holder; and
(6) the debtor will be able to make all payments under the plan and to comply with the plan.
It is clear that if the conditions of section 1325(a) are met, congress intended confirmation to be mandatory. S.Rep. No. 95-989, 95th Cong., 2d Sess. 142 (1978); H.R. Rep. No. 95-595, 95th Cong., 1st Sess. 430 (1977), U.S.Code Cong. & Admin.News 1978, p. 5787.
However, § 1325(a)(3) clearly allows a bankruptcy judge discretion in determining whether a reorganization plan is acceptable. As trier of fact, it is the bankruptcy judge's responsibility to determine the presence or absence of good faith. In the instant case, the appellant's lack of good faith is due to his proposed $1.00 payment to cover three years worth of back child support, in the amount of $3,301. The only finding which Judge Brumbaugh relied upon to deny confirmation of the plan stated that "there is no provision for cure of default on priority non-dischargeable debt for past child support."
It is true that child support is not listed as a claim having priority under 11 U.S.C. § 507 of the bankruptcy code. However, I interpret this statement to relate to the priority given child support as a non-dischargeable debt pursuant to 11 U.S.C. § 1328. This provision of the code specifically excepts child support from discharge even after a reorganization plan has been approved and completed. It says, in pertinent part:
(a) As soon as practicable after completion by the debtor of all payments under the plan . . . the court shall grant the debtor a discharge of all debts provided for by the plan or disallowed under section 502 of this title, except any debt
(1) provided for under section 1322(b)(5) of this title; or
(2) of the kind specified in section 523(a)(5) of this title.
Section 1322(a) specifies the mandatory contents of a reorganization plan. Section 1322(b) states the permissive elements of a plan:
(b) Subject to subsections (a) and (c) of this section, the plan may
(5) . . . provide for the curing of any default within a reasonable time and maintenance of payments while the case is pending on any unsecured claim or secured claim on which the last payment is due after the date on which the final payment under the plan is due.
The applicable portion of section 523 states:
(a) A discharge under section 727, 1141, or 1328(b) of this title does not discharge an individual debtor from any debt
(5) to a spouse, former spouse, or child of the debtor, for alimony to, maintenance for, or support of such spouse or child, in connection with a separation agreement, divorce decree, or property settlement agreement.
Appellant states that there are no reported cases dealing with the factual issue presented in this case. However, his own brief cites a Ninth Circuit case which contains language specifically acknowledging that a failure to repay child support could be considered an act of bad faith. In distinguishing circumstances in which (lack of) good faith was improperly considered, the court included testimony found in the Congressional Record:
Senator DeConcini, a leading sponsor of both the Technical Amendments Bill and the 1978 Bankruptcy Reform Act, noted:
[J]udges have had to strain the provisions of Section 1325 by decision or informal rule to reach the right result vis-a-vis the level of payment of the debtor for the particular case.
*665 Many courts have construed the good faith language, Section 1325(a)(3) to this end, which was not intended by Congress in the enactment of that requirement.
126 Cong.Rec.S. 15,175 (daily ed. Dec. 1, 1980) (remarks of Sen. DeConcini); see also H.R.Rep. No. 1195, 96th Cong., 2d Sess. 24. Senator DeConcini further stated that the good faith requirement "is meant to bar the confirmation of a chapter 13 plan where the debtor either does not intend to effectuate the plan as proposed or where the proposed plan is for a purpose not permitted under Title 11," citing as an example "any plan the principal purpose of which is to render the debtor incapable of meeting legal obligations for the support and maintenance of a former spouse or dependent child." 126 Cong.Rec.S. 15,175 (daily ed. Dec. 1, 1980).
Barnes v. Whelan, 689 F.2d 193, 200 (D.C. Cir.1982).
Appellant next cites an opinion written by then Bankruptcy Judge John P. Moore which also cautioned courts to avoid reading additional provisions into the law or stretching their interpretations of the statute to reach a more equitable outcome. However, at the same time, Judge Moore contrasted this reliance on overly broad statutory interpretation to the plain language of 11 U.S.C. § 1328, and held that § 1328 excepts alimony, maintenance and child support from a Chapter 13 discharge. In re Jenkins, 4 B.R. 278 (Bkrtcy.D.Colo. 1980).
Without belaboring the point, I refer to one other instance in which a case supplied by appellant distinguishes child support from the bulk of other Chapter 13 debts. In In re Sellers, 81-B-106 (D.Colo.1981), Judge Moore again explains that 11 U.S.C. § 1328 excepts debts
(a) on which the last contract payment becomes due after final payment under the plan; and
(b) for alimony, maintenance, and support;
and refers to the "erudite opinion" in In re Seely, 6 B.R. 309 (Bkrtcy.E.D.Va.1980) which says "There are two exceptions. Does anyone see three? . . . One must therefore conclude that every other debt every otheris dischargeable."
While every case cited by appellant deals with the issue of good faith, the arguments in those cases are directed to the minimal amount of payments made to unsecured creditors rather than to the ramifications of child support as a claim under a Chapter 13 reorganization plan. It is clear from his order that Judge Brumbaugh, in the instant case, has not based his denial of the Chapter 13 confirmation on the $1.00 payment price to each unsecured creditor, but on his finding that provisions for payment of child support are insufficient and therefore violate the good faith requirement necessary for approval of a Chapter 13 reorganization plan.
Case authority, legislative history and public policy all strengthen the position taken by Judge Brumbaugh. Moreover, Bankruptcy Rule 810 requires that the bankruptcy judge's findings be upheld by the reviewing court unless they are clearly erroneous. Farmers Co-Op Ass'n of Talmage, Kansas v. Strunk, 671 F.2d 391 (10th Cir.1982).
I conclude that the Order Denying Motion to Confirm was not clearly erroneous. Therefore,
The order of the bankruptcy court is affirmed.
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803 F.Supp. 442 (1992)
MIAMI FREE ZONE CORPORATION, Plaintiff,
v.
FOREIGN-TRADE ZONES BOARD, DEPARTMENT OF COMMERCE, et al., Defendants.
Civ. A. No. 92-0392.
United States District Court, District of Columbia.
October 8, 1992.
Ronald W. Gerdes, Washington, D.C., for plaintiff.
Jeffrey T. Sprung, Asst. U.S. Atty., Washington, D.C., for defendants.
MEMORANDUM
GESELL, District Judge.
Defendant, claiming this Court lacks jurisdiction, has moved to dismiss the complaint, which seeks a review of an action taken by the Foreign-Trade Zones Board. The parties have filed extensive briefs which have been thoroughly considered, along with the Administrative Record.
Under the terms of the Foreign-Trade Zones Act of 1934, as amended, 19 U.S.C. § 81a-81u (Supp.1991), and 15 C.F.R. § 400.00 et seq., ("FTZ Act"), the Foreign-Trade Zones Board, an agency within the U.S. Department of Commerce, is authorized *443 to review and approve applications for the establishment, operation, and maintenance of general-purpose foreign trade zones ("FTZs"). This litigation reflects an ongoing controversy which has arisen in several different cases concerning the respective roles of U.S. District Courts and the Court of International Trade ("CIT") in disputes arising from actions taken by the Board.
Plaintiff contends that this Court has jurisdiction under Section 701 of the Administrative Procedure Act, which entitles a person wronged by agency action to judicial review in this Court, unless review is precluded by statute. 5 U.S.C. § 701(a)(1). Pointing to the same section, defendants contend that the FTZ Act precludes general judicial review of Board action authorizing and awarding an FTZ.
This Court must determine whether or not the FTZ Act is a statute that precludes judicial review by this Court, which would otherwise be available under Section 701 of the Administrative Procedure Act. The Motion to Dismiss must be supported by "clear and convincing" evidence since general jurisdiction should be accepted absent a definite congressional intent to preclude jurisdiction.
While the complaint is somewhat general, it attacks the action of the Board in granting a new FTZ which allegedly threatens to affect the business of an FTZ previously authorized and awarded by the Board to plaintiff in the same area. The FTZ Act at 19 U.S.C. § 81r specifically addresses revocation by the Board of an FTZ authorized by the Board and provides in § 81r(c) for direct review by the Court of Appeals for the circuit where the revoked FTZ is located. The FTZ Act does not otherwise mention any other review of Board action by a Court of Appeals, nor does it consider jurisdiction of district courts in § 81r(c) or elsewhere. The FTZ Act is silent as to whether a Board action authorizing an FTZ is reviewable by any court.
This revocation provision alone suggests lack of jurisdiction in this Court, but it does not constitute "clear and convincing evidence" that Congress intended to bar review of a Board action authorizing an FTC pursuant to Section 701 of the Administrative Procedure Act. It is necessary, therefore, to resolve the motion only after considering the statutory context in which this very specific grant of revocation jurisdiction to the Court of Appeals arose.
In an effort to avoid jurisdictional conflicts, Congress not only gave CIT full Article III powers but also, by 28 U.S.C. § 1581(i)(4), placed the administration and enforcement of certain international trade laws under the "exclusive jurisdiction" of CIT. CIT thus has exclusive power to enforce and administer all statutes providing for:
(1) revenue from imports or tonnage;
(2) tariffs, duties, fees, or other taxes on the importation of merchandise for reasons other than the raising of revenue;
(3) embargoes or other quantitative restrictions on the importation of merchandise for reasons other than the protection of the public health or safety; ...
28 U.S.C. § 1581(i)(1)-(3). Congress granted CIT jurisdiction over these matters "to eliminate the confusion which currently exists as to the demarcation between the jurisdiction of the Federal District Courts and the Court of International Trade." H.R.Rep. 96-3745, 96th Cong., 2d Sess. (1980).
The legislative history makes clear that the purpose of this section was to broaden the exclusive jurisdiction of CIT's comprehensive authority over trade matters:
Section 201 of H.R. 6394 added a new section 1581(i) to Title 28, United States Code, granting broad residual jurisdiction to the United States Court of International Trade. This section granted the court jurisdiction over those civil actions which arise directly out of an import transaction and involve one of the many international trade laws. The purpose of this section was to eliminate the confusion which currently exists as to the demarcation between the jurisdiction of the federal district courts and the Court of International Trade. This language made it clear that all suits of this type *444 are properly commenced only in the Court of International Trade and not in a district court.
H.R.Rep. 96-1235, 96th Cong., 2d Sess., reprinted in 1980 U.S.Code Cong. & Admin.News 3729, at 3745.
A reading of the FTZ Act demonstrates that at the very least the business of FTZs falls within (i), (1), (2) and (4). The FTZ Act is directly concerned with regulating duties, in part through the special zones established in the areas of larger ports. It should also be noted that the FTZ Act is of little guidance if one seeks to determine governing standards for grants to new FTZs, particularly those that may have competitive consequences. This is largely a matter of expert administration and is within CIT's reviewing authority, subject to appeal to the Court of Appeals for the Federal Circuit, except as to revocation.
If this Court were to accept continuing jurisdiction based on the Administrative Procedure Act it would hold, in effect, that two Article III courts whose decisions are subject to appellate review by different appellate courts were intended to have concurrent jurisdiction to review the FTZ Board as to many FTZ activities, since any challenge to the grant of an FTZ may have procedural, factual or purely legal aspects, depending on the facts and circumstances. While there is no provision explicitly justifying review of any grant, if there is jurisdiction anywhere surely it is not in this Court since many aspects of such a review fall exclusively to CIT.
The Court is satisfied that the jurisdictional requirements reviewed above placed review of revocation in the appropriate Court of Appeals, in this case the Eleventh Circuit. Revocation differs from grants. Standards for revocation, constitutional and otherwise, have been well developed over the years. But since promotion of international trade is but a precatory objective and FTZs are concerned with shifting tariffs, duties and import conditions, all other review of the Board's actions were intended to be exclusively in CIT, a specialized court. It is for that Court to define the scope of its jurisdiction over FTZ grants, not this U.S. District Court.
It can be persuasively argued that if a district court has jurisdiction, this case must be transferred to the Eleventh Circuit. See Supplemental Brief filed by defendant. But this Court is qualified to determine its jurisdiction under 5 U.S.C. § 702 and venue exists under 28 U.S.C. § 1391. Standing has been accepted because plaintiff is regulated by the Board, its injury is not unduly speculative and the issue required prompt resolution for the speedy and fair administration of justice.
The complaint is dismissed, without prejudice, for lack of jurisdiction.
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803 F.Supp. 135 (1992)
NATIONAL PAINT & COATINGS ASSOCIATION; Rust-Oleum Corporation, an Illinois corporation; The Sherwin-Williams Company, an Ohio corporation; Ace Hardware Corporation, a Delaware corporation; Tru-Test Manufacturing Company, a Delaware corporation; FMA, Inc., d/b/a Jim's Ace Hardware, an Illinois corporation; W.C. Schauer Hardware Center, Inc., an Illinois corporation; Elston Ace Hardware, Inc., an Illinois corporation; Smiley Ace Hardware, Inc., an Illinois corporation; The Art & Craft Materials Institute, Inc., a New York corporation; Brudno Art Supply Store Co., Inc., a Delaware corporation; Sakura Color Products of America, Inc., a California corporation; Peter Michael O'Brien, an individual; and Kirby J. Briske, an individual, Plaintiffs,
v.
CITY OF CHICAGO, an Illinois municipal corporation, Defendant.
No. 92 C 4023.
United States District Court, N.D. Illinois, E.D.
July 31, 1992.
*136 *137 *138 Harvey M. Sheldon, Bruce H. Weitzman, Paul Andre Katz, Edward C. Stewart, McDermott, Will & Emery, P.C., Chicago, Ill., for plaintiffs.
Thomas G. Dent, Jeryl Dezelick, Peter C. Woodford, Therese G. Pinter, Seyfarth, Shaw, Fairweather & Geraldson, Chicago, Ill., for plaintiff Sherwin-Williams Co.
Gail A. Niemann, Susan R. Lichtenstein, Anita K. Modak-Truran, City of Chicago, Law Dept. Corp. Counsel, Ronald D. Jolly, Governor's Office of Consumer Services, Chicago, Ill., for defendants.
MEMORANDUM OPINION AND ORDER
ASPEN, District Judge:
In an effort to combat the growing problem of graffiti, on May 20, 1990, the City Council of the City of Chicago enacted four ordinances, Municipal Code §§ 4-132-150, 8-4-130, 8-16-095 and 8-16-096, regulating the sale and possession of paint in spray cans ("spray paint") and markers containing a non-water soluble fluid and having a writing surface of 3/8 of an inch or greater ("large markers"). Sections 4-132-150 and 8-4-130(a) are the subjects of the instant suit for declaratory and injunctive relief.[1] Plaintiffs, who consist of manufacturers, transporters, retail sellers and consumers of spray paint and large markers, contend that the ordinances are facially unconstitutional,[2] in that they: (1) unduly *139 interfere with interstate commerce in violation of the United States Constitution; (2) constitute an impermissible use of the police power of the City of Chicago under the Illinois Constitution; (3) deny plaintiffs their rights to equal protection of the laws as guaranteed by the Illinois and United States Constitutions; (4) deny plaintiffs their rights to procedural and substantive due process as guaranteed under the Illinois and United States Constitutions; and (5) violate the protections of due process by being vague and overbroad. Presently before the court is defendant City of Chicago's motion to dismiss plaintiffs' complaint pursuant to Fed.R.Civ.P. 12(b)(6). For the reasons set forth below, the motion is granted in part and denied in part.
I. Motion to Dismiss Standard
A motion to dismiss should not be granted unless it "appears beyond doubt that the plaintiff can prove no set of facts in support of his claims which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957); see also Beam v. IPCO Corp., 838 F.2d 242, 244 (7th Cir.1988); Ellsworth v. City of Racine, 774 F.2d 182, 184 (7th Cir.1985), cert. denied, 475 U.S. 1047, 106 S.Ct. 1265, 89 L.Ed.2d 574 (1986). We take the "well-pleaded allegations of the complaint as true and view them, as well as reasonable inferences therefrom, in the light most favorable to the plaintiff." Balabanos v. North Am. Inv. Group, Ltd., 708 F.Supp. 1488, 1491 n. 1 (N.D.Ill.1988) (citing Ellsworth).
II. Background
A. The Challenged Ordinances
Section 4-132-150 of the Municipal Code prohibits the retail sale of spray paint and large markers in the City of Chicago. That provision provides:
It shall be unlawful for any person holding a retail business license to sell paint in spray cans to any person or to sell any marker containing a fluid which is not water soluble and has a point, brush, applicator or other writing surface of three-eighths of an inch or greater to any person.
Municipal Code of Chicago, § 4-132-150. "Any person found in violation of Section 4-132-150 shall be fined not less than nor more than $100.00 and/or required to perform reasonable public service for each separate offense." Id. § 4-132-170.
Section 8-4-130(a) prohibits the possession of spray paint and large markers in Chicago's public buildings, public facilities or on the property of another:
(a) It shall be unlawful for any person to possess a spray paint container, liquid paint or any marker containing a fluid which is not water soluble and has a point, brush, applicator or other writing surface of three-eighths of an inch or greater, on the property of another or in any public building or upon any public facility. It shall be a defense to an action for violation of this subsection that the owner, manager or other person having control of the property, building or facility consented to the presence of the paint or marker.
Municipal Code of Chicago, § 8-4-130(a). The penalty for violating this provision is a fine not to exceed $200. Id. § 8-4-360.
B. The Plaintiffs
National Paint Coatings Association ("NPCA") is a voluntary, non-profit industry association that represents many of the nation's paint manufacturers. Its members accounting for approximately one-half of the spray paint manufactured and marketed in the United States, NPCA brings this action in its own name and on behalf of its members.
Rust-Oleum Corporation ("Rust-Oleum") is an Illinois corporation having its principal offices in Vernon Hills, Illinois. Rust-Oleum manufactures and sells spray paint in Chicago and elsewhere in interstate commerce.
*140 The Sherwin-Williams Company ("Sherwin-Williams") is an entity incorporated under the laws of Ohio, and licensed to conduct business in Illinois. Sherwin-Williams manufactures spray paint at facilities located in Chicago, selling such paint in wholly-owned retail stores in Chicago and elsewhere.
Ace Hardware Corporation, a Delaware corporation, maintains its offices for its Paint Division in Matteson, Illinois, and conducts business in Chicago as licensed retail sellers of spray paint.
Tru-Test Manufacturing Company ("Tru-Test"), likewise incorporated under the laws of Delaware, maintains its principal offices in Cary, Illinois. Tru-Test manufactures spray paint, and is affiliated with "cooperative members" who transact business in Chicago as licensed retail sellers of spray paint.
The following plaintiffs, all of which are Illinois corporations operating as licensed retailers in Chicago, sell spray paint amongst their product lines: FMA Inc., d/b/a Jim's Ace Hardware; W.C. Schauer Hardware Center, Inc.; Elston Ace Hardware, Inc.; and Smiley Ace Hardware, Inc.
The Art & Craft Materials Institute ("ACMI") is a New York corporation, having its principal offices in Boston, Massachusetts. ACMI, an international membership association organized in 1936, brings suit in its own name and on behalf of its members, who include manufacturers of large markers.
Brudno Art Supply Store Co., a Delaware corporation, operates as a licensed retailer in Chicago, and sells amongst its product line spray paint and large markers.
Sakura Color Products of America, Inc. ("Sakura"), a California corporation, manufactures large markers, and sells them to retail sellers in Chicago.
Peter Michael O'Brien is an individual working as a manufacturers' representative of artists' supplies in Illinois. One of the products he sells to retail stores in Chicago is large markers manufactured by Sakura.
Kirby J. Briske is an individual who resides and works as an artist in Chicago. He buys and uses spray paint for his works of art on paper.
III. Discussion
At the threshold, a word about the role of the court in reviewing state regulations is in order. As a federal court it is our duty to review state laws and regulations for constitutional infirmities; to the extent that the state law or regulation in question conflicts with the dictates of the United States Constitution, the former must yield to the latter. Marbury v. Madison, 5 U.S. (1 Cranch) 137, 2 L.Ed. 60 (1803). This role, however, is limited. Certainly, the Constitution does not compel the City of Chicago to subscribe to any particular means of combating the problem of graffiti. As such, this court will not "`second-guess the empirical judgments of lawmakers concerning the utility of legislation....'" CTS Corp. v. Dynamics Corp. of Am., 481 U.S. 69, 92, 107 S.Ct. 1637, 1651, 95 L.Ed.2d 67 (1987) (quoting Kassel v. Consolidated Freightways Corp., 450 U.S. 662, 679, 101 S.Ct. 1309, 1320, 67 L.Ed.2d 580 (1981) (Brennan, J., concurring)).
A. Standing and Ripeness
The City initially asserts that plaintiffs lack standing to challenge § 8-4-130(a), regulating possession of spray paint and large markers, as they have not set forth facts indicating a "distinct and palpable" injury, as opposed to an abstract, hypothetical or conjectural injury. Additionally, the City maintains that plaintiffs' challenge to the possession ordinance is not ripe for review. We disagree with both contentions.
The doctrine of standing "is grounded both on constitutional and prudential considerations, with the division between the two often a blurry one." Government Suppliers Consolidating Serv. v. Bayh, 734 F.Supp. 853, 857 (S.D.Ind.1990). The City confines its attack on plaintiffs' standing to the requirements of the Constitution and, finding no prudential concerns warranting a denial of standing, we proceed to *141 the requirements of Article III of the United States Constitution. Article III restricts the jurisdiction of federal courts to "cases or controversies." U.S. Const. art. III, § 2 ("The judicial Power shall extend to all Cases, in Law and Equity, arising under this Constitution ... to Controversies between...."). To meet this constitutional requirement plaintiffs must show that (1) they have suffered an actual or threatened injury, (2) fairly traceable to the challenged conduct, and (3) for which the court can provide a remedy. Valley Forge Christian College v. Americans United for Separation of Church & State, Inc., 454 U.S. 464, 472, 102 S.Ct. 752, 758, 70 L.Ed.2d 700 (1982); Simmons v. Interstate Commerce Comm'n, 900 F.2d 1023, 1026 (7th Cir. 1990), cert. denied, ___ U.S. ___, 111 S.Ct. 1308, 113 L.Ed.2d 242 (1991); City of Evanston v. Regional Transp. Authority, 825 F.2d 1121, 1123 (7th Cir.1987), cert. denied, 484 U.S. 1005, 108 S.Ct. 697, 98 L.Ed.2d 649. (1988).
Respecting the first prong of the Valley Forge test the only prong in dispute plaintiffs have alleged that those
who for business or personal purposes need to use spray paint or large markers ... [will] have no means under [§ 8-4-130(a)] to travel with those materials in Chicago, because public facilities or public places are almost always involved and ordinary transit through building lobbies and other private places, without the permission of the owners or managers, is a crime under the ordinance.
Complaint ¶ 48, at 12. The fear of prosecution under § 8-4-130(a) of those plaintiffs who anticipate possessing, without consent, spray paint and large markers in Chicago's public buildings, public facilities or on the property of another is a sufficient threatened injury to meet the "injury in fact" requirement of Valley Forge. See Kucharek v. Hanaway, 902 F.2d 513, 516 (7th Cir.1990) (plaintiffs had standing to challenge new obscenity statute based on a showing that they "want to sell materials which the statute actually or arguably prohibits and that they are deterred from doing so by a reasonable fear of prosecution"), cert. denied, ___ U.S. ___, 111 S.Ct. 713, 112 L.Ed.2d 702 (1991). Further, it is reasonable to conclude that such fear of prosecution will result in financial losses to those plaintiffs who sell such items, as consumers change their consumption patterns to avoid prosecution under the possession ordinance. Such an economic injury is precisely the type that is consistently found to satisfy the constitutional injury in fact requirement. See Government Suppliers Consolidating Serv., 734 F.Supp. at 859 (collecting cases).
In a declaratory judgment action, the issue of ripeness focuses on the following question: "`[W]hether ... there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.'" Lake Carriers' Ass'n v. MacMullan, 406 U.S. 498, 506, 92 S.Ct. 1749, 1755, 32 L.Ed.2d 257 (1972) (quoting Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 512, 85 L.Ed. 826 (1941)). The gravamen of the City's ripeness argument is that the ordinance has yet to be enforced in Chicago and, as such, may not apply to plaintiffs' conduct. Additionally, the City noted that to the extent that the ordinance is applied to plaintiffs, the maximum penalty is a fine of $200 a penalty the City characterizes as "slight." Plaintiffs, however, do not object to the application of this particular provision. Rather, they contend that the regulation is unconstitutional on its face. Under these circumstances, we find plaintiffs' challenge to § 8-4-130(a) ripe for adjudication. See Kerr-McGee Chemical Corp. v. City of West Chicago, 914 F.2d 820, 823-24 (7th Cir.1990) (characterizing plaintiff's facial attack on City Code as an entirely legal question, and concluding that it was ripe for review) (citing Pacific Gas & Electric Co. v. State Energy Resources Conservation and Dev. Comm'n, 461 U.S. 190, 103 S.Ct. 1713, 75 L.Ed.2d 752 (1983)). We now turn to the merits of plaintiffs' complaint.
B. Commerce Clause
In Count I of their complaint, plaintiffs contend that § 4-132-150 and § 8-4-130(a) *142 violate the commerce clause of the United States Constitution, which empowers Congress "to regulate Commerce ... among the several States...." U.S. Const. art. 1, § 8, cl. 3. It is settled law that the "negative" or "dormant" component of the commerce clause prevents states and local governing bodies from impeding the flow of interstate commerce, even absent congressional action in a particular field.[3]See Fort Gratiot Sanitary Landfill, Inc. v. Michigan Dep't of Natural Resources, ___ U.S. ___, ___, 112 S.Ct. 2019, 2023, 119 L.Ed.2d 139 (1992); Raymond Motor Transp. v. Rice, 434 U.S. 429, 440, 98 S.Ct. 787, 793, 54 L.Ed.2d 664 (1978); Bowman v. Niagara Mach. and Tool Works, Inc., 832 F.2d 1052, 1055 (7th Cir.1987). The limitation on state regulatory action, however, "is by no means absolute." Lewis v. BT Inv. Managers, Inc., 447 U.S. 27, 36, 100 S.Ct. 2009, 2015, 64 L.Ed.2d 702 (1980). Rather, local governing bodies "retain authority under their general police powers to regulate matters of `legitimate local concern,' even though interstate commerce may be affected." Id.; see also Maine v. Taylor, 477 U.S. 131, 138, 106 S.Ct. 2440, 2447, 91 L.Ed.2d 110 (1986).
In determining whether a state or local governing body has overstepped its role in regulating interstate commerce, the initial inquiry delves into the discriminatory nature of the challenged regulation. If the legislation discriminates against interstate commerce "either on its face or in practical effect," the local governing body bears the burden of demonstrating that the regulation "serves a legitimate local purpose," and that this purpose could not be served as well by available nondiscriminatory means. Fort Gratiot Sanitary Landfill, Inc., ___ U.S. at ___, 112 S.Ct. at 2024; Maine v. Taylor, 477 U.S. at 138, 106 S.Ct. at 2447; Sporhase v. Nebraska, 458 U.S. 941, 957, 102 S.Ct. 3456, 3464, 73 L.Ed.2d 1254 (1982); Hughes v. Oklahoma, 441 U.S. 322, 336, 99 S.Ct. 1727, 1736, 60 L.Ed.2d 250 (1979); Hunt v. Washington State Apple Advertising Comm'n, 432 U.S. 333, 353, 97 S.Ct. 2434, 2446, 53 L.Ed.2d 383 (1977); Dean Milk Co. v. City of Madison, 340 U.S. 349, 354, 71 S.Ct. 295, 297-98, 95 L.Ed. 329 (1951). If, on the other hand, the legislation "regulates evenhandedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits." Pike v. Bruce Church, Inc., 397 U.S. 137, 142, 90 S.Ct. 844, 847, 25 L.Ed.2d 174 (1970).[4]
There is no doubt that §§ 4-132-150 and 8-4-130(a) are not protectionist measures; rather, they apply evenhandedly between intra- and inter-state commerce. Indeed, both the City and the plaintiffs agree that the Pike balancing test is applicable to the instant challenge to the anti-graffiti regulations. As such, we begin *143 our analysis with the first Pike consideration: does the local legislation serve a legitimate local public interest? Sections 4-132-150 and 8-4-130(a) are directed at the same interest, namely preserving property values, deterring illegal activity and protecting the aesthetic character of the City's neighborhoods from the devastation of graffiti vandalism. See Municipal Code of Chicago, §§ 4-132-150 & 8-4-130, Preamble. Clearly, these are the types of local interests that are legitimate subjects for local regulation, and plaintiffs do not suggest otherwise. Second, as the legislation on its face addresses only matters of local concern, i.e., sale and possession of spray paint and large markers within Chicago, any impact on interstate commerce is only "incidental." See Camille Corp. v. Phares, 705 F.2d 223, 229 (7th Cir.1983) (city's ordinance banning the sale of drug paraphernalia "is concerned only with local activity; therefore any impact on interstate commerce is only incidental").
Contrary to the City's suggestion, however, our analysis does not end here. Having met the first two Pike elements, this court will uphold the ordinances only if the burden on interstate commerce is not excessive in relation to the local benefits. This question parts from the legislative purposes as espoused, instead focusing on the extent of the burdens imposed by, and the benefits derived from, the ordinances. It is an empirical question "one of degree." Pike, 397 U.S. at 142, 90 S.Ct. at 847. Plaintiffs contend that the ordinances' ban on the sale and possession of spray paint and large markers presents substantial economic and recreational burden. Complaint ¶¶ 28-39, at 8-11. Further, they assert that the means employed by the ordinances will not achieve, or move the City closer to achieving, the stated local objectives of preserving property values, deterring illegal activity and protecting the aesthetic character of the City's neighborhoods from the devastation of graffiti vandalism. Id. ¶ 51, at 13. Finally, plaintiffs point to education, prompt correction, law enforcement and other programs such as annual "community paint out" campaigns as reasonable alternatives for addressing Chicago's graffiti problem without burdening interstate commerce. Id. ¶¶ 52-53, at 13. In light of these allegations, and despite the City's assertion of a "strong public interest," plaintiffs must be afforded the opportunity to garner and present facts substantiating their claims. See Raymond Motor, 434 U.S. at 447 n. 25, 98 S.Ct. at 797 n. 25 (citing Dowling, Interstate Commerce and State Power, 27 Va.L.Rev. 1, 27-28 (1940)); see also id. at 796, 98 S.Ct. at 796 ("the State's assertion that the challenged regulations contribute to highway safety is rebutted by appellants' evidence...."). Until they have been given this opportunity, this court cannot engage in the balancing required under Pike, and the City's motion to dismiss Count I of plaintiffs' complaint is denied.
C. The City's Police Power
Article VII, § 6(a) of the Illinois Constitution authorizes local governments, such as the City of Chicago, to function as home rule units to "exercise any power and perform any function pertaining to its government and affairs." Pursuant its police power, the City may "`restrict or prohibit the exercise of a legitimate trade where it is necessary for the protection of the public health, morals, safety or welfare.'" Opyt's Amoco, Inc. v. The Village of South Holland, 149 Ill.2d 265, 269, 172 Ill.Dec. 390, 392, 595 N.E.2d 1060, 1062 (1992) (quoting Figura v. Cummins, 4 Ill.2d 44, 122 N.E.2d 162 (1954)). To constitute a legitimate exercise of the police power, municipal regulation "must bear a reasonable relationship to the public interest sought to be protected and the means adopted must be a reasonable method of accomplishing the chosen objective." Id. (citing Crocker v. Finley, 99 Ill.2d 444, 77 Ill.Dec. 97, 459 N.E.2d 1346 (1984)); see also Finish Line Express, Inc. v. City of Chicago, 72 Ill.2d 131, 138, 19 Ill.Dec. 626, 628, 379 N.E.2d 290, 292 (1978); Midwest Petroleum Marketers v. City of Chicago, 82 Ill.App.3d 494, 500, 37 Ill.Dec. 707, 712, 402 N.E.2d 709, 714 (1st Dist.1980). Once the legislative body determines that a problem exists and acts to protect and promote the general welfare of its citizens, the legislation *144 is presumed to be a valid exercise of the City's police power. Opyt's Amoco, 149 Ill.2d at 269, 172 Ill.Dec. at 392, 595 N.E.2d at 1062; Midwest Petroleum Marketers, 82 Ill.App.3d at 500, 37 Ill.Dec. at 712, 402 N.E.2d at 714 (citing Union Cemetery Ass'n v. Cooper, 414 Ill. 23, 110 N.E.2d 239 (1953)). The mere fact that the legislature has invoked the police power, however, is not conclusive that the power was lawfully exercised; it remains within the province of the court to determine that issue. Opyt's Amoco, 149 Ill.2d at 269, 172 Ill.Dec. at 392, 595 N.E.2d at 1062 (citing Figura, 4 Ill.2d at 49, 122 N.E.2d at 165).
As stated supra subsection III(B), both §§ 4-132-150 and 8-4-130(a) are directed at promoting legitimate governmental interests, namely preserving property values, deterring illegal activity and protecting the aesthetic character of the City's neighborhoods from the devastation of graffiti vandalism. The controverted issue in this case concerns the means adopted to achieve these goals. Plaintiffs' complaint contains allegations that: (1) the ban on retail sales and on public possession of spray paint and large markers will not eliminate the availability of such items to individuals who have commonly used them to deface buildings, Complaint ¶ 68, at 16-17; (2) the prohibition of the retail sale of spray paint and large markers unreasonably interferes with and curtails innocent business relationships out of all proportion to any demonstrable reduction in defacement of buildings, id. ¶ 69, at 17; (3) the ban on public possession of spray paint and large markers, without proper consent, will unreasonably interfere in the ability of people to carry out ordinary lawful occupations and tasks, and will not prevent individuals who intend to deface buildings from using other means to do so, id. ¶¶ 70-71, at 17; (4) the ban on public possession of spray paint and large markers, without proper consent, will not prevent individuals from defacing property because of the inherent difficulties associated with the enforcement of the ban, id. ¶ 72, at 17; and (5) the ordinances are unduly oppressive and arbitrarily imposing restrictions on manufacturers, retailers and consumers of spray paint and large markers. Id. ¶ 73, at 18. Plaintiffs have sufficiently alleged that the means adopted by the ordinance are arbitrary, capricious and unreasonable and, as such, must be given the opportunity to substantiate their claims. Accordingly, we deny the City's motion to dismiss Count II of plaintiffs' complaint.
D. Equal Protection
The Fourteenth Amendment forbids state governing bodies from denying "any person within its jurisdiction the equal protection of the laws." U.S. Const. amend. XIV, § 1. Because §§ 4-132-150 and 8-4-130 do not deprive plaintiffs of a fundamental right or classify along suspect lines, i.e., race or religion, the ordinances must be upheld if the disputed classifications are "rationally related" to a legitimate end. See Burlington N. R.R. Co. v. Ford, ___ U.S. ___, ___, 112 S.Ct. 2184, 2186, 119 L.Ed.2d 432 (1992); United States v. Sperry Corp., 493 U.S. 52, 64, 110 S.Ct. 387, 396, 107 L.Ed.2d 290 (1989); Vaden v. Village of Maywood, 809 F.2d 361, 365 (7th Cir.), cert. denied, 482 U.S. 908, 107 S.Ct. 2489, 96 L.Ed.2d 381 (1987). The "rational relationship" test is not exacting: state governing bodies "are accorded wide latitude in the regulation of their local economies under their police powers, and rational distinctions may be made with substantially less than mathematical exactitude." City of New Orleans v. Dukes, 427 U.S. 297, 303, 96 S.Ct. 2513, 2517, 49 L.Ed.2d 511 (1976) (per curiam).
Plaintiffs, citing Cabell v. Chavez-Salido, 454 U.S. 432, 440, 102 S.Ct. 735, 740, 70 L.Ed.2d 677 (1982), argue that the ordinances classifications are sufficiently under- and over-inclusive to "undercut the governmental claim that the classification serves legitimate political ends." Plaintiffs claim § 4-132-150 is under-inclusive because it applies only to persons holding a retail business license, but not wholesalers, mail-order businesses, causal sellers or suburban retailers of spray paint and large markers. Complaint ¶¶ 77-78, at 18-19. Likewise, plaintiffs assert that both ordinances are under-inclusive in that they do *145 not apply to other items that might be used for graffiti vandalism. Id. ¶ 79, at 19. These classifications, however, do not afford plaintiffs with an equal protection challenge. There is no doubt that the City perceived a legitimate problem in need of redress. And, regardless of whether these ordinances are reasonable means to achieve the City's goals an issue yet to be resolved we do not believe the equal protection clause mandates the City to tackle the problem in its entirety or not at all. As stated in Vaden, 809 F.2d at 365 (quoting Williamson v. Lee Optical Co. of Oklahoma, Inc., 348 U.S. 483, 489, 75 S.Ct. 461, 465, 99 L.Ed. 563 (1954)): "`[R]eform may take one step at a time, addressing itself to the phase of the problem which seems most acute to legislative mind.'" See also Bowen v. Owens, 476 U.S. 340, 347, 106 S.Ct. 1881, 1886, 90 L.Ed.2d 316 (1986); Illinois Health Care Ass'n v. Illinois Dep't of Public Health, 879 F.2d 286, 290-91 (7th Cir.1989).
Equally unavailing is plaintiffs' assertion that the ordinances are over-inclusive in that they apply to all persons regardless of age and regardless of their intended use of spray paint and large markers. See Complaint ¶ 80, at 19. Under the minimal standards of the rational basis test, we find the ordinances' inclusion of all age groups rationally related to the legislation's stated objectives. Apart from the reasonable assumption that adults partake in vandalism, that adults may buy and possess spray paint and large markers for the benefit of youths who ultimately engage in graffiti is a reasonable basis to prohibit the sale and possession of these items for all age groups. More troubling is the fact that § 8-4-130(a), addressing possession in public buildings and facilities or on private property, applies irrespective of intended use, while application of § 8-4-130(b), addressing possession on the public way, depends on the intention of the actor. Nonetheless, the City has articulated the basis for this distinction as follows. A person who wishes to possess spray paint or large markers in public buildings and facilities or on private property can obtain the permission of the owner, manager or other person having control of the premises. Indeed, obtaining such consent is set forth as a defense to an action for violation of § 8-4-130(a). A person who desires to possess spray paint or large markers on the public way, however, cannot easily obtain such consent. Therefore, as a safeguard against unwarranted application, § 8-4-130(b) prohibits the possession of spray paint and large markers on the public way only if a person intends to deface property. While optimal protection against unwarranted application may dictate the inclusion of an intention provision in each ordinance, that is a decision for the legislature and not this court. For the purposes of our inquiry, the constitutionality of the regulations, we find the disparate treatment of the intention requirement in the respective ordinances rationally related to the legitimate goals of the legislation. Accordingly, we dismiss Count III of plaintiffs' complaint.
E. Procedural Due Process
The Fourteenth Amendment prohibits a state from depriving persons of life, liberty or property without due process of law. In order to ascertain whether state action affecting an individual is violative of this prohibition, two inquiries are made: first, a life, liberty or property interest must be identified; and second, the degree of process due to the individual must be ascertained. Logan v. Zimmerman Brush Co., 455 U.S. 422, 428, 102 S.Ct. 1148, 1154, 71 L.Ed.2d 265 (1982); Shango v. Jurich, 681 F.2d 1091, 1097 (7th Cir.1982); Mustfov v. Rice, 663 F.Supp. 1255, 1265 (N.D.Ill. 1987). Assuming for the purposes of this motion that plaintiffs have adequately alleged a protected property right, a point the City does not contest, plaintiffs nonetheless have failed to state a procedural due process claim.
The gravamen of plaintiffs' procedural due process claim is that their fundamental right to engage in lawful, useful and harmless trade has been denied without prior notice and an opportunity for a hearing before the City Council. See Complaint ¶ 86, at 20. It is well established, however, that statutes or ordinances of general applicability may condition or even *146 prohibit the right to conduct a business without running afoul of procedural due process. Vaden v. Village of Maywood, 809 F.2d 361, 365 (7th Cir.), cert. denied, 482 U.S. 908, 107 S.Ct. 2489, 96 L.Ed.2d 381 (1987); Mustfov, 663 F.Supp. at 1265. As the Supreme Court stated in Bi-Metallic Inv. Co. v. State Bd. of Equalization, 239 U.S. 441, 445, 36 S.Ct. 141, 142, 60 L.Ed. 372 (1915):
Where a rule of conduct applies to more than a few people, it is impracticable that everyone should have a direct voice in its adoption. The Constitution does not require all public acts to be done in town meeting or an assembly of the whole. General statutes within the state power are passed that affect the person or property of individuals, sometimes to the point of ruin, without giving them a chance to be heard. Their rights are protected in the only way that they can be in a complex society, by their power, immediate or remote, over those who make the rule.
Finding the adoption of §§ 4-132-150 and 8-4-130 the type of legislative decision for which no individual hearing was necessary, we conclude that the guarantee of procedural due process does not afford plaintiffs the vehicle to challenge the constitutionality of these ordinances.[5]See Atkins v. Parker, 472 U.S. 115, 130-31, 105 S.Ct. 2520, 2529, 86 L.Ed.2d 81 (1985); Carson v. Block, 790 F.2d 562, 566 (7th Cir.), cert. denied, 479 U.S. 1017, 107 S.Ct. 669, 93 L.Ed.2d 721 (1986); Mustfov, 663 F.Supp. at 1265.
F. Substantive Due Process
In response to plaintiffs' assertion of a substantive due process violation, see Complaint ¶¶ 87-88, at 21, the City argues that the oxymoron that is "substantive due process" should be limited to protection of privacy rights and certain other limited personal rights. Indeed, the Seventh Circuit has recently called into question the practice of reviewing state regulations under the guise of the due process clause. See Saukstelis v. City of Chicago, 932 F.2d 1171, 1173 (7th Cir.1991) ("Out side the realm of personal liberties, substantive due process may be a misnomer for the enforcement of rights expressly established in the Constitution and applied to the states through the fourteenth amendment."); Schroeder v. City of Chicago, 927 F.2d 957, 961 (7th Cir.1991) ("We do not consider [substantive due process] a blanket protection against unjustifiable interferences with property."). Nonetheless, neither the Seventh Circuit nor the Supreme Court has "completely extinguished" the doctrine of substantive due process. See Schroeder, 927 F.2d at 961 (conceding that substantive due process has been "saved from total formlessness without being completely extinguished"); see also Swartz v. Scruton, 964 F.2d 607, 609 (7th Cir.1992) ("A substantive due process claim can be brought in the context of property interests."). Until that moment, this court will continue to test state economic regulation against the standards of substantive due process.
State ordinances can be said to deny substantive due process only if they do not bear a rational relationship to a legitimate governmental interest. Williamson v. Lee Optical Co. of Oklahoma, Inc., 348 U.S. 483, 487-88, 75 S.Ct. 461, 464, 99 L.Ed. 563 (1955); Nebbia v. New York, 291 U.S. 502, 524-25, 54 S.Ct. 505, 510, 78 L.Ed. 940 (1934); Coniston Corp. v. Village of Hoffman Estates, 844 F.2d 461, 467 (7th Cir.1988); Vaden v. Village of Maywood, 809 F.2d 361, 364 (7th Cir.), cert. denied, 482 U.S. 908, 107 S.Ct. 2489, 96 L.Ed.2d 381 (1987); Waste Management of *147 Illinois, Inc. v. Metropolitan Water Reclamation Dist. of Greater Chicago, 1989 WL 56917, at *2-3 (N.D.Ill. May 23, 1989). This test involves the same inquiry as that set forth supra subsection III(C) and, for the reasons stated therein, we deny the City's motion to dismiss plaintiffs' substantive due process claim.
G. Overbreadth
In Count V of their complaint, plaintiffs maintain that the ordinances are facially overbroad, and thus violate due process, as their prohibitions extend well beyond the evil at which they are addressed. Complaint ¶ 89, at 21. In order to prevail on their overbreadth challenge, plaintiffs must demonstrate that the ordinances reach a "substantial" amount of constitutionally protected conduct. Massachusetts v. Oakes, 491 U.S. 576, 581, 109 S.Ct. 2633, 2637, 105 L.Ed.2d 493 (1989); New York State Club Ass'n v. City of New York, 487 U.S. 1, 13, 108 S.Ct. 2225, 2234, 101 L.Ed.2d 1 (1988); Broadrick v. Oklahoma, 413 U.S. 601, 613, 93 S.Ct. 2908, 2916, 37 L.Ed.2d 830 (1973); United States v. Rodgers, 755 F.2d 533, 542 (7th Cir.), cert. denied, 473 U.S. 907, 105 S.Ct. 3532, 87 L.Ed.2d 656 (1985). Although acknowledging that the concept of "substantial overbreadth" is not readily reduced to an exact definition, the Supreme Court has made it clear that legislation cannot be facially invalidated as overbroad simply because some constitutionally impermissible applications of the law are conceivable. Members of City Council of City of Los Angeles v. Taxpayers for Vincent, 466 U.S. 789, 800, 104 S.Ct. 2118, 2126, 80 L.Ed.2d 772 (1984). Moreover, the overbreadth doctrine should be invoked "only as a last resort," and even legislation that appears overbroad should not be struck down if it is subject to a reasonable limiting construction. Broadrick, 413 U.S. at 613, 93 S.Ct. at 2916.
Contrary to plaintiffs' suggestion, the overbreadth doctrine applies only to expression protected under the First Amendment, working to relax the standing requirements by permitting parties to raise the rights of those not before the court. Mustfov v. Rice, 663 F.Supp. 1255, 1273 (N.D.Ill.1987); see also Oakes, 491 U.S. at 581, 109 S.Ct. at 2637 (referring to the overbreadth doctrine as "[t]he First Amendment doctrine"). There is no doubt that the ordinances in question will reach a substantial amount of legitimate commercial activity. However, while relevant to the above discussed commerce challenge, police power claim and substantive due process analysis, the amount of legitimate commerce curtailed does not involve the First Amendment and, as such, is irrelevant to the instant overbreadth inquiry. The only legitimate assertion of First Amendment conduct potentially reached by §§ 4-132-150 and 8-4-130 involves those artists who use spray paint and large markers for art work.[6] Surely, as plaintiffs allege, it is conceivable that the ban on the sale and possession of spray paint and large markers may prevent some artists from conveying their particular messages via their art work. However, when compared to the ordinances' potential applications to unprotected conduct, this conceivable infringement upon First Amendment rights cannot be considered "substantial." Consequently, we dismiss Count V of plaintiffs' complaint.
H. Vagueness
An ordinance may be facially attacked as a violation of the due process clause under the void-for-vagueness doctrine. "`To succeed, however, the complainant must demonstrate that the law is impermissibly vague in all of its applications.'" Brockert v. Skornicka, 711 F.2d 1376, 1381 (7th Cir.1983) (quoting Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 497, 102 S.Ct. 1186, 1193, 71 L.Ed.2d 362 (1982)). There are two distinct problems presented by vague legislation. First, a vague law does *148 not give an individual of ordinary intelligence a reasonable opportunity to comply with the law. In effect, there is no notice of what the law requires. Brockert, 711 F.2d at 1381. Second, a vague law lacks explicit standards for its application, and thus "impermissibly delegates basic policy matters to policemen, judges, and juries for resolution on an ad hoc and subjective basis, with the attendant dangers of arbitrary and discriminatory applications." Id. (quoting Grayned v. City of Rockford, 408 U.S. 104, 108-09, 92 S.Ct. 2294, 2298-99, 33 L.Ed.2d 222 (1972)).
Because fair notice and fair enforcement are more important in some areas than in others, the application of the void-for-vagueness doctrine varies with the nature of the enactment:
[E]conomic regulation is subject to a less strict vagueness test because its subject matter is often more narrow, and because businesses, which face economic demands to plan behavior carefully, can be expected to consult relevant legislation in advance of action. Indeed, the regulated enterprise may have the ability to clarify the meaning of the regulation by its own inquiry, or by resort to an administrative process. The Court has also expressed greater tolerance of enactments with civil rather than criminal penalties because the consequences of imprecision are qualitatively less severe. And the Court has recognized that a scienter requirement may mitigate a law's vagueness, especially with respect to the adequacy of notice to the complainant that his conduct is prescribed.... Finally, perhaps the most important factor affecting the clarity that the Constitution demands of a law is whether it threatens to inhibit the exercise of constitutionally protected rights. If, for example, the law interferes with the right of free speech or of association, a more stringent vagueness test should apply.
Village of Hoffman Estates, 455 U.S. at 498-99, 102 S.Ct. at 1193-94 (citations omitted). Although conceding that the ordinances are "quasi-criminal" in nature, City of Chicago's Reply Memorandum at 13 n. 3, the City nonetheless argues that the ordinances are economic regulations and, as such, should be tested against the least restrictive standard of review. We agree that the ordinances in question are economic in nature. However, the fact that neither of the challenged provisions contain a scienter requirement, coupled with their prohibitory and stigmatizing effect, warrants the relatively strict test traditionally applied to quasi-criminal and criminal laws. See id. at 499-500, 102 S.Ct. at 1194. Nevertheless, even under the test appropriate to either a quasi-criminal or criminal law, plaintiffs' facial challenge cannot stand as the ordinances are sufficiently clear.
In support of their lack-of-notice allegation, plaintiffs argue that the ordinances do not define the terms "public way," "possession," "public building," "public facility," and "consent." Complaint ¶ 96, at 22-23. None of these terms, however, are "terms of art"; each has a meaning that is readily understandable to a person of ordinary intelligence. The term "public way" does not appear in § 4-132-150 or § 8-4-130(a) and, to the extent that plaintiffs sought to challenge its meaning as it appears in § 8-4-130(b), it is defined in the Municipal Code as "any sidewalk, street, alley, highway, or other public thoroughfare." Municipal Code of Chicago, § 1-4-090(f). A principal meaning of the term "possession" is "the act or condition of having in or taking into one's control or holding at one's disposal." Webster's New International Dictionary of the English Language 1770 (3d ed. 1976). "Public building" has been defined as "[a]ny building held, used, or controlled exclusively for public purposes by any department or branch of government, state, county, or municipal, without reference to the ownership of the building or of the reality upon which it is situated." Black's Law Dictionary 1228 (6th ed. 1990). A "facility" is generally defined as "something that is built, constructed, installed, or established to perform some particular function or to serve or facilitate some particular end." Webster's New International Dictionary of the English Language 812-13 (3d ed. 1976). *149 Thus, a "public facility" can fairly be described as such a structure "held, used, or controlled exclusively for public purposes by any department or branch of government, state, county, or municipal, without reference [its] ownership ... or of [the ownership of] the reality upon which it is situated." Finally, "consent" is ordinarily understood to mean "to express a willingness (as to accept a proposition or carry out a particular action): give assent or approval: agree." Id. at 482.
More significant to plaintiffs' vagueness claim is the prospect that the ordinances provide insufficient standards for enforcement. The ordinances in question, however, like that reviewed in Village of Hoffman Estates, 455 U.S. at 503, 102 S.Ct. at 1196, have yet to be enforced. As such, plaintiffs have not, and could not, allege any specific instances of discriminatory or unfair enforcement. Under these circumstances, we are confined to the language in the ordinances, and we find that such language is "sufficiently clear that the speculative danger of arbitrary enforcement does not render the ordinance[s] void for vagueness." Id. (citing Papachristou v. City of Jacksonville, 405 U.S. 156, 168-71, 92 S.Ct. 839, 846-48, 31 L.Ed.2d 110 (1972); Coates v. City of Cincinnati, 402 U.S. 611, 614, 91 S.Ct. 1686, 1688, 29 L.Ed.2d 214 (1971)).
Although alternate constitutional grounds are available for plaintiffs to challenge these ordinances, the void-for-vagueness doctrine is not one of them, and Count VI of plaintiffs' complaint is dismissed.
IV. Conclusion
In summary, and in order of our discussion above, we have taken the following actions. (1) We find that plaintiffs possess standing to contest the validity of § 8-4-130(a), and that such challenge is ripe for adjudication. (2) The City's motion to dismiss Count I (commerce clause challenge) of plaintiffs' complaint is denied as plaintiffs must be afforded the opportunity to garner and present facts with respect to the Pike balancing test. (3) We deny the City's motion to dismiss Count II (challenge to police power) of plaintiffs' complaint because plaintiffs have sufficiently alleged that the means adopted by the ordinance are arbitrary, capricious and unreasonable. (4) Finding the disparate classifications of the respective ordinances rationally related to the legitimate goals of the legislation, we dismiss Count III (equal protection challenge) of plaintiffs' complaint. (5) Because the adoption of §§ 4-132-150 and 8-4-130 constitute the type of legislative decision for which no individual hearing was necessary, we grant the City's motion to dismiss plaintiffs' procedural due process claim. (6) Reaffirming the notion that a substantive due process claim can be brought in the context of property interests, the City's motion to dismiss plaintiffs' substantive due process claim is denied. (7) Having failed to allege a "substantial" amount of constitutionally protected expression reached by the ordinances, we dismiss Count V (overbreadth challenge) of plaintiffs' complaint. (8) Finding the language of the ordinances sufficiently clear, we dismiss Count VI (vagueness challenge) of plaintiffs' complaint. (9) Finally, a status hearing in open court is set for August 25, 1992, at 10:00 a.m. It is so ordered.
NOTES
[1] Although § 8-4-130 consists of two subsections, plaintiffs do not challenge the constitutionality of § 8-4-130(b), which prohibits the possession of spray paint and large markers "on the public way with the intent to use the same to deface any building, structure or property." See Complaint ¶ 3, at 3. Likewise, plaintiffs do not challenge the validity of § 8-16-095, which prohibits minors from possessing spray paint and large markers, nor do they challenge § 8-16-096, which prohibits aiding and abetting minors in obtaining possession of such items. Id.
[2] Likewise, plaintiffs contend that the ordinances are unconstitutional as applied to retail sellers, manufacturers, users and consumers of spray paint and large markers. These graffiti ordinances, however, have not been applied to plaintiffs (nor any other person) and, as such, leave plaintiffs with only a facial attack upon their validity.
[3] We note that Congress may authorize the states to engage in regulation that otherwise would be prohibited by the commerce clause. See South-Central Timber Dev., Inc. v. Wunnicke, 467 U.S. 82, 91, 104 S.Ct. 2237, 2242, 81 L.Ed.2d 71 (1984). In this case, however, the City does not assert that the anti-graffiti ordinances stem from such congressional authorization. Rather, the City contends that the challenged ordinances were enacted pursuant to the local government's police power to regulate matters of legitimate local concern.
[4] We note that the Seventh Circuit in Amanda Acquisition Corp. v. Universal Foods Corp., 877 F.2d 496, 505-07 (7th Cir.), cert. denied, 493 U.S. 955, 110 S.Ct. 367, 107 L.Ed.2d 353 (1989), questioned the validity of the Pike balancing test in light of the Supreme Court's decision in CTS Corp. v. Dynamics Corp. of Am., 481 U.S. 69, 107 S.Ct. 1637, 95 L.Ed.2d 67 (1987). CTS involved an Indiana statute prohibiting acquirors from securing voting rights in Indiana target corporations unless target management or unaffiliated shareholders approved. The Supreme Court in CTS upheld the statute without any citation to Pike, instead testing the statute against the "firmly established" principle of "a State's authority to regulate domestic corporations." CTS, 481 U.S. at 89, 107 S.Ct. at 1649. The validity of the Pike test, however, has since been re-affirmed by the Supreme Court, noting in Chemical Waste Management, Inc. v. Hunt, ___ U.S. ___, ___ n. 5, 112 S.Ct. 2009, 2014 n. 5, 119 L.Ed.2d 121 (1992), that the lesser scrutiny afforded under the Pike test is available "where other legislative objectives are credibly advanced and there is no patent discrimination against interstate trade." In any event, no party in the instant action disputes the validity of the Pike test.
[5] Underlying our conclusion that the legislative mechanism provides all the process due is the assumption that the ordinances were "enacted in accordance with the procedures established in the state constitution and statutes for the enactment of legislation." Richardson v. Town of Eastover, 922 F.2d 1152, 1158 (4th Cir.1991). Plaintiffs have alleged that "the rules of the City Council were not adhered to in the adoption of the ordinance[s]." Complaint ¶ 86, at 20. However, neither plaintiffs' complaint nor any of their pleadings specifies which, if any, rules were violated. Nor do plaintiffs set forth any of the facts which purportedly form the basis of such a violation. With nothing more than the conclusory statement quoted above, plaintiffs' procedural due process claim cannot stand.
[6] We note that plaintiffs do not argue that graffiti is a form of expressive conduct protected by the First Amendment.
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In the
United States Court of Appeals
For the Seventh Circuit
No. 09-2336
U NITED S TATES OF A MERICA,
Plaintiff-Appellee,
v.
JASON P APE,
Defendant-Appellant.
Appeal from the United States District Court
for the Western District of Wisconsin.
No. 08 CR 174—Barbara B. Crabb, Judge.
A RGUED JANUARY 21, 2010—D ECIDED A PRIL 15, 2010
Before E ASTERBROOK, Chief Judge, and C UDAHY and
M ANION, Circuit Judges.
C UDAHY, Circuit Judge. Jason M. Pape pleaded guilty
to one count of possession of child pornography, in
violation of 18 U.S.C. § 2252(a)(4)(B) and, on appeal,
challenges his sentence. He was sentenced to 90 months’
imprisonment followed by 20 years’ supervised release.
He now claims that the district court failed to address
his non-frivolous arguments in support of a two-year
2 No. 09-2336
sentence including a plea for leniency based on his per-
sonal history as an upstanding member of his com-
munity and his exceptional family responsibilities for
his children, some of whom have disabilities. In addi-
tion, Pape contends that the district court failed to
address his argument that disparities in the length of
pornography sentences among different districts in
Wisconsin and the purported lack of careful empirical
study underpinning the child pornography Guidelines
suggest that a sentence over two years is too high.
We affirm because the district court adequately con-
sidered Pape’s arguments about his history and parenting
responsibilities. Moreover, a district court is presumed
to have considered arguments about unwarranted dispari-
ties if, as here, it sentences within or below the Guide-
lines, see United States v. Bartlett, 567 F.3d 901, 908 (7th Cir.
2009). And, although district courts are certainly free
to disagree with the child pornography Guidelines as
applied to a particular case as long as the sentence
imposed is reasonable, the district court here did not
abuse its discretion when it implicitly rejected the im-
position of a much lower sentence based on a disagree-
ment with the Guidelines range.
I. Background
Pape has long been active in his Wisconsin community
as a small-business owner and as a trustee for his
church. He is also a father who helped care for his two
children and three others he adopted when he married
their mother, who was dying of cancer. Pape’s stable
No. 09-2336 3
caretaking was especially important to his adopted child,
who suffered from autism. Prior to the indictment in
the present case, Pape had no criminal history.
In 2008, Pape’s daughter reported to the school guidance
counselor that, while completing a homework assign-
ment on her father’s computer, she had discovered
images of child pornography. Using the daughter’s in-
formation, law enforcement executed a warrant and
found images and movies of child pornography on
Pape’s computers and on a thumb drive, including de-
pictions of children being sexually exploited while in
bondage and prepubescent minors engaging in anal
intercourse with adult males. Law enforcement, how-
ever, uncovered no persuasive evidence that he sexually
abused his own children or actually abused any minors.1
A grand jury returned an indictment charging Pape
with possession of child pornography and containing a
request for the forfeiture of his computer equipment.
Pape eventually pleaded guilty to the possession count
and agreed to forfeit the equipment.
At sentencing, the district court received letters con-
taining testimonials to Pape’s devotion to his children
and to his selflessness towards members of the com-
munity. Pape asked for a sentence reduction based on
the consequences of imprisonment to his family. The
1
We have noted that even those who merely obtain and
share child pornographic images promote further abuse by
encouraging the creation of child pornography. See United
States v. Goldberg, 491 F.3d 668, 672 (7th Cir. 2007).
4 No. 09-2336
district court acknowledged Pape’s positive role in his
family and within the community, but also noted that
Pape’s ex-wife had described him as “manipulative,
controlling, emotionally abusive, and obsessed with sex.”
In support of his other arguments, Pape provided
statistics describing the disparities in Wisconsin in sen-
tencing for pornography crimes. According to the
United States Sentencing Commission, in 2008, the mean
sentence in the Western District of Wisconsin for pornog-
raphy or prostitution offenses was 231.1 months (median
129 months), compared with 122.2 nationally (median
78) and 67.1 in the Eastern District of Wisconsin (median
60). Pape argued that these statistics prove that there are
unwarranted disparities in sentencing across Wisconsin
that the district court should have considered. Lastly,
Pape highlighted concerns with the empirical under-
pinnings of the child pornography Guideline based, in
part, on a 2008 paper by federal defender Troy Stabenow
that was recently discussed by the Seventh Circuit in
United States v. Huffstatler, 571 F.3d 620, 622-23 (7th Cir.
2009). The government did not file a response but
instead responded at the hearing to the arguments
raised in the sentencing memorandum.
Before announcing its sentence, the district court ex-
plained, “I’m not here to balance the good and bad parts
of people and say the good parts of this person out-
weigh the bad parts. I don’t have the authority. I don’t
have the ability. That’s to be done by somebody else. I am
here to sentence what’s bad, bad behavior.” The district
court then described Pape’s positive and negative
No. 09-2336 5
personal history and characteristics, explained its con-
cerns with his family’s inability to grasp that he had a
problem with child pornography, and described the
sadism depicted in the images as well as Pape’s online
conversations describing abuse of a close minor female
relative. A few days after the sentence was imposed, the
district court filed a written Statement of Reasons in
which it restated its rationale for imposing its sentence
and described the defendant’s history and characteristics,
his parenting, his works in the community and relevant
offense conduct as well as related conduct. This appeal
followed.
II. Standard of Review
Whether the district court followed proper sentencing
procedure is a legal question reviewed de novo. United
States v. Smith, 562 F.3d 866, 872 (7th Cir. 2009). We
must determine that the district court did not commit
procedural error by, for example, failing to properly
calculate the Guidelines range or by failing to consider the
§ 3553(a) factors. See Gall v. United States, 552 U.S. 38, 51
(2007). The district court is not required to consider every
argument a defendant makes, but it must address the
defendant’s principal arguments that are “not so weak as
to not merit discussion.” United States v. Villegas-Miranda,
579 F.3d 798, 801 (7th Cir. 2009) (quoting United States v.
Cunningham, 429 F.3d 673, 679 (7th Cir. 2005)). If an argu-
ment of recognized legal merit has a factual basis but
the district court fails to mention it, the court may have
erred by failing to exercise its sentencing discretion. See
Cunningham, 429 F.3d at 679.
6 No. 09-2336
Once a reviewing court has ensured itself that the
sentencing procedure was proper, it reviews the sub-
stantive reasonableness of a sentence for an abuse of
discretion and, on appeal, a correctly calculated, within-
Guidelines sentence is entitled to a presumption of rea-
sonableness. See Rita v. United States, 551 U.S. 338, 347
(2007). This presumption is also applied to below-Guide-
lines sentences. See United States v. Wallace, 531 F.3d 504,
507 (7th Cir. 2008).
III. Discussion
Neither party objects to the calculation of the ap-
plicable Guidelines range of 97-120 months, which in-
corporates the 10-year statutory maximum for 18 U.S.C.
§ 2252(a)(4)(B). After reviewing the calculation, we have
no reason to doubt that it was correctly computed.
Instead, Pape argues that the district court ignored his
four non-frivolous arguments in support of his recom-
mendation for a two-year sentence. We address each one.
A. The district court properly addressed Pape’s argu-
ments concerning his personal history and charac-
teristics and his family responsibilities.
First, Pape contends that the district court’s statement,
reproduced above, that it did not have authority to
balance the good and bad parts of him was an admission
that it did not consider the defendant’s history and charac-
teristics in sentencing him. It appears that the district court
was merely stating that it was not authorized to render
No. 09-2336 7
final judgment on the defendant’s life and, in effect,
emulate God at the Last Judgment. See United States v.
Christiansen, 594 F.3d 571, 576-77 (7th Cir. 2010) (rejecting
an argument regarding a claim that the district court
failed to consider the defendant’s history and charac-
teristics based on similar language used at the sen-
tencing hearing). Moreover, the district court’s oral state-
ment is augmented by the Statement of Reasons the
district court issued after the sentencing hearing. See
United States v. Harris, 567 F.3d 846, 854 (7th Cir. 2009)
(evaluating both oral and written statements to deter-
mine whether the sentencing explanation was suffi-
cient); Goldberg, 491 F.3d at 671 (same); cf. United States
v. Baker, 445 F.3d 987, 991-92 (7th Cir. 2006) (declining
to limit the appellate court’s review to the written state-
ment of reasons); but see United States v. Omole, 523
F.3d 691, 700 (7th Cir. 2008) (finding that the sentence
was unreasonable in part because the district court’s
statements at the sentencing hearing were contradicted
by a subsequent written document that explained the
court’s reasons for deviating from the Guidelines). We
have encouraged district courts to commit their sen-
tencing decisions to paper in certain contexts to “create[ ]
a surer path of communication with the reviewing court.”
See United States v. Higdon, 531 F.3d 561, 565 (7th Cir.
2008). We must balance this suggestion with the acknowl-
edgment that a district court must “state in open court
the reasons for its imposition of the particular sentence.”
See 18 U.S.C. § 3553(c); see also Fed. R. Crim. P. 43(a)(3)
(“[T]he defendant must be present at sentencing.”). We
will not disregard the statement made in open court, but
8 No. 09-2336
we read the district court’s Statement of Reasons as an
aid to the interpretation of its oral statement.
The district court’s Statement evaluates the mixed
picture revealed in the defendant’s history of an active
community member and a good father with no crim-
inal background who also exhibited bad behavior in his
private life. Consequently, the district court gave ex-
plicit consideration to the defendant’s history and charac-
teristics in sentencing Pape as required by § 3553(a)(1)
and committed no procedural error. See United States v.
Jung, 473 F.3d 837, 844-45 (7th Cir. 2007); cf. United States v.
Williams, 553 F.3d 1073, 1085 (7th Cir. 2009) (remanding
for resentencing because the district court ignored de-
fendant’s arguments regarding his mental illness).
Pape’s arguments that the district court’s choice of
words quoted above suggested improper sentencing
procedure are not well taken.
Second, Pape argues that the district court erred by
failing to consider pertinent policy statements issued by
the Sentencing Commission. See 18 U.S.C. § 3553(a)(5).
He highlights the policy statement U.S.S.G. § 5H1.6, n.1,
which discourages a sentencing court from reducing
the sentence of a defendant with care-taking obligations
unless the defendant has exceptional family responsi-
bilities. See U.S.S.G. § 5H1.6 n.1(B). As Pape concedes,
this Guideline is inapplicable because he was convicted
of an offense under chapter 110 of Title 18. See U.S.S.G.
§ 5H1.6. The district court was certainly authorized to
disregard the referenced part of the policy statement.
There is no policy of the Sentencing Commission that
No. 09-2336 9
militates in favor of giving weight to the caretaking
responsibilities of someone who has been convicted of
possession of child pornography, even if his caretaking
responsibilities are extraordinary.2 The district court
did not need to discuss Pape’s argument grounded in
§ 3553(a)(5) as “potentially meritorious.” See Cunning-
ham, 429 F.3d at 678.
The government acknowledges, however, that the
district court retained discretion to consider Pape’s care-
taking responsibilities as part of its § 3553(a) analysis.
See United States v. Schroeder, 536 F.3d 746, 755-56 (7th
Cir. 2008) (“Although the concept of departures has
been rendered obsolete in post-Booker sentencing the
2
Pape highlights several district court memoranda and orders
in which a court considered a downward adjustment for
family responsibilities in child pornography cases to argue
that his policy arguments merited discussion. The Prosecutorial
Remedies and Tools Against the Exploitation of Children
Today Act of 2003 (PROTECT), amended the Guidelines to
include the proviso that § 5H6.1 does not apply to those con-
victed of offenses under chapter 110 of title 18, such that those
district court cases are not interpreting the same Guidelines
as the district court in the present appeal. See Pub. L. No. 108-
21 § 401(b)(4), 117 Stat. 650, 669. See United States v. Bailey, 369
F. Supp. 2d 1090, 1091, 1100 (D. Neb. 2005) (applying the
2001 Guidelines and noting that “[h]ad I been required to
apply the 2003 law, and the Guidelines as amended in relation-
ship thereto, one wonders whether this case would have
warranted a variance or deviation from the advisory Guidelines
since a departure would have been otherwise prohibited.”);
United States v. Artim, 944 F. Supp. 363, 369-70 (D. N.J. 1996).
10 No. 09-2336
district court may apply those departure guidelines by
way of analogy in analyzing the section 3553(a) fac-
tors.”) (internal citations omitted); United States v. Millet,
510 F.3d 668, 680 (7th Cir. 2007) (remanding to ensure
that the district court imposed its sentence with the
understanding that it had the discretion to consider
the defendant’s family circumstances). As noted above,
however, the district court heard Pape’s arguments
regarding his responsibility for his children and the
special difficulties of raising a child with autism. In
sentencing Pape, the district court mentioned his
parenting responsibilities and his failure to convince
his family that he had a problem with child pornography.
Cf. United States v. Schroeder, 536 F.3d at 756 (remanding
for resentencing because the district court explicitly
rejected consideration of any hardship on the defendant’s
family). Pape’s procedural arguments for the district
court’s consideration of his history, characteristics and
parenting responsibilities are unavailing given the
district court’s consideration and discussion of these
subjects in shaping its sentence.
B. The district court properly considered Pape’s
concerns with the child pornography Guidelines.
Pape urged the district court to disregard the child
pornography Guidelines because, he argues, like the
crack Guidelines discussed in Kimbrough v. United States,
552 U.S. 85 (2007), they do not reflect the result of careful
study based in empirical analysis and national experience.
See, e.g., Huffstatler, 571 F.3d at 622-23 (collecting district
No. 09-2336 11
court cases relying on this rationale). As Pape notes,
we recently rejected an argument that the child pornogra-
phy Guidelines were invalid because of these purported
flaws, and we therefore upheld Guideline § 2G2.2 as a
starting point for sentencing those convicted of offenses
involving child pornography. See id. at 623-24 (noting
that the crack guidelines discussed in Kimbrough are still
valid and a district court’s within-crack-guidelines sen-
tence may be reasonable). We left open the question
whether, by analogy to Kimbrough, the district court has
the discretion to disagree with the child pornography
Guidelines on policy grounds. See id. at 623.
Pape’s argument is not the one we rejected in
Huffstatler. Instead, he argues that the district court
failed to consider his “non-frivolous argument that [the]
Guideline produces an unsound sentence in the par-
ticular circumstances of the case.” United States v. Aguilar-
Huerta, 576 F.3d 365, 367-68 (7th Cir. 2009) (holding that
a district court is free to leave for appellate review an
argument that the guideline is universally invalid). As
the parties note, it is well accepted that courts may
deviate from the Guidelines in particular cases, and
that the district court should ensure that its sentences
reflect the § 3553(a) factors. See Rita, 551 U.S. at 351. As
we have recently explained, more broadly, “[w]e under-
stand Kimbrough and Spears to mean that district judges
are at liberty to reject any Guideline on policy grounds-
though they must act reasonably when using that
power.” United States v. Corner, No. 08-1033, ___ F.3d ___,
2010 WL 935754, at *2 (7th Cir. Mar. 17, 2010) (en banc)
(citing, inter alia, Kimbrough and Spears v. United States,
129 S.Ct. 840, 843-44 (2009)).
12 No. 09-2336
In the present case, the district court was aware of its
discretion to vary based on disagreements with the Guide-
line as it applied to Pape. At sentencing, Pape argued
that the child pornography Guidelines had “gone through
the roof in direct response to Congressional politically-
based directives.” And the district court interjected:
“[p]assed by Congress,” to which Pape responded:
I understand, but not mandatory minimums. Congress
could have passed a statute. They didn’t. Instead they
directed the Sentencing Commission to step outside
the Sentencing Commission’s role. I also know, Your
Honor, and I don’t know if we need to get into a
specific recitation of cases, but I am aware of other
cases that Your Honor has sentenced below the
child pornography guidelines based specifically on
this argument. So it’s not a Congressional directive
that the Court has to do it.
Consequently, Pape acknowledged that the district
court understood its own discretion. In imposing
Pape’s sentence, the court implicitly declined to exercise
that discretion and to accept Pape’s argument that defi-
ciencies in the Guideline meant that he should receive
a two-year sentence. See, e.g., United States v. Poetz, 582
F.3d 835, 838-40 (7th Cir. 2009) (holding that when it is
apparent from the record that the district court understood
the defendant’s argument, it may implicitly reject it,
especially when the sentence is below-Guidelines). Instead,
the district court sentenced Pape based on his history, his
possible failure to admit to his family that he had com-
mitted the offenses charged, and the particular circum-
No. 09-2336 13
stances of his offense. In short, the district court applied
the § 3553(a) factors as it was required to do and thought-
fully imposed a sentence that was reasonable in light of
the relevant statutory factors. It committed no error by
declining to explain its precise position on the general
debates regarding the child pornography Guideline, but
confined its discussion to the defendant at hand and
sentenced accordingly and reasonably.
C. The district court adequately considered unwar-
ranted disparities in pornography sentences.
Pape argues that the district court failed to consider
his evidence of an unjustified difference in the length of
sentences across districts among defendants convicted of
pornography crimes. As noted, Pape submitted data
from the Sentencing Commission. The district court
did not mention these statistics in either its sentencing
hearing or in the subsequent Statement of Reasons, al-
though it explained that it was sentencing in accordance
with the statutory factor that requires consideration of
unwarranted disparities. It then imposed a sentence
below the Guidelines range and, according to the Sen-
tencing Commission’s then-recent statistics, below the
national median pornography sentence.
We have recently held, citing observations made by the
Supreme Court in Gall, that a district court judge neces-
sarily considers unwarranted disparities among de-
fendants when it decides to impose a within-Guidelines
sentence. See Bartlett, 567 F.3d at 908 (citing Gall, 552 U.S.
at 54). Likewise, in its Statement of Reasons, the district
14 No. 09-2336
court acknowledged its responsibility pursuant to
§ 3553(a)(6) to avoid unwarranted disparities among
similarly situated offenders. M oreover, Pape presented
no analysis to explain the disparities—perhaps the dif-
ferences were justified because of differences in the
types of charges or other differences among defendants.
Without more, Pape’s argument lacks substance. As we
have highlighted, only unwarranted disparities are imper-
missible in sentencing. See United States v. Statham, 581
F.3d 548, 556 (7th Cir. 2009). Here, where the district
court applied a slightly below-Guidelines sentence and
specifically noted that it imposed a sentence to achieve
parity with similarly situated offenders, it did not err
by declining to address in depth Pape’s argument re-
garding the differences in sentences.
Given the district court’s consideration of Pape’s argu-
ments and its articulation of a sentence based on the
§ 3553(a) factors, we have no reason to conclude that it
committed procedural error or imposed an unreasonable
sentence when it sentenced him below the applicable
Guidelines range. The judgment of the district court is
therefore
A FFIRMED.
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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 30, 2010
Decided November 30, 2010
Before
FRANK H. EASTERBROOK, Chief Judge
RICHARD A. POSNER, Circuit Judge
DIANE P. WOOD, Circuit Judge
No. 10‐1460
UNITED STATES OF AMERICA, Appeal from the United States District
Plaintiff‐Appellee, Court for the Western District of Wisconsin.
v. 09‐CR‐107‐C‐01
ERIC KOENIG, Barbara B. Crabb,
Defendant‐Appellant. Judge.
O R D E R
Eric Koenig entered a U.S. Bank in Eau Claire, Wisconsin, pointed a loaded pistol at
two different tellers in close range, and made off with $4295. Koenig and an accomplice fled
the scene in a vehicle with the police in hot pursuit. After a two‐mile chase that ended on
foot in the deep woods, a SWAT team apprehended Koenig and his accomplice. Ignoring
the SWAT team’s instructions not to move, Koenig and his accomplice struggled with each
other for control of a pistol before an officer overtook Koenig and wrested the gun away.
Koenig pleaded guilty to one count of armed bank robbery, 18 U.S.C. § 2113(a), (d),
and one count of possession of a firearm by a convicted felon, id. § 922(g)(1). The district
court sentenced him to 19 years’ imprisonment and 5 years’ supervised release on both
counts, to run concurrently. Koenig appeals, but appointed counsel concludes that the
No. 10‐1460 Page 2
appeal is frivolous and therefore seeks to withdraw. See Anders v. California, 386 U.S. 738
(1967). Koenig did not submit a statement explaining why he believes his appeal has merit.
See CIR. R. 51(b). We confine our review to the potential issues counsel identifies in his
facially adequate brief. See United States v. Schuh, 289 F.3d 968, 973‐74 (7th Cir. 2002).
Koenig has told counsel that he does not want his guilty plea vacated, so counsel
properly refrains from considering 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).
Counsel first considers whether Koenig could argue that the district court erred in
sentencing him as an armed career criminal, see 18 U.S.C. § 924(e)(1), U.S.S.G. § 4B1.4(a),
because one of his three prior convictions—a 1991 Florida aggravated assault
conviction—was not a violent felony under 18 U.S.C. § 924(e)(2)(B). But this contention
would be frivolous. A crime is a violent felony if it is punishable by imprisonment for more
than a year and “has as an element the use, attempted use, or threatened use of physical
force against the person of another.” 18 U.S.C. § 924(e)(2)(B)(i). Under Florida law
aggravated assault is “assault: (a) With a deadly weapon without intent to kill; or (b) With
an intent to commit a felony.” FLA. STAT. § 784.021(1) (1991). At sentencing Koenig’s
counsel asserted that the Florida statute was divisible and expressed confusion about which
statutory subsection governed Koenig’s conviction. But the particular subsection is beside
the point; as the district court explained, any aggravated assault conviction under
§ 784.021(1) qualified as a violent felony. Florida law defines assault as an “intentional,
unlawful threat by word or act to do violence to the person of another, coupled with an
apparent ability to do so, and doing some act which creates a well‐founded fear in such
other person that such violence is imminent,” id. § 784.011(1). Because Florida’s definition
of “assault” contains the elements of violence and a threatened use of force, see, e.g., Lay v.
Kremer, 411 So.2d 1347, 1347 (Fla. Dist. Ct. App. 1982), we would conclude that a conviction
for “aggravated assault” under Florida law qualifies as a “violent felony” for sentencing
purposes. See 18 U.S.C. § 924(e)(2)(B)(i).
Counsel next examines whether Koenig could argue that the district court erred in
calculating the guidelines range, see United States v. Carter, 538 F.3d 784, 789 (7th Cir. 2008),
but properly concludes that such an argument would be frivolous. Grouping Koenig’s
armed bank‐robbery count together with his possession count, see U.S.S.G. § 3D1.3(a), the
court classified Koenig as a career offender for both counts, see id. §§ 4B1.1, 4B1.4, and
determined that the adjustment for both counts resulted in an offense level of 34. The court
then adjusted Koenig’s offense level downward three levels to 31 to reflect acceptance of
responsibility, see id. § 3E1.1(b). Given Koenig’s criminal history category of VI, see id.
§§ 4B1.1(b), 4B1.4(c), the court correctly assessed Koenig’s sentencing range under the
guidelines as 188 to 235 months.
No. 10‐1460 Page 3
Counsel then considers whether Koenig could argue that the within‐guidelines
sentence imposed by the district court is unreasonable, see Rita v. United States, 551 U.S. 338,
347 (2007), but concludes that such a challenge would be frivolous. The court adequately
considered the sentencing factors listed in 18 U.S.C. § 3553(a): Koenig’s history and
characteristics such as his troubled relationships with his family, his drug abuse, and his
significant criminal record, see id. § 3553(a)(1); the threats he poses to society and the need
for deterrence in light of his acknowledgment that he is “a very dangerous individual” and
“need[s] to be in prison for a very long time,” see id. § 3553(a)(2)(B), (a)(2)(C); his need for
rehabilitation and substance‐abuse treatment, see id. § 3553(a)(2)(D); and the need to avoid
unwarranted sentencing disparities, see id. § 3553(a)(6).
Accordingly, we GRANT counselʹs motion to withdraw and DISMISS the appeal.
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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 17, 2010*
Decided November 18, 2010
Before
JOHN L. COFFEY, Circuit Judge
JOEL M. FLAUM, Circuit Judge
KENNETH F. RIPPLE, Circuit Judge
No. 10‐1441
UNITED STATES OF AMERICA, Appeal from the United States District
Plaintiff‐Appellee, Court for the Southern District of Illinois.
v. No. 95‐cr‐40003‐JPG
ESTON THOMAS, J. Phil Gilbert,
Defendant‐Appellant. Judge.
O R D E R
A jury found Eston Thomas guilty of distributing and conspiring to distribute crack
cocaine, see 21 U.S.C. §§ 846, 841(a)(1), and we upheld his sentence of 360 months’
imprisonment, the bottom of the then‐applicable guidelines range. United States v. Lewis,
*
After examining the briefs and the record, we have concluded that oral argument is
unnecessary. Thus, the appeal is submitted on the briefs and the record. See FED. R. APP. P.
34(a)(2)(C).
No. 10‐1441 Page 2
117 F.3d 980 (7th Cir. 1997). In 2008 Thomas moved for a reduced sentence under 18 U.S.C.
§ 3582(c)(2), invoking Amendments 706 and 713 of the sentencing guidelines, which
retroactively reduced the base offense level for most crack offenses, see U.S.S.G. supp. to
app. C, 221‐26, 253 (2008) (Amendments 706 and 713). The district court concluded that
Thomas was entitled to a 2‐level reduction to his base offense level because he had
originally been convicted of distributing more than 1.5 but less than 4.5 kilograms of crack,
and Amendment 706 changed U.S.S.G. § 2D1.1 to reduce the base offense level for this
quantity from 38 to 36. The court imposed a reduced sentence of 324 months’
imprisonment, the bottom of the revised guidelines range.
On appeal Thomas argues, as he did in the district court, that he is entitled to a
further reduction because, as he sees it, (1) he was responsible for distributing less than 1.5
kilograms of crack, and (2) the district court erroneously increased his offense level by four
under U.S.S.G. § 3B1.1(a) for his leadership in the conspiracy. Thomas’s arguments
challenge the district court’s original sentencing decision, and § 3582(c) does not authorize a
“plenary resentencing proceeding,” Dillon v. United States, 130 S. Ct. 2683, 2691 (2010); see
United States v. Neal, 611 F.3d 399, 401 (7th Cir. 2010). Instead, the district court must
determine what the defendant’s guideline range would have been with the amendment and
leave other sentencing factors unchanged. See U.S.S.G. § 1B1.10(b)(1); Dillon, 130 S. Ct. at
2694. Thomas’s challenge to the increase under § 3B1.1(a) fails because Amendment 706
does not affect the applicability of that guideline to Thomas’s total offense level. See United
States v. James, 548 F.3d 983, 985 (11th Cir. 2008). To accept Thomas’s contention that he was
responsible for distributing less than 1.5 kilograms of crack, the district court would have
had to contradict the original determination that he was responsible for more than 2
kilograms, Lewis, 117 F.3d at 986. Because § 3582(c) prohibits district courts from making
“findings inconsistent with that of the original sentencing court,” United States v. Woods, 581
F.3d 531, 538 (7th Cir. 2009), the district court here properly concluded that Thomas was not
entitled to more than a two‐level reduction to his offense level.
AFFIRMED.
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659 F. Supp. 541 (1987)
Dwight S. DODY and Winner's Choice, Inc., Plaintiffs,
v.
Howard B. BROWN, et al., Defendants.
No. 86-1304-CV-W-5.
United States District Court, W.D. Missouri, W.D.
April 10, 1987.
*542 *543 Andrew H. McCue, Mark D. Wasserstrom, P.C., Kansas City, Mo., for plaintiffs.
John R. Cullom, Kansas City, Mo., for defendants.
ORDER
SCOTT O. WRIGHT, Chief Judge.
Before the Court is defendants' motion to dismiss because of improper venue or, in the alternative, to transfer the case to the United States District Court for the Northern District of Florida. For the reasons set forth below, defendants' motion to dismiss is denied and defendants' motion to transfer is granted.
Factual Background
Plaintiffs Dwight S. Dody ("Dody"), a resident of Clinton, Missouri, and Winner's Choice, Inc. ("Winner's Choice"), a Missouri corporation, bring this action under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq. ("RICO") based on an alleged fraudulent scheme involving the sale of distributorships for the lottery ticket dispensing machines to be operated within the State of Missouri.
According to the facts as set forth in plaintiffs' complaint, defendant Ramm Vending Promotions, Inc. ("Ramm") is a corporation organized and existing under the laws of Florida, with its principal place of business in Orlando, Florida. Defendant Howard B. Brown ("Brown") resides in the State of Florida and is a shareholder, officer and director of Ramm. Defendant Charles Arnold ("Arnold") resides in North Carolina and is also a shareholder, officer and director of Ramm.
During August, 1985, Arnold and Brown solicited investment capital from Dody and his wife, Nancy, at a seminar in Phoenix, Arizona. At this seminar, Arnold and Brown allegedly made numerous misrepresentations to plaintiffs for the purpose of obtaining investors to purchase "exclusive distributorships" for "lotto-game" vending machines from Ramm.
According to plaintiffs' petition, these misrepresentations in Phoenix included the following:
1. that Ramm was a lucrative investment opportunity from which Dody would earn a guaranteed return on his investment;
2. that other persons were actively pursuing the purchase of "exclusive territory" in Missouri;
3. that the "lotto tickets" were "computer-generated randomly selected probable winning combinations" based on information gathered from previous winners in various state lotteries;
4. that the vending machines would be made of industrial gauge steel with a fair market value in excess of $500.00; and
5. that the operation of the distributorship required minimal time and was "labornonintensive".
Upon plaintiffs' return to Clinton, Missouri, defendants exchanged numerous telephone calls with plaintiffs regarding inspection of defendants' operation in Florida. According to plaintiffs, defendants Brown and Arnold reaffirmed their misrepresentations regarding the profitability, location selection, legality and product quality. In reliance on these misrepresentations, plaintiffs visited defendants' offices in Orlando, Florida shortly thereafter.
According to plaintiffs' complaint, defendants Brown and Arnold continued to recite to plaintiffs in Florida the advantages of owning and operating a Ramm distributorship. Plaintiffs were presented with a proposed distributorship agreement ("agreement"). Plaintiffs did not enter into an agreement with defendants while in Florida, but returned to Missouri to further consider defendants' offer.
During this period, Dody formed Winner's Choice in Missouri for the purposes of implementing and administering the distributorship. Plaintiffs likewise received further telephone calls from defendants Brown and Arnold in which they continued *544 to insure plaintiffs of the profitability, legality, location selection and product quality of defendants' investment package.
Plaintiffs then altered the terms of defendants' standard distributorship agreement, signed it on behalf of Winner's Choice, and mailed it back to defendants in Florida. Defendant Brown thereafter modified the contract, signed it on behalf of Ramm, and returned the modified agreement to Dody in Missouri. By an accompanying letter, Brown requested Dody to acknowledge his assent to the modified agreement by initialing and dating the changes and returning a fully executed copy of the agreement to Brown in Florida. Dody accepted the agreement as modified and returned it by mail to Florida.[1] Pursuant to the terms of the agreement, Dody alleges that he made three separate wire transfers, totaling $144,800.00, to defendants in Florida. Plaintiffs further contend that on November 7, 1985, defendants shipped to Missouri a sample machine that was to be used by plaintiffs in attempting to secure retail locations for their vending machines.[2] The remaining sample machines were sent to plaintiffs in Illinois due to the delay of the Missouri lottery.
Plaintiffs allege further that in order to delay discovery by plaintiffs of defendants' fraudulent practices on them in Missouri, defendants agreed to grant plaintiffs an exclusive limited territory in Chicago, Illinois. Such agreement was negotiated by telephone on about November, 1985, and was included as an "Exhibit" to the original agreement. Plaintiffs claim that defendants knew at the time they contracted with plaintiffs that another distributor existed for plaintiffs' "exclusive territory" in Chicago.
The distributorship proved to be impractical during its temporary operation in Illinois. Thereafter, plaintiffs returned to Missouri and attempted, by means of telephonic and postal communication, to rescind the agreement. Defendants allegedly refused to cooperate with plaintiffs and this lawsuit ensued.
Defendants now move to dismiss this action or, in the alternative, seek to transfer this case to the United States District Court for the Northern District of Florida, alleging that venue in this district is improper under either of three applicable venue provisions, 18 U.S.C. § 1965(a) (Venue for RICO actions), and 28 U.S.C. § 1391(b) and (c). In support of their motion, defendants argue that: (1) none of the defendants reside or are incorporated in Missouri; (2) none of the defendants own any property, either real or personal, in Missouri; (3) none of the defendants have an office or an agent in Missouri; (4) none of the defendants have ever conducted business within this district; and (5) none of the defendants have negotiated any sales agreements or contracts within this district.
In opposition to defendants' motion, plaintiffs argue that venue is proper, both under 18 U.S.C. § 1965 and 28 U.S.C. § 1391, since defendants clearly have transacted business within this district and since plaintiffs' claim arose here in Missouri.
Discussion
A. Venue
Plaintiffs rely on 18 U.S.C. § 1965 and 28 U.S.C. §§ 1391(b) and (c) as a basis for venue. Section 1965(a) provides that "any civil action or proceeding under this chapter against any person may be instituted in the District Court of the United States for *545 any district in which such person resides, is found, has an agent, or transacts his affairs." (emphasis added).
Section 1391(b) provides that: "A civil action wherein jurisdiction is not founded solely on diversity of citizenship may be brought only in the judicial district where all defendants reside, or in which the claim arose ..." (emphasis added). Section 1319(c) provides that "[a] corporation may be sued in any judicial district in which it is incorporated or licensed to do business or is doing business ..." (emphasis added).
Plaintiffs concede that where defendants raise an objection to venue, the burden is upon plaintiffs to prove proper venue. See e.g. Pfeiffer v. International Academy of Biomagnetic Medicine, 521 F. Supp. 1331, 1337 (W.D.Mo.1981). In this case, the Court concludes that plaintiffs have failed to demonstrate that venue is proper in this district under either 18 U.S.C. § 1965(a), 28 U.S.C. §§ 1391(b) or 1391(c).
1. Venue under 18 U.S.C. § 1965(a)
Plaintiffs argue that venue is proper under § 1965(a) since defendants have clearly "transacted their affairs" within the Western District of Missouri. As noted by plaintiffs, a person transacts his affairs within a particular district when he regularly conducts business of a substantial and continuous character within that district. Miller Brewing Company v. Landau, 616 F. Supp. 1285, 1288 (E.D.Wis. 1985). See also Hodgdon v. Needham-Skyles Oil Company, 556 F. Supp. 75 (D.C. D.C.1982). (In order for venue to be proper under RICO venue provision, a defendant must regularly carry on a business of a substantial and continuous character within the district). Thus, plaintiffs must prove that defendants have regularly engaged in some significant and substantial activities in the Western District in order to show that venue is proper under § 1965(a).
Plaintiffs argue that defendants transacted business of a substantial and continuous nature within this district by claiming that defendants exchanged numerous phone calls with plaintiff in this district, the agreement at issue was executed in this district, payment was effectuated in Missouri by means of a wire transfer to defendants in Florida, and the effects of defendants' alleged fraud were felt here. Plaintiffs acknowledge, however, that other than the acts which give rise to this cause of action, defendants have not transacted any other business within the Western District of Missouri. Thus, the issue to be decided is whether these acts alone are sufficient, in and of themselves, to constitute regular, substantial and continuous business activity within this district. The Court concludes that it does not.
Plaintiffs have cited no cases which stand for the proposition that making a few telephone calls from outside the district to a person within the district constitutes transaction of any business within this district, let alone business of a regular, substantial and continuous nature. It is clear that none of the defendants are residents or incorporated in Missouri, have no agents or offices in Missouri, and have no property, real or personal, in Missouri. Nor do plaintiffs contend that defendants ever conducted any business in Missouri other than the transaction in question. Defendants' contacts are more akin to those of the defendants in Follett College Stores Corp. v. Fernandez, 587 F. Supp. 1051 (N.D.Ill. 1984), in which the Court transferred the case for lack of venue under the RICO venue provision.
In Follett College Stores Corp., plaintiff, a bookstore, sued some of its employees under RICO, alleging that defendant employees used their control over plaintiff's bookstores to falsify accounting procedures and reports for store operations, manipulated and misrepresented store inventory and used assets of plaintiff's bookstores for their own personal use. Plaintiff argued that the RICO Act claim arose within this district since this was where false and misleading documents were received through the mail and where telephone calls were received from defendants as part of an alleged conspiracy and scheme to defraud plaintiff. 587 F. Supp. at 1052.
*546 The Court held that since virtually all of the alleged activity concerning plaintiff's cause of action took place outside of the district, then venue within that district would be improper. Id. at 1053. The Court specifically concluded that the only contacts with the district involved document mailings and telephone calls originating from outside of the district, and deemed such contacts to be minimal. Id.
In the instant case, the only contacts that defendants had with this forum are telephonic communications made by defendants from outside of this district, mailings made from outside of the district, and the shipment of one sample machine to Missouri. Plaintiffs were solicited by defendants Brown and Arnold while attending a seminar in Phoenix, Arizona. Plaintiffs then left Missouri and went to Orlando, Florida to inspect the defendants' operation and to negotiate the terms of the agreement. While plaintiffs argue that the agreement was executed in Missouri, the plain language of the contract itself provides that the contract shall be deemed to be executed in Florida and shall be governed by the laws of Florida. Therefore, the only business affairs, if any, that could have conceivably been transacted by defendants that have any connection with this district were the telephone calls and mailings that were done outside of this district. Thus, the Court concludes that such activity does not rise to the level of regular, substantial and continuous activity within the district so as to satisfy § 1965(a)'s transaction of affairs requirement. See also Eaby v. Richmond, 561 F. Supp. 131, 140 (E.D.Pa.1983) (allegations that engineer and petroleum geologists purportedly wrote misleading reports about mineral leases in another district and that codefendant premised its own intradistrict misrepresentations on those reports failed to satisfy venue requirement that defendant engage in some significant act pursuant to conspiracy in challenged district).
2. Venue under 28 U.S.C. § 1391(b)
Plaintiffs also argue that venue properly lies in this district under 28 U.S.C. § 1391(b), claiming that this is the district in which "the claim arose." For the reasons set forth below, the Court concludes that plaintiffs' claim arose in Florida and not in the Western District of Missouri.
Before deciding whether plaintiffs' cause of action arose in Arizona, Missouri or Florida, the Court must first attempt the very difficult task of determining the correct standard to apply in deciding where a claim arises under § 1391(b). This task is extremely difficult because there is great confusion amongst the circuits as to what the applicable standards are for determining where the "claim arose" for purposes of § 1391(b). See Pfeiffer v. International Academy of Biomagnetic Medicine, 521 F. Supp. 1331, 1340 (1981). This confusion has been further heightened by the United States Supreme Court's pronouncement in Leroy v. Great Western United Corp., 443 U.S. 173, 99 S. Ct. 2710, 61 L. Ed. 2d 464 (1979).
Prior to the Leroy decision, the most widely used test for determining where the claim arose in multi-district venue cases was the "substantial contacts" or "weight of the contracts" approach. This test was first espoused in Philadelphia Housing Authority v. American Radiator and Standards Sanitary Corporation, 291 F. Supp. 252 (E.D.Pa.1968), in which the Court reasoned that:
"[I]t is submitted that `where the claim arose' should be dependent upon where the contacts weigh most heavily. A `weight of contacts' test would enable venue to exist in a district where the injury occurred, if significant sales causing substantial injury were made to plaintiffs there by defendants. If some other overt act pursuant to the conspiratorial meetings took place in a district and it was significant and substantial element of the offense, then venue would be in that district. Conversely, if one insignificant sale was made in a district, ... venue would not lie there. Similarly, if a meaningless or insignificant meeting of the conspirators took place in a certain district, venue would not exist there either."
*547 291 F.Supp. at 269-61. The courts in this circuit had also applied the substantial contacts or weight of the contacts approach. See e.g. Travis v. Anthes Imperial Ltd., 473 F.2d 515, 529 (8th Cir.1973); Gardner Engineering Corp. v. Page Engineering Co., 484 F.2d 27 (8th Cir.1973); Arnold v. Smith Motor Co., 389 F. Supp. 1020 (N.D.Ia.1974).
Another test employed by the courts to determine where "the claim arose" is the American Law Institute Test ("ALI"). Under this test, which is similar to the weight of the contacts test, venue is proper in any district in which "a substantial part of the events or omissions giving rise to the claim occurred." ALI Study of the Division of Jurisdiction Between the State and Federal Courts, § 1303, 1314 (1969). The major purpose of the ALI test was to liberalize the weight of the contacts test by insuring that venue would be proper in more than one district by emphasizing the word "any" instead of "most". See Pfeiffer v. International Academy of Biomagnetic Medicine, 521 F. Supp. 1331, 1339. This ALI test was also noted and applied in pre-Leroy Eighth Circuit cases. See Cochrane v. Iowa Beef Processors, 596 F.2d 254, 261 (8th Cir.1979) (applying the ALI test in addition to the weight of contacts test); Gardner Engineering Corp. v. Page Engineering Co., 484 F.2d 27, 33 (8th Cir.1973) (noting but not necessarily applying the ALI test).
Another major pre-Leroy test, applied primarily in tort actions, is the place of the injury test. Under this approach, the claim arose in the district where the injury occurred. See Iranian Shipping Lines, S.A. v. Moraites, 377 F. Supp. 644 (S.D.N.Y. 1974); Albert Levine & Associates v. Bertoni & Cotti, 314 F. Supp. 169 (S.D.N.Y. 1970); Rosen v. Savant Instruments, Inc., 264 F. Supp. 232 (E.D.N.Y.1967).
The application of these varying approaches in determining where the claim arose led to confusion on the part of the courts as to which standard was more in line with the Congressional intent in enacting § 1391(b). This confusion was evidenced by the Eighth Circuit Court of Appeals in Cochrane v. Iowa Beef Processors, 596 F.2d 254 (8th Cir.1979).
In Cochrane, a panel for the Eighth Circuit noted that the federal courts have developed varying standards for determining where the claim arose. According to the panel, the "principal ones are: (1) the `weight of contacts' rule; (2) the `place of injury' rule; and (3) the American Law Institute Rule." Id, at 260. Apparently uncertain as to which rule to apply, the panel applied all three rules and concluded without explanation that "under any of the federal procedural standards mentioned above" the claim arose in the Southern District of Iowa. Id. at 261.
Because of the uncertainty surrounding the determination of where the claim arose, this Court and other federal courts were indeed hopeful that this confusion would be cleared up by the enunciation of an applicable test when the Supreme Court decided Leroy v. Great Western United Corp., 443 U.S. 173, 99 S. Ct. 2710, 61 L. Ed. 2d 464 (1979). However, not only did Leroy not provide a clear standard for determining where the claim arose, but it also has opened the way for a number of confusing and inconsistent standards as to where a claim arises under § 1391(b).
In Leroy, plaintiff, a Texas corporation, attempted to make a tender offer for the purchase of the stock of a company having substantial assets in Idaho. Plaintiff filed the required documents with the Securities Exchange Commission and also filed documents in Idaho in order to comply with Idaho's take-over statute. Idaho officials objected to the filing and delayed the effective date of the tender offer.
Plaintiff then filed suit in the Northern District of Texas to restrain the Idaho state officials from applying the Idaho take-over statute to prevent plaintiff from making a tender offer. Based on defendants' motion to dismiss for lack of venue, the District Court for the Northern District of Texas found that venue was improper under § 1391(b) because the claim did not arise in Texas. The district court did decide, however, that venue could be sustained under *548 the special venue provisions of Section 27 of the Securities Exchange Act of 1934.
On appeal, the Fifth Circuit Court of Appeals held that venue was proper under § 1391(b) and Section 27, reasoning that because the allegedly invalid restraint against plaintiff corporation occurred in Texas, it was the district in which the claim arose. Great Western United Corp. v. Kidwell, 577 F.2d 1256, 1265-1274 (5th Cir. 1978).
On appeal to the Supreme Court, the Court reversed the Court of Appeals and held that venue did not lie in the Northern District of Texas under either of the statutes. In reference to 28 U.S.C. § 1391(b), the Court stated:
"The statute allows venue in `the judicial district .. in which the claim arose.' Without deciding whether this language adopts the occasionally fictive assumption that a claim may arise in only one district, it is absolutely clear that Congress did not intend to provide for venue at the residence of the plaintiff or to give that party an unfettered choice among a whole list of different districts. Denver & R.G.W.R. Co. v. Railroad Trainmen, 387 U.S. 556, 560 [87 S. Ct. 1746 1748, 18 L. Ed. 2d 954]. Rather, it restricted venue to the residence of the defendants or to `a place which may be more convenient to the litigants' i.e. both of them `or to the witnesses who are to testify in the case.' S.Rep. No. 1752, 89th Cong.2d Sess. 3 (1966). See Denver & R.G.W.R. Co., supra, at 560 [87 S.Ct. at 1748]. See also Brunette Machine Works v. Kochum Industries, 406 U.S. 706 710 [92 S. Ct. 1936, 1939, 32 L. Ed. 2d 428]. In our view, therefore, the broadest interpretation of the language of § 1391(b) that is even arguably acceptable is that in the unusual case in which it is not clear that the claim arose only in one specific district, a claimant may chose between those two (or conceivably even more) districts that with approximately equal plausibility in terms of the availability of witnesses, the accessibility of other relevant evidence, and the convenience of the defendant (but not of the plaintiff) may be assigned as the locus of the claim. Cf. Branden v. 30th Judicial Circuit of Ky., 410 U.S. 484, 493-494 [93 S. Ct. 1123, 1128-29, 35 L. Ed. 2d 443]."
Leroy v. Great Western United Corp., 443 U.S. at 184-85, 99 S. Ct. at 2717. (emphasis added).
The Court went on to conclude that this case was not the "unusual" case, reasoning that the District of Idaho was the only obvious forum since Idaho is where the Idaho takeover statute had its impact on plaintiff. Id. at 185, 99 S. Ct. 2718. Thus, the Court held that the District of Idaho is the only district in which "the claim arose" within the meaning of § 1391(b).
The Leroy decision has been highly criticized for a number of reasons. First, the court referred to virtually none of the several tests used by the lower federal courts that had construed the "claim arose" language, thereby making it difficult to determine whether the "equal plausibility" test was meant to replace other approaches (like the weight of the contacts test) or whether it was simply one prong in the venue analysis. See e.g. Pfeiffer v. International Academy of Biomagnetic, 521 F. Supp. 1331, 1343 (W.D.Mo.1981). Second, other federal courts which have attempted to determine where the claim arose since Leroy have expressed their dismay with the decision because of the court's failure to articulate a clearer standard. See Cheeseman v. Carey, 485 F. Supp. 203, 213 (S.D.N.Y.1980) ("The difficulties posed by Leroy seem certain to make venue issues an even greater problem for lower federal courts than they were before the Supreme Court spoke."). Third, commentators have noted that the Court did not define the "unusual case" in which a claim may be said to arise in more than one district, concluding that the decision has raised more questions than it has answered. See 15 Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction, § 3806 at 7 (1980 Supp.).
Hence, the fallout from the Leroy decision has been a number of inconsistent and varying applications (and misapplications) of the standards enunciated under the *549 equal plausibility test. One approach taken by the courts is to avoid deciding the question of whether Leroy indirectly overruled and replaced the other approaches by analyzing each case under both the weight of the contacts test and the equal plausibility test. See e.g. Noxell Corp. v. Firehouse No. 1 Bar-B-Que Restaurant, 760 F.2d 312, 317, 245 U.S.App.D.C. 242, (1985) ("We need not decide whether the [weight of the contacts] formulation is compatible with that of Leroy...."); Kramer v. Pittstown Point Landings, Ltd., 637 F. Supp. 201, 204 (N.D.Ill.1986) (applying the equal plausibility factors and the weight of the contacts test without reconciling the two tests); District No. 1, Pacific Coast District, M.E. B.A. v. State of Alaska, 682 F.2d 797, 799 (9th Cir.1982) ("[I]t is unclear what effect Leroy had on the `substantial contacts' test. However, we need not decide that question in this case."); Leidholdt v. L.F.P., Inc., 647 F. Supp. 1283 (D.Wyo.1986) (applying both the equal plausibility and the weight of the contacts test); Miller Brewing Co. v. Landau, 616 F. Supp. 1285 (E.D.Wis.1985) (finding venue proper under weight of contacts test and equal plausibility test).[3]
Another approach taken by courts is to analyze the case under the weight of the contacts only and simply ignore Leroy's equal plausibility factors. See e.g. Kupcho v. Steele, 651 F. Supp. 797 (S.D.N.Y.1986) (applying weight of the contacts test even though Leroy cited); Champion International Corp. v. Bennett Forest Industries, 637 F. Supp. 170 (D.Mont.1986) (applying weight of the contacts test without discussion of Leroy's equal plausibility standards); In re Nine Mile Ltd., 692 F.2d 56 (8th Cir.1982) (applying the weight of the contacts test).
Another approach taken by the courts is to analyze the case under the factors espoused in Leroy and to ignore the contacts that the cause of action has with the particular district. This approach was one that was recently taken by the Eighth Circuit Court of Appeals in Maybelline Co. v. Noxell Corporation, 813 F.2d 901 (8th Cir., 1987).[4] In Maybelline Co., the court applied the equal plausibility factors to determine that venue was improper in the Eastern District of Arkansas. The Court, however, did not directly decide the question of whether Leroy was consistent or inconsistent with the weight of the contacts test. Rather, the court, in a footnote, noted that, "we conclude that we must follow the Supreme Court's interpretation of section 1391(b) in Leroy in our review of this section 1391(b) issue, and thus Leroy represents the correct standard for determining whether Maybelline's claim arose in the Eastern District of Arkansas." Maybelline at p. 906, n. 8. See also Transistor Device, Inc. v. Tracor, Inc., 654 F. Supp. 601, n. 4 (E.D.N.Y.1987) ("Whether or not this test is compatible with the approach mandated by Leroy, the courts in this circuit now exclusively apply the Leroy test"). However, the Court in Maybelline, like the courts in other circuits, while acknowledging that Leroy was controlling, did not decide the question of whether Leroy overruled the weight of the contacts analysis. Thus, this question becomes one for this Court to decide. If Leroy did overrule those cases applying the weight of the contacts *550 test, then any reference to the contacts that the defendants have with the Western District of Missouri become irrelevant under the Leroy equal plausibility test since the only relevant factors would be the convenience of the defendants, the availability of witnesses and the accessibility of other relevant evidence. If Leroy did not overrule the weight of the contacts test and other tests, then a further question for the Court is how the two tests can be reconciled analytically and applied cohesively in determining where the claim arose under § 1391(b).
After a careful examination of the language in the Leroy opinion, it is the conclusion of the Court that Leroy did not overrule those cases applying the weight of the contacts test. The Supreme Court in Leroy specifically stated that only in the "unusual case" where it is "not clear where the claim arose" does the equal plausibility factors become relevant. Thus, it would appear that in those other not-so-unusual cases where it is clear that the cause of action arises in one of a number of possible districts (which constitutes the great bulk of venue cases before the district courts) the holding in Leroy and the equal plausibility standard would not be applicable.[5] Therefore, the task before the Court is to determine the standards to be applied in determining when venue clearly arises in one of a number of possible districts.
Having carefully examined the varying standards applied by the federal courts, both before and after Leroy, this Court concludes that the best approach in determining where the claim arose under § 1391(b) is a three-step line of analysis. The first question for the Court when confronted with a multidistrict venue situation is to determine whether the contacts with a particular district are "miniscule" or minor, or whether the contacts are "significant and substantial." If the contacts with a particular forum are deemed to be miniscule, then the claim cannot be said to have arisen in that district. On the other hand, if the contacts with a particular forum are deemed to be "significant and substantial," then at that point the weight of the contacts become relevant. See Eaby v. Richmond, 561 F. Supp. 131, 139-140 (E.D.Pa. 1983). ("[R]esolution of this issue requires initial reference to the complaint for a determination of whether it [complaint] alleges that defendants engaged in some significant or substantial conduct within this district. Only if our inquiry yields an affirmative answer, should we analyze the `significance' and `weight' of the alleged contacts.") See also Catsimatidis v. Innovative Travel Group, Inc., 650 F. Supp. 748, 752 (S.D.N.Y.1986) (Multidistrict venue permissible only where the claim has very substantial contacts with, or a close relationship to, each of the districts claimed as potentially appropriate); Champion International Corp. v. Bennett Forest Industries, 637 F. Supp. 170 (D.Mont.1986) (Telephone conversations and negotiation within the district `minimal' and, thus, venue improper).
Once it has been determined that there are two or more districts with "significant and substantial" contacts with plaintiff's claim, then the next step for the Court is to weigh the contacts to determine which district has the most significant contacts. Only when it is determined, based on this weighing process, that it is "unclear" which district has the most significant contacts does the equal plausibility factors set forth in Leroy become relevant.
The third line of inquiry, which arises in these "unclear" cases, is whether two or more of the districts can "with approximately equal plausibility in terms of the availability of witnesses, the accessibility of the other relevant evidence, and the convenience of the defendant (but not the plaintiff)" be assigned as the locus of the claim. Leroy, 443 U.S. at 185, 99 S. Ct. at 2717. If so, then plaintiff may choose between either of the two or more possible districts. See e.g. Checki v. Webb, 785 F.2d 534 (5th Cir.1986).
*551 Applying the foregoing tests to the facts of this case, the Court concludes that venue in this case would not be proper under § 1391(b) in the Western District of Missouri. First, of the three possible districts in which venue could lie, Arizona, Missouri or Florida, the only states with "significant and substantial" contacts with plaintiffs' claims are Missouri and Florida. Although plaintiffs were initially solicited by defendants at a seminar in Phoenix, Arizona, and the initial misrepresentations were allegedly made there, these contacts were "miniscule" when compared with those contacts with Missouri and Florida.
According to plaintiffs' complaint, telephone negotiations took place between plaintiffs in Missouri and defendants in Orlando, Florida, in which defendants Brown and Arnold allegedly reaffirmed the initial misrepresentations made in Phoenix. It was these misrepresentations that eventually enticed plaintiffs to go to Orlando, Florida in order to examine the defendants' operation. In addition, certain mailings were made to plaintiffs in Missouri. Defendants also allegedly shipped a sample machine from Florida to plaintiffs in Missouri. As to the contacts with Florida, plaintiffs went to visit defendants Brown and Arnold at their offices in Orlando. The parties undertook negotiations in Orlando and defendants allegedly reaffirmed all of their previous misrepresentations. The final agreement executed by the parties provided that the agreement would be deemed executed in Florida and would be governed by the laws of Florida. Finally, plaintiffs wired money from Missouri to defendants in the State of Florida. Therefore, the Court concludes that while Missouri's and Florida's contacts are "significant and substantial," Arizona's contacts with plaintiffs' claims are relatively "miniscule" and, thus, Arizona could not properly be assigned as the district where the cause of action arose.
Second, the Court concludes that under the weight of the contacts test, venue clearly lies in the Northern District of Florida rather than the Western District of Missouri. The only contacts that Missouri has with plaintiffs' claims are the fact that the plaintiffs are from Missouri, telephonic communications were made by defendants from outside Missouri to plaintiffs in Missouri, certain mailings were made by defendants from Florida to plaintiffs in Missouri, and one sample machine was shipped to plaintiffs in Missouri. As to the telephonic communications and mailings, the courts have consistently held that these acts, which were performed outside of this district, are an improper basis for venue under § 1391(b). See Champion International Corp. v. Bennett Forest Industries, 637 F. Supp. 170 (D.Mont.1986); Follett College Stores Corp. v. Fernandez, 587 F. Supp. 1051 (N.D.Ill.1984); Eaby v. Richmond, 561 F. Supp. 131, 140 (E.D.Pa.1983). Additionally, the mere fact that plaintiffs are from Missouri does not make Missouri the proper place for venue purposes. See Leroy v. Great Western United Corp., 443 U.S. at 185, 99 S. Ct. at 2717 ("[I]t is absolutely clear that Congress did not intend to provide for venue at the residence of the plaintiff or to give that party an unfettered choice among a host of different districts.")
In contrast, Florida appears to have the most significant contacts with plaintiffs' claims. Plaintiffs went to Florida to visit defendants. Negotiations took place in Florida. The final agreement between the parties was executed in Florida. The misrepresentations that prompted plaintiffs' visit to Florida were reiterated during these Florida negotiations. All of the mailings and the shipment of one sample machine originated in Florida. Finally, seven counts of plaintiffs' fifteen-count complaint are based on Florida anti-fraud statutes. Therefore, it appears that under the weight of the contacts test, the Northern District of Florida clearly has more significant contacts than this district and, thus, the cause of action arises in the Northern District of Florida under § 1391(b).[6]
*552 3. Venue under § 1391(c)
Plaintiffs also argue that venue is proper in the Western District of Missouri under § 1391(c) which provides that "[a] corporation may be sued in any judicial district in which it is incorporated or licensed to do business or is doing business." (emphasis added). Since Ramm is incorporated under the laws of Florida and is not licensed to do business in Missouri, then the Court must determine whether defendant corporation is "doing business" under § 1391(c).[7]
The crux of plaintiffs' argument is that since defendant Ramm is subject to Missouri's long-arm statute for personal jurisdiction purposes, then Ramm is "doing business" under the meaning of § 1391(c). See e.g., Oral-B Laboratories, Inc. v. Mi Lor Corp., 611 F. Supp. 460 (S.D.N.Y.1985); Cumis Insurance Society, Inc. v. South-Coast Bank, 587 F. Supp. 339 (N.D.Ind. 1984). However, in light of the Eighth Circuit Court of Appeals' recent pronouncement in Maybelline Co. v. Noxell Corp., 813 F.2d 901 (8th Cir.1987), the Court finds that venue is likewise improper under § 1391(c).
In Maybelline Co., the court was faced with the question of whether it is sufficient under § 1391(c) to meet due process jurisdictional standards for "doing business" or whether a higher level of activity within the district must be demonstrated. After a lengthy analysis of the conflicting views amongst the various circuits, the court held: (1) that since the doctrines of personal jurisdiction and venue rest on different considerations, the standards for analyzing the two should be different; and (2) that "doing business" for venue purposes should be subject to a higher standard than that for personal jurisdiction. Id. at 904. Borrowing the test set forth in Johnson Creative Arts, Inc. v. Wool Masters, Inc., 743 F.2d 947, 954 (1st Cir.1984), the court held that: "`doing business' in a district for purposes of Section 1391(c) means `engaging in transactions there to such an extent and of such a nature that the state in which the district is located could require the foreign corporation to qualify to do business there." Maybelline, at 905. The court also cautioned that venue under this standard is only proper when a "defendant's business in a district is sufficiently intrastate and localized" within that state. (emphasis added). Id., at 904; see also Allenberg Cotton Co. v. Pittman, 419 U.S. 20, 33, 95 S. Ct. 260, 42 L. Ed. 2d 195 (1974).
Applying this standard to the facts of this case clearly demonstrates that venue is improper in this district under § 1391(c). Ramm is a Florida corporation with its principle place of business in Florida. Ramm has no office or property in Missouri. Ramm has no agent or employees in Missouri. Ramm has not solicited any business in Missouri. In fact, plaintiffs have not alleged that any of Ramm's agents or employees have ever set foot in Missouri. See Cardwell v. Investor's Analysis, Inc., 620 F. Supp. 1395, 1398 (D.C.D.C.1985) ("Generally, in cases in which courts have found corporations to be `doing business' in a given district involve substantial contacts, such as employing an agent, maintaining an office, or hiring a distributor"). See also Pesaplastic, C.A. v. Cincinnati Milacron Co., 750 F.2d 1516, 1523 (11th Cir.1985). As previously indicated, the only contacts that defendants have with Missouri is the fact that telephone calls were made to plaintiff here, mailings were made to plaintiffs here and one sample machine was shipped to plaintiffs in Missouri. Surely, these contacts are insufficient intrastate and localized business within this state such that the State of Missouri could constitutionally require Ramm to obtain a license to do business in Missouri. See Critzas Industries v. Waterway-Creve Coeur, 652 F. Supp. 56, 62 (E.D.Mo.1986). Thus, the Court concludes that Ramm is not "doing business" within the meaning of § 1391(c).
*553 Conclusion
Having determined that venue does not properly lie in the Western District of Missouri under 18 U.S.C. § 1965(a), 28 U.S.C. § 1391(b) or § 1391(c), the Court, pursuant to 28 U.S.C. § 1406(a)[8], finds that transfer to the United States District Court for the Northern District of Florida, rather than dismissal, is in the best interest of the parties and in the best interest of justice.
Accordingly, it is hereby
ORDERED that defendants' motion to dismiss for improper venue is denied. It is further
ORDERED that pursuant to 28 U.S.C. § 1406(a) this action be transferred to the United States District Court for the Northern District of Florida. It is further
ORDERED that all other pending motions are denied without prejudice to their renewal after transfer.
NOTES
[1] Paragraph 10.2 of the final agreement reads as follows:
"Governing Law. This agreement shall be deemed executed in the State of Florida and shall be governed by and construed in accordance with the laws of the State of Florida ..."
Dody alleges that one of the alterations to the initial proposed distributorship agreement was Dody's scratching out this Florida forum selection clause. However, this clause remained intact in the agreement that was finally executed.
[2] Defendants contend that the machines in question were sent to plaintiffs in Illinois and not Missouri. However, in deciding the question of the defendants' contacts with this district for venue purposes, the Court will accept as true the facts pleaded in plaintiffs' complaint. Thus, the Court will assume that at least one of the machines were delivered from Florida to Missouri on November 7, 1985.
[3] The problem with this approach is that attorneys become bound to argue in very lengthy and confusing briefs (such as those submitted by the parties in this case) how venue is proper (or improper) under the weight of the contacts test, the equal plausibility test and the ALI test.
In addition, courts like this one are forced to proceed haphazardly through a maze of varying (and often inconsistent) standards, uncertain of which particular standard comports with both the legislative intent behind the enactment of § 1391(b) and the Supreme Court's interpretation of this venue provision in Leroy. Therefore, in order to provide some kind of guidance for the courts and attorneys in their analysis of such a basic precept like venue, this Court feels compelled to provide some answers to the many unanswered questions left after the Supreme Court's decision in Leroy.
[4] In Maybelline Co., plaintiff sought to enjoin defendants Noxell Corporation and SSC & B Lintas Worldwide from making false representations concerning Noxell's "Cover Girl Clear Lash Mascara," which was claimed to be a waterproof mascara. The court applied the factors set forth in Leroy and concluded that venue in the Eastern District of Arkansas would be improper since the claim did not arise in that district. Maybelline, at pg. 907.
[5] At least one court has so interpreted Leroy. See e.g. American Carpet Mills v. Gunny Corporation, 649 F.2d 1056 (5th Cir.1981) (concluding that this case was not the "unusual case," and, thus, Leroy factors not applied).
[6] Since venue "clearly" lies in the Northern District of Florida, then Leroy's equal plausibility test does not apply to this case. However, even under Leroy, venue appears to properly lie in the Northern District of Florida since the accessibility of all the relevant evidence, location of the witnesses and the convenience to defendant seem to point to the Northern District of Florida as the appropriate forum for venue purposes.
[7] Plaintiffs have pleaded the alter ego liability of Brown, Arnold and Ramm. Under this theory, if venue is appropriate as to Ramm, it is likewise appropriate as to Brown and Arnold.
[8] 28 U.S.C. § 1406(a) allows a district court, in which a case is filed improperly (from a venue standpoint), to dismiss or transfer the case to another district wherein venue is proper.
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(2008)
AMERICAN CHEMICAL SERVICE SITE RD/RA AGREEMENT MEMBERS, Plaintiff,
v.
ADMIRAL INS. CO., American Empire Surplus Lines Ins. Co., Appalachian Ins. Co., Certain Underwriters of Lloyds, London & Certain London Market Insurers, Columbia Casualty Ins. Co., Constitution State Ins. Co., Employers Ins. Co. of Wausau, First State Insurance Co., International Surplus Lines Ins. Co., Interstate Fire & Casualty Co., Mutual Fire, Marine & Inland Ins. Co., North Star Reinsurance Corp., and Twin City Fire Ins. Co., Defendants.
No. 1:08-cv-0741-RLY-JMS.
United States District Court, S.D. Indiana, Indianapolis Division.
October 17, 2008.
ENTRY ON (1) PLAINTIFF'S MOTION TO REMAND, (2) DEFENDANT'S MOTION TO TRANSFER, AND (3) PLAINTIFF'S MOTION TO STAY
RICHARD L. YOUNG, District Judge.
On April 29, 2008, American Chemical Service Site RD/RA Agreement Members ("ACS Site Group") filed its Complaint for Declaratory Judgment in Marion County, Indiana, Environmental Court. Defendant Interstate Fire & Casualty Company ("Interstate") removed the action to the United States District Court for the Southern District of Indiana on June 4, 2008, alleging federal subject matter jurisdiction under 28 U.S.C. §§ 1334(b) and (e). Now before the court is ACS Site Group's Motion to Remand. For the foregoing reasons, that motion is GRANTED. ACS Site Group also requests that it be awarded costs, expenses, and attorney fees under 28 U.S.C. § 1447(c). That request is DENIED.
Also before the court is Interstate's Motion to Transfer Case and ACS Site Group's Motion to Stay Any Decision on Transfer. As the court finds that this case must be remanded to state court, those motions are DENIED AS MOOT.
I. Background
This case arises out of the Chapter 7 bankruptcy liquidation of DeMert & Dougherty, Inc. ("DeMert"). ACS Site Group and the United States both filed unsecured claims in the bankruptcy, based on DeMert's liability for cleanup costs at an Indiana Superfund site. On January 24, 2006, DeMert, ACS Site Group, and the United States entered into a Consent Decree resolving these claims. (Docket # 1-2 ("Consent Decree")). The Consent Decree was lodged in the United States District Court for the Northern District of Indiana and was approved in the United States District Court for the Northern District of Illinois.
Pursuant to the Consent Decree, the United States' claim in the bankruptcy was deemed withdrawn. (Consent Decree ¶ 4(b)). ACS Site Group's claim was reduced from $70 million to $2.225 million. (Id. ¶ 4(a)). To cover ACS Site Group's $2.225 million claim for DeMert's share of cleanup costs, DeMert assigned any and all of its rights to receive payment under the insurance policies issued by certain insurersthe defendants in the instant case. (Id. ¶ 14(b)). The United States also assigned any right it might have to recover under DeMert's insurance policies to ACS Site Group. (Id. ¶ 20).
The bankruptcy liquidation, which began in 1996, is now in its final stages. (Docket #36-5 ("Trustee Report") ("all environmental issues resolved, final report being drafted")). All assets of the estate have been fully administered or are zero, and any additional claims were barred as of February 20, 2000. (Id.). The instant action is for declaratory judgment. ACS Site Group seeks a declaration that DeMert's insurers are obligated to provide coverage for DeMert's liability for environmental damage at the Indiana Superfund site.
II. Discussion
Pursuant to 28 U.S.C. § 1452(a), a party may remove a civil action "to the district court for the district where such civil action is pending, if such district court has jurisdiction of such claim or cause of action under 28 U.S.C. § 1334." In the instant case, Interstate argues that this court has jurisdiction under 28 U.S.C. § 1334(b) because ACS Site Group's action for declaratory judgment is "related to" the DeMert bankruptcy. Interstate also argues that this court has jurisdiction under 28 U.S.C. § 1334(e) because the insurance policies at issue are the "property" of the DeMert bankruptcy estate. Alternatively, Interstate argues that federal jurisdiction exists because the United States District Court for the Northern District of Indiana expressly retained jurisdiction in the Consent Decree entered into by DeMert, ACS Site Group, and the United States.
A. Jurisdiction Under 28 U.S.C. § 1334(b)
Section 1334(b) provides that federal district courts "have original but not exclusive jurisdiction of all civil proceedings arising under title 11 [bankruptcy], or arising in or related to cases under title 11." While "related to" jurisdiction has "some breadth," it "cannot be limitless." Celotex Corp. v. Edwards, 514 U.S. 300, 308, 115 S. Ct. 1493, 131 L. Ed. 2d 403 (1995). The Seventh Circuit has explained that "related to" jurisdiction is "intended to encompass tort, contract, and other legal claims by and against the debtor . . . [and] suits to which the debtor need not be a party but which may affect the amount of property in the bankruptcy estate." Zerand-Bernal Group, Inc. v. Cox, 23 F.3d 159, 162 (7th Cir.1994). As the debtor, DeMert, is not a party to this action, the relevant inquiry is whether the insurance policies proceeds at issue affect the amount of property in the DeMert bankruptcy estate.
Interstate cites In re U.S. Brass Corp. for the proposition that insurance coverage litigation is "related to" the bankruptcy of the insurance policy holder. 110 F.3d 1261 (7th Cir.1997). However, Interstate overlooks two important distinctions from the instant case. In U.S. Brass, the debtor (and insurance policies holder) was a party to the proceeding. This alone was enough to give the district court "related to" jurisdiction under the standard expressed in Zerand-Bernal Group, Inc. Additionally, the debtor held all rights to the proceeds under the disputed insurance policies. If the debtor prevailed in court, the proceeds under the insurance policies would go to the debtor, thereby "affect[ing] the amount of property in the bankruptcy estate." The set of facts in U.S. Brass is not analogous to the instant case, and Interstate fails to cite to any case where the court held that "related to" jurisdiction existed where a debtor had assigned his rights under an insurance policy to a third party.
In the instant case, the insurance policies proceeds in dispute would not affect the amount of property in the DeMert bankruptcy estate. DeMert assigned any and all of its rights to receive payments from the insurers for the liability claims related to the Indiana Superfund site to ACS Site Group. Interstate argues that this action does affect the amount of property because the insurance companies would pay the proceeds to the DeMert bankruptcy estate, which would then distribute the money to ACS Site Group. This is a hyper-technical interpretation. The policy behind federal jurisdiction in bankruptcy proceedings is to allow competing claims to be resolved in one forum. See In the Matter of Xonics, Inc., 813 F.2d 127, 131 (7th Cir.1987). In the instant case, there are no creditors competing for a share of the insurance policies proceeds. The only other party with a claim against DeMert for its share of cleanup costs was the United States, and it assigned any right it might have to the insurance policies proceeds to ACS Site Group. Even if DeMert still had creditors with existing claims, those creditors could not compete for the proceeds from the insurance policies because the right to that money has already been assigned to ACS Site Group. This action has no affect on the DeMert bankruptcy estate, and therefore, federal jurisdiction does not exist under § 1334(b).
B. Jurisdiction Under § 1334(e)
Pursuant to 28 U.S.C. § 1334(e)(1), "[t]he district court in which a case under title 11 is commenced or is pending shall have exclusive jurisdiction of all the property, wherever located, of the debtor as of the commencement of such case, and of the property of the estate." No one disputes that the insurance policies are the property of the bankruptcy estate. However, the insurance policies themselves are not the "property" at issue in this case the insurance policies proceeds are. Therefore, the court must determine whether the insurance policies proceeds are the property of the bankruptcy estate.
As discussed above, DeMert assigned to ACS Site Group its right to receive payment under the insurance policies for DeMert's alleged share of liability for past and future response costs with respect to the Indiana Superfund site. Despite that assignment, Interstate argues that the proceeds are at least partially the property of the bankruptcy estate because the Consent Decree limited ACS Site Group's right to collect to $2.225 million, meaning that any proceeds above that amount still belong to the bankruptcy estate. This is an incorrect summation of the Consent Decree. DeMert assigned any and all of its right to receive payments under the insurance policies to ACS Site Group. The assignment did not include any dollar amount limitation. The $2.225 million figure comes from ACS Site Group's agreement to limit its claims against DeMert for that amount. Furthermore, even if Interstate's assertion that the bankruptcy estate would be entitled to any proceeds in excess of $2.225 million were true, the claim bar date for any additional claims has passed. There is no possibility that DeMert will receive any insurance proceeds in excess of $2.225 million as all insurance proceeds under DeMert's policies have been assigned to ACS Site Group. As the insurance policies proceeds are no longer the property of the bankruptcy estate, federal jurisdiction does not exist under § 1334(e)(1).
C. Jurisdiction Under the Consent Decree
In a footnote to its Memorandum of Law in Opposition to Motion to Remand, Interstate argues that the United States District Court for the Northern District of Indiana has expressly retained jurisdiction over ACS Site Group's attempt to assert rights granted in the Consent Decree. While the Consent Decree does provide that the Northern District of Indiana "shall retain jurisdiction over this matter for purposes of interpreting and enforcing the terms of the Consent Decree," the court finds that the instant action does not fall within the scope of the jurisdiction retained by the Northern District. This is not a matter of interpretation because there is no dispute that the Consent Decree did in fact assign DeMert's rights to receive payment under the insurance policies to ACS Site Group. This is also not a matter of enforcement because DeMert is not asserting that it still holds the rights to receive payments under the insurance policies. Furthermore, Interstate was not a party to the "matter" over which the Northern District retained jurisdiction. Accordingly, the court finds that the Northern District of Indiana does not have jurisdiction over this action under the Consent Decree.
III. Attorney Fees
When granting a motion to remand, the court may award the prevailing party "just costs and any actual expenses, including attorney fees, incurred as a result of the removal." 28 U.S.C. § 1447(c). This type of award is appropriate only where the defendant "lacked an objectively reasonable basis for seeking removal." Lott v. Pfizer, Inc., 492 F.3d 789, 793 (7th Cir.2007) (quoting Martin v. Franklin Capital Corp., 546 U.S. 132, 141, 126 S. Ct. 704, 163 L. Ed. 2d 547 (2005)). In determining whether an objectively reasonable basis exists, the court should examine the "clarity of the law at the time the notice of removal was filed". Id. (citing Valdes v. Wal-Mart Stores, Inc., 199 F.3d 290, 293 (5th Cir.2000)). While courts in the Seventh Circuit have addressed insurance policies proceeds in relation to "related to" and "property of the bankruptcy estate" jurisdiction, none of those cases have involved a situation where the insurance policies proceeds had been assigned to a third party. Accordingly, there was an objectively reasonable basis for removal, and ACS Site Group's request for attorney fees and costs is DENIED.
IV. Transfer of Venue
On June 11, 2008, Interstate filed a motion to transfer this action to the United States District Court for the Northern District of Illinois. On June 16, 2008, ACS Site Group filed a motion to stay any decision on transfer until the court ruled on the motion to remand. As the court has ruled to remand this action to state court, the motions concerning transfer of venue are both deemed MOOT.
V. Conclusion
For the foregoing reasons, ACS Site Group's Motion to Remand (Docket # 36) is GRANTED and this action is remanded to the Marion County Environmental Court. However, the request for attorney fees and costs is DENIED. Interstate's Motion to Transfer (Docket # 24) and ACS Site Group's Motion to Stay (Docket # 37) are DENIED AS MOOT.
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950 F. Supp. 168 (1997)
Mary DEGRUISE, By and Through her Next Friend, Linda UPCHURCH, Plaintiff,
v.
NPC INTERNATIONAL, INC., d/b/a Pizza Hut and Michael Tran, Defendants.
No. 1:96CV210-S-A.
United States District Court, N.D. Mississippi, Eastern Division.
January 17, 1997.
Charles T. Yoste, Starkville, MS, J. Niles McNeel, Louisville, MS, for Plaintiff.
Frederick J. Lewis, Rhonda M. Taylor, McKnight, Hudson, Lewis & Henderson, PLLC, Memphis, TN, for Defendant NPC International, Inc.
Richard E. Circeo, Holcomb Dunbar, Oxford, MS, for defendant Michael Tran.
ORDER REMANDING CAUSE AND AWARDING PLAINTIFF COSTS AND ATTORNEY'S FEES
SENTER, Chief Judge.
In this case, plaintiff charges the defendants, NPC International, Inc. (Pizza Hut) and Michael Tran, with false imprisonment, assault, and intentional infliction of emotional distress in connection with an episode occurring at a Pizza Hut in Starkville, Mississippi. Specifically, plaintiff, who worked for Pizza Hut at the time, claims that someone identifying himself as an Oktibbeha County deputy sheriff called the restaurant and accused plaintiff of stealing money from a customer. In response to the call, the manager, defendant Tran, was summoned to the restaurant, where he detained plaintiff and strip-searched her.
*169 Plaintiff, a Mississippi citizen, brought her complaint in the Circuit Court of Oktibbeha County, Mississippi, asserting state law claims only against NPC International, a foreign corporation, and Tran, a citizen of Mississippi. Initially, the matter proceeded in that forum until two events occurred which planted in defendants' minds the idea that this cause was removable. First, plaintiff sought to take the deposition of NPC International's 30(b)(6) designee and informed the company that she intended to inquire into its corporate policy regarding sexual harassment and the handling of Title VII complaints. And second, plaintiff, in response to defendants' request for production, produced a charge of sex discrimination which she had submitted to the EEOC in connection with the events underlying this cause. In response to these events, defendants filed a notice of removal based on original jurisdiction "inasmuch as Plaintiff alleges that she was subjected to hostile environment sexual harassment in violation of Title VII"; her claims, according to defendants, are therefore "founded upon the alleged violation of rights arising under the laws of the United States providing for the protection of civil rights."
This cause is now before the court on plaintiff's motion to remand. She maintains that this court has no subject matter jurisdiction over this matter, as there is neither original jurisdiction, since all of her claims are premised on state, not federal law, nor diversity jurisdiction, since Tran is a non-diverse citizen. Plaintiff asserts that although she "may have a viable federal claim, she is solely alleging state law claims in the complaint," and that because she has the right to pursue that avenue alone, the case was improperly removed.
In an attempt to justify their removal of this action, defendants point to the fact that plaintiff requested and received a right to sue letter (although the EEOC did not close its investigation of this matter) and to her representation to the magistrate judge at the case management conference that she intended to amend her complaint to assert a Title VII violation. They argue that these actions somehow make this case "akin" to cases in which the court exercises its discretion to retain supplemental jurisdiction under 28 U.S.C. § 1367 after all federal claims have been dismissed.
This argument is specious and has absolutely no basis in law. The court has no discretion regarding retention of this action, as it has at no time possessed subject matter jurisdiction over plaintiff's complaint. Plaintiff has chosen to assert only state law claims and has not filed a second amended complaint which might bestow jurisdiction on this court. It was improper for defendants to remove this action based on nothing more than an EEOC charge and a 30(b)(6) notice when nothing in her pleadings suggests a basis for original jurisdiction. Furthermore, the timing of plaintiff's motion to remand is immaterial as the court's subject matter jurisdiction can be questioned at any stage of the proceedings. Plaintiff's motion to remand is therefore well taken.
Plaintiff also seeks an award of costs and expenses pursuant to 28 U.S.C. § 1447(c), which states: "An order remanding the case may require payment of costs and any actual expenses, including attorney fees, incurred as a result of the removal." 28 U.S.C. § 1447(c) (emphasis added). This section, as interpreted by the Fifth Circuit, "permits an award of `just costs' if the district court finds that `the case was removed improvidently and without jurisdiction....'" News-Texan, Inc. v. City of Garland, 814 F.2d 216, 220 (5th Cir.1987) (citations omitted).[1] Under this standard, the court is not required to find that the removing party acted in bad faith, id., or in a "vexatious, wanton, or oppressive" manner, Penrod Drilling, 764 F.Supp. at 1147, before it awards costs. Id. Nevertheless, at all times the decision whether to award § 1447(c) costs lies within this court's discretion, Teer *170 v. Upjohn Co., 741 F. Supp. 1242, 1244 (M.D.La.1990), although the court "will be [more] inclined to do so when the nonremovability of the action is obvious...." Charles Alan Wright, Arthur R. Miller, & Edward H. Cooper, 14A Federal Practice and Procedure § 3739 (2d ed.1985).
The court chooses in this instance to exercise its discretion in favor of awarding costs and expenses. As discussed above, defendants had no basis upon which to predicate removal of this action. Although plaintiff may have considered pursuing a cause of action under Title VII (and advised defendants of that possibility), she never amended her complaint, and until that event occurs, if it occurs, this cause is not removable. Jurisdiction is determined by the face of the complaint, not by a 30(b)(6) notice or an EEOC charge of discrimination. The court is certain that neither defendant had any ill motive in removing this action, but plaintiff should not be forced to pay for their mistake when a sound and reasonable argument for removability cannot be made. Therefore, plaintiff is entitled to her reasonable costs and expenses, including attorney's fees, incurred in seeking remand. The court encourages plaintiff and defendants to utilize their best efforts to resolve this matter without court intervention; if an amicable resolution cannot be reached, plaintiff should submit an itemized accounting in accordance with the Uniform Local Rules and the applicable case law.
Accordingly, it is ORDERED:
That plaintiff's motion to remand is granted;
That this entire cause is hereby remanded to the Circuit Court of Oktibbeha County, Mississippi;
That plaintiff's request for costs and expenses is granted;
That, if the parties cannot resolve this issue, then plaintiff shall submit an itemized accounting in accordance with the Uniform Local Rules and the applicable case law no later than Thursday, January 30, 1997;
That defendants shall, if necessary and appropriate, submit a response to plaintiff's accounting no later than Monday, February 10, 1997.
NOTES
[1] At the time News-Texan, Inc., was decided, § 1447 did not specifically address whether attorney's fees could be awarded as part of the allowable "just costs." The 1988 amendment certainly makes this point clear but does not undercut the validity of any cases decided before the amendment. See Penrod Drilling Corp. v. Granite State Ins. Co., 764 F. Supp. 1146 (S.D.Tex.1990).
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01-03-2023
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10-30-2013
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https://www.courtlistener.com/api/rest/v3/opinions/2570976/
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177 F. Supp. 2d 591 (2001)
Carol E. ANDERSON, et al., Plaintiffs
v.
PINE SOUTH CAPITAL, LLC, et al Defendants
No. 3:98CV-739-S.
United States District Court, W.D. Kentucky, at Louisville.
August 8, 2001.
*592 *593 *594 Dorothy M. Pitt, Pitt, Fenton & Smith, Louisville, KY, Vicki L. Buba, Stone, Pregliasco, Haynes & Buba, Louisville, KY, for all plaintiffs and for intervenor plaintiff Home Healthcare Management and Trustee John Wilson.
Maureen P. Taylor, Frost, Brown & Todd, Louisville, KY, Richard Paul Schiller, Schiller, Osbourn & Barnes, Louisville, KY, Drew H. Campbell, Bricker & Eckler, LLP, Columbus, OH, for National Century Financial Enterprises, Inc. and Lance Paulsen.
Richard W. Beckler, Matthew H. Kirtland, Michelle C. Ciszak, Fulbright & Jaworski, LLP, Washington, DC, for Medshares *595 Consolidated, Inc., Medshares Management Services, Inc. and John Koch.
Michael D. Risley, Stites & Harbison, Louisville, KY, Richard W. Beckler, Matthew H. Kirtland, Michelle C. Ciszak, Fulbright & Jaworski, LLP, Washington, DC, for Stephen Winters.
Douglas C. Ballantine, John T. Ballantine, Ogden, Newell & Welch, Louisville, KY, Gene Lynn Humphreys, Bass, Berry & Simms, Nashville, TN, Hayden J. Silver, III, Kilpatrick & Stockton, LLP, Atlanta, GA, P. Stephen Gordinier, Louisville, KY, Emily A. Moseley, Kilpatrick & Stockton, Raleigh, NC, for William Riddle, Jr., Dean Holland, James J. Terbeest, Leanne Barney and Nelson Clemmens.
Joan Lloyd Cooper, Barbara Wetzel Gernert, Wyatt, Tarrant & Combs, Louisville, KY, for Trans Financial Bank, NA.
Samuel G. Bridge, Jr., Wyatt, Tarrant & Combs, Louisville, KY, for First Allmerica Financial Life Ins. Co.
MEMORANDUM OPINION
SIMPSON, Chief Judge.
This matter is before the Court on the motions of certain Defendants to dismiss for failure to state a claim against them upon which relief can be granted. For the reasons stated below, we will grant the motions in part and deny them in part.
BACKGROUND
This case arises out of the financial difficulties of Homecare and Hospital Management, Inc.,[1] ("HHM"), which is currently involved in bankruptcy proceedings in this district. There are two complaints. Claims of certain former employees of HHM and its subsidiaries ("Employees") are set forth in the Second Supplemental Complaint. HHM's Trustee in Bankruptcy ("Trustee") has also filed the Intervening Complaint. Both complaints recite largely overlapping factual allegations, although they allege distinct causes of action.
The Employees have alleged that they were enticed by some of the Defendants to remain with HHM during its financial difficulties by fraudulent promises that their wages and benefits would be paid. They further allege that remaining Defendants aided the fraudulent scheme and financially benefitted.
The Trustee has alleged that two of the Defendants reneged on a promise to provide funding to HHM, that certain Defendants breached their fiduciary duties to HHM, and finally, that HHM's assets were converted by all Defendants.
DISCUSSION
In determining a motion to dismiss under Fed.R.Civ.P. 12(b)(6), we must "construe the complaint liberally in the plaintiff's favor and accept as true all factual allegations and permissible inferences therein." Sistrunk v. City of Strongsville, 99 F.3d 194, 197 (6th Cir.1996) (quoting Gazette v. City of Pontiac, 41 F.3d 1061, 1064 (6th Cir.1994)). The Sixth Circuit expounded on this standard in the case of Andrews v. Ohio, 104 F.3d 803 (6th Cir. 1997).
This Court must ... determine whether the plaintiff undoubtedly can prove no set of facts in support of his claims that would entitle him to relief. A complaint *596 need only give "fair notice of what plaintiff's claim is and the grounds upon which it rests." A judge may not grant a Fed.R.Civ.P. 12(b)(6) motion to dismiss based on a disbelief of a complaint's factual allegations. While this standard is decidedly liberal, it requires more than a bare assertion of legal conclusions. "In practice, a ... complaint must contain either direct or inferential allegations respecting all the material elements to sustain a recovery under some viable legal theory."
Id. at 805 (quoting In re DeLorean Motor Co., 991 F.2d 1236, 1240 (6th Cir.1993))(internal citations omitted).
I. Employees' Claims
A. Standing
The Trustee has the exclusive right to pursue any claim that could have been raised by HHM prior to bankruptcy. Honigman v. Comerica Bank, 128 F.3d 945, 947 (6th Cir.1997). This principal does not prevent the Employees from bringing claims which are independent of the rights of HHM, but it informs our reading of their complaint. The Employees have standing to assert claims for direct injuries to themselves, but may not assert claims for injuries to HHM.
B. ERISA Preemption
To the extent that a state law claim arises out of an employer's refusal to make payments to a benefit plan, it is preempted by ERISA. 29 U.S.C. § 1144(a); Tassinare v. American National Ins. Co., 32 F.3d 220, 224 (6th Cir.1994)(holding claim for intentional infliction of emotional distress caused by employer's refusal to make matching payments preempted). The only remedy must come from ERISA itself.
Thus, the Employees' fraud and intentional interference with contractual relations claims are preempted by § 1144(a) to the extent that they request damages (or equitable relief) for payments that allegedly should have been made to ERISA covered plans. However, to the extent that these claims allege that the Defendants are responsible for salaries and other non-ERISA payments, they are not preempted.
C. Fraud
The Defendants move for dismissal of the Employees' fraud claims against them. They argue that the complaint fails to allege facts which state a claim for fraud and that it fails to state these facts with sufficient particularity. In response, the Employees point to certain paragraphs of the complaint in which they contend that the claims of fraud are particularized.
In order to satisfy Rule 12(b)(6), the Employees must allege facts supporting the elements of fraud, which are: "(a) a material representation, (b) which is false, (e) known to be false or made recklessly, (d) made with inducement to be acted upon, (e) acted in reliance thereon, and (f) causing injury." Wahba v. Don Corlett Motors, Inc., 573 S.W.2d 357, 359 (Ky.App.1978).
Also, Fed.R.Civ.P. 9(b) requires that "the circumstances constituting fraud ... shall be stated with particularity." The purpose of this rule is to provide fair notice to defendants to allow them to respond on an informed basis. Advocacy Org. for Patients and Providers v. Auto Club Ins. Ass'n, 176 F.3d 315, 322 (6th Cir.1999), cert. denied, 528 U.S. 871, 120 S. Ct. 172, 145 L. Ed. 2d 145 (1999). A plaintiff must allege the time, place, and content of the misrepresentation on which he or she relied, the fraudulent scheme, the intent of the defendants, and the resulting injury. Id. (citing Coffey v. Foamex L.P., 2 F.3d 157, 161-62 (6th Cir. 1993)). When the complaint involves multiple *597 defendants, then "each defendant's role must be particularized with respect to their alleged involvement in the fraud." Kuney Int'l S.A. v. DiIanni, 746 F. Supp. 234, 237 (D.Mass.1990)(citing Wayne Inv. v. Gulf Oil Corp., 739 F.2d 11, 14 (1st Cir.1984)). However, averments regarding the condition of defendants' minds can be made generally. Rule 9(b).
The complaint is fulsome to the point of being verbose. There are forty-four paragraphs of generalized factual allegations. With respect to fraud, there are an additional forty-four lengthy paragraphs of allegations. Plodding through this factual morass is extremely difficult. Therefore, we have paid particular attention to the paragraphs upon which the Employees rely in their responsive brief as constituting the crux of their claims.
Paragraph 19 is a generalized allegation against Defendants William Riddle, Jr. ("Riddle"), Dean Holland ("Holland"), and James J. TerBeest ("TerBeest") setting forth the alleged fraudulent scheme. It alleges that these Defendants made promises to the Employees to induce them to remain with HHM through a transition period even though the Defendants did not plan to fulfill these promises. The remaining paragraphs, then, appear to be the Employees' attempt to specify and particularize the general averments in this paragraph.
Paragraph 30 amplifies the allegations in ¶ 19 with respect to Riddle and Holland but does not particularize the time, place or manner of the alleged misrepresentations. Paragraph 37 is similar, but it adds an allegation that Riddle, Holland, TerBeest, and Nelson Clemmens ("Clemmens")[2] were aware that the employees would not be paid as promised. Further, it includes a generalized allegation that the remaining Defendants "approved and/or ratified" these misrepresentations. However, as it relates to Clemmens and the remaining Defendants, this paragraph contains no particularized allegations which could support a claim for fraud.
Paragraph 58 alleges, "Riddle sent a letter to corporate Employees informing them that `everything is fine' and that HHM would honor all of its financial commitments." The statement that "everything is fine" is not a material representation and is not actionable. However, the assertion that HHM would honor its financial commitments is a material representation. Although it relates to future events, the Employees have alleged that the Defendant made it with the knowledge that they would not perform so as to induce the Employees into continuing their employment. This is enough to state a claim for fraud against Riddle. Schroerlucke v. Hall, 249 S.W.2d 130, 131 (Ky. 1952)(Fraud exists where one makes a "false representation of an existing intention to do certain things, made for the purpose of inducing another to enter into a contractual relation with him.").
Additionally, the allegation satisfies Rule 9(b). It suffers slightly from a lack of specificity regarding the content of the fraudulent statement. However, because the statements were contained in a letter which is identifiable, we find that it presents enough information to permit Riddle to respond intelligently to the charges.
Paragraph 63 contains an allegation that Riddle continued to make representations to the Employees that HHM would pay its debts to them. It does not, however, provide *598 the time, place or manner of this additional representations.
Paragraph 72 alleges that Riddle, TerBeest, and Holland sent a memo to the Employees which "implied that all obligations to Employees would be met." This paragraph, however, does not set forth the contents of the memo or indicate how this assertion was "implied." Whether HHM would meet its financial obligations is a material issue. However, this allegation does not present us with a "representation," and thus, it fails to establish one of the necessary elements of a fraud claim. Further, the Employees, in this paragraph, have set forth the time and place of the memo, but have failed to set forth its contents relative to the misrepresentation so that the Defendants can respond intelligently. Therefore, it also fails to satisfy Rule 9(b).
Paragraph 74 asserts that Riddle sent a letter to the Employees on May 1, 1998 which reassured them that "employee ... issues would be resolved." (Sec.Supp. Compl.¶ 74.) This representation is somewhat ambiguous in that it only implies that (1) financial obligations to the Employees will be resolved (2) favorably. However, an ambiguous representation can be the basis for a fraud claim if it is made "with the intention that it be understood in the sense in which it is false." Restatement (Second) of Torts, § 527. According to the Employees' complaint, these financial obligations were not fully paid, and Riddle intended that the Employees be misled into believing that they would be paid. Therefore, this paragraph states a claim for fraud against Riddle.
Paragraph 74 further alleges, "The representations were made at the direction of or with the approval and/or ratification of" the remaining Defendants. This allegation is broad and conclusory and does not begin to satisfy the requirements of Rule 9(b) as it relates to these Defendants.
Paragraph 77 alleges that Riddle, Holland, and TerBeest held meetings with the Employees in which they assured Employees that money had been accrued to satisfy all of HHM's obligations through and including the month of June, 1998. These assurances were made in conjunction with a memo sent by Riddle to the Employees on May 14, 1998. Whether HHM had accrued money for June's obligations was a present material fact. Also, this paragraph provides sufficient particularization of the time, place, content, and manner of these representations so that the these Defendants can intelligently respond.
Again, this paragraph alleges generally that the remaining Defendants approved or ratified the statements of Riddle, Holland, and TerBeest. There are, however, no particularized factual allegations indicating each Defendants' role in making, or in aiding and abetting the making of these representations. Therefore, with respect to these Defendants, these allegations do not satisfy Rule 9(b).
Paragraph 81 alleges that Riddle, TerBeest or Holland assured Employees that new medical plan coverage would be retroactive to April 28, 1998. They did this, allegedly, despite knowledge by another Defendant, Leigh Ann Barney ("Barney"), that it was "doubtful" that coverage could be made retroactive to April 1, 1998. This claim, as it seeks damages related to HHM's failure to make payments to an ERISA plan, is preempted. See supra, Section I.B.. Even if it were not preempted, this allegation does not state the manner or place of the representation and only specifies that the time of the representation was "shortly []after" a memo which was prepared on or about May 27. This, *599 too, is insufficiently particular under Rule 9(b).
Paragraph 87 only realleges the fraudulent scheme generally. Neither it nor any of the other paragraphs in the complaint contain particularized factual allegations which would inform the Defendants, other than Riddle, Holland and TerBeest, of their alleged role in fraudulent misrepresentations or satisfy all of the elements for aiding and abetting a misrepresentation.
After carefully analyzing the paragraphs singled out by the Employees and reviewing all of the allegations of the complaint, we find that the Employees have sufficiently alleged a claim of fraud against Defendants Riddle, Holland, and TerBeest in ¶¶ 58, 74, and 77. With respect to the remaining Defendants, the Employees have not alleged facts which state a claim for fraud and have failed to particularize their allegations in order to satisfy Rule 9(b).
D. Intentional Interference with Contractual Relations
Defendants National Century Financial Enterprises, Inc. ("NCFE"), Lance Poulsen ("Poulsen"), and Stephen Winters ("Winters")[3] contend that the Employees have failed to state a claim for intentional interference with contractual relations because they have not alleged malice or knowledge of the employment contracts on the part of the Defendants, because the Employees have not alleged causation, and because this claim is preempted by ERISA.
We reiterate that the Employees' state-law based claims for ERISA covered benefits are preempted. See, Section I.B., supra. The Employees have alleged that their contractual relationship with HHM entitled them to "payments/benefits." (Sec.Supp.Compl.¶ 131.) Thus, to the extent that the Employees complain for "benefits" which were owed to ERISA covered plans, the Employees have failed to state a claim upon which relief can be granted. That portion of the Employees' claim for intentional interference with contractual relations must be dismissed. However, the complaint includes a claim for contractual "payments" which may not be preempted and, therefore, requires further examination.
In arguing that the Employees must allege malice, the Defendants overstate the elements of this tort. The Employees are only required to allege that the interference was done without justification. See Thermothrift Industries, Inc. v. Mono-Therm Insulation Systems, Inc., 450 F. Supp. 398, 404 (W.D.Ky.1978)(interference must be "malicious or without justification"). The Employees claim, throughout the complaint, that these Defendants were motivated by a desire to loot a dying corporation. This is sufficient to allege that there was no justification for the interference. But cf. Foster v. Churchill, 87 N.Y.2d 744, 642 N.Y.S.2d 583, 665 N.E.2d 153, 157 (1996)("To the extent that respondents acted to preserve the financial health of an ailing [corporation], their actions were economically justified.").
The Employees have also alleged that HHM breached its contracts with them at "the encouragement/insistence of" the Defendants. (Sec.Supp.Compl.¶ 132.) This allegation satisfies the element of causation. Further, the Employees allege that *600 the Defendants encouraged and insisted "that monies due Employees not be paid" and that they intentionally interfered with the contractual relationship between the Employees and HHM. (Id.) A reasonable inference from these allegations is that these Defendants knew of the alleged contracts. Therefore, the Employees have stated a claim upon which relief may be granted.
E. RICO
In Count II, the Employees also allege that the Defendants formed an enterprise for the purposes of diverting HHM's assets for their own gain. They claim that this enterprise engaged in a pattern of racketeering activity in violation of RICO, 18 U.S.C. § 1962(c).
We find that this count of the Employees' complaint must be dismissed under Rule 12(b)(6) because the Employees have failed to allege sufficient facts to satisfy the `continuity' requirement of RICO claims. See H.J., Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229, 240, 109 S. Ct. 2893, 2901, 106 L. Ed. 2d 195 (1989). This requirement ensures that RICO suits only address "Congress's primary concern in enacting the statute, i.e. long-term criminal conduct." Vemco v. Camardella, 23 F.3d 129, 134 (6th Cir.1994). To satisfy this requirement, the Employees must allege "a series of related predicates extending over a substantial period of time" or demonstrate a "threat of continuity." H.J., 492 U.S. at 242, 109 S. Ct. at 2902. However, "[p]redicate acts extending over a few weeks or months and threatening no future criminal conduct do not satisfy this requirement...." Id.
The Employees' complaint alleges that this fraudulent enterprise was formed in April, 1998. (Sec.Supp.Compl.¶ 21.) The complaint also alleges that several of the Defendants exchanged a fax on October 9, 1998 which was "in furtherance of the goals of the Enterprise, ...." (Id. at ¶ 104.) There are no allegations of fraudulent acts after October, 9, 1998, (Id.), and there is only one allegation of a fraudulent act after July 3, 1998, (Id. at ¶ 86). Assuming that these paragraphs satisfy Rule 9(b) and allege fraudulent activity, the entire conspiracy could not have lasted more than six months.
The Sixth Circuit has held that, when the Defendants are engaged in a singular fraudulent scheme, a period of seventeen months is not enough to satisfy the continuity requirement. Vemco, 23 F.3d at 134. In this case, there are significantly more alleged victims than there were in Vemco, but all of them belong to the same class, employees of HHM and its subsidiaries. They were allegedly defrauded by the same statements which were all apart of the same scheme, looting HHM. Also, the scheme could only last until HHM went bankrupt which amounts to a short-term, close-ended scheme. See Thompson v. Paasche, 950 F.2d 306, 311 (6th Cir.1991)(holding that land sale scheme was too short-term to satisfy RICO).
The Plaintiffs failed to cite, and we have not uncovered, any cases which find that a six month conspiracy is sufficient to satisfy the continuity requirement of RICO. Therefore, we find that, given the limited scheme and its close-ended nature, this alleged six month scheme is not sufficient to satisfy RICO's continuity requirement.
F. ERISA
The Defendants argue that they are not liable for breach of a fiduciary duty under ERISA because they are not fiduciaries. Under ERISA, a fiduciary is defined, in part, as a person who "exercises any authority or control respecting ... disposition of [the plan's] assets, ...." 29 U.S.C. § 1002(21)(A)(i). According to 29 *601 C.F.R. § 2510.3-102(a), plan assets include "amounts that a participant has withheld from his wages by an employer, for contribution to the plan as of the earliest date on which such contributions can reasonably be segregated from the employer's general assets."
The Employees allege that NCFE, Poulsen, Riddle, Leigh Ann Barney ("Barney"), Holland, Clemmens and Winters were fiduciaries. (Sec.Supp.Compl.¶ 120.) They also allege that each of these Defendants exercised authority or control over monies withheld from the Employees' wages. (See id. at ¶¶ 116, 117, 124.) These paragraphs are sufficient to allege that the Defendants were ERISA fiduciaries with respect to these alleged withheld funds. They have stated a claim upon which relief may be granted.
We also note that the Defendants argue that the Employees are not entitled to certain remedies under ERISA law. The Employees, however, have not made clear what remedies they are seeking. Therefore, we will defer ruling upon this issue until the record is further clarified.
II. Trustee's Complaint
A. Statute of Frauds
The Trustee alleges that NCFE failed to fulfil its promise to provide funding to help "sustain HHM operations through a financially difficult time." (Inter.Compl. ¶ 51.) In Count V, the Trustee alleges this agreement as a contract which NCFE breached. In the portions of Count II which relate to NCFE, the Trustee alleges that NCFE fraudulently induced HHM to make certain transfers by promising this funding. This is also the basis upon which the RICO claim is made in Count I. NCFE responds by arguing that Kentucky's statute of frauds prevents HHM from maintaining these claims because this alleged promise was never reduced to writing.
KRS § 371.010 states:
No action shall be brought to charge any person: ... (9) Upon any promise, contract, agreement undertaking, or commitment to loan money, to grant, extend, or renew credit ... unless the promise, contract, agreement, representation, assurance, or ratification, or some memorandum or note thereof, be in writing and signed by the party to be charged therewith ....
This statute squarely addresses the situation alleged by the Trustee. Therefore, in order to maintain any claims based upon these allegations, the Trustee must allege either a writing which satisfies the statute or facts which warrant finding an exception. He has done neither.
The Trustee argues that two writings mentioned in the complaint satisfy the statute of frauds. (See Inter.Compl. ¶¶ 45, 47.) He notes that multiple writings may satisfy the statute of frauds and that such writings can either predate or postdate the contract. Lonnie Hayes and Sons Staves, Inc. v. Bourbon Cooperage, 777 S.W.2d 940, 942 (Ky.App.1989). However, the Trustee fails to explain how the two documents to which the complaint refers satisfy the statute of frauds.
To satisfy the statute of frauds, writings must show all of the essential terms of the contract. Nicholson v. Clark, 802 S.W.2d 934, 938 (Ky.App.1990)(citing Antle v. Haas, 251 S.W.2d 290 (Ky.1952)). The terms must be ascertainable without resort to parol evidence. Id. The Trustee is required to satisfy the statute of frauds in order to state a valid claim. He has not met this burden.
The Trustee relies upon a document which is mentioned in ¶ 47 of his complaint. Unfortunately, he has not provided *602 a copy of this document to the Court or attached one to his brief.[4] Regardless, the Trustee alleges that this document gave HHM "reason to believe that the Reorganization Plan was still supported ...." This does not allege the existence of a contract or promise in writing.
The same situation exists with the document mentioned in ¶ 45. Again, no copy has been provided to the Court. The only specifics provided regarding this document are that it was "an outline of the promised funding to HHM." This conclusory statement provides no details regarding the alleged promises made by NCFE or the terms of the alleged agreement.
The Trustee also argues that he is entitled to maintain these causes of action because HHM fully performed its portion of the agreement. Although there is an exception to the statute of frauds when one party has fully performed his portion of a contract, it does not apply in this situation. Pilcher v. Stadler, 276 Ky. 450, 124 S.W.2d 475, 479 (1939)("a contract is no longer executory and [the statute of frauds] has no application thereto, where it has been fully performed upon one side ...."). Typically, the borrower's primary obligation on a loan agreement is to repay the amount borrowed plus interest. In this case, though, the Trustee contends that the main consideration for NCFE's promise of a multi-million dollar loan was HHM's transfer of assets to Poulsen. Nevertheless, the Trustee alleges that these assets were separately sold to Poulsen with the approval of the HHM principals. (Inter.Compl.¶ 38.)
In order for this limited exception to the statute of frauds to apply, the actions of the performing party must be "unequivocally referable" to the alleged contract. Austin v. Cash, 274 Mont. 54, 906 P.2d 669, 673-74 (1995). The Trustee admits that Poulsen paid for the assets and even that there may have been some good business strategy in making them, (see Trustee's Resp. Summ.J., at 8). Therefore, these facts do not point unequivocally, or even probably, to the conclusion that there must have been some definite contract in place.
Because the Trustee's allegations do not satisfy the statute of frauds, no action may be brought based upon these alleged promises. Counts I and V and those portions of Count II of the Trustee's complaint which relate to NCFE fail to state a claim upon which relief can be granted, and those claims will be dismissed. In light of this disposition, the dependent claims against Winters in Count I will also be dismissed.
B. Fraud
The remaining portion of Count II of the Trustee's complaint alleges that Defendant Mark O'Brien ("O'Brien") committed a fraud against HHM by collecting money for the purpose of purchasing stock for Riddle. Rule 9(b) requires that the Trustee, in making this claim, allege the time, place, and content of the misrepresentation on which he relied, the fraudulent scheme, the intent of the defendants, and the resulting injury. Advocacy Org. for Patients, 176 F.3d at 322.
The alleged facts pertaining to this claim are contained in ¶ 42(d) of the Trustee's complaint. This paragraph contains no allegations regarding the time, place, or content of the alleged misrepresentation, nor is there an adequate indication that there was any misrepresentation at all. Therefore, *603 this claim falls short of the heightened pleading standards required by Rule 9(b) and will be dismissed.
C. Conversion
The Trustee alleges that the Defendants "received from HHM monies or assets to which they were not otherwise entitled or received assets at less than their full market value." (Inter.Compl. ¶ 58.) These alleged transactions are detailed throughout the complaint and involve a purported conspiracy between principals of HHM and other Defendants to loot HHM of its assets before it wound up in bankruptcy.
In order to state a claim for conversion, a plaintiff must allege facts sufficient to indicate that (1) the plaintiff had ownership rights at the time of the conversion, (2) the defendants obtained the property by a wrongful act or dispossession of the plaintiff's property rights, and (3) the plaintiff suffered harm. In re Clark, 206 B.R. 439, 441 (Bnkrtcy.W.D.Ky.1996). For the purposes of this motion, the Defendants do not challenge that the money and assets allegedly taken were originally in the possession of HHM or that the loss of those assets would harm HHM. The Defendants, however, focus their attention on the second element listed above and argue that the Trustee has not alleged a wrongful taking of the property.
Kentucky law recognizes that when a plaintiff consents to a transfer of property, he no longer has a cause of action for conversion. Gross v. Citizens Fidelity Bank Winchester, 867 S.W.2d 212, 214 (Ky.App.1993). In the present case, the allegations indicate that the alleged takings were done with the consent of several HHM principals who had agency authority from HHM. The Trustee also acknowledges that, at the time of the conveyances, HHM consented to them. (Trustee Resp. Summ.J. at 19.) There is no factual foundation for any claim of duress and, therefore, because the "victim" of this alleged conversion consented to the transactions, we hold that there are insufficient allegations of wrongful dispossession. This claim will also be dismissed for failure to state a claim upon which relief may be granted.
D. Breach of Fiduciary Duty
Finally, the Trustee alleges that Riddle, Holland, TerBeest, Barney, and Clemmens (collectively, the "HHM principals") breached their fiduciary duties to HHM and that the remaining Defendants aided or abetting them in this breach.
The Trustee alleges that Riddle, Holland, and TerBeest were officers and directors of HHM. (Inter.Compl.¶ 7.) He further alleges that Barney and Clemmens were directors of HHM. (Id.) He does not, however, specify the dates that each held these positions. Thus, it cannot be determined, from the complaint, if and when each of the HHM principals owed a fiduciary duty to HHM. Several of the HHM principals have denied that they owed fiduciary duties to HHM at the time of some of the alleged breaches. This is not an appropriate ground of dismissal under Rule 12(b)(6), but it may be raised later in a motion for summary judgment.
The HHM principals admit that, at a minimum, directors have a duty not to engage in transactions from which they receive improper personal benefits. (Riddle, et al., Mem. Summ.J. at 6.) The Trustee alleges that Barney, a director, requested and received payments from HHM to which she was not entitled and that these payments were made in exchange for her assurances of continued participation in a plan to divert HHM assets. (Inter.Compl. ¶ 39.) Also, the Trustee alleges that Clemmens, through a company he owned, received payment of over $100,000 *604 for "services that were never rendered." (Inter.Compl.¶ 42(b).) These allegations are sufficient to state a claim that Barney improperly engaged in a transaction from which she received a personal benefit.
Officers of a corporation owe a duty of loyalty and are required by the law to refrain from acting against the corporation's interest. Steelvest, Inc. v. Scansteel Service Center, Inc., 807 S.W.2d 476, 483 (Ky.1991).[5] The Trustee has alleged that the remaining HHM principals engaged in acts which could have been disloyal or against HHM's best interests. (See ex. Inter.Compl. ¶ 42(a) and (e).) Therefore, the Trustee has stated a cause of action with respect to these Defendants for breach of their fiduciary duties.
The remaining Defendants are alleged to have aided or abetted the HHM principals' alleged breach of fiduciary duty. One may be held liable to an injured plaintiff for aiding and abetting a breach of a fiduciary duty. Lappas v. Barker, 375 S.W.2d 248, 252 (Ky.1963). Such aid must be active and must be done with knowledge. Id. The Trustee has generally alleged that the remaining Defendants had knowledge of the HHM principals' actions which are alleged to be tortious, (Inter.Compl. ¶¶ 29 and 30), and that they, in various ways, acted to facilitate these alleged breaches. Winters, who is said to have had control of the corporate check book, allegedly made the improper payments. (Id. at ¶ 33.) It is claimed that NCFE and Poulsen required the HHM principals to sell Poulsen certain assets at an unfair price. (Id. at ¶ 38.) O'Brien purportedly received $50,000 to which he was not entitled so as to aid one HHM principal in a transfer of stock scheme. (Id. at ¶ 42(d).) We conclude that the Trustee has stated a cause of action against these Defendants.
Defendant Winters makes an additional argument which we do not find persuasive. He notes that the statute of limitations for a conspiracy in Kentucky is one year. K.R.S. § 413.140(1)(c). However, we do not believe that the allegations in this case of aiding and abetting a breach of fiduciary duty amount to a claim of conspiracy. Civil conspiracy is a distinct cause of action recognized by the courts of Kentucky. See McDonald v. Goodman, 239 S.W.2d 97 (Ky.1951). Liability for aiding and abetting is separately recognized by the courts and puts the defendant in the same shoes as the original tortfeasor. Thus, we hold that the statute of limitations for a charge of aiding and abetting should fall under the section reserved for the underlying cause of action which, in the present case, has not yet expired. K.R.S. § 413.120.
CONCLUSION
A separate order will be entered this date in conformity with this opinion.
ORDER
For the reasons set forth in the memorandum opinion entered this date and the Court being otherwise sufficiently advised, IT IS HEREBY ORDERED AND ADJUDGED that the motions of the Defendants to dismiss the complaints are GRANTED IN PART. Count II (RICO) of the Second Supplemental Complaint and Counts I (RICO), II (Fraud), III (Conversion), and V (Breach of Contract) of the Intervening Complaint are DISMISSED.
*605 Count I (Fraud) of the Second Supplemental Complaint is DISMISSED with respect to Defendants National Century Financial Enterprises, Inc., Lance Poulsen, Leigh Ann Barney, Stephen Winters, Nelson Clemmens, and Mark O'Brien. Counts I (Fraud) and IV (Intentional Interference with Contractual Relations) of the Second Supplemental Complaint are DISMISSED to the extent that they allege damages for benefits or payments covered by ERISA. Additionally, the Second Supplemental Complaint is DISMISSED to the extent that it complains for injuries done to HHM.
The remaining portions of the Defendants' motions are DENIED.
NOTES
[1] The two complaints, prepared by the same counsel, alternatively refer to this corporation as "Home Healthcare Management" and "Homecare and Hospital Management, Inc." We use the latter title because it is the one used by the other parties and the bankruptcy court.
[2] Again, the Plaintiffs, in their complaints, alternatively spell this name "Clemmens" and "Clemmons." We use the former spelling because that is the one used by his counsel.
[3] The only Defendants named in this count of the Employees' complaint are Medshares Condolidated, Inc. ("Medshares"), Medshares Management Services, Inc. ("MMSI"), NCFE, Poulsen, and Winters. Medshares and MMSI are currently in bankruptcy, and the parties have agreed that the action against them is stayed. Thus, only NCFE, Poulsen, and Winters have addressed this count of the Employees' complaint.
[4] Because these documents are referred to in the complaint, we may consider them in a motion to dismiss without converting it into a motion for summary judgment. Weiner v. Klais and Co., 108 F.3d 86, 89 (6th Cir.1997).
[5] For understandable reasons, the parties did not devote adequate space in their briefs to address whether Georgia or Kentucky law governs the duties owed by HHM's officers. Therefore, we cite Steelvest for an understanding of the general rule. However, we do not intend for it to be the law of the case on this issue.
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August 20, 2013
JUDGMENT
The Fourteenth Court of Appeals
IN THE INTEREST OF I.S.M., A CHILD
NO. 14-13-00411-CV
________________________________
Today the Court heard its own motion to dismiss the appeal from the
judgment signed by the court below on February 7, 2013. Having considered the
motion and found it meritorious, we order the appeal DISMISSED.
We further order that all costs incurred by reason of this appeal be paid by
appellant, Gala Hill.
We further order this decision certified below for observance.
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358 F. Supp. 558 (1973)
Archie Preston LATHON, Plaintiff,
v.
PARISH OF JEFFERSON et al., Defendants.
Civ. A. No. 72-562.
United States District Court, E. D. Louisiana.
April 6, 1973.
*559 R. M. Michalczyk, A. W. Wambsgans, Metairie, La. for Cronvich and Reed.
Joseph J. Laura, Jr., New Orleans, La., for Gairrusso.
REASONS
CASSIBRY, District Judge.
The plaintiff in this case seeks to hold the various defendants here liable in damages for allegedly illegal conduct that occurred in connection with his arrest for certain drug offenses. The plaintiff's complaint asserts that his warrantless arrest was tainted by an illegal wiretap and an illegal search. He alleges further that certain of the defendants lied about these circumstances at his trial, as a direct consequence of which he was found guilty of the offenses in question and sentenced to a term in prison which he is now serving.
The various defendants raise different objections to the sufficiency of these allegations. The defendant Giarrusso alleges that he played no personal role in the events in question and that the only way he could be held liable for any illegal acts would be if he had had a direct personal involvement in them. This contention is correct. The doctrine of respondeat superior has no place in a civil rights action brought under § 1983. (Bennett v. Gravelle, D.Md.1971, 323 F. Supp. 203; Sanberg v. Daley, N.D.Ill. 1969, 306 F. Supp. 277; Salazar v. Dowd, D.Colo.1966, 256 F. Supp. 220; Jordan v. Kelly, W.D.Mo.1963, 223 F. Supp. 731), and plaintiff has failed to allege any facts showing that defendant Giarrusso personally acted under color of law to deprive plaintiff of rights, privileges and immunities secured by the United States Constitution. The absence of such allegations is fatal to the complaint. Peoples Cab Co. v. Bloom, W.D.Pa.1971, 330 F. Supp. 1235. Consequently that defendant's motion to dismiss must be granted.
The defendants Reed and Cronvich launch a broader attack on the sufficiency of the plaintiff's complaint. They first assert that the plaintiff's cause of action is prescribed, as the arrest upon which it is based occurred more than one year prior to the commencement of this action, and the state-derived limitations period applicable to this suit is the one-year period governing offenses and quasi-offenses contained in La.Civ.Code Art. 3536. While I believe that this position is correct as to any cause of action sounding in false arrest, Meyers v. Edwards, 256 So. 2d 337, 339 (La.App.1971), I do not believe that it disposes of a cause of action sounding in false imprisonment, since "Louisiana apparently follows the majority rule that the prescriptive period does not begin to run until such time as the plaintiff is released from prison, although his cause of action is complete once the last of those acts leading to the harm he is suffering is accomplished." Whitsell v. Rodrigues, E.D.La.1972, 351 F. Supp. 1042, 1045, and authorities cited therein. A successful objection to a plea of prescription might also obtain as to any cause of action based on perjured testimony at trial.
Defendants Reed and Cronvich, however, have a more telling objection to the plaintiff's present action. Essentially they make three separate but related arguments:
(1) Lathon cannot prevail because, having been convicted of the crime for *560 which the officers arrested him, he has not been falsely imprisoned;
(2) The conviction of Lathon means that any subsequent imprisonment was pursuant to court order, and the officers are insulated thereby from any liability;
(3) Even if the plaintiff's complaint is not substantively defective, this court ought not to look behind the federal proceedings and reexamine the validity of plaintiff's arrest and subsequent confinement, both of which were adjudged proper by the trial court and by the Fifth Circuit on direct review.
The plaintiff has made no response to this motion. As I believe that the defendants' third assertion is dispositive of the issues here, I need not reach their broader contentions of absolute immunity from liability.
The defendants point out that both the district court and the Court of Appeals found as facts that the plaintiff's arrest was proper. His characterization of the alleged eavesdropping, entry and seizure that preceded it as an "unwarranted and illegal invasion of his privacy" presented questions of fact that were resolved against the petitioner at his trial. Similarly the question of the veracity of the agents' testimony regarding these events was necessarily passed upon and decided adversely to the plaintiff here. At this juncture, these determinations seem to encompass all of the allegedly improper conduct forming the basis of the plaintiff's complaint. Thus either on the grounds of issue preclusion, Palma v. Powers, 295 F. Supp. 924, 933, N.D.Ill.1969, or out of a due respect for the workings of the federal judicial system, cf. Martynn v. Darcy, 333 F. Supp. 1236, 1240-1242, E.D.La.1971, those factual and legal judgments must be given conclusive effect and the plaintiff's action dismissed.
The insurmountable obstacle that the plaintiff faces here is that, irrespective of the unreasonableness of his arrest, it is a complete defense to an action for false arrest or false imprisonment that he did commit the crime for which he was arrested. Martynn v. Darcy, supra; Whirl v. Kern, 407 F.2d 781, 790 (5th Cir. 1968); I. Harper & James, The Law of Torts § 3.18 at 280 (1956) and cases cited therein. Here Lathon stands convicted of just those offenses. Thus before he can hope to prevail, he must establish that, despite his conviction, he is in fact innocent of the crimes for which he is imprisoned. But it is well established that the only basis for collateral attack on a federal conviction is by way of a § 2255 petition. 28 U.S.C. §§ 2241, 2255; 7B J. Moore, Federal Practice § 2255, at 915.2-915.4 (1972). In a sense, therefore, the plaintiff's action is premature, in that its success depends on his innocence, a fact not yet established and incapable of being established in these proceedings.
For the above stated reasons, the defendants' motion to dismiss is granted.
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358 F. Supp. 1053 (1973)
UNITED STATES of America
v.
William Paul KOHNE et al.
Crim. A. No. 71-254.
United States District Court, W.D. Pennsylvania.
April 25, 1973.
*1054 *1055 Samuel J. Orr, III, Asst. U. S. Atty., Pittsburgh, Pa., for the U.S.
James A. Ashton, Pittsburgh, Pa., for defendants William Paul Kohne, Patrick Denham and Jeanine Denham.
*1056 Martin M. Sheinman, Pittsburgh, Pa., for defendants Patsy Stanizzo and Betty Howden Stanizzo.
Ray Radakovich, Pittsburgh, Pa., for defendant Joseph Tabella.
James R. Fitzgerald, Pittsburgh, Pa., for defendant Paul Patrick Woods.
Gilbert M. Gerber, Pittsburgh, Pa., for defendant Frank DeLucia.
OPINION AND ORDER
MARSH, Chief Judge.
The ten original defendants in the above captioned case were charged in a two-count indictment with conspiring to violate the federal statute prohibiting illegal gambling businesses, 18 U.S.C. § 1955, in violation of 18 U.S.C. § 371 (Count one) and with the substantive violation of 18 U.S.C. § 1955 (Count two). Two of the indicted defendants, Jeanne Kosh and James Quay, pleaded guilty to the substantive violation immediately after the jury was sworn to try this case. After a five and one-half week jury trial, at which the government presented evidence gathered via court-authorized wiretaps, the remaining eight defendants were found guilty of the substantive violation of 18 U.S.C. § 1955 and acquitted of the conspiracy.
After the jury's verdict, two of the defendants, Patsy and Betty Stanizzo, moved for and were granted judgments of acquittal for the reasons stated in a separate opinion. The remaining six convicted defendants (William Paul Kohne, Paul Patrick Woods, Joseph Tabella, Patrick Denham, Jeanine Denham, and Frank DeLucia) have filed motions for judgment of acquittal and for a new trial.[1] In our opinion the motions should be denied. We consider seriatim the following grounds for a new trial raised by defendants:
(1) The court erred in not suppressing the evidence gathered by wiretaps installed on certain telephones.
(2) The voices of certain defendants were not properly identified and therefore the wiretap conversations were erroneously admitted as evidence against them.
(3) The jury's verdict was inconsistent and a nullity.
(4) The court erred in allowing opinion and expert witness testimony.
(5) The court's charge and supplemental instructions were erroneous.
(6) The evidence derived from the search of defendant Tabella's residence should have been suppressed.
(7) The court erred in allowing the trial to continue after two of the defendants pleaded guilty.
(8) The court erred in allowing the jury to view transcripts of the wiretap conversations and to wear earphones while the conversations were played.
Finally, we also consider defendants' contentions that they are entitled to judgments of acquittal because the verdicts are against the weight and sufficiency of the evidence.
Admissibility of Wiretap Evidence
Defendants assert and reassert that this court erred in not suppressing the wiretap evidence because:
(1) Title III of the Omnibus Crime Control and Safe Streets Act of 1968, 18 U.S.C. §§ 2510-2520, is unconstitutional;
(2) the affidavits filed in support of the wiretap applications lack probable cause;
(3) defendants' toll records were used illegally in establishing probable cause;
(4) the wiretap application was not properly authorized under 18 U.S.C. § 2516(1);
*1057 (5) the wiretap applications fail to show why other investigative techniques would fail as required by 18 U.S.C. § 2518(3);
(6) the government failed to comply with 18 U.S.C. § 2519 requiring reports to be filed with the Administrative Office of the United States Courts;
(7) the government failed to serve copies of the wiretap applications and court orders on all parties at least ten days before trial as required by 18 U.S. C. § 2518(9);
(8) the government presented duplicate tapes, rather than the sealed originals, to the grand jury.
Grounds one through five above were decided adversely to defendants when this court ruled on their pretrial motions, United States v. Kohne, 347 F. Supp. 1178 (W.D.Pa.1972).[2] Ground six is untimely[3] and without merit since the failure to file reports with the Administrative Office of the United States Courts is not one of the specifically enumerated grounds for suppression provided under 18 U.S.C. § 2518(10)(a). Grounds seven and eight were ruled upon at trial and merit brief discussion here.
As alleged by the defendants in ground seven, the government failed to serve the defendants copies of the applications and court orders for the wiretaps involved in this case at least ten days prior to trial as required by 18 U. S.C. § 2518(9). But, defendants do not contend, nor can they, that this was a deliberate bypassing of the requirement of the Act or that they have been prejudiced by this failure in any manner. The purpose of 18 U.S.C. § 2518(9) is to provide a defendant with notice so that he can move to suppress wiretap evidence prior to trial. U.S.Code Cong. and Admin.News, 1968, p. 2195. The defendants in this case did move to suppress the wiretap evidence prior to trial, asserting as one of the grounds therefor that the applications for the court orders authorizing the wiretaps did not set forth probable cause. At the hearing on their motions on March 16, 1972, defendants, by their counsel, extensively cross-examined witnesses using the applications and court orders they now complain were not served on them ten days prior to trial.[4] Furthermore, these documents were offered into evidence as exhibits at this hearing,[5] and prior to the hearing had been public records on file in the Office of the Clerk of Court since January 14, 1972.[6] Since the record clearly establishes that defendants had access to these documents almost one year prior to trial and, in fact, moved to suppress the wiretap evidence because of alleged insufficiencies in them, we find substantial compliance with the statute, and hold that the refusal to suppress the wiretap evidence during the trial was correct. United States v. Wolk, 466 F.2d 1143 (8th Cir. 1972); cf. United States v. Eastman, 465 F.2d 1057 (3d Cir. 1972).
In ground eight above the defendants moved to suppress the wiretap evidence because the tapes presented to the grand jury were duplicates of the *1058 sealed tapes used at trial. The sealing procedure required by 18 U.S.C. § 2518(8)(a) is aimed at protecting the confidentiality of the tapes and, as a secondary purpose, aids in establishing a chain of custody at trial. United States v. Cantor, 470 F.2d 890, 893 (3d Cir. 1972); United States v. Poeta, 455 F.2d 117, 122 (2d Cir. 1972). But 18 U.S.C. § 2518(8)(a) also specifically provides that duplicate tapes may be made, and 18 U.S.C. § 2517(2) allows law enforcement officers to use duplicate tapes "to the extent such use is appropriate to the proper performance of [their] duties." We believe that it was appropriate under 18 U.S.C. §§ 2517(2), 2518(8)(a) to prepare and present duplicate tapes to the grand jury so that the sealed originals would remain intact for inspection by defendants and use at trial. In our opinion this procedure did not require that all wiretap evidence be suppressed.
Adequacy of the Voice Identification
Defendants, Tabella, Woods, and DeLucia, object to the admission of wiretap recordings of phone conversations against them, contending that their voices were never properly identified so as to establish their participation in these conversations. We disagree.
As to Woods and Tabella, their voices were identified by Special Agents Thompson and Britton, respectively. Also, the evidence showed that the phones that were tapped were located in their residences, and they were referred to by name during both incoming and outgoing calls occurring on these phones.[7] The identification evidence by the agents, coupled with the strong circumstantial evidence, satisfactorily identified their voices so as to support the jury's findings that they were the participants in the gambling conversations. United States v. Alper, 449 F.2d 1223, 1229 (3d Cir. 1971); Carbo v. United States, 314 F.2d 718, 743 (9th Cir. 1963). Moreover, William Kohne testified in his own defense and implicated Woods and Tabella in his gambling business.
The identification of Frank DeLucia's voice presents a different problem. DeLucia's voice was not identified by any witness and the government relies entirely on circumstantial evidence to support its contention that his is the voice on the recordings; this mode of identification is complicated by the fact that Frank DeLucia's adult son, Frank DeLucia, Jr., allegedly resided with him.[8] The circumstantial evidence adequately established that someone named "Frank" received and placed telephone calls dealing with illegal gambling from telephones located in the DeLucia residence. Two sets of calls support the government's contention that the senior DeLucia was the "Frank" participating in the gambling operation.[9] In these calls, Woods called the DeLucia residence, a child answered, Woods asked if the child's father, "Frank", was there; DeLucia's wife, "Becky", then came to the phone and informed Woods that "Frank" was at Leo's; Woods then called a number registered to Leo T. McGrath and spoke to "Frank" about the gambling operation. Based on these *1059 two sets of conversations the jury could find, with reason, that the senior DeLucia, rather than his son, was participating in the illegal gambling operation.[10]
The Inconsistency in the Jury's Verdicts
Numerous objections are based upon the jury's verdicts being inconsistent in that they acquitted the defendants of conspiracy and convicted them of the substantive violation. Defendants contend that the indictment was duplicitous; that the jury's verdicts are inconsistent and a nullity; and, because the defendants were ultimately acquitted of the conspiracy count, declarations of co-conspirators were erroneously admitted into evidence at the trial.
Since all defendants were acquitted of conspiracy defendants are entitled to no relief even if the indictment was duplicitous, and assuming arguendo that the verdicts are inconsistent, such inconsistency has long been one of a jury's prerogatives. United States v. Fiorella, 468 F.2d 688, 690 (2d Cir. 1972). Likewise, the fact that the defendants were charged with conspiracy, but acquitted, despite strong evidence of conspiracy, does not retroactively render inadmissible the hearsay which was allowed into evidence under the declarations of the co-conspirators exception to the hearsay rule. This hearsay evidence remained competent and its admission does not vitiate the jury's verdict finding the defendants guilty only of the substantive offense. United States v. Herr, 338 F.2d 607, 610 (7th Cir. 1964); Burns v. United States, 286 F.2d 152, 155 (10th Cir. 1961); Coplin v. United States, 88 F.2d 652, 661 (9th Cir. 1937).
We find nothing talismanic in the form in which the jury rendered its verdicts which would entitle these defendants to a new trial.
Opinion and Expert Witnesses
Defendants contend that this court erred in allowing Special Agents Meek, Thompson, and Burton to give certain opinions, and in allowing the government's expert on gambling, Special Agent T. C. Whitcomb, to testify when defendants were not supplied with a copy of his report prior to trial.
Special Agent Meek gave his opinion that the pen register, an instrument used in this case to determine the outgoing telephone numbers being dialed on monitored phones, was an accurate instrument. Agent Meek had not tested the pen register used in this particular case, but testified to the accuracy of the pen register generally. Agent Meek was a college graduate; he had one month of specialized training by the Federal Bureau of Investigation in electronic surveillance, and eight months practical experience in such work; he had read books dealing with the pen register; and he had used the pen register when working on two other wiretap cases. While Agent Meek was not an eminently qualified expert, we believe he was sufficiently qualified to give his opinion as to the pen register's reputation for accuracy. His opinion found later support in the numerous recorded conversations in which the parties to the calls were identified by name or voice identification as being individuals whose residences contained telephones bearing the same numbers which the pen register had reported.
Agents Thompson and Burton gave certain opinions concerning gambling. They were not experts as gamblers, but both did have considerable experience in investigating gambling cases. *1060 We believe such investigative experience sufficiently qualified these agents so as to allow them to express their opinions on certain aspects of the gambling operation involved in this case. Moore v. United States, 394 F.2d 818 (5th Cir. 1968); Commonwealth v. Ametrane, 205 Pa.Super. 567, 210 A.2d 902 (1965), aff'd, 422 Pa. 83, 221 A.2d 296 (1966); Commonwealth v. Smith, 186 Pa.Super. 89, 140 A.2d 347, 349 (1958).
Finally, defendants object to the testimony of Special Agent T. C. Whitcomb, contending that they were entitled to have a report covering his testimony prior to trial. We have found no authority which entitles a defendant, as a matter of right, to a gambling expert's report. Rule 16, Fed.R.Crim.P., is limited to reports of physical or mental examinations, and scientific tests or experiments. In any event, when this court was informed by the government that it intended to use an expert witness on gambling, his report was ordered to be supplied to the defendants at least five days before he testified, this was done, and none of the defendants requested a continuance to further study Whitcomb's report. On these facts, we can see no prejudice to the defendants because Whitcomb's report was not supplied prior to trial. Cf. Rule 16(g), Fed.R.Crim.P.
Errors in the Court's Charge and Supplemental Instructions
Defendants' attack on the court's charge centers on the definition of the word "conduct" and the supplemental explanation of "knowingly and wilfully" given in response to a question from a juror.
In the charge, this court instructed that all participants in the operation of an illegal gambling business, except customers and persons placing bets, are conducting the business within the meaning of 18 U.S.C. § 1955. We believe this to be a correct statement of the law. United States v. Ceraso, 467 F.2d 653, 656 (3d Cir. 1972); United States v. Becker, 461 F.2d 230, 232 (2d Cir. 1972); cf. United States v. Palmer, 465 F.2d 697, 699 (6th Cir. 1972); United States v. Riehl, 460 F.2d 454, 459 (3d Cir. 1972); United States v. Harris, 460 F.2d 1041, 1049 (5th Cir. 1972). Contrary to defendants' contention, we do not believe this court erred in defining the term "conduct".
During the course of deliberations, Juror No. 10 sent to the court a statement and later a question dealing with the use of the terms "knowingly and wilfully" in the indictment.[11] It seemed from these communications that this juror felt that the government had the burden of proving that the defendants knew that a federal law prohibiting illegal gambling businesses had been enacted and that they wilfully and knowingly violated it. In response to this juror's second question, an instruction defining the terms "knowingly and wilfully" was given, and the jury was told they were not required under the indictment or the law to find that the defendants knew the size of, or the number of participants in the illegal gambling business, or that a federal law proscribed such a business; but, that it was only necessary that the defendants knew that Pennsylvania state law made their activities *1061 criminal.[12] Defendants object to the correctness of this instruction.
We believe that a fair reading of the indictment shows that it only charges that the defendants "knowingly and wilfully" performed the proscribed act with specific intent to do something the state law forbids, and it does not interject the requirement that they did so with knowledge that a federal law proscribed their acts as well.[13] Nor do we believe the law requires such knowledge. While no case clearly decides the issue, 18 U. S.C. § 1955 is the type of statute only requiring a general criminal intent,a voluntary and intentional doing of an act which the statute makes unlawful and knowledge that such act is unlawful under federal law is not necessary. United States v. Erlenbaugh, 452 F.2d 967, 973 (7th Cir. 1971), aff'd, 405 U.S. 973, 92 S. Ct. 1194, 31 L. Ed. 2d 247 (1972); United States v. Miller, 379 F.2d 483, 486 (7th Cir. 1967); cf. United States v. Weiler, 458 F.2d 474 (3d Cir. 1972). We believe the response to the juror's question was a correct statement of the law and properly given to clear up his obvious misunderstanding as to the effect to be given the words "knowingly and wilfully" in the indictment.[14]
At trial defendants also objected to the court's supplemental instruction to the jury that even though the indictment charged multiple acts in the conjunctive, proof that one of the acts so charged was committed by a named defendant was sufficient to support his conviction. This principle is so well established that this objection does not merit discussion here. United States v. Gimelstob, 475 F.2d 157 (3d Cir. 1973).
Search of the Tabella Residence
Defendant Tabella contends that Agents of the Federal Bureau of Investigation searched his home under color of a search warrant for another residence, thereby vitiating any consent from him for such search and rendering inadmissible certain demonstrative evidence seized by the government and used at trial as the product of an illegal search and seizure. This objection was raised for the first time at trial and is untimely under Rule 12(b)(3), Fed.R. Crim.P. Moreover, Tabella's reliance on *1062 Bumper v. North Carolina, 391 U.S. 543, 88 S. Ct. 1788, 20 L. Ed. 2d 797 (1968), is misplaced[15] because the undisputed facts surrounding the search of his residence show that he gave his consent knowingly, and the agents did not in any way act under color of an invalid warrant.
The only evidence concerning the search of Tabella's residence came from Special Agent Britton. He testified that he went to Tabella's residence at 192 Provost Street on July 12, 1971; he informed Tabella he wanted to search for gambling paraphernalia and that he had a search warrant for Tabella's former residence at 3710 Sawmill Run Boulevard; that he stressed that he had no legal authority to search the new residence unless Tabella consented; and that Tabella reviewed a consent to search form, refused to sign it, but orally informed Special Agent Britton that he consented to the search.
Clearly this is not a case where officers searched under color of an invalid or nonexistent warrant; therefore Bumper v. North Carolina, supra, is inapposite to these facts. Here the agents took great pains to inform Tabella they did not have a valid search warrant, and Tabella, obviously to give the impression that he had nothing to hide, voluntarily and knowingly consented to the search. On this record we can only find that Tabella gave valid consent to have his residence searched, and, contrary to defendant's contention the evidence derived therefrom was properly admitted at trial. Cf. Hoover v. Beto, 467 F.2d 516, 520 (5th Cir. 1972); Leeper v. United States, 446 F.2d 281, 284 (10th Cir. 1971); United States ex rel. Combs v. La Vallee, 417 F.2d 523, 525 (2d Cir. 1969).
The Guilty Pleas of Quay and Kosh
After the jury was sworn and counsel for the defendants introduced, two defendants, James Quay and Jeanne Kosh pleaded guilty in the absence of the jury. The remaining defendants immediately moved for a mistrial, contending that the conspicuous absence of these two defendants would prejudice them. The motions were denied, but the court offered to inform the jury of the pleas and give the required cautionary instruction.[16] This offer was unanimously declined by defendants. Accordingly, the jury was never told that Quay and Kosh had pleaded guilty, but was told in the court's charge that they were not permitted to speculate on the absence of Quay and Kosh from the trial.[17] Defendants contend that it was error to continue with the trial after these guilty pleas were accepted. We disagree.
The cases clearly hold that it is not error to accept the guilty pleas of a co-defendant during the course of a trial. United States v. Broadhead, 395 F.2d 761 (2d Cir. 1968); United States v. Kahn, 381 F.2d 824, 836 (7th Cir. 1967); United States v. Edwards, 366 F.2d 853 (2d Cir. 1966); Wood v. United States, 279 F.2d 359 (8th Cir. 1960); United States v. Stallings, 273 F.2d 740 (2d Cir. 1960); Davenport v. United States, 260 F.2d 591 (9th Cir. 1958); cf. Freije v. United States, 386 F.2d 408 (1st Cir. 1967). The only question with such procedure being the propriety of the court informing the jury of such a *1063 guilty plea on its own motion. Compare United States v. Edwards, supra, 366 F. 2d at 870, with Wood v. United States, supra, 279 F.2d at 363.[18] In this case the defendants, for obvious reasons of strategy, decided that the jury should not be informed of the guilty pleas and given the appropriate cautionary instruction. The defendants were not entitled to have a mistrial declared merely because two of the defendants pleaded guilty. The options that were available were explained to them and they made a unanimous choice that the jury not be informed of the guilty pleas of their co-defendants. This court respected the defendants' decisions and considering all the circumstances, we perceive no error in the procedure followed.
Use of Transcripts and Earphones by the Jury
Defendants contend that this court erred in allowing the jury to follow the taped conversations with the aid of transcripts, and that they were denied a public trial because the jury used earphones to better hear the taped conversations.
The transcripts used by the jury were available to defense counsel before trial and they were ordered to inspect and submit written objections to them prior to trial.[19] Furthermore, objections to the accuracy of the transcripts were considered at trial and the defendants were given the benefit of any doubt concerning their accuracy. Under these circumstances we believed it was appropriate to use those transcripts to which no substantial objection was made as visual aids to the jury in following the recorded evidence.
Likewise, we do not believe that the fact that the court, the jury, defendants and counsel were permitted to use earphones to better hear the recorded conversations denied defendants a public trial. During all but a few days of trial a public address system enabled spectators to hear the recorded exhibits offered by the government, and at all times during the trial extra earphones were available for spectators. In any event this very issue has been raised before and, without exception, it has been held that the use of earphones does not infringe upon a defendant's right to a public trial. See: Iva Ikuko Toguri D'Aquino v. United States, 192 F.2d 338, 365 (9th Cir. 1951); Gillars v. United States, 87 U.S.App.D.C. 16, 182 F.2d 962, 977 (1950). Even when a public address system and the extra earphones were not available for spectators we agree with the D'Aquino case, supra, where it was stated at 365:
"* * * Essentially the records were exhibits and we think that appellant might as logically argue that she was denied a public trial because certain exhibits such as photographs, samples of handwriting, etc., although examined by the parties and by the jury were not passed around to the spectators in the courtroom. We think that the contention as to lack of public trial is wholly without merit."
The Weight and Sufficiency of the Evidence
All defendants object to the weight and sufficiency of the evidence, contending that they are entitled to judgments of acquittal. In light of the jury's verdict, the government is entitled to have the evidence viewed in a light most favorable to the prosecution, respecting the right of the jury to draw inferences. Glasser v. United States, 315 U.S. 60, 80, 62 S. Ct. 457, 86 L. Ed. 680 (1942); United States v. De Cavalcante, 440 F.2d 1264, 1273 (3d Cir. 1971). So viewed *1064 the evidence at trial established the following:
William Kohne admittedly managed, financed, directed and owned a substantial gambling operation involving both numbers and sports betting. Kohne hired employees, gave orders to subordinates, was ultimately responsible for paying off winners, and insured that his operation remained solvent by laying off large bets. In the legitimate business world Kohne would be characterized as the chief executive officer of the illegal gambling business proved by the government.
Defendants, Joseph Tabella, Jeanine Denham and Patrick Denham, were secondary level employees, under Kohne, who would gather numbers bets and pass them on to Kohne or, in the case of Tabella, to Kohne's salaried employee Jeanne Kosh.[20]
Defendants Woods and DeLucia were involved in the sports side of the Kohne gambling business. Woods received the betting line (point spread) from DeLucia,[21] passed it on to bettors and subordinates, accepted bets on sports events,[22] and laid off some of the larger bets to DeLucia.[23] Woods was in constant contact with Kohne, receiving instructions from him,[24] discussing and dividing up winnings with him,[25] and reporting line information and on the progress of the sports aspect of the Kohne operation.[26] DeLucia dealt only with Woods, but was a necessary and indispensable part of the sports side of the Kohne business and therefore a participant therein.[27] United States v. Riehl, 460 F.2d 454, 459 (3d Cir. 1972). In addition a certain amount of overlap existed between the two segments of the Kohne business as evidenced by Woods occasionally accepting numbers bets and passing them on to Kohne's employee Kosh.[28]
The evidence showed that the combined sports and numbers gambling operation controlled by Kohne involved five or more participants, was in substantially continuous operation for over 30 days (February 6 to April 6, 1971), and grossed over $2,000 on certain days.[29] We believe the above to be sufficient to support defendants' convictions.
Defendants contend that the government charged only one business was involved, but proved two businessesa numbers business and a sports business and that applying the law to the evidence in this case, that evidence cannot support a conviction on the one business theory charged in the government's indictment. We disagree.
The statute the defendants have been convicted of violating, 18 U. S.C. § 1955, makes no distinction between the type of gambling conducted but speaks in the generic term of a *1065 "gambling business". The statute is aimed at business-type gambling operations of considerable size and specifically states that the subject matters of the Kohne business, book-making and the numbers game, come under the term "gambling". See: U.S.Code and Admin.News, 1970, p. 4029 and 18 U.S.C. § 1955(b)(2). Nowhere in the statute or the legislative history is it intimated that the various innumerable species of gambling are to be segregated and considered separately in determining if the statutory requirements are met. All syndicated gambling proscribed by state law is the focal point of the statute, with emphasis on size and continuity, rather than the name of the particular game being played by the patrons of the business.
We need go no further than to state that if defendants' contention was correct, it would be (hypothetically) possible for someone to own a gambling casino, hire three employees to maintain slot machines, three others to operate roulette wheels, and three more to oversee dice tables, remain in operation over 30 days, gross over $2,000 daily, and violate the law of the state in which the casino was operatingall without coming within the parameters of 18 U.S.C. § 1955. We do not believe this to be the law.
In this case William Kohne owned, financed, supervised, and directed one illegal gambling business involving two types of gambling. He was the chief executive officer and made managerial decisions. Given the other statutory requirements, this is precisely the type of syndicated business 18 U.S.C. § 1955 was aimed at. Because of Kohne's key position we believe the jury properly found that the numbers operation and the sports operation were one illegal gambling business for purposes of 18 U.S.C. § 1955.[30]
Defendants' motions will be denied. An appropriate order will be entered.
NOTES
[1] Kohne, the Denhams, Tabella, and DeLucia have moved alternatively for an arrest of judgment, but fail to set forth any grounds cognizable under Rule 33, Fed.R.Crim.P., which governs such motions. Insofar as these defendants have set forth grounds for judgments of acquittal or a new trial in their motions, they have been considered as such.
[2] See also, United States v. Ciamacco, Criminal No. 72-150 (W.D.Pa. 3/9/73), disposing of pretrial motions attacking the same wiretap authorizations involved in this case.
[3] If it were necessary to decide the factual issue raised by this contention, an evidentiary hearing would be required to determine if reports were actually filed. We see no reason why this issue could not have been raised and decided before trial. Rule 12(b)(3), Fed.R.Crim.P.; 8 Moore's Federal PracticeCipes, Criminal Rules ¶ 41.08.
[4] The transcript of the March 16, 1972, hearing is replete with references by defense counsel to the relevant applications and court orders. See, for example, transcript pp. 35-36, 42, 62-63, 71-72, 83-84, 92-117, 126, etc.
[5] See transcript of the March 16, 1972, hearing, pp. 97-98.
[6] Interestingly two pretrial conferences were held in this case, but defendants did not complain about the failure to serve the applications and court orders until after the jury was sworn and double jeopardy attached.
[7] Some confusion existed as to whether a telephone having number 882-8195 was registered to one Virginia Warren or Virginia Fox, and, moreover, whether this phone was located in the Woods' residence. The government's witness, C. Robert Ellis, made a further check of telephone company records and established that this phone was located in the Woods' residence as the government contended. Similarly, the fact that Tabella had a young son named "Joe" only goes to the weight to be given Special Agent Britton's voice identification and does not make such testimony inadmissible per se. (See also, conversation 167, a call to "Joe" at the Tabella residence wherein "Joe" complains that his "kid" has his car.)
[8] While evidence was submitted at trial establishing that DeLucia had a son named Joseph, we do not recall any evidence concerning a Frank DeLucia, Jr., and assume arguendo that defense counsel's representations at oral argument concerning a Frank, Jr., have a basis in the record.
[9] See conversations 102, 107, 146 and 147.
[10] While the calls in which DeLucia's wife and children participated appear innocuous on their facethe type of call that should be terminated by the monitoring agentwe believe the fact that Woods was attempting to speak to "Frank" put the monitoring agents on notice of the evidential value of the calls, and they were therefore properly monitored.
[11] Juror No. 10's statement was as follows:
"I have no doubt in my mind that the defendants performed illegal gambling acts.
"I myself did not know there was a Federal Law enacted prohibiting gambling.
"I can not in all fairness render a verdict that all defendants of [sic] the specific wording.`wilfully' and `knowingly' conspired against Title 18 United States Code. First count. and `knowingly' and wilfully' [sic] ran a gambling operation in violation of Title 18 United States Code. Second Count."
The question was as follows:
"Am I permitted to render a verdict if the words wilfully and knowingly in connection with the words regarding Title 18 United States Code are omited [sic] ?"
[12] See transcript of the court's charge, pp. 76-78.
[13] The indictment charges:
"That from on or about the 1st day of December, 1970, through on or about the 12th day of July, 1971, in the Western District of Pennsylvania, * * * the defendants herein, did knowingly and wilfully conduct, finance, manage, supervise, direct, and own an illegal gambling business, such business having a gross revenue of $2,000 or more on one or more single days, involving five or more persons in its conduct, financing, management, supervision, direction, and ownership, being in substantially continuous operation for a period in excess of thirty days, and being in violation of the laws of the Commonwealth of Pennsylvania, Purdon's Pennsylvania Statutes, Title 18, Sections 4601 and 4607; in violation of Sections 1955 and 2, Title 18 United States Code." (Emphasis supplied.)
While the emphasized portion of the indictment does require that a defendant have specific intent to participate in an "illegal gambling business", it does not require a specific intent to violate the federal statute and, we believe, the intent requirement of this indictment is satisfied when a defendant participates in a proscribed manner in a gambling business he knows state law forbids. In short, "illegal gambling business" as used in the emphasized portion of the indictment is not a term of art incorporating all the jurisdictional requirements of size and continuity set out in the federal statute, rather the term as used is a descriptive one referring to a gambling business illegal under state law. The remainder of the indictment, which charges the elements necessary to bring the business within the reach of the federal statute, would be superfluous if the term "illegal gambling business" in the emphasized portion was an all inclusive term of art.
[14] The jury delivered a unanimous verdict within 11 minutes after they were given this supplemental instruction. See also, United States v. Kohne, 358 F. Supp. 1046 (W.D.Pa. 1973), dealing with defendants' contentions that Juror No. 10 was coerced into rendering a verdict.
[15] In Bumper officers asserted that they had authority to search a private residence under a search warrant, but at trial the prosecution relied on consent to validate the search not a warrant. The Supreme Court held that the officers' representation that they had a warrant vitiated any consent to the search.
[16] The instruction tendered to defendants was patterned after those given in Wood v. United States, 279 F.2d 359 (8th Cir. 1960), and Davenport v. United States, 260 F.2d 591, 596 (9th Cir. 1958), and, in short, told the jury that the guilty pleas of the co-defendants are not evidence against the remaining defendants, nor are they evidence that a crime has been committed.
[17] See the transcript of the court's charge at p. 6. Cf. United States v. Panepinto, 430 F.2d 613 (3d Cir. 1970).
[18] At least one treatise has opted that it is better that the jury not know of a co-defendant's guilty plea. Wright, Federal Practice and Procedure: Criminal § 499, pp. 339-340.
[19] See paragraph 6 of the pretrial stipulation and order entered January 3, 1973.
[20] As to Tabella, see conversations 4 and 155-168. As to Jeanine and Patrick Denham, see conversations 1, 2, 4, 17-20, 33-36, 39-42, 54-56, 68-70, 213 and 214.
[21] See conversations 124, 135, 147, 197, 198, 199, 200 and 201.
[22] See conversations 112-119; 128-134.
[23] See conversations 103, 125, 139, 140, 148, 149, 152 and 203. This procedure necessitated Woods and DeLucia to compare accounts, see conversations 124, 147, 152 and 202.
[24] See conversations 7, 11, 14, 16, 82, 90, 91, 95, 109, 110 and 111.
[25] See conversations 15, 31, 82, 95, 126 and 153.
[26] See conversations 6, 8, 9, 10, 12, 38, 81, 98, 109, 127 and 150.
[27] In addition to the conversations, the government also introduced betting slips, a quantity of rice paper, and other assorted gambling paraphernalia seized during raids conducted on the residences of all six defendants presently under consideration.
[28] See conversations 141, 142 and 154.
[29] The evidence was also sufficient to show that the numbers and sports aspects of the operation, when considered separately, met the requirements of 18 U.S.C. § 1955, but this was not the theory of the government's case and is irrelevant for purposes of the present motions.
[30] This issue was submitted to the jury in the court's charge, and they obviously resolved it in favor of the government. See transcript of the court's charge, pp. 34-35.
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461 F. Supp. 2d 271 (2006)
PFIZER INC., Pharmacia Corp., Pharmacia & Upjohn Inc., Pharmacia & Upjohn Company, G.D. Searle & CO, G.D. Searle LLC, Searle LLC (Delaware) and Searle LLC (Nevada), Plaintiffs,
v.
TEVA PHARMACEUTICALS USA, INC., Defendant.
Civ. Action No. 04-754(JCL).
United States District Court, D. New Jersey.
November 9, 2006.
*272 *273 David E. Delorenzi, Sheila F. McShane, Gibbons, Del Deo, Dolan, Griffinger & Vecchione, PC, Newark, NJ, for Plaintiffs.
Michael E. Patunas, Lite Depalma Greenberg & Rivas, LLC, Newark, NJ, for Defendant.
OPINION
Pfizer's Motion In Limine No. 2
LIFLAND, District Judge.
This case arises out of Teva Pharmaceuticals U.S.A., Inc.'s ("Teva" or "Defendant") alleged infringement of U.S. Patent Nos. 5,466,823; 5,563,165; and 5,760,068 (the "patents-in-suit"), which are held by Pfizer, Inc., Pharmacia Corp., Pharmacia & Upjohn Inc., Pharmacia & Upjohn Company, G.D. Searle & Co., G.D. Searle LLC, Searle LLC (Delaware), and Searle LLC (Nevada) (collectively "Pfizer" or "Plaintiffs"). The patents-in-suit are directed toward celecoxib, the active ingredient in Celebrex, and a broad genus of compounds that includes celecoxib, pharmaceutical compositions including such compounds, and methods of using such compounds.
Before the Court is Pfizer's motion in limine No. 2 to preclude the testimony of several of Teva's expert witnesses. Pfizer seeks to preclude Teva from proffering testimony from the following experts: Dr. Keith Leffler (economist); Dr. Simon Helfgott (rheumatologist); Mr. William Schultz (attorney); and Dr. Michael Wolfe (gastroenterologist).
Under Federal Rule of Evidence 702, a court may allow an expert to give testimony that would otherwise be inadmissible
[i]f scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, [and] if (1) the *274 testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case.
F.R.E. 702. The Third Circuit has "explained that Rule 702 embodies a trilogy of restrictions on expert testimony: qualification, reliability and fit." Schneider v. Fried 320 F.3d 396, 404 (3d Cir.2003).
Qualification refers to the requirement that the witness possess specialized expertise. . . . Secondly, the testimony must be reliable; it "must be based on the `methods and procedures of science' rather than on `subjective belief or unsupported speculation'; the expert must have `good grounds' for his on her belief. . . . Finally, Rule 702 requires that the expert testimony must fit the issues in the case. In other words, the expert's testimony must be relevant for the purposes of the case and must assist the trier of fact."
Id. (internal citations omitted). Pfizer contends, inter alia, that the testimony of each of the expert witnesses listed above should be precluded because it fails to meet one or more of the trilogy of requirements.[1]
A. Dr. Leffler
Pfizer intends to rely on Celebrex's commercial success as a secondary consideration suggesting non-obviousness. It is well-established that the commercial success of an invention may be strong evidence of non-obviousness. See, e.g., Demaco Corp. v. F. Von Langsdorff Licensing, Ltd, 851 F.2d 1387, 1391 (Fed.Cir. 1988). However, evidence showing sale of a large number of goods supposedly embodying the claimed invention does not necessarily demonstrate non-obviousness: "The success must be due to the claimed features of the invention, rather than factors such as advertising, superior workmanship, or other features within the commercialized technology." Roger Schechter and John Thomas, Principles of Patent Law 164. Dr. Leffler plans to testify that Celebrex's commercial success is due to Pfizer's marketing efforts, not to claimed features of the invention. Pfizer contends that this testimony should be precluded because it fails to satisfy the second requirement of Rule 702 reliability. Specifically, Pfizer argues that Dr. Leffler's opinions are not based on any established methodology, but rather on an untested assumption that Celebrex's properties are not superior to other non-steroidal anti-inflammatory drugs ("NSAIDs"). The Court disagrees.
An expert "must consider enough factors to make his or her opinion sufficiently reliable in the eyes of the court . . . [but the] expert need not consider every possible factor to render a `reliable' opinion." MicroStrategy Inc. v. Business Objects, S.A., 429 F.3d 1344, 1355-1356 (Fed. Cir.2005). Moreover, a district court is not required to preclude expert testimony simply because the proposed expert could have performed his or her analysis in a better manner. See Kannankeril v. Terminix Int'l, 128 F.3d 802, 809 (3d Cir. 1997). As the Third Circuit has stated:
A judge should find an expert opinion reliable under Rule 702 if it is based on "good grounds," i.e., if it is based on the *275 methods and procedures of science. . . . The grounds for the expert's opinion merely have to be good, they do not have to be perfect. The judge might think that there are good grounds for an expert's conclusion even if the judge thinks . . . that a scientist's methodology has some flaws such that if they had been corrected, the scientist would have reached a different result.
In re Paoli R.R. Yard PCB Litig., 35 F.3d 717, 745 (3d Cir.1994). The Court finds that this standard is met here. Dr. Leffler considered, inter alia, sales and marketing data including data related to prescriptions for Celebrex and other NSAIDs, Celebrex's promotional expenditures, expert medical opinions, and academic literature on drug promotion and sales. (See Declaration of Daniel Reisner in Support of Pfizer's Motion in Limine No. 2 (hereinafter, "Reisner Decl."), Ex. A.) He applied established economic principles to this data, and explained how it informed his ultimate conclusions. (Id.)
Pfizer's contention that Dr. Leffler's testimony is unreliable because he failed to conduct his own independent analysis of the comparative therapeutic properties of Celebrex and other NSAIDs is unavailing. Initially, as an economist, it would have been inappropriate for Dr. Leffler to personally conduct a medical study or reach independent conclusions as to Celebrex's therapeutic advantages. Moreover, Dr. Leffler plans to testify regarding a plethora of factors other than therapeutic benefits that he believes account for Celebrex's commercial success. Even if Dr. Leffler is inaccurate and there in fact are therapeutic advantages to Celebrex over other NSAIDs this would not obviate his ultimate conclusion that factors such as marketing and promotion, not these therapeutic benefits, were ultimately responsible for Celebrex's commercial success.
Finally, the Court notes that Pfizer's concerns regarding Dr. Leffler's methods "go[] more to the weight of the evidence than to its admissibility." Liquid Dynamics Corp. v. Vaughan Co., 449 F.3d 1209, 1221 (Fed.Cir.2006). As such, these concerns are appropriately addressed in cross examination rather than in a motion in limine to preclude the evidence altogether. See In re TMI Litig., 193 F.3d 613, 692 (3d Cir.1999) ("`So long as the expert's testimony rests upon `good grounds,' it should be tested by the adversary process competing expert testimony and active cross-examination rather than excluded from jurors['] scrutiny. . . .") (quoting Ruiz-Troche v. Pepsi Cola of Puerto Rico Bottling Co., 161 F.3d 77, 85 (1st Cir.1998)); see also Daubert v. Merrell Dow Pharms., 509 U.S. 579, 596, 113 S. Ct. 2786, 125 L. Ed. 2d 469 (1993) ("[V]igorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof are the traditional and appropriate means of attacking shaky but admissible evidence.").
Accordingly, Pfizer's motion to preclude Dr. Leffler's testimony will be denied.
B. Dr. Helfgott
Dr. Helfgott is a practicing rheumatologist at Brigham and Women's Hospital (BWH) in Boston Massachusetts, an Associate Professor of Medicine at Harvard Medical School, and Director of Education and Fellowship Training at the Division of Rheumatology at BWH. Teva plans to offer Dr. Helfgott's testimony concerning Celebrex's therapeutic properties, the absence of therapeutic advantages over other NSAIDs, and physician prescribing practices specifically the role of marketing materials in influencing physicians to prescribe Celebrex. Pfizer objects to this evidence on two grounds.
*276 Pfizer argues that Dr. Helfgott's testimony should be precluded because he relied only on documents that were hand-selected and provided to him by Teva's counsel. The Court disagrees. As Dr. Helfgott explained during his deposition, he "initiated the request to see what [internal marketing] materials would be available." He was subsequently "provided with lots of documents that [he] could look at," and was "involved in the selection of the documents that ended up being referenced in his reports." (Declaration of Michael Patunas in Opposition to Pfizer's Motion in Limine No. 2, Ex. M, at 23-24, 26.)
Pfizer also argues that Dr. Helfgott's testimony should be excluded in its entirety because it is speculative and not based on a reliable methodology. The Court finds that some aspects of the proposed testimony are indeed speculative and thus inadmissible. However, the Court will not preclude Dr. Helfgott's testimony in its entirety because other aspects of his testimony are appropriately grounded in his experience, training, and specialized knowledge.
The first subject addressed in Dr. Helfgott's expert report is the history and development of Celebrex and NSAIDs in general. As an expert in the field of rheumatology, Dr. Helfgott is "fully qualified to opine on the medical facts and science" regarding Celebrex and NSAIDs. In re Diet Drugs Prods. Liab. Litig., No. 1203, 2000 WL 876900, at *11, 2000 U.S. Dist. LEXIS 9037, at *37 (E.D. Pa. June 20, 2000). His opinions on this topic are based on many years of training and experience in the field, as well as reference to several academic medical journals. Accordingly, the Court finds Dr. Helfgott's testimony as to this subject to be appropriate and admissible.
The next subject addressed in Dr. Helfgott's report is the factors that affected physicians' choice among available NSAIDs before Celebrex entered the market. Dr. Helfgott's expertise in rheumatology "do[es] not qualify [him] as [an] expert[] about what all doctors generally consider when making prescription decisions." Diet Drugs Liab. Litig., 2000 WL 876800, at *11, 2000 U.S. Dist. LEXIS 9037, at 036. Nor does it qualify him to testify as to all physicians' understandings of the risks and benefits of NSAIDs. See In re Rezulin Prods. Liab. Litig., 309 F. Supp. 2d 531, 555-56 (S.D.N.Y.2004).
Teva argues that Dr. Helfgott should be permitted to testify on these subjects because his opinions "are based on his 20 years practicing rheumatology and prescribing NSAID therapies for the treatment of chronic pain." (Teva's Memorandum in Opposition to Pfizer's Motion in Limine No. 2, at 9.) This is not a sufficiently reliable basis for his broad opinions on the prescribing practices and general understanding of all physicians. A similar argument was made, and rejected, in Advanced Medical Optics, Inc. v. Alcor, Inc., No. 03-1095(KAJ), 2005 WL 782809, 2005 U.S. Dist. LEXIS 5803 (D.Del. Apr. 7, 2005). There, an opthamologist planned to testify regarding the competitive advantages accruing to pharmacoemulsification machines that incorporated the claimed invention, Occlusion Mode.[2] As is the case here, the doctor was clearly qualified in his field of medicine, but had no specialized expertise regarding sales or market analysis, and had conducted no scientific studies or surveys concerning purchasing practices of other doctors in his field. The proponent of the testimony argued that the opthamologist should be permitted to testify because he was an "expert consumer" of *277 pharmacoemulsification products, who was familiar with various pharmacoemulsification machines, had been performing cataract surgery for thirty years, and was responsible for approving all purchases for his department at a large eye care center.
The Court held that being an "expert consumer" did not remedy the doctor's lack of expertise in sales and market trends, and did not overcome the lack of a scientific basis for his opinions. Id., 2005 WL 782809, at *3, 2005 U.S. Dist. LEXIS 5803, at *9. The Court precluded the opthamologist from testifying regarding the competitive advantages of Occlusion Mode or the general preferences of other surgeons in his field. Id, 2005 WL 782809, at *3-6, 2005 U.S. Dist. LEXIS 5803, at *9-*13.
Here, as in Advanced Medical Optics, Dr. Helfgott's testimony regarding what physicians in general think/know and how they make prescription decisions is speculative and not based on reliable evidence.[3] Accordingly, this testimony will be precluded. The court notes, however, that this section of Dr. Helfgott's report also contains opinions concerning the general factors that physicians may consider when selecting an NSAID to prescribe to a patient. As an expert in the field of rheumatology, Dr. Helfgott, is qualified to opine on these factors and may properly explain these considerations to the Court.
The next section of Dr. Helfgott's report is entitled, "Celebrex is Marketed as the First COX-2 Compound." The first three paragraphs of this section (paragraphs 35-37) contain general information on the history and development of NSAIDs and Celebrex. As explained above, such testimony is appropriate and admissible. In the remainder of this section (paragraphs 38-40), Dr. Helfgott asserts that the marketing claims about Celebrex "fueled physician and patients expectations," but that these claims were later shown to be unsubstantiated. As an expert in rheumatology, Dr. Helfgott may render an opinion on the accuracy of Celebrex's marketing materials. He is "fully qualified to opine on the medical facts and science of [Celebrex] and to compare that knowledge with what was provided in the text of [the marketing materials]." Diet Drugs Liab. Litig., 2000 WL 876900, at *11, 2000 U.S. Dist. LEXIS 9037, at *37. However, he may not opine as to physicians' or patients' understanding of these materials or the effect that these materials had on their prescription choices. Dr. Helfgott's opinions on this subject are speculative and not based on a reliable methodology.
In the next section of his report Dr. Helfgott asserts that Celebrex prescriptions were heavily influenced by advertising and promotion. This opinion is based primarily on his personal experiences with Celebrex's marketing representatives and patients who requested Celebrex prescriptions, as well as "common sense," (Reisner Decl., Ex. F, at 424-25), and informal discussions with other doctors. This is not a sufficiently reliable basis for his opinions.
This is not to say that "the personal experience or knowledge of the expert alone is not to be trusted. To the contrary, the text of Rule 702 expressly contemplates that an expert may be qualified on the basis of experience." United States v. Frazier, 387 F.3d 1244, 1296 (11th Cir. 2004); see also Kumho Tire Co., Ltd. v. *278 Carmichael, 526 U.S. 137, 150, 119 S. Ct. 1167, 143 L. Ed. 2d 238 (1999); Maiz v. Virani, 253 F.3d 641, 668-69 (11th Cir. 2001) ("[T]here is no question that an expert may still properly base his testimony on `professional study or personal experience.'"). However, the Court is not persuaded that personal knowledge and experience Dr. Helfgott relies upon in support of his opinion forms a sufficient basis for his broad conclusions concerning the impact of sales and marketing efforts on Celebrex prescriptions. The fact that he received frequent visits from Pfizer representatives, and that several of his patients requested Celebrex prescriptions does not alone support a conclusion that Celebrex's prescriptions were heavily influenced by advertising and promotion.
In the final section of Dr. Helfgott's report, he asserts that the claimed superiority that drove Celebrex prescriptions was misleading and falsified. For the reasons discussed above, this testimony is permissible since Dr. Helfgott is "fully qualified to opine on the medical facts and science of [Celebrex] and to compare that knowledge with what was provided in the text of [the marketing materials]." Diet Drugs Liab. Litig., 2000 WL 876900, at *11, 2000 U.S. Dist. LEXIS 9037, at *37.[4]
In summary, Dr. Helfgott's may testify concerning the history and development of Celebrex and NSAIDs in general, the general factors that physicians may consider when making prescription decisions, and the accuracy of Celebrex's marketing and promotional materials. He may not testify concerning what all doctors generally consider when making prescription decisions, what all physicians believe or know about the risks and benefits of NSAIDs, or the extent to which marketing drove Celebrex's prescriptions.[5]
C. Mr. Schultz
Mr. Schultz is an expert in FDA regulation. Teva plans to offer his testimony regarding FDA regulation of the labeling, advertising, and promotion of prescription drugs, and to what extent Pfizer's actions with respect to Celebrex have complied with the FDA's statutory and regulatory requirements. The Court assumes, for present purposes, that this testimony is relevant to Teva's position on the secondary consideration of commercial success. Pfizer argues that Mr. Schultz's testimony should be precluded because it is merely a recitation of selected language from FDA regulatory documents. The Court disagrees.
Mr. Schultz's expert report provides general information regarding the FDA's regulation of prescription drug labeling, as well as an overview of the FDA's regulation of Celebrex and Pfizer's promotion of Celebrex. Mr. Schultz ultimately concludes that Pfizer violated applicable FDA regulations governing advertising of approved drug products in several ways. Given these conclusions, the Court cannot agree with Pfizer's assertion that Mr. Schultz does not offer any opinions and merely recites the text of FDA documents. The report does refer to, and sometimes quotes from, FDA documents; however, such citations are proper and indeed necessary *279 in order to set forth the basis for Mr. Schultz's ultimate conclusions.
Pfizer also argues that Mr. Schultz's testimony should be precluded because he only reviewed material hand-selected by Teva's counsel, and ignored information contrary to his opinion. Teva does not respond to this argument. Nevertheless, the Court is not persuaded that Mr. Schultz's testimony should be precluded on this ground.
Pfizer states that "Mr. Schultz's testimony is based primarily on selected FDA regulatory letters sent to Pfizer," but does not cite any source for this conclusory statement. (Pfizer's Memorandum in Support of its Motion in Limine No. 2, at 21.) Pfizer points to no deposition testimony or other evidence indicating that Mr. Schultz failed to conduct an independent analysis and instead relied exclusively on documents selectively furnished by Teva's counsel. Pfizer does point to evidence that Mr. Schultz failed to consider some documents that might have affected his opinions; however, the Court finds this is an issue best addressed by cross-examination. Mr. Scultz's failure to consider all relevant documents may impact the validity of his opinions or the weight they should be accorded, but the Court does not find that it renders his entire testimony inadmissible.
D. Cardiovascular Testimony of Drs. Helfgott and Wolfe
This Court previously granted Teva's motion to preclude Dr. Zusman's testimony on the alleged superior cardiovascular safety profile and cardiovascular properties. (See Pfizer v. Teva, No. 04-754, Opinion and Order on Teva's Omnibus in Limine Motion No. 6.) Teva agreed not to offer the testimony of Drs. Wolfe and Helfgott with respect to cardiovascular issues if its motion to limit Dr. Zusman's testimony was granted. (Teva's Opposition to Pfizer's Motion in Limine No. 2, at 18 ("If the Court grants Teva's motion to exclude the opinion testimony of Dr. Zusman, Teva will honor its original proposal not to offer the testimony of Drs. Wolfe and Helfgott with respect to cardiovascular issues.").) Accordingly, Pfizer's motion to preclude Drs. Wolfe and Helfgott's testimony on cardiovascular issues will be denied as moot.
E. Conclusion
In summary, Pfizer's motion to preclude the testimony of several of Teva's expert witnesses will be granted with respect to aspects of Dr. Helfgott's testimony, denied as moot with respect to Drs. Wolfe and Helfgott's testimony on cardiovascular issues, and denied in all other respects.
NOTES
[1] Motions to exclude evidence are committed to the Court's discretion. See In re Paoli R.R. Yard PCB Litig., 35 F.3d 717, 749 (3d Cir. 1994) (explaining that on a motion to preclude proffered expert testimony, the trial court's inquiry is a flexible one, and its decision to admit or exclude expert testimony is reviewed under an "abuse of discretion" standard) (internal citations omitted).
[2] Pharmacoemulsification machines are used in cataract surgery.
[3] One striking example of an assertion in this section that self-evidently purports to explain how physicians make prescription decisions is Dr. Helfgott's statement that "a physician's choice among NSAIDs is largely driven by habit and convenience." In the absence of a reliable basis, such an opinion is not admissible. (Reisner Decl., Ex. C, at ¶ 27.)
[4] This section also includes a few paragraphs concerning the cardiovascular effects of Celebrex. Dr. Helfgott's proposed testimony on cardiovascular issues will be addressed below in Section D.
[5] Pfizer also argues that Dr. Helfgott should be precluded from offering opinions about the state of mind of Pfizer and its employees and about FDA regulations. The Court does not see any such opinions in Dr. Helfgott's proposed testimony.
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236 F. Supp. 2d 343 (2002)
AISIN SEIKI CO. LTD. and Aisin World Corp. of America, Plaintiffs,
v.
UNION PACIFIC RAILROAD COMPANY, Defendant.
No. 01 Civ. 4202(AGS).
United States District Court, S.D. New York.
November 26, 2002.
*344 *345 Robert J. Phillips, Bigham Englar Jones & Houston, New York City, for Plaintiffs.
Barry N. Gutterman Ilene J. Feldman, Barry N. Gutterman & Associates, New York City, for Defendant.
MEMORANDUM ORDER
SCHWARTZ, District Judge.
Plaintiffs in this action allege negligence and conversion arising out of defendant's handling of a shipment of automobile parts. Currently before the Court is defendant Union Pacific Railroad Company's ("UP's") motion, pursuant to Fed.R.Civ.P. 56, for partial summary judgment. Specifically, defendant UP seeks an order limiting plaintiffs' recovery in this action to $10,500. For the reasons set forth below, UP's motion is granted.
Background
The Parties
Plaintiff Aisin Seiki Co. Ltd. ("Aisin Seiki") is "a legal entity with a principal place of business in Kariya City, Japan." (Complaint ¶ 2). Plaintiff Aisin World Corp. of America ("Aisin World") is "a corporation with a principal place of business in Torrance, California." (Id. ¶ 3). Defendant UP is "a rail carrier with offices and places of business in Omaha, Nebraska and Palestine, Texas." (Answer ¶ 4).
The Facts[1]
On May 23, 2000, Aisin Seiki sold a parcel of automobile parts, with an alleged value of $234,000, to Aisin World. (Complaint ¶¶ 5-6). Plaintiffs hired Kawasaki Kisen Kaisha, Ltd. ("K" Line) to transport the automobile parts from Nagoya, Japan to Detroit, Michigan, pursuant to a bill of lading issued by "K" Line on May 31, 2000. (Defendant's Statement Pursuant to Local Rule 56.1 ("Def.56.1") ¶¶ 1, 10). On the bill of lading, the shipment is described as containing 21 packages.[2] No declared value of any of the packages, or for the shipment as a whole, was inserted in the bill of lading. (Defs. 56.1 ¶ 7; Declaration of Terry Sheldon, Exh. A).
On or about May 31, 2000, the parts were loaded aboard the M/V Akashi Bridge, which sailed from Nagoya to Long Beach, California. (Complaint ¶ 7). At Long Beach, the shipment was delivered to defendant UP, which had been hired by *346 Rail Bridge Corporation ("RBC"), a division of "K" Line's American affiliate, to transport the automobile parts by rail and deliver them to Aisin World in Detroit. (Complaint ¶¶ 7,8; Def. 56.1 ¶ 1). On or about June 12, 2000, the train on which the shipment was traveling derailed at Casa Grande, Arizona. (Complaint ¶ 9; Affidavit of K. Nguyen ¶ 9; Letter of Victor Thibeault at 1). Defendant UP determined that the contents were "a total loss" and disposed of the contents. (Sheldon Decl. ¶¶ 11, 13; Nguyen Aff. ¶ 11).
Plaintiffs contend that UP's determination that the shipment was a total loss was inaccurate. (Nguyen Aff. ¶ 14). Plaintiffs also maintain that neither plaintiffs nor "K" Line was given an adequate opportunity to contest UP's determination or attempt to salvage any usable merchandise from the derailed train. (Pl. Memorandum of Law in Opposition to the Motion at 6-7). Defendant maintains that "K" Line representatives attended the scene of the train derailment and did not take exception to UP's determination that the contents of the container were a total loss. (Def. 56.1 ¶¶ 15-16). Defendant also asserts that "K" Line did not contest UP's decision to dispose of the shipment's contents. (Sheldon Decl. ¶ 14). While there is some disagreement as to what exactly happened to the auto parts at issue, it is undisputed that none of the 21 packages were delivered to Aisin World in Detroit.
The Bill of Lading
Several clauses of the "K" Line bill of lading are pertinent here. Clause 1 defines the "Carrier" as "K" Line, and "Connecting Carriers" as parties "contracted by or acting on behalf of ["K" Line], participating in the transport of goods by land, water, or air under this Bill of Lading." (Sheldon Decl., Exh. B at 1). Clause 1 also defines the term "Sub-Contractor" to include "stevedores, longshoremen, terminal operators, warehousemen, watchmen, any Connecting Carrier, and any person, firm, corporation, or other legal entity, who or which performs services incidental to the transport of Goods under this Bill of Lading and their servants, agents and independent contractors." (Id.).
Clause 4, entitled "Responsibility For Shipments To, From Or Through U.S. Territories", states that:
With respect to Goods shipped to, from, or through U.S. Territories, Carrier's responsibilities during the entire period (and not just during Water Carriage) from the time of receipt of Goods to the time of delivery of Goods shall be governed by the United States Carriage of Goods by Sea Act (U.S. COGSA) and U.S. COGSA shall be incorporated herein during the entire aforesaid period.... Also, if U.S. COGSA so applies, in no event shall Carrier be or become liable for any loss or damage to or in connection with the transport of Goods in an amount exceeding US$500 per package ... unless the nature and value of such have been declared by the shipper before receipt of Goods by Carrier and inserted in this Bill of Lading. (Id. at 4).
Clause 5 of the bill of lading is a "Himalaya" clause, which extends the bill's protections to sub-contractors.[3] It states *347 that sub-contractors and connecting carriers
shall be express beneficiaries under this Bill of Lading and shall have the benefit of all rights, defenses, exemptions from or limitations of liability, and immunities of whatsoever nature to which Carrier is entitled under the provisions of this Bill of Lading or by law, so that in no circumstances shall any [Connecting Carriers] be under a liability in contract or in tort greater than Carrier. (Id. at 5).
Legal Standard
A court may grant summary judgment only if it is satisfied that "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). The burden rests on the moving party to demonstrate the absence of a genuine issue of material fact, which may be satisfied if it can point to the absence of evidence necessary to support an essential element of the non-moving party's claim. See Goenaga v. March of Dimes Birth Defects Found., 51 F.3d 14, 18 (2d Cir.1995); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). If the moving party meets its burden, the opposing party must produce evidentiary proof in admissible form sufficient to raise a material question of fact to defeat the motion for summary judgment, or in the alternative, demonstrate an acceptable excuse for its failure to meet this requirement. See Ortiz v. Makram, No. 96 Civ. 3285(AGS), 2000 WL 1876667, at *4 (S.D.N.Y. Dec. 21, 2000). "[M]ere conclusory allegations, speculation or conjecture will not avail a party resisting summary judgment." Cifarelli v. Village of Babylon, 93 F.3d 47, 51 (2d Cir.1996). All reasonable inferences and ambiguities are resolved in favor of the party against whom summary judgment is sought. See Gallo v. Prudential Residential Servs., Ltd. P'ship, 22 F.3d 1219, 1223 (2d Cir. 1994). The court's function on a motion for summary judgment is not to weigh the evidence, but to determine if there is an issue for trial. See Anderson, 477 U.S. at 249, 106 S. Ct. 2505. There is an issue for trial if the party opposing summary judgment offers sufficient evidence for that party to obtain a favorable jury verdict at trial. See id. Summary judgment is proper when reasonable minds could not differ as to the import of the proffered evidence. See Id. at 250-52, 106 S. Ct. 2505; Bryant v. Maffucci, 923 F.2d 979, 982 (2d Cir.1991).
Discussion
As an initial matter, the Court notes that the provisions of COGSA govern the shipment of goods from foreign ports to the United States and expressly provide for a $500 per package liability limitation. COGSA covers "the period from the time when the goods are loaded on to the time when they are discharged from the ship." 46 U.S.C.App. § 1301(e). However, the provisions of COGSA may contractually be extended past the time of discharge of the cargo from the ship. See Colgate Palmolive Co. v. S/S Dart Canada, 724 F.2d 313, 315 (2d Cir.1983). It is also well-settled that the protections of COGSA and other provisions of the bill of lading may contractually be extended to third party agents of the carrier, such as inland carriers. See, e.g., Lucky-Goldstar v. S.S. California Mercury, 750 F. Supp. 141 (S.D.N.Y.1990) (citing cases); see also Seguros Illimani S.A. v. M/V POPI P, 929 F.2d 89, 93 (2d Cir.1991) (extension of bill of lading protections to stevedores upheld); Toyomenka, Inc. v. S.S. Tosaharu Maru, 523 F.2d 518, 520 (2d Cir.1975) ("It is axiomatic that parties to a bill of lading *348 may extend the $500 limitation of liability to third parties."). However, as plaintiffs point out, when a Himalaya clause extends COGSA beyond the point of discharge from a particular ship, the provisions of the Act function purely as contractual terms, and not by force of law. See Colgate Palmolive, 724 F.2d at 315.
Here it is clear that the provisions of COGSA applied to defendant UP's rail carriage of plaintiffs' goods. Clause 4 of the bill of lading states that COGSA shall govern the responsibilities of the carrier (i.e. "K" Line) during the "entire period" of shipment not just during the "Water Carriage." (Sheldon Decl., Exh. B at 4). Clause 4 also states that the carrier shall not be liable for any loss exceeding $500 per package unless a higher value for the goods being shipped is declared by the shipper and inserted in the bill of lading before the carrier receives the goods. (Id.). Under Clause 5 (i.e. the Himalaya clause), defendant UP, as a "connecting carrier," is entitled to "the benefit of all rights, defenses, exemptions from or limitations of liability ... to which Carrier is entitled under the provisions of this Bill of Lading or by law, so that in no circumstances shall ... [it] be under a liability in contract or in tort greater than Carrier." (Id. at 5). The meaning of such language is clear: Because plaintiffs did not declare that any of the packages being shipped had a value greater than $500, the liability limitation that is part of COGSA and is also expressly reiterated in Clause 4 of the bill of lading applies to claims by plaintiffs against defendant UP.
Plaintiffs recognize that the liability limitation of COGSA can be extended to rail carriers like defendant UP. However, plaintiffs argue that the liability limitation should not apply here because the limitation functioned as a contract term not by force of law and the contract at issue was automatically terminated when UP allegedly disposed of plaintiffs' goods without properly consulting plaintiffs. (See Pl. Memorandum in Opposition to the Motion at 12-13). Plaintiffs' argument is not supported by the existence of any express default or termination clause in the bill of lading, nor do plaintiffs cite case law to support their contention that UP's alleged conduct terminated the shipping contract. Accordingly, the Court finds that plaintiffs' claims, which arise out of the performance of duties contemplated by the bill of lading, are subject to the liability limitation contained therein.[4]
Conclusion
For the reasons set forth above, defendant UP's motion for partial summary judgment is granted. Plaintiffs' potential recovery in this action is limited to $10,500.
SO ORDERED.
NOTES
[1] Under Local Civil Rule 56.1(c) a party opposing a motion for summary judgment must submit a "short and concise statement of the material facts as to which it is contended that there exists a genuine issue to be tried." The Local Rules also require that "[e]ach statement of material fact by a movant or opponent must be followed by citation to evidence which would be admissible, set forth as required by Federal Rule of Civil Procedure 56(e)." Local Rule 56.1(d); see also Individual Rules of Practice of Allen G. Schwartz, United States District Judge, § IV.A. The 56.1 Statement submitted by plaintiffs on the instant motion contains no citations to evidence in the record, nor does it specifically identify the numbered factual assertions in defendant's 56.1 statement that are in dispute. Accordingly, the Court rejects plaintiffs' 56.1 statement, although it does consider the evidence attached to plaintiffs' "Notice of Opposition," submitted on May 6, 2002.
[2] Defendant supports its factual assertion about the number of packages in the shipment by citing the Declaration of Terry Sheldon, an employee of defendant UP. (Def. 56.1 ¶ 3). Sheldon's declaration, however, states that the shipment contained 22 packages, not 21. (Sheldon Decl. ¶ 6). The bill of lading itself (Sheldon Decl., Exh. A), and plaintiffs' response to defendant's request for admissions (Declaration of Ilene J. Feldman, Exh. B ¶ 3), both indicate that there were 21 packages in the shipment. Given the fact that plaintiff does not dispute the number of packages (even in its non-compliant 56.1 statement (see n. 1, supra)), the Court accepts defendant's representation that the correct number of packages is 21.
[3] The term "Himalaya Clause" is derived from an English case involving a steamship named "Himalaya." See Adler v. Dickson, 1 Q.B. 158 (1955). A Himalaya clause is strictly construed against the party whom it is claimed to benefit. See Toyomenka, Inc. v. S.S. Tosaharu Maru, 523 F.2d 518, 520-21 (2d Cir.1975). The meaning and extent of the clause is determined by the intentions of the parties to the contract. See Garnay, Inc. v. M/V Lindo Maersk, 816 F. Supp. 888, 893 (S.D.N.Y.1993).
[4] The issue of whether all of plaintiffs' cargo was irrevocably damaged as a result of the derailment, though it poses a question of fact, does not preclude the granting of UP's motion for partial summary judgment. Even if UP's determination that the shipment was a "total loss" was inaccurate, the bill of lading would still limit plaintiffs' recovery to $500 per package, or a total of $10,500.
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457 F. Supp. 841 (1978)
Robert Richard BUTSON, Petitioner,
v.
CHAIRMAN, UNITED STATES PAROLE COMMISSION, Respondent.
Civ. A. No. 78-C-282.
United States District Court, D. Colorado.
September 21, 1978.
*842 Robert Richard Butson, pro se.
Joseph F. Dolan, U. S. Atty., and Asst. U. S. Atty. Jerre W. Dixon, Denver, Colo., for United States Parole Commission.
OPINION AND ORDER
CHILSON, District Judge.
FACTS
On June 6, 1977, petitioner was sentenced to a two year term for making false statements to influence a federal savings and loan association. His initial parole hearing was held on December 7, 1977, before a panel of parole commission examiners. The commission denied parole and a "Notice of Action" dated December 29, 1977, was sent. The decision of the commission was that the petitioner was to "continue to expiration" without further parole hearings. On January 20, 1978, petitioner appealed this decision to the Regional Commissioner. The action of the commission was affirmed. A *843 "Notice of Action on Appeal" dated February 28, 1978, was allegedly not received by petitioner until March 10, 1978. On March 13, petitioner filed a national appeal. On March 17, he filed a Petition for Writ of Mandamus with this court, requesting the court to direct that a new parole hearing be provided to the petitioner. During the pendency of this case the national appeal was decided adversely to petitioner. Notice of the action of the National Appeals Board was allegedly sent on June 9, but petitioner denied having received the notice as of June 29. Subsequent to filing his petition for a writ of mandamus, petitioner has filed a "Motion for Summary Judgment" and a "Motion for Declaratory Judgment" requesting summary relief of an unspecified nature.
CONTENTIONS
Petitioner makes five claims:
1. That he was not given access to certain information used by the parole commission in making its determination. At issue are a "Post Sentence Report" dated May 31, 1977 (actually a presentence report) and an "Institutional Progress Report" dated October 19, 1977. Respondent claims that the petitioner reviewed the former on November 3, 1977, and the latter on November 23. Petitioner denies having seen the post sentence report until it was attached as an exhibit to the respondent's reply in the instant mandamus action. He admits having seen the progress report on November 23, but points out that this was not at least 30 days prior to the parole hearing as required by 18 U.S.C. § 4208(b)(2). The delay in making the report available has not been explained by respondent.
Petitioner also complains that the "Guidelines and Salient Factors" used by the parole board were not made available to him. Respondent admits that no personal copy was given to petitioner but points out that copies of the guidelines are available to inmates in all federal corrections institutions.
2. That the board's decision to deny parole was based on inaccurate information. Specifically, petitioner alleges that the post sentence report is incorrect when it estimates that the monetary losses resulting from petitioner's crime totalled over $100,000. Petitioner points to the indictment, which allegedly makes mention only of the sum of $16,000 as the amount fraudulently procured by petitioner.
3. That the reasons for the parole board's action were inadequately explained in the notice sent, and that the two appeals boards did not act upon his appeals in a timely fashion. Respondent claims that no prejudice to petitioner resulted from this.
4. That the guidelines established by the parole commission are arbitrary and capricious because when applied to the petitioner, they indicate that 26-36 months of incarceration would be appropriate. The maximum sentence for the petitioner's offense is only 24 months.
5. That he was denied his statutory right to appear in person at the "parole determination proceeding" as required by 18 U.S.C. § 4208(e). The hearing examiners before whom he appeared, petitioner asserts, are merely advisory personnel and have no authority to grant or deny parole.
DISCUSSION
The only relief which could be afforded the petitioner would be by writ of mandamus directing the parole board to correct its wrongful conduct within a fixed time, after which the court could grant a writ of habeas corpus if the board fails to comply. Relief in the nature of an independent parole hearing is unavailable. Billiteri v. Parole Bd., 541 F.2d 938, 943-44 (2d Cir. 1976).
1. 18 U.S.C. § 4208(b)(2) requires that
"At least thirty days prior to any parole determination proceeding, the prisoner shall be provided with . . . reasonable access to a report or other document to be used by the Commission in making its determination."
*844 By the time of his first appeal, the petitioner had read and studied both of the reports in question. (The petitioner, in spite of his subsequent statements to the contrary, reviewed the presentence investigation report prior to his regional appeal. Express reference is made to the report in the "Inmate's Explanation of Appeal" completed by petitioner on the appeal form.) Petitioner, therefore, has had ample time to demonstrate that the alleged delay prejudiced his case. Aside from the single issue discussed in point 2, below, petitioner claims and at no time did he claim any prejudice resulting from the delay in the disclosure of the documents (if any delay in fact occurred). Nor has the petitioner made an allegation that the delay was a result of bad faith.
2. It is not improper for the parole commission to consider material, such as the presentence report, which would not be admissible in a court of law. Dye v. Parole Comm'n, 558 F.2d 1376 (10th Cir. 1977); Billiteri v. Parole Bd., 541 F.2d 938, 944-45 (2d Cir. 1976). 18 U.S.C. § 4207 expressly directs the parole authorities to consider such reports in making parole determinations.
The paragraph of the report challenged by the petitioner states:
"Investigative material further indicates that in addition to Far West Federal Savings and Loan losing $16,000, that Commodore Corporation, Nationwide Financial Services, and Wes Campbell suffered losses. Contact with Commodore Corporation reveals their losses to be approximately $80,000; Wes Campbell's attorney states that Campbell has lost over $100,000, with several lawsuits still pending. Campbell has been financially ruined and has suffered a nervous breakdown; Nationwide Financial Services indicate their loss to be approximately $17,400 as of this date, with approximately $750,000 worth of outstanding contracts, upon which there is no way to forecast success or failure."
The petitioner had ample opportunity to voice his objections to the accuracy of the paragraph during the course of two administrative appeals. The record shows that he utilized this opportunity and that the alleged error was squarely raised and dealt with by both the regional and national appeals boards. Both boards chose to rely upon the report.
"[I]t is not the function of courts to review the Board's discretion in denying parole or to repass on the credibility of reports received by the Board in making its determination." Dye v. Parole Comm'n, 558 F.2d at 1378. The only function which the court can fulfill is to insure that the petitioner was afforded his right to review the report and express his objections to it in a meaningful manner. The petitioner did have such an opportunity and no judicial relief would be appropriate.
3. 18 U.S.C. § 4206(b) provides:
"The Commission shall furnish the eligible prisoner with a written notice of its determination not later than twenty-one days, excluding holidays, after the date of the parole determination proceeding. If parole is denied such notice shall state with particularity the reasons for such denial."
There is no suggestion that the minor delays experienced by the petitioner in any way prejudiced his case. He is, therefore, entitled to no relief on that score. Cf. United States v. Sielaff, 563 F.2d 821 (7th Cir. 1977). Accordingly the only issue is whether the reasons for the board's decisions were adequately explained.
The "Notice of Action" sent to the petitioner stated in pertinent part:
"Your offense behavior has been rated as very high severity because of financial losses of all victims amounted to over $100,000. You have a salient factor score of 11. You have been in custody a total of 6 months. Guidelines established by the Commission for adult cases which consider the above factors indicate a range of 26-36 months to be served before release for cases with good institutional program performance and adjustment. After a review of all relevant factors and information presented, a decision outside the guidelines at this consideration is not found warranted."
*845 The board's notice of its decision stated the primary reason for the denial of parole as being the severity of petitioner's offense. The severity rating, in turn, was stated to have been based on the enormous financial consequences of the crime. During the appeals process the petitioner was able to challenge this finding and introduce any additional factors he felt were relevant to the assessment of the severity of his offense. Under these circumstances the notice was sufficiently specific. See Fronczak v. Warden, 553 F.2d 1219 (10th Cir. 1977); United States v. Wolff, 525 F.2d 797 (7th Cir. 1975), cert. denied, 425 U.S. 914, 96 S. Ct. 1511, 47 L. Ed. 2d 764 (1976).
4. 18 U.S.C. § 4203(a)(1) empowers the United States Parole Commission to "promulgate rules and regulations establishing guidelines" for the granting or denial of parole. The current guidelines of the commission rely upon two factors: the severity rating of the offense and the "salient factor" score of the prisoner. See 28 C.F.R. § 2.20 (1977). In the present case the offense was rated as "very high severity" because of the monetary losses accompanying the crime. The petitioner's salient factor score (computed by assigning points to such factors as the prisoner's age, previous offenses, employment record, etc.) was 11 ("very good"). The "customary total time to be served before release" indicated in the guidelines for the petitioner is 26-36 months.
The guidelines affect only the prisoner's chances for parole and have no impact upon the length of the two year sentence imposed upon the petitioner by the trial judge. Also, the guidelines are merely advisory: where warranted a decision outside of the guidelines can be rendered. 28 C.F.R. § 2.20(c).
Unless the parole commission's actions violate the applicable statutes, result in constitutional infractions, or are patently arbitrary and capricious, the merits of the actions are not reviewable by the courts. Dye v. Parole Comm'n, 558 F.2d 1376 (10th Cir. 1977); Billiteri v. Parole Bd., 541 F.2d 938 (2d Cir. 1976). The guidelines described are clearly within the commission's statutory authority. See 18 U.S.C. § 4203(a)(1). The granting or denial of parole are matters for the sound discretion of the commission and the lawful exercise of that discretion does not impinge upon any constitutional right. Carson v. Dep't of Parole, 292 F.2d 468 (10th Cir. 1961). Finally, the commission's decision to require the petitioner to serve out a sentence of two years for a "very high severity" offense cannot be termed patently arbitrary or capricious.
5. The petitioner has no constitutional right to appear before voting members of the parole commission. Personal appearance before hearing examiners has been held to be sufficient. Billiteri v. Parole Bd., 541 F.2d at 945; French v. Ciccone, 308 F. Supp. 256 (W.D.Mo.1969). The ambiguous statutory provision alluded to by petitioner refers only to the "parole determination proceeding." The personal interview of the petitioner by the parole commission hearing examiners is obviously a part of the total "determination proceeding." The intent of the statute is merely to guarantee a prisoner the chance to be heard prior to the parole commission's decision and the statute does not create a previously unknown right to be present throughout the entire deliberation process of the commission.
CONCLUSIONS
The petition for a Writ of Mandamus should be denied.
ORDER
IT IS THEREFORE ORDERED that the petition for Writ of Mandamus is hereby denied and Judgment of Dismissal of the petition therefore is hereby entered.
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828 F. Supp. 254 (1993)
UNITED STATES of America
v.
Simcha NEIMAN, Defendant.
No. 91 Cr 637 (VLB).
United States District Court, S.D. New York.
August 13, 1993.
Robert S. Khuzami, Asst. U.S. Atty., New York City, for the U.S.
Ronald M. Kleinberg, New York City, for defendant.
Peter B. Hume, Supervising U.S. Probation Officer, New York City, for the Probation Dept.
MEMORANDUM
VINCENT L. BRODERICK, District Judge.
I
This case presents the question of whether non-narcotic rehabilitation prospects may be the basis for a downward departure from the United States Sentencing Guidelines in an appropriate case where chances of rehabilitation without imprisonment are good but with imprisonment are minimal or nonexistent. I answer the question in the affirmative.
II
Congress has directed that in addition to deterrence and prevention of further crime, *255 an objective of sentencing be providing "the defendant with ... correctional treatment in the most effective manner." 18 U.S.C. § 3553(a)(2)(D).
Where a regime combining effective punishment for purposes of deterrence and supervision for purposes of prevention can further be combined with rehabilitation efforts involving that supervision, the objectives of the statute may be fulfilled; if incarceration would be ineffective for these purposes and counterproductive from the view-point of rehabilitation, a departure from the Guidelines is appropriate. This is confirmed in United States v. Maier, 975 F.2d 944 (2d Cir.1992), which involved drug rehabilitation but speaks in terms which would be equally applicable to other kinds of rehabilitation, provided the other purposes of § 3553 are optimally fulfilled.
The Maier opinion recognized that "Congress must have anticipated that sentencing judges would use their authority, in appropriate cases, to place a defendant on probation in order to enable him to obtain `needed ... medical care, or other correctional treatment in the most effective manner.'" 975 F.2d at 947. Nothing in the statute or Maier suggests a restriction of rehabilitation to any one type of regimen, or that any single type of problem lends itself to rehabilitative measures. Members of a defendant's family, community and religious institutions, and appropriately tailored community service may help to guide a wrongdoer toward useful citizenship.
Home confinement may be rehabilitational as well as punitive if the person involved must modify a lifestyle and become aware of the consequences of committing illegal acts, while at the same time avoiding the sometimes negative atmosphere in places of imprisonment. Electronic monitoring can help to insure compliance but has financial costs as well as weakening the moral force exerted by requiring self-discipline on the part of a defendant without such a mechanical external check. When a person must take affirmative steps toward rehabilitation, this has a more powerful impact than externally imposed restrictions. See W. Glasser, Reality Therapy (1965). And if others in close contact with a defendant monitor compliance, an even greater impact may at times be felt than is likely to arise from imprisonment or electronic monitoring.
III
Against this background the present memorandum explains my downward departure from the United States Sentencing Guidelines in sentencing the defendant Simcha Neiman ("Neiman") upon his plea of guilty to an information charging him with mail fraud in violation of 18 U.S.C. § 1341 and use of a false Social Security number in violation of 42 U.S.C. § 408(d)(2). Neiman's criminal activity arose from a scheme to cause health insurers to provide unauthorized coverage through false statements and use of false documents.
Neiman is working full time for a pasta company, earning $350 weekly. He has a wife and six children and has shown increased attention to their needs. He has embarked on Talmudic studies under Rabbinical supervision and is undergoing psychiatric treatment. The Probation Officer conducting the presentence investigation has concluded that Neiman shows genuine remorse for his criminal activity, appears to be turning his life around, and would face a setback in his rehabilitation if imprisoned.
On August 4, 1993 I adopted the recommendations of the Probation Officer and sentenced Neiman to probation for five years, with conditions including confinement to his home for ten months beginning 30 days from the date of sentence, continuation of psychiatric counselling, community service and restitution. Neiman's wife, who appeared at the sentencing conference and stated persuasively that Neiman is showing progress in reorienting his life. She and Neiman's Rabbi have each agreed to assist the Probation Department in assuring that Neiman fulfills all of the conditions of probation.
I regard family and community involvement as of great importance in this case and have every confidence that Neiman's wife and his Rabbi will pay close attention to Neiman's progress and notify him at once of *256 the need to fulfill his obligations should any possibility of backsliding arise.
The Guidelines would, without departure, have called for imprisonment for 10 to 16 months, which would interfere with rather than enhance Neiman's prospect for rehabilitation. Moreover, the home detention with explicit family and community reinforcement will exert greater general deterrence than Neiman's isolation from the rest of society.
I have every hope and expectation that at the end of Neiman's five years of probation he will be a useful member of society.
SO ORDERED.
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01-03-2023
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10-30-2013
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https://www.courtlistener.com/api/rest/v3/opinions/2463968/
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339 F. Supp. 2d 202 (2004)
AMGEN, INC., Plaintiff,
v.
HOECHST MARION ROUSSEL, INC. and Transkaryotic Therapies, Inc., Defendants.
No. CIV.A. 97-10814-WGY.
United States District Court, D. Massachusetts.
October 15, 2004.
*203 *204 *205 *206 *207 *208 *209 *210 *211 D. Dennis Allegretti, Duane Morris LLP, Boston, MA, for Amgen, Inc., Plaintiff.
Linda A. Baxley, Day Casebeer Madrid Winters & Batchelder LLP, Cupertino, CA, for Amgen, Inc., Plaintiff.
Michael F. Borun, Marshall, O'Toole, Gerstein, Murray & Borun, Chicago, IL, for Amgen, Inc., Plaintiff.
Craig H. Casebeer, Day Casebeer Madrid Winters & Batchelder LLP, Cupertino, CA, for Amgen, Inc., Plaintiff.
Padmaja Chinta, Fish & Neave, New York, NY, for Hoechst Marion Roussel, Inc., Transkaryotic Therapies, Inc., Defendants.
Jane J. Choi, Marshall, O'Toole, Gerstein, Murray & Borun, Chicago, IL, for Amgen, Inc., Plaintiff.
Lloyd R. Day, Jr., Day Casebeer Madrid Winters & Batchelder LLP, Cupertino, CA, for Amgen, Inc., Plaintiff.
Edward DiLello, Darby & Darby, New York, NY, for Lonza Biologic, Movant.
Bindu Donovan, Fish & Neave, New York, NY, for Hoechst Marion Roussel, Inc., Transkaryotic Therapies, Inc., Defendants.
Jennifer R. Dupre, Carr & Ferrell, Palo Alto, CA, for Amgen, Inc., Plaintiff.
Russell W. Faegenburg, Fish & Neave, New York, NY, for Hoechst Marion Roussel, Inc., Transkaryotic Therapies, Inc., Defendants.
Deborah E. Fishman, Day Casebeer Madrid Winters & Batchelder LLP, Cupertino, CA, for Amgen, Inc., Plaintiff.
Gerald J. Flattmann, Fish & Neave, New York, NY, for Hoechst Marion Roussel, Inc., Transkaryotic Therapies, Inc., Defendants.
Kevin M. Flowers, Marshall, O'Toole, Gerstein, Murray & Borun, Chicago, IL, for Amgen, Inc., Plaintiff.
Robert S. Frank, Jr., Choate, Hall & Stewart, Boston, MA, for Hoechst Marion Roussel, Inc., Transkaryotic Therapies, Inc., Defendants.
Mark S. Freeman, Choate, Hall & Stewart, Boston, MA, for Hoechst Marion Roussel, Inc., Transkaryotic Therapies, Inc., Defendants.
Robert M. Galvin, Day Casebeer Madrid Winters & Batchelder LLP, Cupertino, CA, for Amgen, Inc., Plaintiff.
Douglas J. Gilbert, Fish & Neave, New York, NY, for Hoechst Marion Roussel, Inc., Transkaryotic Therapies, Inc., Defendants.
Michael R. Gottfried, Duane Morris LLP, Boston, MA, for Amgen, Inc., Plaintiff.
James F. Haley, Jr., Fish & Neave, New York, NY, for Hoechst Marion Roussel, Inc., Transkaryotic Therapies, Inc., Defendants.
Kenneth B. Herman, Fish & Neave, New York, NY, for Hoechst Marion Roussel, Inc., Transkaryotic Therapies, Inc., Defendants.
Douglass C. Hochstetler, Marshall, O'Toole, Gerstein, Murray & Borun, Chicago, IL, for Amgen, Inc., Plaintiff.
Derek M. Kato, Fish & Neave, New York, NY, for Hoechst Marion Roussel, Inc., Transkaryotic Therapies, Inc., Defendants.
*212 Ryan M. Kent, Keker & VanNest LLP, San Francisco, CA, for Amgen, Inc., Plaintiff.
Peter J. Knudsen, Fish & Neave, New York, NY, for Hoechst Marion Roussel, Inc., Transkaryotic Therapies, Inc., Defendants.
Anna A. Kobilansky, Fish & Neave, New York, NY, for Hoechst Marion Roussel, Inc., Transkaryotic Therapies, Inc., Defendants.
Patricia L. Leden, Day Casebeer Madrid & Batchelder, LLD, Cupertino, CA, for Amgen, Inc., Plaintiff.
Jonathan D.J. Loeb, Day Casebeer Madrid & Batchelder, LLP, Cupertino, CA, for Amgen, Inc., Plaintiff.
Denise L. Loring, Fish & Neave, New York, NY, for Hoechst Marion Roussel, Inc., Transkaryotic Therapies, Inc., Defendants.
David M. Madrid, Day Casebeer Madrid Winters & Batchelder LLP, Cupertino, CA, for Amgen, Inc., Plaintiff.
Peter C. McCabe, III, Winston & Strawn, Chicago, IL, for Hoechst Marion Roussel, Inc., Transkaryotic Therapies, Inc., Defendants.
Mark A. Michelson, Choate, Hall & Stewart, Boston, MA, for Hoechst Marion Roussel, Inc., Transkaryotic Therapies, Inc., Defendants.
Steven F. Molo, Winston & Strawn, Chicago, IL, for Hoechst Marion Roussel, Inc., Transkaryotic Therapies, Inc., Defendants.
Mario Moore, Day Casebeer Madrid & Batchelder, Cupertino, CA, for Amgen, Inc., Plaintiff.
Jackie N. Nakamura, Day Casebeer Madrid Winters & Batchelder LLP, Cupertino, CA, for Amgen, Inc., Plaintiff.
Edward M. O'Toole, Marshall, O'Toole, Gerstein, Murray & Borun, Chicago, IL, for Amgen, Inc., Plaintiff.
Sandip H. Patel, Marshall, O'Toole, Gerstein, Murray & Bourn, Chicago, IL, for Amgen, Inc., Plaintiff.
Raymond C. Perkins, Abbott Laboratories, Abbott Park, IL, for Hoechst Marion Roussel, Inc., Transkaryotic Therapies, Inc., Defendants.
Melanie R. Rupert, Fish & Neave, New York, NY, for Hoechst Marion Roussel, Inc., Transkaryotic Therapies, Inc., Defendants.
Barbara A. Ruskin, Fish & Neave, New York, NY, for Hoechst Marion Roussel, Inc., Transkaryotic Therapies, Inc., Defendants.
Krista M. Rycroft, Fish & Neave, New York, NY, for Hoechst Marion Roussel, Inc., Transkaryotic Therapies, Inc., Defendants.
Herbert F. Schwartz, Fish & Neave, New York, NY, for Hoechst Marion Roussel, Inc., Transkaryotic Therapies, Inc., Defendants.
Ellen A. Scordino, Fish & Neave, New York, NY, for Hoechst Marion Roussel, Inc., Transkaryotic Therapies, Inc., Defendants.
Elaine Stracker, Day Casebeer Madrid Winters & Batchelder LLP, Cupertino, CA, for Amgen, Inc., Plaintiff.
Christopher E. Stretch, Day Casebeer Madrid Winters & Batchelder LLP, Cupertino, CA, for Amgen, Inc., Plaintiff.
Terry L. Tang, Day Casebeer Madrid Winters & Batchelder LLP, Cupertino, CA, for Amgen, Inc., Plaintiff.
Courtney Towle, Day, Casebeer Madrid & Batchelder, Cupertino, CA, for Amgen, Inc., Plaintiff.
*213 Robert B. Wilson, Fish & Neave, New York, NY, for Hoechst Marion Roussel, Inc., Transkaryotic Therapies, Inc., Defendants.
Richard M. Wong, Scansoft, Inc., Peabody, MA, for Amgen, Inc., Plaintiff.
Keith A. Zullow, Fish & Neave, New York, NY, for Hoechst Marion Roussel, Inc., Transkaryotic Therapies, Inc., Defendants.
MEMORANDUM AND ORDER
YOUNG, Chief Judge.
I. INTRODUCTION
This patent infringement action concerns patents held by Amgen, Inc. ("Amgen"), relating to the manufacture of a recombinant (genetically engineered) DNA[1] product, known as epoietin alfa,[2] that is similar to natural erythropoietin ("EPO"), a hormone that stimulates production of red blood cells, and is useful in, among other things, treating patients who need blood transfusions and suffer from blood composition disorders such as hemophilia, anemia, and sickle cell disease. This product and this case are not new to the public or to this Court. The case began brewing in 1997, when Amgen filed a declaratory judgment in the United States District Court for the District of Massachusetts against Defendants Hoechst Marion Roussel, Inc.[3] and Transkaryotic Therapies, Inc. (collectively "HMR/TKT") claiming that three of its patents were infringed by HMR/TKT's human EPO product, "HMR 4396," produced from the R223 cell line grown in culture. See Amgen, Inc. v. Hoechst Marion Roussel, Inc., 3 F. Supp. 2d 104, 106 (D.Mass.1998). In 1999, Amgen amended the complaint to include two other patents. Amgen, Inc. v. Hoechst Marion Roussel, Inc., 126 F. Supp. 2d 69, 96-98 (D.Mass.2001) ("Amgen I"). A lengthy jury-waived trial ensued. It commenced in May 2000 and lasted twenty-three days over the course of four months. Id. at 78. Not surprisingly, HMR/TKT appealed this Court's decision, Amgen I, 126 F. Supp. 2d 69. In Amgen Inc. v. Hoechst Marion Roussel, Inc., 314 F.3d 1313 (Fed.Cir.2003) ("Amgen II"), the Federal Circuit affirmed a majority of this Court's findings and rulings but vacated and remanded a few issues to this Court. Id. at 1358. This memorandum and order addresses those issues on remand, some of which have already been decided by the Court and announced to the parties, thus requiring only a brief review.
II. BACKGROUND: PROCEDURAL AND SUBSTANTIVE HISTORY
A. The Patents at Issue
There were originally five patents at issue in this case. Only four, however, remain on remand. The patents and claims now at issue are: Claim 1 of U.S. Patent No. 5,955,422 (issued Sept. 21, 1999) ("'422 patent"); Claims 2-4 of U.S. Patent No. 5,621,080 (issued Apr. 15, 1997) ("'080 patent"); Claims 4-9 of U.S. Patent No. 5,618,698 (issued Apr. 8, 1997) ("'698 patent"); and Claims 1, 3, 4, 6, and 7 of U.S. Patent No. 5,756,349 (issued May 26, 1998) ("'349 patent"). Amgen I, 126 F.Supp.2d at 79; Amgen II, 314 F.3d at 1320.[4]
*214 Although the patents vary, they all share a common disclosure and identical specifications. Amgen I, 126 F.Supp.2d at 79. For ease of reference, the Court cites to the specification found in the '933 patent, which is identical to the specification of the patents in dispute on remand. '933 Patent, Ex. 1.[5]
B. The Technology
As Amgen I set out the basics of the underlying technology in detail, only a brief summary is provided here. EPO is a naturally occurring hormone that controls erythropoiesis, the production of red blood cells in bone marrow. '933 Patent, Ex. 1, col. 5: 39-67. Erythropoiesis occurs continuously to offset cell destruction. Id. It enables a sufficient (but not excessive) amount of red blood cells to be available in the blood to provide tissue oxygenation. Id. Hemoglobin is the protein in the red blood cells that actually transports the oxygen. Amgen I, 126 F.Supp.2d at 98. The amount of hemoglobin correlates to the amount of oxygen. Id. Hematocrit, which indicates the relative proportion of red blood cells to the total volume of blood, measures the ability of the blood to supply oxygen to the body. Id. Thus, generally an increase or decrease in hematocrit equates with an increase or decrease in the ability to supply oxygen to the body. Id. Under normal conditions, a person has a hematocrit of about forty-five to fifty, which means forty-five to fifty percent of the blood is made up of red blood cells. Id.
EPO is produced in the kidney and liver. Therefore, patients with chronic renal failure lack normal levels of EPO and suffer from anemia. Amgen II, 314 F.3d at 1321. Introduction of additional EPO into the patient's body can increase a patient's hematocrit level and sustain it at or near normal levels. Id. In other words, the blood is able to provide a steady supply of sufficient oxygen to the tissues. Id.; Amgen I, 126 F.Supp.2d at 99.
Early attempts to obtain EPO from plasma or urine proved unsuccessful because the body only produces human EPO in very small amounts, '933 Patent, Ex. 1, col. 5: 54-58, and the techniques were very complicated and resulted in the collection of very small amounts of impure and unstable amounts of EPO, id. at col. 6: 60-65. Amgen is recognized as the pioneer in the production of a therapeutically effective amount of EPO via recombinant EPO ("rEPO") techniques. See, e.g., Molecular Biology and Biotechnology: A Comprehensive Desk Reference 108 (Robert A. Meyers ed., VCH Publishers 1995).
Dr. Fu-Kuen Lin ("Lin"), the named inventor of all the patents in issue, isolated and characterized DNA sequences encoding EPO from humans and monkeys. '933 Patent, Ex. 1, col. 13: 50-53. Lin determined the DNA sequence of human EPO and its predicted amino acid sequence. '933 Patent, Ex. 1, col. 10: 65-11: 2. Lin then produced large amounts of EPO by using recombinant DNA technology. Id. at col. 14: 23-29. In the patent specification, many methods of producing EPO are described. EPOGEN® is produced *215 by the method described in Example 10, wherein human EPO is produced by introducing exogenous DNA into host Chinese hamster ovary ("CHO") cells. Id. at col. 25: 30-29: 7.[6] The rEPO that is produced has the same or similar amino acid sequences or primary structural conformation as that of naturally-occurring EPO. Id. at col. 29: 1-7. As a result, it possesses one or more the biological properties of naturally-occurring EPO but differs from natural EPO in its "glycosylation," that is, it has a different average carbohydrate composition. Id. at col. 10: 35-41.
HMR/TKT, in producing its human erythropoietin, HMR 4396 (also called Gene-Activated EPO "GA-EPO"), also uses recombinant technology. HMR/TKT, however, does not use a host cell from a non-human species but manipulates the ordinarily unexpressed human EPO gene where it naturally resides. Amgen I, 126 F.Supp.2d at 102. In that way, the human EPO DNA material is endogenous to the human cell. Id. After introducing a promoter sequence, human EPO is expressed in a human rather than a hamster cell. Id.
C. The Federal Circuit's Decision
A brief review of the key rulings and findings that were affirmed and remanded on appeal follows:
1. Claim Construction
a. Affirmed
The Federal Circuit upheld all of the Court's claim constructions. Amgen II, 314 F.3d at 1320. Specifically, the Federal Circuit upheld this Court's construction that Amgen's claims do not limit the invention to using only exogenous DNA (as opposed to endogenous DNA). Id. at 1327. It also upheld this Court's determinations that (1) non-naturally occurring means "`not occurring in nature"'; (2) vertebrates are anything with "`a segmented bony or cartilaginous spinal cord' which obviously includes humans"; and (3) humans are a subset of mammals and mammals are a subset of vertebrates. Id. at 1327-28 (quoting Amgen I, 126 F.Supp.2d at 85, 90-91). To that end, the Federal Circuit agreed that the specification indicates that the invention uses human DNA in human host cells in culture. Id.
The Federal Circuit also upheld the Court's determination that claim 1 of the '422 patent, claims 2, 3, and 4 of the '080 patent, and claims 1, 3, 4, and 6 of the '349 patent are product claims (not process claims) and thus are not restricted or defined by any method of production or any particular source, other than what is specifically excluded. Amgen II, 314 F.3d at 1329-30.
b. Remanded
Although all the terms that this Court construed in Amgen I under the principles of Markman v. Westview Instruments, Inc., 517 U.S. 370, 116 S. Ct. 1384, 134 L. Ed. 2d 577 (1996), were upheld, the Federal Circuit remanded to this Court the construction of the term "therapeutically effective."[7]Amgen II, 314 F.3d at 1354. *216 This phrase was not considered by the Court to be in dispute during the first trial. In its written analysis, however, this Court interpreted the term. Amgen I, 126 F.Supp.2d at 112; see also id. at 99. While interpreting a term to provide context for the discussion is proper when the term is not in dispute, the Federal Circuit determined that the term "therapeutically effective" actually was in dispute "because it is central to whether Goldwasser is properly considered prior art." Amgen II, 314 F.3d at 1353. Therefore, it remanded so this Court could construe "therapeutically effective" pursuant to Markman. Id. at 1358. Since claim construction is matter of law, Markman, 517 U.S. at 386, 116 S. Ct. 1384; but see Arthur R. Miller, The Pretrial Rush to Judgment: Are the "Litigation Explosion," "Liability Crisis," and Efficiency Cliches Eroding Our Day in Court and Jury Trial Commitments?, 78 N.Y.U. L.Rev. 982, 1087 (2003). (criticizing the decision in Markman), the Federal Circuit could have proceeded to construe the phrase itself. Where a word or phrase has not been first construed in the district court, the Federal Circuit follows the courteous and prudential path of first seeking claim construction below. Hon. Pauline Newman, Remarks at the American Law Inst. Am. Bar Assoc. Panel on the Trial of a Patent Case (Sept. 18, 2003).
2. Infringement
a. Affirmed
The Federal Circuit affirmed this Court's ruling on summary judgment that claim 1 of the '422 patent is literally infringed. Amgen II, 314 F.3d at 1348. It also affirmed this Court's ruling that the '080 patent is not literally infringed by HMR/TKT's HMR 4396, id. at 1344-45, but that claims 1, 3, 4, and 6 of the '349 patent are literally infringed by it, id. at 1351-52.
b. Remanded
(1) The '080 Patent
After finding that HMR 4396 did not literally infringe claims 2, 3, and 4 of the '080 patent because HMR 4396 comprised only 165 amino acids, Amgen I, 126 F.Supp.2d at 99-101, this Court held that HMR 4396 performed substantially the same function in substantially the same way to obtain substantially the same result as the EPO glycoprotein of claims 2 and 3 of the '080 patent, id. at 133. Therefore, it ruled that Amgen's '080 patent was infringed by HMR/TKT's product under the doctrine of equivalents. Id.
In response to HMR/TKT's argument that Amgen should be estopped from arguing equivalent infringement, this Court ruled that prosecution history estoppel did not apply because Amgen did not add the "mature amino acid sequence of Figure 6" limitation "in an attempt to overcome a rejection [or] to avoid prior art," but, instead, to "demonstrate that `same invention' type double patenting did not apply," that is, to distinguish the '080 patent from the '933 patent. Id. at 134-35.
The Federal Circuit agreed that the amendment was made for this purpose but made clear that under Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki, 535 U.S. 722, 731, 122 S. Ct. 1831, 152 L. Ed. 2d 944 (2002) ("Festo II"), "`a narrowing amendment to satisfy any requirement of the Patent Act may give rise to an estoppel.'" Amgen II, 314 F.3d at 1345 (quoting Festo II, 535 U.S. at 736), 122 S. Ct. 1831 (emphasis added). Therefore, it held that the presumption of prosecution history estoppel applied. Id. at 1345. The Federal Circuit then vacated this Court's finding of equivalent infringement and remanded for an analysis based on the "narrow ways of *217 rebutting the Supreme Court's presumption of estoppel" outlined in Festo II. Id. at 1345.
(2) The '698 Patent
On appeal, the Federal Circuit vacated and remanded this Court's ruling regarding infringement of the '698 patent because this Court had compared the accused device to the preferred or commercial embodiments of the patent instead of to the properly construed claims themselves. Amgen II, 314 F.3d at 1347. Therefore, it remanded to this Court the question whether claims 4-9 of the '698 patent are infringed. Id.
(3) The '349 patent
Although this Court found that claims 1, 3, 4, and 6 of the '349 patent are literally infringed by HMR/TKT's 4396, it held that HMR/TKT did not literally or equivalently infringe claim 7, the process claim, of the '349 patent. Amgen I, 126 F.Supp.2d at 122. The Court compared the accused process to the preferred embodiment in the claim and concluded that HMR/TKT's "process for producing erythropoietin differs markedly from that disclosed by Amgen's specification." Id. The Federal Circuit, as it did with the Court's holding of infringement of the '698 patent, vacated this ruling and remanded so that the Court could analyze infringement by comparing the accused process to the properly construed claims themselves. Amgen II, 314 F.3d at 1350-51.
3. Inequitable Conduct
The Court's determination that HMR/TKT had not proven by clear and convincing evidence that the '933, '080, '349 and '422 patents were unenforceable due to inequitable conduct was affirmed on appeal. Amgen II, 314 F.3d at 1357-58.
4. Written Description, Definiteness, and Enablement
a. Affirmed
The Federal Circuit affirmed this Court's rulings that the '422, '080, and '349 patents are adequately described and enabled. Id. at 1337. In so ruling, the Federal Circuit explained that this Court "carefully considered these issues, finding in the end that HMR/TKT had not met its clear and convincing burden of proof." Id. Because the Federal Circuit found "no clear error in these factual determinations," and the parties did not allege any legal error, it reasoned that it would "not disturb [this Court's] holding that the asserted patents are not invalid for failure to meet the enablement requirement of § 112 ¶ 1." Id.
As mentioned in an earlier footnote, see note 3, supra, this Court held and the Federal Circuit affirmed that the '933 patent (specifically the claims requiring "glycosylation which differs") was invalid for indefiniteness under section 112. Amgen I, 126 F.Supp.2d at 156-57. Therefore, the '933 patent is not at issue on remand.
5. Anticipation and Obviousness
a. Affirmed
The Court's ruling that the asserted claims of the '080, '349, and '933 patents are not anticipated under 35 U.S.C. § 102 by the Sugimoto reference was affirmed by the Federal Circuit. Id. at 1320, 1356.[8]*218 In affirming, however, the Federal Circuit made clear that the Court's determination that Sugimoto was not enabled was an error, though harmless, because the Court put the burden of proving enablement of Sugimoto on HMR/TKT when the burden of proving non-enablement should have been put on Amgen. Id. at 1356.[9]
b. Remanded
The Federal Circuit remanded, however, the Court's findings that Sugimoto does not anticipate claim 1 of the '422 patent stating that the "district court should consider whether claim 1 of the '422 patent is novel over Sugimoto in light of the court's new definition of `therapeutically effective'" and be "mindful of the principle that source limitations cannot impart novelty to old compositions." Id. at 1356.[10] Additionally, the Federal Circuit remanded this Court's finding that the '422, '080, and '349 patents were not obvious in light of Sugimoto because this Court based its decision, in part, on the fact that it concluded that Sugimoto was not enabled. Id. at 1357. The Federal Circuit explained that under section 103, a reference need not be enabled to qualify as prior art. Id.
In Amgen I, this Court found that the asserted claims of the '080, '422 and '349 patents were not anticipated or rendered obvious by the Goldwasser reference. Amgen I, 126 F.Supp.2d at 112-17. The Federal Circuit remanded these findings for further proceedings given that "therapeutically effective" was not construed in accordance with Markman. Amgen II, 314 F.3d at 1354. As mentioned above, it directed the Court to construe the term and determine whether Goldwasser invalidates any of the asserted patents under 35 U.S.C. § 102(a) or § 103. in light of the Court's construction. Id. at 1354.
D. Procedural and Substantive History Since Amgen II
The Federal Circuit's decision issued on January 6, 2003. This Court received the action on remand on March 13, 2003 [Doc. No. 653], and it held a status conference on April 16, 2003 [Doc. No. 657]. On May 16, 2003, Amgen moved for: (1) judgment under Federal Rule of Civil Procedure 52(c) that claims 2-4 of the '080 patent were infringed under the doctrine of equivalents [Doc. No. 659]; (2) summary judgment of infringement of claims 4-9 of the '698 patent [Doc. No. 663]; (3) judgment pursuant to Rule 52(c) that claim 1 of the '422 patent and claim 4 of the '080 patent are valid [Doc. No. 670]; and (4) judgment pursuant to Rule 52(c) that claims 1, 3, 4, 6, and 7 of the '349 patent are valid and that claim 7 of the '349 patent is infringed [Doc. No. 674]. HMR/TKT simultaneously moved for: (1) judgment that Amgen is estopped from asserting infringement of the '080 patent pursuant to the doctrine of equivalents [Doc. No. 678]; (2) judgment that claim 1 of the '422 patent is invalid as *219 anticipated [Doc. No. 682]; (3) judgment pursuant to Rule 52(c) that the asserted process claims of the '698 patent and '349 patents are not infringed [Doc. No. 686]; and (4) judgment that the '422, '080, and '349 claims are invalid for obviousness [Doc. No. 690].
The memoranda in support of and in opposition to these motions raised additional issues that are reviewed in this opinion. They are described briefly below.
In its opposition to Amgen's renewed motion for summary judgment of infringement of the '698 patent,[11] HMR/TKT argued, among other things, that Amgen's proposed construction of the words "DNA encoding" found in claims 4 and 6 of the '698 patent is incorrect. HMR/TKT's Mem. in Opp'n re '698 [Doc. No. 700] at 7-8. Second, HMR/TKT argued that in claims 4 and 6 of the '698 patent, Amgen set forth a step-plus-function claim in referring to the "steps of ... growing, under suitable nutrient conditions" and that an assessment of whether HMR/TKT infringed this aspect of the claim must focus on a comparison between HMR/TKT's process for growing and the process for growing described by Amgen in the specification. Id. at 9. Finally, HMR/TKT argued that even if there is literal infringement here, it can justifiably invoke the defense of the reverse doctrine of equivalents. Id. at 13.[12]
With regard to claim 7 of the '349 patent, HMR/TKT made four "new" arguments, two of which are very similar to those made in conjunction with the '698 patent. First, HMR/TKT contended that its process does not infringe claim 7 of the '349 patent when considered in light of its proposed claim construction of "DNA encoding." HMR/TKT's Mem. in Support re '698/'349 [Doc. No. 687] at 8-9. Second, HMR/TKT argued that its process does not infringe claim 7 of the '349 patent because claim 7 is a step-plus-function limitation; and, as such, HMR/TKT's process does not literally infringe the "step of culturing" found in claim 7 because it does not involve the culturing procedures set forth in Amgen's specification. Id. at 12-15. Third, HMR/TKT claimed that its process does not infringe the process claim under the reverse doctrine of equivalents. Id. at 15-18. Fourth and lastly, HMR/TKT argued that if the Court construes the term "DNA encoding" as Amgen urges, then the validity of the asserted claim of the '349 patent is called into question. Id. at 12.
Amgen, in response, did not dispute that "DNA encoding" needs to be construed by the Court. See, e.g., Amgen's Reply re '698 [Doc. No. 731] at 6-10. It did, however, assert that HMR/TKT should not be allowed to make its "new" arguments relating to step-plus-function and the reverse doctrine of equivalents given the procedural posture of the case.[13]See, e.g., id. at 10-15.
*220 On July 29, 2003, this Court held a Markman hearing regarding those terms in dispute and in need of construction and considered other pending motions, including motions for summary judgment. At the end of the Markman portion of the hearing, the Court tentatively construed the terms "DNA encoding" and "therapeutically effective," providing two constructions for the latter, one being an alternate. 7/29/03 Hr'g Tr. at 55: 1-56: 23. It then continued to hear argument. At the end of the day, the Court noted that it would determine whether the asserted claims of the '698 and '349 patents were step-plus-function claims at a later date. Id. at 176: 1-10. It then continued the motion hearing to July 31, 2003. Id. at 176: 11-15.
During a hearing two days later, the Court retracted the alternative construction and reiterated its primary "working construction," retaining its right to revise it after a more careful review of the claims, specification, and prosecution history. 7/31/03 Hr'g Tr. at 87: 5-88: 7. Additionally, it ruled that claims 4 and 6 of the '698 patent and claim 7 of the '349 patent were not step-plus-function claims pursuant to 35 U.S.C. § 112. Id. at 88: 8-89: 9. It then denied Amgen's motion for summary judgment of infringement of the '698 patent, citing Arthur Miller's recent article, The Pretrial Rush to Judgment. Id. at 89: 23-90: 25; see Miller, supra. The Court took everything else under advisement and set the final pretrial conference for September 18, 2003. Id. at 91: 25-92: 2.
On August 5, 2003, the Court entered an order regarding the pending motions. [Doc. No. 740]. It denied HMR/TKT's motions for summary judgment with respect to the validity of the asserted claims of the '422, '080 and '349 patents. Order of 8/5/03 at 1. It denied in part and allowed in part Amgen's motions, under Rule 52(c), for judgment that claim 1 of the '422 patent and claim 4 of the '080 patent are valid and that claims 1, 3, 4, 6, and 7 of the '349 patent are valid. Id. Because HMR/TKT did not dispute that the '080 and '349 patents are not anticipated by Goldwasser and that the '349 patent is not rendered obvious by Goldwasser, the Court allowed Amgen's motions with respect to these matters. Id. at 1-2. Specifically, the Court held that claim 4 of the '080 patent is not anticipated by Goldwasser and that claims 1, 3, 4, 6, and 7 of the '349 patent are not anticipated or rendered obvious by Goldwasser. Id. at 2. Because Amgen did not have the opportunity to rebut HMR/TKT's remaining validity arguments concerning the '422, '080, and '349 patents during trial in 2000, the Court stated that Amgen would have that opportunity at the October trial. Id.
On September 18, 2003, the Court held a final pretrial conference. After explaining that this case will not "turn into a patent version of Penelope's robe," in other words, that the Court and the parties were "not going to unravel anything [that the Court has] woven thus far which has not been unraveled by a higher court," the Court made the following findings and rulings. First, it ruled that it would hear and take evidence on the reverse doctrine of equivalents as it related to the '698 patent and that HMR/TKT could address other patent defenses. 9/18/03 Final Pretrial Conf. Tr. at 6: 4-16. Second, it ruled that Amgen had met its burden (outlined in Festo II) of proving that the prosecution history does not estop it from arguing equivalent infringement with regard to the '080 patent and it affirmed its earlier *221 finding that HMR/TKT infringes claims 2-4 of the '080 patent. Id. at 7: 17-8: 5. It explained that it would issue a full opinion at a later date but that it might have to revisit the Festo issue due to the rapidly developing law in that area. Id. at 7: 19-25. The Court then turned to the '349 patent and explained that it would allow Amgen to put on rebuttal evidence as to the matter of obviousness and Sugimoto only and it made clear that the Court would not accept other evidence from HMR/TKT regarding the '349 patent. Id. at 8: 12-19, 16: 5-6 ("As far as evidence goes, '349 is in the can and I'm done with it."). The Court then issued a revised claim construction of "therapeutically effective" based on a more thorough analysis of the claims, specification, and prosecution history. Id. at 9: 3-10: 25. The Court mentioned, however, that this revision may have made the third sentence of the construction unnecessary and, therefore, reserved its right to further consider the proper construction. Id. at 10: 21-25. It directed the parties to try the case based on the construction it had just issued along with a construction that eliminated the third sentence. Id. at 11: 1-5. The pretrial conference was continued until September 24, 2003. Id. at 30: 22-23.
During the further pretrial conference, the Court reviewed the issues to be tried and outlined the procedure for trial and the parameters for the introduction of evidence and expert testimony. See 9/24/03 Final Pretrial Conf. Tr. After the Court provided both parties with an opportunity to be heard on the subject, pursuant to Federal Rule of Civil Procedure 53(b)(1), the Court appointed Michele D. Beardslee as Special Master, beginning January 1, 2004, to assist the Court in research, analysis, and drafting of the forthcoming opinion. Order re Special Master [Doc. No. 801]; see also 11/07/03 Beardslee Aff. [Doc. No. 799].[14] The trial on remand was set to commence on October 7, 2003. 9/24/03 Final Pretrial Conf. Tr. at 40: 23.
On October 30, 2003, the Court issued an opinion supporting its ruling that Amgen had successfully rebutted the presumption of prosecution history estoppel as outlined in Festo II and, therefore, was not estopped from asserting equivalent infringement of the '080 patent. Amgen, Inc. v. Hoechst Marion Roussel, Inc., 287 F. Supp. 2d 126 (D.Mass.2003) ("Amgen III").[15]
The remanded trial lasted nine days over the course of four and a half weeks.[16]*222 All the remaining issues those remanded to the Court from the Federal Circuit and those raised by the parties in the course of this remanded trial are addressed herein.[17]
III. CLAIM CONSTRUCTION
As expounded in great detail in Amgen I, this Court strongly believes in the importance of construing patent claims without regard to the alleged infringement issues. Amgen I, 126 F.Supp.2d at 80-81; MediaCom Corp. v. Rates Tech., Inc., 4 F. Supp. 2d 17, 21-24 (D.Mass.1998); see also Anthony R. Zeuli & Rachel Clark Hughey, Avoiding Patent Claim Construction Errors: Determining the Ordinary and Customary Meaning Before Reading the Written Description, Fed. Law., June 2004, at 29. One way to avoid conflating issues of fact and law and to ensure division between the fact finding and law explaining roles in a patent case is to hold the Markman hearing prior to and separate from the summary judgment motion hearing. Although (as mentioned above) this Court held the Markman hearing for the trial on remand on the same day as the summary judgment motions hearing, it kept the hearings independent of one another by separating the hearing into two parts. The first part dealt with claim construction. Then the Court held a recess, issued its preliminary constructions, and moved on to the summary judgment motions hearing.
The Court followed its usual procedure in conducting the Markman hearing. The Court entertained oral argument from counsel for each party. Counsel referred the Court to the relevant portions of the patent, specification, and prosecution history. Demonstrative exhibits were presented and references were made to certain expert testimony, but extrinsic evidence was not admitted.
At the conclusion of the Markman portion of the hearing the Court interpreted "therapeutically effective" and "DNA encoding" cautioning that they were "working constructions" and held off deciding whether the asserted claims of the '349 and '698 patent were step-plus-function claims. The Court then announced during the July 31, 2003 hearing that it did not construe the asserted claims of the '349 and '698 patents as step-plus-function claims. During the pretrial conference on September 18, 2003, after the Court had engaged in a more careful review of the patents, specification, and prosecution history, the Court issued a revised claim construction for "therapeutically effective." The final claim constructions are reproduced and explained below.[18]
A. "Therapeutically Effective"
1. Background
The term "therapeutically effective" is contained in claim 1 of the '422 patent and claim 4 of the '080 patent.[19] As *223 mentioned above, although this phrase was not construed during the first trial, in determining whether prior art anticipated the '422 and '080 patents, the Court interpreted the term to mean an increase in hematocrit:
Such evidence [of e.g., increased erythroid marrow stimulation] should be outweighed by the fact that the actual production of mature red blood cells was not achieved and, as a result, hematocrit levels were unchanged. Because an increase in hematocrit and hemoglobin levels is the true mark of therapeutic effectiveness, Dr. Goldwasser's study, which revealed only inchoate indicators of red blood cell production, falls far short of anticipating claims requiring a therapeutic amount of human EPO.
Amgen I, 126 F.Supp.2d at 112; see also id. at 99 ("The therapeutic effectiveness or benefit of an erythropoietin preparation is shown by demonstrating a correction in anemia by increasing and maintaining the hematocrit of a patient to normal or near normal levels.").
The Federal Circuit, in addition to remanding so that the Court could construe the term pursuant to Markman, provided some guidance. It agreed that the "endgame in the treatment of chronically anemic patients is to increase the hematocrit," but pointed out that the term should be construed in light of the specification. Amgen II, 314 F.3d at 1353. It stated, however, that the "specification appears to teach that results in addition to simply an increase in hematocrit can provide effective therapy." Id. (citing '933 Patent, col. 33: 19-31). It pointed out that Amgen was arguing that one skilled in the art would construe "therapeutically effective" as "increasing and maintaining the patient's hematocrit to normal or near normal levels," but that "the relevant question is not whether one of ordinary skill would so understand the term, but whether that term should be limited based upon the express disclosure in the specification." Id. at 1353-54 (citing CCS Fitness v. Brunswick Corp., 288 F.3d 1359, 1367 (Fed.Cir.2002) ("[A] claim term will not carry its ordinary meaning if the intrinsic evidence shows that the patentee distinguished that term from prior art on the basis of a particular embodiment, expressly disclaimed subject matter, or described a particular embodiment as important to the invention.")). The Federal Circuit stated that it appeared that the term "therapeutically effective" encompassed the list of effects described in the specification and noted that if the Court also held this to be true, then the Goldwasser study may indeed invalidate some of the claims at issue in this case under 35 U.S.C. § 102(a) or § 103. Id. at 1354 ("If the claim term `therapeutically effective' encompasses the patient responses described in the specification, as it appears to us it does, then the Goldwasser study may constitute invalidating prior art under § 102(a) or § 103 even if he did not achieve his intended result.") (emphasis added). Therefore, it vacated this Court's determination that Goldwasser did not constitute prior art[20] and ordered this Court to construe the term and thereafter determine whether Goldwasser invalidates any of the asserted patents. Id.
2. The Claims at Issue
The actual words of the claims are as follows:
*224 '422 Claim 1: A pharmaceutical composition comprising a therapeutically effective amount of human erythropoietin and a pharmaceutically acceptable diluent, adjuvant or carrier, where insaid erythropoietin is purified from mammalian cells grown in culture.
'422 Patent, Ex. 1, col. 38: 36-41 (emphasis added).[21]
'080 Claim 4: A pharmaceutical composition comprising a therapeutically effective amount of an erythropoietin glycoprotein product according to Claim 1, 2, or 3.
'080 Patent, Ex. 1, col. 38: 51-53 (emphasis added).
3. Summary of the Parties' Arguments
Amgen urges adoption of the ordinary meaning of "therapeutically effective" given by those skilled in the art. Amgen's Mem. in Support re '422/'080 [Doc. No. 671] at 7. Specifically, it argues that (1) expert testimony shows that the ordinary meaning of "therapeutically effective" is "sufficient to produce a sustained increase in hematocrit," and that the term requires a therapeutic not merely biological effect; (2) the other effects listed in the specification, to which the Federal Circuit referred, are known biological effects of EPO, not the intended therapeutic effects; (3) the specification taken as a whole supports the plain meaning of "therapeutically effective," and that no special meaning was given to the term; (4) the prosecution history shows that Amgen specifically noted that its invention shares the same in vivo biological activity as naturally occurring human EPO, but differentiated its invention from prior art by pointing out that human recombinant EPO (unlike naturally-occurring human EPO) is not a viable, effective human therapeutic product; and (5) the doctrine of claim differentiation requires that this term have a different meaning than the recitation of EPO's biological activities. Id. at 8-17. In its reply memorandum, Amgen also argues that the dictionary definition of the term supports its asserted meaning. Amgen's Reply re '422/'080 [Doc. No. 730] at 5-6.
HMR/TKT, on the other hand, argues that the Federal Circuit made clear that it believed that the term "therapeutically effective" encompasses all of the effects set forth in the specification described. HMR/TKT's Mem. in Opp'n re '422/'080 [Doc. No. 702] at 5. Thus, it argues, the term encompasses those effects observed in the Goldwasser study. Id. at 6. Moreover, it asserts that Amgen is trying to import limitations from the specification to make the claims require an increase in the hematocrit levels when the claims contain no language indicating such a requirement and the specification language itself is actually inconsistent with such a requirement. HMR/TKT points to the same section of the specification as did the Federal Circuit did to make its point:
[T]o the extent that polypeptide products of the invention share the in vivo activity of natural EPO isolates they are conspicuously suitable for use in erythropoietin therapy procedures practiced on mammals, including humans, to develop any or all of the effects herefore attributed in vivo to EPO, e.g., stimulation of reticulocyte response, development of ferrokinetic effects ... erythrocyte mass changes, stimulation of hemoglobin C syntheses ... and, as indicated *225 in Example 10, increasing hematocrit levels in mammals.
Id. at 13 (quoting '933 Patent, Ex. 1, col. 33: 19-31). This, HMR/TKT asserts, makes clear that "erythropoietin therapy procedures" include procedures that "develop any or all of the effects heretofore attributed in vivo to EPO," and, therefore, "therapeutically effective amount" includes any or all of the effects listed in this portion of the specification which, HMR/TKT argues, are defined in terms of biological effects. Id. at 14. HMR/TKT further argues that Amgen is trying to rely on isolated references of the specification to restrict the term meaning when these restrictions are not apparent in the plain language, and when the intrinsic record, as a whole, supports a broader interpretation. Id. at 16.
4. Discussion
While the Federal Circuit indeed mentioned that the term "therapeutically effective" appeared to encompass the biological effects listed within lines 19-31 of column 33, the Court notes that the Federal Circuit did not, in Amgen II, actually construe the term "therapeutically effective." See Amgen II, 314 F.3d at 1324 (noting that the Federal Circuit considers claim construction "afresh" on appellate review); Bayer AG. v. Biovail Corp., 279 F.3d 1340, 1349 (Fed.Cir.2002) (noting that, notwithstanding its de novo review, "it would be premature for this court to engage in its own claim construction without ... evidence of the meaning of the terms to one of skill in the art at the time of the invention"). On the contrary, the Federal Circuit remanded that task to this Court. To perform it properly, however, the Court must consider the prosecution history in addition to the claims and the specification something that the Federal Circuit did not do. See Amgen II, 314 F.3d at 1324 ("To properly construe the claims, a court must examine the claims, the rest of the specification, and if in evidence, the prosecution history."); Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1582 (Fed.Cir.1996) ("[I]t is well-settled that, in interpreting an asserted claim, the court should look first to the intrinsic evidence of record, i.e., the patent itself, including the claims, the specification and, if in evidence, the prosecution history."); SRI Int'l v. Matsushita Elec. Corp. of Am., 775 F.2d 1107, 1118 (Fed.Cir.1985) (noting that a claim is construed in light of its language, the specification, and the prosecution history). Moreover, the Court must begin by determining what the plain and ordinary meaning of "therapeutically effective" is in order to determine whether Amgen has become its own lexicographer. Intellectual Prop. Dev., Inc. v. UA-Columbia Cablevision of Westchester, Inc., 336 F.3d 1308, 1315 (Fed.Cir.2003) ("Consulting the written description and prosecution history as a threshold step in the claim construction process, before any effort is made to discern the ordinary and customary meanings attributed to the words themselves, invites a violation of our precedent counseling against importing limitations into the claims." (quoting Texas Digital Systems, Inc. v. Telegenix, Inc., 308 F.3d 1193, 1204 (Fed.Cir.2002)) (internal quotation marks omitted)).
a. The Plain and Ordinary Meaning
Generally, it is the plain and ordinary meaning of the words as defined by one skilled in the relevant art that governs. Vitronics, 90 F.3d at 1582; Erik Paul Belt, Federal Circuit Stresses Ordinary Meaning, Nat'l L.J., Sept. 22, 2003, at S1. Amgen argues that the plain and ordinary meaning of the term "therapeutically effective" is "sufficient to produce a sustained increase in hematocrit." HMR/TKT argues, on the other hand, that the *226 plain and ordinary meaning of "therapeutically effective" is not so restricted.[22] Interestingly, HMR/TKT never states what it believes the plain and ordinary meaning of the term to be it only discusses the meaning of the term with reference to how it believes Amgen has so defined it in the specification and prosecution history.
Amgen, on the other hand, grounds its assertion of the plain and customary meaning of the disputed term upon expert testimony. This, however, is extrinsic evidence to which resort ought be had only "if necessary." Vitronics, 90 F.3d at 1583 (quoting Hormone Research Foundation, Inc. v. Genentech, Inc., 904 F.2d 1558, 1562 (Fed.Cir.1990)). Therefore, the Court does not begin by considering this evidence. Instead, it turns first to the dictionary and to technical treatises to decipher the plain and ordinary meaning of "therapeutically effective." See id. at 1584 & n. 6 (noting that judges are free to consult technical treatises and dictionaries in order to gain a better understanding of the claims and to interpret them, "so long as the dictionary definition does not contradict any definition found in or ascertained by a reading of the patent documents.").[23]*227
*228 The dictionary definition of "therapeutic" is "[h]aving healing or curative powers," or "[o]f or relating to the treatment of disease or disorders by remedial agents or methods." The American Heritage Dictionary 1260 (2d college ed.1985); Webster's Ninth New Collegiate Dictionary 1223 (1984), attached as Tab X to Supp.App. [Doc. No. 735] to Amgen's Reply re '422/'080; see also Chamber's Technical Dictionary 844 (3d ed.1961), attached as Tab W to Supp.App. to Amgen's Reply re '422/'080 ("Of, or pertaining to, the medical treatment of disease: remedial: curative"). The definition of therapeutics is "[t]he medical treatment of disease." The American Heritage Dictionary, supra, at 1260. The dictionary definition of "effective" is "[h]aving an intended or expected effect" or "[p]roducing or designed to produce the desired impression or response." Id. at 439.
Based on these definitions alone, one would surmise that a "therapeutically effective" amount is one that produces healing or curing as it relates to medical treatment of disease.[24] This is, in essence, consistent with the definition that Amgen proposes. See Amgen's Mem. in Support re '422/'080 [Doc. No. 671] at 14 (arguing that the ordinary meaning is an amount sufficient to "cure or relieve a disease state" and "require[s] a meaningful benefit to the health of patients"). Amgen, however, goes further, asserting that the plain and ordinary meaning of "therapeutically effective amount," to one skilled in the art, taken in the context of this patent, is an amount that provides more than the biological effects of EPO and "produce[s] a *229 sustained increase in hematocrit," because only this result provides a meaningful benefit to the health of patients suffering from anemia.[25]Id. at 7-8, 14. Neither the claims, the specification, nor the prosecution history, however, demonstrate clearly that the plain and ordinary meaning of the term to one skilled in the art involves an increase in hematocrit. Therefore, the Court begins with the assumption that the plain and ordinary meaning of "therapeutically effective amount" is one in line with that found in the dictionaries and treatises noted above i.e., one that heals or cures as it relates to medical treatment of disease.
The next step is to look to the claims, specification, and prosecution history to see if Amgen redefined the term in the file wrapper. In addition, the Court will look to these sources to determine whether the file wrapper indicates clearly the types of patients for which this product is "therapeutically effective" and thus infuses the term with real meaning. Indeed, this is the elephant in the room. Without tackling this question, the term "therapeutically effective" or "therapeutically effective amount" is vague and meaningless. The public must know upon reading the patent what disease state is cured or healed by the product.[26] As the Federal Circuit pointed out, "indiscriminate reliance on definitions found in dictionaries can often produce absurd results.... One need not arbitrarily pick and choose from the various accepted definitions of a word to decide which meaning was intended.... The subject matter, the context, etc., will more often than not lead to the correct conclusion." Renishaw PLC v. Marposs Societa' per Azioni, 158 F.3d 1243, 1250 (Fed.Cir.1998) (quoting Liebscher v. Boothroyd, 258 F.2d 948, 46 C.C.P.A. 701 (1958)) (first alteration in original). Thus, the Court, in addition to determining whether Amgen has expanded or confined the meaning of the disputed term, will look to the file wrapper to clarify this ambiguity.
b. The Claims
"The name of the game is the claim." Amgen I, 126 F.Supp.2d at 80 (quoting Giles S. Rich, Extent of Protection and Interpretation of Claims American Perspectives, 21 Int'l Rev. Indus. Prop. & Copyright L. 497, 499 (1990)) (internal quotation marks omitted). Thus, the first step in claim construction is to look to the plain and ordinary meaning of the words of the patent claim to determine the meaning of a term. Vitronics, 90 F.3d at 1582; Bell Communications Research, Inc. v. Vitalink Communications Corp., 55 F.3d 615, 619-20 (Fed.Cir.1995); Renishaw, 158 F.3d at 1248 ("[T]he claim construction inquiry, therefore, begins and ends in all cases with the actual words of the claim.... [T]he resulting claim interpretation must, in the end, accord with the words chosen by the patentee to stake out the boundary of the claimed property.").
Do the claims redefine the plain and ordinary meaning of the terms used? Amgen asserts that the claims do not support HMR/TKT's argument that it has redefined the term to include the biological effects of EPO. Amgen asserts that because *230 claim terms are construed to give each term meaning, Lantech, Inc. v. Keip Mach. Co., 32 F.3d 542, 546 (Fed.Cir.1994), the patent claims themselves distinguish between biological and therapeutic effects. Amgen's Reply re '422/'080 at 10. To make its point, it refers to claims 4 and 2 of the '080 patent.
'080 Claim 4: A pharmaceutical composition comprising a therapeutically effective amount of an erythropoietin glycoprotein product according to claim 1, 2, or 3.
'080 Claim 2: An isolated erythropoietin glycoprotein having the in vivo biological activity of causing bone marrow cells to increase production of reticulocytes and red blood cells, wherein said erythropoietin glycoprotein comprises the mature erythropoietin amino acid sequence of FIG. 6 and is not isolated from human urine.
Amgen asserts that under the doctrine of claim differentiation, claim 4 of the '080 patent must not include any or all of the effects listed in the specification because otherwise claim 4 would be identical to that of claim 2. Specifically, it points out that claim 4 of the '080 patent requires "[a] pharmaceutical composition comprising a therapeutically effective amount" of EPO according to claim 1, 2, or 3. Amgen's Mem. re '422/'080 at 15-16. It then asserts that the claim 2 requires the "in vivo biological activity of causing bone marrow cells to increase production of reticulocytes and red blood cells." Therefore, if "therapeutically effective" included the effects listed in the specification to which the Federal Circuit pointed, Amgen argues, it would include the in vivo biological activity cited by claims 1, 2, or 3 of the '080 patent and render claim 4 of the '080 patent superfluous. Id. at 16.
As HMR/TKT urges, however, this argument is flawed because claim 4 concerns a pharmaceutical composition comprising a "therapeutically effective amount" of an EPO that happens to have the qualities described in claim 2. HMR/TKT's Opp's re '422/'080 at 22. HMR/TKT correctly points out that claim 2 recites an isolated EPO glycoprotein and therefore refers to biological effects whereas claim 4 recites a pharmaceutical composition and involves therapeutic effects. Id. at 21-22. Hence, claim 2 would not be rendered superfluous if this Court construed "therapeutically effective" to include the biological effects listed in the specification. Id. at 22.
Another equally flawed argument is that claim 4, by encompassing claim 2 (in referring to a "therapeutically effective" amount of the product claimed in claim 2), indicates that a "therapeutically effective amount" is one that does more than cause the in vivo biological activities described in claim 2. After a careful review of the technology and its history, it is clear that this is not a correct reading of the claims. This review relied on extrinsic evidence, as is permissible under Federal Circuit precedent. Vitronics, 90 F.3d at 1584 (noting that a court may resort to extrinsic evidence and expert testimony to help it understand the technology); Altiris, Inc. v. Symantec Corp., 318 F.3d 1363, 1371 (Fed.Cir.2003) ("In this regard, the expert testimony serves the permissible purposes of aiding our understanding of the technology and in helping us view the patent through the eyes of the skilled artisan.").[27]
*231 Before Amgen's invention, human EPO was known to elicit certain biological effects, but it was impossible to extract an efficient amount of it for use in treatment of patients with anemias and other low red blood cell disorders. Amgen invented a product, recombinant EPO, that had the same in vivo biological effects as natural EPO but differed in its carbohydrate composition and was capable of manufacture in quantities large enough to provide effective treatment.
With this understanding of the technology, it is clear that claims 2 and 4 of the '080 patent, by themselves, do not define "therapeutically effective" beyond its plain and ordinary meaning, nor do they indicate that a "therapeutically effective amount" of EPO is one that does more than elicit the biological effects noted in claim 2. Instead, claim 2 stakes out Amgen's novel recombinant EPO that has the same in vivo biological activities of natural EPO (causing bone marrow cells to increase production of reticulocytes and red blood cells). Claim 4 sets out a pharmaceutical composition that has a novel amount of the EPO an amount that can actually treat or cure patients. Notably, these claims do not indicate whether biological effects are themselves sufficient to treat or cure patients.
Similarly, the claims of the '422 patent do not define a "therapeutically effective amount" as one that does something above and beyond eliciting the biological effects of EPO listed in the specification.
The next question is whether the claims themselves indicate for what types of patients this product is "therapeutically effective." Amgen contends that its EPO is specifically designed for those suffering from anemias and thus only an increase in hematocrit is "therapeutically effective." Indeed, the record shows that Amgen's product can be used to increase levels of hematocrit, in other words, it can be used to "cure" or "relieve" the diseased state brought on by anemia. Amgen I, 126 F.Supp.2d at 99 ("The therapeutic effectiveness or benefit of an erythropoietin preparation is shown by demonstrating a correction in anemia by increasing and maintaining the hematocrit of a patient to normal or near normal levels.").[28] Dr. Erslev testified at the first trial that a sustained increase in hematocrit and hemoglobin is required to determine whether or not anemia has been corrected. Erslev Test., Trial Tr. at 1688: 14-1689: 4; Means Test., Trial Tr. at 1905: 17-20; 1910: 9-13. Dr. Erslev also testified that the other effects listed in the specification such as an increase in reticulocyte count or an increase in iron uptake cannot each standing alone correct anemia. Erslev Test., Trial Tr. at 1688: 14-1689: 4.
The problem with Amgen's argument, however, is that the claims that contain the disputed term do not themselves include a limitation directed to the specific clinical benefit of correcting anemia. Therefore, the plain and ordinary meaning of "therapeutically effective" cannot be limited to curing anemia, i.e., producing an increase in hematocrit levels based on the claims *232 alone. The claim language simply does not allow for such a specific interpretation. This conclusion is further supported by the fact that claim 6 of the '080 patent (unlike claim 4) does indeed specify the type of treatment (kidney dialysis) for which the EPO should be used and calls out, in that context, that an effective amount is one that increases hematocrit:
'080 Claim 6: A method for treating a kidney dialysis patient which comprises administering a pharmaceutical composition of claim 4 in an amount effective to increase the hematocrit level of said patient.
'080 Patent, Ex. 1, col. 38: 57-60. Had Amgen used similar claim language in claim 4 that is, had it referred specifically to anemia then its argument would have merit. Based on the non-specific language of claim 4, however, this argument fails.
In sum, the claim language supports only the plain and ordinary definition of "therapeutically effective" an amount that produces a result that, in and of itself, helps to heal or cure. The language of the claims at issue does not delineate the type of disease for which the EPO is "therapeutically effective." Therefore, the Court must now turn to the specification and the prosecution history to determine whether Amgen has limited or altered the plain meaning of the term either by defining the term or specifying the disease states for which the product is intended.
c. The Specification
The second step in claim construction is to review the specification to determine whether the patentee has used terms in a manner inconsistent with the ordinary meaning or has become his own lexicographer. Vitronics, 90 F.3d at 1582. In essence, "[t]he specification acts as a dictionary when it expressly defines terms used in the claims or when it defines terms by implication." Id. (noting that the specification is "the single best guide to the meaning of a disputed term"). The Federal Circuit has stated that "a claim must be read in view of the specification of which it is part," and therefore, a court can use the written description to define a term that is already in a claim limitation. Renishaw, 158 F.3d at 1248; SciMed Life Sys. v. Advanced Cardiovascular Sys., 242 F.3d 1337, 1341 (Fed.Cir.2001) (noting that claims can be given a narrow construction in light of the written description and explaining that one reason to look to the specification is "to determine if the patentee has limited the scope of the claims" (quoting Watts v. XL Systems, Inc., 232 F.3d 877, 882 (Fed.Cir.2000))).
The part of the specification to which the Federal Circuit in Amgen II pointed is as follows:
Similarly, to the extent that polypeptide products of the invention share the in vivo activity of natural EPO isolates they are conspicuously suitable for use in erythropoietin therapy procedures practiced on mammals, including humans, to develop any or all of the effects herefore attributed in vivo to EPO, e.g., stimulation of reticulocyte response, development of ferrokinetic effects (such as plasma iron turnover effects and marrow transit time effects), erythrocyte mass changes, stimulation of hemoglobin C synthesis (see, Eschbach, et al., supra) and, as indicated in Example 10, increasing hematocrit levels in mammals.
'933 Patent, Ex. 1, col. 33: 19-31 (emphases added).
The Court begins by analyzing whether this section defines therapeutically effective to include the effects listed above. It is undisputed that this section declares that Amgen's recombinant EPO is similar to natural EPO in that it shares some of the same in vivo activity. Id. at col. 33: *233 19-22. "[T]o the extent" that it does so to the extent that it is similar to natural EPO Amgen's EPO are "conspicuously suitable for use in erythropoeitin therapy procedures" to develop any or all of the effects that were "herefore" (before) attributed in vivo to EPO, such as the stimulation of reticulocyte response, development of ferrokinectic effects, erythrocyte mass changes, and stimulation of hemoglobin C synthesis. What is unclear and disputed, however, is whether the section that begins with "and, as indicated in Example 10, increasing hematocrit levels in mammals" is part of the laundry list of effects previously attributed in vivo to EPO or a separate suitable use for the product. In other words, this portion of the specification can be interpreted one of the following two ways:
1) Amgen's EPO is "conspicuously suitable for use in erythropoietin therapy procedures practiced on mammals, including humans, to develop any or all of the effects herefore attributed in vivo to EPO, e.g., stimulation of reticulocyte response, ... and, as indicated in Example 10, increasing hematocrit levels in mammals."
2) Amgen's EPO is "conspicuously suitable for" (a) "use in erythropoietin therapy procedures practiced on mammals, including humans, to develop any or all of the effects herefore attributed in vivo to EPO, e.g., stimulation of reticulocyte response,..." and, (b) "as indicated in Example 10, increasing hematocrit levels in mammals."
The former interpretation a direct quote of the specification suggests that an increase in hematocrit level was an effect previously attributed to natural EPO and that it, along with the biological effects, are a type of effective therapy. In other words, it includes "increasing the hematocrit levels" as one of the many effects of EPO that were previously identified and that are now produced by this product and useful in "erythropoietin therapy procedures." The problem with this reading is that the intrinsic evidence (the claims, the specification, and the prosecution history) and extrinsic evidence suggest that an increase in hematocrit levels was not previously attributed to natural EPO.[29] In remarks following an amendment made during prosecution of the '080 patent, Amgen explained to the Patent and Trademark Office ("PTO") that Example 10 is novel in that it is the first therapeutic procedure ever practiced with EPO to demonstrate that EPO has the capacity to generate an increase in hematocrit in vivo. Amgen's '422/'080 App., Tab G (Ex. 2), at Tab 6, at 179. The extrinsic record also suggests that an increase in hematocrit was not previously attributed to natural EPO. Vitronics, 90 F.3d at 1583 ("Included within an analysis of the file history may be an examination of the prior art cited therein."). Therefore, the first reading implies a factually incorrect conclusion.
The latter interpretation and the one that the Court adopts suggests that an increase in hematocrit is independent or different from the in vivo effects previously attributed to natural EPO. In other words, in this section, Amgen calls out that its recombinant EPO can elicit "any or all" of the effects that natural EPO does and more. Admittedly, the use of the words "therapy procedures" supports the interpretation that a "therapeutically effective amount" encompasses an amount that would result in the biological effects because it implies that the effects are a part *234 of therapy. That being said, however, the way in which the increase in hematocrit is set off from the rest of the language suggests that this product elicits something in addition to what the prior art elicited, something more than the biological effects. Moreover, it makes clear that "any or all" only modifies those effects previously attributed to natural EPO not the increase in hematocrit. Indeed, if the phrase "as indicated in Example 10, increasing hematocrit levels in mammals" were merely an item in the list of "any or all of the effects herefore attributed in vivo to EPO," then the words "in mammals" would be redundant. The list of items refers to "effects herefore attributed in vivo to EPO" for "use in erythropoietin therapy procedures practiced on mammals", so "increasing hematocrit levels in mammals" must be a second end for which Amgen's EPO is "conspicuously suitable."
This interpretation comports with the Court's understanding developed over the course of two intensive trials of what hematocrit actually measures. Hematocrit measures the ability of the blood to supply oxygen to the body. It indicates the relative proportion of red blood cells to the total volume of blood. By introducing additional EPO into the patient's body, a patient's hematocrit level can be increased to and sustained at or near normal levels. In other words, the blood is able to provide a steady supply of sufficient oxygen to the tissues. It is the Court's understanding that, in most cases, an increase in hematocrit is accompanied, if not preceded, by "any or all" of the biological effects listed in the specification.[30] In other words, this portion of the specification explains what happens when a "therapeutically effective amount" of EPO is used that is, it produces an increase in hematocrit along with any or all of the biological affects previously attributed to natural EPO. As will be discussed below, this reading is further supported by other parts of the specification and the prosecution history.
Therefore, while this Court agrees with the Federal Circuit that therapeutic effectiveness "encompasses the patient responses described in the specification," this part of the specification does not indicate that these biological responses are sufficient or that Amgen "broadened" the plain meaning of the term "therapeutically effective" to encompass the elicitation of biological effects alone regardless of whether they heal or cure. Indeed, the term "therapeutically effective" is never even mentioned in this section of the specification. While guidance as to a claim term's meaning or a claim's scope need not be provided in explicit definitional format, SciMed Life Systems, 242 F.3d at 1344, to alter the plain and customary meaning of a term that is not ambiguous on its face, a patentee must do so clearly and deliberately. Renishaw, 158 F.3d at 1249 (noting that when a patent applicant "has elected to be a lexicographer by providing an explicit definition in the specification for a claim term[,] ... the definition selected by the patent applicant controls" as long as the patentee's lexicography is made "`with reasonable clarity, deliberateness, and precision'" (quoting In re Paulsen, 30 F.3d *235 1475, 1480 (Fed.Cir.1994))); Vitronics, 90 F.3d at 1582; Altiris, 318 F.3d at 1370.[31] Here, there is no "manifest exclusion or restriction, representing a clear disavowal of claim scope." Teleflex, Inc. v. Ficosa N. Am. Corp., 299 F.3d 1313, 1325 (Fed.Cir.2002). Thus, this portion of the specification does not redefine the plain and ordinary meaning of the term to include the biological effects regardless of whether they heal or cure. Likewise, this portion of the specification does not limit the term to an increase in hematocrit. While it makes clear that its product is useful because it can increase hematocrit, it does not redefine the term in question to equate only with an increase in hematocrit (or relate only to curing anemia).
Amgen points to a few other portions of the specification in support of its argument that while it did not alter the meaning of "therapeutically effective" to include the biological effects, it did limit the claimed therapy to patients suffering from anemia and anemia-like disorders and likewise limited the claim to an increase in hematocrit.[32]
The first such passage is the one immediately following the portion of the specification cited by the Federal Circuit:
Included within the class of humans treatable with products of the invention are patients generally requiring blood transfusion and including trauma victims, surgical patients, renal disease patients including dialysis patients, and patients with a variety of blood composition affecting disorders, such as hemophilia, sickle cell disease, physiologic anemias, and the like.
'933 Patent, Ex. 1, col. 33: 31-36 (emphasis added).[33] As HMR/TKT correctly points out, this list of patients is obviously incomplete as it begins with the words "included within," which suggests that there are other types of patients for which the product is intended. HMR/TKT's Post-Hr'g Mem. [Doc. No. 747] at 4. While this is true, it still provides insight into the type of patients who may receive a therapeutic benefit from the pharmaceutical compositions of the invention. Therefore, while the specification does not actively limit the term to this class of patients, it provides guidance to the Court in defining the term. Vitronics, 90 F.3d at 1582; Teleflex, Inc., 299 F.3d at 1325 ("The specification may assist in resolving ambiguity where the ordinary and customary meaning of the words used in the claims lack sufficient clarity to permit the scope of the claim to be ascertained from the words alone."). By listing the types of patients responding to treatment by the product, the specification implies that the term "therapeutically effective" amount was written with respect *236 to these types or classes of patients. "The specification acts as a dictionary when it expressly defines terms used in the claims or when it defines terms by implication." Vitronics, 90 F.3d at 1582 (emphasis added).[34] It does not, however, indicate that this invention is only for the treatment of anemia but instead for all the ailments listed. While this may not be an exhaustive list and patients with similar or like disorders might also benefit from the product, this list begins to infuse "therapeutically effective amount" with real meaning.
Other portions of the specification support interpreting the claims with reference to the class of patients listed in the specification. For example, the specification states: "The minimization of the need for transfusion therapy through use of EPO therapy can be expected to result in reduced transmission of infectious agents." '933 Patent, Ex. 1., col. 33: 37-39. While this is only one example of how the product is useful or advantageous, it falls within the class of patients listed in the specification.[35]
Other pertinent sections are as follows:
It has recently been estimated that the availability of erythropoietin in quantity would allow for treatment each year of anemias of 1,600,000 persons in the United States alone.
Id. at col. 6: 35-39.
... clinical testing and potential wide-ranging therapeutic use of [Lin's recombinant EPO] in treatment of e.g., chronic kidney disease wherein diseased tissues fail to sustain production of erythropoietin.
Id. at col. 9: 6-9 (emphasis added).
Also comprehended by the invention are pharmaceutical compositions comprising effective amounts of polypeptide products of the invention together with suitable diluents, adjuvants and/or carriers which allow for provision of erythropoietin therapy, especially in the treatment of anemic disease states and most especially such anemic states as attend chronic renal failure.
Id. at col. 12: 1-7 (emphasis added).
Because erythropoietin is essential in the process of red blood cell formation, the hormone has potential useful application in both the diagnosis and the treatment of blood disorders characterized by low or defective red blood cell production.
*237 Id. at col. 6: 20-24 (emphasis added).[36]
Amgen also points to column 6, lines 28-33 of the '933 patent, which cites a study done by Eschbach:
See, generally, ... Eschbach, et al[.] ... describing a therapeutic regimen for uremic sheep based on in vivo response to erythropoietin-rich plasma infusions and proposing a dosage of 10 U EPO/kg per day for 15-40 days as corrective of anemia of the type associated with chronic renal failure.
That Amgen intended its invention to treat anemic patients is clear from these sections (along with the prosecution history, as will be discussed below) and is pertinent to the analysis. Renishaw, 158 F.3d at 1250 (noting that what the "inventors actually invented and intended to envelop with the claim" is relevant in claim construction); CVI/Beta Ventures v. Tura LP, 112 F.3d 1146, 1160 (Fed.Cir.1997) ("In construing claims, the problem the inventor was attempting to solve, as discerned from the specification and the prosecution history, is a relevant consideration."). None of these sections, however, shows that Amgen intentionally re-defined the plain meaning of the term "therapeutically effective" to refer exclusively to anemia or to an increase in hematocrit.
While these sections do not suggest that the product is solely intended for anemic patients and to increase hematocrit, they do imply, in combination, that it is designed for the class of patients listed in column 33 and noted above.[37] That being said, it seems to stretch the doctrine of claim construction too far to incorporate into the plain and ordinary meaning a reference to a class of patients that at best is only implied in the specification. Northern Telecom Ltd. v. Samsung Elecs. Co., 215 F.3d 1281, 1294 (Fed.Cir.2000); KX Indus., L.P. & Koslow Technologies Corp., 18 Fed. Appx. 871, 876 (Fed.Cir. Aug.10, 2001) (unpublished opinion)[38] ("[W]hat is determinative is whether the patentee has defined a claim term as excluding a broader interpretation with reasonable clarity and deliberateness."). On the other hand, it seems foolish to construe a term such as "therapeutically effective," without reference to a class of patients for which the product is intended to be "therapeutically effective." This quandary, however, is put to rest by the prosecution history. When the specification is considered along with the prosecution history, it becomes apparent that a class-of-patients limitation is appropriate.
*238 d. The Prosecution History
The third step in claim construction is to consider the prosecution history to determine whether the applicant has made any express representations regarding the claim's scope. Vitronics, 90 F.3d at 1582-83; Standard Oil Co. v. American Cyanamid Co., 774 F.2d 448, 452 (Fed.Cir.1985) ("[A]ll express representations made by or on behalf of the applicant to the examiner to induce a patent grant ... [can] limit[] the interpretation of claims."); Alpex Computer Corp. v. Nintendo Co. Ltd., 102 F.3d 1214, 1220 (Fed.Cir.1996) (noting that prosecution history is "relevant ... for construing the meaning and scope of the claims").
The amendments made early on in pursuance of the patents support HMR/TKT's contention that Amgen defined a "therapeutically effective amount" of EPO to encompass an amount sufficient to elicit any or all of the biological effects that were attributed to natural EPO.
On December 5, 1988, in response to a rejection under 35 U.S.C. §§ 112, 102(b) and 103 of what eventually became the '080 patent, Amgen submitted independent claim 41 and dependent claims 55-57 and 61-66. The pertinent amendments are claim 41 (which relates to claim 2 of the '080 patent), claim 55 (which relates to claim 4 of the '080 patent), claim 57 (which relates to claim 6 of the '080 patent), and claim 56 (because it is referenced in claim 57).
Claim 41: A glycoprotein product having a primary structural conformation and glycosylation sufficiently duplicative of that of a naturally occurring human erythropoietin to allow possession of the in vivo biological property of causing bone marrow cells to increase production of reticulocytes and red blood cells and having an average carbohydrate composition which differs from that of naturally occurring human erythropoietin.
Claim 55: A pharmaceutical composition comprising an effective amount of a glycoprotein product according to claim 41 and a pharmaceutically acceptable diluent, adjuvant or carrier.
Claim 56: A method for providing erythropoietin therapy to a mammal comprising administering an effective amount of a glycoprotein product according to claim 41.
Claim 57: A method according to claim 56 wherein the therapy comprises enhancing hematocrit levels.
Amgen's '422/'080 App., Tab G (Ex. 2), at Tab 6, at 174-75.
These claims make clear that Amgen's product purposefully duplicates natural EPO in that it elicits the in vivo biological activity of causing bone marrow cells to increase production of reticulocytes and red blood cells, but that it differs from natural EPO in its carbohydrate composition. These claims also make clear that claim 55 (similar to claim 4 in the '080 patent) is not limited to increasing hematocrit because that is precisely what claim 57 does (and what claim 6 in the '080 patent now does). In the remarks accompanying the amendment, Amgen twice explained that its product produces the same in vivo biological activity as that of natural EPO:
Applicant's novel glycoprotein preparations ... hav[e] the glycosylation-requiring in vivo biological activity (promoting reticulocyte and red blood cell production) characteristics of naturally occurring human erythropoietin.
Amgen's '422/'080 App., Tab G (Ex. 2), at Tab 6, at 175.
[T]he glycoprotein products herein claimed ... possess the essential in vivo biological activity of naturally occurring erythropoietin.
*239 Amgen's '422/'080 App., Tab G (Ex. 2), at Tab 6, at 181. It then explained, with reference to claim 56, that Amgen "first developed knowledge of the full amino acid sequence of erythropoietin and first generated the presently claimed glycoprotien products which allowed for full scale clinical application to provide therapeutic effects consistent with the in vivo activity of naturally occurring erythropoietin." Id. at 177 (first emphasis added). With reference to claim 41, it stated that Amgen "was the first to provide a glycoprotein which is both different from previously isolated urinary erythropoietin in its glycoyslation and yet sufficiently like the natural product ... in terms of its glycosylation to allow it to fill the long-felt need (unsatisfiable by urinary isolates) for life-sustaining human therapeutic agents for, e.g., the anemia associated with dialysis in renal failure patients." Id. at 178. It then explained that the product is "sufficiently like" natural EPO in glycosylation because it "allow[s] for in vivo biological activity." Id. at 179. Later, it explained that Example 10 is novel in that it is the first therapeutic procedure ever practiced with EPO to demonstrate that EPO has the capacity to generate in vivo an increase in hematocrit. Id.
Taken in combination, the amendments and these remarks support the interpretation that Amgen intended "therapeutically effective amounts" of EPO to encompass an amount that elicited in patients any or all of the biological effects previously attributed to natural EPO and that it did not limit the term to an increase in hematocrit.[39] Such an effect is separately claimed in claim 6 (here claim 57).
Were this the entire prosecution history, the Court would agree with HMR/TKT and the Federal Circuit that Amgen broadened the term to mean one that elicits any or all of the in vivo effects before attributed to natural EPO regardless of whether they actually heal or cure the patient. In the course of overcoming two additional rejections later on in the process, however, Amgen differentiated its product from natural EPO (i.e., it overcame rejection) by asserting that natural EPO which elicits the biological effects was not therapeutically viable, whereas its product was clinically effective and designed specifically for a class of patients for which the product was intended. In doing so, Amgen avowed that its invention produced enough quantity of EPO to elicit responses that actually healed or cured the patient. Renishaw, 158 F.3d at 1249 n. 3 ("[A]ny interpretation that is provided or disavowed in the prosecution history also shapes the claim scope."); Standard Oil Co., 774 F.2d at 452 ("[T]he prosecution history (or file wrapper) limits the interpretation of claims so as to exclude any interpretation that may have been disclaimed or disavowed during prosecution in order to obtain claim allowance.").
For example, in a June 5, 1989 amendment, in response to a PTO rejection under 35 U.S.C. § 103 for obviousness, Amgen distinguished its recombinant EPO product from natural EPO by claiming natural EPO was "not a viable therapeutic product" whereas its recombinant EPO was "clinically effective" and the "first *240 therapeutic product" successfully to treat anemia and other disorders involving low red blood cell counts:
All of the references cited by the Examiner in this rejection relate to naturally occurring erythropoietin. The claims of the subject invention relate to erythropoeitin which is produced through recombinant DNA techniques. Recombinant erythropoietin is different from naturally occurring erythropoietin... Moreover, naturally occurring human erythropoietin is not a viable human therapeutic product; human recombinant erythropoietin, on the other hand, has been proven to be clinically effective, and is the first therapeutic product which can be used to effectively treat the hundreds of thousands of patients who suffer from anemia and other disorders involving low red blood cell counts.
Amgen's '422/'080 App., Tab G (Ex. 2), at Tab 11, at 227 (emphasis omitted). Amgen further explained that "[i]n contrast to recombinant erythropoietin, naturally occurring human erythropoietin is not used to treat patients. In the past, efforts were made to obtain purified erythropoietin from natural sources.... The results of these efforts however yielded only a small amount of material which was far too little for clinical research." Id. at 229. As the FDA stated in its approval of recombinant EPO "there is not enough naturally occurring enthropoetin produced to collect it from healthy persons for use in treatment," but "gene splicing techniques have permitted its production." Id. Thus, in response to this rejection, Amgen differentiated its EPO from natural EPO in two respects. First, Amgen claimed its invention allowed for a sufficient amount of EPO actually to treat patients as opposed to natural EPO which was not available in large enough quantities. Second, it claimed its EPO, as opposed to prior art, effectively treated patients suffering from anemia or other disorders involving low red blood cell count.[40] This was a clear and definitive statement about what the invention "envelopes." Renishaw, 158 F.3d at 1250 (noting that a term can only be properly interpreted "with a full understanding of what the inventors actually invented and intended to envelop with the claim" and that the correct construction is that which "stays true to the claim language and most naturally aligns with the patent's description of the invention"). Here, the prosecution history makes clear that Amgen intended its invention to be clinically effective at least for the class of patients suffering from anemia and low red blood cell disorders. See Standard Oil Co., 774 F.2d at 452 ("[A]ll express representations made by or on behalf of the applicant to the examiner to induce a patent grant or ... to reissue a patent ... [can] limit[] the interpretation of claims."); Spectrum Int'l Inc. v. Sterilite Corp., 164 F.3d 1372, 1378 (Fed.Cir.1998) ("[E]xplicit statements made by a patent applicant during prosecution to distinguish a claimed invention over prior art may serve to narrow the scope of the claim."). Amgen was trying to cure anemia and other diseases associated with low red blood cell count not simply to duplicate the effects of natural EPO regardless of whether those effects cured or healed. CVI/Beta Ventures, 112 F.3d at 1160 ("In construing claims, the problem the inventor was attempting to solve, as discerned from the specification and the prosecution history, is a relevant consideration.").
*241 That Amgen intended its invention to provide a meaningful health benefit to the list of patients expressly mentioned in the specification is supported by another portion of the prosecution history. On November 6, 1990, Amgen claimed the following in an application that eventually resulted in the '422 patent:
Claim 61: An erythropoietin-containing, pharmaceutically-acceptable composition wherein human serum albumin is mixed with erythropoietin.
Claim 62: A composition according to claim 61 containing a therapeutically effective amount of erythropoietin.
Claim 63: A composition according to claim 61 containing a therapeutically effective amount of recombinant erythropoietin.[41]
HMR/TKT's App. to Opp'n [Doc. No. 705], Tab 2 (Ex.2003, 11/6/90 Preliminary Amendment) at 9. The examiner rejected claims 62 and 63 as "being indefinite for failing to particularly point out and distinctly claim the subject matter which [the] applicant regard[ed] as the invention." Id. (Ex.2003, 6/1/94 Examiner's Action) at 2. Claim 62 was rejected for being "vague and indefinite because it is unclear what the claimed composition is required to be `effective' for," and claim 63 was rejected as "vague and indefinite because it is unclear as to how the recitation that the claimed erythropoietin is `recombinant' modifies the physical erythropoietin composition[;]... while the claimed erythropoietin may be prepared using recombinant techniques, the product would not necessarily distinguish over that found in nature." Id. In essence, then, the examiner rejected Amgen's patent because it did not specify for what type of patients the product was intended to be "therapeutically effective" and it did not distinguish how the recombinant EPO was different than natural EPO besides its preparation. In other words, it did not differentiate what recombinant EPO provided to patients that natural EPO did not.
Amgen requested reconsideration, stating that the terms "effective" and "recombinant" are, "in view of the extensive disclosure of the specification," well-defined and understood by a person of skilled in the art. Id. (Ex.2003, 12/1/94 Request for Reconsideration) at 1. Amgen argued that "the specification indicates several potential therapeutic uses for the claimed invention." Id. at 2 (emphasis added). It then quoted the exact portion of the specification to which the Federal Circuit had pointed, where the in vivo effects along with the effect of an increase in hematocrit levels are mentioned. Id. Importantly, however, Amgen also quoted the following sections regarding the class of humans treatable with products:
Similarly, to the extent that polypeptide products of the invention share the in vivo activity of natural EPO isolates they are conspicuously suitable for use in erythropoietin therapy procedures practiced on mammals, including humans, to develop any or all of the effects heretofore attributed in vivo to EPO e.g., stimulation of reticulocyte response, development of ferrokinetic effects (such as plasma iron turnover effects and marrow transit time effects), erythrocyte mass changes, stimulation of hemoglobin C synthesis (see, Eschbach, et al[.], supra) and[,] as indicated in Example 10, increasing hematocrit levels in mammals. Included within the class of humans treatable with products of the invention are patients generally requiring *242 blood transfusions and including trauma victims, surgical patients, renal disease patients including dialysis patients, and patients with a variety of blood composition affecting disorders, such as hemophilia, sickle cell disease, physiologic anemias[,] and the like.
Id. (Ex.2003, 12/1/94 Request for Reconsideration) at 2 (emphasis omitted) (quoting '933 Patent, Ex. 1, col. 33: 19-36). According to Amgen,
these sentences from the specification and others provide a clear and definite description of the uses for which the claimed erythropoietin compositions would be therapeutically effective. A person of skill in the art would understand that the amount of erythropoeitin necessary to achieve these defined therapeutic results would vary for each use. However, clinicians can readily determine the "therapeutically effective" amounts for each condition, and indeed for each patient.
Id. (emphasis added).
The question then is what are the "uses" to which Amgen refers. At first blush, it may appear that the "therapeutic uses" are the effects listed in the specification. A close reading of the remarks, however, makes clear that the words "uses" and "use" refer to treatment of the conditions listed in the specification not to eliciting the effects. If this were not the case, the following sentence would not make sense: "A person of skill in the art would understand that the amount of erythropoeitin necessary to achieve these defined therapeutic results would vary for each use." Id. (emphasis added). Amgen overcame a rejection of indefiniteness, in part by claiming that its product was specifically designed to treat patients suffering from the types of disease listed in the specification. Such a clear avowal when considered alone or along with the other parts of the prosecution history and specification would estop Amgen now were it to try to claim that its product was "therapeutically effective" in treating patients with high red blood cell counts. Alpex Computer Corp., 102 F.3d at 1221 ("Just as prosecution history estoppel may act to estop an equivalence argument under the doctrine of equivalents, positions taken before the PTO may bar an inconsistent position on claim construction."); Ekchian v. Home Depot, Inc., 104 F.3d 1299, 1304 (Fed.Cir.1997) ("[B]y distinguishing the claimed invention over the prior art, an applicant is indicating what the claims do not cover, [and] he is by implication surrendering such protection."). Here we have prosecution history estoppel in reverse that is, Amgen wants this Court to constrain the meaning of the term to this class of patients. This does not change the effect the Court must give Amgen's clear and definite statements. Thus, the Court holds that Amgen limited the term in dispute to refer to the class of patients listed in the specification and quoted to the examiner. Teleflex, 299 F.3d at 1327 (noting that a term can be limited or extended by the specification or prosecution history as long as the patentee clearly intended to do so); Altiris, 318 F.3d at 1370 (same).[42]
The trickier question, however, is whether these remarks define the disputed term to include the in vivo effects of EPO regardless of whether they heal or cure this *243 class of patients.[43] While it is a close call, the Court does not so read these remarks. Admittedly, all of the effects the in vivo effects and an increase in hematocrit are labeled together as "therapeutic results." What is not made clear, however, is whether "therapeutic results" equates with "therapeutically effective." While there is support for reading the terms as coextensive, there is also support for viewing them differently. Amgen specifically differentiates between an amount that achieves therapeutic results and a "therapeutically effective amount:"
A person of skill in the art would understand that the amount of erythropoeitin necessary to achieve these defined therapeutic results would vary for each use. However, clinicians can readily determine the "therapeutically effective" amounts for each condition, and indeed for each patient.
HMR/TKT's App. to Opp'n, Tab 2 (Ex.2003, 12/1/94 Request for Reconsideration), at 2 (emphasis added). These two sentences indicate that a different amount of EPO is used to achieve each of the effects listed in the specification including the in vivo effects depending on the condition and needs of the patient, but that a clinician can determine the amount that would be "therapeutically effective." Thus, when read together, these sentences indicate that (1) the biological effects listed in the specification are part of the "therapy" but not necessarily "therapeutically effective," i.e., they do not necessarily heal or cure the patient, and (2) the amount necessary for therapeutic effectiveness an amount that heals or cures depends on the types of patients to which the recombinant EPO is being administered.
Because these remarks do not clearly disavow the ordinary and customary meaning of the disputed term and can actually be interpreted to support the ordinary and customary meaning of the disputed term,[44] the Court does not construe "therapeutically effective" to encompass any or all of the biological effects regardless of whether they work to heal or cure. Amgen II, 314 F.3d at 1327 ("We indulge a heavy presumption that a claim term carries its ordinary and customary meaning... [P]rosecution history may not be used to infer the intentional narrowing of a claim absent the applicant's clear disavowal of claim coverage."); see KX Industries, L.P. & Koslow Technologies Corp., 18 Fed. Appx. 871, 876 (Fed.Cir.2001) (unpublished opinion); see also Northern Telecom Ltd. v. Samsung Elec. Co., Ltd., 215 F.3d 1281, 1294-95 (Fed.Cir.2000) (analyzing whether the patentee in the prosecution history "with reasonable clarity and deliberateness" excluded a broader interpretation of the claims).[45] In further support of this conclusion *244 is the fact that the examiner allowed the claims to stand. As the Federal Circuit pointed out in a slightly different context in Amgen II, "[w]e must presume the examiner did his job, and if he truly thought that" Amgen's EPO was the same as natural EPO in that it merely elicited the biological effects, "the asserted claims would not have issued." 314 F.3d at 1327.[46]
5. Conclusion and Claim Construction of "Therapeutically Effective"
The Federal Circuit has stated that "any interpretation [of a patent claim term] that is provided or disavowed in the prosecution history shapes the claim scope." Renishaw, 158 F.3d at 1243 n. 3; see Digital Biometrics, Inc. v. Identix, Inc., 149 F.3d 1335, 1347 (Fed.Cir.1998) ("The public has a right to rely on such definitive statements made during prosecution."); Ekchian, 104 F.3d at 1303-04 (noting that the courts and the public may rely on an information disclosure statement to interpret a claim). Here, to overcome a patent rejection for indefiniteness, Amgen avowed that its invention was "therapeutically effective" for the class of patients listed in column 33 of the specification. Therefore, the Court rules that "therapeutically effective" must be read with reference to this class of patients despite the fact that the specification uses the words "included within." Amgen did not, however, go so far as to limit the list of patients to those suffering from anemia only or refine the term to mean an increase in hematocrit.[47] Nor did Amgen *245 clearly redefine the term "therapeutically effective amount" to mean an amount that induces the effects heretofore attributed to natural EPO regardless of whether they work to heal or cure the patient. To the contrary, Amgen repeatedly states in the prosecution history and in the specification that recombinant EPO's novelty is that it can actually effectively treat, that is heal or cure, patients. While "the inventor's subjective intent as to claim scope, when unexpressed in the patent documents, [should not] have any effect," Vitronics, 90 F.3d at 1584 (emphasis added), the correct construction is that which "stays true to the claim language and most naturally aligns with the patent's description of the invention," Renishaw, 158 F.3d at 1243. Throughout the prosecution history, Amgen repeatedly describes the invention as one that heals patients suffering from low red blood cell counts something that could not be done before. While the prosecution history and specification indicate a clear intent to define "therapeutically effective amount" as one that elicits "one or more" of the in vivo effects of natural EPO, they do not define the in vivo effects as necessarily being "therapeutically effective." In other words, they do not define these effects as being "therapeutically effective" regardless of whether they heal or cure. Instead, the plain and ordinary meaning of the term "therapeutically effective amount" was refined to (1) require (in addition to healing or curing) an elicitation of one or more of the in vivo effects that was attributed to natural EPO and (2) be read in the context of a certain class of patients. Thus, the Court's claim construction is as follows:
A therapeutically effective amount is a quantity that produces a result that in and of itself helps to heal or cure. A therapeutically effective amount is one that elicits in vivo biological activity of natural EPO such as those listed in the specification, column 33, lines 24 through 28: stimulation of reticulocyte response, development of ferrokinetic effects (such as plasma iron turnover effects and marrow transit time effects), erythrocyte mass changes, stimulation of hemoglobin C synthesis (see, Eschbach, et al., supra) and, as indicated in Example 10, increasing hematocrit levels in mammals.
Therapeutically effective is to be interpreted as being therapeutically effective with respect to the class of patients listed in the specification, column 33 lines 31 through 36: patients generally requiring blood transfusions and including trauma victims, surgical patients, renal disease patients including dialysis patients, and patients with a variety of *246 blood composition affecting disorders, such as hemophilia, sickle cell disease, physiologic anemias, and the like.
See 9/18/03 Pretrial Conference Tr. at 9-11.
As will be discussed further below, in deciding whether the Goldwasser reference anticipates Amgen's patents, this construction leaves the Court with a very fact-intensive task: determining which, if any, of the effects listed in the specification actually heal or cure the class of patients referred to therein.
B. "DNA Encoding"
1. Background
At the close of Amgen's case-in-chief during the first trial, this Court granted HMR/TKT's Fed.R.Civ.P. 52(c) motions for judgment of non-infringement of claims 4-9 of Amgen's '698 process patent. Amgen I, 126 F.Supp.2d at 99-101. On appeal, the Federal Circuit vacated and remanded this Court's rulings regarding infringement of the '698 patent because the Court had compared the accused device to the preferred or commercial embodiments of the patent instead of to the properly construed claims themselves. Amgen II, 314 F.3d at 1347.
In the memoranda in support and in opposition to each party's motions regarding infringement of the '698 patent, the parties argued different interpretations of the term "DNA encoding" found in claims 4 and 6 of the '698 patent. Thus, the Court concluded that the term is in dispute and needed to be construed in order properly to determine the issue of literal infringement.[48]
2. The Claims at Issue
Claim 4 of the '698 Patent:
A process for the production of a glycosylated erythropoietin polypeptide having the in vivo biological property of causing bone marrow cells to increase production of reticulocytes and red blood cells comprising the steps of: (a) growing, under suitable nutrient conditions, vertebrate cells comprising promoter DNA, other than human erythropoietin promoter DNA, operatively linked to DNA encoding the mature erythropoietin amino acid sequence of FIG. 6; and (b) isolating said glycosylated erythropoietin polypeptide expressed by said cells.
'698 Patent, Ex. 1, col. 38: 37-47 (emphasis added) (paragraph structure altered).
Claim 6 of the '698 Patent:
A process for the production of a glycosylated erythropoietin polypeptide having the in vivo biological property of causing bone marrow cells to increase production of reticulocytes and red blood cells comprising the steps of: (a) growing under suitable nutrient conditions, vertebrate cells comprising amplified DNA encoding the mature erythropoietin amino acid sequence of FIG. 6; and (b) isolating said glycoslated erythropoietin polypeptide expressed by said cells.
Id. at col. 38: 50-59 (emphasis added) (paragraph structure altered).
3. Summary of the Parties' Arguments
HMR/TKT's proposed claim construction rests on the argument that the word "encoding" means "producing." HMR/TKT's Mem. in Opp'n re '698 [Doc. No. 700] at 8. HMR/TKT argues that the phrase at issue in Amgen's '698 patent means that the DNA actually produces a *247 glycosylated erythropoietin polypeptide having a 166 amino acid sequence. Id. In other words, HMR/TKT argues that section (a) of claims 4 and 6 of the '698 patent should be construed to require the production of an EPO protein with 166 amino acids. Id. at 1; HMR/TKT's Reply re '698 [Doc. No. 725] at 3.
Amgen agrees that the term "mature erythropoietin amino acid sequence of FIG 6" refers to a fully processed EPO glycoprotein having a 166 amino acid sequence. Amgen argues, however, that section (a) of the disputed claims refers to the DNA that encodes the fully processed EPO glycoprotein not to the EPO glycoprotein itself. In other words, Amgen argues that the disputed claims refer to the type of DNA that is involved and describe that DNA as one that has a certain sequence, the genetic code, for the amino acid sequence spanning +1 through +166 of Figure 6. Amgen's Reply re '698 [Doc. No. 731] at 6. Amgen asserts that the proper construction of the claim language is "a DNA sequence that contains the genetic code for the amino acid sequence spanning from position +1 through position +166 of Figure 6." Amgen's Reply re '698 at 6. Amgen contends that a process can contain DNA that encodes the full 166 amino acids but result in an end-product that does not have the full 166 amino acid sequence. Thus, according to Amgen, this portion of the disputed claims refers to a type of DNA and to what that DNA encodes not the end-protein that is ultimately produced.
4. Discussion
It is true that the Court construed the "mature erythropoietin amino acid sequence of FIG. 6," as stated in both the '080 and '698 patent, to mean a mature (fully realized) erythropoietin having 166 amino acids. Amgen I, 126 F.Supp.2d at 100. HMR/TKT's argument that "DNA encoding ...[the] amino acid sequence of FIG. 6" means that the DNA actually must produce an EPO with a 166 amino acid sequence, however, stretches this construction too far.
The Court notes that HMR/TKT supports its definition of "encoding" primarily with extrinsic evidence evidence to which resort ought be had only "if necessary." Vitronics, 90 F.3d at 1583. As will be discussed below, use of extrinsic evidence here is not appropriate in construing these terms because "the patent documents, taken as a whole," are sufficient "to enable the court to construe [the] disputed claim terms." Id. Moreover, even if it were necessary, and thus appropriate, for this Court to consider extrinsic evidence as to the meaning of the word "encoding," HMR/TKT's arguments would still fail. HMR/TKT misinterprets the extrinsic evidence to which it points from the first trial. Dr. Kingston did indeed state that "the protein that is encoded is the protein that is actually produced," Kingston Test., Trial Tr. at 1390-91, but this does not define "DNA encoding" as referring directly and exclusively to the specific product that is actually produced. Instead, what this language requires is DNA that is capable of encoding the final product not DNA that produces the final product. HMR/TKT's interpretation of Dr. Lodish's testimony is also faulty. In the trial transcript pages to which HMR/TKT referred, Dr. Lodish never states that "encoding" means "producing," nor does Dr. Lodish define the fragment in question. He does indeed explain the end of the process as one that produces the same EPO glycoprotein. Lodish Test., Trial Tr. at 156-60. But this is the same point. Amgen's argument, and it is a sound one, is that this part of the claim is not describing the last step of the process, but an interim step one that requires a *248 DNA with a certain type of sequence or encoding capability.
Furthermore, the extrinsic evidence adduced during the second trial shows that "DNA encoding" in these claims does not mean that the end product must be produced. Dr. Lodish testified that those of skill in the art at the time would understand the plain meaning of the disputed term to mean "a DNA which when copied into RNA, and if necessary spliced, specifies the order of amino acids that are the mature erythropoietin amino-acid sequence depicted in Figure 6 of the patent."[49] Lodish Test., R. Trial Tr. at 1054: 17-22, 1058: 10, 1059: 1-3 (explaining that genes have two parts, one of which involves the "coding sequence, the piece of DNA that actually specifies the amino acids in the encoded product" and stating that it is this part that is the subject of the claim, "that is, it is an issue of DNA encoding specifying an amino-acid sequence as determined by the genetic code"); id. at 1059: 16-21 (stating that "DNA encoding the mature erythropoietin amino acid sequence of FIG. 6" refers to "the DNA sequences that encode all of the amino acids from +1 to +166 of the EPO sequence"); id. at 1063: 17-19 (explaining that "DNA encoding" refers to DNA in the cell, not to "the polypeptide that is ultimately secreted by the cell. It's a statement of the coding capacity of the DNA in the cell"); id. at 1055: 13-18 ("It simply refers to a sequence of DNA which has the capability of encoding, which encodes, a particular protein. It is not a statement about a protein that the cell actually makes or secretes."). Indeed, even Dr. Kingston, HMR/TKT's expert, admitted that one way the word "encoding" "could be used very precisely is to describe a very, very precise small bit of the gene, and that is the codons." Kingston Test., R. Trial Tr. at 163: 2-16.[50] Further, consistent with Dr. Lodish's testimony, Dr. Kingston stated that the phrase "DNA encoding the mature erythropoietin amino acid sequence of FIG. 6" means "DNA that provides the instruction to make th[e] protein which would be the sequences" found in Figure 6 and depicted as the codons encoding amino acids +1 through +166. Kingston Test., R. Trial Tr. at 135: 2-142: 7 (circling the entire sequence of Figure 6); Lodish Test., R. Trial Tr. at 1059: 22-1060: 25 (same).
Again, however, none of this evidence is necessary to the Court's construction because an examination of the plain and ordinary meaning of the words, the claims themselves, and the specification demonstrates that HMR/TKT's asserted construction is off base. Vitronics, 90 F.3d at 1582; SRI Int'l, 775 F.2d at 1118; Autogiro, 384 F.2d at 397.[51]
a. The Plain and Ordinary Meaning
The plain and ordinary meaning of "encode" is to "convert from one system of communication to another" and "to convert (a message) into code." Webster's Ninth New Collegiate Dictionary 1990. This implies that "DNA encoding" is DNA that converts one type of message or text into *249 another type of message and that it provides information to the cell.
b. The Claims
The claim language supports the plain and ordinary meaning of the term. The claim language establishes that "DNA encoding" refers to DNA that contains a certain sequence in the cells. Both claims 4 and 6 describe processes for producing a glycosylated erythropoietin polypeptide. The sentences in section (a) of the disputed claims do not, as HMR/TKT argues, require the production of the end-product of the claimed processes an EPO polypeptide with 166 amino acids. To the contrary, the claims clearly distinguish between the cells grown in step (a) (which comprise "DNA encoding the mature erythropoietin amino acid sequence of Figure 6") and the EPO glycoprotein itself that is isolated in step (b). Here, the "mature erythropoietin amino acid sequence of FIG. 6" modifies "DNA encoding" in the cells grown in step (a) not the "glycosylated erythropoietin polypeptide" isolated in step (b). Therefore, based on the claim language and the ordinary meaning of the words, it appears that the sentences containing the disputed phrase mean, in conjunction, that the DNA must provide or contain the code or instructions for the "mature erythropoietin amino acid sequence of FIG. 6."
The claims do not, however, imply that a protein with the "mature erythropoietin amino acid sequence of FIG. 6" must at the end of the process be produced. This point becomes clear when comparing these claims to that of the '080 patent. The '698 claims recite a "DNA encoding the mature erythropoietin amino acid sequence of FIG. 6." as opposed to the claims of the '080 patent that specifically recite an EPO glycoprotein that "comprises the mature erythropoietin amino acid sequence of FIG. 6." '080 Patent, Ex. 1, col. 38: 42-43.
In a nutshell, HMR/TKT's construction conflates the concept of DNA that encodes for a protein with requiring the production of a specific protein and in so doing ignores how proteins are actually produced. The DNA encodes the protein. It provides the instruction set used by the cell to synthesize a polypeptide that is later processed to its final form. DNA encoding a specific amino acid sequence, however, does not necessarily determine the final length of the polypeptide produced by the cell. The testimony adduced at trial regarding the 166th arginine makes this clear. Dr. Lodish explained that "as long as that DNA encodes the mature erythropoietin mature EPO sequence, it matters not at all how many other amino acids might be there. Whatever it is, as long as it encodes that sequence, it's fine." Lodish Test., Trial Tr. at 248: 23-249: 1.
HMR/TKT counterargues that it is the protein that is produced by the cell that determines what instructions were actually present in the cell and used in the process, that is, that erroneous instructions are not really instructions at all. See, e.g., 7/28/03 Hr'g Tr. at 52: 1-9 (explaining that "there's no proof one way or another as to what the intermediary is," and "the only proof that there is in this case is as to the end product").[52]
The Court, however, is not persuaded. The evidence adduced at the first trial overwhelmingly suggested that although *250 the DNA encodes for a 166 amino acid sequence, ultimately, the cell cleaves off the last amino acid residue prior to secretion of the final protein, EPO that has a 165 amino acid sequence. Amgen I, 126 F.Supp.2d at 86, 101; Lodish Test., Trial Tr. at 347: 16-18, 348: 3-9; 7/28/03 Hr'g Tr. at 52: 1-9. As Amgen's counsel explained at the Markman hearing, "DNA encoding the mature erythropoietin amino acid sequence of FIG. 6" is DNA containing codons for amino acids 1-166 of FIG. 6. These instructions will be used by the cell to produce a 165 amino acid erythropoietin. 7/28/03 Hr'g Tr. at 44: 11-47: 11.[53] Thus, DNA can encode or provide the genetic instructions for a protein that when ultimately secreted has a structure different from the one that the instructions dictate. That some of these instructions are not in the end "used" does not erase the fact that the DNA contained the information in the first place.
Moreover, as Amgen argues, HMR/TKT's construction makes the claims illogical. With HMR/TKT's construction, the claimed processes would require the use of a cell containing "a promoter DNA operatively linked to an EPO protein" or "an amplified EPO protein." Amgen's Mem. In Opp'n re '698 [Doc. No. 717] at 6-7. As asserted by Amgen and undisputed by HMR/TKT, this does not make sense.
In sum, any argument based on the claims that the words "producing" or "that produces" should be inserted in lieu of "encoding" fails along with HMR/TKT's argument that "encoding" refers to the EPO protein itself.[54]
c. The Specification
Like the claims, the specification supports the plain and ordinary meaning of the word "DNA encoding." It demonstrates that one skilled in the art at the time would have defined "encoding" as providing genetic instructions, that is, the sequence.
At the Markman hearing, HMR/TKT pointed to columns 11 and 13 in the specification to support its argument that DNA encoding means producing or that the protein is actually produced. 7/28/03 Hr'g Tr. at 51: 6-11. Those sections state that:
The isolation of the desired cDNA clones containing EPO encoding DNA was accomplished through the use of DNA/DNA colony hybridization.
'933 Patent, Ex. 1, col. 13: 64-66.
Specifically comprehended in part (b) are genomic DNA sequences encoding allelic variant forms of monkey and human erythropoietin and/or encoding other mammalian species of erythropoietin. Specifically comprehended by part (c) *251 are manufactured DNA sequences encoding EPO, EPO fragments and EPO analogs which DNA sequences may incorporate codons facilitating translation of messenger RNA in non-vertebrate hosts.
'933 Patent, Ex. 1, col. 11: 54-61.
As this Court pointed out during the hearing, however, neither of these sections equates "encoding" with producing. 7/28/03 Hr'g Tr. at 51: 12-15. Likewise, neither shows a clear and deliberate attempt by the patentee to become its own lexicographer. See Renishaw, 158 F.3d at 1249; Vitronics, 90 F.3d at 1582; Altiris, 318 F.3d at 1370; Teleflex, 299 F.3d at 1326. Each can be read consistently with the ordinary and customary meaning as understood by one skilled in the art, that is, inserting "providing the genetic instructions for" in lieu of "encoding." In fact, the section to which HMR/TKT points in column 11 works against its argument that "DNA encoding" means DNA producing the actual protein because it refers to DNA sequences encoding EPO and EPO fragments. Under HMR/TKT's construction, this section would require EPO fragments actually to be produced instead of requiring that the DNA have the genetic instructions for, that is, provide the codons or genetic sequence for, EPO fragments.
5. Conclusion and Claim Construction of "DNA Encoding"
Accordingly, the Court construed "DNA encoding" to mean "the genetic instructions for." 7/28/03 Hr'g Tr. at 56: 18-23.[55] TKT/HMR, however, did not give up. As a last-ditch effort to win on literal infringement which is what claim construction is really all about HMR/TKT argued at the second trial via Dr. Kingston's testimony that "genetic instructions for," the Court's construction of DNA encoding, could mean either the codons for the amino acids plus 1 to 166 of Figure 6 of the patent, or alternatively, all the instructions to make the mature protein including the regulatory sequences. Kingston, R. Trial Tr. at 161-163. Dr. Kingston explained that a scientist could use the term differently depending on the context. Id. To be clear, in this context, the Court interprets the claim to be referring to the coding sequence, the piece of DNA that actually specifies the amino acid sequence not the regulatory sequences that determine when and under what conditions the cells copy the gene into RNA.[56] This interpretation is supported by the claims themselves, which refer to DNA that encodes provides the genetic instructions for "the mature erythropoietin amino acid sequence of FIG. 6." Figure 6 indeed depicts, among other things, the deduced amino acid sequence that is arrived at by reading the codons of the DNA encoding the protein. Importantly, HMR/TKT points to no support in the prosecution history for its argument on this point. Thus, the Court interprets the claims to require the use of cells containing *252 DNA that provides the genetic instructions, the codons, for a 166 amino acid sequence.
C. Are Claims 4 and 6 of the '698 Patent Step-Plus-Function Claims?
1. Background[57] and Summary of The Parties' Arguments
Whether Amgen, in referring to the "step[] of ... growing under suitable nutrient conditions" in claims 4 and 6 of the '698 patent, was making step-plus-function claims is an issue raised for the first time by HMR/TKT in its Memorandum in Opposition to Amgen's Renewed Motion for Summary Judgment of infringement of claims 4-9 of the '698 patent. HMR/TKT's Mem. In Opp'n re '698 [Doc. No. 700] at 9. Paragraph 6 of 35 U.S.C. § 112, which sets forth the notion of step-plus-function and means-plus-function, "obligates this court to interpret each functional element in a combination claim by reference to the corresponding structure, material, or acts described in the specification and their equivalents." Seal-Flex, Inc. v. Athletic Track and Court Const., 172 F.3d 836, 843 (Fed.Cir.1999) (emphasis added); O.I. Corp. v. Tekmar Co., Inc., 115 F.3d 1576, 1583 (Fed.Cir.1997).[58] In other words, if this section applies, the Court must limit its infringement analysis to a comparison of the type of "growing" claimed in the specification to the type of growing utilized by HMR/TKT.
Ironically, this is exactly what the Court did in error in the first go-round. In Amgen I, the Court based its holding of non-infringement of the '698 patent on a comparison of HMR/TKT's process to the processes outlined in the patent specification.[59] This was error because the Court had never ruled that the relevant claims qualified as a step-plus-function claims.[60] HMR/TKT now presses the Court to address the issue and so to rule.
The wrinkle here is whether the Court now can address this issue that is, whether the Court can or should permit HMR/TKT to raise the argument at this stage. After all, in 2000, the Court issued a sanction order against HMR/TKT limiting it to *253 the contentions specifically described in its responses to interrogatories. Amgen's Mem. in Opp'n re '698 & '349 [Doc. No. 717] at 4; Amgen's App. to Mem. in Opp'n re '698 & '349 [Doc. No. 719], Ex. A (1/28/00 Order Granting Sanction). HMR/TKT never identified its step-plus-function theory in its responses to Amgen's contention interrogatories as a basis for non-infringement of the '698 patent. Amgen's App. to Mem. in Opp'n re '698 & '349, Tab C (12/7/99 HMR/TKT's Supplemental Answers and Objections to Amgen's Interrog. Nos. 2, 3, and 9) at 5-7, 17. Moreover, HMR/TKT never stated that this aspect of the '698 patent (i.e., whether it included a step-plus-function claim) needed to be resolved through a Markman hearing. Amgen asserts that the Court should therefore not allow this argument, and, at a minimum, the Court should afford Amgen the opportunity to present evidence directed to this new step-plus-function argument. Id. at 4-5. Moreover, Amgen argues that even if the Court allows such an argument, it lacks merit because "growing" is an "act," not a "function."
2. Discussion[61]
a. Should the Court Allow HMR/TKT to Make Its Step-Plus-Function Argument?
Whether the language of a claim is in step-plus-function format is a question of claim construction. See, e.g., Kemco Sales, Inc. v. Control Papers Co., Inc., 208 F.3d 1352, 1360 (Fed.Cir.2000) ("Whether the language of a claim is to be interpreted according to 35 U.S.C. § 112, ¶ 6, i.e., whether a claim limitation is in means-plus-function [or step-plus function] format, is a matter of claim construction and is thus a question of law, reviewed de novo."); Personalized Media Communications, LLC v. Int'l Trade Comm'n, 161 F.3d 696, 702 (Fed.Cir.1998) ("An infringement analysis entails two steps.... The first step, claim construction, is a question of law which we review de novo.... The second step is factual.... Whether certain claim language invokes 35 U.S.C. § 112, ¶ 6 is an exercise in claim construction and is therefore a question of law." (citations and internal quotation marks omitted)). Generally, on appeal, a party cannot proffer a new claim construction that changes its scope, but it can present additional arguments in support of a previously proposed construction. See, e.g., CCS Fitness, Inc. v. Brunswick Corp., 288 F.3d 1359, 1371 (Fed.Cir.2002). The rationale is that the parties deserve notice and an opportunity to develop the record and, at the same time, the appellate court needs to have a properly reviewable record on an issue raised on appeal. Interactive Gift Exp., Inc. v. Compuserve, Inc., 256 F.3d 1323, 1346-46 (Fed.Cir.2001); cf. Finnigan Corp. v. Int'l Trade Comm'n, 180 F.3d 1354, 1363 (Fed.Cir.1999). Thus, a relevant inquiry in determining whether a new claim construction can be pressed is "whether the trial court and the party claiming waiver had fair notice and an opportunity to address the issue concerning the scope of a claim limitation." CCS Fitness, 288 F.3d at 1371.
The situation here is unusual. First, this is not a new claim construction argument raised on appeal but instead a new claim construction argument raised on remand to the trial court. Second, counsel for Amgen the party now seeking to have the issue deemed waived acknowledged the possible applicability of the step-plus-function doctrine to the Court. On June 9, *254 2000, after the Court made its finding of non-infringement of the '698 patent, Amgen queried whether the Court was construing the '698 process claims as "means plus function" claims. Trial Tr. at 1308-1309. The Court replied as follows:
I don't mean to be elliptical. That is my analogy. That's right.... Now I think you've missed on the '698 patent. I think that because I do think you have to spell out a means-plus-function. And I have read this patent with great care and I've reflected on it throughout the testimony of all the witnesses. I don't see either by equivalent or by literal infringement.
Trial Tr. at 1309-1310. Thus, the Court referred to the means-plus-function doctrine in relation to the '698 patent[62] but, as noted earlier, did not definitively rule that the asserted claims were in means or step-plus-function format nor even mention step-plus-function in the opinion despite applying the infringement analysis required when a claim is in step-plus-function format.
Although the situation is not straightforward, it is clear that Amgen was on notice of the issue but did not get an opportunity to argue it. Given the procedural posture of the case with respect to the '698 patent specifically, Amgen was fully afforded the opportunity during the remand trial to address the issue, which substantially reduces any prejudice to it.
Indeed, the Federal Circuit has suggested that it is appropriate to consider whether a claim is in means-plus-function or step-plus-function format even when one party has essentially waived the issue. Rodime PLC v. Seagate Technology, Inc., 174 F.3d 1294 (Fed.Cir.1999). In that case, the parties contested at trial whether the plaintiff's claim was in means-plus-function format, with the plaintiff arguing that it was not. Id. at 1302. The district court ruled that the claim was in means-plus-function format. Id. The plaintiff appealed, but did not press that particular issue and thus apparently conceded that the claim was in means-plus function format. Id. The Federal Circuit nonetheless assessed de novo whether the claim was indeed in means-plus-function format, explaining that:
[The plaintiff's] concession ... does not relieve this court of its responsibility to interpret the claims as a matter of law. To interpret the claims, this court must decide the subsidiary question of whether the claim element disputed by the parties invokes § 112, ¶ 6 in the first instance.... Only by undertaking this inquiry can this court ensure consistency in statutory application. Moreover, this court's claim interpretation affects entities beyond the parties to this case. Therefore, this court examines the district court's decision that this claim falls under § 112, ¶ 6.
Id. (internal citations omitted). The Federal Circuit subsequently concluded that the district court had erred and that the claim was not in means-plus-function format.
*255 Similarly, in this case, whether this portion of the '698 patent is in step-plus-function format determines the entire analytic framework for analyzing whether HMR/TKT's process infringes this part of the patent. To make this assessment, therefore, this Court needs to determine which analytic framework is implicated. The Court can either make this decision on the merits or can simply decide that the regular infringement framework must be used because HMR/TKT waived its argument that the step-plus-function framework should be used. The problem with the latter approach is that, if the step-plus function framework is truly the applicable one, and the Court nonetheless declines to use it on grounds of waiver, the Court will essentially be applying the wrong law to this aspect of the claim. This, in turn, undermines consistency in statutory application.
For these prudential reasons, this Court analyses whether claims 4 and 6 of the patent are step-plus-function claims. It does so in the course of construing the claims because, as noted above, whether the language of a claim is in step-plus-function format is a question of claim construction. See, e.g., Kemco Sales, Inc., 208 F.3d at 1360; Personalized Media Communications, LLC, 161 F.3d at 702.
b. Are Claims 4 and 6 of the '698 Patent Step-Plus-Function Claims?
This is a close question, but, on balance, claims 4 and 6 of the '698 patent do not qualify as step-plus-function claims.[63] Five reasons support this conclusion.
First although this is not dispositive the words "steps of" are used in the claim. Such a grammatical structure indicates that this is not a step-plus-function claim, because the phrase "steps of" colloquially signals the introduction of specific acts, rather than functions. See Seal-Flex, 172 F.3d at 850 ("[T]he ... phrase `steps of' tend[s] to show that § 112, ¶ 6 does not govern that limitation. Accordingly, this court has similarly denied step-plus-function treatment to method claims which use the conventional `steps of' language."); see also O.I. Corp., 115 F.3d at 1582-83; Serrano v. Telular Corp., 111 F.3d 1578, 1583 (Fed.Cir.1997). Similarly, Amgen did not use the phrase that typically signals the introduction of a step-plus-function limitation: "step for." See Seal-Flex, 172 F.3d at 849 (Rader, J., concurring); Masco Corp. v. United States, 303 F.3d 1316, 1326-27 (Fed.Cir.2002). Accordingly, there is a presumption that section 112, paragraph 6 does not apply, that is, that this is not a step-plus-function claim. Generation II Orthotics Inc. v. Med. Tech. Inc., 263 F.3d 1356, 1368 (Fed.Cir.2001).
Second, upon examination, the claim element "growing" appears to recite a specific act for performing an ultimate function, that is, it appears to explain how the function is accomplished, rather than reciting the ultimate function itself. This is a key distinction. As Judge Rader explained in his concurrence in Seal-Flex, "the `underlying function' of a method claim element corresponds to what that element ultimately accomplishes in relationship to what the other elements of the claim and the claim as a whole accomplish. `Acts,' on the other hand, correspond to how the function is accomplished." Seal-Flex, 172 F.3d at 849-50. Here the "what" that is ultimately accomplished is the production of glycosylated erythropoietin, and the "how" is "growing [vertebrate cells] under suitable *256 conditions."[64] The dictionary definition of "growing" supports the interpretation that this is an act. Masco, 303 F.3d at 1327 (looking to a mechanical engineering dictionary and a regular unabridged dictionary to determine whether "transmitting" is an act); Vitronics, 90 F.3d at 1584 (noting that judges are free to consult technical treatises and dictionaries "so long as the dictionary definition does not contradict any definition found in or ascertained by a reading of the patent documents"). Here, the dictionary definitions of growing are "to increase in size by a natural process" or "to develop and reach maturity." The American Heritage Dictionary, supra, at 579. These definitions support that growing is an act. Moreover, they do not contradict the meaning of "growing" that may be inferred from the prosecution history, and HMR/TKT does not argue that Amgen defined the term to have anything other than its plain and customary meaning.
Third, HMR/TKT does not even attempt to explain, much less show, how Amgen's language "growing under suitable nutrient conditions" fails to describe an act. "[W]here a method claim does not contain the term `step[s] for,' a limitation of that claim cannot be construed as a step-plus-function limitation without a showing that the limitation contains no act." Masco, 303 F.3d at 1327 (emphasis added). To the contrary, HMR/TKT makes only a half-hearted assertion in a footnote in a memorandum in opposition that these claims are in step-plus-function format. Indeed, the footnote merely states that the argument HMR/TKT made with reference to claim 7 of the '349 patent can be applied to claims 4 and 6 of the '698 patent. HMR/TKT's Mem. In Opp'n re '698 at 9 n.* *.[65] HMR/TKT does not dispute Amgen's evidence, but simply claims that "growing" is not an act. HMR/TKT contradicts itself, however, as it implicitly refers to "growing" as an act in the Corrected Joint Pretrial Memorandum when it admits that HMR 4396 is produced by "growing, under suitable nutrient conditions R223 cells." Amgen's App. to Mot. for Judgment re '349 [Doc. No. 676], Tab M (4/26/00 Corrected Joint Pretrial Mem.) *257 ¶ 25. This implies that "growing..." is not in step-plus-function format. If "growing" was a function and needed further explanation, arguably HMR/TKT would not have admitted to such a statement in the Joint Pretrial Memorandum at least not without further explanation. HMR/TKT cannot merely assert that there is "no act" contained in this part of the claim without producing some evidence that there is not, i.e., that growing is not an act. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986) (quoting Fed.R.Civ.P. 56(e)) (stating that the non-moving party must "go beyond the pleadings, and by [its] own affidavits, or by the `depositions, answers to interrogatories, and admissions on file,' designate `specific facts showing there is a material issue for trial"'); Seal-Flex, 172 F.3d at 849-50 (noting that step-plus-function applies only when the "limitation contains nothing that can be construed as an act").
Fourth, the Federal Circuit has made clear that "claiming a step by itself, or even a series of steps, does not implicate section 112, ¶ 6," and that courts must be
careful not to extend the language of this provision to situations not contemplated by Congress. If we were to construe every process claim containing steps described by an "ing" verb, such as passing, heating, reacting, transferring, etc. into a step-plus-function limitation, we would be limiting process claims in a manner never intended by Congress.
O.I. Corp., 115 F.3d at 1583. If the Court were to construe this process claim that begins with "growing" an "ing" verb very much like heating, reacting, or transferring, as a step-plus-function limitation, it would be doing just that, that is, limiting the process claims in a manner never intended by Congress. Moreover, the Court would be "render[ing] the scope of coverage of these method claims uncertain and disrupt[ing] the patentees' settled expectations regarding the scope of their claims." Masco, 303 F.3d at 1327 (noting that "method claims are commonly drafted ... by reciting the phrase `steps of' followed by a list of actions comprising the method claimed").
As a final matter, the Federal Circuit's silence as to whether these claims are step-plus-function claims may be indicative. True, the Federal Circuit probably may not even have considered the possibility.[66] Alternatively, however, the Federal Circuit may have considered the step-plus-function possibility but rejected it as without merit. This latter interpretation of the Federal Court's silence is supported by the Federal Circuit's statement that this Court's analysis (comparing HMR/TKT's process to the specification) was "legally unsupportable." Amgen II, 314 F.3d at 1350-51. If the analysis was "legally supportable" by, for example, a finding that the claim was in step-plus-function format, the Federal Circuit certainly could have reached in and decided the issue itself, see Rodime, 174 F.3d at 1294. While it is true that in Rodime, the issue had been squarely before the district court and thus apparent to the Federal Circuit, here the issue was flagged by the way this Court erroneously conducted its infringement analysis. To anyone familiar with patent law, step-plus-function would have come to mind upon reading the Court's infringement analysis which limited Amgen's processes to those outlined in the specification. That the Federal Circuit failed to address the issue may, therefore, be significant. Ethicon Endo-Surgery, Inc. v. U.S. Surgical Corp., 93 F.3d 1572, 1582 (Fed.Cir.1996) *258 ("We must affirm the decision of the district court if it is supported by any ground properly preserved on appeal."); Datascope Corp. v. SMEC Inc., 879 F.2d 820, 822 n. 1 (Fed.Cir.1989) ("Appellees always have the right to assert alternative grounds for affirming the judgment that are supported by the record.").
3. Conclusion and Claim Construction
Though it is a close question, this Court rules that claims 4 and 6 of the '698 patent, in referring to the "steps of: (a) growing under suitable nutrient conditions ...," are not step-plus-function claims and that the regular infringement framework should therefore apply.
D. Is Claim 7 of the '349 Patent a Step-Plus-Function Claim?
1. Background
Amgen's '349 patent contains six product claims (claims 1-6) and one process claim (claim 7). '349 Patent, Ex. 1. This Court held, and the Federal Circuit affirmed, that HMR/TKT's HMR 4396 literally infringes the product claims of the '349 patent. Amgen II, 314 F.3d at 1352, 1358. Based on a comparison between the accused product and the preferred embodiment, this Court held that HMR/TKT did not literally or equivalently infringe the process claim, claim 7. Amgen I, 126 F.Supp.2d at 122. The Federal Circuit, as it did with the Court's holding of infringement of the '698 patent, vacated this ruling and remanded it so that the Court could analyze infringement by comparing the accused process to the properly construed claims themselves. Amgen II, 314 F.3d at 1351, 1347, 1313. Therefore, the remaining issue regarding this patent is whether HMR/TKT's HMR 4396 infringes claim 7.
2. The Claim at Issue
Claim 7 of the '349 Patent:
A process for producing erythropoietin comprising the step of culturing, under suitable nutrient conditions, vertebrate cells according to claim 1, 2, 3, 4, 5 or 6.
'349 Patent, Ex. 1, col. 38: 34-36.
3. Summary of the Parties' Arguments
HMR/TKT, in an effort to establish non-infringement of claim 7, has argued, as it did with claims 4 and 6 of the '698 patent, that claim 7 is a step-plus-function claim and that 35 U.S.C. § 112, ¶ 6 therefore applies. As such, it contends that its product does not literally infringe the "step of culturing" because HMR/TKT's process does not involve the culturing procedures set forth in Amgen's specification. HMR/TKT's Mem. in Supp. [Doc. No. 687] at 12-13. As with the '698 patent, Amgen argues, as a preliminary matter, that HMR/TKT is improperly basing its motion under Fed.R.Civ.P. 52(c) on new arguments and defenses, given the previous orders of this Court and Amgen's lack of opportunity to address these issues. Amgen's Mem. In Opp'n re '698 & '349 [Doc. No. 717] at 3-5. Furthermore, Amgen points out, the procedural context here is different than it was with the '698 patent, as this Court heard the entirety of both parties' arguments and evidence concerning '349 claims 1, 3, 4, 6, and 7. Lastly, Amgen argues, for the same reasons that it did regarding the '698 patent, that claim 7 is not a step-plus-function claim. Id. at 11-14.
4. Discussion
a. Should the Court Allow HMR/TKT to Make Its Step-Plus-Function Argument?
Here, there is the same wrinkle that there was with the step-plus-function argument respecting the '698 patent: *259 should the Court permit HMR/TKT to raise this argument at this late stage in the game? There are two differences, however, that make the wrinkle, in the context of this patent, harder to iron out. First, the Court did not remark on the record, as it did with the '698 patent, that it was making a means-plus-function analogy in ruling on the '349 patent claims. Second, HMR/TKT has already presented its case of non-infringement regarding all the claims of the '349 patent.
Neither of these differences, however, prevents the Court from allowing HMR/TKT to make this argument at this point. The fact that the Court did not make a means-plus analogy to this patent is easily overcome since the Court, in Amgen I, explained that it found non-infringement of claim 7 of the '349 patent for the same reasons as it did the '698 patent. Thus, the parties were on notice that any analysis regarding the process claims of the '698 patent would necessarily apply to the '349 patent. The procedural landscape ought not prevent the Court from construing whether this is a step-plus-function claim. If it is such a claim, the Court ought not conduct its infringement analysis as though it were not. This claim is here on remand and this Court must construe it in accordance with the law. Thus, the Court reaches the same conclusion as it did with the '698 patent, that is, that it can and should address HMR/TKT's step-plus-function argument.
b. Is Claim 7 of the '349 Patent a Step-Plus-Function Claim?
The determination of whether claim 7 of the '349 patent is a step-plus-function claim must be made in the same way as any other determination regarding claim construction. As such, the Court must principally rely on intrinsic evidence and refer to extrinsic evidence only if necessary, with the exception that a dictionary or treatise which qualifies as extrinsic evidence can be consulted freely as long as it does not contradict the patent language.
The Court's assessment of whether "culturing" is a function rather than an act, such that the step-plus-function framework applies, tracks the analysis provided above with respect to the whether "growing" is a function rather than an act in the '698 patent. Just as the Court ruled that growing is an act, it rules that culturing is an act, and claim 7, therefore, does not state a step-plus-function limitation.
Like the asserted claims of the '698 patent, claim 7 contains the phrase "step of," rather than the phrase "step for." Accordingly, there is a presumption that section 112, paragraph 6 does not apply that this is not a step-plus-function. Generation II Orthotics Inc., 263 F.3d at 1368; Seal-Flex, 172 F.3d at 849 (Rader, J., concurring); Masco, 303 F.3d at 1326-27.
HMR/TKT argues that "culturing" is the claimed function of claim 7. HMR/TKT's Mem. in Supp. re '698 & '349 [Doc. No. 687] at 13. Specifically, it claims that the "what" is "culturing." In other words, HMR/TKT argues that "culturing" is "what" the claim ultimately accomplishes, and nothing else in the claim describes "how" the culturing is accomplished. HMR/TKT's Reply Mem. re '698 & '349 [Doc. No. 725] at 9. While at first blush this argument makes sense, the Federal Circuit, in Masco, interpreted Judge Rader's formulation as requiring analysis of "what th[e] limitations ultimately accomplish in relation to what the other limitations and each claim as a whole accomplish." Masco, 303 F.3d 1316. Although there are no words in claim 7 that state the function, as Judge Rader explained in Seal-Flex, "the function of that element may nonetheless be discernible from the context of the overall claim and the disclosure *260 in the specification." Seal-Flex, 172 F.3d at 850. Here, the claim states in its preamble that it is "a process for producing erythropoietin" suggesting that there is a larger, ultimate function and that "culturing" is merely one act that achieves it. While the "recitation of the overall function of the claim in the preamble does not suffice to convert each element into an act for performing that function so as to preclude application of section 112, paragraph 6," Seal-Flex, 172 F.3d at 850,[67] language in other claims of the patent lends further support to the Court's conclusion that "culturing" is an act. Here, claim 7 itself refers to, inter alia, product claims 1 and 4. Claims 1 and 4 describe the purpose of culturing vertebrate cells as being able to produce erythropoietin at a certain rate:
Claim 1: Vertebrate cells which can be propagated in vitro and which are capable upon growth in culture of producing erythropoietin in the medium of their growth in excess of 100 U of erythropoietin per 10 6 cells in 48 hours ...
Claim 4: Vertebrate cells which can be propagated in vitro which comprise transcription control DNA sequences... for production of human erythropoietin, and which upon growth in culture are capable of producing in the medium of their growth in excess of 100 U of erythropoietin per 10 6 cells in 48 hours ...
'349 Patent, Ex. 1, col. 38: 8-14, 21-27 (emphasis added). Hence, when considering what the "other limitations and each claim as a whole accomplish," it appears that "culturing" is not the claimed function but instead a single step or act of a process claim that "ultimately accomplishes" the production of erythropoietin at a certain rate. Masco, 303 F.3d at 1327 (emphasis added).
There are two other pieces of support for construing "culturing" as an act. First, both parties agreed that the claim term "culturing under suitable conditions" means "growing in vitro under appropriate [or suitable] conditions." Amgen's App. to Mem. in Opp'n re '698 & '349, Tab P (9/20/99 App. to Amgen's Claim Construction Submission) at 7; id., Tab Q (10/18/99 App. to HMR/TKT's Claim Construction Submission) at 5. Thus, implicitly HMR/TKT admitted that "culturing" and "growing" are essentially interchangeable terms. This, considered in combination with the Joint Pretrial Memorandum itself, which states that HMR/TKT's HMR 4396 is produced by "growing, under suitable nutrient conditions R223 cells," 4/26/00 Corrected Joint Pretrial Mem. at 5, ¶ 25, suggests that even HMR/TKT at one point did not believe that "growing" and by extension, "culturing" was a function that needed further explanation. This strongly suggests that the term "culturing" was one reasonably well understood by those skilled in the art, a relevant consideration in determining whether a term is an act. Cf. Greenberg v. Ethicon Endo-Surgery, Inc., 91 F.3d 1580, 1582 (Fed.Cir.1996); see also Watts, 232 F.3d at 881; Caterpillar, 961 F.Supp. at 1256.[68]
Second, dictionary definitions of "culturing" define this word as an act. A standard medical dictionary, Dorland's Medical *261 Dictionary, defines "culture" as "propagation of ... living tissue cells in special media conducive to their growth." Amgen's App. to Mem. in Opp'n re '698 & '349, Tab R (Dorland's Illustrated Med. Dictionary (27th ed.1988)), at 334; see, e.g., Masco, 303 F.3d at 1328 (relying on a standard mechanical engineering dictionary definition of "transmitting" to help determine whether it is an act). The American Heritage Dictionary describes the verb culturing to mean "to cultivate" or "to develop (microorganisms or tissues, for example) in a culture medium." The American Heritage Dictionary, supra, at 348; see, e.g., Masco, 303 F.3d at 1328 (relying on standard unabridged dictionary definition of "transmitting" to help determine whether it is an act); Vitronics, 90 F.3d at 1584. None of these definitions contradicts what is described in the patent.
In sum, HMR/TKT has failed to show that the "limitation contains nothing that can be construed as an act." Seal-Flex, 172 F.3d at 850. On the contrary, "culturing" that is, developing cells in a certain medium can logically be construed as an act because it describes how the EPO is produced (i.e., by culturing the cells), and because "culturing" is itself a term well understood by those skilled in the art.
As a final matter, the Court notes the same concerns it had with construing "growing" as a step-plus-function limitation. If the Court were to construe "culturing" as a step-plus-function limitation, it would run the risk of interpreting the process claim of the '349 patent in a way that Congress never intended, rendering the scope of coverage of the patent uncertain and disrupting the patentee's settled expectations regarding the scope of the claims. Masco, 303 F.3d at 1328; O.I. Corp., 115 F.3d at 1583.
5. Conclusion and Claim Construction
Accordingly, the Court rules that claim 7 of the '349 patent does not contain a step-plus-function limitation and that the regular framework for assessing infringement therefore applies.[69]
IV. VALIDITY CHALLENGES UNDER 35 U.S.C. § 112
When claims are construed broadly, alleged infringers commonly challenge validity under 35 U.S.C. § 112, ¶¶ 1, 2 in light of the broad construction. Amgen II, 314 F.3d at 1330. This is exactly what HMR/TKT does here. It argues that certain of Amgen's claims are now invalid because of how broadly the Court construed them. Because these validity challenges relate directly to this Court's claim construction and claims are construed the same way for both invalidity and infringement, see, e.g., W.L. Gore & Assocs., Inc., v. Garlock, Inc., 842 F.2d 1275, 1279, 1280 (Fed.Cir.1988), this Court now addresses the relevant section 112 issues before turning to the infringement issues. See Amgen II, 314 F.3d at 1330 (addressing section 112 issues before infringement for the same reasons).
As with any validity challenge, the Court begins by presuming that the patents are valid. Amgen II, 314 F.3d at 1335; 35 U.S.C. § 282 (2000).[70] As a result, HMR/TKT bears the burden of going *262 forward and a "heavy burden" of persuasion, one that requires proof by clear and convincing evidence. Amgen II, 314 F.3d at 1335. Clear and convincing evidence is "evidence which produces in the mind of the trier of fact an abiding conviction that the truth of [the] factual contentions is `highly probable.'" Buildex, Inc. v. Kason Indus., Inc., 849 F.2d 1461, 1463 (Fed.Cir.1988).
A. Definiteness
1. The '698 and '349 Patent[71]
a. Discussion
Paragraph 2 of section 112 requires that a patent specification include one or more claims "particularly pointing out and distinctly claiming subject matter which the applicant regards as his invention." 35 U.S.C. § 112, ¶ 2 (2000). The Federal Circuit has stated that the standard for determining whether a claim is sufficiently definite is "[i]f one skilled in the art would understand the bounds of the claim when read in light of the specification." Exxon Research and Eng'g Co. v. United States, 265 F.3d 1371, 1375 (Fed.Cir.2001); Union Pac. Res. Co. v. Chesapeake Energy Corp., 236 F.3d 684, 692 (Fed.Cir.2001) ("The definiteness inquiry focuses on whether those skilled in the art would understand the scope of the claim when the claim is read in light of the rest of the specification."). Although the definiteness requirement is meant to protect public notice of the scope of the patentee's right to exclude, Honeywell Int'l, Inc. v. Int'l Trade Comm'n, 341 F.3d 1332, 1338-39 (Fed.Cir.2003), the Federal Circuit has made clear that the standard for indefiniteness is rather high. A claim is not indefinite merely because its scope is not ascertainable from its face. Instead, it is indefinite if it is "insolubly ambiguous and no narrowing construction can be properly adopted." Amgen II, 314 F.3d at 1342; Honeywell, 341 F.3d at 1338-39; Amgen Inc. v. Chugai Pharm. Co., 927 F.2d 1200, 1218 (Fed.Cir.1991); Standard Oil Co. v. Am. Cyanamid Co., 774 F.2d 448, 453 (Fed.Cir.1985).
HMR/TKT argues that under the Court's construction of "DNA encoding" the asserted claims of the '698 patent and claim 7 of the '349 patent are invalid as indefinite because they include within their scope many embodiments that will not make EPO. HMR/TKT's Opening Br. After Trial [Doc. No. 808] at 47-48. Specifically, it argues that the Court's construction of the term requires only that the DNA provide the requisite letters or codons, regardless of what protein is actually made, and that the evidence demonstrates that while many cells contain the same DNA codons, only those in which certain particular DNA codons are contiguous will actually produce EPO. Further, it asserts that Amgen has changed its stance and now claims that "genetic instructions for" includes not only the codons but also the splicing instructions for putting those codons together in the correct order.[72] The claims, it asserts, say nothing about splicing instructions or messages and, as such, are indefinite and inoperative.
*263 Amgen responds primarily by arguing that the evidence demonstrates that skilled artisans using the teachings of Amgen's patents would have been able to produce EPO using cells comprising non-contiguous DNA encoding the "mature erythropoietin amino acid sequence of FIG. 6." Amgen's Reply to HMR/TKT's Opening Br. After Trial [Doc. No. 815] at 33-34.[73] Further, it claims that this very evidence establishes that those skilled in the art would have known how to determine which processes fell within the '698 and '349 claims.
The primary dispute, then, is whether the specification teaches skilled artisans to splice the codons into the correct order when the codons are not contiguous but need to be in order to make EPO. If it does, then the claims are not indefinite as they do not cover embodiments that do not make EPO.
While it may be true, as Dr. Kingston originally stated, that "only those cells in which the DNA letters were contiguous would actually produce EPO," Kingston Test., R. Trial Tr. at 56-60, 164: 2-7, Dr. Kingston admitted that the cells from Example 10 of Amgen's specification produce EPO even though the Figure 6 codons for the mature erythropoietin sequence in the Example 10 cells are not contiguous. Id. at 164: 8-22; 170: 4-10. Either Dr. Kingston was blatantly contradicting his original statement, or as the Court concludes is more likely Example 10 and Figure 6 communicate to Dr. Kingston, one skilled in the art, how non-contiguous codons can be manipulated to produce EPO. This belies HMR/TKT's argument that the claims are vague or indefinite for not including splicing instructions and for covering contiguous and noncontiguous codons because the specification provides the information that Dr. Kingston believed was missing from the claims.
This deduction that the specification makes the term "DNA encoding" understandable to the skilled artisan, Exxon Research and Engineering Co., 265 F.3d at 1375; Union Pacific Resources Co., 236 F.3d at 692 is supported by expert testimony from Dr. Lodish and by other testimony from Dr. Kingston.
According to Dr. Lodish, Dr. Lin's patent taught those skilled in the art in 1983 to produce DNA sequences encoding EPO that are either contiguous or noncontiguous. Lodish Test., R. Trial Tr. at 1061: 4-1063: 4. In other words, Dr. Lodish testified that those skilled in the art would not *264 consider the phrase "DNA encoding" to require the presence of contiguous codons of the mature EPO sequence of Figure 6. The main support for this contention stems from the fact that the codons were non-contiguous in Figure 6 of the patent. As mentioned earlier in the claim construction portion of this memorandum and order, Dr. Lodish testified that those of ordinary skill in the art at the time would have understood the disputed term to mean "a DNA which when copied into RNA, and if necessary spliced, specifies the order of amino acids that are the mature erythropoietin amino-acid sequence depicted in Figure 6 of the patent." Lodish Test., R. Trial Tr. at 1054: 17-22 (emphasis added); id. at 1058: 10-1059: 3. He explained that Figure 6 disclosed to those skilled in the art the codons for the mature EPO amino acid sequence, the introns, exons, and splice donor and acceptor sites of the human genomic EPO sequence. Id. Indeed, Dr. Kingston admitted that Lin's specification discloses the EPO gene sequence, the EPO splice donor and acceptor sites, and the linkage of a non-human promoter with the EPO gene. Kingston Test., R. Trial Tr. 116: 23-117: 2. According to Dr. Lodish (and not directly disputed by Dr. Kingston), this information, along with what was known in the art, enabled skilled artisans to alter the codons, to alter or eliminate the introns, and to make many DNA sequences that would encode human EPO and work in the claimed processes. Id. Thus, contrary to HMR/TKT's assertions, expert testimony from both sides shows that those skilled in the art would understand the claims to cover contiguous and non-contiguous DNA sequences that when necessary could be spliced into a correct and contiguous order to produce EPO. Union Pacific Resources Co., 236 F.3d at 692 ("The definiteness inquiry focuses on whether those skilled in the art would understand the scope of the claim when the claim is read in light of the rest of the specification.").
b. Conclusion
HMR/TKT has failed to establish by clear and convincing evidence that "DNA encoding" is a vague, ambiguous, or undefined term not understandable to a skilled artisan when read in light of the specification. Accordingly, the Court rejects HMR/TKT's argument that the disputed claims of the '349 and '698 patent are indefinite.
B. Written Description[74]
1. The '698 and '349 Patents
a. Discussion
The basic requirements for the content of a patent specification are found in 35 U.S.C. § 112, ¶ 1:
The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains ... to make and use the same....
35 U.S.C. § 112, ¶ 1 (2000). "The purpose of this provision is to ensure that the scope of the right to exclude, as set forth in the claims, does not overreach the scope of the inventor's contribution to the field of art as described in the patent specification." Reiffin v. Microsoft Corp., 214 F.3d 1342, *265 1345 (Fed.Cir.2000). Therefore, the specification must communicate clearly to those skilled in the art that the inventor invented what is claimed. In re Gosteli, 872 F.2d 1008, 1012 (Fed.Cir.1989). Specifically, the disclosure as originally filed must explicitly or inherently convey to the skilled artisan that the inventor had possession at that time of the later claimed subject matter. Reiffin, 214 F.3d at 1346; In re Kaslow, 707 F.2d 1366, 1375 (Fed.Cir.1983); see generally Guang Ming Whitley, A Patent Doctrine without Bounds: The "Extended" Written Description Requirement, 71 U. Chi. L.Rev. 617 (2004). Compliance, however, is to be judged as of the date the application is filed. United States Steel Corp. v. Phillips Petroleum Co., 865 F.2d 1247, 1251 (Fed.Cir.1989); Application of Koller, 613 F.2d 819, 824, 204 U.S.P.Q. 702 (1980). Thus, the critical inquiry is whether the specification clearly communicated to those skilled in the art what was claimed based on what was known in the art at the time of the filing in this case, 1983-84. Only if the claims would have been, at the time of filing, correctly rejected for inadequate support will a court find that the claims are now invalid for lack of support. See Koller, 613 F.2d at 824.
HMR/TKT contends that Amgen's claims, as construed by the Court, have a scope far greater than the written description of Amgen's patents and are, therefore, invalid. HMR/TKT's Opening Br. After Trial at 47-48. Primarily, it makes two arguments in support of this contention. First, HMR/TKT argues that the specification "repeatedly describes [the] DNA, cells, processes and proteins in terms of only exogenous DNA and heterologous recombination," whereas the Court construed the asserted claims in the '698 and '349 patents to cover both exogenous and endogenous DNA and homologuous and heterologous recombination.[75] HMR/TKT's Opening Br. After Trial at 47-48. Second, HMR/TKT points to the undisputed fact that the specification provides only an example of a process which places the promoter just upstream of the ATG initiation codon of a cloned and isolated EPO gene, although the Court construed "operatively linked," as found in the '698 patent,[76] to cover placement much farther upstream. Id.[77] As such, HMR/TKT argues, the asserted process claims of the '698 patent fail to provide adequate written description. Id.
(1) HMR/TKT's First Argument: Endogenous DNA and Homologous Recombination
Although HMR/TKT's first argument is, in part, factually correct the specification explicitly discloses only exogenous EPO DNA expression systems and heterologous recombination techniques[78] it is misdirected. The section *266 112 inquiry focuses on what was known by those skilled in the art at the time of the filing of the application. Here, it is undisputed that in 1983-84 (the time period of the application filing date), endogenous activation technology and homologous recombination were not known to skilled artisans. HMR/TKT's Findings of Fact ¶ 488; Amgen's Reply to HMR/TKT's Opening Br. After Trial at 34-35.[79] Therefore, this technology is irrelevant to the written description analysis, and for good reason. "If later states of the art could be employed as a basis for rejection under 35 U.S.C. § 112, the opportunity for obtaining a basic patent upon early disclosure of pioneer inventions would be abolished." Application of Hogan, 559 F.2d 595, 606, 194 U.S.P.Q. 527 (1977); see also Koller, 613 F.2d at 825 (same).[80]
HMR/TKT incorrectly assumes that the Court's construction of Amgen's claims to cover this later developed technology changes the analysis. Application of Koller, a case similar to this one, shows the fallacy of HMR/TKT's assumption. In that case, the Federal Circuit upheld a broad construction of the term "liquid medium" that covered all solvents (including the later developed water-immiscible solvents) despite a specification that only described water and water-miscible solvents and not water-immiscible solvents. It reversed, however, the decision of the United States Patent and Trademark Office Board of Appeals that had found, inter alia, that the claims failed to provide adequate description. The Federal Circuit conducted its section 112 analysis based on what was claimed and known at the time of the application filing date. Because water-immiscible solvents were not known at the time of the application filing date, the Federal Circuit found that the term "liquid medium" was adequately described. Koller, 613 F.2d at 823-25.
Here, the situation is very similar. Because homologous recombination and use of endogenous DNA were not known to those skilled in the art at the time of the application, HMR/TKT's first argument *267 for inadequate written description fails. As the Federal Circuit explained in Application of Hogan, "the Courts have consistently considered subsequently existing states of the art as raising questions of infringement but never of validity." Hogan, 559 F.2d at 607 (noting that the PTO's concern that allowance of the claims might lead to enforcement efforts against later developers is "both irrelevant and unwarranted" because "[t]he business of the PTO is patentability, not infringement"); United States Steel Corp., 865 F.2d at 1251 (stating that the fact that "claim[s] may cover a later version of the claimed [invention] relates to infringement not to patentability").
HMR/TKT's arguments are more properly reserved for invoking the judicially developed reverse doctrine of equivalents defense which allows interpretation of the claims in light of the specification, inter alia, and precludes improper enforcement against later developers. Hogan, 559 F.2d at 607. This argument alone fails to establish this defense. Because this is the only argument presented with respect to the sufficiency of the written description of claim 7 of the '349 patent, the Court holds that HMR/TKT has failed to meet its burden with respect to this defense.
(2) HMR/TKT's Second Argument: Placement of the Promoter
HMR/TKT's second argument and Amgen's response thereto, as they relate to the '698 patent, render determination of the written description a bit more squirrelly. As stated above, HMR/TKT correctly argues that the specification only describes insertion of the promoter just upstream of the ATG initiation codon of the EPO gene to be expressed while the Court construed the claims to cover HMR/TKT's process of inserting the promoter far upstream leaving multiple ATGs between the promoter and the gene to be expressed.[81] Instead of counter-arguing, as it did in response to HMR/TKT's first argument, that HMR/TKT's placement technique was a post-filing advance which need not be described, Amgen contends that by 1984, artisans of ordinary skill could have placed a promoter DNA in such a position that multiple ATGs would exist between it and the gene to be expressed, and they knew how to express proteins in vertebrate cells by positioning a promoter upstream of exon coding sequences and removing unwanted DNA by manipulating splice sites. Amgen's Reply to HMR/TKT's Opening Br. After Trial at 34-35; Amgen's Reply to HMR/TKT's Findings of Fact ¶ 67. Further, Amgen asserts, evidence shows that those of skill in the art would have understood the patent to describe operative linkages of far greater distances than 44 pairs and that skilled artisans would have understood from Lin's patent how to avoid potentially interfering ATG sequences and thereby successfully position the promoter further upstream of DNA encoding EPO. Id. ¶ 68, ¶ 342.[82]
*268 This argument is curious because the easier path would have been to argue that placement so far upstream was a post-filing advance. Indeed, the Court's factual findings in Amgen I would have supported such an argument. See, e.g., Amgen I, 126 F.Supp.2d at 160 (concluding that placing the promoter farther upstream works to make HMR/TKT's process more "technologically advanced" than that in Amgen's patent and commenting that there was no evidence implying that "one of ordinary skill in the art would dare to place a promoter sequence in such a position that multiple ATGs would exist between it and the gene to be expressed"). Such an argument, however, would have weakened Amgen's position with respect to the reverse doctrine of equivalents. In other words, urging that this technique was a post-filing advance would work against Amgen's argument that HMR/TKT's product and process is not so far changed in principal that the Court ought find that it does not infringe under the reverse doctrine of equivalents.
Stuck in a similar catch-22, HMR/TKT argues with respect to section 112 that Amgen should have described upstream placement of the promoter, yet, in furtherance of its reverse doctrine of equivalents argument, HMR/TKT argues with equal passion that a process for producing EPO by linking the promoter and transcription control sequences far upstream of the EPO gene had never been done before HMR/TKT developed its patented gene activation process. HMR/TKT's Reply Br. After Trial [Doc. No. 819] at 29, 34. Further, it argues that those skilled in the art recognized that promoter linkages further upstream of the initiation codon would not work to produce EPO. HMR/TKT's Findings of Fact ¶ 493. Thus, HMR/TKT's reverse doctrine of equivalents argument belies its argument that Amgen should have described placement of the promoter further upstream of the EPO gene to be expressed since, according to HMR/TKT, this had never been done before. Thus, both parties, to a degree, have argued against their best interests on this issue because to do otherwise would weaken their positions with respect to application of the reverse doctrine of equivalents.
However the parties may frame the issue, this Court, as trier of fact in this case, must determine whether placing the promoter farther upstream was a concept sufficiently known to those skilled in the art at the time of filing such that the claims would have been understood to encompass such a technique. United States Steel Corp., 865 F.2d at 1251 ("`[L]engage in a specification is to be understood for what it meant to one having ordinary skill in the art at the time the application was filed' ... and ... support need be found for only the claimed invention, in view of how one skilled in the art at that time would construe the claims and would read its specification." (quoting Koller, 613 F.2d at 824) (internal citation omitted)); United States Steel Corp., 865 F.2d at 1252 (considering the state of the art in 1983-84, the level of sufficiency and the condition of knowledge about all art-related facts at the time of filing).[83] If the Court determines *269 that this is so, the Court must consider whether the specification in its entirety not just literally conveys to the skilled artisan that Amgen's process includes such upstream promoter placement. Kaslow, 707 F.2d at 1375; cf. Application of Edwards, 568 F.2d 1349, 1352, 196 U.S.P.Q. 465 (1978).
After careful review of the evidence from the first and second trials, the Court now concludes that placement of the promoter further upstream of the EPO coding region and splicing out deleterious ATGs was indeed a concept known and understood albeit not practiced by those skilled in the art at the time Amgen filed its application (1983-84).
Dr. Lodish and Dr. Kingston testified that both Amgen and HMR/TKT use a technique of linking two different pieces of DNA together with a splice donor site and a splice acceptor to express a protein and that this was a standard technique in 1983. Kingston Test., Trial Tr. at 1428-30, 1433, 1434: 12-19; Lodish Test., R. Trial Tr. at 1081 (claiming that at the time of the patent application this type of splicing was common). While Dr. Lodish did indeed admit that Dr. Lin did not know what sequences were upstream of the EPO gene, and that it was intuitive to place the promoter close to the EPO coding region because the "longer the distance the more problems you're likely to encounter," he clarified that those skilled in the art knew that it was possible to vary the distance and still cause transcription and proteins to be made, because the sequences that are unwanted are readily identifiable and can be avoided. Lodish Test., Trial Tr. at 255-58. Further, he explained, those skilled in the art in 1983 did indeed know that a promoter could be placed 8,000-10,000 bases upstream and that very long intervening sequences could be spliced out. Lodish Test., R. Trial at 1081. Even Dr. Kingston himself admitted that in 1983 those skilled in the art knew how to place a promoter much further upstream than 44 base pairs, the location identified in Example 7 of Dr. Lin's patent. Kingston Test., Trial Tr. at 1436-38.
Additionally, there were published articles showing that those skilled in the art possessed this knowledge. Dr. Kingston's mentor, Dr. Sharp, published an article in 1983 that, according to Dr. Kingston, showed a construct in which a splice donor site was added to splice out approximately a 700 base pair fragment of DNA ("a 5 prime splice and a 3 prime splice") from the message. Kingston Test., Trial Tr. at 1435-36. Indeed, Dr. Kingston himself published an article in 1982 that disclosed that the way to discard a portion of the DNA that was not wanted in the vector was to put a downstream splice receptor or *270 acceptor site and splice it out. Id. at 1436-37. In the constructs discussed in the article, the distance between the 5 prime and 3 prime splice sites was, according to Dr. Kingston, between 180 and 500 pairs. Id. at 1438.
HMR/TKT argues, however, that the evidence shows that no one had in fact used those splice sites the way that HMR/TKT eventually did in other words, that placing the promoter upstream as HMR/TKT did was novel. HMR/TKT's Response to Amgen's Findings at 130. HMR/TKT also suggests that the situations to which reference has just been made appear only in nature; that is, they were not human constructs or experiments. See, e.g., Lodish Test., R. Trial Tr. at 1104: 15-1105: 5. The Court is not persuaded that the evidence shows what HMR/TKT claims it does. First, Dr. Sharp's article, Trial Ex. 247, discloses actual experiments showing upstream placement, see, e.g., R. Trial Tr. at 1134-35. HMR/TKT produced no evidence to the contrary. Tellingly, HMR/TKT's counsel neither asked Dr. Kingston whether actual experiments had been conducted in 1983-1984 nor asserted in any of its post-trial memoranda the absence of actual experimentation. Second, and perhaps most enlightening, the only support HMR/TKT offers for its contention that no one skilled in the art had in 1983-84 placed the promoter upstream as HMR/TKT did, or even would have dared to do so, is the Court's previous factual findings, which were made with respect to a different legal issue. See, e.g., HMR/TKT's Opening Br. After Trial at 15 (citing only this Court's opinion in support); HMR/TKT's Reply Br. After Trial at 29 (citing this Court's opinion and unsupportable testimony by Dr. Lodish (inaccurately referred to as "Kingston Tr. 162-167") and irrelevant testimony by Dr. Kingston, "Kingston R. Tr. 177, 181"); HMR/TKT's Proposed Findings of Fact ¶¶ 111, 112, 114, 116 (citing this Court's opinion and irrelevant testimony from Dr. Lodish, admitting that he did not include homologous recombination in the first edition of his textbook). The Court finds that placement of the promoter further upstream, as HMR/TKT does with its HMR 4396, was a technique known to those skilled in the art at the time of Amgen's application filing.[84]
Because upstream placement of the promoter was known at the time of Amgen's application, however, the Court now addresses whether HMR/TKT has shown by clear and convincing evidence that Amgen did not adequately describe such a placement. The Court agrees with HMR/TKT's central contention that the specification explicitly refers only to placement of the promoter in close proximity (within 44 base pairs) of the EPO gene to be expressed, leaving only one ATG adjacent to the amino terminal coding region. '933 Patent, Ex. 1, col. 24: 15-32. "The test for determining compliance with the written description requirement," however "is whether the disclosure of the application as originally filed reasonably conveys to the artisan that the inventor had possession at that time of the later claimed subject matter," rather than the presence or absence of literal support in the specification for the claim language. Kaslow, 707 F.2d at 1375; cf. Edwards, 568 F.2d at 1352 (noting that in the context of the case *271 before it, "this translates into whether the parent application provides adequate direction which reasonably leads persons skilled in the art to the later claimed compound"). After much reflection and despite some hesitancy, the Court concludes that the disclosure does convey the "later claimed subject matter."
First, as Amgen rightly points out, the '698 claims themselves have no limitations specifying the promoter distance or the number of ATGs. Instead, the claims state that the promoter DNA must be "operatively linked" to the "DNA encoding the mature erythropoietin amino acid sequence of FIG. 6." The Court in Amgen I construed this to mean "the promoter DNA is linked to the EPO DNA in a way that maintains the capability of the promoter DNA to initiate transcription of the EPO DNA." Amgen I, 126 F.Supp.2d at 90.
Second, as was determined in Amgen I, the specification does not clearly communicate a locational restriction. Amgen I, 126 F.Supp.2d at 90. That the specification recites in one of the examples an exact location for the promoter that is in close proximity to the EPO gene to be expressed is not dispositive. "[T]hat a claim may be broader than the specific embodiment disclosed in a specification is of no moment." In re Rasmussen, 650 F.2d 1212, 1215, 211 U.S.P.Q. 323 (1981); see Gentry Gallery, Inc. v. Berkline Corp., 134 F.3d 1473, 1480 (Fed.Cir.1998). As the Court of Customs and Patent Appeals reasoned in In re Kirschbraun, 18 C.C.P.A. 735, 44 F.2d 675 (1930), a court "should never interpret a positively recited generic expression [such as "operatively linked"] to the precise instrumentality disclosed by the patent, except where such narrow interpretation is necessary to distinguish the claim from prior art." Id. at 739, 44 F.2d 675 (internal citations and quotations omitted).[85]
The only support in the specification that the invention is of a narrower scope than the claims is the absence of specific examples showing an alternate location for the promoter. The specification, however, does not limit the patent to the examples therein. It does not clearly identify placement within 44 base pairs as the only possible location from which to conduct the process nor does it indicate that this exact location was an essential element of the invention or that placement farther upstream is "outside the stated purpose of the invention." Cf. Amgen II, 314 F.3d at 1334 (considering these factors); Gentry, 134 F.3d at 1479 (same); Ethicon, 93 F.3d at 1582 (considering whether the aspect was considered an element of the invention and stating that if it was not then the patentee was free to draft the claim broadly). Moreover, the specification does not address possible variations from which the Court could conclude that a further upstream placement was not in the realm of possibility.
That Amgen chose to show placement of the promoter in very close proximity is only evidence that this was perceived to be the best location to achieve operative linkage as Dr. Lodish testified not the only location. Lodish Test., Trial Tr. at 258 (explaining that the longer the distance the *272 higher likelihood that problems might occur and that "there's no reason one would want to put it very far upstream. But one could," with a little bit of work); id. at 553 (commenting that "in practice in the laboratory one does what is most expeditious"); Lodish Test., R. Trial Tr. at 1131 (explaining that Dr. Lin had no reason even to consider other sequences of pieces of DNA); cf. Kingston Test., R. Trial Tr. at 41: 20-21 (testifying that standard practice in 1984 was to place the promoter in a position such that there was not another ATG present). True, Dr. Lodish stated that the patent teaches that by linking a strong promoter or placing it near the first codon for the signal sequence of EPO, one could overcome the natural suppression of EPO expression in vertebrate cells. Lodish Test., R. Trial Tr. at 1070, 1077-78. This, however, does not unambiguously limit the location of the promoter to a distance of 44 base pairs or indicate that further upstream placement was not part of the invention. As Dr. Lodish explained, placement of the promoter thousands of base pairs upstream, as HMR/TKT does, is only a "minor difference" that is "irrelevant in the final process." Id. at 1077: 1-6.[86] Thus, as testified to by Dr. Lodish, the specification teaches that putting a strong viral promoter upstream of the human EPO gene is the important feature not how far upstream as long as the intervening sequences are spliced out. Lodish Test., Trial Tr. at 173, 549; see also Lodish Test., R. Trial Tr. at 1081 (noting that "there's nothing different about a large intro spliced out and a small intron spliced out"); Cooper Cameron Corp. v. Kvaerner Oilfield Products, Inc., 291 F.3d 1317, 1322-23 (Fed.Cir.2002) (considering expert testimony on the issue of what the specification teaches). In other words, Amgen's patent teaches that the natural suppression of EPO expression in vertebrate cells can be overcome by operatively linking a non-human promoter upstream of DNA encoding human EPO. See id.; see also Lodish Test., R. Trial Tr. at 1068: 21-1070: 3.
Therefore, the Court infers that though the examples may show linkage that is directly upstream, those skilled in the art would not, nor does the Court, read the specification so to limit the process. United States Steel Corp., 865 F.2d at 1251; cf. Ethicon, 93 F.3d at 1582 n. 7 (noting that 35 U.S.C. § 112 (1994) allocates to the inventor the task of claiming what the inventor regards as his invention); Vas-Cath Inc. v. Mahurkar, 935 F.2d 1555, 1565 (Fed.Cir.1991) ("There is no legally recognizable or protected essential element, gist or heart of the invention in combination patent. The invention is defined by the claims." (citations and internal quotation marks omitted)). As such, Amgen was free to draft the claim broadly (within the limits imposed by prior art) to exclude the exact placement of the promoter as a limitation of the claimed invention. Cf. Ethicon, 93 F.3d at 1582 n. 7. "Such a claim is not necessarily unsupported by the specification even though it would be literally infringed by undisclosed embodiments." Id.
Third, although HMR/TKT has shown that the specification lacks literal support for a process that places the promoter further upstream, it has failed to show by *273 clear and convincing evidence that Amgen's patent does not "reasonably convey to the artisan that [Amgen] had possession at that time of the later claimed subject matter." Kaslow, 707 F.2d at 1375 (noting that the presence or absence of literal support in the specification is not determinative). To the contrary, the evidence shows that the specification (both the written words and the figures) discloses the techniques that are employed in a process that places the promoter further upstream such as HMR/TKT does in HMR 4396.[87] It is undisputed that the specification discloses a DNA sequence and the amino acid sequence it encodes, introns, exons, splice donor and splice acceptor sites, and the linkage of a non-human promoter with the EPO gene, and communicates that splicing events occur to avoid the deleterious effects of ATGs and to allow the appropriate final functional mRNA to form to produce the amino acids disclosed in Figure 6. See, e.g., Kingston Test., Trial Tr. at 1428-29, 1430; Kingston Test., R. Trial. Tr. at 116: 23-117: 2; see also Lodish Test., R. Trial Tr. at 1061: 4-1063: 4. As discussed infra with respect to the reverse doctrine of equivalents, the evidence shows (albeit by a slim margin) that HMR 4396 uses the same splice donor and splice acceptor sites as are disclosed in Amgen's specification. Kingston Test., Trial Tr. at 1431: 10-19, 1432: 14-24, 1433: 1-22, 1440: 19-25.[88] HMR/TKT merely copies the splice donor site and places it upstream of the deleterious ATGs, the intended effect of which is to splice out all the deleterious ATGs that were upstream of the coding region of the EPO gene. Id. (explaining that the way the splice donor site is moved is by "ma[king] a design that happens to include the same nucleotides" and "the purpose of that is so that this splice donor ... would direct a splicing event" that spliced out all of the deleterious ATGs); see also Lodish Test., R. Trial Tr. at 1081 ("Very simply put, what [HMR/]TKT did is take this splice donor that's right here, include this G residue directly upstream of it, and move it in toto immediately adjacent to this hGH signal sequences. So in fact, the splicing that occurs ... in the RNA, between donor 1 and acceptor 1 is identical to the splicing that occurs in ... Amgen's Example 10 cells."); Lodish Test., Trial Tr. at 174; Lodish Test., R. Trial at 1076: 23-1077: 6; id. at 1068-69 (discussing the three principals of Lin's '698 patent). As discussed earlier, placement of the promoter further upstream and splicing out deleterious data was a technique known to *274 skilled artisans in 1983-84. Thus, Amgen's process discloses exactly what HMR/TKT's process does, that is, it discloses locating a strong promoter upstream of the ATG initiation codon of a cloned and isolated EPO gene (i.e., upstream of the DNA encoding EPO), and splicing out the deleterious data. Gosteli, 872 F.2d at 1012 (explaining that the specification must communicate clearly to those skilled in the art that the inventor invented what is claimed).
While it appears that the scope of the right to exclude as set forth in the claims does not overreach the scope of Amgen's contribution to the field of the art as described in the specification, see Reiffin, 214 F.3d at 1346, HMR/TKT points to one piece of evidence that suggests the contrary and gives the Court pause. As discussed earlier in a different context, Dr. Lodish admitted that Dr. Lin never even attempted such an upstream placement and did not know what was upstream or downstream of the EPO gene. Lodish Test., R. Trial Tr. at 1129. This, therefore, indicates that Amgen was not in actual possession of the entire scope of the invention at the time of filing; that is, that Amgen had not, at that time, itself demonstrated though experimentation the distant upstream placement of the promoter.
Although this evidence is compelling, when considered in light of prior case law and HMR/TKT's high burden of proof, it fails to persuade the Court that Amgen's specification is invalid for lack of written description. As discussed, the techniques disclosed in the specification are the same ones used in a process that places the promoter further upstream. Simply because further upstream placement was possible and applicants could have, as testified to by Dr. Lodish, done it and then described it in an example does not mean that the applicant must describe it. This is just the sort of argument rejected in In re Vickers, 31 C.C.P.A. 985, 988, 141 F.2d 522 (1944). Although In re Vickers was a mechanical case, its reasoning applies here. If an inventor had to describe more than what he conceives is his best mode, most patents would be worth little. "The principle of the invention is a unit, and invariable; the modes of its embodiment in a concrete invention may be numerous and in appearance very different from each other." Id. at 991, 141 F.2d 522 (quoting Continental Paper Bag Co. v. Eastern Paper Bag Co., 210 U.S. 405, 418, 28 S. Ct. 748, 52 L. Ed. 1122 (1908)) (internal quotation marks omitted). Here, as explained above, the principal of the process was operative linkage overcoming the natural restriction of the cell from making EPO by placing a strong promoter upstream of the EPO gene to be expressed and splicing out the intervening deleterious ATGs. Example 7 describes the best mode the best process and should not limit Amgen's right to exclude other processes that fall within the principal of the invention:
The exclusive right to the thing patented is not secured, if the public are at liberty to make substantial copies of it, varying its form or proportions. And, therefore, the patentee, having described his invention, and shown its principles, and claimed it in that form which most perfectly embodies it, is, in contemplation of law, deemed to claim every form in which his invention may be copied, unless he manifests an intention to disclaim some of those forms.
In re Kirschbraun, 18 C.C.P.A. 735, 44 F.2d 675, 677 (1930) (quoting Winans v. Denmead, 56 U.S. (15 How.) 330, 343, 14 L. Ed. 717 (1853)) (internal quotation marks omitted). Thus, Amgen's admission that Dr. Lin had not attempted to place the promoter further upstream is not dispositive. It does not show by clear and *275 convincing evidence that the specification does not reasonable convey that the patentee was in possession but only that Dr. Lodish believed that Dr. Lin had not actually attempted one mode of the invention. Indeed, "patent law permits inventors to obtain patents based entirely on a written description of the invention, without actually constructing or selling the products embodying the invention." Dan L. Burk & Mark A. Lemley, Policy Levers in Patent Law, 89 Va. L.Rev. 1575, 1681 n.69 (2003).
Moreover, this admission can be distinguished from the admission in Gentry Gallery, Inc. v. Berkline Corp., upon which HMR/TKT relies for support. There, Gentry admitted he broadened his claims to cover placement of the controls outside the console only after competitors engaged in such placement. Gentry, 134 F.3d at 1479; see also Amgen II, 314 F.3d at 1334 (distinguishing the facts in Gentry). Further, in Gentry, the exact placement of the controls was clearly identified in the specification to be an essential element of the invention. Gentry, 134 F.3d at 1479. Here, there is absolutely no indication in the claims or the specification of a locational restriction. So while Dr. Lodish may have admitted that Amgen was not in literal possession of this embodiment of the invention at the time of filing, given the broadness of claims, this admission is not determinative. Judge Miller, as he did dissenting in Application of Edwards, would no doubt argue that this is in essence an admission that Amgen was not literally in possession of the invention as claimed since it did not ever even try to move the promoter further upstream. See Edwards, 568 F.2d at 1354-55. This Court concludes, however, that although the question is extremely close, Amgen was in possession of the invention as claimed, i.e., it used the words "operatively linked." The specification adequately describes what is claimed a broad claim. A persuasive analogy is found in the enablement context. There, "[i]t is not necessary that a patent applicant test all the embodiments of his invention; what is necessary is that he provide a disclosure sufficient to enable one skilled in the art to carry out the invention." Amgen Inc. v. Chugai Pharmaceutical Co., Ltd., 927 F.2d 1200, 1213 (Fed.Cir.1991) [hereinafter Chugai] (citing In re Angstadt, 537 F.2d 498, 502, 190 U.S.P.Q. 214 (1976)), and In re Donohue, 766 F.2d 531, 533 (Fed.Cir.1985) (discussing enablement of a publication under § 102(b)).
Here, according to undisputed expert testimony, the specification communicates that in order to achieve "operative link[age]," what is important is placing a strong promoter upstream of the ATG initiating codon of the EPO gene and splicing out unwanted ATGs. One skilled in the art who read Amgen's specification would understand that it is unimportant where upstream the promoter is placed, so long as it is genuinely "operatively linked." Cf. Rasmussen, 650 F.2d at 1214-15 (concluding that the generic step of "adheringly applying" one layer to an adjacent layer satisfied the written description requirement, because "one skilled in the art who read [the] specification would understand that it is unimportant how the layers are adhered, so long as they are adhered."); Gentry, 134 F.3d at 1480 (applying Rasmussen and considering what one skilled in the art would understand was important or essential to the invention). Amgen may claim other patentable means of operative linkage despite not having provided specific examples in its specification or a boilerplate statement that the examples in the specification were not meant to limit the breadth of the claims. Rasmussen, 650 *276 F.2d at 1215; cf. Kirschbraun, 44 F.2d at 677.[89] Thus, the phrase "operatively linked" appears to be supported by the specification.
In a nutshell, HMR/TKT misconstrues the focus of the section 112 inquiry, to wit, whether the claimed subject matter is adequately described, see, e.g., Ralston Purina Co. v. Far-Mar-Co., Inc., 772 F.2d 1570, 1575 (Fed.Cir.1985); In re Wilder, 736 F.2d 1516, 1520 (Fed.Cir.1984), and whether the applicant asserted that he invented that which he did not, Moba, B.V. v. Diamond Automation, Inc., 325 F.3d 1306, 1319 (Fed.Cir.2003). If the claims contained a limitation regarding promoter placement, HMR/TKT's arguments would have merit. They do not, and HMR/TKT points to nothing in the specification or prosecution history that justifies a location restriction for the promoter. Moreover, the specification adequately describes operative linkage and upstream promoter placement. Thus, HMR/TKT has failed to present clear and convincing evidence that Amgen failed adequately to describe the claimed inventions of the '698 and '349 patents.
b. Conclusion
Accordingly, the Court holds that HMR/TKT has failed to show by clear and convincing evidence that the asserted claims of the '698 patent and claim 7 of the '349 patent are invalid for lack of written description under 35 U.S.C. § 112, ¶ 1.
C. Enablement
1. The '698 and '349 Patents
a. Discussion
A patent application must "contain a written description of the invention, and of the manner and process of making and using it ... as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected to make and use the same." 35 U.S.C. § 112, ¶ 1 (2000). "To be enabling, the specification of the patent must teach those skilled in the art how to make and use the full scope of the claimed invention without `undue experimentation.'" Genentech, Inc. v. Novo Nordisk A/S, 108 F.3d 1361, 1365 (Fed.Cir.1997) (quoting In re Wright, 999 F.2d 1557, 1561 (Fed.Cir.1993)); Plant Genetic Systems, N.V. v. DeKalb Genetics Corp., 315 F.3d 1335, 1339 (Fed.Cir.2003) (same). The scope of the claims must reasonably correlate to the scope of enablement provided by the specification to skilled artisans at the time of the patent's effective filing date. Plant Genetic Systems, 315 F.3d at 1340; Hogan, 559 F.2d at 604 (stating that enablement is determined as of the effective filing date of the patent). Therefore, crucial to the analysis is the state of the art at the time of the application which is undisputedly 1983-84.
The parties' arguments for non-enablement run parallel to those regarding written description. Although the enablement requirement is separate and distinct from the written description requirement, the *277 written description requirement is broader than the enablement requirement. Vas-Cath, 935 F.2d at 1563. Because the Court already held that the asserted claims of the '698 and '349 patents met the written description requirement based on the same arguments and evidence, it need address the enablement issue only briefly.
(1) HMR/TKT's First Argument: Endogenous DNA and Homologuous Recombination
HMR/TKT rightly claims that under the Court's claim construction, the asserted process claims of the '698 and '349 patents "do not enable one of skill in the art to produce EPO from vertebrate cells other than those transfected with exogenous cloned EPO DNA." HMR/TKT's Opening Br. After Trial at 48. As discussed above, however, it is undisputed that in 1983-84, endogenous activation technology and homologous recombination were not known to skilled artisans. HMR/TKT's Findings of Fact ¶ 488; Amgen's Reply to HMR/TKT's Opening Br. After Trial at 34-35. As with the written description requirement, when considering enablement, later states of art cannot be employed as a basis for rejection. Hogan, 559 F.2d at 606; Plant Genetic Systems, 315 F.3d at 1340 (stating that Hogan held that "one could not use later-existing states of the art to invalidate a patent that was enabled for what it claimed at the time of filing"). Thus, this argument fails with respect to the '349 and '698 patents. Moreover, because HMR/TKT makes no other enablement arguments with respect to claim 7 of the '349 patent, the Court holds that HMR/TKT has failed to show by clear and convincing evidence that Claim 7 of the '349 patent was not enabled.
(2) HMR/TKT's Second Argument: Placement of the Promoter
HMR/TKT argues that Amgen's specification only enables operative linkage of promoter DNA and EPO DNA near or adjacent to the ATG initiation codon of a cloned and isolated EPO gene and that skilled artisans at the time would not have expected promoters placed further upstream to produce EPO. Furthermore, HMR/TKT contends that Amgen's argument that enablement of one way to make a claimed product suffices does not apply, because these are process claims not product claims. As a result, HMR/TKT argues, Amgen has forfeited its patent under 35 U.S.C. § 112, ¶ 1 by claiming all processes for making EPO but enabling only one.
HMR/TKT cites no cases that actually support its contention that process claims are somehow different than product claims when it comes to the enablement inquiry. HMR/TKT's Opening Br. After Trial at 49-50. The two cases that HMR/TKT does cite, Genentech, 108 F.3d at 1365[90] and Enzo Biochem, Inc. v. Calgene, Inc., 188 F.3d 1362, 1371, 1374-75 (Fed.Cir. *278 1999),[91] stand only for the unremarkable proposition that a patent must teach those skilled in the art how to make and use the full scope of the invention. The Court holds that the '698 patent meets this requirement.
Here, HMR/TKT has not proved that the disclosure fails adequately to guide the skilled artisan to a process that places the promoter further upstream without undue experimentation. The thrust of HMR/TKT's argument that the skilled worker would not have expected promoter linkages further upstream to produce EPO has already been rejected by the Court. As discussed in the written description analysis, this Court finds as a factual matter that skilled artisans at the time of the application filing were aware of how to place promoters further upstream than is shown in example 7 of the '698 patent specification. Moreover, this Court found that all the techniques required to achieve such placement were taught in the specification. According to Dr. Lodish, using the specification, one skilled in the art could have placed a promoter further upstream and produced EPO. While he admitted that some problems might have occurred and that it would have taken a little bit of work, Lodish Test., Trial Tr. at 258, this does not necessarily equate to undue experimentation. See In re Vaeck, 947 F.2d 488, 495 (Fed.Cir.1991) ("That some experimentation may be required is not fatal; the issue is whether the amount of experimentation required is `undue.'" (quoting In re Wands, 858 F.2d 731, 737 (Fed.Cir.1988))); see also Wands, 858 F.2d at 737 ("The key word is `undue,' not `experimentation.'" (quoting Angstadt, 537 F.2d at 504) (internal quotation marks omitted)). Thus, the evidence shows that all the methods required to conduct the process with the promoter further upstream were disclosed and one skilled in the art could replicate the invention using a further upstream promoter placement with some experimentation.
Tellingly, HMR/TKT has neither addressed in its memorandum nor pointed to record evidence regarding the amount of experimentation required by one of skill in the art to use the specification to place the promoter further upstream. Rather, it implicitly asks the Court to infer undue experimentation from general testimony about the development of the technology, the admission that Dr. Lin had not actually tried to place the promoter further upstream and did not know what was upstream of the EPO gene, and the absence of working examples disclosing placement of the promoter further upstream.[92] Given this lack of specific evidence, HMR/TKT *279 simply has not met its burden to prove undue experimentation. See Moba, 325 F.3d at 1321 (reaching a similar conclusion in the absence of specific evidence). First, the Court points out that "it is not necessary that a patent applicant test all the embodiments of his invention; what is necessary is that he provide a disclosure sufficient to enable one of skill in the art to carry out the invention commensurate with the scope of his claims." Chugai, 927 F.2d at 1213 (citing Angstadt, 537 F.2d at 502); Donohue, 766 F.2d at 533 (discussing enablement of a publication under section 102(b) and concluding that "it is not ... necessary that an invention disclosed... have actually been made in order to satisfy the enablement requirement[;] ... the fact that [the inventor] did not attempt to make his disclosed invention does not indicate one way or the other whether the [patent] [is] enabling"). Second, the evidence produced at trial about the state of the art and the amount of guidance the specification provides suggest the contrary that the patents at issue do teach those skilled in the art how to make and use the full scope of the invention. Cf. Wands, 858 F.2d at 737 (noting that the determination is not a "simple factual determination, but rather is a conclusion reached by weighing many factual considerations"). In light of the presumption of validity, HMR/TKT has failed to carry its burden with respect to this issue.
b. Conclusion
Accordingly, the Court holds that HMR/TKT has failed to show by clear and convincing evidence that the process claims of the '349 and '698 patents were not enabled.
V. INFRINGEMENT
A. The '698 Patent: Claim 4-9
1. Background
At the close of Amgen's case-in-chief in the first trial, and before HMR/TKT had presented its case, this Court granted HMR/TKT's motions for judgments of non-infringement under Fed.R.Civ.P. 52(c), both literally and under the doctrine of equivalents of claims 4-9 of the '698 patent. Amgen I, 126 F.Supp.2d at 99-101. In reaching this decision, the Court compared HMR/TKT's process to the specific embodiments exemplified in the '698 patent and found two significant differences between HMR/TKT's process and Amgen's process: (1) HMR/TKT's process uses homologous recombination to make its erythropoietin-producing cells and HRM/TKT's human EPO gene is endogenous to the human cell, whereas the preferred embodiment of the '698 patent employs heterologous recombination and uses human EPO DNA material that is exogenous; and (2) HMR/TKT's process uses cells in which the CMV promoter and enhancer are placed at a greater distance from the EPO DNA than did the particular examples found in the '698 patent, resulting in several ATG sites in HMR/TKT's process as opposed to only one in Amgen's examples. Amgen I, 126 F.Supp.2d at 102-04. The Court considered these differences to be substantial ones and therefore held that Amgen had failed to show by a preponderance of the evidence that HMR/TKT's process infringes (literally or equivalently) the independent claims of the '698 patent. Id.
On appeal, the Federal Circuit vacated and remanded this Court's ruling regarding infringement of the '698 patent because the Court had erroneously compared the accused device to the preferred or commercial embodiments of the patent instead of to the properly construed claims themselves. Amgen II, 314 F.3d at 1347. In the course of its ruling, the Federal Circuit made some specific statements about whether this Court's factual findings ought have any bearing on the infringement analysis when properly conducted. *280 With regard to the Court's finding that HMR/TKT's process is homologous, the Federal Circuit pointed out that none of the claims at issue in the '698 patent contains any limitation regarding heterologous recombination. Id. Furthermore, the Federal Circuit pointed out this Court's claim construction as opposed to a specific example in the specification indicated that HMR/TKT did infringe the "operatively linked" limitation in the claims.
As discussed briefly in the procedural history portion of this memorandum and order, the Court denied both Amgen's and HMR/TKT's renewed motions for summary judgment regarding infringement of the '698 patent [Doc. Nos. 664 and 665]. As a result, HMR/TKT presented its case on these issues at the remand trial.
HMR/TKT was also allowed to present its defense that it does not literally infringe claims 4-9 of the '698 patent under the reverse doctrine of equivalents. The Court decided to entertain such an argument because the facts that form the reverse doctrine of equivalents defense were always a part of HMR/TKT's interrogatory responses. In Wright Medical Technology, Inc. v. Osteonics Corp., 122 F.3d 1440, 1445 (Fed.Cir.1997), the Federal Circuit remanded a case to the district court so it could determine the doctrine of equivalents issue even though the patentee had not argued equivalents, on the basis that the patentee had already introduced evidence in support of this argument. The analysis in Wright, although it addresses the doctrine of equivalents and not the reverse doctrine, is applicable here.[93] Therefore, the Court afforded HMR/TKT the opportunity to present its defense and Amgen the opportunity to rebut.
2. The Claims at Issue
Claims 4 and 6 are the critical claims for resolving the infringement issue, as claims 5, 7, 8, and 9 are dependent.
Claim 4:
*281 A process for the production of a glycosylated erythropoietin polypeptide having the in vivo biological property of causing bone marrow cells to increase production of reticulocytes and red blood cells comprising the steps of: (a) growing, under suitable nutrient conditions, vertebrate cells comprising promoter DNA, other than human erythropoietin promoter DNA, operatively linked to DNA encoding the mature erythropoietin amino acid sequence of FIG. 6; and (b) isolating said glycosylated erythropoietin polypeptide expressed by said cells.
'698 Patent, Ex. 1, col. 38: 37-47 (paragraph structure altered).
Claim 6:
A process for the production of a glycosylated erythropoietin polypeptide having the in vivo biological property of causing bone marrow cells to increase production of reticulocytes and red blood cells comprising the steps of: (a) growing under suitable nutrient conditions, vertebrate cells comprising amplified DNA encoding the mature erythropoietin amino acid sequence of FIG. 6; and (b) isolating said glycoslated erythropoietin polypeptide expressed by said cells.
Id. at col. 38: 50-58 (paragraph structure altered).
3. Literal Infringement
a. Discussion
To determine whether an accused device literally infringes a patent claim, courts apply a two-step analysis. See, e.g., Watts v. XL Sys., Inc., 232 F.3d 877, 880 (Fed.Cir.2000); Laitram Corp. v. Morehouse Indus., Inc., 143 F.3d 1456, 1461 (Fed.Cir.1998). First, the court construes the claims to determine their scope as matter of law. See Markman, 517 U.S. at 370, 116 S. Ct. 1384. Second, the court determines whether the claims cover the accused device. See, e.g., Watts, 232 F.3d at 880; Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1454 (Fed.Cir.1998) (en banc).
The only limitation of claims 4-9 of the '698 patent that HMR/TKT asserts it does not literally infringe is "DNA encoding the mature erythropoietin amino acid sequence of FIG. 6." See, e.g., HMR/TKT's Reply Br. After Trial at 26-27; HMR/TKT's Opening Br. After Trial at 10-11. As discussed, supra, the Court conducted the first step of the inquiry and construed the term "DNA encoding" to mean "the genetic instructions for" the "mature erythropoietin amino acid sequence of FIG. 6." To conduct the second step, the Court must compare the properly construed claim with the accused product to determine whether the accused product meets each and every limitation. Bayer AG v. Elan Pharm. Research Corp., 212 F.3d 1241, 1247-48 (Fed.Cir.2000); Young Dental Mfg. Co. v. Q3 Special Prods., Inc., 112 F.3d 1137, 1141 (Fed.Cir.1997).
HMR/TKT argues that the claims require the genetic instructions for an EPO with the fully realized, secreted 166 amino acid sequence of Figure 6. See HMR/TKT's Reply Br. After Trial at 26-27; HMR/TKT's Opening Br. After Trial at 10-11. In support it points to the Court's ruling in Amgen I, in the context of the '080 patent, that the "mature erythropoietin amino acid sequence of FIG. 6" is "the fully realized form of the amino acid sequence of Figure 6," Amgen I, 126 F.Supp.2d at 100, that is, one with a 166 amino acid sequence.
HMR/TKT's argument fails to persuade the Court because "the mature erythropoietin amino acid sequence of FIG 6" in the context of the '080 patent refers to the structure of the claimed glycoprotein *282 whereas in the '698 claims it refers to the structure of a DNA in the claims.[94] This is not to suggest that the phrase should have different meanings in different contexts. Indeed, the parties agreed in Amgen I that the meaning of the term should be the same in both settings. Amgen I, 126 F.Supp.2d at 86. Here, as in the context of the '080 patent, the phrase means the "fully realized form of the amino acid sequence of Figure 6." Id. at 87. In the '698 patent, however, the phrase is preceded by "DNA encoding," and thus the primary subject is the DNA whereas in the '080 patent the primary subject is the "erythropoietin glycoprotein" itself. See '080 and '698 Patents, Ex. 1. Although it is true that HMR 4396 is a glycoprotein containing 165 amino acids, experts for both parties agree that HMR/TKT's R223 cells contain a DNA encoding EPO that "has the same codons for the same amino acids as is depicted in Dr. Lin's Figure 6." Kingston Test., R. Trial Tr. at 154: 21-155: 15; Lodish Test., Trial Tr. at 245: 16-247: 18; id. at 259: 12-15 (stating that HMR/TKT's R223 cells contain amplified DNA encoding the mature erythropoietin amino acid sequence of Figure 6); Lodish Test., R. Trial Tr. at 1066: 23-1067: 18.[95] In other words, each process encodes or provides the genetic instructions for the 1-166 amino acid sequence depicted in Figure 6, as each contains a DNA sequence having codons for amino acids +1 through +166 as depicted in Figure 6. As discussed in Amgen I, the reason that HMR/TKT claims an end-product that only has 165-amino acids while Amgen claims one that has 166 is that at the time Amgen's patents were written, it was not yet known that the last amino acid residue ultimately cleaves off prior to secretion of the EPO from the cell. Amgen I, 126 F.Supp.2d at 86, 101.
HMR/TKT argues that "Amgen ignores that the `cDNA' sequence it relies upon has a `methionine, alanine, threonine' amino acid sequence, which is exon 1" and is derived from human growth hormone, not from EPO. HMR/TKT's Findings of Fact After Trial at 24, ¶ 104. This argument, however, is irrelevant. First, as Amgen points out and HMR/TKT does not dispute this argument involves the amino acids of the leader sequence in HMR/TKT's R223 cells, yet the claims do not specifically address the leader sequence. Amgen's Reply to HMR/TKT's Findings of Fact at 36. The Court held, in Amgen I, that the mature EPO amino acid sequence of Figure 6 included only 166 amino acids, that is, positions +1 through +166. Amgen I, 126 F.Supp.2d at 86, 100 (noting that Figure 6 depicts the amino acids starting from -27, the signal or leader peptide which is cleaved off, and concluding that in order for HMR 4396 to infringe literally, it "must contain an EPO glycoprotein comprising the fully realized erythropoietin *283 amino acid sequence of Figure 6, which depicts 166 amino acids"). Consistent with this holding, Dr. Lodish testified at the remand trial that the amino acid sequence of the mature EPO in Figure 6 begins at the +1 position and ends at +166. Lodish Test., R. Trial Tr. at 1067: 5-18. Amgen's counsel suggested the same to Dr. Kingston, and he never contradicted this implication. Kingston Test., R. Trial Tr. at 156: 14-23 (agreeing with Amgen's counsel's depiction of Figure 6 as having codons for a leader sequence and then codons for the "mature sequence" beginning at +1). Second, this argument ignores expert testimony proffered by both parties, noted above, that HMR/TKT's R223 contain DNA encoding the mature erythropoietin amino acid sequence of Figure 6, as defined by this Court, regardless of any differences in the leader sequences.
Even so, HMR/TKT argues that proof that its DNA is the same as Amgen's DNA is not enough. It contends that the claims require production of an EPO product with 166 amino acids because "the mature erythropoietin amino acid sequence of Fig. 6" is followed in the claims by a clause which states "said glycosylated erythropoietin polypeptide" is "isolated." HMR/TKT's Opening Br. After Trial at 11.
Based on the language of the claims, including the preambles, the Court rejects this argument and concludes that "the mature erythropoietin amino acid sequence of FIG. 6" modifies the words "DNA encoding" in the cells grown in step (a) and does not modify "glycosylated erythropoietin polypeptide" isolated in step (b). This interpretation is supported by evidence, proffered by Amgen and undisputed by HMR/TKT, that the proper antecedent basis is provided only by use of prior identical language in the claim. See Manual of Patent Examining Procedure 2173.05(e) (6th ed.1997); Amgen's Reply to HMR/TKT's Findings of Fact at 37. Here, "glycosylated erythropoietin polypeptide" is previously found only in the preamble and not in part (a) of the claim.[96] Part (a), although it refers to the "mature erythropoietin amino acid sequence of Fig. 6," concerns the DNA that is doing the encoding not the EPO itself. Part (b) merely addresses the next step in the process which is the step of isolating. Thus, "said glycosylated erythropoietin polypeptide" refers back to the preamble before steps (a) and (b) are described. This is the only reading that makes grammatical sense. Moreover, it is consistent with how the claims of the '080 patent are read. There, "said erythropoietin glycoprotein" always refers back to the exact identical language at the beginning of the claim and not to the attributes of the glycoprotein itself. '080 Patent, Ex. 1, col. 38: 39-50.
b. Conclusion
In sum, Amgen has shown by a preponderance of the evidence that HMR/TKT's HMR 4396 does indeed literally infringe claims 4-9 of the '698 patent. Before ruling that Amgen prevails on this issue, however, the Court must address HMR/TKT's reverse doctrine of equivalents defense.
4. Reverse Doctrine of Equivalents
a. Overview of the Doctrine
The reverse doctrine of equivalents is an equitable doctrine that a court applies when it finds that the accused device literally infringes a patented invention, but is so fundamentally different from the patented invention that a judgment of infringement would be inappropriate. Texas Instruments, Inc. v. United States *284 International Trade Commission, 846 F.2d 1369, 1371 (Fed.Cir.1988) ("Texas Instruments II") (noting that it might be better described as "the doctrine of non-equivalents"); Scripps Clinic & Research Found. v. Genentech Inc., 927 F.2d 1565, 1581 (Fed.Cir.1991). The doctrine was first articulated by the Supreme Court in Boyden Power-Brake Co. v. Westinghouse, 170 U.S. 537, 568, 18 S. Ct. 707, 42 L. Ed. 1136 (1898) (establishing that the doctrine of equivalents could be used defensively); Gillette v. S.C. Johnson & Son, Inc., Nos. 83-2657-N, 83-3201-N, 1989 WL 87374, at *19 (D.Mass. July 31, 1989) (Collings, M.J.) (commenting that Westinghouse was the seminal case respecting the reverse doctrine of equivalents); George M. Sirilla, Thomas P. Feddo & Michael C. Antone, The Doctrine of Equivalents: Both a Sword and a Shield, 13 Fed. Cir. B.J. 75, 77-78 (2003) (noting that Westinghouse was a "seminal case" in establishing the use of the doctrine of equivalents as a shield); John F. Duffy, The Festo Decision and the Return of the Supreme Court to the Bar of Patents, 2002 Sup.Ct. Rev. 273, 315 (2002). Approximately fifty years later, in Graver Tank & Mfg. Co. v. Linde Air Products Co., 339 U.S. 605, 608-609, 70 S. Ct. 854, 94 L. Ed. 1097 (1950), the Supreme Court explicitly endorsed the reverse doctrine of equivalents. Graver Tank, 339 U.S. at 608-609, 70 S. Ct. 854 (noting that the doctrine of equivalents "is not always applied in favor of the patentee but is sometimes used against him" when "the invention is so far changed in principle from a patented article that it performs the same or a similar function in a substantially different way"); Scripps, 927 F.2d at 1581 (quoting Graver Tank); Tate Access Floors, Inc. v. Interface Architectural Res. Inc., 279 F.3d 1357, 1368 (Fed.Cir.2002) (remarking that the Supreme Court referred to the reverse doctrine in Graver Tank).
The reverse doctrine of equivalents is applied equitably based upon factual determinations made after "the accused infringer proves that, despite the asserted claims literally reading on the accused devise, `it has been so changed that it is no longer the same invention.'" Amgen II, 314 F.3d at 1351 (quoting Del Mar Avionics, Inc. v. Quinton Instrument Co., 836 F.2d 1320, 1325 (Fed.Cir.1987)).[97] As the Supreme Court explained in Westinghouse:
The patentee may bring the defendant within the letter of his claims, but if the latter has so far changed the principle of the device that the claims of the patent, literally construed, have ceased to represent his actual invention, he is as little *285 subject to be adjudged an infringer as one who has violated the letter of a statute has to be convicted, when he has done nothing in conflict with its spirit and intent.
170 U.S. at 568, 18 S. Ct. 707. Thus, the determination of whether the reverse doctrine should apply is not made in a vacuum. Graver Tank, 339 U.S. at 609, 70 S. Ct. 854; Amgen II, 314 F.3d at 1351. Nor is it made by merely considering the language of the claims themselves.[98] Rather, the Court must determine the originally intended scope, the "spirit and intent" of the claims, Westinghouse, 170 U.S. at 568, 18 S. Ct. 707, based on the "the context of the patent, the prior art, and the particular circumstances of the case." Graver Tank, 339 U.S. at 609, 70 S. Ct. 854; see also Texas Instruments II, 846 F.2d at 1372 (explaining that the reverse doctrine concerns the "original intended scope" of the claims); Scripps, 927 F.2d at 1581 ("[T]he purpose of the `reverse' doctrine is to prevent unwarranted extension of the claims beyond a fair scope of the patentee's invention." (emphasis added)). In other words, "the analysis requires a determination of the `substance of the invention,' the `thing' or `article' patented, or `the principle of the device.'" Sirilla, Feddo & Antone, supra, at 83 (citing Festo II, 535 U.S. at 731, 122 S. Ct. 1831, Westinghouse, 170 U.S. at 568, 18 S. Ct. 707, and Winans, 56 U.S. (15 How.) at 343).
Although the Federal Circuit recognizes this doctrine, it is rarely invoked successfully. Shyh-Jen Wang & Shyh-Yau Wang, The Verification Flow Chart of Patent Infringement, 86 J. Pat. & Trademark Off. Soc'y 74, 78 (2004) ("[I]t is not often raised and even less frequently successful."); Burk & Lemley, supra, at 1657. Indeed, according to the Federal Circuit, it has never upheld a decision of non-infringement based on the reverse doctrine of equivalents. Tate, 279 F.3d at 1368 (labeling the reverse doctrine "anachronistic").[99] This may be because circumstances in which the doctrine is satisfied are very rare. See, e.g., SRI Int'l, 775 F.2d at 1124, n. 19 ("Because products on which patent claims are readable word for word often are in fact the same, perform the same function in the same way, and achieve the same result, as the claimed invention, a defense based on the reverse doctrine of equivalents is rarely offered."); Caterpillar Tractor Co. v. Berco, S.P.A., 714 F.2d 1110, 1115, n. 3 (Fed.Cir.1983) ("It is possible, of course, for a claim to be literally but not actually infringed, where, for example, a claim may `read on' a structure having no relation to the invention. Instances are rare."); Donald S. Chisum, Chisum on Patents, § 18.04(4)(b) at 18-392 (2000).[100] On the other hand, its rarity *286 may be, as the Federal Circuit suggested in Tate, a result of the enactment of 35 U.S.C. § 112. Tate, 279 F.3d at 1368 (explaining that "the written description requirements of 35 U.S.C. § 112 are co-extensive with the broadest possible reach of the reverse doctrine of equivalents"); Joseph Yang & Roxana H. Yang, An Update on the Doctrine of Equivalents Where Do We Stand in 2003?, 749 Practicing L. Inst. 521, 561 (2003) (concluding that this is a dead doctrine due to the enactment of section 112). In other words, alleged infringers that perhaps could successfully have evoked the reverse doctrine of equivalents do not attempt to do so because they prevail with section 112 challenges on grounds such as inadequate written description, lack of enablement, or means-plus-function. See, e.g., Texas Instruments, Inc. v. United States Int'l Trade Comm'n, 805 F.2d 1558, 1571-2 (Fed.Cir.1986) ("Texas Instruments I") (applying the principles underlying the reverse doctrine of equivalents in the context of section 112, paragraph 6). As the Federal Circuit explained in Texas Instruments II, 846 F.2d at 1372, section 112 and the reverse doctrine are intertwined:
The reverse doctrine of equivalents is invoked when claims are written more broadly than the disclosure warrants. The purpose of restricting the scope of such claims is not only to avoid a holding of infringement when a court deems it appropriate, but often is to preserve the validity of the claims with respect to their original intended scope.
846 F.2d 1369, 1372.[101]
Despite the paucity of cases relying on the reverse doctrine, the doctrine is not yet dead.[102] Indeed, just last year, the Federal Circuit implied in two separate cases that the reverse doctrine of equivalents *287 still had a heart beat, albeit a faint one. See Amgen II, 314 F.3d at 1351 (discussing the doctrine as though it were a viable one, but holding that it did not apply to the case at bar); Plant Genetic Systems, N.V. v. DeKalb Genetics Corp., 315 F.3d 1335, 1341 (Fed.Cir.2003) ("[T]he judicially-developed `reverse doctrine of equivalents,' requiring interpretation of claims in light of the specification, may be safely relied upon to preclude improper enforcement against later developers."); Burk & Lemley, supra, at 1657, n. 308 (interpreting Amgen II as implying the viability of the reverse doctrine). This is rightly so.
Although both the reverse doctrine of equivalents and section 112 spring from the same roots and very often take account of the same factors and considerations," Texas Instruments II, 846 F.2d at 1372 (Davis, J., concurring),[103] the reverse doctrine is theoretically if not practically distinct from section 112 requirements. See, e.g., Warner-Jenkinson Co., Inc. v. Hilton Davis Chemical Co., 520 U.S. 17, 35, 117 S. Ct. 1040, 137 L. Ed. 2d 146 (1997) (rejecting the notion expressed in Tate that section 112 nullified or codified the reverse doctrine); cf. Sirilla, Feddo & Antone, supra, at 82, 102 (stating that the requirements of section 112 provide the context in deciding the rightful reach of the claims and thereby implying that section 112 and the reverse doctrine are distinct); Ronald D. Hantman, Why Not the Statute?: Revisited, 83 J. Pat. & Trademark Off. Soc'y 685, 704 (2001) (noting that "the Federal Circuit has interpreted the reverse doctrine of equivalents as distinct from section 112" but opining that they are not). The reverse doctrine of equivalents, unlike the requirements of section 112, supports innovation especially in the area of biotechnology where blocking patents are common because it offers some chance of protection to those that make substantial changes or radical improvements to inventions. Mark A. Lemley, The Economics of Improvement in Intellectual Property Law, 75 Tex. L.Rev. 989, 991, 1011, 1067 (1997) ("Economics") ("The application of the reverse doctrine is to protect substantial improvers from infringing if they are sufficiently radical."); cf. Burk & Lemley, supra, at 1681; Mark R. Patterson, Inventions, Industry Standards, and Intellectual Property, 17 Berkeley Tech. L.J. 1043, 1052 (2002) ("The reverse doctrine of equivalents can be viewed as a means of avoiding hold-ups that can deter innovation."); see also Robert P. Merges & Richard R. Nelson, On the Complex Economics of Patent Scope, 90 Colum. L.Rev. 839, 866 (1990) ("[T]he reverse doctrine of equivalents solves the problem of [hold-up by blocking patents] by, in effect, excusing the improver from infringement liability and therefore removing the original patentee's hold-up right.").[104] As the Federal Circuit explained *288 in Plant Genetics, should an alleged infringer lose its section 112 arguments because the technology was new and therefore did not need to be described or enabled, it can bring a challenge under the reverse doctrine of equivalents. Plant Genetics, 315 F.3d at 1341. Thus, the reverse doctrine, unlike section 112, acts as a "judicial safety valve," Robert Merges, Intellectual Property Rights and Bargaining Breakdown: The Case of Blocking Patents, 62 Tenn. L.Rev. 75, 75-76 (1994) ("Blocking Patents"), allowing consideration of equity and fairness, "soft factors," that a section 112 inquiry does not incorporate.[105] In essence, the reverse doctrine, when equity demands it, reverses the protection given to broad patents that satisfy section 112. Cf. Lemley, Economics, at 1003 (noting that patent owners are not limited to what they actually discovered "so long as the patentee describes the general class and its characteristics with sufficient precision that others can identify and use them without undue experimentation"); cf. Antony L. Ryan & Roger G. Brooks, Innovation vs. Evasion: Clarifying Patent Rights in Second Generation Genes and Proteins, 17 Berkeley Tech. L.J. 1265, 1280 (2002) (noting that "in theory the reverse doctrine of equivalents" could provide some relief in the biotech arena where innovation is stifled by broad patents but concluding that it is applied so rarely that its comfort is slight); Toshiko Takenaka, Doctrine of Equivalents After Hilton Davis: A Comparative Law Analysis, 22 Rutgers Computer & Tech. L.J. 479, 506-07 (1996) ("Application of the reverse doctrine of equivalents may prevent enforcing the patent as broadly as drafted.").
This is not to suggest that the reverse doctrine of equivalents should be invoked frequently. To the contrary, it should be saved and apparently is for the inventor that radically, not just modestly, improves upon the prior art such that there is a "manifest departure from the principle in the [patentee's] patent." Westinghouse, 170 U.S. at 572, 579, 18 S. Ct. 707 (commenting that the alleged infringer's invention did not infringe not just because it was novel or changed in principle but because it solved an important problem that the patentee's invention did not and pointing out that the alleged infringer's invention was a "radical departure");[106]see generally SRI International, 775 F.2d at 1123 (emphasizing that the reverse doctrine protects when the alleged infringer's device is "so far changed in principle that it performs in a substantially different way" (internal quotation marks omitted)); Scripps, 927 F.2d at 1581 (suggesting application of the reverse doctrine on remand where the defendant produced similar biological materials by a potentially radically new biotechnological process); cf. Winans, 56 U.S. (15 How.) at 342-343 ("It is only ingenious diversities of form and proportion, presenting the appearance of something unlike the thing patented," *289 which indicate that infringement should not be found. (emphasis added)); see also Diamond Int'l Corp. v. Maryland Fresh Eggs, Inc., 374 F. Supp. 1223, 1247 (D.Md.1974) (noting that it is the "really meritorious improver" who deserves the benefit of the concept of the reverse doctrine of equivalents), rev'd on other grounds, 523 F.2d 113 (4th Cir.); Lemley, Economics, at 1067; Merges, Blocking Patents, at 92-94 (opining that the alleged infringer must show a "radical improvement" or "significant contribution" or "substantial technological improvement" such as that shown in Westinghouse or Scripps); Donna M. Gitter, International Conflicts Over Patenting Human DNA Sequences in the United States and the European Union: An Argument for Compulsory Licensing and a Fair-Use Exemption, 76 N.Y.U. L.R. 1623, n. 411 (2001); Sean Hogle, Unauthorized Derivative Source Code, 18 No. 5 Computer & Internet Law. 1, 3 (2001). Only then will the certainty of patent law be preserved while still encouraging and rewarding substantial, radical, innovation. Merges & Nelson, supra, at 867 n. 120; cf. Merges, Blocking Patents, at 92 (asserting that the reverse doctrine creates enough of a threat to pioneer patentees to positively influence the changes of a society productive agreement between the pioneer and radical improver); Lemley, Economics, at 1012 ("The reverse doctrine of equivalents therefore benefits radical improvers at the expense of the original patentee, and so encourages radical improvements, just as the blocking patents rule provides some lesser encouragement to significant improvements.").
b. Discussion
HMR/TKT argues that it does not infringe claims 4-9 of the '698 patent because its process is "so far removed in terms of its principles of operation from the process Amgen disclosed." HMR/TKT's Opening Br. After Trial at 18. Although HMR/TKT proffers many reasons in support of its position, it has failed to make out a prima facie case.[107] As Amgen aptly points out, HMR/TKT makes the same mistake with each of its arguments. It repeatedly compares its process to the examples disclosed in Amgen's patent specification instead of to the "equitable scope of the claims." Scripps, 927 F.2d at 1581 ("Application of the doctrine requires that facts specific to the accused device be determined and weighed against the equitable scope of the claims, which in turn is determined in light of the specification, the prosecution history, and the prior art."); cf. Amgen II, 314 F.3d at 1351 (rejecting HMR/TKT's reverse doctrine of equivalents arguments regarding the '349 patent that compared its invention to the examples in the specification and not to the claims); SDS USA, Inc. v. Ken Specialties, Inc., 122 F. Supp. 2d 533, 541 (D.N.J.2000) (holding that the accused infringer had "fail[ed] to mount a prima facie case because it [had] compare[d] the accused product not to the ... patent, but to [the patentee's] commercial embodiment"). The proper question, however, is how any purported differences are changed in principle from Amgen's patented processes given "the context of the patent, the prior art, and the particular circumstances of the case." Graver Tank, 339 U.S. at 609, 70 S. Ct. 854; United States Steel Corp., 865 F.2d at 1253 n. 9. (affirming district court's decision that was based on the principle of the contribution made by the inventor); Scripps, 927 F.2d at 1581. Thus, as will be explained below, although HMR/TKT presents evidence showing many differences between its process and those specifically exemplified in Amgen's *290 specification, it fails to prove that these differences matter.[108]
(1) Homologous Recombination, Endogenous EPO DNA, and The Neighborhood's Effect on the Production of EPO
(a) Homologous Recombination and Endogenous EPO DNA[109]
HMR/TKT repeatedly asserts that (1) its process is different because it uses homologous recombination (as opposed to heterologous recombination); and (2) its EPO gene is different in structure because HMR/TKT's EPO DNA is endogenous and Amgen's is exogenous. HMR/TKT's Opening Br. After Trial at 13; HMR/TKT's Proposed Findings of Fact ¶ 141; HMR/TKT's Reply Br. After Trial at 28.[110]
Tellingly, aside from the neighborhood theory (discussed immediately below), *291 HMR/TKT does not even attempt to explain how these differences matter that is, how they are different in principle from the processes disclosed in Amgen's patents. Instead, it primarily relies on this Court's prior findings, in the equivalent infringement context, that HMR/TKT's process is not substantially similar to Amgen's because, inter alia, it uses homologous recombination and endogenous activation techniques. See, e.g., Amgen I, 126 F.Supp.2d at 102-03 (concluding that "[HMR/]TKT is able to express high levels of human EPO in human cells without having to rely upon host cells from alternative species"). While it is true that the Court in Amgen I asserted that use of endogenous DNA was "an important distinction" in its eyes, the Court's vantage point has now changed. The Federal Circuit has made clear that the proper infringement analysis of which the reverse doctrine of equivalents is a part requires the Court to look at the properly construed claims and not to limit its purview to the invention as described in embodiments in the specification. See Amgen II, 314 F.3d at 1351 (making clear that the claims must frame the analysis when considering the reverse doctrine of equivalents). Clearly, endogenous DNA and homologous recombination are not explicated in any claim limitations. Moreover, the Court has already found and the Federal Circuit upheld that the specification does not limit the claims to exogenous activation and homogenous recombination. Id. Thus, the mere fact that HMR/TKT utilizes these other techniques does not alone demonstrate any substantial change from Amgen's patents. As the Court found in Amgen I in the context of the '349 patent, whether DNA encoding human EPO originated within or outside of the host cell simply does not matter, because the coding sequences of the DNA are the same and both DNA sequences function the same way to produce human EPO. 126 F. Supp. 2d at 121; see also Lodish Test., R. Trial Tr. at 1098: 6-12.
True, heterologous recombination and endogenous activation techniques were not known by skilled artisans at the time Amgen filed its application. Equivalent infringement, however, is evaluated based on the date of infringement. Warner-Jenkinson, 520 U.S. at 37, 117 S. Ct. 1040. Here, the evidence does not show that these techniques are different in principle than those espoused in Amgen's patent. Moreover, the mere use of new technology even when it is superior does not on its own justify the application of the reverse doctrine of equivalents. Westinghouse, 170 U.S. at 568-69, 18 S. Ct. 707 (noting that infringement can be found even if the device is an improvement upon that of the patentee); Studiengesellschaft Kohle, m.b.H. v. Dart Indus., Inc., 726 F.2d 724, 728 (Fed.Cir.1984) ("That [the alleged infringer's] catalysts may be superior to those actually invented, disclosed, and contemplated by [the patentee] would not by itself remove [the alleged infringer's] catalysts from the scope of [the patentee's] claims."); Phillips Petroleum Co. v. United States Steel Corp., 673 F. Supp. 1278, 1357 (D.Del.1987) (similar); Lemley, Economics, at 1010-11 (noting that "any invention, no matter how pioneering, can be thought of as an improvement on prior work," and that "not all improvements escape infringement," even significant ones, but that "radical improvements are protected under the reverse doctrine of equivalents"). HMR/TKT must somehow show its product or process is changed "in principle" from what is embraced in the patent claims that is, that these differences "amount to a significant contribution that takes the invention outside the equitable bounds of the patent." Westinghouse, 170 U.S. at 572, 579, 18 S. Ct. 707 (noting that *292 it was not just novel but also a substantial improvement); cf. Scripps, 927 F.2d at 1581; Merges & Nelson, supra, at 864-65 (interpreting the reverse doctrine as requiring not just novelty but a significant contribution or substantial improvement and relying on Westinghouse and SRI International as support). Importantly, HMR/TKT provides no support aside from this Court's dicta that its endogenous activation technique or homologous recombination was an improvement "so radical that it fundamentally changed the nature of the invention." Lemley, Economics, at 1067. HMR/TKT merely points to differences such as "endogenous genes in mammalian cells have a methylation pattern that exogenous genes lack." HMR/TKT's Proposed Findings of Fact ¶ 141. Aside from the neighborhood theory, discussed and rejected by the Court below, HMR/TKT does not explain how these differences matter. Its showing is simply inadequate.
(b) The Endogenous EPO Neighborhood and Its Effect on EPO Production
HMR/TKT argues that how the gene construct "functions with the surrounding neighborhood to produce EPO is completely different in HMR/TKT's and Amgen's cells." HMR/TKT's Proposed Findings of Fact at 29-32; HMR/TKT's Opening Br. After Trial at 16 (claiming that the way in which expression of human EPO is accomplished is significantly different in HMR/TKT's process). In support, it explains that HMR/TKT activates the normally silent EPO gene and inserts it amidst the endogenous EPO neighborhood. HMR/TKT's Proposed Findings of Fact ¶¶ 122-125. This, according to HMR/TKT, enables the promoter "to work with other nearby enhancers and the EPO gene neighborhood to contribute to the gene's transcriptional activity," id. ¶ 124, and to "produce higher levels of EPO," id. ¶ 129. See id. ¶¶ 126-138.[111]
While this theory is intriguing and might well have justified invocation of the reverse doctrine of equivalents the evidence HMR/TKT presented fails sufficiently to support it.
HMR/TKT relied primarily on Dr. Kingston's testimony to elucidate its neighborhood theory. Dr. Kingston testified that the neighborhood around the EPO gene affects expression capability. See, e.g., Kingston Test., R. Trial Tr. at 36. He explained that HMR/TKT uses an endogenous EPO promoter in a region that is normally set up to express EPO. Therefore, like a hotel that is positioned in the heart of the city, he argued, it is helped by its surroundings, that is, the nearby regulatory sites "all work together to help keep this gene on." See, e.g., Kingston Test., R. Trial Tr. at 26-28. This is different, according to Dr. Kingston, than Amgen's process which, as explained in the specification, randomly integrates exogenous DNA, leaving the potential surroundings up to chance. Id. at 26-28 ("A gene that has gone into an open region that doesn't happen to be near any other regulatory elements" may have "nothing in its surroundings to help it stay on."); id. at 151. Dr. Kingston opined that it was the neighborhood and not the difference in promoter strength, culture conditions, media, *293 or cell type, or any other factors that caused HMR/TKT's construct to express more EPO per gene copy than the cells made following example 10 in Amgen's patent. Id. at 29-33.
Although this testimony is compelling, it fails to persuade the Court for three reasons. First, notwithstanding Dr. Kingston's testimony to the contrary, the bulk of the credible evidence demonstrates that the endogenous regulatory sequences surrounding the EPO gene in HMR/TKT's construct are "inactive" and actually do not work with the CMV promoter to enhance EPO reproduction in the R223 cells. Dr. Wall testified that the EPO neighborhood in HRM/TKT's cells does not enhance their ability to produce EPO. Wall Test., R. Trial Tr. at 1149: 3-5, 1161-62. Specifically, he explained
The genomic neighborhood around the EPO gene is there to constrain the expression of the EPO gene in very specific cells; and in all the rest of the cells in the body the genomic neighborhood is silent, it's shut down, it's not responsive to hypoxia. So the genomic neighborhood is not set there to somehow enhance the activity of this really robust viral promoter. Instead, it's there to exquisitely restrict the level and the tissue-specific activity of the EPO gene expression.
Id. at 1161: 18-1162: 2; id. at 1148: 13-25, 1149: 5-9, 1162: 15-1163: 11. See also Lodish Test., R. Trial Tr. at 1085-86 (disagreeing with Kingston's neighborhood theory). Moreover, contrary evidence exists not merely from Amgen but also from HMR/TKT itself. In its own FDA filings, HMR/TKT admitted that the regulatory sequences surrounding the EPO gene in HMR/TKT's construct are not active and actually are bypassed. HMR/TKT's IND, Ex. 18, at 16 (stating that HMR/TKT's technology works by "bypassing regulatory DNA sequences set in the "off position" "); HMR/TKT's IND, Ex. 19, at 561.
Second, Dr. Kingston the sole exponent of the neighborhood theory did not perform any experiment to validate his conclusions. Kingston Test., Trial Tr. at 1495: 9-1496: 16; Kingston Test., R. Trial Tr. at 189: 14-16; Lodish Test., R. Trial Tr. at 1086 (noting that there is no evidence that supports Dr. Kingston's contention); id. at 1096: 1-5. He merely compared HMR/TKT's R223 cell experiments with Amgen's Example 10 cell experiments. These comparisons do not, on their own, establish Dr. Kingston's conclusions. As both Dr. Lodish and Dr. Wall pointed out and Dr. Kingston did not dispute Dr. Kingstown compared EPO production per gene copy by looking at experiments with cells grown in different locations under different conditions by different people without controlling for other variables that could have affected the amount of EPO produced per gene copy. Id. at 1095-98, 1091 (explaining that Dr. Kingston's comparison did not account for the different growing conditions, different promoters, and many other variables in the experiment that are evidenced by the thousand-fold variance in data points for one construct and pointing out that Kingston relied on only a single data point); Wall Test., R. Trial Tr. at 1155, 1157-1158 (objecting to Dr. Kingston's conclusions because there is not a reliably established significant difference; "you can't really compare these two cells. They're like apples and oranges" due to "time differences" and a "large number of variables that could affect the expression level of EPO in those cells"); cf. Kingston Test., R. Trial Tr. at 190-91, 199-202, 205-06 (conceding that no other experiments were conducted, that the experiments were based on a single data point, and that he could not do a statistical analysis to determine if there was an outlier, but *294 asserting that he still considered them to be controlled experiments); Kingston Test., Trial Tr. at 1484-85, 1490-91 (acknowledging that factors other than "neighborhood" effects can affect the amount of EPO produced per gene copy). Even Dr. Kingston admitted that a failure to use controls can lead to erroneous or misleading results and that a competent technician controls for the variables that could cause certain results. Kingston Test., R. Trial Tr. at 120: 10-18, 119: 9-120: 3. Furthermore, the evidence at trial suggested that HMR/TKT's experimental data itself was inconsistent. A single data point was an 800-fold difference from all the other data points a variance greater than the alleged 500-fold difference between the single data point for pREPO26 and the highest value reported for pREPO22. Kingston Test., R. Trial Tr. at 190: 16-25, 201: 1-10; see also 12-17-96 Memo from Fike to Hermentin, Ex. 165. Thus, there is no reliable experimental data supporting the contention that it is the neighborhood, as opposed to some other factor, that accounts for HMR/TKT's expression capabilities.
Third, even if HMR/TKT had proven that the genomic EPO regulatory sequences in the EPO neighborhood and not other factors like nutritional growth conditions, limits in cellular folding, strength of promoter, number of enhancers, and the Kozak sequence affected the amount of EPO produced per gene copy, that would not have proved a meaningful change or substantial difference in actual EPO production. SRI Int'l, 775 F.2d at 1123; cf. Winans, 56 U.S. (15 How.) at 342-343. The evidence shows that HMR/TKT's R223 cells do not produce more EPO or better EPO, even though they make more EPO per gene copy than the cells made following example 10 in Amgen's patent.[112] Lodish Test., Trial Tr. at 178: 4-12; Wall Test., R. Trial at 1155: 4-9, 1156: 23-1157: 1 (noting that the difference is not significant). Indeed, Dr. Kingston admitted that actual EPO production levels by Amgen's example 10 cells and R223 cells were comparable. Kingston Test., R. Trial Tr. at 177: 25-178: 16. Moreover, uncontradicted testimony adduced at trial shows that there was no difference in biological activity or therapeutic effects of the EPO glycoprotein ultimately secreted by the two cells. Lodish Test., Trial Tr. at 166: 15-25. Given the claims, the specification, and the absence of any language about gene copy number, how efficiently the EPO is made is simply not material.[113] HMR/TKT points to nothing in the specification or prosecution history to suggest otherwise. As both Dr. Lodish and Dr. Wall testified, a more significant comparison would be between the amounts of EPO made by the respective cells or even between the rates of expression of EPO per million cells per 24 hours in the respective parties' processes not the amount of EPO produced per gene copy. Wall Test., R. Trial Tr. at 1155: 4-9; Lodish Test., R. Trial Tr. at 1085: 13. Moreover, even if a comparison of the amount of EPO produced per gene copy was a material one, and if such a comparison had been conducted using controls, *295 HMR/TKT's argument would likely still fail. HMR/TKT compares its cells to the cells in an example when it is clear, as Amgen argues, that "Dr. Lin's patent describes and teaches much more including various cultured vertebrate and mammalian cells, including human cells, grown in optimized nutrient conditions having stronger and/or more numerous viral promoters and enhancers." Amgen's Reply to HMR/TKT's Findings of Fact ¶ 101; see also Wall Test., R. Trial Tr. at 1161: 8-13.
Had HMR/TKT proven that its new technology of using homologous recombination or endogenous activation actually worked in some substantially different way due to the neighborhood and enabled it to produce significantly more EPO or EPO that somehow differed in its biologic or therapeutic effects (which would have supported HMR/TKT's contention that its technology functions differently), it might well have demonstrated sufficient grounds for invoking the reverse doctrine of equivalents. Cf. Scripps, 927 F.2d at 1565 (noting that whether alleged infringer's new recombinant technology resulted in "specific activities and purity" otherwise unattainable might, if proven, provide sufficient grounds for invoking the reverse doctrine of equivalents). Here, however, HMR/TKT has not done so. It has not shown that any of these differences constitute a radical or dramatic improvement or are "so far changed in principal that they perform the function in a substantially different way." SRI Int'l, 775 F.2d at 1124.
Thus, despite the fact that HMR/TKT's process employs homologous recombination and endogenous DNA and produces more EPO per gene copy than Amgen's Example 10 cells, it appears that its process does exactly that which Amgen's patent teaches: it introduces a strong viral promoter and non-human enhancers to overcome the naturally restrictive neighborhood in the R223 cells. See Wall Test., R. Trial Tr. at 1149: 3-14, 1159: 6-1161: 13; Lodish Test., R. Trial Tr. at 1097; Lodish Test., Trial Tr. at 165: 1-11, 178: 4-12; Kingston Test., Trial Tr. at 1382-1386.[114]
(2) Different Promoter Placement, Splice Sites, and Leader Sequences
HMR/TKT argues that it places its promoter much farther upstream of the EPO gene to be expressed than does Amgen and that this was something those skilled in the art in 1984 would not have dared to attempt. HMR/TKT's Opening Br. After Trial at 13. As a result, it contends, HMR/TKT's process for producing EPO uses primary RNA transcripts and splice sites that differ from those used in Amgen's process, and results in a different EPO mRNA in HMR/TKT's and Amgen's cells and a different primary EPO protein product. HMR/TKT's Proposed Findings of Fact at 33-36; HMR/TKT's Opening Br. After Trial at 15.
(a) Upstream Promoter Placement and Splice Sites
Although it is undisputed that HMR/TKT places its promoter much farther upstream than 44 base pairs (the position described in one example in Amgen's specification), the Court has now found that placement of the promoter further upstream of the EPO coding region and splicing out deleterious ATGs was indeed a concept known and understood to those *296 skilled in the art at the time Amgen filed its application (1983-84).[115] Furthermore, the Court has held that Amgen's process covers, adequately describes, and enables such upstream promoter placement.
In terms of the EPO splice donor sites, it is undisputed that absent the exons, the splice donor sites are the same and that the intended effect of both processes was to splice out what is in between including intervening sequences and any deleterious ATGs. See, e.g., Kingston Test., Trial Tr. at 1431: 10-19, 1432: 14-24, 1433: 1-22, 1440: 19-25, 2094-2102 (admitting that what HMR/TKT labeled as its splice donor site is identical to the human splice donor site disclosed by Amgen in Figure 6). HMR/TKT argues, however, that its splice site is not the same as Amgen's because the left portion (the exon) is different. HMR/TKT's Opening Br. After Trial at 15; HMR/TKT's Proposed Findings of Fact at 35. It asserts that "it is the exon portion that matters" because it creates the leader sequence for the expressed polypeptide, that is, the exons remain to encode the polypeptide while the introns are removed. HMR/TKT's Opening Br. After Trial at 15. Amgen argues that the exon is irrelevant and not part of the splice site. Therefore, the key factual question for the Court is whether exons are included when one skilled in the art refers to the splice sites.
To the extent that the experts disagreed, the Court credits Dr. Lodish's testimony explaining that the exons are not included. Lodish Test., R. Trial Tr. at 1107-10; id. at 1132-33 (explaining that it is the splice donor sequence, not the splice junction, that will determine where downstream and with what corresponding DNA downstream a splice junction will splice and stating that "the splice donor is the sequence... that is removed during the splicing process," the splice acceptor is the sequence that is removed downstream, and "it's the regions on either side that are linked together"). This accreditation of Dr. Lodish's testimony is supported by evidence that HMR/TKT itself did not consider the hgH exon 1 to be part of the splice donor sequence. In its Investigational New Drug Application (IND) and in its patent, HMR/TKT identifies the splice donor site to be separate from the growth hormone exon 1 sequence. See, e.g., HMR/TKT's IND, Ex. 19, at 554; HRM/TKT's IND, Ex. 20, at 830; U.S. Patent No. 5,641,670 ("Treco's Patent"), Ex. 12, col. 50: 53-55; see also Kingston Test., Trial Tr. at 2094-2102 (conceding that this interpretation of the IND and patent is correct that is, that HMR/TKT did not include the three nucleotides in exon 1 as part of the splice donor sequence). Moreover, in the IND, HMR/TKT identifies the splice donor sequence to be the first 10 nucleotides of intron 1: GTGAGTACTC, which is identical to the sequence in Amgen's patent. See, e.g., HMR/TKT's IND, Ex. 19, at 554; HRM/TKT's IND, Ex. 20, at 830; see also Demonstrative Aids 7 & 8 from Lodish Rebuttal Examination, R. Trial.
Thus, as alluded to earlier in the written description analysis, this Court finds that the fair preponderance of the evidence shows, by a slight margin, that HMR 4396 uses the same splice donor site as that disclosed in Amgen's specification. Kingston Test., Trial Tr. at 1431: 10-19, 1432: 14-24, 1433: 1-22, 1440: 19-25 (admitting that absent the exons, the splice donor sites were the same and that the intended effect was to splice out what is in between, including intervening sequences and the *297 deleterious ATGs). The only difference is that Amgen takes the genomic EPO splice donor site disclosed in Amgen's Figure 6 and moves it upstream. Placing the promoter further upstream of DNA encoding a protein using the identical splice site is simply not a fundamental change in principal, because the intervening DNA is spliced out when the mRNA is formed. As discussed supra, skilled artisans could have done this at the time Amgen filed its application, and, more importantly, skilled artisans could easily have done it at the time of the alleged infringement the relevant time period for analyzing equivalent infringement. Warner-Jenkinson, 520 U.S. at 37, 117 S. Ct. 1040. Therefore, it is unclear how HMR/TKT can argue that its promoter placement differentiates its process from Amgen's process. As the Federal Circuit pointed out when HMR/TKT made the same argument in furtherance of the reverse doctrine of equivalents with respect to the '349 product claims, the exact promoter placement or the way the accused device controls transcription is not relevant to the analysis because neither the claims nor the specification require a locational limitation. They merely call for "operative linkage," which was construed by the Court to mean "the promoter DNA is linked to the EPO DNA in a way that maintains the capability of the promoter DNA to initiate transcription of the EPO DNA." Amgen, 126 F.Supp.2d at 90. It refused to read any distance restriction in the claim term "operatively linked," because the specification does not restrict the promoter location. It merely communicates that in order to achieve "operative link[age]," what is important is placing a strong promoter upstream of the ATG initiating codon of the EPO gene and splicing out unwanted ATGs. Thus, that which HMR/TKT does was "suggested" by the patent. Westinghouse, 170 U.S. at 573, 18 S. Ct. 707 ("If the method pursued by the patentee for the performance of the function discovered by him would naturally have suggested the device adopted by the defendants, that is in itself evidence of intended infringement."). Thus, HMR/TKT has not shown any real difference, let alone a substantial or radical one.[116]
(b) Different Leader Sequences in the Primary EPO Protein Product
HMR/TKT argues that its primary EPO protein product is different from Amgen's product because it contains a hybrid leader sequence containing both hGH and human EPO amino acids, whereas Amgen's only contains EPO leader sequences. HMR/TKT's Proposed Findings of Fact at 36; HMR/TKT's Opening Br. After Trial at 15.[117] At trial, Dr. Lodish conceded that in Amgen's Example 10, exon 1 comes from the EPO gene whereas in HMR/TKT's process, it comes from the human growth hormone gene. Lodish Test., Trial Tr. at 174. He explained that the difference between *298 the leader peptides is a "minor" one because they both function in exactly the same way and both are removed. Id.; see also id. at 433-34 (stating that the leader peptides are different but perform the same function and are ultimately cleaved); id. at 159-160. Evidently, exons 2-5 of the EPO structural genes are what encode amino acids in the mature secreted form of the protein. Id. at 173; id. at 160 ("[E]xon 1 ... encodes part of the leader peptide which is removed from the cell and has no other function."). Furthermore, what is ultimately secreted from the cell is the same polypeptide with three n-linked oligosacharides, sialic acids ... and one o-linked oligosacharide." Id. at 174; id. at 160 ("Exon 1 ... has no effect whatsoever on the secreted mature EPO glycoprotein."). HMR/TKT points to no evidence disputing this testimony nor does it even attempt to explain how this difference presents a change in principle from Amgen's patented process.
(3) Method of Growing Cells
HMR/TKT argues that it grows its cells in a substantially different manner from that described in the '698 patent. HMR/TKT's Opening Br. After Trial at 18-19; HMR/TKT's Proposed Findings of Fact at 38-41. It points out that Amgen's specification describes a process of growing vertebrate cells that uses a roller bottle system to obtain adhesion of the cell line to the bottle surface. HMR/TKT's Opening Br. After Trial at 19. HMR/TKT, on the other hand, uses an air-lift technology that "works in a completely different way from roller bottle technology". Id.
These arguments fail for the same reasons that all of HMR/TKT's other reverse doctrine of equivalents arguments fail. First, HMR/TKT compares its process to the method of culturing described in an embodiment in the specification instead of to the spirit and intent of the claims. Second, it has not even argued how its culturing process is changed in principle from that explicated in Amgen's patent.
The Court begins by pointing out that it has not construed the claims to require roller bottle culturing. Nor has HMR/TKT pointed to anything in the patent, specification, or prosecution history to compel it to do so. HMR/TKT simply argues that because a roller bottle system is the only type of culturing actually described in the specification, the claims should be limited to this type of culturing. The Court has already explained at length that a patent's scope is not limited to those embodiments described in the specification, absent concerns about invalidity, prosecution history estoppel, or other such grounds.
Moreover, after a careful review of the specification, it is clear that it does anything but imply that use of roller bottles is the only way to culture or grow the cells. The specification states that productivity can be improved "by appropriate cell culture techniques." '933 Patent, Ex. 1, col. 27: 7-9. Then it makes a general statement that "[the] propagation of mammalian cells in culture generally requires the presence of serum in the growth media," but that "a method" that does not contain serum can "greatly facilitate" the process. Id. at col. 27: 10-14 (emphasis added). The implication of these two sentences is (a) more than one culturing technique is contemplated, and (b) both serum and serum-free culturing can be used to propagate mammalian cells, but serum-free is preferred. The specification then goes on to describe one such preferred method that happens to use roller bottles. Id. at col. 27: 15-53. Later, the specification also teaches, in the preferred method, growing suspension cell cultures in spinner *299 flasks yet another type of culturing or growing process. Id. at col. 27: 19-21. Thus, the specification does not only teach culturing via the roller-bottle but also teaches culturing in spinner flasks.[118] Indeed, HMR/TKT's expert testimony confirms this interpretation of the specification. See Hancock Test., R. Trial Tr. at 259: 20-260: 21, 262: 16-263: 24 (admitting that in 1984 roller-bottles were not the only method for culturing mammalian cells and that the specification teaches growing up the suspension cell cultures in spinner flasks, which grow the cells in suspension).
Since HMR/TKT points to nothing in the patent or prosecution history to support adding a limitation to the claims, the Court refuses to do so. The equitable scope of the claim is broader than roller-bottle culturing. Scripps, 927 F.2d at 1581 (weighing accused device against equitable scope of the claims); Sirilla, Feddo & Antone, supra, at 101.
Even if the Court were to limit the claims to a roller bottle system of culturing, HRM/TKT would still fall short of making a prima facie showing that the reverse doctrine of equivalents is applicable. HMR/TKT does not even attempt to explain how using an air-lift fermenter to grow its cells (as opposed to roller bottles) justifies invoking the reverse doctrine of equivalents, that is, it does not show how this difference is a "manifest departure in principle" or even novel, for that matter. Westinghouse, 170 U.S. at 572, 579, 18 S. Ct. 707. Instead, it spent many of its precious trial minutes[119] eliciting testimony about the minute distinctions between air-lift fermenting and roller-bottle culturing. See generally Hancock Test., R. Trial Tr. at 232-39. For example, it showed at trial that (a) the cells circulate through the fermenter, but adhere as a layer to the surface of the roller bottles; (b) roller bottle culturing uses fetal calf serum, while the air-lift technology does not; (c) roller bottle culturing is done horizontally, while air-lift fermenting is done vertically; and (d) multiple bottles are used in roller bottle culturing, while only a single vessel is used in air-lift fermentation. Id. at 234, 236-40. HMR/TKT failed, however, to demonstrate that the two processes are premised on anything other than the same principle of mixing cell cultures.
Indeed, HMR/TKT did not even show that air-lift fermenting was superior let alone a substantial or radical improvement. Dr. Hancock basically testified as to how the processes were different, but said nothing about how these differences mattered. See generally Hancock Test., R. Trial Tr. at 232-39. True, Dr. Hancock testified there is a risk of contamination when using fetal calf serum and that the air-lift fermenter allows for more uniform monitoring and control of conditions since it only uses one vessel. Id. at 234-35, 241, 256; see also id. at 238-399. He did not, *300 however, loop it back together. He did not present or refer to any controlled experimental data comparing the two processes that showed that fetal calf serum caused contamination that affected the process. Id. at 256-57. Moreover, he did not testify as to how or even whether the additional level of control in air-lift fermenting is beneficial or superior. Id. at 239. He merely made some vague statements that in the air lift fermentation technology, the process could potentially be optimized because the medium can be defined. Id. at 242-43. Even if there had been a more concrete showing that serum-free medium was advantageous to fetal-calf serum medium, it would not have been enough to show a substantial change or manifest departure in principle. As discussed earlier, the mere fact that something is improved or better does not justify invoking the reverse doctrine. See, e.g., Studiengesellschaft, 726 F.2d at 728; Phillips Petroleum Co., 673 F. Supp. 1278.
Further, HMR/TKT's own expert implicitly admitted that growing cells in an air-lift fermenter is equivalent to many culture methods including the roller bottles or spinner flasks exemplified in Amgen's patent. Hancock Test., R. Trial Tr. at 264: 12-265: 12, 261: 23-262: 24 (conceding that regardless of whether roller bottle spinner cells are used or other types of culturing techniques, the objectives are the same and can be met by mixing or agitating the cell culture by spinning, rolling, or mixing it with air bubbles from an air-lift fermenter).
As the Federal Circuit has noted many times in the past, "[e]quivalence and non-equivalence, as the terms indicate, are but opposite sides of the same coin." SRI International, 775 F.2d at 1125; id. at 1125 n. 22 ("In both instances, one is dealing with whether a particular product falls within a range of products which the patent entitles the patentee to exclude others from making, using, or selling."); see Westinghouse, 170 U.S. at 568, 18 S. Ct. 707; Texas Instruments II, 846 F.2d at 1371; Duffy, supra, at 315. Since air-lift fermenting is essentially equivalent to roller-bottle culturing and is premised on the same principle of mixing cell cultures, it cannot qualify as a "reverse equivalent." SDS USA, Inc., 122 F.Supp.2d at 541; see also Westinghouse, 170 U.S. at 569, 18 S. Ct. 707 (explaining that if the substance of the invention is there, "[m]ere variations of form may be disregarded").[120]
(4) HMR/TKT's Process Was Patented
HMR/TKT seems to believe that since the United States Patent and Trademark Office granted it a patent on its culturing process, the two processes must be so substantially different that the reverse doctrine of equivalents can justifiably be invoked. See, e.g., HMR/TKT's Reply Br. After Trial at 28; HMR/TKT's Proposed Findings of Fact ¶ 121. While attainment of a patent may aid in making a prima facie case in support of the reverse doctrine of equivalents, see, e.g., Jewish Hosp. of St. Louis v. IDEXX Laboratories, 973 F. Supp. 24, 28 (D.Me.1997) (finding a prima facie showing met when one of three facts asserted was that the process was patented), it does not necessarily equate to such a determination. See, e.g., Nat'l Presto Indus., Inc. v. West Bend Co., 76 F.3d 1185, 1191-92 (Fed.Cir.1996) ("The *301 grant of a separate patent on the accused device does not automatically avoid infringement, either literal or by equivalency. Improvements or modifications may indeed be separately patentable if the requirements of patentability are met, yet the device may or may not avoid infringement of the prior patent."); Atlas Powder Co. v. E.I. du Pont De Nemours & Co., 750 F.2d 1569, 1580-81 (Fed.Cir.1984) (finding equivalent infringement despite the fact that the accused device was separately patented). Thus, as Amgen contends, "patents are routinely granted for improvements in technology even though the practice of the technology would infringe an earlier issued patent." Amgen's Reply to HMR/TKT's Opening Br. After Trial at 29; see also Lemley, Economics, supra, at 1009 (noting that "patenting an improvement does not prevent it from infringing on the original patent" and describing three situations where "an improvement which is nonobvious in view of the prior art can still infringe on a patent which is part of that prior art"); see also Merges & Nelson, supra, at 865 ("Issuance of an improvement patent or a holding that a patent is valid but subservient to another patent is ... common."). Indeed, here it appears that HMR/TKT's patent consists of claims that are narrower but within the scope of Amgen's broader patent since its claims relate to homologous recombinant cells comprising a targeting sequence, an "exogenous regulatory sequence, an exogenous exon, and a splice-donor site operatively linked to the second exon of an exogenous gene." Treco's Patent, Ex. 12, col. 63: 50-54. Thus, without more, the fact that its process has been patented fails to make HMR/TKT's case.
c. Conclusion
HMR/TKT has succeeded in proving that its process differs in many respects from those specifically exemplified in the Amgen's specification and even is advanced technologically in at least one way. As the Supreme Court explained in Graver Tank, however,
Equivalence, in the patent law, is not the prisoner of a formula and is not an absolute to be considered in a vacuum. It does not require complete identity for every purpose in every respect. In determining equivalents, things equal to the same thing may not be equal to each other and, by the same token, things for most purposes different may sometimes be equivalents. Consideration must be given to the purpose for which [some aspect of the invention] is used in a patent, the qualities it has when combined with the other [aspects], and the function which it is intended to perform.
339 U.S. at 609, 70 S. Ct. 854; see SRI International, 775 F.2d at 1124. Here, taken together, the accumulated differences between the accused device and Amgen's invention as described in the patent, the claims, and the specification are not substantial; that is, they do not show that any principal has been so far changed such that it would be inequitable to view HMR/TKT's invention as within the scope of the claims of the '698 patent. Studiengesellschaft, 726 F.2d at 728 (considering whether there is so much dissimilarity that it would be inequitable to regard the infringing invention as within the scope of the claims); see also Westinghouse, 170 U.S. at 568, 18 S. Ct. 707 (considering whether the claims cease to represent the invention).
While the Court affirms the viability of the reverse doctrine of equivalents for those rare cases where the claims read on a new device or process despite its use of a new technology that makes a real difference in how the process works or what is produced, HMR/TKT has failed to meet its burden in establishing the defense here *302 (although the neighborhood theory potentially could have carried the day, had it been thoroughly demonstrated through experimentation at trial).
5. Ultimate Conclusion Concerning Infringement of the '698 Process Patent
The Court holds that Amgen has carried its burden of proving by a fair preponderance of the evidence that HMR/TKT's process infringes the '698 patent, claims 4-9.
B. The '349 Patent: Claim 7
1. Background
In Amgen I, the Court held that HMR/TKT did not literally or equivalently infringe claim 7, the process claim, of the '349 patent. Amgen I, 126 F.Supp.2d at 122.[121] In reaching this determination, the Court compared the accused process to the preferred embodiment in the specification and concluded that "[HMR/]TKT's process for producing erythropoietin differs markedly from that disclosed by Amgen's specification" because it "utilizes the endogenous rather than exogenous EPO gene" and it "places its promoter upstream from, rather than adjacent to, the EPO gene." Id. The Federal Circuit, as it did with the Court's holding of infringement of the '698 patent, vacated this holding and remanded it so that the Court could analyze infringement by comparing the accused process to the properly construed claims themselves. Amgen II, 314 F.3d at 1313, 1347, 1351.
Since the Court heard the entirety of both parties' arguments and evidence concerning the '349 patent at the first trial, no new evidence with respect to this patent was taken on remand. The parties, however, were given the opportunity to brief the issues remanded to this Court in pre and post-trial memoranda. Before the Court are both parties' motions for judgment pursuant to rule 52(c) [Doc. Nos. 674 & 686].
In HMR/TKT's motion for judgment pursuant to rule 52(c), it argued a new defense, the reverse doctrine of equivalents. Although the Court allowed the defense as it related to the '698 patent, it did not definitively do so for the '349 patent, because the procedural postures of the two patents were different. HMR/TKT never had a chance to present its case of non-infringement with regard to the '698 patent in Amgen I, but it did with regard to the '349 patent. As it ends up, this procedural dispute is moot. Even if the Court were to allow the defense at this stage, it would fail for lack of merit.
2. The Claim At Issue
Amgen's '349 patent contains six product claims regarding types of vertebrate cells grown in culture and one process claim, claim 7. The issue is whether HMR/TKT infringed claim 7, the process claim:
A process for producing erythropoietin comprising the step of culturing, under suitable nutrient conditions, vertebrate cells according to claim 1, 2, 3, 4, 5 or 6.
'349 Patent, Ex. 1, col. 38: 34-36.
3. Literal Infringement
a. Discussion
Since literal infringement of claims 1, 2, 4, and 6 has been established and affirmed, Amgen II, 314 F.3d at 1352, 1358, to prevail on this issue, Amgen need only show by a fair preponderance of the *303 evidence that HMR/TKT's process for producing EPO comprises "culturing under suitable nutrient conditions, vertebrate cells." Here, it is clear that Amgen has met its burden.
First, Dr. Lodish specifically testified that "I guess there is no dispute that [HMR/TKT's] cells are cultured and they're clearly vertebrate cells." Amgen's '349 App., Tab I (Lodish Test., Trial Tr.) at 300: 22-301: 8. HMR/TKT's assertion that Dr. Lodish's testimony makes clear that he was only guessing does not cast any affirmative doubt on Dr. Lodish's statements, which this Court credits.
Second, as discussed earlier, the Joint Pretrial Memorandum itself states that HMR/TKT's HMR 4396 is produced by "growing, under suitable nutrient conditions R223 cells," Amgen's '349 App., Tab M (4/26/00 Corrected Joint Pretrial Mem.), ¶ 25, and that its cells are cultured, id. ¶ 13 ("HMR 4396 is produced from the R223 cell line grown in culture."). Since HMR/TKT has admitted in various contexts that culturing and growing basically mean the same thing, it has implicitly admitted that its process literally infringes claim 7.[122]
Last, this Court's factual findings support the holding that HMR/TKT's process cultures the cells. In finding literal infringement of claims 1 and 4 of the '349 patent, this Court found that HMR/TKT's R223 cells are "capable, upon growth in culture, of producing erythropoietin in the medium of their growth in excess of 100 units of erythropoietin per 10 cells in forty-eight hours as determined by RIA (radioimmunoassay)," just like Amgen's cells. Amgen I, 126 F.Supp.2d at 119. Thus, the Court finds that HMR/TKT's cells are cultured.
Tellingly, HMR/TKT did not even argue in its post-trial submissions that its process did not literally infringe claim 7 of the '349 patent.
b. Conclusion Concerning Infringement: '349 Patent, Claim 7
Amgen has shown by a fair preponderance of the evidence that HMR/TKT's HMR 4396 literally infringes claim 7 of the '349 patent.
4. Reverse Doctrine of Equivalents
HMR/TKT presented the exact same arguments in furtherance of its reverse doctrine of equivalents arguments for the '349 patent as it did for the '698 patent. Given that it points to nothing in the claims or prosecution history of the '349 patent specifically in support, and the specifications are the same as between the two patents, the above analysis with respect to the '698 patent applies here.[123]
*304 5. Ultimate Conclusion Concerning Infringement of Claim 7 of the '349 Patent
The Court rules that Amgen has shown by a fair preponderance of the evidence that HMR/TKT's process literally infringes Amgen's '349 patent. Therefore, HMR/TKT's Fed.R.Civ.P. 52(c) motion regarding infringement of the '349 patent [Doc. No. 686] is DENIED and Amgen's Fed.R.Civ.P. 52(c) motion regarding infringement of the '349 patent [Doc. No. 674] is ALLOWED.
VI. VALIDITY CHALLENGES UNDER 35 U.S.C. §§ 102(a) & 103
HMR/TKT argues that the asserted claims of the '422, '080, '698, and '349 patents are either anticipated or rendered obvious by Sugimoto, Goldwasser, or both. Since these patents are presumed valid, HMR/TKT bears the burden of proving its contentions by clear and convincing evidence. 35 U.S.C. § 282 (2000); Amgen II, 314 F.3d at 1335.
A. Sugimoto
1. Background
a. Overview of Sugimoto
U.S. Patent No. 4,377,513 (Sugimoto's patent) was filed in 1981 and issued to Sugimoto on March 22, 1983. Sugimoto's patent, Ex. 2229, at 1. Sugimoto claims a process for producing human erythropoietin comprising "multiplying human lymphoblastoid cells capable of producing erythropoietin by transplanting said cells into a non-human warm-blooded animal body," or, alternatively, multiplying said cells "by allowing said cells to multiply with a device by which the nutrient body fluid of a non-human warm-blooded animal is supplied to said cells," and allowing the cells multiplied by either of the above multiplications procedures to release human erythropoietin. Id. at col. 6: 46-59. Put another way, Sugimoto claims that when a human cell line that produces EPO is fused with a human lymphoblastoid cell line, the resulting fused cells produce higher amounts of EPO in culture than the original fusion partners. Amgen I, 126 F.Supp.2d at 108. Sugimoto also advises that (1) conventional techniques can be utilized to achieve purification; and (2) human EPO produced thereby can be used in pharmaceutical compositions for the treatment of anemia. Sugimoto's patent, Ex. 2229, col. 3: 50-55; col. 3: 66-4: 2.
b. The Court's Decisions in Amgen I
(1) Anticipation
This Court held that HMR/TKT failed to show by clear and convincing evidence that Sugimoto's patent anticipated Amgen's '422, '080, and '349 patents. Id. at 110. In support of this holding, it found that Sugimoto was not enabled and that none of the cited references disclose each and every limitation of any of Amgen's individual claims. Id. at 109. With respect specifically to claim 1 of the '422 patent, the Court found that none of the cited references disclose a therapeutically effective amount of EPO or the purification of human EPO from mammalian cells grown in culture. Id.
(2) Obviousness
Because the Court had already held that HMR/TKT failed to prove that Sugimoto was enabled, it held that Amgen's claims were also not invalid due to obviousness. The Court noted in a footnote, however, that had the Court found the Sugimoto patent enabled, it would have "go[ne] a long way toward proving HMR/TKT's obviousness *305 defense." Id. at 114. This is because the patent itself suggested combining its invention with prior art sources relating to both purification and therapeutic delivery. The Court noted that if one of ordinary skill could actually make the EPO-producing cells described in the Sugimoto patent, a point on which HMR/TKT failed to persuade this Court, such a combination of prior art material might render invalid the pharmaceutical composition claims of the '080, and '422 patents. Amgen I, 126 F.Supp.2d at 114 n. 29. Finally, the Court noted that secondary considerations also applied to support the Court's findings of non-obviousness.
c. The Federal Circuit's Opinion
The Federal Circuit ruled that the Court erred in placing the burden of proving enablement of Sugimoto on HMR/TKT. Amgen II, 314 F.3d at 1354. The Federal Circuit explained that in prosecution of a patent, the examiner can reject applications as anticipated by prior art without first having determined whether that application had been enabled. The patent applicant can then overcome such a rejection by proving that the prior art had itself not been enabled. The Federal Circuit reasoned that this type of burden shifting was appropriate in this context as well. Therefore, it held "that an accused infringer should be similarly entitled to have the district court presume the enablement of unclaimed (and claimed) material in the prior art patent defendant asserts against a plaintiff." Id. at 1355.[124] The patentee, however, may prove nonenablement by a fair preponderance of the evidence. See id. Thus, the Federal Circuit concluded, Amgen is the party that bears the burden of proving the nonenablement of Sugimoto. Id.
The Federal Circuit noted that the Court could not have found that Amgen met its burden based solely on Dr. Erslev's testimony that "no one reported using Sugimoto's process to make a pharmaceutical composition of human EPO, nor has any patient ever been treated by any EPO produced by Sugimoto procedure." Id. at 1356. "The mere fact that no one has so used the Sugimoto process is only minimally probative of non-enablement: a conclusion that no one could have used Sugimoto." Id. at 1356. Moreover, the Federal Circuit stated, the fact that Amgen argued non-enablement of Sugimoto before the patent examiner during prosecution of Amgen's patents is only minimally probative of the issue since this was only one argument out of many and "we cannot assume the acceptance of every argument presented during prosecution." Id. Thus, the Federal Circuit concluded that Amgen had not presented evidence sufficient to meet its burden.
The Federal Circuit clarified that the Court's error was harmless for the most part because the Court had conducted a detailed anticipation analysis. With respect to claim 1 of the '422 patent, however, the Federal Circuit directed the Court to consider, on remand, whether it is novel over Sugimoto in light of the Court's new definition of "therapeutically effective" while being "mindful of the principle that source limitations cannot impart novelty to old compositions." Id.
Additionally, the Federal Circuit remanded to this Court the issue of obviousness in light of Sugimoto, because a *306 reference need not be enabled to prove invalidity under section 103. Id. at 1537.
2. The Claims at Issue
HMR/TKT argues that Sugimoto (1) anticipates claim 1 of the '422 patent and claims 6 and 9 of the '698 patent and (2) renders obvious claim 1 of the '422 patent, claims 2-4 of the '080 patent, and the asserted claims of the '349 and '698 patents.
3. Discussion
a. Anticipation: Does Sugimoto Anticipate Any of the Asserted Claims of the '422 and '698 Patents?
"[I]nvalidity by anticipation requires that the four corners of a single, prior art document describe every element of the claimed invention, either expressly or inherently, such that a person of ordinary skill in the art could practice the invention without undue experimentation." Advanced Display Sys., Inc. v. Kent State Univ., 212 F.3d 1272, 1282 (Fed.Cir.2000) (citing Atlas Powder Co. v. Ireco Inc., 190 F.3d 1342, 1347 (Fed.Cir.1999)); In re Paulsen, 30 F.3d 1475, 1479 (Fed.Cir.1994). The invention at issue must be identical to that in a single prior art reference and it must be shown in as complete detail. Richardson v. Suzuki Motor Co., Ltd., 868 F.2d 1226, 1236 (Fed.Cir.1989). Determining whether a patent is invalid by anticipation in prior art is matter of fact, Advanced Display, 212 F.3d at 1283, and the burden is placed on the party trying to prove anticipation. Robotic Vision Sys., Inc. v. View Eng'g, Inc., 189 F.3d 1370, 1377 (Fed.Cir.1999). Hence, here HMR/TKT must prove anticipation by clear and convincing evidence.
(1) Has Amgen Shown that Sugimoto Was Not Enabled?
As the Federal Circuit explained in Amgen II, "a non-enabled disclosure cannot be anticipatory (because it is not truly prior art) if that disclosure fails to enable one of skill in the art to reduce the disclosed invention to practice." 314 F.3d at 1354 (internal quotations and citations omitted). Therefore, if Amgen shows by a preponderance of the evidence, that it "present[ed] evidence of nonenablement that [this Court] finds persuasive, the [Court] must then exclude that particular prior art patent in any anticipation inquiry, for then the presumption [of enablement] has been overcome." Id. at 1355.[125]
*307 For the following reasons, the Court finds that Amgen has shown by a preponderance of the evidence that Sugimoto is not enabled that is, that Sugimoto's specification does not teach skilled artisans how to make and use the entire scope of the claimed invention without undue experimentation. See 35 U.S.C. § 112, ¶ 1 (2000); Genentech, 108 F.3d at 1365 (quoting In re Wright, 999 F.2d at 1561); Plant Genetic Systems, 315 F.3d at 1339 (same).
(a) The Starting Materials Were Neither Described Nor Made Available to the Public
First, the Sugimoto starting materials were not deposited, not described so that one skilled in the art could obtain them, and not otherwise made available to the public. Both Dr. Lodish and Dr. Green testified that Sugimoto's failure to deposit the starting materials, or to make them available to the public in some way, was critical in this case, because Sugimoto also failed to describe the starting kidney cells in a manner that would enable one skilled in the art to reproduce the method. See Lodish Test., R. Trial Tr. at 287: 3-288: 16 (explaining that Sugimoto only loosely describes the kidney tumor cells as "carcinomas," when he should have characterized the cells as to karyotype and morphology so that one could repeat the experiments); Green Test., R. Trial Tr. at 421: 4-422: 2 (hypothesizing that one reason why HMR/TKT's attempts to reproduce Sugimoto's hybridization failed might be that HMR/TKT was unable to obtain the starting kidney tumor line described by Sugimoto).
That this failure to teach how to obtain the starting materials or to deposit them was debilitating is evidenced by both parties' unsuccessful attempts to procure such cells. Amgen, after many attempts, was unsuccessful at locating or obtaining any of the human kidney tumor cells used by Sugimoto or any cells capable of producing EPO at the levels reported by Sugimoto in his patent. Lin Test., R. Trial Tr. at 562: 19-563: 11.[126] Moreover, as this Court found in Amgen I, after an arduous search, even HMR/TKT's star witness, Dr. Heartlein, was unable to obtain any of the human kidney tumor cells used by Sugimoto, 126 F. Supp. 2d at 109; Heartlein Test., Trial Tr. at 1812: 10-1813: 13; 1826: 5-1827: 24, and was unable to find any prior art EPO-producing cell lines that could be fused successfully to lymphoblastoid cells, Green Test., R. Trial Tr. at 427: 10-25.
HMR/TKT urges that Dr. Heartlein did not duplicate Sugimoto and, therefore, that his experiments cannot be used to show *308 that Sugimoto was not enabled. Johns Hopkins Univ. v. CellPro, Inc., 152 F.3d 1342, 1360 (Fed.Cir.1998) ("A party who wishes to prove that the claims of a patent are not enabled by means of a failed attempt to make the disclosed invention must show that the patent's disclosure was followed."). As pointed out in Amgen I, however, the reason Dr. Heartlein did not duplicate Sugimoto was that he could not do so he could not obtain starting materials that produced EPO at the levels disclosed in the examples of Sugimoto's patent. Amgen I, 126 F.Supp.2d at 109. Therefore, Dr. Heartlein's failed experiments are relevant to the analysis.
HMR/TKT argues that EPO-producing cells such as the human cell line that Goldwasser obtained from Abbott and from the American Type Culture Collection (ATCC) were available to the public and that, as of 1984, several groups of researchers had reported human kidney tumor cells capable of production of human EPO. See, e.g., HMR/TKT's Proposed Findings of Fact ¶¶ 281-85; HMR/TKT's Response to Amgen's Proposed Conclusions of Law and Findings of Fact ¶ 21. The evidence shows, however, that these cells were not comparable to the starting materials reported by Sugimoto. Lin Test., R. Trial Tr. at 562: 19-563: 11 (testifying that Amgen was never successful in obtaining EPO producing human cells or tissue sources). The Abbott cells were normal embryonic kidney cells, not kidney tumor cells, and they did not produce EPO. Id. at 541-42; Amgen Project Update, Ex. 234 (providing that Abbott cells did not make EPO). None of the cells Amgen obtained from the ATCC made EPO or could be induced to produce EPO at the levels reported in Sugimoto. Lin Test., R. Trial Tr. at 559: 21-560: 2; 1/20/83 Memo from Browne to Distribution, Ex. 235; Excerpts from Lab Notes, Ex. 236; 3/23/83 Summary Notes from Lin, Ex. 237. As to the other reported EPO producing kidney tumor cells, Dr. Sherwood would not make her cells available, Lin Test., R. Trial Tr. at 540, and Dr. Green testified that none of the cell lines made appreciable amounts of EPO, Green Test., R. Trial Tr. at 421, 471: 6-19, 478: 3-15 (explaining that he was not aware that any of these researchers showed that production of EPO was sustained to the same level over time, and testifying that in 1984, several groups of researchers had reported human kidney tumor cells capable of production of human EPO, but they were "all poor producers of the EPO"); Joseph W. Eschbach, The History of Renal Anemia (Anemia and Erythropoietin), Nephrology 4:279-287 (1998), Ex. 48, at 280 (noting that Lin's invention was a "difficult feat" because, inter alia, "there was no source of erythropoietin mRNA").
While it is true, as HMR/TKT points out, that Sugimoto's method is not limited to starting cells that produce a certain threshold amount of EPO, even HMR/TKT itself was unable to find any prior art EPO-producing cell lines that could be fused successfully to lymphoblastoid cells to do as Sugimoto claimed. Amgen I, 126 F.Supp.2d at 109; Green Test., R. Trial Tr. at 421: 18-422: 2; 427: 10-25. Further, HMR/TKT points out that Sugimoto claimed that any human cells (and specifically any human kidney tumor cells) capable of producing human erythropoietin could be used in his method. See, e.g., Sugimoto Patent, Ex. 2229, at col. 6: 60-68. Yet no one was successful in finding any starter cells that worked regardless of their EPO production capabilities. This is significant because enablement must be coextensive with the scope of the claims. Genentech, 108 F.3d at 1365; Plant Genetic Systems, 315 F.3d at 1339.
Although it is not always necessary to deposit starting materials, Wands, 858 *309 F.2d at 736; 35 U.S.C. § 112, deposit is required "[w]here an invention depends on the use of living materials such as microorganisms or cultured cells" and it is "impossible to enable the public to make the invention (i.e., to obtain these living materials) solely by means of a written disclosure." Wands, 858 F.2d at 735; see Deposit of Biological Materials for Patent Purposes, 52 Fed.Reg. 34,080, 34,084 (Sept. 9, 1987) (noting that a deposit may be required to satisfy enablement requirements of section 112); see also Chugai, 927 F.2d at 1211 (discussing circumstances where a deposit may be required). Here, as Dr. Lodish explained, without access to or adequate disclosure of the starting materials, "one could not begin to repeat [Sugimoto's] experiments." Lodish Test., R. Trial Tr. at 289: 16-290: 181. Therefore, undue experimentation would necessarily be required. Genentech, 108 F.3d at 1366 ("[W]hen there is no disclosure of any specific starting material or of any of the conditions under which a process can be carried out, undue experimentation is required.").
(b) Sugimoto Did Not Teach How To Select EPO-Producing Hybrid Cells
Second, Sugimoto neither deposited his putative "hybrids" nor taught how to select true hybrids. Dr. Green's testimony that the formation of hybrid cells incorporating the material of two parental nuclei into a single nucleus is "a rare event," went undisputed. See Green Test., R. Trial Tr. at 414: 1-8, 415: 2-9. Because most of the cells in a culture following a fusion event are not true hybrids, use of a selection method to remove all cells which are not hybrids is a very important step. Id. at 414-16. Sugimoto did not describe any selection method. As a result, according to Dr. Green, if skilled artisans tried to reproduce his experiments as described, "they would have no benefit of the selective system and therefore the amount of work which would be required might make it impossible for them to succeed in isolating such a hybrid." Id. at 422: 21-25; see also Elan Pharms., Inc. v. Mayo Found. for Med. Educ. and Research, 346 F.3d 1051, 1055 (Fed.Cir.2003) ("The determination of what level of experimentation is `undue,' so as to render a disclosure non-enabling, is made from the viewpoint of persons experienced in the field of the invention.").
Although Dr. Green admitted that methods to select hybrid cells were available to those skilled in the art at the time, Green Test., R. Trial Tr. at 423: 14-16, 507, he explained that execution of the methods was not routine, because the methods sometimes worked and sometimes did not, and that without publishing which methods to use and whether they worked, "there's no reason to suppose that you can apply it routinely to any combination of cells and have it work correctly." Id. at 425: 3-5; see id. at 420: 10-14, 422: 16-25, 424: 19-425: 5, 520: 2-24. According to Dr. Green, this lack of selection method, along with the fact that Sugimoto neither deposited nor characterized the cells, i.e., proved that they were hybrids, posed great difficulties to one skilled in the art attempting to reproduce the procedure. Id. at 425: 22-426: 8.[127]
*310 HMR/TKT attempts to rely on Dr. Kingston's testimony to lessen the weight the Court accords Dr. Green's testimony. This attempt is unsuccessful because HMR/TKT points to no testimony by Dr. Kingston addressing selection methods specifically, let alone the potential problems identified by Dr. Green. Furthermore, although the Court has indeed considered both Dr. Kingston's and Dr. Green's testimony regarding the amount of experimentation due, Elan Pharmaceuticals, 346 F.3d at 1055 (citing Enzo, 188 F.3d at 1373-74), it gives more weight to Dr. Green's testimony, because he is undisputedly the more experienced professional in this specific area. See, e.g., Kingston Test., R. Trial Tr. at 128: 2-8 (agreeing that Dr. Green is a "world-renowned expert on somatic cell fusion" and more expert than Dr. Kingston himself in that area).[128]
Moreover, that these deficiencies were debilitating to those skilled in the art trying to reproduce the procedure, and thus required undue experimentation to be overcome, is supported by HMR/TKT's failed attempt to repeat Sugimoto's process to obtain an EPO-producing hybrid cell. Green Test., R. Trial Tr. at 427: 10-22. Dr. Heartlein could not even obtain a putative hybrid when he used multiple selective markers, which make the job of selection easier. Id. at 427: 10-428: 12 (noting that he tried unsuccessfully with one marker ten times and then with multiple markers twenty-seven separate times, finding no putative hybrids on any occasion). While it is true, as mentioned earlier, *311 that Dr. Heartlein did not exactly duplicate Sugimoto's process, he could not for the reasons stated above. Moreover, as Dr. Green pointed out, even when he used advanced technology, had even more resources at his disposal than Sugimoto had, and had every incentive to achieve, he could not make any hybrid cells. Id. at 430: 3-7. Thus, the evidence shows that undue experimentation would have been required to select a hybrid human kidney tumor/lympohblastoid cell having the EPO-producing properties reported by Sugimoto. See Genentech, 108 F.3d at 1366 ("[W]hen there is no disclosure of any specific starting material or of any of the conditions under which a process can be carried out, undue experimentation is required; there is a failure to meet the enablement requirement that cannot be rectified by asserting that all the disclosure related to the process is within the skill of the art.").
(c) Purification of EPO To Be Used To Treat Anemia Was Claimed But Not Taught, and Prior Art Techniques Were Insufficient
Third, Sugimoto did not enable a purification method. Sugimoto's specification states that "conventional procedures" for purification may be used to purify EPO from the lysate produced in Sugimoto's experiments and can be used "in the prevention and treatment of human diseases such as anaemia." Sugimoto's patent, Ex. 2229, at col. 3: 50-65, col. 3: 66-4: 2. HMR/TKT's experts rendered opinions that an ordinarily skilled artisan, combining procedures of Yanagawa, Chiba, and Erslev, could have purified EPO from serum or cell culture medium. See, e.g., Erslev Test., Trial Tr. at 1751: 15-1754: 3; Robbins Test., Trial Tr. 1984: 7-1987: 5; Matsudaira Test., R. Trial Tr. at 910-14. Notwithstanding this testimony, the Court is persuaded that one of ordinary skill in the art could not have used the prior art purification methods to purify to substantial homogeneity the EPO produced in tumor cell cultures.
Given the state of the art and the skill level at the time, purification of EPO in the context of the Sugimoto patent was not as simple as it seemed; that is, it was not simply a matter of applying generic protein purification procedures already well known in the art to purify EPO produced in tumor cell cultures. See Wands, 858 F.2d at 737 (noting that the state of the art and level of skill are factors to be considered in the enablement decision). This Court was not convinced during Amgen I nor is it convinced now that one of ordinary skill could have used the Yanagawa or Chiba purification methods to purify to substantial homogeneity the EPO produced in the tumor cell cultures. Amgen I, 126 F.Supp.2d at 115 (noting as much in support of the conclusion that HMR/TKT failed to show by clear and convincing evidence that the pharmaceutical compositions claimed in the '933, '080, and '422 patents were rendered obvious by prior art). Dr. Green testified that Sugimoto's claim that other methods can be used to obtain human EPO preparation of high purity was "embarrassing[ ]" because it was "quite impossible." Green Test., R. Trial Tr. at 505: 6-16. He explained that as a scientist, he had to "examine the basis for Sugimoto's statements," and he found them "very deficient." Id. at 506: 5-7; see Wands, 858 F.2d at 738 (citing the amount of direction in the patent as one of the factors to consider in determining whether undue experimentation is required). Dr. Bradshaw gave specific examples why Yanagawa's purification method could not be used. He explained that the antibody in Yanagawa was not available and could not be substituted and that Yanagawa used an intermediate that would *312 have denatured the EPO protein, potentially resulting in an incorrectly folded molecule. Bradshaw Test., Trial Tr. at 2717: 22-2718: 18, 2721: 4-21. There is also evidence that HMR/TKT's Dr. Erslev did not believe that prior art purification methods could easily be combined to purify EPO. Three years after Sugimoto's disclosure, he stated in the book Hematology that "[r]eplacement therapy with erythropoietin, the most rational approach to the treatment of the anemia of chronic renal failure, unfortunately still lies in the future." Allan J. Erslev, Anemia of Chronic Renal Failure, in Hematology (3rd ed.1983), Ex. 249, at 422.
Moreover, no one to this day has been reported as being able successfully to purify to homogeneity therapeutically effective human EPO from non-recombinant cells grown in culture, nor has any patient ever been treated by any EPO produced by the Sugimoto procedure. Even HMR/TKT's witnesses, Dr. Matsudaira and Dr. Erslev, admitted this. Matsudaira Test., R. Trial Tr. at 930: 16-23; Erslev Test., Trial Tr. at 1755: 17-1756: 3.[129] As this Court pointed out in Amgen I, "in light of the intense competition that grew out of the race to make human EPO suitable for treatment of chronic anemia, one would imagine that if Sugimoto's invention were truly enabling then he would have won that lucrative race." 126 F. Supp. 2d at 108; see also Genentech, 108 F.3d at 1367 (concluding undue experimentation was needed based, in part, on the fact that the method was not used to make the claimed product for nearly a year). That Sugimoto's assignee had actually discontinued the project further supports the conclusion that Sugimoto's experiments were not enabling. 9/27/82 Rathmann Memo Memorializing Meeting with Assignee, Ex. 239, at 1 (characterizing the program as inactivated and "dormant").[130] Moreover, the experiments of HMR/TKT's star witness, Dr. Heartlein, affirm that undue experimentation would be required to produce results similar to those reported by Sugimoto. As discussed in Amgen I, after many attempts, Dr. Heartlein could not identify any clones producing EPO in fusions involving the HEpG2 cells. As HMR/TKT points out, the Sugimoto patent is not limited to certain types of EPO-producing cells, and, therefore, this failure alone indicates that Sugimoto's patent is not enabled. Genentech, 108 F.3d at 1366.[131]
*313 Thus, given the state of the art and the level of skill at the time proven by testimony about the prior art and subsequent art Sugimoto's failure to provide any guidance as to what combination of purification techniques is likely to produce substantially homogenous human EPO from Sugimoto's cell extracts that could potentially be used to treat patients means his patent is nothing more than an "invitation" to experiment and this is simply not sufficient to satisfy the enablement requirement. Enzo, 188 F.3d at 1374; see also Elan Pharmaceuticals, 346 F.3d at 1055 ("The disclosure in an assertedly anticipating reference must be adequate to enable possession of the desired subject matter. It is insufficient to name or describe the desired subject matter, if it cannot be produced without undue experimentation."). The testimony regarding the state of the art up till the time Amgen's patent issued and the experiments performed by Dr. Heartlein show that more than routine experimentation would be required to combine prior art techniques to purify and make EPO that is therapeutically effective in treating human diseases such as anemia.
(2) Conclusion
Patent protection is granted in return for an enabling disclosure of an invention, not for vague intimations of general ideas that may or may not work. Genentech, 108 F.3d at 1366. "While every aspect of a generic claim certainly need not have been carried out by an inventor, or exemplified in the specification," id., expert witnesses for both sides were shocked at the lack of direction and detail in Sugimoto's patent. See Wands, 858 F.2d at 738; Enzo, 188 F.3d at 1374. Dr. Green called the patent "a parody of a scientific document" because "[i]t has very, very poorly constructed experiments for examples. It has absence of controls or defective controls. It has many ambiguities, or worse, implausible statements that are not justified by any evidence. In short, it is a thoroughly unacceptable document from the scientific point of view...." Green Test., R. Trial Tr. at 401: 8-14; id. at 506: 5-7. Dr. Erslev, HMR/TKT's expert, was *314 similarly "flabbergasted" by Sugimoto's patent. Erslev Test., Trial Tr. at 1754: 24-1755: 9. Like in Genentech, here "the claimed invention is the application of an unpredictable technology in the early stages of development." 108 F.3d at 1367. As such, the specification must provide skilled artisans with "specific and useful teaching" and "supply the novel aspects of an invention." Id. at 1368, 1366. It is not sufficient merely to set forth a "plan or invitation for those of skill in the art to experiment" without providing sufficient guidance as to how to reproduce the starting materials, to select the hybrid cells, and then, most importantly, to purify the EPO so that it can be used, as is stated in the specification, to treat human diseases such as anemia. Enzo, 188 F.3d at 1374.
Like in Chugai, here a substantial discovery is claimed, yet there is no credible evidence that the claimed EPO can be purified and produced by skilled artisans by the disclosed process. Indeed, all evidence even that from HMR/TKT itself is to the contrary. Chugai, 927 F.2d at 1217 (basing decision on same criteria).[132] Therefore, this Court concludes that Amgen has proved by a fair preponderance of the evidence that Sugimoto's claims were not adequately enabled. As a consequence, Sugimoto does not anticipate any of the asserted claims of the '422 and '080 patents.
b. Obviousness: Does Sugimoto Render Obvious Any of the Asserted Claims of the '422, '080, '698, and 349 Patents?
A patent is invalid under 35 U.S.C. § 103 if the differences between the patented subject matter and the prior art are small enough that the patented subject matter "as a whole" would have been obvious at the time of the invention to a person having ordinary skill in the art. 35 U.S.C. § 103 (2001); SIBIA Neurosciences, Inc. v. Cadus Pharm. Corp., 225 F.3d 1349, 1355 (Fed.Cir.2000). Obviousness is determined based on four factual considerations and a set of secondary objective considerations. The factual considerations that are important are (1) the content of the prior art and its scope; (2) the differences that exist between the claimed invention and the prior art; (3) the level of skill in the prior art (as opposed to that in the claimed invention); and (4) the "objective indicia of non-obviousness." Yamanouchi Pharm. Co., Ltd. v. Danbury Pharm., Inc., 231 F.3d 1339, 1342 (Fed.Cir.2000); see also Graham v. John Deere Co., 383 U.S. 1, 17-18, 86 S. Ct. 684, 15 L. Ed. 2d 545 (1966); Ruiz v. A.B. Chance Co., 234 F.3d 654, 667 (Fed.Cir.2000).
The "objective indicia of non-obviousness," referred to as secondary considerations, include (1) commercial success; *315 ( 2) copying; (3) long-felt, but unresolved need; (4) the failure of others; (5) commercial success; (6) unexpected result created by claimed inventions; (7) unexpected properties of the claimed inventions; (8) licenses revealing industry respect for the invention; and (9) skepticism of skilled artisans before the invention. Graham, 383 U.S. at 17-18, 86 S. Ct. 684; In re Rouffet, 149 F.3d 1350, 1355 (Fed.Cir.1998). Although they are "but a part of the `totality of the evidence' that is used to reach the ultimate conclusion of obviousness," Richardson-Vicks, Inc. v. Upjohn Co., 122 F.3d 1476, 1483 (Fed.Cir.1997), these secondary considerations are by no means secondary in importance. Ryko Mfg. Co. v. Nu-Star, Inc., 950 F.2d 714, 719 (Fed.Cir.1991); Arkie Lures, Inc. v. Gene Larew Tackle, Inc., 119 F.3d 953, 958 (Fed.Cir.1997) (emphasizing that the secondary considerations are not secondary). To the contrary, they "can constitute `highly probative, objective criteria fully capable of serving as a foundation for the legal conclusion of unobviousness.'" Perkin-Elmer Corp. v. Computervision Corp., 732 F.2d 888, 895-96 (Fed.Cir.1984) (quoting Raytheon Co. v. Roper Corp., 724 F.2d 951, 961 (Fed.Cir.1983)). More than that, "secondary considerations may often be the most probative and cogent evidence in the record. It may often establish that an invention appearing to have been obvious in light of the prior art was not." Ruiz, 234 F.3d at 668 (quoting Stratoflex Inc. v. Aeroquip Corp., 713 F.2d 1530, 1538 (Fed.Cir.1983)) (internal quotation marks omitted) (emphasis added).
Importantly, the defense of obviousness can be based on a single prior art reference or more than one prior art reference. In other words, if it is shown that it would have been obvious to one skilled in the art to modify the teachings of a reference or combine the teachings of more than one reference to accomplish the claimed invention, then the patent for the claimed invention is invalid. SIBIA Neurosciences, 225 F.3d at 1356; Richardson-Vicks, 122 F.3d at 1483. To prevail, however, the alleged infringer must meet two requirements. First, it must show a suggestion, teaching or motivation to modify the reference or combine the prior art references. Yamanouchi, 231 F.3d at 1341 (citing In re Longi, 759 F.2d 887, 896 (Fed.Cir.1985)); Brown & Williamson Tobacco Corp. v. Philip Morris Inc., 229 F.3d 1120, 1125 (Fed.Cir.2000) (quoting C.R. Bard, Inc. v. M3 Systems Inc., 157 F.3d 1340, 1352 (Fed.Cir.1998)); Ortho Pharm. Corp. v. Smith, 959 F.2d 936, 942 (Fed.Cir.1992).[133] This may be inferred from the prior art, from knowledge of one skilled in the art, or from the nature of the problem to be solved. Brown & Williamson Tobacco, 229 F.3d at 1125 (citing Pro-Mold & Tool Co. v. Great Lakes Plastics, Inc., 75 F.3d 1568, 1573 (Fed.Cir.1996)). Broad conclusory statements, standing alone, are insufficient, however. In re Dembiczak, 175 F.3d 994, 999 (Fed.Cir.1999), abrogated on other grounds by In re Gartside, 203 F.3d 1305 (Fed.Cir.2000). Instead, evidence of motivation or suggestion to modify a reference or combine it must be "clear and particular." Dembiczak, 175 F.3d at *316 999; see Brown & Williamson Tobacco, 229 F.3d at 1125. Second, it must show that one of ordinary skill in the art would reasonably expect that so combining or modifying the prior art references would achieve success. Id.
(1) Claim 1 of the '422 Patent and Claims 2-4 of the '080 Patent
HMR/TKT argues that Sugimoto afforded the skilled worker a reasonable expectation of success in obtaining the claimed invention of the asserted claims of the '422 and '080 patents because Sugimoto discloses on its face every specific element of those claims, except for the extra 166th amino acid. HMR/TKT's Reply Br. After Trial at 10. In other words, it urges, that because Sugimoto discloses all the elements of the asserted claims, it necessarily shows that those skilled in the art would have had a reasonable expectation of success in practicing Amgen's claimed invention. This, however, erroneously conflates into a single issue what the Federal Circuit has defined as a two-part inquiry. See, e.g., Brown & Williamson Tobacco, 229 F.3d at 1124; In re Vaeck, 947 F.2d 488, 493 (Fed.Cir.1991). Also, it fails to address the four factors involved in the obviousness inquiry. Cf. Ruiz, 234 F.3d at 660, 664 (vacating and remanding district court's judgment for failure to address and make specific findings on the four factors outlined in Graham). Although it may appear today, with the benefit of hindsight, that Sugimoto's patent renders the asserted claims of the '080 and '422 patents obvious, as will be explained below, the record shows that at the time Amgen's patents issued there was no reasonable expectation of success in modifying Sugimoto and doing that which Amgen did. Indeed, what Amgen did was anything but obvious when considered in light of the secondary factors. See Dembiczak, 175 F.3d at 999 (stressing the importance of "casting the mind back to the time of the invention" and ignoring the "powerful attraction of hindsight-based obviousness").
(a) Scope and Content of the Prior Art/Differences Between the Claimed Invention and the Prior Art
HMR/TKT contends that Sugimoto alone, along with what was known by those skilled in the art, renders obvious the asserted claims of the '422 and '080 patents. As stated in Amgen I, Sugimoto itself "suggested combining its invention with prior art sources relating to both purification and therapeutic delivery." Amgen I, 126 F.Supp.2d at 114 n. 29. Thus, there was motivation to combine Sugimoto and prior art to make EPO to treat patients suffering from diseases such as anemia.
The differences between Sugimoto (combined with prior art knowledge) and claim 1 of the '422 patent and the asserted claims of the '080 patent, however, can be summarized easily.
Sugimoto does suggest all that is contained in claim 1 of the '422 patent. Amgen contends that Sugimoto does not disclose "therapeutically effective" because it does not use those words nor describe an increase in hematocrit. While this argument may indeed have merit in an anticipation analysis, where more complete detail and description may be required, it fails here. Sugimoto suggests (if not teaches) EPO that is therapeutically effective when it claims that its EPO is useful in the treatment of patient diseases such as anemia. Sugimoto Patent, Ex. 2229, col. 3: 66-4: 2; see also Kingston Test., Trial Tr. at 1227, 1234. Moreover, it is undisputed that Sugimoto claims it produced human EPO in excess of 1000 units/10 (6) cells, a range HMR/TKT asserts, and Amgen does not dispute, to be *317 therapeutically effective. Sugimoto Patent, Ex. 2229, col. 6: 27-39. Amgen argues in defense that Sugimoto does not suggest purification from mammalian cells grown in culture specifically. The Federal Circuit made clear in Amgen II, however, that when considering obviousness with respect to the '422 and '080 product claims, "a claimed product shown to be present in the prior art cannot be rendered patentable solely by the addition of source or process limitations." Amgen II, 314 F.3d at 1354 n. 20 (citing General Electric Co. v. Wabash Corp., 304 U.S. 364, 373, 58 S. Ct. 899, 82 L. Ed. 1402 (1938), and Cochrane v. Badische Anilin & Soda Fabrik, 111 U.S. 293, 311, 4 S. Ct. 455, 28 L. Ed. 433 (1884)). Therefore, this argument fails.
There are more differences between Sugimoto and the asserted claims of the '080 patent than there are between Sugimoto and claim 1 of the '422 patent. As the Court explained in Amgen I, claims 2, 3, and 4 (by dependency) make reference to the mature erythropoietin amino acid sequence of Figure 6, which is unique to and at the heart of Amgen's invention. Sugimoto does not discuss in any way the amino acid sequence of human EPO. HMR/TKT assumes that because Sugimoto discloses human EPO, it necessarily discloses human EPO with either a 165 amino acid sequence or 166 amino acid sequence. HMR/TKT's Reply Br. After Trial at 12. This, however, is not necessarily true. As Amgen points out, Reply to HMR/TKT's Findings of Fact ¶ 149, this Court already found that changes at the C-terminus neither affect the biological activity of the protein nor inhibit proper secretion from the cells. Amgen I, 126 F.Supp.2d at 133 (concluding that the absence of the 166th amino acid is not significant because the absence of the last four amino acids does not substantially change the glycoprotein). Moreover, HMR/TKT does not dispute that EPO fragments, rather than human EPO, can elicit an erythropoietic response in the Cotes bioassay. See Jean-Paul Boissel et al., Erythropoietin Structure-Function Relationships, 268 J. Biol. Chem. 15883 (1993), Ex. 2302, at 15983-93 (showing that variants of human EPO with internal deletions are biologically active, as measured in bioassays). Thus, simply because human cells were used does not necessarily mean that the sequence was present.
Amgen also claims, correctly, that Sugimoto does not examine the in vivo biological activity of causing bone marrow cells to increase production of reticulocytes and red blood cells, a limitation found in claims 2 and 3 of the '080 patent. While this argument supports a finding that Sugimoto does not anticipate these claims, it does not work here in an obviousness inquiry. As discussed above, Sugimoto claimed its EPO was "advantageously useable .... in the prevention or treatment of human diseases such as anaemia" Sugimoto Patent, Ex. 2229, at col. 3: 66-4: 2. This necessarily suggests an increase in reticulocytes and red blood cells since, as Dr. Schumacher explained and Amgen did not dispute, these side affects necessarily coincide with therapeutically effective treatment. Schumacher Test., R. Trial Tr. at 824-25.
(b) Level of Ordinary Skill in the Art[134] and Reasonable Expectation of Success
This Court has already found that those skilled in the art at the time Sugimoto *318 patented his invention would not have been able to use Sugimoto along with knowledge and skill in the art to select the hybrids or purify the EPO without undue experimentation. HMR/TKT does not suggest that at the time that Amgen made its claims as opposed to the time that Sugimoto filed its patent common knowledge in the art about these procedures had advanced. Moreover, there is no proof on record aside from that discussed and rejected that those skilled in the art would have been capable of practicing Sugimoto let alone practicing Amgen's claimed invention based on Sugimoto and general knowledge of skilled artisans. Indeed, there is proof to the contrary. No one has ever purified EPO from non-recombinant cells to substantial homogeneity and all attempts to obtain a therapeutic result had failed. Although a particular reference need not be enabling to be considered in the obviousness inquiry, the asserted combination (here Sugimoto combined with knowledge of one skilled in the art) must provide a reasonable expectation of successfully practicing the claimed invention. Boehringer Ingelheim Vetmedica, Inc. v. Schering-Plough Corp., 320 F.3d 1339, 1354 (Fed.Cir.2003); Yamanouchi, 231 F.3d at 1343; Beckman Instruments, Inc. v. LKB Produkter AB, 892 F.2d 1547, 1551 (Fed.Cir.1989) ("In order to render a claimed apparatus or method obvious, the prior art must enable one skilled in the art to make or use the apparatus or method.").[135] It is with respect to *319 this part of the analysis that HMR/TKT has failed to carry its burden. It has failed to show by clear and convincing evidence that one skilled in the art could practice Amgen's claimed invention with a reasonable expectation of success. Further, the evidence attested to by multiple experts that Sugimoto's experiments lacked sufficient controls, were not confirmed, and were unbelievable suggests that those of ordinary skill in the art would actually not reasonably expect that combining Sugimoto with knowledge of skilled artisans would achieve success. Brown & Williamson Tobacco, 229 F.3d at 1125.
(c) Secondary Considerations
As discussed in great detail in Amgen I, 126 F.Supp.2d at 115-16, this is definitely a case where the secondary considerations weigh heavily into the Court's decision. Indeed, here they represent the "most probative and cogent evidence in the record." Ruiz, 234 F.3d at 668 (quoting Stratoflex, 713 F.2d at 1538). Before Amgen's path-breaking invention, there was a long-felt need for the mass production of EPO. Amgen I, 126 F.Supp.2d at 108. Many skilled artisans tried unsuccessfully to achieve Dr. Lin's inventions. Id. at 115-16. If Sugimoto's invention truly rendered Amgen's invention obvious, one wonders why so many tried and failed. See Panduit Corp. v. Dennison Mfg. Co., 774 F.2d 1082, 1099 (Fed.Cir.1985) ("That many others including [the alleged infringers] had tried for years and failed to create the [claimed invention] is virtually irrefutable evidence that the [claimed invention] would not have been obvious to those skilled in the art when it was invented."), judgment vacated on other grounds, 475 U.S. 809, 106 S. Ct. 1578, 89 L. Ed. 2d 817 (1986), on remand, 810 F.2d 1561 (Fed.Cir.1987). Importantly, it was Amgen's invention that opened the floodgates for EPO production and led to the first pharmaceutical composition containing EPO to obtain FDA approval. Amgen I, 126 F.Supp.2d at 116. It was Amgen that won the lucrative race to make human EPO suitable for treatment of chronic anemia. Id.
HMR/TKT argues, however, that Amgen did not explain to which claims its success was attributable, and that the mapping of the EPO gene was claimed in Dr. Lin's '008 patent. HMR/TKT's Response to Amgen's Proposed Findings of Fact ¶ 46. In support, it cites Riverwood International Corp. v. Mead Corp., 212 F.3d 1365, 1367 (Fed.Cir.2000) (citing In re GPAC, Inc., 57 F.3d 1573, 1580 (Fed.Cir.1995)). In Riverwood and GPAC, however, success was attributable to factors that were entirely outside the scope of the claims. This is not the case here. The evidence suggests that these patents were groundbreaking in their own right since, as discussed above, no one had been able, even using Sugimoto, to purify to homogeneity EPO (as claimed in the' 422 patent)[136] or to produce a product that was actually therapeutically effective (as claimed in the '422 and '080 patents).
(2) Claims 4-9 of the '698 Patent and Claims 1, 3, 4, 6, and 7 of the '349 Patent
HMR/TKT contends that every element of the asserted claims of the '698 *320 and '349 patents is found in Sugimoto except the 166th amino acid of Figure 6, the "non-human" or non-EPO promoter or transcription control sequences and the amplified marker DNA. HMR/TKT's Opening Br. After Trial at 41-44. The missing elements, it argues, were available and routinely used in the art in 1983-84. Specifically, it asserts that
[g]iven the teachings of Sugimoto, it would have been obvious for the ordinary skilled worker to use retroviral insertion to operatively link a retroviral promoter and its transcription control sequences to the erythropoietin production genetic sites in a kidney or liver tumor cell that produced EPO and to transfer those production sites ... with an amplifiable marker DNA if desired, to a lymphoblastoid cell.
Id. at 41-42. HMR/TKT, however, fails to show a suggestion or motivation to modify the teachings of Sugimoto to create what Amgen claims. Moreover, it has not shown with clear and convincing evidence that one of skill in the art would have had a reasonable expectation of success in achieving Amgen's '349 or '698 claimed inventions using such techniques. Finally, as they did in the context of the '080 and '422 claims, the secondary factors weigh heavily in Amgen's favor on the issue.
(a) Scope and Content of the Prior Art/Differences Between the Claimed Invention and the Prior Art
Sugimoto differs from the asserted claims of the '349 patent in that it does not disclose the "non-human" or non-EPO promoter or transcription control sequences as claimed in the asserted claims of the '349 patent. Sugimoto differs from the asserted claims of the '698 patent in that it does not disclose the amino acid sequence of Figure 6,[137] amplified marker DNA, the "dihydrofolate reductase (DHFR) gene DNA," or use of a non-EPO promoter operatively linked to the EPO gene.[138]
With respect to amplified marker DNA, HMR/TKT asserts that Sugimoto's claimed hybrid cells comprise amplified DNA because they have more copies of the EPO gene than are found in normal cells. HMR/TKT Proposed Findings of Fact at 94. Dr. Lodish testified, however, that amplified EPO DNA refers to an increase in the "number of copies of EPO DNA *321 relative to other DNA sequences in the genome." Lodish Test., R. Trial Tr. at 1099: 25-1100: 1 (emphasis added); see also James Darnell, Harvey Lodish & David Baltimore, Molecular Cell Biology (1st ed.1986), Ex. 2394, at 457 ("When mammalian cells are grown in culture, specific sites on their DNA can become amplified." (emphasis added)); id. at 461 (showing in a diagram that DHFR gene copy numbers increase, but does not depict a change in the chromosome copy numbers). As HMR/TKT admits, Sugimoto's claimed hybrid cells had potentially 4 copies of every gene on every chromosome (two from each parental cell). See, e.g., HMR/TKT's Proposed Findings of Fact at 94; Kingston Test., R. Trial Tr. at 98: 19-99: 5. This does not represent an increase in the relative amount of EPO DNA compared to other DNA sequences.
Notwithstanding this, HMR/TKT argues that Dr. Lodish's testimony regarding amplification supports its argument that Sugimoto's hybrid cells will often have more than four copies of the EPO gene. See, e.g., HMR/TKT's Proposed Findings of Fact at 94 (citing Lodish Test., Trial Tr. at 160: 24-161: 10, 494: 24-495: 3). The Court, however, is not convinced that Dr. Lodish's testimony supports this conclusion. Instead, it appears that in the testimony on which HMR/TKT relies, Dr. Lodish was addressing selection for amplification events using the DHRF gene as a selectable marker a feature totally missing from Sugimioto.
With respect to the other missing elements, including amplification, HMR/TKT argues that they were available and routinely used in the art in 1983-84. See, e.g., HMR/TKT's Opening Br. After Trial at 41. Instead of focusing on the invention as a whole, however, as required under 35 U.S.C. § 103, HMR/TKT approaches the obviousness inquiry on a piecemeal basis, arguing that the separate elements of Amgen's invention existed in the prior art and, separately, "could" have been done easily. See, e.g., HMR/TKT's Opening Br. at 43-44; HMR/TKT's Proposed Findings of Fact After Trial at 93-115. "[A]bsent some teaching or suggestion, in the prior art, to combine the elements," however, this is "insufficient." Arkie Lures, 119 F.3d at 957; see also Ruiz, 234 F.3d at 665; In re Fine, 837 F.2d 1071, 1075 (Fed.Cir.1988) ("One cannot use hindsight reconstruction to pick and choose among isolated disclosure in the prior art to deprecate the claimed invention."); Connell v. Sears, Roebuck & Co., 722 F.2d 1542, 1549 (Fed.Cir.1983). As the Federal Circuit has explained, "[t]hat all elements of an invention may have been old (the normal situation), or some old and some new, or all new, is however, simply irrelevant. Virtually all inventions are combinations and virtually all are combinations of old elements." Environmental Designs, Ltd. v. Union Oil Co. of California, 713 F.2d 693, 698 (Fed.Cir.1983).
HMR/TKT tries to hang its hat on the statements in Sugimoto regarding genetic sites and recombinant techniques. See Sugimoto Patent, Ex. 2229, col. 1: 55-2: 3. It argues that Sugimoto's reference to "genetic recombination techniques" suggests combining Sugimoto with retroviral insertion art, that is, that Sugimoto suggested the insertion of non-human transcription control sequences. HMR/TKT's Reply Br. at 13. The Court is not convinced. Sugimoto nowhere suggests using "retroviral insertion" to induce expression of EPO. That the specification specifically defines recombination techniques as those "using DNA ligase, nuclease and DNA polymerase," Sugimoto Patent, Ex. 2229, col. 2: 2-3, argues against interpreting a suggestion of retroviral insertion. Similarly, both Dr. Lodish and Dr. Green testified that an ordinarily skilled artisan reading Sugimoto *322 would not have interpreted the section relied on by HMR/TKT as teaching a way to make cells capable of producing human EPO by recombinant DNA techniques. Lodish Test., R. Trial Tr. at 281: 10-282: 4, 285: 6-23; Green Test., R. Trial Tr. at 405: 19-409: 6. While Dr. Kingston testified that the most commonly used technology to increase expression of the EPO gene in 1983-84 was retroviral insertion, Kingston Test., R. Trial Tr. at 99: 14-23, when asked how Sugimoto teaches recombinant DNA techniques to increase expression of the EPO coating region, he stated that Sugimoto did so by using "ligases and nucleases and polymerases," id. at 104: 14-19 not retroviral insertion.
Moreover, it is not as if "retroviral insertion" was a commonly understood technique that could simply be applied by any skilled artisan in 1983-84. Instead, as Dr. Kingston explained, a skilled artisan would have to rely on many different prior art references to achieve it. See Kingston Test., R. Trial Tr. at 99-112 (relying on at least six other references in combination in forming opinion about process of inserting a retrovirus and producing erythropoietin from the resulting cell). That all of these references, save one, were published after Sugimoto's patent issued (after 1983) also supports the conclusion that Sugimoto was not suggesting a combination with retroviral insertion. See John M. Coffin, Stephen H. Hughes & Harold E. Varmus, Retroviruses (1997), Ex. 2481; Roger D. Cone & Richard C. Mulligan, High-efficiency Gene Transfer Into Mammalian Cells, 81 Proc. Nat'l Acad. Sci. 6349 (1984), Ex. 2479; Randal J. Kaufman & Phillip A. Sharp, Amplification and Expression of Sequences Cotransfected with a Modular Dihydrofolate Reductase Complementary DNA Gene, 159 J. Molecular Biol. 601 (1982), Ex. 2239; David L. Nelson et al., Metaphase Chromosome Transfer of Introduced Selectable Markers, 2 J. Molecular & Applied Genetics 563 (1984), Ex. 2476; Munehisa Ueno et al., Enhanced Erythropoietin Secretion in Hepatoblastoma Cells in Response to Hypoxia, 257 Am. J. Physiology C743 (1989), Ex. 2480; John H. Weis et al., Eukaryotic Chromosome Transfer, 81 Proc. Nat'l Acad. Sci. 4879 (1984), Ex. 2477.
While the motivation to modify can be found outside the reference itself, SIBIA Neurosciences, 225 F.3d at 1358, HMR/TKT has not shown that the knowledge of those skilled in the art or the nature of the problem to be solved suggested this modification. It is undisputed that the later published retroviral insertion references cited by Dr. Kingston do not refer to Sugimoto or to the expression of EPO or any protein that uses a host cell's gene. See id. The only reference that discusses expression of an endogenous gene after insertion of a retrovirus is the Weis article, but that article is not about increasing the expression of H-2 antigens as compared to starting cells and did not involve using retroviral insertions to identify cells that produce enhanced amounts of a protein that is either expressed in very small quantities or not at all. Weis et al., supra, Ex. 2477, at 4879-83 (identifying that the point of the paper is to transfer the chromosomes to cells of other species). Thus, HMR/TKT has failed to prove the existence of a "clear and particular" suggestion to modify Sugimoto or combine it with prior art so as to produce the asserted claims. Dembiczak, 175 F.3d at 999 (noting that while the references need not expressly teach that the disclosure contained therein should be combined with another, the showing of combinability must be "clear and particular"); id. (explaining that "[t]he range of sources available does not diminish the requirement for actual evidence" of a motivation or suggestion); see Brown & Williamson Tobacco, 229 F.3d at 1125 (same); SIBIA Neurosciences, 225 F.3d at 1356 (making clear that *323 the suggestion to combine or modify must be proven, even when a claim of obviousness is based on a single prior art reference); Rouffet, 149 F.3d at 1357-58.
HMR/TKT fails to show a suggestion to modify Sugimoto or combine it with prior art with respect to amplification as well. With respect to claims 6, 7, and 8, HMR/TKT merely asserts that although Sugimoto does not disclose or teach a means to position a selection marker such as DHFR next to the EPO gene, it renders this element of the claim obvious because "it was well-known in 1983-84 that the DHFR marker gene can be used to transfer and amplify co-transferred DNA sequences when transfected into CHO cells." HMR/TKT's Proposed Findings of Fact ¶ 448; HMR/TKT's Response to Amgen's Proposed Findings ¶ 40; HMR/TKT's Reply Br. After Trial at 15. While HMR/TKT may have something with respect to this element, fatally, it neither identified any motivation or suggestion to combine this supposed common knowledge with Sugimoto nor demonstrated how this motivation can be found in the prior art or the problem to be solved. HMR/TKT's Proposed Findings of Fact ¶¶ 448, 452. Given that HMR/TKT shoulders the burden here, this lack of evidence and argument is fatal.
(b) Level of Ordinary Skill in the Art and Reasonable Expectation of Success
Even if one could glean the motivation to modify Sugimoto by applying knowledge in the art to create the claimed invention, HMR/TKT would not prevail here. HMR/TKT has not shown that a skilled artisan would reasonably expect to have succeeded in achieving Dr. Lin's claimed '349 or '698 inventions using such known techniques.[139] As mentioned earlier, HMR/TKT parses elements that comprise one limitation. For example, in its Proposed Findings of Fact, it separates the element "comprising promoter DNA, other than human EPO promoter DNA, operatively linked" from the element "DNA encoding the mature erythropoietin amino acid sequence of FIG. 6." In doing so, it fails to recognize the import of the combination of elements. As this Court pointed out in Amgen I, in the context of the '349 patent and tumor cell references, the identity of the sequence of the DNA encoding human erythropoietin was critical. Amgen I, 126 F.Supp.2d at 114-15. Without it, an ordinarily skilled artisan would not have been able to hook up transcription control sequences in a way that caused transcription of the EPO gene, or to obtain cells with the specified structures. Id. Like the prior art tumor cell references, Sugimoto does not speak to the genetic characteristics of the cells, and HMR/TKT has not shown during either trial that any knowledge possessed by those of ordinary skill in the art in 1983-84 could fill this gap.[140]Id. This reasoning equally applies to the '698 patent's "promoter DNA other than human erythropoietin DNA, operatively linked to DNA encoding the mature *324 erythropoietin amino acid sequence of FIG. 6" (claim 4) and "amplified DNA encoding the mature erythropoietin amino acid sequence of FIG. 6" (claims 6 and 9).[141]
Moreover, the Court does not overlook the fact that HMR/TKT's only evidence on this issue comes from testimony by Dr. Kingston, who earlier testified that a person of ordinary skill in the art, applying Dr. Lin's specification which includes the identification of the EPO gene sequence, splice, donor, and restriction sites, and much more detail than Sugimoto's patent would not have been able to produce EPO using a cell's endogenous EPO gene. Kingston Test., R. Trial Tr. at 116: 23-117: 24 (testifying that an ordinarily skilled worker could not have taken Lin's teaching to insert randomly a retrovirus into a cell and to obtain an EPO-producing cell with a reasonable likelihood of success). His testimony that ordinarily skilled artisans could have combined Sugimoto with references regarding retroviral insertion is seemingly incongruous, Kingston Test., R. Trial Tr. at 100: 11-101: 19; 116: 11-16; 117: 15-24, not to mention inconsistent with yet other testimony by the doctor. In the first trial, Dr. Kingston stated that before Dr. Lin cloned the EPO gene, it would not have been obvious for one skilled in the art to do what he did. Kingston Test., Trial Tr. at 1357: 11-1358: 12 (explaining why he retracted yet another inconsistent statement). The Court does not, therefore, lend Dr. Kingston's oscillatory testimony on this issue much weight especially when considered in light of Dr. Green's and Dr. Lodish's testimony that one skilled in the art, lacking knowledge of EPO's DNA sequence, would not have had a reasonable expectation of successfully making EPO-producing cells by genetic recombination. Green Test., R. Trial Tr. at 406: 17-22; 409: 3-6 (explaining that in order to use any of the recombinant methods mentioned in Sugimoto, "you must know the sequence of the erythropoietin gene and that information ... did not become available until Dr. Lin's inventions"); Lodish Test., R. Trial Tr. at 285: 21-23. Indeed, Dr. Kingston implicitly admitted the importance of knowing EPO's DNA sequence when he testified that the first step in genetic recombination is to isolate the EPO-neo fragment, which suggests that the gene must first have been cloned. Kingston Test., R. Trial Tr. at 103: 17-104: 18 (using Demonstrative Exhibit TX II W as support for conclusion that Sugimoto teaches this type of genetic recombination); Demonstrative Ex. TX II W.[142]
Thus, HMR/TKT has failed to prove that skilled artisans, without knowing EPO's DNA sequence, would reasonably expect that combining Sugimoto with prior art references regarding retro viral insertion and knowledge regarding amplification *325 would successfully achieve what Amgen claims.
(c) Secondary Considerations
As with the claims of the '422 and '080 patent, the secondary considerations play a large role in the Court's decision with respect to obviousness. For the reasons discussed above and in Amgen I, 126 F.Supp.2d at 116, the Court finds that the secondary factors strongly counsel it against a finding of obviousness. The real world story in evidence here not only reflects the inadequacy of the prior art, but compels a conclusion of nonobviousness of the claimed inventions in suit. See Panduit, 774 F.2d at 1099.
(3) Conclusion
Having considered the scope and content of the prior art references, the differences between such references and the claimed inventions, how one skilled in the art might combine such references in order to make what Amgen claimed, and the objective secondary considerations, the Court concludes the HMR/TKT has failed to persuade the Court by clear and convincing evidence that the asserted claims of the '080, '422, '349, and '698, patents were obvious in light of Sugimoto and the prior art.
B. Goldwasser[143]
1. Background
a. Overview of Goldwasser
Dr. Goldwasser obtained a preparation of highly purified erythropoietin derived from human urine i.e., it was naturally-occurring EPO. Amgen I, 126 F.Supp.2d at 111.[144] From 1979 to 1981, Drs. Goldwasser and Baron conducted a clinical study in which approximately 10,000 units of the human urinary EPO in doses of 500 and 1000 units were administered to three anemic patients. Ex. 2057, at A 196399; Erslev Test., Trial Tr. at 1579; Amgen I, 126 F.Supp.2d at 111. Dr. Goldwasser reported a number of effects in the patients: an increase in reticulocyte count in all three patients, an increase in erythroid cells in the marrow and an increased plasma iron clearance rate in two patients, and an increase in red cell mass in at least one patient. Id. Expert testimony by Dr. Erslev explained that these effects are "strong evidence for an increase in the rate of red cell production." Amgen I, 126 F.Supp.2d at 112. Hematocrit levels, however, were unchanged. Id. As a result, Dr. Goldwasser admits that his abortive, three-patient trial was a failure. Id. at 112.
b. The Court's Holdings in Amgen I[145]
(1) Anticipation
In Amgen I, the Court held that Dr. Goldwasser's study did not anticipate the asserted claims in the '422 and '080 patents, because the accepted standard by which physicians measure a therapeutic response to EPO is an increase in hematocrit, and Dr. Goldwasser admitted that "there was no significant change in hematocrit in any patient" and that the trial was a failure. Amgen I, 126 F.Supp.2d at 112. *326 The Court interpreted Amgen's claims to require a therapeutically effective amount of EPO one that provides a sustained increase in hematocrit. Thus, it held that Dr. Goldwasser's study "falls far short of anticipating" the pharmaceutical composition claims of the '080 and '422 patents. Id. at 112. Because claims 2 and 3 of the '080 patent required actual production of red blood cells as well as reticulocytes, the Court also held that Goldwasser did not anticipate these claims. Id. at 112.
Further, the Court pointed to other differences between Goldwasser's study and Amgen's claims. First, the Court stated that Amgen specifically excluded urinary EPO preparations from the scope of the claims by including the claim limitations "non-naturally occurring" and "not isolated from human urine." Thus, it concluded that claims 2 and 3 of the '080 patent do not encompass Goldwasser's urinary EPO treatment. Id. at 112. Second, Goldwasser's study does not involve cells that have been altered by recombinant means, and therefore, it held that none of the '349 claims are implicated. Id.
(2) Obviousness
The Court held that because Dr. Goldwasser's study was a failure and a person skilled in the art "would not reasonably have expected that Dr. Goldwasser's work would eventually bear fruit," none of Amgen's patents were invalid for obviousness. Amgen I, 126 F. Supp 2d at 114. The Court also found, inter alia, that HMR/TKT "failed to prove the existence of any suggestion in the prior art to combine [Essers or Goldwasser and Yanagawa or Chiba] so as to produce the pharmaceutical compositions claimed in the ... '080, and '422 patents." Id. It explained that "the fact that no one has ever then or now attempted to determine if a pharmaceutical composition comprising human EPO could be made from these cultured prior art cells also informs the Court's decision." Id. Therefore, the Court stated that "the contention that these various references could be combined to produce a pharmaceutical composition meeting the limitations of ... claim 4 of the '080 patent and claim 1 of the 422 patent is simply unsubstantiated conjecture." Id. Lastly, the Court stated that the secondary considerations counseled strongly against a finding of obviousness. Thus, at the close of HMR/TKT's defensive case, the Court granted Amgen's 52(c) motion for judgment of validity with respect to the defense of obviousness.
c. The Federal Circuit's Opinion
HMR/TKT challenged, on appeal, the Court's acceptance of Goldwasser's assertion that his test was a failure in light of the testimony of Dr. Baron, Goldwasser's collaborator. Amgen II, 314 F.3d at 1352-3. Dr. Baron reported to the FDA in 1984 that stimulation of erythoid marrow was detected. Id. Specifically, HMR/TKT pointed out that the Court failed to look to the specification to define therapeutic effect. The Federal Circuit agreed and stated that the term "therapeutically effective" must be construed in accordance with Markman v. Westview Instruments before the issue of anticipation and obviousness could be resolved. Therefore, it vacated and remanded for further proceedings with respect to Goldwasser. Amgen II, 314 F.3d at 1353.[146]
2. The Claims at Issue
On remand, HMR/TKT argues that Goldwasser anticipates claim 1 of the '422 *327 patent and renders obvious claim 1 of the '422 patent and claims 2-4 of the '080 patent.[147] The relevant claims are as follows:
'422 Claim 1: A pharmaceutical composition comprising a therapeutically effective amount of human erythropoietin and a pharmaceutically acceptable diluent, adjuvant or carrier, where in said erythropoietin is purified from mammalian cells grown in culture.
'422 Patent, Ex. 1, col. 38: 36-41 (emphasis added).
'080 Claim 2: An isolated erythropoietin glycoprotein having the in vivo biological activity of causing bone marrow cells to increase production of reticulocytes and red blood cells, wherein said erythropoietin glycoprotein comprises the mature erythropoietin amino acid sequence of FIG. 6 and is not isolated from human urine.
'080 Patent, Ex. 1, col. 38: 39-44.
'080 Claim 3: A non-naturally occurring erythropoietin glycoprotein having the in vivo biological activity of causing bone marrow cells to increase production of reticulocytes and red blood cells, wherein said erythropoietin glycoprotein comprises the mature erythropoietin amino acid sequence of FIG. 6.
'080 Patent, Ex. 1, col. 38: 45-50.
'080 Claim 4: A pharmaceutical composition comprising a therapeutically effective amount of an erythropoietin glycoprotein product according to Claim 1, 2 or 3.
'080 Patent, Ex. 1, at col. 38: 51-53 (emphasis added).
3. Discussion
a. Anticipation
(1) Claim 1 of the '422 Patent
Given the Court's construction of the term "therapeutically effective," a critical factor in the anticipation analysis is whether any of the effects elicited by Goldwasser actually, in and of themselves, helped to heal or cure the class of patients listed in column 33 of the specification.[148] Therefore, the Court will review, in turn, the responses elicited by Goldwasser and asserted by HMR/TKT to be "therapeutically effective."[149]
(a) Increase in Reticulocytes
HMR/TKT argues that a "therapeutically effective amount" of EPO encompasses an amount that results in an increase in *328 reticulocyte count, whether or not there is an increase in hematocrit, because this increase, in and of itself, helps to heal or cure anemia. See, e.g., HMR/TKT's Proposed Findings of Fact ¶¶ 28-31. In support, it explains that reticulocytes function like normal red blood cells and deliver greater amounts of oxygen to the body's tissues than do older red blood cells. Id. The increased oxygen delivery to the tissues, it asserts, "confers health benefits on the patient it can help to resolve anemia and possibly prevent strokes and heart attacks." Id. In support of this contention, it relies mainly on the testimony of Drs. Schumacher and Foster. Id.
HMR/TKT overemphasizes the relative significance of reticulocytes in the oxygenation of the body's tissue. Experts from both sides agree that reticulocytes comprise only one percent of all red blood cells. Schumacher Test., R. Trial Tr. at 829: 18-20; Erslev Test., Trial Tr. at 1685: 5-7. They exist for about three days, whereas mature red blood cells exist for 100-120 days. Erslev Test., Trial Tr. at 1684: 21-1685: 7. Moreover, no expert testified that a transitory increase in reticulocytes meaningfully elevates the oxygen levels of the body as a whole. Dr. Schumacher did not testify that a mere increase in reticulocytes increases oxygen supply to these tissues. Instead, she carefully testified that "if you are increasing the oxygen supply," there would be a reduction in the risk of stroke or heart attacks. Schumacher Test., R. Trial Tr. at 813-14 (emphasis added).[150] Both Drs. Erslev and Eschbach testified that reticulocytes are not the accepted reference standard for oxygenation of the body as a whole; that is, recticulocyte counts do not provide direct evidence of the number of red blood cells in circulation and do not always reflect the amount of red blood cells in the body. Erselv Test., Trial Tr. at 1687: 14-1689: 7; Eschbach Test., R. Trial Tr. at 653: 6-14 (stating that the number of circulating red blood cells is determined by the hematocrit).[151] This is because measurements of reticulocytes only reflect the production of red blood cells not the destruction. Erslev Test., Trial Tr. at 1687: 14-1689: 7; Eschbach Test., R. Trial Tr. at 662-64, 670: 8-10. Reticulocytes do not account for the rate of red cell loss, which could exceed the rate of production. As explained by Dr. Eschbach, reticulocytes may never mature into red blood cells, because of intervening factors such as iron deficiency, infection, inflammation, blood loss, or rapid red cell destruction. Eschbach Test., R. Trial Tr. at 662-64; 670: 21-25.[152]
*329 Perhaps most telling is the fact that experts from both sides agreed that an increase in reticulocytes is merely an indication or "surrogate marker" that a therapeutic effect, i.e., one that actually helps to heal or one that makes the patient feel better, is going to follow. See, e.g., Foster Test., R. Trial Tr. at 965: 3-7 (describing an increase in reticulocytes as a "surrogate marker" of activity and of therapeutic effect); Schumacher Test., R. Trial Tr. at 807: 3-5 (testifying that increase in reticulocytes is "the first indication of a therapeutic response"); id. at 813: 3-18 ("[T]he reticulocyte response is the first response that gives you a clue that you're getting a response from your therapy... the early harbinger of the cure or treatment." (emphasis added)); Eschbach Test., R. Trial Tr. at 766: 4-17 (agreeing that an increase in reticulocytes puts a physician "on the lookout for the hematocrit to rise"); id. at 660: 22-661: 8, 669: 10-670: 2; Christensen Test., R. Trial Tr. at 1186: 9-24 (testifying that reticulocytes are a "marker... that the marrow is putting out more blood cells," which "signals that there will ultimately be [a benefit]"); id. at 1185: 1-17. That Amgen administered more EPO to those patients that showed an increase in reticulocytes and ferrokinetics and told the FDA that "[t]he first evidence of a response to three times weekly ... administration of EPOGEN® is an increase in the reticulocyte count within ten days," Physicians' Desk Reference (56th ed.2002), Ex. 2497, at 582 (describing Amgen's EPOGEN product) (emphasis added), merely supports the point made by HMR/TKT's own witnesses: an increase in reticulocytes is an indicator or marker that an increase in hematocrit will follow.
The bulk of the testimony indicates that an increase in reticulocytes alone does not help patients feel better. Indeed, HMR/TKT's Dr. Erslev conceded that only by increasing and maintaining hematocrit is the patient able to gain energy and feel better. Erslev Test., Trial Tr. at 1681: 18-1683: 2. Even HMR/TKT's Dr. Foster a pharmacist arguably not qualified to testify in the area admitted after a series of direct questions from the Court that an increase in reticulocytes such as that exemplified in Goldwasser would not in and of itself help patients feel better. Foster Test., R. Trial Tr. at 964-66.
HMR/TKT places a great deal of weight on Dr. Ohls' testimony regarding the anemia of prematurity. She testified that an increase in reticulocytes is typically accompanied by an improvement in an infant's overall condition that does not necessarily correspond to an increase in hematocrit, and that clinical signs that an infant is doing better as a result of EPO therapy can occur even with a decrease in hematocrit. Ohls Test., R. Trial Tr. at 1020-21 (noting that conditions like tachycardia, apnea, and poor weight gain improve with an increase in reticulocytes, even if the hematocrit stays the same or decreases); id. at 1025. While this testimony may seem at first glance to support HMR/TKT's case on this point, after a careful review of the testimony of Dr. Ohls and her mentor, Dr. Christensen, it is clear that it does not.
Importantly, Dr. Ohls carefully qualified her testimony by stating that the clinical signs of anemia "gradually disappear" after a moderate increase in reticulocytes. Id. at 1021: 2-4 (emphasis added); see also Christensen Test., R. Trial Tr. at *330 1185: 1-17 (pointing out that Dr. Ohls said "gradually," and explaining that a rise in reticulocyte count, in and of itself, has "no medical meaning," except to "help you predict that eventually this baby is going to have a hematocrit that is stable"). Dr. Ohls' testimony is further qualified by the biological facts associated with babies and anemia. As Dr. Ohls explained, babies, unlike adults, are constantly growing. As they grow, their blood volume also constantly grows in proportion to their size. Ohls Test., R. Trial Tr. at 1022: 9-21. While, in adults, one can measure the percentage of red blood cells in a sampled blood cell volume to get an accurate reading of hematocrit,[153] in babies, hematocrit is a constantly moving target, because as babies grow their blood volume increases. Id.; see also Christensen Test., R. Trial Tr. at 1184: 7-15 (noting that an infant's growth rate complicates the measuring of hematocrit). Therefore, even an actual increase in red cell mass (versus just an increase in reticulocytes) can result in a constant or even decreased hematocrit. Ohls Test., R. Trial Tr. at 1024.[154] Moreover, Dr. Ohls stated that a neonatologist would use reticulocytes to measure EPO's efficiency not because it necessarily had a therapeutic effect but because it "means that the EPO is working to stimulate the bone marrow to make new red blood cells." Id. at 1026; see also id. at 1029: 20-23 ("But in general, when we treat these babies with EPO they start making new reticulocytes, new red blood cells; they stimulate the circulation, build up the red-cell mass, the hematocrit."). As discussed above, however, just because a person's body is making new red blood cells does not mean that it is doing so fast enough to make up for continuing destruction of red blood cells. Presumably, this is why Dr. Ohls and her peers, in their clinical research, measure the hematocrit, the amount of blood drawn out for laboratory evaluation, and the number of transfusions and the volume of transfusions the babies receive in addition to the reticulocyte count. Id. at 1040-41, 1043: 21-24.[155]
The significance of Dr. Ohls' testimony is further diminished by the testimony of her mentor, Dr. Christensen. He stated repeatedly that the reticulocyte count, in and of itself, does not have any effect on the baby and does not help the baby in any way. Id. at 1183: 15-22, 1185: 1-17, 1186: 6-24. Instead it is merely a biological indicator that a benefit will ultimately follow. Id. Further, he clarified that an infant's growth rate does not invalidate hematocrit as a measure of therapeutic efficacy. Id. at 1183: 23-1184: 15. Instead, a physician has to consider the growth factor in infants much like a physician takes into account an adult patient's age, *331 sex, disease state, etc., in order to understand the meaning of the patient's hematocrit. Id. Dr. Christensen made clear that EPO is used to stabilize an infant's hematocrit and to prevent it from falling to a level that would require a transfusion. Christensen Test., R. Trial Tr. at 1189: 23-1190: 4.
In further support of the conclusion that reticulocytes in and of themselves do not help to heal or cure babies suffering from anemia is the fact that a decision whether to transfuse a baby (the goal of using EPO on infants is to avoid the necessity of a transfusion)[156] is never based on reticulocytes alone. Id. at 1116-17. Evidently, the reticulocytes can be high and the hematocrit low, and in that situation, the baby will still need the transfusion.
In light of Dr. Christensen's testimony and the other testimony discussed above regarding reticulocytes in adults, Dr. Ohls' testimony is unpersuasive. Although, as Dr. Schumacher testified, "therapeutic response" may be "related to the reticulocytes response," Schumacher Test., R. Trial Tr. at 811: 11-12, the evidence does not show that a reticulocyte response, in and of itself, helps to heal or cure patients suffering from anemia or from any of the other diseases listed in column 33 of the specification.
For these reasons, after a careful review of all the evidence, this Court finds that an increase in reticulocytes alone does not in and of itself help to heal or cure a patient suffering from anemia or any of the diseases listed in the specification.
(b) Increase in Plasma Iron Clearance Rate (i.e., Ferrokinetics)
HMR/TKT next contends that increases in the plasma iron clearance rate are an indication that red blood cell production has increased and that there is a therapeutic response to EPO. HMR/TKT's Proposed Findings of Fact ¶ 51.[157] As with reticulocytes, however, HMR/TKT has failed to show that an increase in plasma iron clearance rate is "therapeutically effective."
First, an increase in the plasma iron clearance rate indicates an increase in reticulocytes, but not necessarily an increase in red blood cell mass. As discussed above, there are a number of intervening events, such as cell death and destruction, which preclude one from concluding that the reticulocytes become red blood cells. See, e.g., Eschbach Test., R. Trial Tr. at 670: 3-25 (noting that ferrokinetics only reflect red blood cell production, not destruction); id. at 658: 2-8.
Second, Dr. Eschbach testified that ferrokinetic measurements were understood to be a biological effect that did not guarantee that a therapeutic response would follow. Eschbach R. Trial Tr. at 660: 22-661: 8; id. at 658: 2-8 ("Ferrokinetics is an investigational tool. It does not ... tell you anything about therapeutic response.").
Third, Dr. Schumacher admitted that inferences as to the rate of red blood cell production cannot be drawn from the plasma iron disappearance rate without also measuring the plasma iron concentration *332 (serum iron) at the beginning and the end of the trial. Schumacher Test., R. Trial Tr. at 835: 17-836: 9, 837: 4-21; Eschbach Test., R. Trial Tr. at 689: 13-691: 20, 693: 21-25; Allan J. Erslev, Anemia of Chronic Renal Failure, in Hematology (3rd ed.1983), Ex. 249, at 399. Although the plasma concentration was measured at the beginning of the Goldwasser study, it was not measured at the end. Schumacher Test., R. Trial Tr. at 841: 24-842: 2.
Because HMR/TKT points to no other persuasive evidence on the point,[158] the Court finds that it has failed to prove that an increase in the plasma iron clearance rate, in and of itself, helps to heal or cure anemia or any of the diseases referred to in column 33 of the specification.
(c) Erythrocite (Red Cell) Mass Changes
An increase in erythrocite mass, i.e., an increase in red cell mass, is an increase in the number of erythrocytes. That is, it reflects an increase in the aggregate number of red blood cells. Schumacher Test., R. Trial Tr. at 896: 16-897: 10. HMR/TKT argues that Dr. Eschbach testified that erythrocite mass change is a measure of therapeutic efficacy because increasing the number of red cells helps to heal or cure anemia. HMR/TKT's Findings of Fact at 13. It omits, however, Dr. Eschbach's clear qualification that this is true only if "there's significant mass changes." Eschbach Test., R. Trial Tr. at 658: 13-15. He explained that when erythrocyte mass changes are of sufficient quantity, they elicit a therapeutic effect because they represent an increase in hematocrit. Id. at 660: 1-5.
Here, HMR/TKT does not produce any evidence that the red cell mass changes were significant or meaningful. Indeed, arguably it cannot prove such a thing. Dr. Eschbach's testimony, undisputed by any of the expert witnesses, that a significant increase in erythrocyte mass is the same as an increase in hematocrit prevents HMR/TKT from so proving, because the Court has already found and the Federal Circuit has affirmed that there was no significant increase in hematocrit in any of the patients. Thus, there could be no significant increase in red cell mass.
For that matter, given that the red cell mass changes only occurred in one patient and were not shown to be significant, the evidence does not support a finding that Goldwasser's EPO actually elicited red cell mass increases.[159]
Further, HMR/TKT did not prove that a larger dose of Goldwasser's EPO would have increased red cell mass, increased hematocrit, or elicited a therapeutic response. While there is some evidence in HMR/TKT's favor, the bulk of it suggests the contrary.
First, Dr. Baron himself attempted to increase the dosage and the duration with patient # 3, and still there was no recorded increase in hematocrit above the baseline level at any time during or after the study. Indeed, the opposite occurred; as HMR/TKT's expert attested, the patient's red cell mass declined over the treatment period. Goldwasser Data, Ex. 242, at AM 47 038668 (patient # 3); Schumacher *333 Test., R. Trial Tr. 885: 14-886: 20; id. at 887: 1-5; Eschbach Test., R. Trial Tr. at 759: 6-17 (testifying that there was no significant increase in hematocrit for any of the three patients); 7/7/80 Baron Letter to FDA, Ex.2056, at A 193007 (explaining to the FDA that the third patient received a trial of the medication using an altered protocol that increased the dosage and length of time).[160]
Second, although HMR/TKT presented evidence that the experimentors did not believe the EPO was toxic or impure, see, e.g., IND Application for EPO, Ex. 2489, at HMR 935380, 935344; 7/7/80 Baron Letter to FDA, Ex.2056, at A 193007, there is contrary evidence that Goldwasser's EPO was unsuitable for increased dosages. Eschbach Test., R. Trial Tr. at 706: 1-16 (testifying that it was impure and toxic), IND Application for EPO, Ex. 2489, at HMR 935386. Dr. Eschbach even opined that, given these issues with the Goldwasser preparation, the international review boards likely would not have permitted Goldwasser to give more of his urinary EPO preparation to human subjects even had he wanted to, Eschbach Test., R. Trial Tr. at 705: 20-706: 16, and that skilled artisans would likely refrain from giving it to patients in larger dosages for longer duration. Id. at 704: 22-23, 705: 22-706: 16; IND Application for EPO, Ex. 2489, at HMR 935386.
Although HRM/TKT's expert, Dr. Schumacher testified that had Goldwasser's EPO been continued in a larger does, an increase in hematocrit would have been seen, Schumacher Test., R. Trial Tr. at 894: 12-15, Dr. Eschbach testified that the results would not have been different had a larger dose been given to the patients over a longer period of time, because of the potential problems with the EPO. Eschbach Test., R. Trial Tr. at 770: 24-771: 6 (explaining that after he received the EPO T 1/2 values and became aware of the fragments and marked decrease in EPO clearance rate, he doubted whether giving more EPO would make any difference, and believed it might even be harmful); id. at 730-31 (same); id. at 704-706; cf. 2/6/84 Baron Letter to National Center for Drugs and Biologics, Ex. 2058, at A 199034 (describing the increase in reticulocytes as only "mild to modest").
Third, given the incentives to continue the study, the fact that the experimentors themselves chose to abandon it and considered it a failure indicates that an increase in dosage or length of administration would not have led to success. Goldwasser Dep. at 317: 14-321: 2;[161]cf. Fromson v. *334 Advance Offset Plate, Inc., 755 F.2d 1549, 1558 (Fed.Cir.1985) ("[A]nother's experiment, imperfect and never perfected[,] will not serve as an anticipation or as part of the prior art, for it has not served to enrich it." (quoting Picard v. United Aircraft Corp., 128 F.2d 632, 635 (2nd Cir.1942) (internal quotation marks omitted))).
Thus, HMR/TKT failed to prove that Goldwasser's EPO would have achieved therapeutic effectiveness had Goldwasser continued his experiment. The mere possibility of success is not enough to save HMR/TKT. Cf. Continental Can Co. USA, Inc. v. Monsanto Co., 948 F.2d 1264, 1268-69 (Fed.Cir.1991) (stating in the context of anticipation that "[t]he mere fact that a certain thing may result from a given set of circumstances is not sufficient," and explaining that the disclosure must "show that the natural result flowing from the operation as taught would result in the performance of the questioned function").
(2) Conclusion
HMR/TKT contends that all three of the elicited responses discussed above are "surrogate markers of therapeutic efficacy of EPO because each of them represents a critical step in the development of erythroctyes." HMR/TKT's Proposed Findings of Fact ¶¶ 64-66. This specific contention, however, belies its argument. That these three responses are but surrogate markers or indicators that a therapeutic response is on the way necessarily indicates that they did not, in and of themselves, elicit a therapeutic response. This is consistent with this Court's reading of Amgen's specification (discussed in the claim construction part of this memorandum and opinion). These biological responses are critical steps, precursory responses, before a therapeutic result is achieved. Because Goldwasser's study did nothing more than elicit these biological effects or surrogate markers, experts from both sides agreed that there was no evidence that Goldwasser's urinary EPO clinically improved the condition of any of the patients. See, e.g., Means Test., Trial Tr. at 1918: 16-1919: 12 (admitting that there is no evidence that the patients benefitted from any purported activity and labeling the activity as biologic effects); Eschbach Test., R. Trial Test. at 676: 7-18.
In sum, HMR/TKT failed to prove by clear and convincing evidence that Goldwasser anticipates claim 1 of the '422 patent.
b. Obviousness
HMR/TKT argues that Goldwasser alone renders claim 1 of the '422 patent and claims 2-4 of the '080 patent obvious.
(1) Claim 1 of the '422 Patent and Claims 2-4 of the '080 Patent
(a) Scope and Content of the Prior Art /Differences Between the Claimed Invention and the Prior Art
Goldwasser differs from claim 1 of the '422 patent in that, as discussed above, it does not disclose EPO that is therapeutically effective or purified from mammalian cells grown in culture. Goldwasser differs from claims 2-4 of the '080 patent in that it does not disclose the mature amino acid sequence of Figure 6[162] or EPO isolated *335 from a source other than human urine.[163] Moreover, claims 2-4 of the '080 patent require production not just of reticulocytes, but also of red blood cells. Although one patient in Goldwasser showed an increase in red cell mass, the Court has found these increases neither significant nor meaningful not only because the increases were not substantial enough to increase hematocrit, but also because the results occurred in only one patient. Thus, the Court found, as it did in Amgen I, that actual production of mature red blood cells was not evidenced. Lastly, claim 4 of the '080 patent, like claim 1 of the ' 422 patent, requires therapeutic effectiveness, but the Court has found Goldwasser's EPO is not therapeutically effective.
(b) Level of Ordinary Skill in the Art and Reasonable Expectation of Success
In terms of claim 1 of the '422 patent and claim 4 of the '080 patent, HMR/TKT has not shown that one of ordinary skill in the art had a reasonable expectation of success in obtaining EPO compositions that achieved therapeutic effectiveness. Although HMR/TKT tried to show that it was simply a matter of increasing the length and amount of the dosage, it has not convinced the Court.[164] HMR/TKT provides no other support for its defense.
With respect to claims 2-3 of the '080 patent, the evidence once again fails to show a reasonable expectation of success in achieving an increase in the production of red blood cells. The one patient that did receive the increased dosages showed a *336 decrease, not an increase, in red blood cell mass. HMR/TKT has produced no further evidence to support its contentions.
(c) Secondary Considerations
Even if HMR/TKT had shown a reasonable expectation of success on the part of one skilled in the art to practice the claimed invention, this Court would still conclude that HMR/TKT has failed to show by clear and convincing evidence that Goldwasser rendered the claims obvious. This is because the secondary considerations counsel strongly against a finding of obviousness, just as they did in the context of Sugimoto. The secondary considerations discussed above with respect to Sugimoto, and explicated in Amgen I, apply here. Amgen I, 126 F.Supp.2d at 115-16.
(2) Conclusion
Having considered the scope and content of the prior art, the differences between Goldwasser and the claimed invention, the level of skill in the art, and the objective secondary considerations, the Court holds that HMR/TKT has failed to show by clear and convincing evidence that Goldwasser renders claim 1 of the '422 patent and claims 2-4 of the '080 obvious.
VII. CONCLUSION, DECLARATION, AND ORDER FOR JUDGMENT
As with the first trial, it has been an honor to have presided over this case. The attorneys representing both parties litigated the case with dedication, skill, intelligence, integrity, and patience.
For the reasons set forth above, as a result of the remand trial the Court makes the further declaration:
Claim 1 of the '422 patent is valid.
Claims 2-4 of the '080 patent are valid.
Claims 4-9 of the '698 patent are valid and literally infringed.
Claim 7 of the '349 patent is valid and literally infringed.
SO ORDERED.
NOTES
[1] "DNA" is short for "deoxyribonucleic acid."
[2] This product is sold under the trademark EPOGEN®.
[3] Hoechst Marion Roussel, Inc. is now known as Aventis Pharmaceuticals, Inc.
[4] The fifth patent involved in Amgen I was U.S. Patent No. 5,547,933 (issued Aug. 20, 1996) ("'933 patent"). Since this Court's ruling that the '933 patent was invalid for indefiniteness under 35 U.S.C. § 112, ¶ 2 was upheld on appeal, Amgen II, 314 F.3d at 1342, that patent will not be addressed in this memorandum and order.
[5] Because many of the exhibits from the first trial were used in the second trial and the numbering system was simply continued in the second trial, the Court will not designate from which trial the exhibits came but instead simply refer to the trial exhibit number. When citing testimony, however, the Court will refer to the second trial as the "remand trial" and cite it as "R. Trial," while the first trial will simply be cited as "Trial."
[6] Amgen transfects CHO cells with a vector that contains both viral promoter DNA and the human EPO gene. '933 Patent, Ex. 1, col. 25: 58-61; Amgen I, 126 F.Supp.2d at 102. Therefore, the human EPO DNA material is exogenous to the hamster host cell because it was removed from the cell in which it originated, placed in a vector, and reintroduced into a host cell. Amgen I, 126 F.Supp.2d at 102. This is called heterologous recombination. Id.
[7] The term "therapeutically effective" is found in claim 1 of the '422 patent and in claim 4 of the '080 patent.
[8] In its opinion, the Federal Circuit affirmed this Court's finding that Sugimoto did not anticipate the '080, '933, '349, and '698 patents. Amgen II, 314 F.3d at 1320, 1356. This Court, however, never addressed the validity of the '698 patent. It concluded that the '698 patent was not infringed literally or equivalently at the close of Amgen's direct case. Amgen I, 126 F.Supp.2d at 101. Therefore, whether Sugimoto anticipates the '698 patent is one of the issues addressed in this memorandum and order.
[9] The error was harmless because the Court, despite having concluded that Sugimoto was not enabled, "nevertheless conducted a full anticipation analysis" and found that "`none of the cited references disclose[s] each and every limitation of any of Amgen's individual claims'" of the '080, '933 and '349 patents. Amgen II, 314 F.3d at 1356 (quoting Amgen I, 126 F.Supp.2d at 109).
[10] It is clear from Amgen II that Amgen may on remand argue that the '422 patent is not anticipated because Sugimoto is not enabled. See Amgen II, 314 F.3d at 1354-57. The burden of proving Sugimoto's non-enablement, however, rests with Amgen. Moreover, Amgen must present more evidence than that adduced in the first trial as the Federal Circuit made clear that the evidence from the first trial was insufficient to prove non-enablement.
[11] During the first trial, this Court found in favor of HMR/TKT on equivalent and literal infringement of the '698 patent after Amgen presented its case but before HMR/TKT had the opportunity to present its case on this issue.
[12] HMR/TKT also attempted to argue that the '698 patent should be declared unenforceable because it was obtained as a result of inequitable conduct. This Court, during the pretrial conference on September 24, 2003, ruled that HMR/TKT could not put on any evidence of inequitable conduct relating to the '698 patent because it was "satisfied that the pleadings, the pretrial documents early on as to '698 did not frame that issue for trial." 9/24/03 Pretrial Conf. Tr. at 26: 4-9.
[13] Therefore, these memos requested that the Court (1) construe "DNA encoding"; (2) decide whether HMR/TKT is allowed to make its step-plus-function arguments at this stage and if yes, determine whether the asserted claims of the '349 and '698 patents are step-plus-function claims; and (3) determine whether HMR/TKT can argue the reverse doctrine of equivalents with respect to the '698 and '349 patents for the first time on remand and if so, whether this argument has merit.
[14] See generally Hon. Shira A. Scheindlin & Jonathan M. Redgrave, Revisions in Federal Rule 53 Provide New Options for Using Special Masters in Litigation, N.Y. St. B.A.J., Jan. 2004, at 10, reprinted sub. nom. The Evolution and Impact of the New Federal Rule Governing Special Masters, Fed. Law., Feb. 2004, at 35.
[15] While the reasoning need not be rehashed in this memorandum and opinion, the Court takes this opportunity to note a few typographical errors in the decision. At the following pages, the word "urinary" was inadvertently added where it should not have been: 154 ("urinary" is used five times in note 39 and should be deleted); 157 (the word "urinary" is used right before note 41 and should be deleted). As will be noted, the word "urinary" is used in many other places throughout the opinion. These uses of the word should remain. These errors do not in any way change the result of that opinion. Correction of them, however, makes the opinion more accurate.
[16] During the remanded trial, Amgen moved for Judgment Pursuant to Rule 52(c) that claims 4-9 of the '698 patent were infringed and not invalid under 35 U.S.C. § 112 [Doc. No. 778]. The Court did not rule on this motion but instead deferred entering judgment until all of the evidence had been presented. See Fed.R.Civ.P. 52(c). The Court's final decisions regarding infringement and validity of the '698 patent will be explained in detail below.
[17] Previous decisions by the Court, such as claim constructions, will be explained in this memorandum.
[18] While the focus of the Markman hearing was on the patents, specification, and prosecution history, the Court writes now with the benefit of having presided over the entire second trial. Unsurprisingly, both parties continued to present arguments regarding construction throughout the trial, weaving in arguments regarding validity. The Court, however, construed the terms before the re-trial and, therefore, the arguments and intrinsic evidence addressed in this memorandum regarding construction of these terms stem from these data provided before the re-trial.
[19] The Federal Circuit refers to the term "therapeutically effective." The Court notes, however, that claim 1 of the '422 patent and claim 4 of the '080 patent actually recite a "therapeutically effective amount" of either "human erythropoietin" or "an erythropoeitin glycoprotein product," respectively. '422 and '080 Patents, Ex. 1 (emphasis added).
[20] The Court came to this conclusion because it found that the Goldwasser study was a failure.
[21] Although the Court did not receive evidence during the Markman hearing, for the sake of unity throughout this decision, citations to the patents are made to what was identified as Trial Exhibit 1 ("Ex. 1") (which contains the common specification and recitation of all the claims).
[22] HMR/TKT argues that Amgen's position on this claim construction is inconsistent with its position on claim construction for all the other terms the Court has construed in the previous trial because Amgen here is seeking to limit the term's definition via the specification and prosecution history. HMR/TKT's Mem. in Opp'n re '422/'080 at 12. While it is true that Amgen has previously argued to the Court that the terms of the claims were entitled to their broadest possible scope, it also consistently argued that the words of the claim should prevail. Amgen I, 126 F.Supp.2d at 82. In essence, it is here arguing this again. The difference is that, here, Amgen is arguing that the claim language itself contains a term that has a limited definition and that resort to the specification and prosecution history is not necessary since the plain meaning of the term prevails. HMR/TKT, on the other hand, is seeking to "broaden" what Amgen argues is the plain meaning by pointing to the specification and prosecution history.
Ultimately, how the issue has been framed will not change the analysis because it is clear from the principles of claim construction that claims are construed in light of the specification and prosecution history. Southwall Techs., Inc. v. Cardinal IG Co., 54 F.3d 1570, 1576 (Fed.Cir.1995) ("The prosecution history limits the interpretation of claim terms so as to exclude any interpretation that was disclaimed during prosecution.") (emphasis added) (citations omitted). Whether the Court determines that the term is limited or broadened is irrelevant. The important determinations instead are: What is the plain and ordinary meaning of "therapeutically effective," and does the intrinsic evidence define the term differently than its plain and ordinary meaning?
[23] At first glance, the extrinsic evidence rule in Vitronics appears to create somewhat of a conundrum, in that it discourages resort to extrinsic evidence while at the same time urging courts to begin claim construction by considering the plain and customary meaning of a term as understood by one skilled in the art. How does a Court decipher the plain and customary meaning of a term as understood by one skilled in the art without resorting to extrinsic evidence about how one skilled in the art would construe the term?
The Federal Circuit is currently considering this question en banc. In granting a petition for rehearing en banc in Phillips v. AWH Corp., 03-1269, -1286, the Federal Circuit asked for briefing on the following questions:
1. Is the public notice function of patent claims better served by referencing primarily to technical and general purpose dictionaries and similar sources to interpret a claim term or by looking primarily to the patentee's use of the term in the specification? If both sources are to be consulted, in what order?
2. If dictionaries should serve as the primary source for claim interpretation, should the specification limit the full scope of the claim language (as defined by the dictionaries) only when the patentee has acted as his own lexicographer or when the specification reflects a clear disclaimer of claim scope? If so, what language in the specification will satisfy those conditions? What use should be made of general as opposed to technical dictionaries? How does the concept of ordinary meaning apply if there are multiple dictionary definitions of the same term? If the dictionary provides multiple potentially applicable definitions for a term, is it appropriate to look to the specification to determine what definition or definitions should apply?
3. If the primary source for claim construction should be the specification, what use should be made of dictionaries? Should the range of the ordinary meaning of claim language be limited to the scope of the invention disclosed in the specification, for example, when only a single embodiment is disclosed and no other indications of breadth are disclosed?
4. Instead of viewing the claim construction methodologies in the majority and dissent of the now-vacated panel decision as alternative, conflicting approaches, should the two approaches be treated as complementary methodologies such that there is a dual restriction on claim scope, and a patentee must satisfy both limiting methodologies in order to establish the claim coverage it seeks?
5. When, if ever, should claim language be narrowly construed for the sole purpose of avoiding invalidity under, e.g., 35 U.S.C. §§ 102, 103 and 112?
6. What role should prosecution history and expert testimony by one of ordinary skill in the art play in determining the meaning of the disputed claim terms?
7. Consistent with the Supreme Court's decision in Markman v. Westview Instruments, Inc., 517 U.S. 370, 116 S. Ct. 1384, 134 L. Ed. 2d 577 (1996), and our en banc decision in Cybor Corp. v. FAS Technologies, Inc., 138 F.3d 1448 (Fed.Cir.1998), is it appropriate for this court to accord any deference to any aspect of trial court claim construction rulings? If so, in what circumstances, and to what extent?
Phillips, Order of July 21, 2004. Judge Rader, concurring in the granting of the petition, added the following:
Is claim construction amenable to resolution by resort to strictly algorithmic rules, e.g., specification first, dictionaries first, etc.? Or is claim construction better achieved by using the order or tools relevant in each case to discern the meaning of terms according to the understanding of one or ordinary skill in the art at the time of the invention, thus entrusting trial courts to interpret claims as a contract or statute?
Id. (Rader, J., concurring).
This Court's approach is first to consider the plain and ordinary meaning as defined by dictionaries and technical treatises, and then to consider the file wrapper to determine what it communicates to the reader about the plain and customary definition of the term. It may provide clues as to how one skilled in the art would define the term or which dictionary or technical definition is adopted by those skilled in the art. Then again, it may clearly redefine the term and thus overrule the plain and ordinary meaning deciphered by the Court. Regardless, since the patent process is a public one, whatever definition is clearly supported in the file wrapper is the one that ought prevail, since this is the one on which the public relies. Thus, if a term supposedly has a specific technical meaning that cannot be gleaned from general dictionaries and treatises or the file wrapper, but can only be ascertained from expert testimony, this specific meaning will not be adopted, given the Vitronics rule against resort to extrinsic evidence.
This Court's approach resolves the apparent conundrum by drawing a line between cognitive and investigative tasks. One can understand this process by analogizing claim construction to contract interpretation. When a judge interprets the meaning of a term in a run-of-the-mill contract, she is determining how an ordinary speaker of English would understand the term, in context, and she cannot look to extrinsic evidence unless there is some ambiguity. A dictionary constitutes extrinsic evidence of the "plain and customary" meanings that members of the relevant language community ascribe to various words, but it is also serves as a tool to enhance the judge's cognitive capacities, which capacities are then applied to the task of interpretation. In theory, at least, a judge interpreting a contract written in a foreign language would follow the same process, though she might want to gain some background understanding of the language from experts. Having acquired such background, she could then use foreign language dictionaries the same way she would use an English dictionary. Having acquired the additional cognitive capacity, the judge might find that a term's meaning is ambiguous, in which case the judge could turn to extrinsic evidence, say, of industry custom. In other words, the judge would then conduct an empirical investigation of the behavior of relevant actors.
One could thus regard the task of judges in patent cases as one of learning a number of "difficult" words in the English language, or as one of entering a new community of language. In either case, seeking "fluency" is different from determining what customs prevail in a particular "art," even if those customs involve the use of an otherwise ambiguous term. Having learned to "speak" the relevant "language" by consulting lay and technical dictionaries (and perhaps having acquired background understanding from experts), the judge can then apply these new cognitive capacities to determine whether, in context, the patent term is ambiguous. Finding that meaning, then, involves an application of the judge's enhanced cognitive abilities, not an investigation of empirical facts.
In reality, construction of patent claims does not work the same way that interpretation of foreign-language contracts does. In practice, judges interpreting foreign language contracts rely on experts to interpret them. See, e.g., 1st Cir. R. 30(d) ("The court will not receive documents not in the English language unless translations are furnished."); Ramos-Baez v. Bossolo-Lopez, 240 F.3d 92, 94 (1st Cir.2001) (similar); cf. 35 U.S.C. § 371(c)(2) (requiring that an applicant filing a national stage application submit a copy of the international application (with certain exceptions), as well as translation into the English language of the international application). Every foreign language contract is treated as "ambiguous," because learning a new language would involve too dramatic an expansion of a judge's cognitive capacities, and an empirical investigation is the best that she can do (although once that investigation reveals which English translation is correct, the judge can then determine whether that translated document is ambiguous). The Federal Circuit has decided, however, that learning the meaning of technical terms in English, or mastering the language used by members of a community of English-speaking persons of ordinary skill in a particular art, does not reach that level. The task of claim construction falls on the "cognitive" side of the divide between expanding and applying cognitive capacities, on the one hand, and investigating empirical facts, on the other. Thus, only when application of the judge's newly acquired cognitive capacities determines that a term's meaning is ambiguous does she then turn to empirical investigation of the behavior of persons skilled in the art. She then uses dictionaries, expert testimony, and so on not as a cognitive tool, but as evidence.
[24] To heal means "[t]o restore to health, or soundness; cure." The American Heritage Dictionary, supra, at 599.
[25] This was the meaning of the term that this Court essentially adopted in its previous opinion. It was founded on expert testimony demonstrating that those skilled in the art would define "therapeutically effective" as it relates to treating anemia as an increase in hematocrit. Again, however, resort to such extrinsic evidence ought be had only "if necessary." Vitronics, 90 F.3d at 1583 (quoting Hormone, 904 F.2d at 1562).
[26] As will be noted infra, it appears that the patent examiner also believed that the patent needed to address for what disease states the product was "therapeutically effective."
[27] Amgen argues, based on Altiris, that it can rely on expert testimony to confirm the plain and customary meaning of the word as understood by one skilled in the art. HMR/TKT argues that Amgen is using the expert testimony to change the ordinary meaning of a claim term. HMR/TKT's Mem. in Opp'n re '422/'080 at 19. While the expert testimony does support the plain and ordinary meaning of the term since it defines what "cure" means in the context of anemia patients, the Court will not rely on it to construe the claim, because even the Altiris court made clear that it was looking to expert testimony merely to understand the technology not to construe the term itself.
[28] While the Court cannot rely on expert testimony to help construe the term "therapeutically effective" unless absolutely necessary, it may look to the expert testimony to better understand the technology. Vitronics, 90 F.3d at 1584; Altiris, 318 F.3d at 1371. In this respect, the expert testimony that Amgen offers helps the Court understand what is necessary in order to "cure" the effects of anemia.
[29] Again, extrinsic evidence is being used to understand the technology not to define the term.
[30] This is consistent with HMR/TKT's argument with respect to validity and Goldwasser that the biological effects are critical steps in the development of red blood cells, HMR/TKT's Proposed Findings of Fact after Trial [Doc. No. 807] ¶¶ 64-66, and expert testimony. Experts on both sides agree that the biological effects are surrogate markers or early indicators that a therapeutic effect will follow. Foster Test., R. Trial Tr. at 946-47, 965; Schumacher Test., R. Trial Tr. at 807: 3-5, 813: 3-18; Eschbach Test., R. Trial Tr. at 660: 22 to 661: 8, 669: 10-670: 2, 766: 4-17; Christensen Test., R. Trial Tr. at 1185: 1-17, 1186: 9-24.
[31] This is not to suggest that the specification cannot provide guidance as to the scope of the claims absent a clear and deliberate act of lexicography by the patentee. Indeed, if the claim's scope cannot be ascertained from the ordinary and plain meaning of the words alone, the specification can assist and even limit the interpretation of the claims. Teleflex, Inc. v. Ficosa N. Am. Corp., 299 F.3d 1313, 1325 (Fed.Cir.2002). The relevant portion of the specification, however, does not indicate that the patentee deliberately altered the meaning of "therapeutically effective," and indeed the term at issue is not ambiguous. As will be discussed below, what is ambiguous is for whom the invention is intended to be "therapeutically effective."
[32] If Amgen limited the invention to patients suffering from anemia, then by default the definition of "therapeutically effective" equates with an increase in hematocrit if only an increase in hematocrit heals or cures anemia.
[33] All of these patients are in many respects transfusion-dependent. Extrinsic evidence demonstrates that it is an increase in hematocrit which eliminates the need for transfusions.
[34] If this were not the case, arguably, the patent would be invalid for indefiniteness. Issued patents are presumed to be valid, 35 U.S.C. § 282; National Recovery Techs., Inc. v. Magnetic Separation Sys., Inc., 166 F.3d 1190, 1195 (Fed.Cir.1999), and "claims should be construed to sustain their validity," Rhine v. Casio, Inc., 183 F.3d 1342, 1345 (Fed.Cir.1999); see also Amgen I, 126 F.Supp.2d at 83. The Court need not address, however, whether the likelihood that a broad construction would render the '933 patent invalid is significant enough to provide an alternative justification for the narrower construction on which the Court has settled.
[35] Amgen argues that the "minimization of the need for transfusion therapy" which is used to increase the oxygen transport capacity of the blood can only be achieved by raising an anemic patient's hematocrit for a sustained period. Amgen's Mem. in Support re '422/'080 at 12. Therefore, it argues that this section supports its contention that the term "therapeutically effective" means an increase in hematocrit. Id. This section, however, is merely explicating one example of how the product is useful or advantageous just as the section on the class of patients included patients suffering from anemias that can be cured by an increase in hematocrit but also included patients in need of blood transfusions.
[36] As will be discussed infra, the extrinsic evidence shows that an increase in hematocrit is necessary to cure defective red blood cell production effectively.
[37] As will be discussed at great length infra, if the term "therapeutically effective" is properly construed only with reference to this class of patients, it is irrelevant whether Amgen actually refined the term to mean an "increase in hematocrit" as the evidence at trial confirmed that these types of patients are only healed or cured by an increase in hematocrit and not by any of the biological effects.
[38] Citing an unpublished opinion raises a number of difficult questions. See Anastasoff v. United States, 223 F.3d 898, 899-905 (8th Cir.2000) (Arnold, J.) (holding that unpublished opinions have precedential effect), vacated as moot, 235 F.3d 1054 (8th Cir.2000) (en banc), Giese v. Pierce Chem. Co., 43 F. Supp. 2d 98, 103 n. 1 (D.Mass.1999) (relying on unpublished opinions' persuasive authority); Hon. Richard S. Arnold, Unpublished Opinions: A Comment, 1 J.App. Prac. & Process 219 (1999); see also Proposed Fed. R.App. P. 32.1; Anne Coyle, Note, A Modest Reform: The New Rule 32.1 Permitting Citation to Unpublished Opinions in the Federal Courts of Appeals, 72 Ford. L.Rev. 2471 (2004). But see Hon. Alex Kozinski, Letter, Fed. Law., June 2004, at 37.
[39] The specification at that time confirms this interpretation:
Novel glycoprotein products of the invention includes those having a primary structural conformation sufficiently duplicative of that of a naturally-occurring (e.g., human) erythropoietin to allow possession of one or more of the biological properties thereof and having an average carbohydrate composition which differs from that of naturally-occurring (e.g., human) erythropoietin.
Amgen's '422/'080 App., Tab G (Ex. 2), at Tab 6, at 180; see also id. at 181.
[40] This supports Amgen's contention that it defined "therapeutically effective" as an increase in hematocrit since, as will be discussed infra, the evidence shows that an increase in hematocrit unlike the other biological effects listed in the specification cures or heals the diseased states mentioned in the specification.
[41] These were the original claim numbers in the application 08/100,197 for what is now the '422 patent. Also, the word "composition" was crossed out and handwritten above it was the word "preparation."
[42] While "it is improper for a court to add extraneous limitations to a claim," Hoganas AB v. Dresser Indus., Inc., 9 F.3d 948, 950 (Fed.Cir.1993), this limitation, as explained earlier, is not "extraneous." Without a limitation regarding the class of patients to which recombinant EPO is useful, it is impossible to "interpret what the patentee meant" by the disputed term.
[43] As with the specification, these remarks make clear that any or all of the biological effects are part and parcel of therapeutic effectiveness, that is, that Amgen refined "therapeutically effective amount" to be one that, at the least, elicits one or more of the in vivo effects heretofore attributed to natural EPO.
[44] Although the Court does not read them as such, these sentences could be interpreted to support that "therapeutically effective" includes the biological effects. This ambiguity, however, does not establish HMR/TKT's point. To the contrary, it demonstrates that the patentee did not clearly and deliberately redefine the term and that the plain and ordinary meaning should prevail.
[45] This ambiguity itself is helpful to Amgen, given that "claims should be construed to sustain their validity" and Amgen is not advancing a definition of the term that is contrary to the plain and ordinary meaning. Rhine v. Casio, Inc., 183 F.3d 1342, 1345 (Fed.Cir.1999); see also Amgen I, 126 F.Supp.2d at 83 ("[T]he canon that claims terms ought be construed to sustain their validity is simply an interpretation tool to aid courts in determining what a reasonably disputed claim term means in light of the specifications."). If the Court were to construe the term as HMR/TKT urges as covering mere biological responses the claims would likely be invalid as anticipated by prior art.
[46] Further support for the conclusion that Amgen was not redefining therapeutic effectiveness to include the biological effects regardless of whether they worked to heal or cure the patient is found in the prior art disclosed to the patent examiner. Autogiro Co. of America v. United States, 181 Ct. Cl. 55, 384 F.2d 391, 399 (1967) ("In its broader use as source material, the prior art cited in the file wrapper gives clues as to what the claims do not cover."). Although it appears Amgen did not cite the Goldwasser study, it did disclose it to the examiner. Amgen I, 126 F.Supp.2d at 138-39. As will be discussed infra, Dr. Goldwasser obtained a preparation of highly purified EPO derived from human urine. Amgen I, 126 F.Supp.2d at 111-112. He administered EPO to three anemic patients and reported an increase in reticulocyte count in all three patients, an increase in erythroid cells in marrow and increased plasma iron clearance rate in two patients, and an increase in red cell mass in one patient. Id. Dr. Goldwasser admitted that there was no significant change in the hematocrit levels of any of the patients and as such, the trial was a failure. Id. The fact that Dr. Goldwasser believed his study to be a failure, that is, that it did not provide a meaningful health benefit to patients when it achieved the biological effects of EPO but not an increase in hematocrit indicates that Amgen's claims are not merely covering the biological effects.
[47] While the specification and prosecution history support Amgen's contention that it defined "therapeutically effective" to mean an increase in hematocrit, the intrinsic evidence does not show a clear and deliberate attempt to redefine the term this way. Even were this not the case, and the Court ruled there was a clear and deliberate intent to define "therapeutically effective" as an increase in hematocrit or for that matter had resorted to extrinsic evidence and ruled that this was how those skilled in the art defined the term the end result regarding validity of these patents in view of prior art would not be different. As will be discussed further below, the evidence shows that the biologic effects of EPO do not elicit any meaningful health benefit to patients. Therefore, the only thing claimed in the patent that actually does heal or cure is an increase in hematocrit. Thus, by default the terms "therapeutically effective" and "increase in hematocrit" become synonymous.
As mentioned earlier, an alternate route would have been to consider extrinsic evidence as to the meaning those skilled in the art would give the disputed term. Indeed, much evidence was presented at the first trial on the subject, the bulk of which supports Amgen's contention that one skilled in the art would equate "therapeutically effective" with an increase in hematocrit when considering anemia. Two crucial witnesses for the defense conceded as much. Dr. Means testified that in the routine practice of medicine as it relates to EPO in treating anemia in patients, "an increase in hematocrit is how one defines a response." Means Test., Trial Tr. at 1910: 9-13. Dr. Erslev agreed that the accepted standard by which physicians measure a therapeutic response to EPO is an increase in hematocrit. Erslev Test., Trial Tr. at 1675: 12-23. The only problem with relying on such evidence other than the Federal Circuit's ruling in Vitronics and the concern for public reliance on the record is that this expert testimony was given in reference to anemic patients specifically and did not take into account the entire list of patients in the specification.
In hindsight, however, it appears that this distinction between anemia and the entire list of patients included in the specification is meaningless, for the evidence shows that only an increase in hematocrit provides a meaningful health benefit to the class of patients listed in the specification.
[48] Neither party objects to the Court now formally construing the term despite the fact that this issue was not raised during the first trial.
[49] "RNA" is short for "ribonucleic acid."
[50] Dr. Kingston explained that the other "perfectly valid" way the word can be used, depending on the context, is to "describe all the instructions to make the mature protein." Kingston Test., R. Trial Tr. at 163: 7-12. In other words, Dr. Kingston testified that the term can also mean that it provides all the instructions necessary to allow a certain protein to be made.
[51] Neither party directed the Court to the prosecution history. Therefore, the Court will not look to it to construe the disputed term.
[52] HMR/TKT believes it somehow bolsters its argument by pointing out that the Court construed the word "mature" to mean the "fully realized form of the amino acid sequence of Figure 6," Amgen I, 126 F.Supp.2d at 87 (emphasis). This argument, however, fails to persuade the Court, for it does not change the definition of DNA encoding, it merely refines what is being encoded.
[53] Amgen's counsel provided a brief, undisputed, refresher for the Court as follows:
[T]he DNA encodes EPO. The DNA is transcribed to make a messenger RNA. That messenger RNA is then reprocessed in the cell. That messenger RNA is extruded from the nucleus. A ribosome binds to it, translates the messenger RNA into a protein. And a protein that is a copy of the entire DNA sequence of the messenger RNA, including both the leader sequence and the ... amino acid position 166, is made in the cell. The cell then ... further processes that protein cutting off ... the leader sequence of the protein and the amino acid at 166, and that is done before the cell then secretes the fully processed form of the hormone.... And as the protein is secreted from the cell, even though it's encoded by DNA that has 166 amino acid, the cell actually produces a protein that has 165 amino acid.
7/28/03 Hr'g Tr. at 45: 21-46: 12.
[54] It is true that the Court construed the term "mature erythropoietin amino acid sequence of FIG. 6" in the '080 patent to refer to the structure of the claimed EPO glycoprotein. In the '698 patent, however, the claims refer to the structure of the DNA, not of a protein.
[55] The Court noted that this construction applied any time DNA encoding was used throughout the various claims. 7/28/03 Hr'g Tr. at 56: 18-23.
[56] Dr. Lodish and Dr. Kingston appear to agree that there are two parts to genes. "One is the regulatory sequences that determine when and under what conditions the cells copy the gene into RNA; and the second is the coding sequence, the piece of DNA that actually specifies the amino acids in the encoded product." Lodish Test., R. Trial Tr. at 1058: 20-25. They disagree about to what this claim is referring. Interestingly, at the same time that Dr. Kingston claims that this Court's construction means the regulatory sequences all the instructions for the protein he admits that "[t]he DNA that encodes each amino acid is the same" in both Amgen's and HMR/TKT's cells. Kingston Test., R. Trial Tr. at 162: 18-19.
[57] For more background, see background discussion regarding construction of the term "DNA encoding."
[58] The purpose of section 112, paragraph 6 was
to permit use of means expressions without recitation of all the possible means that might be used in a claimed apparatus.... The price that must be paid for use of that convenience is limitation of the claim to the means specified in the written description and equivalents thereof. Similarly, a step for accomplishing a particular function in a process claim may also be claimed without specificity subject to the same price.
O.I. Corp., 115 F.3d at 1583 (internal citations omitted).
[59] The Court compared the accused process to the preferred embodiment in the claim and concluded that "HMR/TKT's process for producing erythropoietin differs markedly from that disclosed by Amgen's specification" because it "utilizes the endogenous rather than exogenous EPO gene" and it "places it promoter upstream from rather than adjacent to the EPO gene." Amgen I, 126 F.Supp.2d at 122.
[60] In other words, the Court went straight to a step-plus-function approach without first ruling that these were indeed step-plus-function claims. As will be discussed infra, the Court mentioned to the parties when giving a ruling of non-infringement of the '698 patent, that it was considering a means-plus-function type of analogy. When writing the opinion, however, the Court did not address whether step-plus-function claims were indeed involved and, despite any discussions to the contrary, did not base its ruling of non-infringement of the '698 patent on a finding that it involved step-plus-function claims.
[61] See the preceding section regarding "DNA encoding" for recitation of claims 4 and 6 of the '698 patent.
[62] The fact that Amgen's counsel and the Court referred to "means-plus-function" as opposed to "step-plus-function" makes little difference in the Court's analysis here because the two concepts are very closely related, enough so that mention of one provides notice of the potential that the other may apply. Seal-Flex, 172 F.3d at 848 (noting that although they require distinct analyses, they are similar and that 35 U.S.C. § 112 ¶ 6 suggests a strong correlation between the two); see also O.I. Corp., 115 F.3d at 1583. To that end, the Federal Circuit has suggested using means-plus-function case law to "give guidance for determining whether a claim element is in step-plus-function form so as to invoke the statute's claim interpretation requirements." Seal-Flex, 172 F.3d at 848.
[63] Thus definitive resolution of the procedural dispute is unnecessary.
[64] Expert testimony by one skilled in the art extrinsic evidence which the Court need not to resort implicitly supports defining "growing" as an act. Dr. Tlsty made clear that the term "growing" was one that was easily understood by one skilled in the art when he stated, without explanation, that he has "been growing and culturing cells since [he] was an undergraduate." Tlsty Test., Trial Tr. at 832: 11-16; cf. Greenberg v. Ethicon Endo-Surgery, Inc., 91 F.3d 1580, 1582 (Fed.Cir.1996) (stating in the means-plus-function context that "[w]hat is important is ... that the term, ... has a reasonably well understood meaning in the art"); see also Watts v. XL Sys., Inc., 232 F.3d 877, 881 (Fed.Cir.2000); Caterpillar Inc. v. Detroit Diesel Corp., 961 F. Supp. 1249, 1256 (N.D.Ind.1996) (quoting Greenberg, 91 F.3d at 1583 ("The acts set forth in Claim 1's elements are `functional' only in the manner in which all acts are functional, and nothing before the court suggests that the acts set forth in the claim lack a `reasonably well understood meaning in the art.'")).
The way in which HMR/TKT described the culturing and growing of its cells in Investigational New Drug Application ("IND") for HMR 4396 provides further evidence that the term has a reasonably well-understood meaning in the art. For example, it stated that "[C]ells grown as attached cultures in static flask were released by trypsination. The cells were resuspended in LONZA Biologics proprietary HM9 Serum-free medium.... Once a reliable pattern of growth was established, the serum supplement was progressively eliminated from the medium." Amgen's App. to Mem. in Opp'n re '698 & '349, Tab T (Ex. 19, IND for HMR 4396) at 574.
[65] As will be discussed, HMR/TKT made a more detailed argument that claim 7 of the '349 patent is a step-plus-function claim. This argument fails, however, so it also fails when applied to the '698 patent.
[66] The issue was likely never brought to the Federal Circuit's attention since neither party, on appeal, had anything to gain in bringing it up.
[67] Importantly, however, neither is the converse true: the Federal Circuit in O.I. Corp., which dealt with a claim very similar to the claim here, held that "a statement in a preamble of a result that necessarily follows from performing a series of steps does not convert each of those steps into step-plus-function clauses." O.I. Corp., 115 F.3d at 1584.
[68] As discussed earlier, expert testimony by Dr. Tlsty and assertions in the IND by HMR/TKT extrinsic evidence to which the Court need not resort also support that the terms "growing" and "culturing" have meanings reasonably well understood by those skilled in the art.
[69] Thus, as with the '698 patent, the procedural dispute and the Court's conclusion as to whether HMR/TKT should be allowed to raise this argument are moot.
[70] As remarked in Amgen I, 126 F.Supp.2d at 137, the presumption of validity is not a true evidentiary presumption. Instead, it shifts the burden of proof to the non-patent holder and places on it not only the burden of going forward but also the burden of persuasion.
[71] Generally, the Court addresses each argument patent by patent. Where, as here, it makes sense to address more than one patent at once, due to their similarities, the Court will do so.
[72] The Court notes that it did not construe the term to include the splicing instructions for putting the codons together. That being said, the term does not occur in a vacuum. It is read with reference to "the mature erythropoietin amino-acid sequence depicted in Figure 6 of the patent." Thus, the claims themselves communicate that other steps are necessary to result in the correct order of amino acids.
[73] Amgen also argues that this Court stated during the 9/18/03 motion hearing that it was not going to address any issues that were not remanded to the Court by the Federal Circuit. Amgen's Reply to HMR/TKT's Findings of Fact [Doc. No. 816] at 173. The issue of infringement, however, was remanded to this Court. A complete decision regarding infringement necessarily includes analysis of these defenses. Moreover, neither party contended that the Court ought not construe "DNA encoding." To the contrary, both parties made it clear this term needed construction. As a result of that construction, a door to a new validity challenge was opened. Thus, to do its job adequately, the Court must address HMR/TKT's challenge.
Additionally, Amgen points out that this Court held that the cell claims (1, 3, 4, and 6) of the '349 patent are adequately described and enabled, and that these rulings are law of the case. Amgen's Reply to HMR/TKT's Opening Br. at n. 150. Claim 7 contains a "DNA encoding" limitation only through its dependence from claims 1 and 3. Id. As such, Amgen contends, any invalidity challenge to the '349 patent must address the only addition claim 7 makes, which is the "growing step." Thus, Amgen reasons, HMR/TKT's challenge regarding "DNA encoding" should fail. This procedural argument, however, need not be addressed, given the Court's ultimate finding, discussed below, that claim 7 of the '349 patent is not invalid for indefiniteness.
[74] For a discussion of the controversy within the Federal Circuit as to whether section 112 contains a separate written description requirement, or whether it only contains an enablement requirement, see Vernon M. Winters & Elizabeth Stotland Weiswasser, The Written Description Requirement: Ripe Enough? Or Is More Percolation Required, Fed. Law., Aug. 2004, at 20.
[75] This is the same argument that HMR/TKT made during the first trial and on appeal with reference to the product claims of the '422 and '349 patents. Amgen I, 126 F.Supp.2d at 149-150, 154 n. 51 (rejecting the argument); Amgen II, 314 F.3d at 1331 (same). Since the asserted claims of the '698 and claim 7 of the '349 patent are process claims, however, HMR/TKT urges that this argument now has merit and ought be revisited in this context.
[76] The term "operatively linked" is not found in the '349 patent, so this argument only relates to the '698 patent.
[77] In Amgen I, the Court construed "operatively linked" to mean "the promoter DNA is linked to the EPO DNA in a way that maintains the capability of the promoter DNA to initiate transcription of the EPO DNA." Amgen I, 126 F.Supp.2d at 90. It refused to read any distance restriction in the claim term "operatively linked."
[78] As stated in Amgen I, experts for both sides agreed that the specification did not explicitly show any examples of human EPO production whereby endogenous EPO DNA was expressed. 126 F. Supp. 2d at 150 n. 50. The Court thus inferred that "Amgen did not in fact contemplate applying its techniques to effectuate endogenous DNA expression." Id.
[79] HMR/TKT does not dispute Amgen's contentions (see Amgen's Reply to HMR/TKT's Opening Brief After Trial at 34-35) that these are post-filing advancements. Moreover, in making its reverse doctrine of equivalents argument, HMR/TKT asserted that this difference contributed to the Court's finding that HMR 4396 was "technologically advanced." HMR/TKT's Mem. in Opp'n re '698 at 6; see Amgen I, 126 F.Supp.2d at 104. Indeed, the Court found in Amgen I, and the Federal Circuit affirmed, that endogenous activation was a later-developed technology. Amgen I, 126 F.Supp.2d at 160; Amgen II, 314 F.3d at 1334 (noting that Amgen could not have described the endogenous activation method because it was developed 10 years later).
[80] Professor John F. Duffy has recently suggested an intriguing revision to the "prospect theory" of patents, which justifies "prospect patents" "broad patents issued in the early stages of technical development" on the ground that they create social benefit by encouraging investment in a technological prospect after the property right has been granted, rather than by encouraging the investment that led to the patent in the first place. John F. Duffy, Rethinking the Prospect Theory of Patents, 71 U. Chi. L.Rev. 439, 440 (2004). Professor Duffy agrees that "prospect patents" are socially beneficial in a forward-looking way, but for a different reason: they channel rivalry in such a way that the property right goes to the inventor who is willing to accept the least profit for it. See id. at 443-44. Because patents have fixed terms, obtaining a patent earlier in the technological development process means that the period between the date when the patentee can convert the invention into a marketable product and the date when the patent term ends (and hence the period when the property right will actually generate profit) will be shorter. See id.
[81] See Amgen I, 126 F.Supp.2d at 103-104 (finding that the specification discloses the promoter placement at a position forty-four base pairs from the first codon that expresses the leader peptide leaving only one ATG in the region to be expressed).
[82] Amgen also argues that the Court's findings regarding proximity of the promoter concern the process for constructing cells (cells which been held to be adequately described and enabled) and are, therefore, irrelevant to the '698 and '349 claimed processes for producing EPO. Amgen's Reply to HMR/TKT's Opening Br. After Trial at 35; Amgen's Reply to HMR/TKT's Findings of Fact at 41. This argument fails. Just because the cells themselves and the EPO product were found to be adequately described and enabled by the product claims does not mean that the method by which the cells are constructed or the EPO is made is necessarily adequately described and enabled in the process claims. As this Court pointed out in Amgen I, "[a] product patent claims a structural entity that, though some process must be undertaken in order to create it, is in no way defined or limited by how it is made." 126 F. Supp. 2d at 101.
[83] While the Court found in the first trial that HMR/TKT's promoter placement was a "technological advance" over Amgen's process, the Court notes that it did so in a different context under a different burden of proof and that the ultimate holding of the Court was reversed. In Amgen I, the Court held that HMR/TKT had shown by a preponderance of the evidence that its process was substantially different from the process identified in Amgen's '698 patent and claim 7 of the '349 patent. Amgen I, 126 F.Supp.2d at 103-104, 122. This ruling was based not only on a finding regarding the promoter placement but also on the finding that HMR/TKT uses homologous recombination as opposed to heterologous recombination. Therefore, the factual finding regarding promoter placement was not alone determinative (as it is here). The Court's legal conclusions based on these factual findings were reversed by the Federal Circuit. Further, the burden here is on HMR/TKT to show by clear and convincing evidence (as opposed to proof by a fair preponderance) that the asserted claims are invalid. Lastly, because the reverse doctrine of equivalents was before the Court for the first time on remand, this Court explained to the parties that it would be evaluating, or rather re-evaluating, the issues involved in such an argument, such as whether placement of the promoter was indeed truly novel. See R. Trial Tr. at 1080-81 (noting its previous findings with respect to placement of the promoter, the Court explained that this issue "cuts to the heart" of the reverse doctrine of equivalents and allowed evidence on the issue).
[84] In any case, even if the Court were to conclude, as HMR/TKT urges, that no one then had the courage to use the splice sites as HMR/TKT later did, HMR/TKT's written description challenge would still fail; if the courage and knowledge had been missing and HMR/TKT's placement of the promoter had been truly innovative and new, then this technique would have constituted a post-filing technological advance something Amgen need not have described in order to satisfy section 112, paragraph 1.
[85] Although the Court intimated in Amgen I that the written description requirement may be different for process claims as opposed to product claims, 126 F. Supp. 2d at 150, case law indicates that the written description inquiry is conducted in the same manner regardless of whether the claims address a product or a process. See, e.g., Rasmussen, 650 F.2d at 1212 (applying same section 112 analysis to method claim as applied by other courts with respect to product claims); see also In re Angstadt, 537 F.2d 498, 502 (Cust. & Pat.App.1976); Koller, 613 F.2d at 819.
[86] Dr. Lodish also conceded that placement of the promoter can indeed affect expression, Lodish Test., Trial Tr. at 421; cf. Kingston Test., R. Trial Tr. at 44: 20-45: 1-5. He clarified, however, that the difference in expression is determined not by the number of pairs between the promoter and the EPO gene necessarily but by other factors concerning the general area of the chromosome in which it finds itself. Lodish Test., Trial Tr. at 420-421.
[87] The Court refers to HMR 4396 as an example of a process that places the promoter further upstream to support the conclusion that the specification communicates to those skilled in the art a process that incorporates such upstream placement.
[88] While there was much debate about this subject, as discussed in more detail infra (parts V.A.3-4, V.B.4), the Court credits Dr. Lodish's testimony explaining that the exons are not included when one skilled in the art refers to the splice donor and acceptor sites. Lodish Test., R. Trial Tr. at 1107-1110; id. at 1132-33 (explaining that it is the splice donor sequence, not the splice junction, that will determine where downstream and with what corresponding DNA downstream a splice junction will splice, and stating that "the splice donor is the sequence ... that is removed during the splicing process," the splice acceptor is the sequence that is removed downstream, and "it's the regions on either side that are linked together."). There is testimony by Dr. Kingston and evidence from the HMR/TKT's IND that supports this conclusion. As a result, the Court concludes that HMR 4396 uses the same splice donor site as that disclosed in Amgen's specification. Kingston Test., Trial Tr. at 1431: 10-19, 1432: 14-24, 1433: 1-22, 1440: 19-25 (admitting that absent the exons, the splice donor sites were the same and that the intended effect was to splice out what is in between, including intervening sequences and the deleterious ATGs).
[89] HMR/TKT also relies on PIN/NIP, Inc. v. Platte Chemical Co., 304 F.3d 1235 (Fed.Cir.2002), to support its argument. See, e.g., HMR/TKT's Opening Br. After Trial at 48. The situation here, however, is distinguishable. In PIN/NIP, the Federal Circuit concluded that the broadened claims incorporated steps that were "quite distinct" from the original claims and what was actually described in the specification. 304 F.3d at 1247-48. None of the methods described in the specification were the same as the method in the broadened claim. Id. Here, as discussed above, the methods are the same and further upstream placement of the promoter is not directed to new subject matter different from that described in the patent.
[90] In Genentech, the patentee was "attempting to bootstrap a vague statement of a problem into an enabling disclosure sufficient to dominate someone else's solution of the problem." Genentech, 108 F.3d at 1365. This is not the case here. Amgen's specification does not provide "vague intimations of general ideas that may or may not be workable." Id. Instead, it provides guidance as to how operatively to link a promoter to EPO DNA in a way that maintains the capability of the promoter DNA to initiate transcription of the EPO DNA. It then provides an example of how this can be done. Moving the location of the promoter further upstream, as discussed above, requires the same methods disclosed in the specification along with an understanding of what actually existed further upstream. This, according to Dr. Lodish and undisputed by HMR/TKT, could have been done in 1983-84 with a little bit of work, but was not done, because there was no reason to do it; that is, it would not have increased expression levels significantly.
[91] In Enzo, the Federal Circuit declared that the minimal disclosure constituted "no more than a plan or invitation to practice" the invention in cells other than E. coli. Enzo, 188 F.3d at 1374. Here, as will be discussed, Amgen provided reasonable detail to enable members of the public to understand and carry out the full scope of the invention without undue experimentation.
[92] HMR/TKT asserts in its Opening Brief after Trial that the reason that the skilled worker would not have expected that linkages further upstream would produce EPO is that "the expression process would be interrupted or misdirected by sequences, such as other start codons or stop codons, that intervened between the promoter and the EPO DNA." While this information about the difficulties of upstream promoter placement might work to support a finding of undue experimentation, HMR/TKT does not even argue that this is what it shows. Moreover, the only support it provides for this statement is the Court's previous finding in Amgen I, which was implicitly rejected by the Federal Circuit. Tellingly, HMR/TKT offers no concrete evidence or expert testimony addressing how it would have been difficult for the skilled artisan to make and use the invention as it is claimed or what type of experimentation would be necessary. Id. at 49.
[93] It is true that in Texas Instruments Inc. v. United States International Trade Commission, 988 F.2d 1165, 1176 (Fed.Cir.1993) ("Texas Instruments III") the Federal Circuit refused to consider the alleged infringers' reverse doctrine of equivalents argument because it had not been raised before. Id. ("One does not make a reverse doctrine of equivalents argument simply by mounting a defense to literal or doctrine of equivalents infringement."). There, however, the prior proceeding was before the International Trade Commission, which had a strict rule regarding abandonment. In Rolls-Royce Ltd. v. GTE Valeron Corp., 800 F.2d 1101, 1108 (Fed.Cir.1986), however, the court implied that had the alleged infringer at least presented evidence regarding the doctrine of equivalents even if not the reverse doctrine specifically it may have entertained the reverse doctrine argument on appeal for the first time. Id. (rejecting alleged infringer's reverse doctrine of equivalents argument because there was "no evidence adduced at trial in support of a requested finding that the accused device was so far changed in principle that it performs in a substantially different way"); cf. Brooktree Corp. v. Advanced Micro Devices, Inc., 977 F.2d 1555, 1575 (Fed.Cir.1992) ("[A]n appellate court may, in order to avoid injustice, elect to entertain arguments or consider issues raised for the first time on appeal."). This makes sense given the fact that the reverse doctrine was originally thought to be the application of the doctrine of equivalents in reverse. See, e.g., Texas Instruments Inc. v. United States Int'l Trade Comm'n, 846 F.2d 1369, 1371 (Fed.Cir.1988) ("Texas Instruments II") (referring to the reverse doctrine as the "doctrine of non-equivalents"); Graver Tank & Mfg. Co. v. Linde Air Prods. Co., 339 U.S. 605, 608-609, 70 S. Ct. 854, 94 L. Ed. 1097 (1950); SRI Int'l v. Matsushita Elec. Corp. of America, 775 F.2d 1107, 1124-25 (Fed.Cir.1985). For more information regarding the genesis of the reverse doctrine of equivalents see overview infra. The Court emphasizes that here the procedural posture is different than in these other cases. HMR/TKT here is pursuing this defense at the trial court level, as opposed to the appellate level, and had not presented its full case at the trial court level before the remand trial.
[94] As Amgen points out (and HMR/TKT does not dispute), "DNA and protein are two distinct types of biological molecules," and, therefore, "the claim limitation must be carefully construed in light of the relevant claim language." Amgen's Reply to HMR/TKT's Findings of Fact at 36.
[95] Dr. Lodish based his opinion on a comparison between the sequence of complementary DNA ("cDNA") made by HMR/TKT's contract manufacturer from the EPO DNA in R223 cells and the codons for amino acids at positions +1 to +166 of Figure 6. Lodish Test., R. Trial Tr. at 1066: 23-1067: 18; Lodish Test., Trial Tr. 245: 16-247: 18. It is undisputed that a cDNA is simply a DNA copy of a messenger RNA. In other words, the DNA is transcribed into an RNA transcript first. Then the RNA transcript is spliced into a messenger RNA. The cDNA is made as a direct DNA copy of the messenger RNA using reverse transcriptase so the sequence of the cDNA will be that of the messenger RNA. Lodish Test., R. Trial Tr. at 1066.
[96] HMR/TKT neither claims nor cites to any authority claiming that the antecedent for a claim limitation must be found in the meat of the claim and not in the preamble.
[97] The Federal Circuit made clear in SRI International, that after the patentee has proved literal infringement, "the accused infringer may undertake the burden of going forward to establish the fact of non-infringement under the reverse doctrine of equivalents." 775 F.2d at 1123-24 (emphasis added). It is only after the alleged infringer makes a prima facie showing that its process is so far changed in principle from the claimed processes that the patentee, "who retains the burden of persuasion on infringement," must rebut. Id. at 1124; see also SmithKline Diagnostics, Inc., v. Helena Labs. Corp., 859 F.2d 878, 889 (Fed.Cir.1988) (observing that the infringement inquiry does not necessarily end when claims read literally on the accused product because the accused "may establish the fact of non-infringement by carrying its burden of going forward to show its device `has been so far changed in principle that it performs the same or similar function in a substantially different way'" (quoting SRI International, 775 F.2d at 1123-24)).
Thus, here notwithstanding its unpersuasive arguments to the contrary HMR/TKT has the burden of making a prima facie showing that "the accused device is outside the fair and equitable scope of the invention." Sirilla, Feddo & Antone, supra, at 101.
[98] If it were based solely on the claim language itself, the analysis would not differ from basic literal infringement and section 112 analysis.
[99] Although the Federal Circuit may never have upheld a decision based on the reverse doctrine of equivalents, some appellate courts, before the Federal Circuit was created, applied the doctrine of equivalents defensively without expressly identifying it as the reverse doctrine. See, e.g., Leesona Corp. v. United States, 208 Ct. Cl. 871, 530 F.2d 896, 906 (1976); Foster Cathead Co. v. Hasha, 382 F.2d 761, 765 (5th Cir.1967); see also Sirilla, Feddo & Antone, supra, at 86-87 (commenting on these decisions and concluding that each implicitly applied the reverse doctrine of equivalents).
[100] District Courts also appear to be reluctant to apply the reverse doctrine of equivalents. But see Marvin Glass & Assocs. v. Sears, Roebuck & Co., 318 F. Supp. 1089, 1104-5 (S.D.Tex.1970). Although the reverse doctrine is recognized, it is often deemed inapplicable, or the court finds that there is insufficient evidence to support application of the doctrine. See, e.g., SDS USA Inc. v. Ken Specialties, Inc., 122 F. Supp. 2d 533, 541 (D.N.J.2000); cf. Monsanto Co. v. Mycogen Plant Science, Inc., 61 F. Supp. 2d 133, 188 (D.Del.1999) (entering judgement as matter of law, holding that the jury acted unreasonably in finding non-infringement based on reverse doctrine of equivalents). There are instances, however, where district courts have based a finding of non-infringement on the reverse doctrine of equivalents or used it as an alternative ground for their decision. See, e.g., Precision Metal Fabricators v. Jetstream Sys., 693 F. Supp. 814, 819 (N.D.Cal.1988) (granting summary judgment in favor of defendants based on the reverse doctrine of equivalents); Brenner v. Recognition Equip. Inc., 593 F. Supp. 1275, 1278 (S.D.N.Y.1984) (invoking the reverse doctrine of equivalents as an alternative ground for non-infringement); Smithkline Diagnostics, Inc. v. Helena Labs., Corp., 662 F. Supp. 622, 628 (E.D.Tex.1987) (same); Technicon Instruments Corp. v. Alpkem Corp., 664 F. Supp. 1558, 1575 (D.Or.1986). It appears, however, that the District Court of Massachusetts has never held non-infringement based on the reverse doctrine of equivalents. VLT, Inc. v. Power-One, Inc., No. 01-CV-10207, 2003 WL 43364 (D.Mass. Jan.3, 2003) (Saris, J.) (concluding that the court need not address the reverse doctrine of equivalents because the court rejected the proposed claim construction); Amgen, Inc. v. Chugai Parmaceutical Co., Ltd., Civ.A. No. 87-2617-Y, 1989 WL 169006. at *85 (D.Mass., Dec. 11, 1989) (Saris, J.) (explaining that defendants should request reconsideration by this Court if they want to raise the issue); Gillette v. S.C. Johnson & Son, Inc., Nos. 83-2657-N, 83-3201-N, 1989 WL 87374, at *19 (D.Mass. July 31, 1989) (Collings, M.J.).
[101] If the claims are broader than the "spirit and intent" of the invention, this will most likely be apparent by a close reading of the specification. At this point, a section 112 challenge may be initiated in lieu of a reverse doctrine of equivalents argument. As discussed immediately infra, however, this challenge may not always be successful. This is where the reverse doctrine of equivalents comes in.
[102] Despite not relying on it, the Federal Circuit has affirmed the viability of the reverse doctrine of equivalents many times, see, e.g., Sirilla, Feddo & Antone, supra, at 87-97 and app. A (identifying many cases that applied the principals of the reverse doctrine and that supported its viability).
[103] Indeed, many scholars and judges have noted the similarity in operation between applying section 112, ¶ 6 and the reverse doctrine of equivalents. Both restrict the coverage of literal claim language. See, e.g., Valmont v. Reinke, 983 F.2d 1039, 1042 (Fed.Cir.1993); Johnston v. IVAC Corp., 885 F.2d 1574, 1580 (Fed.Cir.1989); see generally Gary M. Butter, Marta E. Delsignore, Kimberly J. McGraw & Louis S. Sorell, Selected Aspects of the Impact of Patent Prosecution on Patent Litigation Issues, 750 Practicing L. Inst. 317 (2003).
[104] A blocking patent situation occurs when an improvement is patented but the improvement patent infringes on the original patent. Lemley, Economics, at 1009-1010. The original patent owner is entitled to damages from past infringement and an injunction against future use of the infringing invention. Id. At the same time, however, the original patent owner cannot use the patented improvement without risking liability for damages and a potential injunction. Id. Thus, "the original patent owner can prevent the improver from using his patented technology but the improver can prevent the original patent owner from using the improvement. Unless the parties bargain, no one gets the benefit of the improvement." Id.
[105] Merges argues that it should be used by judges to "releas[e] pressure that builds up when pioneers and improvers fail to agree to a license." Merges, Blocking Patents, at 75-76.
[106] In Westinghouse, the device described by the original patentee could not produce the result achieved by the accused device, that is, it could not quickly and smoothly stop a moving train. Westinghouse, 170 U.S. at 571-72, 18 S. Ct. 707. The Supreme Court held that the alleged infringer's way of accomplishing the function of the patent, applying brakes to a moving train, was such a "radical departure," id. at 579, 18 S. Ct. 707, and "so different" that infringement could not be found. Id. at 568-72, 18 S. Ct. 707.
[107] Even if HMR/TKT had made out a prima facie case, Amgen has successfully rebutted the defense, as will be made clear in the discussion below.
[108] HMR/TKT groups and labels its reasons for applying the reverse doctrine of equivalents differently in its various submissions. See, e.g., HMR/TKT's Opening Br. After Trial 11-19; HMR/TKT's Proposed Findings of Fact at 25-41. For ease of analysis, based on the parties' arguments at trial and submissions after trial, and the overlap among the arguments, the Court groups HMR/TKT's reasons into four areas. While the Court has considered each of HMR/TKT's contentions, and concluded that each fails for the primary reasons explained above, not every contention need be addressed specifically in this section.
[109] The Court first addresses homologous recombination and endogenous EPO DNA because HMR/TKT seems to assert that these points, in their own right aside from the neighborhood theory work to justify evocation of the reverse doctrine of equivalents. HMR/TKT's reliance on these differences appears to stem from the Court's prior factual findings and legal conclusions. Indeed, the Court previously found that HMR/TKT did not equivalently infringe the '698 patent because HMR/TKT's process performs the same function in a substantially different way, based, in part, on the fact that HMR used homologous recombination and endogenous EPO DNA while the embodiments in Amgen's specification only addressed heterologous recombination and exogenous EPO DNA. Amgen I, 126 F.Supp.2d at 102-04. As discussed earlier, however, the Federal Circuit held this comparison between HMR/TKT's process and the embodiments in Amgen's specification to be erroneous. Amgen II, 314 F.3d at 1347. While it is true that "equivalence and non-equivalence, ... are but opposites of the same coin," SRI Int'l, 775 F.2d at 1124-25, candidly, the Court in Amgen I did not conduct the proper equivalents analysis. Moreover, it did not, in making its prior determination, consider the intended scope of the claims or the principles of the invention key components of any reverse doctrine of equivalents analysis. In short, the Court's prior equivalence determination was not based on the correct or complete set of factors upon which a determination regarding equivalents should be made. Therefore, the Court's prior holding that HMR/TKT's process performs the same function in a substantially different way is simply irrelevant to this analysis here.
[110] As discussed earlier, it is undisputed that endogenous activation technology and homologous recombination were unknown to those skilled in the art when Amgen filed its patent application in 1983-84. HMR/TKT's Findings of Fact ¶ 488; Amgen's Reply to HMR/TKT's Opening Br. After Trial [Doc. No. 815] at 34-35. As a result, exogenous EPO DNA expression systems and heterologous recombination techniques were not depicted in Amgen's examples in the patent. Trial Tr. at 375: 19-25; 376-381; see also Amgen I, 126 F.Supp.2d at 102. For example, Amgen's patent describes transfecting Chinese Hamster Ovary ("CHO") cells with a vector that contains both viral promoter DNA and the human EPO gene. '933 Patent, Ex. 1, col. 25: 55-61; Trial Tr. at 174: 18-22, 1330: 2-5. Thus, the human EPO DNA material is exogenous to the hamster host cell. Id.; Amgen I, 126 F.Supp.2d at 102. HMR/TKT, on the other hand, employs homologous recombination. Id. HMR/TKT does not utilize a host cell from a non-human species; rather, it manipulates the human EPO gene where it naturally resides in an HT1080 human cell line. Trial Tr. at 165: 21. The human EPO gene, therefore, is endogenous to the human cell as opposed to exogenous.
[111] It is clear that HMR/TKT claims its construct has a more efficient expression system expressing more EPO per gene copy than the cells made following example 10 in Amgen's patent. See, e.g., HMR/TKT's Reply Br. After Trial at 29-30. It is unclear, however, whether it is truly claiming that its process makes more EPO, as it appears from some of its submissions. Regardless, HMR/TKT never provides any support for such a contention, as will be discussed further below.
[112] Dr. Lodish pointed out that both cell types contain the same expression construct; the R223 cells simply contain more copies of it. Lodish Test., Trial Tr. at 163: 16-18. This, however, does not amount to a functional difference in the cells' ability to produce EPO. Id. at 178: 4-12.
[113] Even if it was material, HMR/TKT has still not met its burden because, as discussed immediately above, much evidence was presented that factors other than the neighborhood could cause the differences in EPO production efficiency and Dr. Kingston did not control for these factors.
[114] To be clear, none of the examples requires that the EPO coding sequences be "cut away" from their native regulatory sequences. To the contrary, according to Dr. Wall, Example 10 retains a downstream native EPO regulatory sequence the hyposix inducible element ("HIE"). Wall Test., R. Trial Tr. at 1128: 10-1129: 1.
[115] As noted earlier, HMR/TKT offers no support except previous statements by this Court for its assertion that no one skilled in the art could have or would have in 1984 dared to place the promoter so far upstream from the coding sequence.
[116] HMR/TKT argues that its upstream promoter placement and the difference in the type of promoter optimize its process, and it cites testimony by Dr. Lodish and Dr. Wall admitting that the location and strength of the promoter affect the promoter's activity. See, e.g., HMR/TKT's Findings of Fact ¶¶ 117, 119. These arguments, however, fail to justify evocation of the doctrine for the same reasons discussed earlier. First, mere improvement or superiority is not enough. Second, it is unclear that HMR/TKT has shown any relevant optimization, since increased EPO production or quality is not claimed. Third, the location of the promoter or type of strong viral promoter are not specifically claimed or defined by the specification.
[117] This involves the step of translation. When the messenger RNA is translated, the result is a polypeptide which has a leader sequence. Kingston Test., R. Trial Tr. at 53: 2-4. During HMR/TKT's translation, the leader sequence contains both the hGH and human EPO amino acids. Id.
[118] That this other type of culturing is described during the preparatory stage does not change the analysis because, according to HMR/TKT's expert, the cells are "growing" and producing EPO in the preparatory stage. Hancock Test., R. Trial Tr. at 263: 3-264: 11. Therefore, this culturing method can be deemed part of the "growing" step described in the claims.
[119] This trial, as indeed all civil trials in this session of the Court, was conducted pursuant to strict overall time limits established by the parties pre-trial and confirmed by order of the Court. Reasonable time limits have been confirmed by the nation's most thoughtful commentators as a trial technique that enhances the quality of justice and improves the administrative aspects of any civil trial. The Vanishing Trial, Discussion at the ABA Section on Litigation Symposium (Dec. 12-14, 2003). The Court has long followed this salutary practice. Lareau v. Page, 840 F. Supp. 920, 933-35 (D.Mass.1993).
[120] The Court's conclusion that HMR/TKT's mode of culturing is not "so far changed in principle" or "substantially different" finds further support in the fact that HMR/TKT's expert stated that HMR/TKT itself employs roller bottle culturing in an early stage of its manufacturing process. Hancock Test., R. Trial Tr. at 265: 13-266: 13; HMR/TKT's IND, Ex. 19, at 566, 574.
[121] As discussed earlier, the Court held and the Federal Circuit affirmed that HMR/TKT literally infringed claims 1, 3, 4, and 6. Amgen I, 126 F.Supp.2d at 117-18; Amgen II, 314 F.3d at 1351-52. Thus, the only issues remaining regarding this patent concern claim 7, the process claim.
[122] In one of its claim construction submissions, HMR/TKT proffered that "culturing under suitable nutrient conditions" means the same things as "growing in vitro, under suitable nutrient conditions." 10/18/99 Amgen's Claim Construction Submission, Ex. A, at 5. In its memorandum in support of its step-plus-function arguments regarding the '349 and '698 patent, HMR/TKT asserted the exact same arguments with regard to the step of growing and the step of culturing.
Experts also used the two words interchangeably. Dr. Tlsty stated that he had been "growing and culturing cells since [he] was an undergraduate." Amgen's Opp'n at 13; Tlsty Test., Trial Tr. at 832: 1-16; see also HMR/TKT's IND, Ex. 19, at 574 (describing the culturing of HMR/TKT's R223 cells).
[123] Indeed, it is even less appropriate to apply the reverse doctrine of equivalents with respect to the '349 patent than with respect to the '698 patent, since these same reverse doctrine arguments were made and rejected by the Federal Circuit with respect to the product claims of the '349 patent, and, as mentioned earlier, HMR/TKT has not adduced, nor has the Court found, any case law suggesting that process patents should be analyzed differently than product patents.
[124] As is so frequently the case in the patent area, this is not a true presumption at all, see Fed.R.Evid. 301, but rather a burden shifting mechanism that places the burden of proving nonenablement on the patentee. For criticism of this recurrent imprecision in language, see Amgen III, 287 F.Supp.2d at 131.
[125] HMR/TKT argues that Amgen's burden of proof is higher than proof by a fair preponderance of the evidence. See HMR/TKT's Reply Br. After Trial at 4 n.* (claiming it is one of "persuasive evidence"). The Court disagrees. First, it is unclear to what standard HMR/TKT believes Amgen should be held, since proof by a fair preponderance is by its very nature "persuasive." Second, the Federal Circuit indicated in Amgen II that the burden should be commensurate with that required of an applicant, before the PTO, to overcome a rejection for anticipation by proving non-enablement of the prior art. The Federal Circuit held that:
an accused infringer should be similarly entitled to have the district court presume the enablement of unclaimed (and claimed) material in a prior art patent defendant asserts against a plaintiff.... Like the applicant in ex parte prosecution,... the patentee may argue that the relevant claimed or unclaimed disclosures of a prior art patent are not enabled and therefore are not pertinent prior art.
Amgen II, 314 F.3d at 1355. Before making this holding, the Federal Circuit quoted the following from In re Sasse, 629 F.2d 675, 681 (Cust. & Pat.App.1980): "[W]hen the PTO cited a disclosure which expressly anticipated the present invention ... the burden was shifted to the applicant. He had to rebut the presumption of the operability of [the prior art patent] by a preponderance of the evidence." Amgen II, 314 F.3d at 1355 (quoting In re Sasse, 629 F.2d at 681) (internal quotation marks omitted) (emphasis added).
As applied to this case, the conclusion that Sugimoto is enabled may be rebutted by Amgen if it shows by a fair preponderance of the evidence that it is not. But see Halliburton v. Weatherford, No. 302CV1347-N, 2003 WL 22017187, at *1-*2 (N.D.Tex. Aug.26, 2003) (interpreting Amgen II to teach that the patentee only has the burden of going forward to present some material evidence which places the enablement of the prior art in question, i.e., the burden of production); Abbott Labs. v. Diamedix Corp., 969 F. Supp. 1064 (N.D.Ill.1997) (same); Chisum, supra, § 3.04(1)(b)(v) at 3-102, 3-103. While these sources are faithful to the import of the word "presumption" in the Federal Rules of Evidence, this Court reads Amgen II to shift the burden of persuasion as well.
[126] Evidently, Amgen even tried to purchase the starting materials and the hybrid cells directly from Sugimoto's assignee, Hayashibara Company, Ltd. See Rathmann Test., R. Trial Tr. at 599: 8-13. While it may be, as HMR/TKT asserts, that Amgen simply did not offer a large enough incentive to retrieve the starting materials, the fact remains that no one skilled in the art was able to obtain them in any manner, i.e., via deposit, financial incentive, or experimentation.
[127] Amgen also tried to argue that Sugimoto's failure to confirm hybrid formation or identify what confirmation method was used suggests that Sugimoto is not enabled. Dr. Green, however, agreed with Dr. Kingston that procedures for characterizing the selected cells were well known to those of skill in the art as of 1980-1984. See, e.g., Green Test., R. Trial Tr. at 392: 23-393: 4, 413: 23-416: 22, 507: 11-13; Kingston Test., R. Trial Tr. at 92: 24-93: 16. While the failure to confirm hybridization leads to skepticism about Sugimoto's claims, there was, by contrast with selection methods, no suggestion that carrying out these well-known confirmation techniques was difficult or posed additional problems.
For similar reasons, Amgen's argument that Sugimoto is not enabled because he did not teach how to grow his cells in in vitro cell culture fails. See, e.g., Amgen's Post-Trial Br. at 11, 12. Although Dr. Lodish testified on remand that some types of kidney cells are not capable of growth in culture with only routine experimentation, Lodish Test., R. Trial Tr. at 337: 24-341: 10, he had testified during the first trial that one of ordinary skill in the art as of 1984 could adapt a vertebrate cell line to continuous growth in culture with only routine experimentation, Lodish Test., Trial Tr. at 535-36. Moreover, Amgen points to no evidence or experiments, other than Dr. Lodish's unsubstantiated and contradictory testimony, that undue experimentation would be required to adapt the cells in Sugimoto's patent to grow in culture. See Bruning v. Hirose, 161 F.3d 681, 686 (Fed.Cir.1998) ("Conclusory and speculative testimony by ... expert witnesses will not suffice [to show enablement]."); cf. Telemac Cellular Corp. v. Topp Telecom, Inc., 247 F.3d 1316, 1329 (Fed.Cir.2001) ("Broad conclusory statements offered by ... experts are not evidence.").
That Dr. Green did not believe that Sugimoto actually achieved growth in culture as reported does not prove that Sugimoto did not enable the process. As discussed earlier in the context of the enablement of Amgen's patents, it is not necessary that a disclosed invention have actually been made or even actually attempted. See Donohue, 766 F.2d at 534; Chugai, 927 F.2d at 1213. Instead, "what is necessary is that he provide a disclosure sufficient to enable one skilled in the art to carry out the invention." Id. (internal citations omitted). Thus, as to this argument, the evidence fails to prove Amgen's point.
[128] Dr. Kingston defined a person of ordinary skill in the field of molecular and cell biology as someone who had a relevant PhD and roughly two years of experience working in the area. Kingston Test., R. Trial Tr. at 128: 12-14. Sugimoto filed his patent application in 1980. Id. at 17-24. Dr. Kingston himself was in the second year of his postdoctoral work in 1983, having received his PhD in 1981. At the time Sugimoto's patent application was filed the relevant time period for determining whether Sugimoto was enabled Dr. Kingston was not even considered one skilled in the art. Plant Genetic Systems, 315 F.3d at 1340 (stating that enablement is determined as of the effective filing date of the patent); Hogan, 559 F.2d at 604 (same).
[129] Although the Federal Circuit made clear that this fact alone is not sufficient to prove non-enablement, Amgen II, 314 F.3d at 1355, it acknowledged that it did have some probative value. Moreover, when analyzing this aspect of the case, the Federal Circuit was under the misunderstanding that Dr. Erslev was Amgen's witness when in actuality he was HMR/TKT's witness. Furthermore, the Court does not rest its decision on this fact alone but also on the many other reasons discussed above.
[130] While this memorandum contains inadmissible hearsay, Fed.R.Evid. 801, it was admitted without objection, see R. Trial Tr. at 604-06, and is thus entitled to full probative weight. The confirming testimony to which objection was properly raised, Rathmann Test., R. Trial Tr. at 599: 8-13 (testifying that the assignee had said that the project had been discontinued); id. at 602: 8-14 (explaining that the assignee had abandoned the program so he attempted to offer money to try to retrieve some cells), was admitted only for the fact of communication (relevant on the issue of Amgen's ability to obtain the cells) and plays no part in this aspect of the analysis.
[131] In addition, Amgen argues strenuously that there is no evidence that Sugimoto actually accomplished what he claimed, that is, there is no evidence that he purified the EPO or for that matter that the lysate produced from the cells actually contained human EPO let alone EPO that would have been therapeutically effective. See, e.g., Amgen's Proposed Findings of Fact and Conclusions of Law ¶ 37; Amgen's Post Trial Br. at 12-13; Amgen's Reply to HMR/TKT's Opening Br. at 8; Amgen's Reply to HMR/TKT's Proposed Findings of Fact ¶ 220. In support, Amgen points out that Sugimoto never claims in the specification actually to have purified the EPO, to have made an EPO pharmaceutical composition, or to have administered it to any patient in need of EPO treatment. Sugimoto Patent, Ex. 2229, col. 3: 51-65; Green Test., R. Trial Tr. at 492: 5-12. Indeed, even HMR/TKT's Dr. Heartlein conceded that Sugimoto did not purify what he called EPO and that there was no evidence that Sugimoto's protein was ever formulated into a pharmaceutical composition or that the protein actually would be suitable as a pharmaceutical. Heartlein Test., Trial Tr. at 1820: 22-25; 1821: 7-11; 1824: 20-1825: 3.
The Court agrees that, given the lack of sufficient controls (attested to by various experts) and the reliance only on the Cotes Assay, Sugimoto's entire patent lacks reliable confirmation that he did what he claimed. As discussed earlier in the context of the enablement of Amgen's patent, however, it is not necessary that a disclosed invention actually have been made or even actually attempted. See Donohue, 766 F.2d at 534; Chugai, 927 F.2d at 1213. Instead, "what is necessary is that [the patentee] provide a disclosure sufficient to enable one skilled in the art to carry out the invention." Id. (internal citations omitted). Nothing in the case relied on by Amgen, In re Wiggins, 488 F.2d 538, 543 (Cust. & Pat.App.1973), suggests the contrary. Id. at 543 (deeming reference insufficient because it stated that attempts to prepare the claimed compounds were not successful); Donohue, 766 F.2d at 532 (explaining in that In re Wiggins does not support the view that an invention needs to have been actually attempted or made in order to be enabling under section 102(b)). Although in the context of anticipation these arguments may have relevance, see, e.g., W.L. Gore & Assocs., Inc. v. Garlock, Inc., 721 F.2d 1540, 1554 (Fed.Cir.1983), here, they do not.
[132] HMR/TKT makes one last effort to show enablement by arguing that Amgen itself recognized Sugimoto's enablement by identifying Sugimoto as an EPO-producing cell line in its patents. See, e.g., HMR/TKT's Response to Amgen's Proposed Conclusions of Law and Findings of Fact at 10. This argument is baseless. In Amgen's patents and the prosecution history, Amgen merely repeats what Sugimoto reported to have done. See, e.g., '933 Patent, Ex. 1, col. 7: 24-35; '933 Patent File History, Ex. 2034, at 237. This type of reporting is part of an inventor's duty to recount assertions in prior art as Dr. Lin testified. Lin Test., R. Trial Tr. at 587: 18-588: 23. Further, that Amgen tried to procure the cells from Sugimoto does not show that Amgen believed Sugimoto's experiments to be successful, but instead that it was trying to obtain the starting materials if indeed they were obtainable so that it could attempt to verify that which Sugimoto claims. Lastly, Amgen told the PTO that Sugimoto did not suggest or teach recombinant procedures involving cloning the EPO gene. 10/3/86 Amendment, Ex. 2001, at 250. This last argument therefore fails.
[133] The Federal Circuit has stressed the importance of this showing:
[V]irtually all [inventions] are combinations of old elements.... Therefore, an examiner may often find every element of a claimed invention in the prior art. If identification of each claimed element in the prior art were sufficient to negate patentability, very few patents would ever issue.... To counter this potential weakness in the obviousness construct, the suggestion to combine requirement stands as a critical safeguard against hindsight analysis and rote application of the legal test for obviousness.
Rouffet, 149 F.3d at 1357-58 (internal quotations and citations omitted).
[134] HMR/TKT contends and Amgen does not dispute that in this action, "a person of ordinarily skill in the art of the patents-in-suit in 1983-84 would have been a scientist with a Ph.D. or M.D. in the biological, biochemical or medical sciences, working in research at the time and having at least two years of post-doctoral research experience in protein production, glycoslyation, and purification, and in the preparation and clinical evaluation of protein-based pharmaceutical compositions for use in human therapy." HMR/TKT's Proposed Conclusions of Law ¶ 80; Amgen's Responsive Conclusions of Law (accepting by not refuting this assertion); see also Kingston Test., R. Trial Tr. at 128: 12-14 (agreeing that one skilled in the filed of molecular and cell biology "would be somebody who has a PhD and roughly two years of experience working in the area").
[135] Although both parties agree that the Federal Circuit in Amgen II stated that a reference need not be enabling to be considered prior art when analyzing obviousness, they disagree as to the extent that a non-enabled prior art may be considered. Amgen argues that it is only that which the non-enabled art actually teaches that can be considered. See, e.g., Amgen's Reply to HMR/TKT's Proposed Findings of Fact ¶¶ 215, 216 (arguing that "to render obvious the asserted prior art must enable ordinarily skilled artisans to make and use the claimed invention" and citing Beckman Instruments, 892 F.2d at 1551 and In re Payne, 606 F.2d 303, 314 (Cust. & Pat.App.1979) in support). HMR/TKT argues, on the other hand, that the Federal Circuit said in Amgen II that a non-enabled reference is relevant to the analysis for all the art it "discloses" and, therefore, argues that anything disclosed in the prior art is fair game.
A review of the case law does not provide a definitive answer but indicates that although a reference need not be enabled to be prior art, the reference when combined with other references or common knowledge of ordinarily skilled artisans at the time of the obviousness inquiry should enable the claimed invention, that is, place it in possession of the public. "If not, every otherwise anticipating reference that is proved to be non-enabling would automatically render the claim obvious, despite not teaching ordinarily skilled artisans how to make and use the invention." Amgen's Reply to HMR/TKT's Proposed Findings of Fact ¶ 216. Arguably, if the non-enabled reference can be combined with other references or knowledge of those skilled in the art such that the combination teaches how to make and use the now claimed invention then it should render the claim obvious. In other words, if by the time the claimed invention is patented, the skill in the art or other references that have been suggested have filled in the missing blanks from the non-enabled reference, then the claimed invention should be rendered obvious. On the other hand, if the missing blanks are still missing (or the non-enabled reference does not suggest the right combination of other references) then the non-enabled reference should not be able to render the claimed invention obvious. In sum, although a prior art reference need not be enabled to render a claimed invention obvious, enablement is not wholly irrelevant. As discussed above, here, the missing blanks were still missing when Amgen filed its patents, and HMR/TKT has not shown a reasonable expectation of success on the part of skilled artisans.
[136] This Court interpreted "purified from mammalian cells grown in culture" to mean purified to substantial homogeneity. Amgen I, 126 F.Supp.2d at 89. It found, however, the evidence was insufficient to warrant the conclusion that plasma EPO could be purified to homogeneity via the prior art. Id. at 115.
[137] See discussion supra regarding Figure 6 and obviousness of the '080 and '422 patents.
[138] HMR/TKT argues that the "non-human" or "other than human" limitations of the asserted patent claims cannot save them from invalidation, because they are source or process limitations. HMR/TKT's Opening Br. After Trial at 42. As HMR/TKT admits, however, there are other "missing elements" from Sugimoto's patent, like transcription control sequences, the amino acid sequence found in Figure 6, amplified marker DNA, the DHFR gene, and operative linkage to the EPO gene. These differences, as will be discussed further below, are determinative notwithstanding the "non-human" or "other than human" limitations. Therefore, the Court declines to address this argument as it relates to these patents. That being said, it is not altogether clear that source or process limitations are irrelevant when considering process claims, as opposed to product claims. See, e.g., In re Luck, 476 F.2d 650, 653 (Cust. & Pat.App.1973) (noting in the product-by-process claim context that process limitations can in certain situations distinguish the product over prior art); In re Moeller, 28 C.C.P.A. 932, 117 F.2d 565, 568 (1941) (same). Moreover, the Federal Circuit did not state that a claimed process could not be rendered patentable solely by the addition of source or process limitations, but instead stated that this was the case for a "claimed product" and a claimed composition. See Amgen II, 314 F.3d at 1354 n. 20 (making clear that the rule applied to patents that address "a claimed product"); id. at 1356 (noting that source limitations cannot impart novelty to old compositions).
[139] Indeed, the only experimental evidence on record attempting to do what Dr. Kingston described by way of Sugimoto and the prior art failed. As HMR/TKT put it in its 5/10/00 trial brief, "Amgen's Dr. Browne failed completely when he attempted to transfect cells with viral promoters to increase their production of EPO." Amgen's App. to Mot. for Judgment re '349, Tab E (HMR/TKT's 5/10/00 Trial Br.), at 22.
[140] Importantly, the Weis et al. article, discussed above, studied a gene that had already been cloned, and therefore the researchers were able to confirm the structure of the mouse DNA that had been inserted into hamster cells, using Southern blotting techniques. Weis et al., supra, Ex. 2477, at 4881-82, Fig. 3.
[141] This reasoning also applies to claims 5, 7, 8, and 9, as they are dependant on the other claims. Cf. Fine, 837 F.2d at 1076 ("Dependent claims are nonobvious under section 103 if the independent claims from which they depend are nonobvious.").
[142] HMR/TKT argues as it did with the '080 and '422 patents that the cloning and isolation of EPO is the subject of Lin's original '008 patent, and thus cannot save the patents in issue here. In other words, HMR/TKT argues that because Amgen first reported its discovery of the genetic sequence of EPO in the '008 patent, reference to the genetic sequence can simply be ignored in the obviousness inquiry concerning all other patents. The Court disagrees. First, HMR/TKT offers no legal support for this contention. Second, the genetic sequence of EPO is at the heart of these patents. Simply because the sequence specifically is not a novel addition as compared to Amgen's other patents does not render it obvious in light of Sugimoto's patent.
[143] HMR/TKT does not contend that Goldwasser anticipates the asserted claims of the '080, '349, or '698 patents or renders obvious any of the asserted claims of the '698 or '349 patents. See, e.g., HMR/TKT's Opening Br. After Trial [Doc. No. 808] at i.-iii.
[144] Dr. Goldwasser's work does not pertain to cells that have been altered by recombinant means. Amgen I, 126 F.Supp.2d at 113.
[145] The history of patents that are no longer at issue is not included below. For that information, see Amgen I, 126 F.Supp.2d at 112-14, and Amgen II, 314 F.3d at 1352-53.
[146] As the Court has discussed above, this procedure promotes comity and collegiality among the Federal Circuit and the district courts.
[147] HMR/TKT does not contend that Goldwasser anticipates the asserted claims of the '080, '349, and '698 patents or renders obvious any of the asserted claims of the '698 or '349 patents. See, e.g., HMR/TKT's Opening Br. After Trial at i.-iii.
[148] Amgen also argues that Goldwasser does not disclose the limitation "purified from mammalian cells grown in culture." HMR/TKT argues that this is a source or process limitation that the Federal Circuit specifically pointed out could not save claim 1 from invalidation in an anticipation analysis. The Court need not address the issue since, as will be shown below, the evidence shows that Goldwasser did not disclose EPO that is "therapeutically effective."
[149] HMR/TKT did not argue specifically that an increase in erythroid cells in the marrow signifies a therapeutic response. HMR/TKT's Proposed Findings of Fact at 6-14 (contending that reticulocytes, ferokinetics and erythrocyte mass change (i.e., red cell mass change) are measures of therapeutic efficacy). Presumably, this is because erythroid marrow stimulation means the marrow is stimulated to raise the reticulocytes. Schumacher Test., R. Trial Tr. at 17-25. Therefore, any argument about erythroid cells in the marrow would necessarily be included in an argument about reticulocytes.
[150] The Court also notes that HMR/TKT produced no evidence that heart attack or stroke were risks associated with the diseases listed in the specification or that a reduction in the risk of stroke or heart attacks helps to heal or cure the diseased states listed in the specification.
[151] This is consistent with the Court's findings in Amgen I, that "[b]y increasing and maintaining the patient's hematocrit to normal or near normal levels, the ability of the patient's blood to provide a steady supply of sufficient oxygen to body tissues can be restored." 126 F. Supp. 2d at 99.
[152] Dr. Eschbach illustrated his point with an analogy to a bathtub. Eschbach Test., R. Trial Tr. at 662-64. The Court borrows the analogy to provide background here. Consider a bathtub: the water is the level of hematocrit, the spigot spits out reticulocytes (the early red blood cells), and the drain is the cell destruction or loss. Hematocrit is measured by the amount of red cells produced and by the number of red cells destroyed. In a patient suffering from renal failure, many times the hematocrit drops because red cell destruction exceeds the rate at which red cells are being produced. When EPO stimulation is started, it is as if the spigot has been turned on, increasing the amount of reticulocytes flowing into the tub. Eventually, the tub may start to fill, but there is no guarantee that it will, because the drain is not completely plugged. Iron deficiency, infection, inflammation, or blood loss could prevent the reticulocytes from maturing or could destroy red blood cells. Therefore, simply measuring what is coming out of the spigot and not taking into account what is going down the drain is not sufficient.
[153] Hematocrit is the ratio of the red-cell mass to the total blood volume.
[154] For an explanatory depiction, see Ohls' Demonstrative Ex. 4.
[155] Indeed, in the cited studies regarding anemia of prematurity, hematocrit was always measured. Darlene A. Calhoun et al., Consistent Approaches to Procedures and Practices in Neonatal Hematology, 27 Clinics in Perinatology 733 (2000), Ex. 252, at 734-35 (basing decision to use transfusions solely on hematocrit); Robin K. Ohls et al., Effects of Early Erythropoietin Therapy on the Transfusion Requirements of Preterm Infants Below 1250 Grams Birth Weight: A Multicenter, Randomized, Controlled Trial, 108 Pediatrics 934 (2001), Ex. 253, at 934 (abstract) (measuring hematocrit and concluding that EPO should not be used in infants under 1250 grams birth weight, because it did not prevent use of transfusions); Robin K. Ohls & Robert D. Christensen, Recombinant Erythropoietin Compared with Erythrocyte Transfusion in the Treatment of Anemia of Prematurity, 119 J. Pediatrics 781 (1991), Ex. 2507, at 781 (measuring hematocrit and concluding that EPO offers promise as an alternative to transfusion in neonates with anemia of prematurity).
[156] Both Dr. Christensen and Dr. Ohls agreed that the goal of using EPO in infants with anemia prematurity is to avoid transfusions. Ohls Test., R. Trial Tr. at 1027: 7-10; Christensen Test., R. Trial Tr. at 1200: 7-21.
[157] When red blood cells are produced, iron in the blood plasma clears into the bone marrow. Schumacher Test., R. Trial Tr. at 805. The rate of clearance of iron from the plasma is known as the plasma iron clearance rate. Id.; Eschbach Test., R. Trial Tr. at 693: 4-11. For further explanation, see Eschbach Test., R. Trial Tr. at 689-91.
[158] HMR/TKT has made other arguments in support of its contention, most of which center on the literature. The Court, however, has not found any of these arguments persuasive, given Amgen's more than adequate counter-arguments. See, e.g., HMR/TKT's Proposed Findings of Fact ¶¶ 52-60; Amgen's Response to HMR/TKT's Proposed Findings of Fact ¶¶ 24-29.
[159] This is consistent with the Court's finding in Amgen I that "actual production of mature red blood cells was not achieved." Amgen I, 126 F.Supp.2d at 112.
[160] HMR/TKT argues that Dr. Baron did not extend the duration long enough, since he only administered the medicine for three weeks. See, e.g., Schmumacher Test., R. Trial Tr. at 894: 13-15. It points to Dr. Baron's letter to the FDA, which stated that "one needs to give larger doses than initially anticipated and for more prolonged periods of time to achieve the substantial and lasting stimulation of red cell production." 7/7/80 Baron Letter to FDA, Ex.2056, at A 193007. It also points to testimony by Drs. Schumacher and Eschbach and to Amgen's product literature, which claim that a rise in hematocrit usually occurs within two to six weeks. Schumacher Test., R. Trial Tr. at 894: 12-16; Eschbach Test., R. Trial Tr. at 725: 12-21; Physicians' Desk Reference (56th ed.2002), Ex. 2497, at 582. Notwithstanding this, Dr. Eschbach testified that an effective EPO therapy would have produced immediate and dramatic increases in hematocrit. Eschbach Test., R. Trial Tr. at 679: 8-680: 14. Further, even if the Court agreed with HMR/TKT on this specific issue, as discussed above, the evidence simply does not show that an increased dosage would necessarily have lead to therapeutic effectiveness. Here, the red cell mass of the patient that received the altered protocol actually decreased.
[161] HMR/TKT tries to soften the impact of this testimony by arguing that Goldwasser was hired as a consultant by Amgen in 1981. The study, however, was not discontinued until 1988. IND Application for EPO, Ex. 2489, at HMR 935313. Therefore, HMR/TKT has not shown a causal link between the consultancy and the discontinuation.
[162] For the significance of this difference, see the discussion of whether Sugimoto renders these claims obviousness.
[163] With respect to "purified from mammalian cells grown in culture" and "not isolated from human urine," the Federal Circuit made clear that a finding of non-obviousness cannot be rendered solely on source or process limitations. Amgen II, 314 F.3d at 1354 n. 20. Amgen, however, argues not simply that these source or process limitations save the claims in their own right, but that because of these source and process differences, Goldwasser's urinary EPO actually differs in structure and function from Dr. Lin's recombinant EPO because of its source. See, e.g., Amgen's Post-Trial Br. at 33-38. Specifically, it claims that EPO molecules derived from Dr. Lin's cell cultures differ in glycosylation, degradation, clearance rates, in vivo potency, and therapeutic effect. See, e.g., Amgen's Proposed Findings of Fact ¶¶ 69-83. While these differences may be significant, Amgen fails to point to convincing case law recognizing unclaimed product attributes as differences in this part of the analysis. See, e.g., Graham, 383 U.S. at 17-18, 86 S. Ct. 684 (noting that an obviousness determination is based in part on differences between the prior art and the "claims"); Riverwood Int'l Corp. v. Mead Corp., 212 F.3d 1365, 1366 (Fed.Cir.2000) (noting that an obvious determination is based in part on "the differences between the prior art and the claims" (emphasis added)). That being said, one of the secondary factors recognized by the Federal Circuit is "unexpected properties." In re Mayne, 104 F.3d 1339, 1342 (Fed.Cir.1997) ("[U]nexpected properties can show that a claimed compound that appeared to be obvious on structural grounds was not obvious when looked at as a whole."); see Rouffet, 149 F.3d at 1355. Arguably, then, these contentions may be relevant to that part of the analysis. The Court, however, does not rely on them here, as the many other secondary factors already explicated support a holding of non-obviousness.
[164] Indeed, there is evidence suggesting that it would not have been possible to give increased amounts of the Goldwasser EPO to patients. In a letter to the FDA, Goldwasser made clear that the supply was limited and that preparing more was a painstaking task. 7/7/80 Baron Letter to FDA, Ex.2056, at A 193007; see also 8/17/79 Application for Continuation Grant, Ex. 250, at A 196293 (explaining that the supply of EPO is small and the study was contingent on obtaining more); IND Application for EPO, Ex. 2489, at HMR 935313 (requesting in 1988 that the IND be put on inactive status, as the researchers "do not have sufficient supplies of the drug available to carry on anticipated studies at this time and for the immediate foreseeable future").
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01-03-2023
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10-30-2013
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https://www.courtlistener.com/api/rest/v3/opinions/2659409/
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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
JEANNETTE FRE'I"I`, )
)
Plaintiff, )
)
v. ) Civil Case N0. 13-551 (RJL)
)
HOWARD UNIVERSITY et al., )
, F I L E D
Defendants. ) MAR 1 0 2014
MEMORA DUM OPINIQ_§ C|erk, U.S. Dlstrict & Bankruptcy
(March l n, 2014) [Dkt_ ##13’ 14] Courts for the Dtstrlct of columbia
Jeannette Frett, an African Americar1 woman, brings this discrimination suit
against Howard University ("Howard" or "the University"); Howard’s President, Dr.
Sidney A. Ribeau; Howard’s Board of Trustees ("the Board"); and the Chairrnan of the
Board of Trustees’ Audit and Legal Committee, the Honorable L. Douglas Wilder
(collectively, "the Hovvard defendants");l as well as James "Jimmy" Jones, Howard’s
former Chief Human Resources Offrcer. See Compl. [Dkt. #l]. The non-University
Howard defendants and J ones move to dismiss all claims against them, and Howard
moves to dismiss one claim against it.z Upon consideration of the pleadings, relevant
law, and the entire record therein, both motions are GRANTED.
' Although the Howard defendants join in a single motion to dismiss, they request different relief
for the University than they do for Dr. Ribeau, the Board, and Chairman Wilder. For ease of
reference, I refer to the latter three defendants as "the non-University Howard defendants."
2 See Defs. Dr, Sidney A. Ribeau’s, Bd. of Trs. of Howard Univ.’s, Hon. L. Douglas Wilder’s,
and Howard Univ.’s Mot. to Dismiss Pl.’s Compl. [Dkt. #13]; Def. James Jones’s Mot. to
Dismiss Pl.’s Compl. [Dkt. #14].
BACKGROUND
Plaintiff’s complaint alleges the following facts, which I accept as true and
construe in her favor at this staged Howard University is a federally chartered private
historically black university that receives approximately $235,000,000 each year from the
federal government. Compl.1111 13, 15-l7. At all relevant times, Howard’s President and
Chief Executive Officer was Dr. Sidney A. Ribeau. Id. 1111 18~19. As President and CEO,
Dr. Ribeau was responsible for the University’s day-to»day decisions, practices, and
procedures. Id. 11 20. University governance fell under the purview of the Board of
Trustees, which had broad authority to exercise all powers conferred upon the University
by its Charter. Id. 11 22. Former Virginia Governor L. Douglas Wilder was a member of
the Board and the Chairrnan of the Audit and Legal Committee, which was responsible
for advising the Board on the University’s Code of Ethics and Conduct. Id. 1111 24-26.
Frett is a 53-year-old dark-skinned African American woman. Id. 1111 9, 78. In
September 2010, Howard University hired her as a consultant, and the following January,
she transitioned into a permanent position as Senior Director and Chief Talent Offrcer in
the Offlce of Human Resources. Id. 11 9. From the time of her promotion through her
termination, Frett reported directly to Howard’s Chief Hurnan Resources Offrcer and
Executive Vice President James Jones. Ia'. 1111 32, 55.
3 I am also considering those documents that are "incorporated in the complaint," E.E. O.C. v. Sr.
Francis Xavier Parochial Sch. , 117 F.3d 621, 624 (D.C. Cir. 1997), and those "upon which the
plaintiff s complaint necessarily relies," Hinton v. Corrections Corp. ofAm., 624 F. Supp. 2d 45,
46 (D.D.C. 2009) (internal quotation marks omitted).
2
Throughout her tenure, Frett had a number of interactions with J ones that she
claims created a hostile work environment and evidenced color or gender discrimination.
For instance, Jones often used the phrase "HNIC" ("Head Nigger in Charge") to refer to
himself and other high-ranking University employees, which Frett found to be "crude,
shocking, and highly offensive" and interpreted as a sign that J ones would not tolerate
anyone questioning his authority. Id. 1111 61»68. Jones also told sexual jokes and "openly
and casually discussed [his] perceived sexual prowess." Id. 1111 70-71. He ignored Frett’s
concerns about another employee’s disrespectful conduct, id. 1111 73-76, and her strong
recommendation that he replace an unqualified Director of the Employment Unit, a light-
skinned African American woman, iri 1111 95~100. In fact, Jones promoted the light-
skinned woman and gave her a pay raise, only to later replace her on the advice of a white
man, z`d. 1111 100-105. Frett, meanwhile, was denied bonuses that Jones had promised her,
supposedly because they had not been approved by the Board of Trustees, while males
with lower performance ratings received unapproved bonuses. Id. 1111 129-135, 159»»162.
On multiple occasions, Jones publicly insulted or raised his voice at female
empl0yees, see, e.g., z`d. 1111 106-107, 110-1 l l, 116-l 19, 121-122, and said he likes to
"wrestle" (z'.e., engage in "violently aggressive, public discussions") with them, id. 1111 81~
83. One day in June 2011, J ones both shouted at Frett and another female employee
during a meeting and also "walked up behind them, towering over their heads, and
provocatively asked them, ‘Have you ever worked for a black man before?"’ ld. 1111 79,
1 18-120. J ones also undermined Frett and other women by making work-related
decisions that adversely affected them_for instance, denying women the executive
coaching opportunities that were provided to men, and changing budget policies to
remove Frett’s decisionmaking authority. Id. 1111 123-124, 127. Frett ultimately came to
believe that J ones "fe[lt] superior to other African American people, especially dark-
skinned, African American females" and that he set up a "discriminatory hierarchy" with
women like her at the bottom. Id. 1111 78, 93.
On June 20, 201 l, Frett submitted her first intemal Equal Employment
Opportunity ("EEO") complaint to J ones and Antwan Lofton, Howard’s Director of the
Office of Equal Employment Opportunity & Diversity. Id. 11 142. Jones responded by
threatening Frett that if she did not retract her complaint, it would negatively impact her
career at Howard. Id. 1111 143, 145. Frett, Jones, and Lofton discussed the complaint in a
June 28 meeting, and Frett was sufficiently satisfied with the proposed resolution that she
withdrew her complaint. Id. 11 148. The situation did not improve, however, and J ones
used intermediaries to continue threatening Frett. Id. 1111 149-153. Jones also explored
the possibility of restructuring Frett’s areas of responsibility without her input, z'a'. 1111 156-
158, and shared Frett’s compensation information with her coworkers, ial 11 l60. On
November 14, 2011, Frett reinstated her EEO complaint. Id. 11 163.
During the next two weeks, Frett was out of the office on sick leave. ]d. 11 164.
On November 29, she returned to find that everything in her office had been moved
without warning into a dirty, unfurnished office outside of the Chief Human Resource
Officer’s suite. Id. 1111 164-165. ln the past, male employees were given notice of
pending relocations, and their new offices were cleaned, painted, and furnished ahead of
time. !`d. 11 168. About a week later, on December 8, Frett went on sick leave again due
to the emotional and physical stress caused by Jones. Id, 1111 176-177. The next day,
J ones announced that a male employee had assumed her responsibilities. Id. 11 181. Jones
then urged Frett to take a position in a different department. ]d. 11 186.
On December l4, 201 1, Frett filed an official EEO complaint. Id. 11 187. Whereas
male employees who had filed EEO complaints in the past were permitted to work in
other departments pending investigation, Howard compelled Frett to take administrative
leave while it reviewed her complaint. Id. 1111 188-189. The subsequent investigation was
conducted by an attomey who had a preexisting relationship with Howard, refused to
allow Frett to have counsel at an interview, and ultimately concluded there was no
discrimination without having ever met with Frett. Id. 1111 193-»206, 219.
While working for Howard, Frett investigated what she believed was a pattern and
practice at Howard of violating federal I-9 immigration laws and ERISA requirements, as
well as what she characterized as "abuse, f`raud, waste, and mismanagement of University
f`unds" resulting from a conflict of interest between Jones and a University contractor,
PRM Consulting Group ("PRM"). Id. 1111 207~208, 21 l. The conflict of interest allegedly
stemmed from Jones’s dual roles as a University officer and a senior manager at PRM,
which allowed him to award PRM no-bid contracts. Id. 1111 38-44. On February 26, 2012,
Frett filed a whistleblower complaint with Howard’s internal Auditor. Id. 1111 2l0.
Frett filed a formal charge with the Equal Employment Opportunity Commission
("EEOC") on March 27, 2012. Id. 11218.4 The next day, she leamed that Howard’s
intemal investigation had uncovered insufficient support for her informal complaints. Id.
11 219. At Howard’s behest, Frett returned to work on April 2, and she was terminated
that same day, purportedly as part of a University "reduction in force" ("RIF"). Id.
1111 138, 220~224. Although University terminations are usually merit-based, this RIF
resulted in the firing of women with higher performance reviews than some men who
remained employed. Id. 1111 140, 231-233. Two of the women fired, including Frett, had
recently filed EEOC charges against the University. Id. 1111 138-139, 225-229.
After being terminated, Frett informed the Board of Trustees and Chairrnan Wilder
about her earlier report of waste, fraud, and abuse and explained how the University had
retaliated against her for her previous EEOC and whistleblower activities. Id. 1111 23 8-
241. The Board responded by initiating an investigation to be conducted by an auditor
with a preexisting relationship with the University. Id. 1111 244-247. As of the filing of
her complaint, Frett had not been notified of the investigation’s results. Id. 11 255.
Plaintiff filed a five-count complaint in this case on April 23, 2013. Id. In it, she
alleges that the defendants engaged in color and gender discrimination in violation of
Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., and the District of
4 She supplemented the charge on June 8, 2012. Id. 11 8.
6
Columbia Human Rights Act ("DCHRA"), D.C. Code § 2-1402.11; denied her equal pay
based on her gender in violation of the Equal Pay Act of l963, 29 U.S.C. § 206(d)(l); and
retaliated against her for filing an EEO complaint and EEOC charge in violation of Title
VII, § 2000e et seq., and the whistleblower provisions of the False Clairns Act ("FCA"),
31 U.S.C. § 3730(h). See Compl.1111 259-286. Although presented in separate briefs, the
non-University Howard defendants and Jones move to dismiss on the same grounds-
namely, that Title VII, the Equal Pay Act, and the FCA provide only for employer
liability, and the DCHRA’S one-year statute of limitations expired before plaintiff filed
her complaint.§ Howard also moves to dismiss the FCA count for failure to state a viable
claim under that statute. Plaintiff opposes both motions.°
LEGAL STANDARD
To survive a Rule l2(b)(6) motion to dismiss, a complaint "must contain
sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its
face." Ashcroji‘ v. Iqbal, 556 U.S. 662, 678 (2009) (intemal quotation marks omitted).
"A claim has facial plausibility when the plaintiff pleads factual content that allows the
court to draw the reasonable inference that the defendant is liable for the misconduct
5 See Defs. Dr. Sidney A. Ribeau’s, Bd. of Trs. of Howard Univ.’s, Hon. L. Douglas Wilder’s, &
Howard Univ.’s Mem. of P. & A. in Supp. of Mot. to Dismiss Pl.’s Compl. (“Howard Defs.’
Mem.") [Dkt. #13-]]; Def. James Jones’s Mem. of Law in Supp. of l-Iis Mot. to Dismiss Pl.’s
Compl. ("Jones’s Mem.") [Dkt. #14].
6 See Pl.’s Mem. & Opp’n to Defs. Dr. Sidney Ribeau, Bd. of Trs. of Howard Univ., Hon. L.
Douglas Wilder, & Howard Univ.’s Mot. to Dismiss ("Pl.’s Howard Opp’n") [Dkt. #16]; Pl.’s
Mem. & Opp’n to Def. James Jones’s Mot. to Dismiss Pl.’s Compl. ("Pl.’s Jones Opp’n")
[Dkt. #l '/']. 7
alleged." Id. "[W]here the well-pleaded facts do not permit the court to infer more than
the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]’_
‘that the pleader is entitled to relief."’ Id. at 679 (quoting Fed. R. Civ. P. 8(a)(2)). The
Court must "treat the complaint’s factual allegations as true" and "grant plaintiff the
benefit of all inferences that can be derived from the facts alleged." Sparrow v. Uniz‘ed
Ai'r Lines, Inc., 216 F.3d 1111, 1113 (D.C. Cir. 2000) (intemal quotation marks omitted).
But "the court need not accept inferences drawn by plaintiff[] if such inferences are
unsupported by the facts set out in the complaint. Nor must the court accept legal
conclusions cast in the form of factual allegations." Kowal v. MCI Commc ’ns Corp., 16
F.3d 1271, 1276 (D.C. Cir. 1994).
ANALYSIS
A. Title VII (Counts I and IV)
In her opposition briefs "[p]laintiff agrees that the proper [d]efendant in a Title VII
claim is the employer, that is Howard University and the Board of Trustees," Pl.’s J ones
Opp’n at 1, not Jones, Ribeau, or Wilder, see id.; Pl.’s Howard Opp’n at 19 (citing Gary
v. Long, 59 F.3d 1391, 1399 (D.C. Cir.), cerr. dem'ed, 516 U.S. 1011 (1995)). Plaintiff
thus concedes dismissal of Counts 1 and IV against the three individual defendants.
The Board of Trustees, on the other hand, plaintiff argues can be held liable as her
employer because it "should either be considered an identical party to Howard University
or a principal/agent of Howard University." Pl.’s Howard Opp’n at 19. The Howard
defendants disagree, arguing that claims against the Board should be dismissed because it
was not plaintiffs employer, See Howard Defs.’ Mem. at 9-l0. As one of my colleagues
recently noted in a similar case, the Board’s argument on this point "seems correct."
Johnson v. District ofColumbia, 947 F. Supp. 2d 123, 126 n.2 (D.D.C. 2013).
Fortunately, 1 need not wade into plaintiffs strained lines of reasoning because her own
complaint identifies only one "employer": Howard University.
In the very first paragraph of the complaint, Frett describes herself as "a former
employee of Howard Universz`ly" and alleges discrimination "during her employment at
Howard Universily." Compl.11 l (emphases added). Just a few pages later, she reiterates
that she "was employed continuously at Howard Unz`versity." Id. 11 10 (emphasis added).
She also alleges that defendant-1 ones was employed pursuant to an "employment contract
with Howard University," z`d. 1145 (emphasis added), which was signed by Howard’s
president on behalf of Howard University, see Employment Agreement Between Howard
University and James "Jimmy" R. J ones 111 at 9 (attached as E.x. 1 to Pl.’s J ones Opp’n)
[Dkt. #17-1]. lt is only logical to assume that plaintiffs employment agreement was
likewise with Howard University, not the Board of Trustees.
Indeed, nowhere in her complaint does Frett allege that she worked for the Board
of Trustees or that the Board had a principal/agent relationship with the University.
Those claims first appear in her opposition brief. lt is well established in our Circuit that
a plaintiff cannot overcome a motion to dismiss by alleging new facts in her responsive
pleading. See, e.g., Harrz`s v. District ofColumbia, 696 F. Supp. 2d 123, 136, 137 n.ll
(D.D.C. 20l0). Plaintiff pled in her complaint that Howard University was her employer,
so that is the defendant against which she can proceed under Title VII.?
B. DCHRA (Count II)
A DCHRA plaintiff has the choice of filing her complaint either with the D.C.
Office of Human Rights (DCOI-IR) or with a court, but regardless of which one she
chooses, she must file within one year of the alleged discrimination or discovery thereof,
D.C. Code §§ 2-l403.04(a), 2-1403.16(a). Bringing claims to the DCOHR tolls the one-
year statute of limitations for bringing those same claims to a court, § 2-1403.16(a), and
"[w]hen a charge of discrimination is filed with the EEOC in the District of Columbia, a
claim is automatically cross-filed with the [DCOHR] pursuant to a ‘worksharing
agreement’ between the two agencies," Ellis v. Georgetown Univ. Hosp., 631 F. Supp. 2d
7 Plaintiff would fare no better on the merits of her arguments. First, if the Board and University
are identical parties, then claims against the Board are duplicative of and merge with those
against the University. Cf Campbell v. District of Columbia, --- F. Supp. 2d ----, 2013 WL
5306641, at *l (D.D.C. Sept. 23, 20l3) ("Because the claims against the individual officer of the
D.C. government are duplicative of the claims against the District, the Court will merge those
claims and dismiss the officer as a party."); Johnson, 947 F. Supp. 2d at 126 n.l ("[B]ecause a
lawsuit against the Mayor acting in his official capacity is the same as a lawsuit against the
District, the Mayor’s inclusion in this lawsuit is unnecessary because it is duplicative."). Second,
even if the Board were an agent of the University, our Circuit Court has held that agents are not
individually liable under Title VII, and discrimination claims against them in their official
capacities merge with claims against employers. See Gary, 59 F.3d at 1399 (agreeing with Ninth
Circuit that "agent" in 42 U.S.C. § 2000e(b) serves only to incorporate employers’ respondeat
superior liability, not agents’ individual liability); see also Hoskins v. Howard Unz`v. , 839 F.
Supp. 2d 268, 276 (D.D.C. 2012). Furtherrnore, plaintiff s own factual assertions about the
Board_na.mely, that it "is entrusted with the governance of Howard University," Compl. 1122,
and is part of "the University’s management," z`d. 11 209 (quoting Howard’s Horline and
Whistleblower Policy and Procedure)_contradict her position that the Board is the "principal"
and the University its "agent."
10
71, 78 (D.D.C. 2009) (citing 29 C.F.R. § l60l.13(a)(4)(ii)(A), and Carter v. George
Washington Unc`v., 387 F.3d 872, 879 (D.C. Cir. 2004)). Here, none of the defendants
dispute that Frett’s March 27 and June 8, 2012 EEOC charges tolled the statute of
limitations for her claims against Howard. See Charge of Discrim. (attached as Ex. C to
Pl.’s Howard Opp’n) ("EEOC Charge") [Dkt. #16-1]; Suppl. Charge of Discrim.
(attached as Ex. A to Howard Defs.’ Mem.) (Suppl. Charge") [Dkt. #13-3]. The question
is whether, with respect to her claims against Jones and the non-University Howard
defendants, the EEOC charges toll at least tvventy-one days between plaintiff s April 2,
2012 termination and the filing of her complaint on April 23, 2013.8 1 find they do not.
A complaint filed under the DCHRA "shall state the name and address of the
person alleged to have committed the violation, hereinafter called the respondent." D.C.
Code § 2-1403.04(a) (emphasis added). 1n her charges, in the space provided below the
prompt: "NAMED1S THE EMPLOYER. . . WHO DISCRIMINATED AGAINST ME
(If more than one list below.)," plaintiff provided the name and address of only one
respondent: Howard University. See EEOC Charge at 5; Suppl. Charge at 3.
Frett nevertheless contends that he was identified as a respondent because his
name appears in the body of the charges and in a cover letter drafted by plaintiffs
counsel. See Pl.’s J ones Opp’n at 22-23. But plaintiff does not address one crucial
consideration: how J ones could have received notice of the charges or had the opportunity
3 Plaintiff does not challenge Jones’s argument that April 2, 2012 was "the last date on which she
could have been subjected to any alleged discrimination,” Jones’s Mem. at 8, nor does she point
to any discrimination discovered after that date.
l l
to participate in the EEOC conciliation process if his name and contact information were
not provided. She cites no authority for the notion that such indirect identification cfa
respondent puts him on notice of the charge or tolls the statute of limitations for claims
against him.g 1n the absence of any suggestion that J ones actually received notice or
participated in proceedings before the EEOC, 1 am compelled to dismiss the DCHRA
claim against him as barred by the statute of limitations. See, e.g., Brown v. Children ’s
Nat'! Med. Ctr., 773 F. Supp. 2d 125, 137 (D.D,C. 2011) ("Plaintiff cannot now proceed
as against the individual defendants on DCHRA claims that were neither brought within
the one-year statute of limitations nor filed with the EEOC or the DCOHR."); Anyat'be v.
Gt`lbert Sec. Serv., Inc., Civ. No. 94-2377, 1995 WL 322452, at *4 (D.D.C. May 18,
l995) (dismissing claims against two defendants because "[a] lthough they are both
mentioned in the plaintiffs [EEOC] affidavit, the plaintiff has presented no evidence (and
the Court is aware of none) that would suggest that either [defendant] was aware of the
contents of the affidavit" and because "there is no evidence that either of these defendants
was aware of the EEOC conciliation process or could have participated in the process").]o
9 ln fact, plaintiff herself cites an opinion from our Circuit Court that says "‘it makes sense, in
our view, to . . . read [EEOC charges] . . . with tveight to the construction given them by the
Commission in the matters it proceeds to investigate."’ Pl.’s Howard Opp’n at 23 (emphasis
added) (quoting Macklin v. Spector Fret'ght Sys., Inc., 478 F.2d 979, 988 (D.C. Cir. 1973)). In
this case, the EEOC considered Jones to be a "third party," not a respondent, to plaintiff s EEOC
charge. See Letter from Mindy E. Weinstein, EEOC Washington Field Office Acting Director, to
Amanda C. Dupree, Esq., Counsel for Defendant Jones, at Comment Page (Aug. 28, 2013)
(attached as Ex. B to Mot. for Leave to Fill Suppl. Mem. & Attachs in Supp. of Mot. to Dismiss
DCHRA Claims Against Def. J ames Jones) [Dkt. #21-2].
w lt bears noting that the cover letter from Frett’s attorney-as well as the fax cover sheet used to
transmit the charge to the EEOC-bear the subject line "'Re: Jearmette Frett’s Claims Agat`nst
12
As to the non-University Howard defendants, plaintiff concedes that they were not
named as respondents in the EEOC charges, see Pl.’s Howard Mem. at 23, but she asserts
that they "had actual notice of the charges against them, whether or not they were directly
named in Ms. Frett’s administrative charge," because "each [d]efendant had, at the very
least, an agency relationship with Howard University," t'd. at 24. Alternatively, she takes
the position that "when Howard University received actual notice of Ms. Frett’s EEOC
charge, the [non-University Howard defendants], would have, at a minimum, received
constructive notice as well." Id. at 25.
Plaintiff s complaint and briefs are devoid of any facts regarding when, where, or
how the non-University Howard defendants received actual notice, which means that her
entire argument turns the legal proposition that Howard’s knowledge of the EEOC charge
can be imputed to the other defendants. Unfortunately for plaintiff, that is not the law.
See U.S. v. $6,976,934.65, Plus lnterestDeposz`ted into Royal Bank of Scot. Int’l Account
No. 2029-56141070, Held in the Name afSoulburjy Ltd., 554 F.3d 123, 129 (D.C. Cir.
2009) ("‘[N]otice of facts that a principal knows . . . is not imputed downward to an
agent."’ (quoting RESTATEMENT (THIRD) oF AoENcv § 5.03 cmt. g (2006)). tn the final
analysis, the non-University Howard defendants, like Jones, did not participate in the
EEOC conciliation process and may not have even known about it because they were not
identified as respondents and their addresses were not included on the EEOC charge. The
Howard University.” EEOC Charge at 1, 2 (emphasis added).
13
DCHRA claims against them therefore must be dismissed."
C. Equal Pay Act (Count III)
Courts in this Circuit and elsewhere have recognized that the Equal Pay Act
"overlaps" with Title VII, and the two statutes should be "construed harmoniously with
the result that the principles developed under each . . . [be] applied interchangeably” with
the other. Hardy v. Bowen, Civ. No. 85-2119, 1986 WL 15710, at *8 (D.D.C. Nov. 19,
1986) (citing Coanty of Washington v. Gunther, 452 U.S. 161 (1981)), aff’d sub nom.,
Hardy v. Sullivan, 889 F.2d 291 (D.C. Cir. 1989); see also Lavin-McEleney v. Marist
Coll., 239 F.3d 476, 483 (2d Cir. 2001) ("The Equal Pay Act and Title VII must be
construed in harmony, particularly where claims made under the two statutes arise out of
the same discriminatory pay policies."); Orahood v. Bd. of Trs. ofUnz'v. of Ark., 645 F.2d
65l, 654 (8th Cir. 198l) ("In examining a sex discrimination case involving unequal
compensation, Title VII and the Equal Pay Act must be construed in harrnony."). As
under Title V11, then, only plaintiffs "employer" can be liable under the Equal Pay Act.
See Howard Unz`v. v. Watkt`ns, 857 F. Supp. 2d 67, 73 (D.D.C. 2012); Zuurbz`er v.
MedStar Health, Inc., 306 F. Supp. 2d l, 6 (D.D.C. 2004). Accordingly, plaintiffs Equal
Pay Act claim can proceed against only Howard University. See supra Part A.]z
ll lt appears that plaintiffs failure to exhaust administrative remedies might also provide an
additional ground for dismissing her Title VII and EPA claims against all defendants except the
University. But "failure to exhaust is an affirmative defense, and the burden rests with the
defendant[s],” Hayes v. Chao, 592 F. Supp. 2d 5l, 55 (D.D.C. 2008) (citing Bowen v. United
States, 106 F.3d 433, 437 (D.C. Cir. 1997)), who in this case have not even raised the argument
14
D. False Claims Act (Count V)
Finally, as under Title VII and the Equal Pay Act, FCA liability is limited to
"employers." See Yesudt`an, 270 F.3d at 972; Saunders v. District of Columbz`a, 789 F.
Supp. 2d 48, 57 (D.D.C. 2011) (citing Untted States ex rel. St`ewt`ck v. Jamieson Sct`. &
Eng ’g, Inc., 322 F.3d 73 8, 740-41 (D.C. Cir. 2003)). Plaintiff is correct that our Circuit
Court has not addressed this issue since the FCA was amended in 2009. See Fraud
Enforcement and Recovery Act of 2009, Pub. L. No. 111-21, § 4(d), 123 Stat. 1617,
1624-25. Other courts have, however, and 1 find their reasoning to be persuasive and
consistent with the logic of our Circuit’s case law. See, e.g., Lijoka v. Advantage Health
Grp., Inc., Civ. No. 13-2223, 2013 WL 5304013, at *10-12 (D, Kan. Sept. 20, 2013);
Aryai v. Forfet`ture Support Assocs., LLC, Civ. No. 10-8952, 2012 U.S. Dist. LEXIS
125227, at *19-27 (S.D.N.Y. Aug. 27, 20l2) (citing Yesudt'an, 270 F.3d at 972, for the
proposition that "even after the 2009 amendment[,] interpreting amended section 373 0(h)
to provide for individual liability is inconsistent with the [FCA’s] mandatory remedy of
reinstatement."). Once again, as Frett’s former employer, Howard University is the only
proper FCA defendant
Frett’s retaliation claim against the University must be dismissed as well because
12 Assuming arguendo that the non-University Howard defendants could be found liable under
the theory that they were "employer[s]" because they "act[ed] directly or indirectly in the interest
of an employer in relation to an employee," 29 U.S.C. § 203(d), Frett still has failed to state a
plausible claim. The complaint contains no specific allegations about these defendants’ role in
setting or supervising wages. Accordingly, there is no basis to infer that they "act[ed] directly or
indircctly" on Howard’s behalf when it came to Frett’s salary
15
she has not alleged a plausible violation of the FCA’s whistleblower provisions. To state
such a claim, plaintiff would have to show that she (1) "engaged in protected activity, that
is, acts done . . . in furtherance of an [FCA] action" and (2) "was discriminated against
because of` that activity." United States ex rel. Yesudz`an v. Howard Unz`v., 153 F.3d 73 l,
736 (D.C. Cir. 1998) (internal quotation marks omitted). 1n her complaint in this case,
plaintiff cites a "whistleblower complaint" that she submitted to Howard’s intemal
auditor as reflecting her protected activity. See Compl. 11 210 (citing Complaint from
Jeanette Frett, Chief Talent Officer and Sr. Director-Human Resources, to Dr. Carroll
Little, internal Auditor (Feb. 16, 2012) (attached as Ex. D to Pl.’s Howard Opp’n)
("Whistleblower Compl.") [Dkt. #16-1]). Read in the light most favorable to plaintiff,
her allegations still do not meet the elements of an FCA retaliation claim.
To constitute a "protected activity," a plaintiff must be "investigating matters that
reasonably could lead to a viable [FCA] case." Yesudian, 153 F.3d at 740 (intemal
quotation marks omitted). "Mere dissatisfaction with one’s treatment on the job is not, of
course, enough. Nor is an employee’s investigation of nothing more than his employer’s
non-compliance with federal or state regulations." Id. Plaintiffs notice to the University
that "audit findings revealed a pattem of gross negligence and mismanagement . . . [of]
federally mandated 19 administration and recordkeeping," as well as "fail[ures] to comply
with federally mandated ERISA requirements," Whistleblower Compl. 1111 l, 2, fits
squarely within this last category of unprotected activities. Her complaint that Jones
16
“created an environment of intimidation and hostility" that left employees "afraid to speak
out against mismanagement, inefficiencies and waste" also has no relation to any
potential FCA claim and more closely resembles an expression of dissatisfaction with her
treatment on the job. Id. 11 5.
Moreover, to establish causation, "[t]he employee must show that: (a) the
employer had knowledge the employee was engaged in protected activity; and (b) the
retaliation was motivated, at least in part, by the employee’s engaging in [that] protected
activity." Yesudtan, 153 F.3d at 736 (internal quotation marks omitted). When an
employee engages in reporting activities that could be "mistaken for routine actions in
accordance with [her] employment obligations," z`d. at 745-for example, a contract
administrator raising concerns about oversight of a government contract, z`a'. at 744 (citing
Robertson v. Bell Helz`copter Textron, Inc., 32 F.3d 948, 949-50 (Sth Cir. 1994))_courts
have ruled as a matter of law that the employer could not have known that the employee’s
actions might lead to FCA charges See, e.g., United States ex rel. Remseyer v. Centurj)
Healthcare Corp., 90 F.3d 1514, 1523 (l0th Cir. 1996); Robertson, 32 F.3d at 952.
Absent any notice that the employee is investigating FCA-typej$'aad_as opposed to
other potential problems that fall within the employee’s area of responsibility_"the
employer could not possess the retaliatory intent necessary to establish a violation of
§ 3730(h)." United States ex rel. Hopper v_ Anton, 91 F.3d 1261, 1269 (9th Cir. 1996),
Frett, by her own account, "was hired in September 2010 to conduct an assessment
17
of the Employment/Recruitment Department in order to address critical deficiencies and
mitigate potentially costly risks that existed in the Office of Human Resources and the
Employment/Recruitment Department." Compl.11 94. She alleged in her whistleblower
complaint that Jones (1) had "contracted with PRM, Robinson Consulting Group (which
has a relationship with PRM) and Lee l-lecht Harrison for services that could have been
provided by current Howard HR staff"’ and had "hired PRM staff and longtime friend
Kirk Dixon of PRM to perform duties that could have been performed by current Howard
HR staff," allegedly because J ones had a financial interest in those companies and
(2) "abused his authority and mismanaged funds by increasing the salaries of select
employees without merit." Whistleblower Compl. 11113, 4. Although Frett used the word
"fraud" in her whistleblower complaint, her actual allegations did not describe any "false
or fraudulent claims" or even hint that Jones, PRM, or anyone else had "submitted false
records or demands for payment" that could lead to FCA liability. Campbell v. District of
Columbia, --- F. Supp. 2d ----, 2013 WL 5306641, at *6 (D.D.C. Sept. 23, 2013)
(dismissing retaliation claim under D.C. False Claims Act, which is "analyzed in a similar
fashion to[] a retaliation claim arising under the federal [FCA]."). "Although [plaintiff]
may have suspected that the [HR department’s contracts] were tainted by impropriety,
disclosing wasteful procedures or practices . . . does not amount to an investigation of
false or fraudulent claims." Id. (intemal quotation marks omitted).
Furthermore, because it was plaintiffs job to address deficiencies and risks in
18
Howard’s HR department, there is no way that the University could have known that
plaintiffs report to the auditor constituted a step towards an FCA claim, rather than
simply a report detailing inefficiencies that she had discovered in the performance of her
job. Thus, even if her investigation and whistleblower complaint constitute "protected
activities," it would be impossible to find that the University retaliated against her for
those activities, as they were indistinguishable from her work in the HR department.
CONCLUSION
Thus, for all of the foregoing reasons the defendants’ motions to dismiss are
GRANTED. An appropriate order shall accompany this Memorandum 0pinion.
twa
mcHARD JQ_F})N
United States District Judge
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825 F. Supp. 340 (1993)
DATA GENERAL CORPORATION and Data General Service, Inc., Plaintiffs,
v.
GRUMMAN SYSTEMS SUPPORT CORPORATION, Defendant.
Civ. A. No. 88-0033-S.
United States District Court, D. Massachusetts.
May 11, 1993.
*341 *342 *343 Robert S. Frank, Jr., Kevin P. Light, Choate, Hall & Stewart, Boston, MA, Jacob Frank, Morris G. Nicholson, Data General Corp., Westboro, MA, for plaintiffs.
David J. Apfel, Paul F. Ware, Goodwin, Proctor & Hoar, Gary L. Benton, Andrew M. Gold, and Ronald S. Katz, Coudert Brothers, San Francisco, CA, for defendant.
Gary R. Greenberg, Louis J. Scerra, Jr., Goldstein & Manello, Boston, MA, Charles A. Gilman, Robert A. Alessi, Cahill, Gordon & Reindel, New York City, for Grumman Data Systems Corp.
MEMORANDUM AND ORDER ON PLAINTIFFS' MOTION FOR LEAVE TO ADD A PARTY AND TO AMEND COMPLAINT, DEFENDANT'S MOTION TO CORRECT JUDGMENT, DEFENDANT'S MOTION FOR A NEW TRIAL OR REMITTITUR, AND DEFENDANT'S MOTION FOR JUDGMENT AS A MATTER OF LAW
SKINNER, Senior District Judge.
Following a vigorously litigated trial spanning more than nine weeks, the jury returned a verdict against defendant Grumman Systems Support Corporation. The jury awarded Data General $27,417,000 on its federal copyright infringement claim and $27,417,000 on its state law misappropriation of trade secrets claim, Mass.Gen.L. ch. 93, § 42. Finding Grumman's misappropriation of trade secrets to be willful, I increased the trade secrets award by $9,000,000. This court entered judgment, in the form submitted by Data General, on January 29, 1993.
Four contested post trial motions are now pending. Data General moves for leave to add a party and to amend its complaint to conform to the evidence presented at trial. Grumman moves (1) to correct judgment, (2) for a new trial or, in the alternative, a remittitur, and (3) for judgment as a matter of law. The parties have exhaustively briefed each motion. I have summarized the facts of this case in prior opinions and will not repeat them here except as is relevant to issues under discussion.
I. Plaintiff's Motion To Add A Party And To Amend Complaint
In an effort to increase the likelihood of collecting the full amount of its jury verdict, Data General moves to amend its complaint to add a new claim against a new party, Grumman Data Systems Corporation ("GDS"), the parent corporation of defendant Grumman. Data General asserts that the evidence at trial demonstrated, as a matter of law, that GDS is vicariously liable for Grumman's infringement of Data General's *344 copyright because GDS had the right and ability to supervise Grumman's infringing activity and a direct financial interest in Grumman's activities. Plaintiff contends, further, that such an amendment is permitted under Fed.R.Civ.P. 15(b) (Amendments to Conform to the Evidence) and Fed.R.Civ.P. 21 (Mis-joinder and Non-Joinder of Parties).
Non-party GDS made a special appearance with this court for the purpose of filing an opposition to Data General's motion. GDS, joined by Grumman, levels a number of challenges to Data General's efforts: (1) due process bars addition of a new party, on a new claim, after judgment; (2) neither the local rules of this court nor the federal rules of civil procedure allow the relief plaintiff seeks; (3) this court lacks personal jurisdiction over GDS; (4) plaintiff extinguished its copyright claim when it accepted judgment on the larger damage award available under state law, and cannot now pursue GDS on a theory of vicarious copyright liability. I need not address many of the issues raised by GDS because I conclude that the relief that Data General seeks is not permitted by Rule 15(b) or Rule 21.
When an issue not embraced by the pleadings is tried with the express or implied consent of the parties, Rule 15(b) permits a party to amend the pleadings to reflect the case as it was actually litigated.[1] Such an amendment can be allowed at any time, even after judgment. Fed.R.Civ.P. 15(b). A party may resort to Rule 21 to add a party who for some innocent reason has not been made a party to the action and whose presence is necessary or desirable. "Parties may be dropped or added by order of the court ... at any stage of the action and on such terms as are just," Fed.R.Civ.P. 21, even after trial or on appeal. Wright, Miller & Kane, 7 Federal Practice and Procedure: Civil § 1688 (1986). Where the motion to amend comes after responsive pleadings have been served, the standard for adding a party is the same whether the motion is made under Rule 15 or Rule 21 because in both cases the moving party must demonstrate an absence of prejudice to the nonmoving party. Kalman v. Berlyn Corp., 914 F.2d 1473, 1479 (Fed.Cir.1990), reh'g, en banc, denied (1991); Wright & Miller, 6 Federal Practice and Procedure: Civil § 1474 (1986).
To prevail on its Rule 15(b) motion, Data General must show that (1) the vicarious liability cause of action was, in effect, tried consensually by the parties and resolved favorably to the plaintiff and (2) granting the motion to amend will not unfairly prejudice the defendant Grumman or the party to be added, GDS. See DCPB, Inc. v. City of Lebanon, 957 F.2d 913, 916-17 (1st Cir.1992). Data General fails to clear either hurdle.
There is no allegation that Grumman or GDS expressly consented to trying the vicarious liability claim. Data General argues, instead, that GDS had actual notice that the unpleaded issue was raised at trial and had an adequate opportunity to defend its interests. The vicarious liability of GDS was purportedly raised and decided by the following trial testimony: GDS employees comprise the senior management of Grumman and have the right to supervise and control Grumman; GDS is the sole shareholder of GDS; GDS employee Joseph Mulderig was a central defense witness for Grumman; GDS employee William O'Neil was Grumman's designated representative at trial; and GDS in-house counsel was present at counsel table throughout the trial. The issue before me, however, is not whether the evidence presented at trial might somehow support a new theory of liability, but rather whether the parties consented to try the unpleaded issue of GDS' vicarious liability. "Consent to the trial of an issue may be implied if, during the trial, a party acquiesces in the introduction of evidence which is relevant only to that issue." Id. at 917. Conversely, when evidence admitted at trial is relevant to a pleaded issue, it cannot give rise to a claim that the opposing *345 party should have realized that a new issue was infiltrating the case. Id. Here, the evidence upon which Data General grounds its claim of vicarious liability was relevant to determining the existence and extent of Grumman's liability, as I ruled during trial. "The purpose of Rule 15(b) is to allow the pleading to conform to issues actually tried, not to extend the pleadings to introduce issues inferentially suggested by incidental evidence in the record." Id. (quoting Grand Light & Supply Co. v. Honeywell, Inc., 771 F.2d 672, 680 (2nd Cir.1985)). GDS was not a party to the suit, in fact or in form. There is nothing to suggest that GDS and Grumman were treated as a single entity, or that GDS, its actions, or its liability were ever an issue in this case. Accordingly, I cannot conclude that Grumman or GDS were on notice that a new issue the vicarious liability of GDS was being raised at trial.
Data General's attempt to amend the complaint fails for a second reason: unfair prejudice to GDS and Grumman. Despite knowing of the facts that purportedly give rise to GDS' vicarious liability, Data General waited four years to file its motion to amend until after trial, after the jury verdict, and after judgment. Though a Rule 15(b) motion may be granted even after the entry of judgment, our court of appeals has noted that a district court should consider the extent to which the opposing party may be prejudiced by the amendment and whether the movant has shown any justification for its delay in moving to amend. DCPB, 957 F.2d at 917-18; Quaker State Oil Ref. Corp. v. Garrity Oil Co., 884 F.2d 1510, 1517 (1st Cir.1989) (parties seeking the benefit of Rule 15(a) "have an obligation to exercise due diligence; unseemly delay, in combination with other factors, may warrant denial of a suggested amendment."); Hayes v. New England Millwork Distrib., Inc., 602 F.2d 15, 19 (1st Cir. 1979) (it is clear that undue delay can be a basis for denial of a Rule 15(a) motion to amend). Consistent with that policy, our local rules specifically demand that, "[a]mendments adding parties shall be sought as soon as an attorney reasonably can be expected to have become aware of the identity of the proposed new party." LR, D.Mass. 15.1(A).[2] Data General has offered no explanation for the four year delay in filing its motion to amend. This is not a case in which previously unknown or undisclosed facts were brought to light at a late stage of discovery or at trial. It appears from the record that Data General was aware of the parental relationship between GDS and Grumman as early as 1988. Moreover, Data General's unexplained delay has unfairly deprived GDS and Grumman of the ability to defend against the unpleaded issue. The vicarious liability of GDS was not an issue in discovery, in briefs filed with this court, in arguments made to the jury, or in the jury instructions. In a similar case, where a plaintiff was aware of the factual predicate of a claim but failed to raise it until after judgment, our court of appeals noted, "it would be both unfair, and substantially prejudicial, to permit the injection of a new and different theory of liability at the very stroke of midnight." DCPB, 957 F.2d at 918. Though GDS and Grumman obviously share some common interests, this fact alone cannot justify imposing liability against a new party on an untried theory of liability after the entry of judgment when the factual predicate for the claim was known almost from the inception of the case. The motion to amend the complaint is denied.
II. Defendant's Motion To Correct Judgment
Grumman moves pursuant to Fed.R.Civ.P. 59(e) and 60(a) to delete the award of attorneys' fees and to correct the award of prejudgment interest in this court's January 29, 1993 judgment. The judgment orders, in relevant part, that "Plaintiff Data General Corporation recover of defendant Grumman Systems Support Corporation the sum of $27,417,000 plus interest thereon from March 22, 1988, at a rate of twelve percent (12%) per annum ($15,956,694), plus costs and attorneys' fees as hereafter determined by the Court."
A. Attorneys' Fees
Grumman contends that attorneys' fees are available under the federal Copyright *346 Act, but are not recoverable under Mass.Gen.L. ch. 93, § 42 for misappropriation of trade secrets. Further, "By electing to take judgment on its state law trade secrets claim, [Data General] has irrevocably waived any right to any award of attorneys' fees." Defendant complains that Data General is impermissibly attempting to "cherrypick" the best elements of recovery from the available state (punitive damages and 12% prejudgment interest) and federal remedies (attorneys' fees).
Data General opposes the motion, arguing that a plaintiff who prevails on a misappropriation of trade secrets claim may recover attorneys' fees and costs under state law. The plaintiff also asserts that there was no waiver of federal remedies because the judgment entered by this court awarded $27,417,000 in compensatory damages on both its state and federal claims. Moreover, Data General asserts that First Circuit precedent does not compel a prevailing plaintiff to choose between nonduplicative state and federal remedies. So long as a plaintiff is not twice compensated for a single injury, a judgment may be comprised of elements drawn from separate state and federal remedies.
The language of the judgment does not support Grumman's claim that Data General "waived any right to any award of attorneys' fees" pursuant to federal statute. The judgment awards $27,417,000 in compensatory damages the same amount the jury awarded on each of Data General's state and federal claims. Though the judgment does not expressly reference the federal copyright claim, I am unwilling to interpret this silence as a voluntary waiver of valuable federal remedies. Finding no waiver, I will allow Grumman's motion only if attorneys' fees are unavailable as a matter of law.
Grumman's assertion that Data General must elect between its state or its federal remedies, but not a combination of the two, finds support in a decision of the Second Circuit Court of Appeals, Kelco Disposal, Inc. v. Browning-Ferris Indus., 845 F.2d 404 (2nd Cir.1988), aff'd, 492 U.S. 257, 109 S. Ct. 2909, 106 L. Ed. 2d 219 (1989). In Kelco, the court affirmed an order of the district court that required the prevailing plaintiff to choose between its federal antitrust remedy (treble damages, attorneys' fees, and costs) and its state tort remedy (compensatory and punitive damages). Id. at 411. The holding of Kelco, however, was limited to the facts of that case. Id. ("This is one of those cases where the tail must go with the hide."). The holding resulted from the court's analysis of the substantive provisions of federal antitrust law, its enforcement provisions, and the public interests protected by federal law. Id. Whatever the relevance of the decision to cases outside of the antitrust context, Kelco is not the law in the first circuit.
Where federal and state remedies address the same injury, our court of appeals has repeatedly upheld judgments that draw from both state and federal remedies. In Schroeder v. Lotito, 747 F.2d 801, 802 (1st Cir.1984) (per curiam), a trademark infringement case, our court of appeals affirmed a district court's order that awarded the plaintiff an injunction pursuant to federal law, an accounting of profits under state law (though unavailable under federal law), and attorneys' fees and costs under federal law (though probably unavailable under state law). Similarly, in Aubin v. Fudala, 782 F.2d 280 (1st Cir.1983), appeal on attorneys' fees, 782 F.2d 287 (1st Cir.1986), appeal after remand, 821 F.2d 45 (1st Cir.1987), a jury awarded the plaintiff $300,000 on a state law negligence claim and nominal damages on a related federal civil rights claim. The court held that the prevailing plaintiff was entitled to pre-judgment interest on his state law tort claim and attorneys' fees on his federal civil rights claim. Id. at 289-91. Were the law as Grumman contends, the court of appeals would have required the plaintiffs in these cases to choose between their state and federal remedies. But instead, the court affirmed the verdicts which drew remedies from both state and federal law.
Grumman contends that a more recent decision, Freeman v. Package Mach. Co., 865 F.2d 1331 (1st Cir.1988) established a "one slice" rule of recovery that prohibits Data General's claim for attorneys' fees:
To be sure, a plaintiff is entitled to only one full recovery, no matter how many different legal grounds may support the *347 verdict; but there is no basis for allowing the losing party to pick which of the overlapped awards it prefers to pay. In collecting the fruits of his victory, [plaintiff] was concededly entitled to only a single slice of the pie but the choice of the slice was his.
Id. at 1345. I do not read Freeman's "one slice" rule as erecting a bar to Data General's recovery of attorneys' fees. Freeman is aimed at duplicative remedies; it does not prohibit a plaintiff from combining state and federal remedies so long as the combination does not result in a double recovery. Indeed, Freeman expressly relied on (rather than overruling) Aubin and Schroeder, which combined non-duplicative state and federal remedies. Id. The court also expressly noted that the district court was "at liberty to award additional remedies [to the jury's federal verdict] which were (1) supported by the record, and (2) available under state law." Id. Subsequent decisions of our court of appeals are consistent with this holding. For example, in Powers v. Grinnell Corp., 915 F.2d 34, 39-42 n. 6 (1st Cir.1990), the court affirmed a district court's order that required a plaintiff to elect between liquidated damages available under federal law and prejudgment interest available under state law because the plaintiff would recover twice for the same loss.
My review of first circuit precedent reveals no bar that prevents a successful plaintiff from obtaining remedies on both state and federal grounds where the claims are related and the remedies are nonduplicative. Moreover, Grumman has failed to argue, much less demonstrate, that an award of attorneys' fees would result in duplicate recovery by Data General. The award of attorneys' fees compensates Data General for the costs of litigation and is not duplicated by the award of compensatory damages, pre-judgment interest, or punitive damages.
Finding that Data General did not waive, voluntarily or as a matter of law, its right to an award of attorneys' fees under the federal Copyright Act, I do not decide whether the same remedy is also available under Mass. Gen.L. ch. 93, § 42. The motion to delete the award of attorneys' fees is denied.
B. Pre-judgment Interest
As required by Mass.Gen.L. ch. 231, § 6B,[3] the clerk of this court awarded Data General pre-judgment interest on the jury's award of compensatory damages at the rate of 12% per annum from March 22, 1988, the date the action was commenced. Grumman complains that the $15,956,694 award of pre-judgment interest is excessive because interest was calculated on the entire award from the date the action was commenced, despite the fact that a majority of the damages were incurred between 1989 and 1992. The defendant, however, acknowledges that pre-judgment interest was calculated in conformity with the text of the statute and controlling precedent, Charles D. Bonanno Linen Service, Inc. v. McCarthy, 708 F.2d 1 (1st Cir.), cert. denied, 464 U.S. 936, 104 S. Ct. 346, 78 L. Ed. 2d 312 (1983), but contends that the application of the general rule to the facts of this case would be grossly unfair. Grumman also asserts that the judgment conflicts with the jury's Special Verdict, which awarded only $6,360,744 in interest on the federal copyright claim.
Bonanno considered and rejected the argument now raised by Grumman. In Bonanno, the defendants objected that plaintiff would receive a windfall recovery if pre-judgment interest were awarded for losses accruing after the commencement of the action. The district court rejected the challenge, reasoning:
One may view the legislature's choice of the date of commencement of the action as a reasonable accommodation of competing interests. On the one hand, it fails to redress loss fully because it does not provide interest or any alternative form of *348 compensation for delay in payment between the date earlier losses were incurred and the date of commencement of the action. On the other hand, it causes interest to be calculated from a date preceding losses accruing after the action is commenced. Thus, a "shortfall" in one respect is counterbalanced by a "windfall" in another respect. The legislature is free, of course, to provide for such an accommodation, and especially so when, as in the calculation of prejudgment interest, there is value in having a fixed rule for mathematically calculable interest to avoid the costs and delays incident to disputes over details such as might be presented here if interest were awarded separately on many elements of damages from many different dates of accrual.
Charles D. Bonanno Linen Service, Inc. v. McCarthy, 550 F. Supp. 231, 246-47 (D.Mass. 1982). The court of appeals affirmed this statement, reiterating that § 6B establishes a simple, mechanical rule under which the clerk simply adds to the court's total award interest thereon from the date of the commencement of the action. Bonanno, 708 F.2d at 12. The Massachusetts Supreme Judicial Court has cited Bonanno with approval. College-Town v. Massachusetts Comm'n Against Discrimination, 400 Mass. 156, 508 N.E.2d 587, 595 (1987).
In light of the balance struck by the legislature and controlling precedent of our court of appeals, I am not at liberty to adjust the award of pre-judgment interest to account for the precise date the various damages accrued. Neither the text of § 6B nor the Bonanno opinion permit such an exception.
Finally, Grumman's claim that the court's award of pre-judgment interest ignores the damage theory used by the jury to calculate interest on the copyright infringement claim is frivolous. The award of pre-judgment interest under state law is not determined or limited by the jury's findings on the federal copyright claim. Moreover, throughout the trial I have explained that interest on the federal claim would be determined by the jury, while interest on the state trade secret claim would be awarded by the court. The defendant never objected to my statement of the law during trial nor at the conclusion of trial when I expressly instructed the clerk to calculate pre-judgment interest on the statelaw claim.
III. Defendant's Motion For New Trial Or, In The Alternative, A Remittitur
Seeking to correct the wayward work of what Grumman perceives as a runaway jury, defendant urges this court to set aside the verdict and grant a new trial pursuant to Fed.R.Civ.P. 59(a). Grumman's primary contention is that the compensatory damages awarded by the jury totalling $27,417,000 are speculative and excessive. Defendant also argues that a new trial is warranted because plaintiff made material misrepresentations to the court and jury regarding its copyright deposits, the testimony of George Tasso was used improperly to create an inference of Grumman's criminality, and this court made numerous errors when it charged the jury. Data General opposes the motion and refutes each charge of error.
A request to set aside a jury's verdict is not to be taken lightly. Though the trial court may weigh the evidence and assess the credibility of witnesses in deciding such a motion, Insurance Co. of N. Am. v. MUSA, 785 F.2d 370, 375 (1st Cir.1986), a jury verdict that is supported by the evidence may not be set aside simply because the trial judge would have reached a different result. CVD, Inc. v. Raytheon Co., 769 F.2d 842, 848 (1st Cir.1985), cert. denied, 475 U.S. 1016, 106 S. Ct. 1198, 89 L. Ed. 2d 312 (1986). A district court should set aside a verdict only where "the verdict is against the clear weight of the evidence, or is based upon evidence which is false, or will result in a clear miscarriage of justice." Id. (citations omitted); MUSA, 785 F.2d at 375. After reviewing the record and evaluating Grumman's arguments, I conclude that the jury's verdict is well-grounded in the evidence. While I might not have reached precisely the same damage award, the jury's verdict was, nonetheless, the product of careful deliberation on the evidence presented in this case. The motion is denied.
*349 A. Compensatory Damages
A prevailing plaintiff in a copyright action is entitled to recover for the actual losses it sustained as a result of the infringing activity, including lost profits from lost customers. The Copyright Act provides, in part:
The copyright owner is entitled to recover the actual damages suffered by him or her as a result of the infringement, and any profits of the infringer that are attributable to the infringement and are not taken into account in computing the actual damages. In establishing the infringer's profits, the copyright owner is required to present proof only of the infringer's gross revenue, and the infringer is required to prove his or her deductible expenses and the elements of profit attributable to factors other than the copyrighted work.
17 U.S.C.A. § 504(b) (West 1977). Grumman complains that the jury awarded speculative and excessive damages because it uncritically adopted the plaintiff's damage analysis in its entirety which was built on theoretically unsound and factually inaccurate assumptions.[4] More specifically, defendant contends that the plaintiff's damage analysis failed to identify relevant revenues, failed to apply a reasonable profit margin, and failed to apportion service profits between infringing and non-infringing activities.
Grumman finds several problems with the revenue base from which damages were calculated. The evidence presented a trial established that MV/ADEX,[5] the copyrighted diagnostic software at issue in this case, was not used at every customer site, nor on every service call. The frequency with which MV/ ADEX was used by Grumman was a contested trial issue, with estimates ranging from less than 1% to more than 50% of the service calls. Grumman claims that the jury award was excessive because it was based on all Grumman service revenues, including service calls when MV/ADEX was not infringed. The jury, however, was entitled to find that MV/ADEX was used extensively and was essential to Grumman's business of maintaining Data General MV computers. As Data General argued at trial, the frequency with which MV/ADEX was used was less important than the ability it conferred on Grumman to resolve complex, difficult problems that might arise only occasionally. When a computer failure has the potential to paralyze entire segments of an organization, customers demand a service company that can quickly fix all the problems, even the hard ones, all the time. There was considerable, though not undisputed, evidence to show that Grumman management, service technicians, and customers thought Grumman could not compete effectively without using MV/ ADEX. The jury was not required to believe defendant's evidence to the contrary and could reasonably conclude that Grumman could not have been in the business of servicing MV computers but for its possession and use of MV/ADEX.
Second, Grumman complains that plaintiff's damage calculation included profits that Data General would have earned from (1) servicing 16-bit computers owned by Grumman's MV computer customers and (2) from selling MV-related equipment to these customers. There was no evidence showing that MV/ADEX was used to service Data General 16-bit computers or non-MV peripherals. Thus, Grumman argues these revenues were improperly included in the damage analysis. However, there was reliable evidence linking Grumman's 16-bit revenues to its 32-bit revenues. Customers prefer to have one maintainer service all of their computer equipment made by a single manufacturer, in this case Data General 16- and 32-bit computers. As a result, the jury could have reasonably concluded that if Grumman could not have effectively serviced Data General 32-bit computers, it would not have obtained the 16-bit revenues that flowed from the same customers. Grumman's argument concerning MV-related equipment sales fails for the same reason. While strictly speaking the MV/ ADEX diagnostic software was not actually used to sell equipment upgrades, the evidence *350 showed that the use of MV/ADEX enabled Grumman to create and maintain customer service relationships that afforded Grumman the unique opportunity to sell additional equipment. The jury could have reasonably concluded that if Grumman had not infringed MV/ADEX, Data General would have obtained its historic market share of these customers and made the same equipment sales.
Third, Grumman voices two objections to the award of lost profits during the period after this court issued a preliminary injunction enjoining Grumman from using MV/ ADEX. The defendant informed all of its MV customers in the beginning of 1989 of the preliminary injunction and explained that it would no longer be using MV/ADEX. However, the jury found, with ample support of the record, that Grumman continued to use MV/ADEX even after this court specifically enjoined such activity. Grumman's claim that the customer notice somehow precludes an award of damages, despite its continued use of MV/ADEX, is frivolous. Grumman's second objection focuses on the period of time after June 1990, for which there is no evidence that Grumman used MV/ADEX. Data General's damage analysis includes revenues earned by Grumman for MV service contract renewals after June 1990, including approximately $1.3 million for the continuing value of the contracts beyond 1992. The jury made no error when it concluded that post-injunction use of MV/ADEX enabled Grumman to retain service business that would have otherwise been lost. Moreover, the jury heard credible evidence that service relationships, once established, have a tendency to continue for an extended period of time; particularly where, as here, numerous customers signed multi-year contracts during the period of time Grumman was infringing MV/ADEX. The 1989 customer notice does not preclude such a finding.
Fourth, Grumman contends that Data General's damage analysis is overstated because it applies Data General prices to Grumman revenues and assumes that Data General would have obtained nearly 95% of Grumman's MV-related business had Grumman not used MV/ADEX. Grumman asserts that the jury should have considered the "return rate" of customers who had already opted for third party maintenance, rather than using Data General's overall market share. Though defendant's arguments might suggest an alternative means of calculating damages, the jury was not compelled to accept Grumman's theory. The evidence fully supported the jury's findings. Historical data showed that Data General secured in excess of 90% of the available service business (95% if the market share held by MV/ ADEX infringers is removed) in spite of its higher prices and allegedly low customer satisfaction. I find no error in the jury's determination that Data General would have enjoyed its historical market share of the service business, at its customary prices, had Grumman not been able to secure customers through infringing MV/ADEX.
In addition to Grumman's numerous challenges to the revenue base used in Data General's damage analysis, defendant questions the profit margin applied to those revenues and the failure to apportion profits between infringing and non-infringing activities. Data General's profit analysis applied an incremental profit margin of 73% to the revenues lost to Grumman; in some post-injunction years, the margin exceeded 90%. Grumman labels Data General's accounting expert as inexperienced and his analysis of variable costs as inaccurate. Defendant claims that the regional approach taken by Data General significantly underestimated variable costs by masking labor shortages at branch offices and ignoring service response time. In contrast, Grumman asserts that the analysis of its own expert which utilized a branch analysis is inherently more reliable. Grumman submits that a generous incremental profit margin would be 28%, cutting plaintiff's damages by nearly two-thirds. Data General, on the other hand, defends its expert and attacks Grumman's analysis as distorted: defendant's labor capacity calculation offered no analysis for any year prior to 1990 and made certain questionable adjustments from Grumman's own internal analysis. The jury heard extensive, conflicting expert testimony on these issues and ultimately elected to credit Data General's analysis as more reliable. Data General's analysis examined *351 the actual, historical Grumman equipment base, calculated the amount of work required to maintain those machines, and compared this work load with available Data General labor capacity, giving consideration to the geographic proximity of the customer and available labor. The regional approach taken by Data General was not solely a product of this litigation, but reflected plaintiff's actual management style and operations. The jury made no error in accepting Data General's profit analysis. Similarly, the jury was free to reject the testimony of Grumman's primary expert, Mr. Blumberg.
Grumman's final challenge to the damage award asserts that the jury failed to apportion profits between Grumman's infringing and non-infringing activities. The copyright act permits an infringer to defend by proving elements of profit that were attributable to factors other than the copyrighted work. 17 U.S.C. § 504(b). Since MV/ADEX was not used on every machine, at every location, on every service call, Grumman claims the infringement of MV/ADEX cannot account for 100% of the profits. Moreover, Grumman argues that even if MV/ADEX was essential to Grumman's service business, the infringement was only one of a number of essential elements that generated service revenue. As I previously explained, there was ample, though not uncontradicted, evidence to support the jury's conclusion that MV/ADEX was used extensively and was essential to Grumman's service business. While Grumman was entitled to attempt to prove that some profits were attributable to factors other than its use of MV/ADEX, the jury was not required to believe the defendant's evidence, particularly in light of Grumman's assertion that MV/ADEX accounted for less than 1% of its profits.
Moreover, apportionment cannot be reduced to the mechanical process that Grumman argues the jury was compelled to follow. For example, if MV/ADEX were used by Grumman employees only 10% of the time, it does not follow that MV/ADEX accounted for only 10% of Grumman's profits. Even if used infrequently, the jury could find that MV/ADEX enabled Grumman to be in the business of maintaining MV-machines. The meteoric success of some computer-related businesses compared with the sudden death of others demonstrates that sometimes a single technological innovation, software program, or service advantage can determine a company's future. This is not a case where a defendant has incorporated copyrighted material within a larger work that included both copyrighted and newly created work. Rather, Grumman copied MV/ADEX in toto and then used the program in the regular course of business. Further, Grumman's contributions to profits were not ignored. Its routine contributions of labor and equipment were accounted for and compensated through the deduction of defendant's costs. The jury was free to consider both the frequency with which MV/ADEX was used and more qualitative factors, such as MV/ADEX's ability to draw and retain customers and the additional capacities it conferred to Grumman. It was not error for the jury to conclude that but for Grumman's use and possession of MV/ADEX, it could not have engaged in the service business.
B. Copyright Deposits
During its case in chief, Data General introduced into evidence the Certificates of Registration for each copyrighted version of MV/ADEX. The Copyright Act provides that a Certificate of Registration is prima facie evidence of the validity of the copyright and the facts contained in the certificate. 17 U.S.C.A. § 410(c) (West 1977). In its case, Grumman attacked the validity of the certificates by pointing to a small difference between the MV/ADEX Rev. 0.0 deposit that had been filed with the Copyright Office and the object code for that same version of MV/ADEX.[6] In its rebuttal case, Data General for the first time informed this court and jury that it had made several clerical errors when making its initial deposits with the Copyright Office for MV/ADEX Revisions 0.0 *352 through 3.0. Data General explained that it discovered the errors in the initial deposits only after it investigated the anomaly raised by Grumman during trial. I am confident that the initial errors were innocent, as was the timing of Data General's disclosure.
Grumman complains that I should have allowed its motion for mistrial because Data General put on its case in chief in rebuttal, depriving Grumman of adequate time and opportunity to respond to the deposit errors. I cannot agree that the way in which the deposit errors were discovered prejudiced Grumman's defense. Indeed, the certificates' validity was tested in precisely the manner contemplated by the Copyright Act: the plaintiff answered the defendant's attacks on the certificates' prima facie validity. Moreover, Grumman attempts to give the certificates and the errors therein, far more importance than they deserve. Though copyright registration is a prerequisite to suit, 17 U.S.C.A. § 411(a) (West 1993), copyright protection exists without regard to registration. 17 U.S.C.A. § 408(a) (West 1993); Computer Assoc. Int'l, Inc. v. Altai, Inc., 775 F. Supp. 544, 556 (E.D.N.Y.1991), aff'd, 23 U.S.P.Q.2d 1241 (2nd Cir.1992), vacated in part, 982 F.2d 693 (2nd Cir.1992). Grumman had an adequate opportunity to explore the errors contained in the initial copyright deposits, to challenge Data General's explanation of those errors, and to argue these issues before the jury.
C. George Tasso's Testimony
Grumman complains that this court improperly admitted the deposition testimony of George Tasso, a former field technician for Data General and a current employee of Grumman. During his deposition, Mr. Tasso repeatedly invoked his Fifth Amendment privilege against self-incrimination on a wide range of issues, including all questions regarding his employment agreement with Data General and whether he shared any copies of MV/ADEX with Grumman. Data General read excerpts from the deposition during trial and the jury was permitted to consider whether an adverse inference should be drawn against Mr. Tasso or Grumman based on his invocation of his Fifth Amendment privilege. Relying on Veranda Beach Club Ltd. Partnership v. Western Sur. Co., 936 F.2d 1364 (1st Cir.1991), Grumman asserts that when an employee invokes the privilege for personal reasons, no negative inference can be drawn against the employer. Moreover, Grumman claims Mr. Tasso's testimony was improperly used to portray Grumman as a criminal enterprise.
I have addressed this issue several times, both prior to trial and from the bench during trial. I revisit the issue one last time to summarize my holding. Veranda Beach establishes no per se rule which insulates a corporate employer from any adverse inference based on an employee's invocation of his Fifth Amendment privilege. Rather, the court demanded that such an inference be based on something more than the mere existence of an employment relationship. "In a civil case, therefore, an individual's invocation of a personal privilege against self-incrimination cannot, without more, be held against his corporate employer in circumstances analogous to those at the bar." Veranda Beach, 936 F.2d at 1374. There was little evidence in Veranda Beach to show that the corporate employer was closely involved in the disputed transaction or that the employer was aware of or benefited from the employee's alleged wrongdoing. Indeed, the trial court directed the verdict in favor of this corporate defendant, while claims against the individual employee and several other corporate defendants went to the jury. Id. at 1369-70.
Other courts that have considered the issue have permitted a jury, under certain circumstances, to draw an adverse inference against an employer when its employee invokes the Fifth Amendment privilege against self-incrimination. RAD Serv., Inc. v. AETNA Casualty and Sur. Co., 808 F.2d 271, 274-278 (3rd Cir.1986); Brink's, Inc. v. City of New York, 717 F.2d 700, 708-10 (2nd Cir.1983). Noting the sensitivity of the issue and potential for abuse, courts have eschewed a mechanical approach to determining whether the jury may hold the employee's silence against the employer. The courts have relied, instead, on a careful analysis of the facts to determine whether an *353 adverse inference may be properly drawn against the employer.
In this case, Data General laid a sufficient foundation to support the admission of Mr. Tasso's deposition. Grumman's President, Mr. Mulderig, testified that Grumman obtained one or more revisions of MV/ADEX by hiring former Data General employees who had taken copies of MV/ADEX from Data General. Mr. Mulderig also testified that he was informed sometime in 1988 by a subordinate that Mr. Tasso had taken a copy of MV/ADEX when he left Data General's employ in mid-1987 and came to work for Grumman. As a field technician, Mr. Tasso was not an officer of Grumman nor a managerial employee; nonetheless, his alleged wrongdoing is highly relevant to determining how Grumman came to possess over 200 copies of MV/ADEX and whether Grumman acquired those tapes in good faith. Grumman acknowledged that it had never purchased MV/ADEX from Data General, never explained how it acquired so many tapes, and apparently made no effort to investigate whether Mr. Tasso had brought a Data General tape with him and whether that tape was being used or copied by other Grumman employees.
In sum, the evidence showed that Grumman learned that Mr. Tasso brought the tape from Data General, turned a blind-eye to Mr. Tasso's potential continued wrongful use of MV/ADEX, and probably shared in the rewards of Mr. Tasso's apparent wrongdoing by not returning the tape. Mr. Tasso was still employed by Grumman at the time of trial. Grumman's President acknowledged these very facts. Under the circumstances of this case, Grumman cannot complain that the jury was permitted to draw a negative inference against Grumman from Mr. Tasso's silence.
Defendant's claim of unfair prejudice fairs no better. Data General's repeated claims that Grumman "stole" MV/ADEX were supported by the evidence and, as Grumman conceded during trial, relevant to show that Grumman wrongfully misappropriated MV/ADEX, to counter Grumman's "good faith" defense, and to determine the availability of doubled trade secret damages. Mr. Tasso's testimony was one of many pieces of evidence that tended to establish that Grumman misappropriated the MV/ADEX tapes. While Mr. Tasso's testimony may have proven damning to Grumman, our rules of evidence do not protect a litigant from facing the sometimes harsh reality of its own actions. Rather, the rules protect against unduly prejudicial evidence that tends to inflame the jury or appeal purely to emotional elements. Here, the evidence was relevant and cast no unfair shadow on Grumman.
D. The Jury Charge
Grumman charges this court made eleven separate errors of law when charging the jury, each of which warrants a new trial on all issues. I have carefully considered Grumman's arguments, but find no error in the jury instructions. I omit any further discussion here because all of the issues raised by Grumman have been adequately addressed by this or prior opinions.
IV. Defendant's Motion For Judgment As A Matter Of Law
Pursuant to Fed.R.Civ.P. 50(b), Grumman urges this court to enter judgment for the defendant as a matter of law, contending that Data General failed to prove the content of its copyright, the validity of its copyright registrations, the infringement of the registered copyright, the identity of the alleged trade secrets, the wrongful misappropriation of such trade secrets, and the adequacy of the protection of such trade secrets. Alternatively, Grumman moves for a new trial under Fed.R.Civ.P. 59(a).
Our court of appeals has explained that the standard for granting a motion for judgment n.o.v. is "very rigorous." MacQuarrie v. Howard Johnson Co., 877 F.2d 126, 128 (1st Cir.1989). Grumman's motion can be allowed only if the evidence and all reasonable inferences drawn therefrom, when viewed in a light most favorable to the verdict, could lead all reasonable persons to but one conclusion. Id. In making its determination, a district court may not weigh the evidence, determine the credibility of the witnesses *354 presented, or attempt to resolve conflicting testimony. Id.
A. The Copyright Claim
To prevail on its claim of copyright infringement, Data General was required to prove (1) that it is the owner of a work protected by the Copyright Act, and (2) that Grumman copied that work without authorization. E.g., Motta v. Weiser, Inc., 768 F.2d 481, 483 (1st Cir.), cert. denied, 474 U.S. 1033, 106 S. Ct. 596, 88 L. Ed. 2d 575 (1985). In addition, as a prerequisite to suit, Data General was required to prove that it duly registered its copyright claim with the Copyright Office. 17 U.S.C.A. § 411(a). Despite Grumman's best efforts to obscure the forest by focusing on the trees, the jury properly concluded, based on ample evidence, that Grumman infringed Data General's copyright in MV/ADEX.
1. Copying a protected work
Grumman argues that it is entitled to judgment in its favor because Data General failed to prove that the MV/ADEX computer programs admittedly copied and used by Grumman were the same works in which Data General held copyrights. More specifically, Grumman asserts that Data General was required to prove that the object code programs copied by Grumman are the same as the source code programs registered with the Copyright Office.[7] Since Data General did not produce the source code for any version of MV/ADEX, it is argued that Data General could not prove that Grumman's admitted use of the object code programs infringed the source code programs registered with the Copyright Office. As I explained in my October 9, 1992 ruling, Grumman's argument is flawed.
Contrary to Grumman's understanding, the materials deposited with the Copyright Office do not define the substantive protection extended to the registered work. Indeed, the Copyright Act expressly provides that copyright "registration is not a condition of copyright protection," and may be obtained at any time during the subsistence of the copyright. 17 U.S.C.A. § 408(a). Since copyright protection exists without regard to copyright registration, it follows that the deposit that accompanies a registration cannot by itself define the copyrighted work. In this case, the source code deposits that were made with the Copyright Office were merely symbols, rather than definitions, of the protected work. See Midway Mfg. Co. v. Artic Int'l, Inc., 211 U.S.P.Q. (BNA) 1152, 1158 (N.D.Ill.1981) ("It is the work that cannot be copied or incorporated and not the specific tangible expression on file in the Copyright Office."). Thus, Data General held copyrights on the various versions of the computer program MV/ADEX, not the source code version of MV/ADEX.
Similarly, Grumman misconceives as three separate programs the registered computer program, source code version of that program, and object code version of that program. Though Grumman has admittedly used MV/ADEX in its object code form, it claims there was no proof that it infringed the "registered source code program." The Copyright Office, however, "considers source code and object code as two representations of the same computer program. For registration, purposes, the claim is in the computer program rather than in any particular representation of the program." Copyright Office, Compendium II of Copyright Office Practices § 321.03 (1984) (emphasis in original); e.g. Apple Computer, Inc. v. Franklin Computer Corp., 714 F.2d 1240, 1249 (3rd Cir.1983), cert. dismissed, 464 U.S. 1033, 104 S. Ct. 690, 79 L. Ed. 2d 158 (1984). Accordingly, while Data General had the burden of proving that Grumman copied MV/ADEX in one of its protected forms, Data General could meet that burden by showing infringement of either the source code or the object code version of MV/ADEX.
At trial, Data General introduced the master object code program for each version of *355 MV/ADEX and Mr. Gove, Data General's expert, testified that he compared each major revision of the MV/ADEX tapes used by Grumman to the master object code programs and found them to be identical in all material respects. In addition, the jury heard testimony that Grumman service employees regularly used MV/ADEX object code tapes on service calls, Grumman employees stored the various versions of MV/ADEX in computer libraries so that additional copies could be made to replace worn-out versions, and Grumman had an informal network to distribute recently appropriated copies of MV/ADEX. Grumman employees referred to these programs as "MV/ADEX", usually identifying the specific revision to which they were referring or requesting. Moreover, hundreds of tapes labeled as MV/ADEX that were recovered from Grumman were introduced into evidence. Grumman's contention that it is entitled to judgment because Data General failed to prove infringement is frivolous. The jury was clearly entitled to find that Grumman infringed Data General's copyrights.
Grumman also argues that without an analysis of the MV/ADEX source code, Data General could not prove that Grumman copied protectable elements of MV/ADEX. Defendant contends that the expression, originality, modular composition, and functionality of MV/ADEX must be examined to determine which elements are copyrightable and whether those elements were copied by Grumman. In many cases, such an analysis is critical to determining whether the defendant actually infringed the plaintiff's copyright. For example, in a recent, erudite opinion by Judge Walker, the Second Circuit Court of Appeals engaged in a detailed, three-step analysis of the copyrighted work's code, structure, and function to determine whether the infringing program was substantially similar to the protected work. Computer Assoc. Int'l, Inc. v. Altai, Inc., 982 F.2d 693, 701-715 (2nd Cir.1992). Computer Assoc., however, addressed an issue not raised by Data General's copyright claim.
A plaintiff may show unauthorized copying of an copyrighted work in one of two ways: (1) by submitting evidence that the defendant directly copied the work or (2) by showing the defendant had access to plaintiff's copyrighted work and that defendant's work is substantially similar to the plaintiff's copyrighted work. Computer Assoc., 982 F.2d at 701; Eckes v. Card Prices Update, 736 F.2d 859, 863 (2nd Cir.1984). Computer Assoc. involved two allegedly infringing computer programs, one which was admittedly directly copied from the plaintiff's copyrighted work and one which contained none of the literal elements of the copyrighted work, but was alleged to be substantially similar. Id. at 700-01. The district court found that the first program, which directly incorporated approximately 30% of the source code of plaintiff's copyrighted work, infringed the plaintiff's copyright; a finding which the defendant did not pursue on appeal. Id. at 702. The appeal addressed the question of whether the second version of the defendant's program, which did not incorporate any of the literal elements of the plaintiff's copyrighted work, infringed the copyrighted work. Id. at 710-12. Though the second program did not directly copy any of the copyrighted work's source or object code, the plaintiff claimed the defendant's program infringed the non-literal elements of the plaintiff's program by utilizing a substantially similar structure and operating system. The appeal and the court's thorough analysis of the program's structure and code was aimed at determining substantial similarity of the copyrighted and infringing work, in the absence of direct copying.
Data General's copyright claim is similar to the first infringement claim in Computer Assoc. Data General proved infringement of its copyright through the most direct method: by showing that Grumman repeatedly copied 100% of the object code of Data General's MV/ADEX copyrights. It is only in the absence of such direct evidence that a plaintiff must resort to proving infringement by showing a defendant's access to the copyrighted work and substantial similarity of the infringing program. While the three-step analysis used in Computer Assoc. may be highly relevant to cases which lack direct evidence of copying, it is not applicable here. Unlike Computer Assoc. there was no evidence to suggest that Grumman independently *356 created the object code tapes; no evidence that Grumman incorporated only a portion of the MV/ADEX object code into a larger, original program; and no evidence that Grumman rewrote the object code tapes or somehow enhanced the software.
Nor was an analysis of the source code necessary to determine the validity of Data General's copyrights in MV/ADEX. The copyright registration is prima facie evidence of the validity of the copyright. 17 U.S.C.A. § 410(c). Grumman never produced sufficient evidence to rebut the validity of the copyrights. Dynamic Solutions, Inc. v. Planning & Control, Inc., 646 F. Supp. 1329, 1337 (S.D.N.Y.1986) (a registration certificate relieves plaintiff of proving the many facts necessary to show ownership and validity of a copyright unless the defendant effectively challenges the presumption and shifts the burden of so doing to the plaintiff). To the contrary, the evidence demonstrated that Data General authored the program and that MV/ADEX constituted an original expression of a copyrightable work. The originality and nonobviousness of MV/ADEX can be inferred from the inability of competitors to replicate its operation. Forcing Data General to produce the source code would have added nothing to the trial, but would have placed an undue burden on Data General and risked serious trial delay and juror confusion.
2. Copyright registration
The jury found that Data General had validly registered each revision of MV/ADEX. Grumman asserts that this finding should be rejected as a matter of law because of errors contained in the copyright registration.
To register a claim of copyright, the Copyright Office requires an applicant to submit a completed application form, the statutory fee, and an appropriate deposit of the copyrighted work. 17 U.S.C.A. § 408(a); Compendium II of Copyright Office Practices § 603. In the case of a computer program that contains trade secret material, such as MV/ADEX, the Copyright Office permits the deposit to take the form of a symbolic filing: the first and last ten pages of the source code. 37 C.F.R. § 202.20(c)(2)(vii)(A)(2) (1992). Data General filed registration applications with the Copyright Office for each revision of MV/ADEX.
The errors in the registration first came to light during trial. During its defense, Grumman compared the MV/ADEX revision 0.0 source code deposit made with the Copyright Office with the corresponding portion of the revision 0.0 object code tape. Grumman demonstrated that the source code deposit contains a date of 1982 in the primary label block, while the object code version contains a date of 1983. Several days later, after investigating the anomaly, Data General informed this court and then the jury that it had made several errors in the source code deposits made with the Copyright Office for revisions 0.0 through 3.0. The jury heard extensive testimony and argument from both parties as to the significance of these errors.
For MV/ADEX Revision 0.0, Data General submitted to the Copyright Office the first ten pages of a program called MTBOOT Revision 0, when it should have submitted the first ten pages of MTBOOT Revision 2. Both programs were authored by Data General and performed the same function, but the source code deposits for these revisions differed in several ways. Data General introduced the correct material into evidence and noted the variances with actual deposits. At page five, the Primary Label Block on the copyright deposit contains a copyright date of "1982," rather than "1983"; contains the designation "directory structure revision level 1," rather than "directory structure revision level 2"; and omits a line reading "BLK 2 ... starting physical block number." The Primary Label Block, which contains descriptive information about the tape, does not instruct or direct the computer. At page eight, the copyright deposit omits a line reading "BLK 2 ... starting physical block number (for disk compatibility)." With these four exceptions, the first ten pages are identical; the last ten pages contained no errors. Data General's expert, Mr. Gove, testified that he successfully ran a copy of MV/ADEX Revision 0 that was modified to reflect the errors in the copyright deposit.
For MV/ADEX Revisions 1.0 and 2.0, Data General submitted to the Copyright Office *357 the first ten pages of MTBOOT Revision 1, rather than the first ten pages of MTBOOT Revision 2. The source code actually submitted differed from the correct material in only one way: the Primary Label Block contains a copyright date "1982," rather than "1983." All remaining lines of code for the first and last ten pages were identical. The different copyright date had no effect on the operation of the program.
For MV/ADEX Revision 3.0, Data General properly submitted the first ten pages of Revision 3.0, but rather than depositing the last ten pages of the program, plaintiff submitted the last ten pages of the next to last program contained in MV/ADEX Revision 3.0. All materials deposited were from Revision 3.0.
There was absolutely no evidence that Data General knowingly misrepresented the deposits to the Copyright Office, obtained any benefit by making these errors, or acted with bad faith, either at the time of making the deposits or during trial. To the contrary, the evidence showed that Data General made several innocent, inadvertent errors in its copyright deposits and promptly informed this court as soon as those errors became known. There is no evidence that Data General realized the errors at any point before the issue emerged during trial. Grumman's claim that the deposit errors invalidate the copyright registrations is unsupported by the facts and unwarranted by law:
Only the `knowing failure to advise the Copyright Office of facts which might have occasioned a rejection of the application constitute[s] reason for holding the registration invalid and thus incapable of supporting an infringement action ... or denying enforcement on the ground of unclean hands....'
Eckes, 736 F.2d at 861-62 (citations omitted). Nor do cases cited by Grumman support its attack on the jury's verdict. In Whimsicality, Inc. v. Rubie's Costume Co., 891 F.2d 452, 455 (2nd Cir.1989), the court explained that copyright certificates create a rebuttable presumption that the work in question is copyrightable. That presumption is generally not overcome by an innocent misstatement in the copyright application, but may be defeated by proof of deliberate misrepresentation. Id. The Whimsicality court found that since the copyright plaintiff knew that its work could not be copyrighted, it intentionally misrepresented its work in its copyright application in an attempt to obtain a certificate of registration. The court held the plaintiff did not have valid copyrights capable of enforcement. Id. at 456.
In Dynamic Solutions, the plaintiff filed copyright registrations which identified two software programs as being created in 1983 and 1984, respectively. The plaintiff, however, deposited versions of the software that existed at the time of filing in 1986 and made other unspecified errors in the deposits. Dynamic Solutions, 646 F.Supp. at 1341 n. 18. The 1983 and 1984 versions no longer existed, could not be reproduced, and the plaintiff could not identify how the programs had changed during the intervening period of time. Id. at 1341. The court explained that "[e]rrors on the registration application do not affect plaintiff's right to sue for infringement unless they are knowing and might have caused the Copyright Office to reject the application." Id.
The evidence wholly supports the jury's finding that Data General validly registered each revision of MV/ADEX.
B. Misappropriation of Trade Secrets
To prevail on its claim that Grumman misappropriated Data General's trade secrets in MV/ADEX, Data General was required to show that (1) MV/ADEX is a trade secret; (2) Data General took reasonable steps to preserve the secrecy of MV/ADEX; and (3) Grumman used improper means, in breach of a confidential relationship, to acquire and use the trade secret. J.T. Healy & Son, Inc. v. James A. Murphy & Son, Inc., 357 Mass. 728, 260 N.E.2d 723, 729-31 (1970); USM Corp. v. Marson Fastener Corp., 379 Mass. 90, 393 N.E.2d 895, 899-903 (1979); Curtiss-Wright Corp. v. Edel-Brown Tool & Die Co., 381 Mass. 1, 407 N.E.2d 319, 323-24 (1980); Laurence H. Reece, Trade Secret Misappropriation: A Review and Analysis of Massachusetts Law, 71 Mass. L.Rev. 171, 173 (1986). The evidence produced *358 at trial amply supports the jury's verdict in Data General's favor.
1. MV/ADEX as a trade secret
Grumman argues that it is entitled to judgment because Data General failed to identify the specific secret which was misappropriated by Grumman. Though the jury heard extensive testimony as to the function, effectiveness, and use of MV/ADEX, Grumman complains that Data General never produced the precise secret as embodied in the software's source code. Grumman initially offered no case law to support its argument. However, in its supplemental brief, Grumman relies on a recently decided opinion of the Ninth Circuit Court of Appeals, MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511 (9th Cir.1993), for the proposition that a plaintiff must specifically identify the trade secrets which were purportedly misappropriated. Grumman asserts that without producing the source code and without identifying specific lines or sections of the source code, Data General could not prevail on its trade secret claim as a matter of law.
MAI shares some commonalities with the case before me. A computer manufacturer, who also serviced the computers it sold, sued an independent computer maintenance company for, among other things, copyright infringement and misappropriation of trade secrets. MAI, 991 F.2d at 513-514. The plaintiff's trade secret claim alleged infringement of its customer data base, field information bulletins, and software. The district court granted summary judgment in plaintiff's favor on all three trade secret grounds, though the plaintiff's brief addressed neither the software nor the field information bulletins. Id. at 520. The only evidence establishing that the software contained trade secrets was a conclusory statement that the diagnostic software "contain[s] valuable trade secrets." Id. at 523. The court of appeals reversed the award of summary judgment because the plaintiff failed to satisfactorily identify the purported trade secret. Id. at 522-523. "[A] plaintiff who seeks relief for misappropriation of trade secrets must identify the trade secrets and carry the burden of showing that they exist." Id. at 522.
Though MAI shares some similarities to the case before me, the facts of the two cases and their procedural histories are quite distinct. MAI arose under California law, was decided by the district court's sua sponte award of summary judgment in the plaintiff's favor, based on an unsupported assertion that a trade secret existed. In this case, a jury found in the plaintiff's favor after a nine-week trial which involved extensive testimony concerning the misappropriated trade secret.
To the extent MAI is relevant to our case, it supports the verdict. Grumman contends that as applied to this case, MAI's "specific identification" requires Data General to point to individual trade secrets in the MV/ADEX source code. MAI, however, does not go so far. The court was unwilling to allow a plaintiff to prevail on summary judgment by baldly asserting the existence of some undefined trade secret. To that end, the MAI court demanded that the plaintiff describe the subject matter of the trade secret with sufficient particularity to separate it from matters of public knowledge, to permit the defendant to ascertain the boundaries of the secret, and to give the defendant notice of the issues to be met at trialthis was the holding of the two California cases upon which MAI relied to reach its result. Diodes, Inc. v. Franzen, 260 Cal. App. 2d 244, 67 Cal. Rptr. 19, 24 (1968); Universal Analytics, Inc. v. MacNeal-Schwendler Corp., 707 F. Supp. 1170, 1177 (C.D.Cal.1989), aff'd, 914 F.2d 1256 (9th Cir.1990). Moreover, one of the cases relied on by MAI expressly rejected the detailed identification requirement that Grumman argues MAI establishes. In Diodes, the court explained,
One who seeks to protect his trade secrets from wrongful use or disclosure does not have to spell out the details of the trade secret to avoid a demurrer to a complaint. To so require would mean that the complainant would have to destroy the very thing for which he sought protection by making public the secret itself.
Diodes, 67 Cal.Rptr. at 24. I cannot believe that the Ninth Circuit intended to overrule a case, sub silentio, upon which it expressly relied.
*359 Under the governing law of this case, Massachusetts law, "[a] trade secret may consist of any formula, pattern, device or compilation of information which is used in one's business, and which [provides] an opportunity to obtain an advantage over competitors who do not know or use it.... The subject matter of a trade secret must be secret. Matters of public knowledge or of general knowledge in an industry cannot be appropriated by one as his secret." J.T. Healy, 260 N.E.2d at 729 (quoting Restatement of Torts § 757, comment b.) The existence of a trade secret depends on the facts of each case. Jet Spray Cooler, Inc. v. Crampton, 361 Mass. 835, 282 N.E.2d 921, 925 (1972). Here, the jury was instructed to consider a number of factors, including the nature of the information and the conduct of the parties, and concluded that MV/ADEX was a trade secret a conclusion well-supported by the evidence.
Several witnesses, including two Grumman witnesses, testified that MV/ADEX contained trade secrets. This evidence was corroborated by testimony about the design, function, and use of MV/ADEX. The evidence showed that MV/ADEX was unique, effective, and conferred a competitive advantage to Data General in the computer service business. Data General's expert witness, Mr. Gove, explained that Data General developed numerous original programs for use in MV/ADEX and testified in some detail as to the more important functions and capabilities of those programs. In addition to this direct evidence, the jury was entitled to infer that MV/ADEX contained trade secrets because Grumman was unable to create functionally comparable diagnostic software. As discussed more fully below, there was no evidence to indicate that MV/ADEX was a matter of public knowledge. Data General took reasonable steps to preserve, and in fact did preserve, the secrecy of MV/ADEX. With the exception of those who lawfully licensed or unlawfully misappropriated MV/ADEX, Data General enjoyed the exclusive use of MV/ADEX. Even those who obtained MV/ADEX and were able to use MV/ADEX were unable to discover its trade secrets because MV/ADEX was distributed only in its object code form, which is essentially unintelligible to humans. An infringer may be liable for misappropriating trade secrets when it loads and runs a computer program in its object code form, even if the infringer never understands exactly how the program works. Trandes Corp. v. Guy F. Atkinson Co., 798 F. Supp. 284, 288 (D.Md.1992).
2. Reasonable steps to preserve secrecy
A plaintiff enforcing a trade secret must take reasonable and proper steps to preserve its secrecy. USM, 393 N.E.2d at 899-902; CVD, 769 F.2d at 851-52. Heroic measures, however, are not required. Id. Whether reasonable steps have been taken depends on the circumstances of each case, including the nature of the information sought to be protected and the conduct of the parties. USM, 393 N.E.2d at 902. Grumman argues that it is entitled to judgment because Data General failed to establish that it took reasonable steps to preserve the secrecy of its trade secret. Grumman's argument is contrary to the weight of the evidence.
Data General required employees to sign confidentiality agreements which prohibited the unauthorized disclosure of confidential or proprietary information; completed termination checklists, which specifically covered software, when an employee left the company; distributed a company brochure detailing the company's policy on protecting confidential and proprietary information, including software; deployed security guards; required visitors to sign in when visiting and prohibited unescorted visits; restricted employee access to the area in which MV/ADEX was developed; labeled MV/ADEX tapes as "property of Data General"; displayed a copyright notice on the exterior of MV/ADEX tapes and on the first display screen of the program itself; did not distribute MV/ADEX source code outside of Data General; and required customers to sign an agreement which, among other things, prohibited unauthorized disclosure to third parties. Grumman cites evidence to the contrary, focusing on perceived shortcomings in the safeguards and instances where Data General's procedures were not followed. The jury heard all testimony, weighed the evidence, and apparently rejected Grumman's evidence as unpersuasive, *360 as they were free to do. The jury properly concluded that Data General took reasonable steps to preserve the secrecy of the information embodied in the MV/ADEX programs.
3. Grumman's misappropriation
Grumman argues that Data General failed to prove that Grumman knowingly misappropriated MV/ADEX and goes so far as to make the remarkable statement that "there is no evidence that [Grumman] knowingly took anything in breach of a duty." The jury, for good reason, differed with Grumman's view of the evidence. Grumman admits that it took copies of MV/ADEX from customer sites and obtained copies from used MV machines on which MV/ADEX resided, but claims that Data General never proved the wrongful acquisition of any one of the hundreds of tapes in Grumman's possession. Grumman's argument is either totally contrary to the evidence or is based on a misunderstanding of the law. Grumman also asserts that the jury erred in rejecting Grumman's "good faith" defense, which alleged that it had a good faith belief that it had a license to use Data General diagnostics.
Though a defendant must "have notice of both the fact that the information claimed to be a trade secret is in fact secret and the fact that disclosure by the third person is a breach of duty before one is subject to liability for the use or disclosure of the trade secret," the requisite notice may be found where the defendant knew or should have known that the proffered information is the trade secret of another. Curtiss-Wright Corp., 407 N.E.2d at 323-24 (quoting Restatement of Torts § 757 (1939)) (emphasis added). "Studious ignorance" will not insulate a defendant from liability. Id. at 324. Moreover, courts have noted that the defendant's knowledge "often must be proved by the weight of credible circumstantial evidence." Id. (citing R. Milgrim, Trade Secrets § 504[3] at 5-102 (1978)). In this case, there was credible evidence from which the jury could infer that Grumman obtained MV/ADEX by taking property known to belong to another or by knowingly participating in the breach of an express or implied confidentiality agreement by, for example, a former employee or customer of Data General.
After this court issued a preliminary injunction enjoining further use of MV/ADEX by Grumman, the defendant returned more than 200 copies of MV/ADEX. Though Data General never proved how Grumman acquired all the tapes, neither could Grumman explain how it came into possession of so many tapes. It was undisputed that Grumman never purchased a copy of MV/ADEX from Data General. On the facts of this case, the unexplained possession of Data General's MV/ADEX tapes is more than suspicious. The tapes were labeled as "property of Data General" and, when run on a computer, displayed a copyright notice identifying Data General as its owner. For some tapes, a Grumman label had been pasted on top of the original Data General label. At the same time Grumman was collecting MV/ADEX tapes from unidentified sources, it was unsuccessful in its attempts to acquire MV/ADEX openly and directly from Data General under a licensing agreement. Moreover, Grumman admitted that it knew confidentiality agreements were widely used in the business to restrict disclosure of proprietary information by customers and former employees. In fact, an internal Grumman memorandum from 1987, which was reviewed by top Grumman officials, stated that use of MV/ADEX diagnostics was illegal unless purchased from Data General. A proper inference is that Grumman was acting with either studied ignorance or actual knowledge of the source of so many copies of a competitor's valuable software program.
Some of the tapes turned in by Grumman were pre-release versions of MV/ADEX. Pre-release versions of MV/ADEX were not sold, distributed, or permitted to leave Data General facilities. The jury could infer that Grumman's possession of these tapes demonstrated that it knew the tapes were taken directly from Data General or were being provided to Grumman by former Data General employees in violation of their employment agreements. This is consistent with Grumman's admission that it came to learn that George Tasso, a former employee of *361 Data General, brought a copy of MV/ADEX when he came to work for Grumman.
As for Grumman's proffered "good faith" defense, further discussion is unnecessary. The purported defense was not based on compelling facts and, in face of inconsistent evidence, the jury was free to reject Grumman's claim of good faith as incredible.
V. Summary
Data General's Motion For Leave To Add A Party And To Amend Complaint To Conform To The Evidence, Grumman's Motion To Correct Judgment, Grumman's Motion For A New Trial Or, In The Alternative, A Remittitur, and Grumman's Motion For Judgment As A Matter Of Law are all DENIED.
NOTES
[1] Fed.R.Civ.P. 15(b) states, in relevant part:
When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment; but failure so to amend does not affect the result of the trial of these issues.
[2] Rule 15.1(A) became effective October 1, 1992, well before trial.
[3] Mass.Gen.L. ch. 231, § 6B provides, in relevant part:
In any action in which a verdict is rendered or a finding made or an order for judgment made for pecuniary damages for personal injuries to the plaintiff or for consequential damages, or for damage to property, there shall be added by the clerk of court to the amount of damages interest thereon at the rate of twelve per cent per annum from the date of commencement of the action....
[4] The jury's award is within a few percent of the damage assessment offered by Data General's accounting expert.
[5] This opinion uses MV/ADEX to refer to all revisions of MV/ADES and MV/ADEX, unless specifically noted otherwise.
[6] The primary label block on one page of the Copyright Office deposit contained the date 1982, whereas the object code introduced at trial was dated 1983, and according to defendant's expert there were other discrepancies, but his testimony as to the existence and significance of these discrepancies was contested, and thus a matter for the jury's evaluation.
[7] Generally, a computer program is written by a programmer using "source code," a computer language that uses a combination of words, symbols, and numbers that are meaningful to a trained programmer. The source code is then compiled by a computer into "object code," a binary machine language appearing as a series of 0's and 1's that is unintelligible to even a trained human observer. A computer runs a program using object code.
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402 F. Supp. 1307 (1975)
Robert E. NELSON and Dorothy Nelson
v.
Clarence MAIDEN et al.
Civ. No. 3-74-330.
United States District Court, E. D. Tennessee, N. D.
May 30, 1975.
*1308 John O. Threadgill, Knoxville, Tenn., for plaintiffs.
Joseph B. Yancey, Knoxville, Tenn., for defendants.
MEMORANDUM
ROBERT L. TAYLOR, District Judge.
Judgment, stemming from a claim of assault and battery, pursuant to a jury verdict awarding plaintiffs $50,000.00 plus interest was entered by the Clerk of the Court in this action on February 19, 1974. Thereafter, a fieri facias was executed against the property of the judgment debtors, but returned unexecuted by the Marshal on April 23, 1975, as he was unable to locate any property belonging to Donnie Maiden. Concurrent with the filing of his writ of execution judgment creditors, Robert Nelson and wife, filed a petition with the Court requesting that a conveyance dated the 18th of February, of certain real property and fixtures from the judgment debtors to include their wives be set aside as being made with the fraudulent intent to deceive the judgment creditors. A similar petition was also filed on April 28 by the judgment creditor requesting the Court to set aside as a fraudulent transfer the conveyance of judgment debtor's automobile to his mother. Essentially, the judgment creditor contends that the liberal spirit of Rule 18(b), F. R.C.P., permits him to petition the Court to set aside the above conveyances at this stage. On May 26, 1975, defendant responded to the judgment creditors' petition, summarily asserting, without authority, that the conveyance of defendants' real property to include their wives one day before the entry of judgment was supported by one dollar consideration, sufficient consideration in Tennessee to defeat a claim of fraudulent transfer. Similarly, the judgment debtor contended that the object of the *1309 second petition, the conveyance of Donnie Maiden's car to his mother, was supported by sufficient consideration. While the judgment debtor's defense goes to the merits, the Court for the reasons set forth below, declines to entertain the petitions filed by Robert Nelson and wife.
Rule 18(b)
Rule 18(b) provides:
"Whenever a claim is one heretofore cognizable only after another claim has been prosecuted to a conclusion, the two claims may be joined in a single action; but the court shall grant relief in that action only in accordance with relative substantive rights of the parties. In particular, a plaintiff may state a claim for money and a claim to have set aside a conveyance fraudulent as to him, without first having obtained a judgment establishing the claim for money."
While it is well settled that the adoption of Rule 18(b) rescinded the common law requirement that a money judgment be obtained before suing to set aside a fraudulent judgment, Graff v. Nieberg, 233 F.2d 860 (7th Cir. 1956); Armour & Co. of Delaware v. B. F. Bailey, Inc., 132 F.2d 386 (5th Cir. 1942), it would strain that Rule to conclude that in all cases a claim to set aside a fraudulent conveyance can be joined with a prior legal claim after a judgment has been entered on the legal claim.
Inquiry into the propriety of plaintiffs' petitions does not end with an examination of the joinder rules of 18(b). Rather, more enlightening guidance can be obtained from a viewing of Rule 69(a), F.R.C.P., which provides in pertinent part:
"(a) In General. Process to enforce a judgment for the payment of money shall be a writ of execution, unless the court directs otherwise. The procedure on execution, in proceedings supplementary to and in aid of judgment, and in proceedings on and in aid of execution shall be in accordance with the practice and procedure of the state in which the district court is held, existing at the time the remedy is sought, except that any statute of the United States governs to the extent that it is applicable."[1]
While prior to the enactment of Rule 69(a), Judge L. Hand's opinion in Empire Lighting Fixture Co. v. Practical Lighting Fixtures Co., 20 F.2d 295, 297 (2d Cir. 1927), may have served as persuasive authority for the maintenance of a supplementary pleading to set aside a fraudulent conveyance subsequent to the entry of judgment,[2] that decision was clearly preempted by the adoption of Rule 69(b), which instead requires this Court to look to the judgment laws of Tennessee. Thus, in the absence of a controlling federal statute, and the Court is neither aware nor advised of such, the Court has no more nor less authority to aid the judgment creditor in supplementary proceedings than is provided under Tennessee law.[3]
Tennessee Law
The holder of a judgment in Tennessee may seek enforcement either through execution, 26 Tenn.Code Ann. § 101 et seq., or through garnishment, 26 *1310 Tenn.Code Ann. § 501 et seq.[4] However, aside from the supplementary procedure of examination contained in Tennessee Rules of Civil Procedure, Rule 69, Tennessee does not provide by statute supplementary proceedings for the collection of judgments. Thus, the judgment creditor under the Uniform Fraudulent Conveyance Act, 64 Tenn.Code Ann. § 317 may either seek to have the allegedly fraudulent conveyance set aside in an equity proceeding or, alternatively, he may choose to ignore the conveyance and have execution levied on the property.[5] To this end, Chancery Court has exclusive jurisdiction over actions to set aside fraudulent conveyances. 23 Tenn.Code Ann. § 1001 et seq.; Marlin v. Merrill, 25 Tenn.App. 328, 156 S.W.2d 814 (1914). Such an action by its nature is original and not ancillary to the judgment creditor's first action. Absent any provision in the Tennessee law for an adjudication of title to property alleged to have been fraudulently conveyed in the form of supplementary relief in aid of execution, this Court must dismiss plaintiffs' petitions.
NOTES
[1] See generally 7 J. Moore, Federal Practice ¶ 69.00 et seq. (2d ed. 1974).
[2] See also Dewey v. West Fairmont Gas Coal Co., 123 U.S. 329, 333, 8 S. Ct. 148, 31 L. Ed. 179; Hobbs v. Gooding, 164 F. 91 (Cir.C.-D.Mass.1908). Those cases held that the supplementary bill to set aside a fraudulent conveyance was ancillary to that already acquired and incident to the collection of the judgment itself.
[3] Two reported cases in the district courts, in which supplementary proceedings were entertained to set aside fraudulent conveyances, are founded on Maryland law, which contains statutory remedies in aid of execution. Douglass v. First National Realty Corporation, 351 F. Supp. 1142 (D.C.D.C. 1972); H. A. Levanne Company v. Katz, 156 F. Supp. 636 (D.Md.1957).
[4] For a general description of judgment procedure in Tennessee, see Baugh, Enforcement of Judgments in Tennessee, 22 Tenn. L.Rev. 873 (1953); Note, Enforcing Money Judgments in Tennessee, 4 Memphis State L.Rev. 65 (1973).
[5] The commentator in Enforcement of Judgments, supra, 22 Tenn.L.Rev., at 885, notes the traditional reluctance of litigants to pursue the latter course.
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759 F. Supp. 4 (1990)
W. Izal SADDLER, Plaintiff,
v.
Philip P. D'AMBROSIO, Defendant.
W. Izal SADDLER, Plaintiff,
v.
UNITED STATES of America, et al., Defendants.
Civ. A. Nos. 88-3188, 88-2699.
United States District Court, District of Columbia.
June 28, 1990.
*5 W. Izal Saddler, Washington, D.C., pro se.
John Cleary, Asst. U.S. Atty., Washington, D.C., for defendants.
MEMORANDUM OPINION
THOMAS F. HOGAN, District Judge.
This case arises from the arrest of the plaintiff, W. Izal Saddler in Washington, D.C. on September 23, 1985 by a United States Capitol Police Officer, Philip P. D'Ambrosio. Defendants are: the United States; the United States Capitol Police Board; the United States Capitol Police; the Sergeant-at-Arms of the United States House of Representatives, Mr. Jack Russ; the Sergeant-at-Arms of the United States Senate, Mr. Henry Giugni; the Architect of the Capitol, Mr. George White; Frank Kerrigan, Chief of Police, United States Capitol Police; and Capitol Police Officer, Philip P. D'Ambrosio.
Presently before the Court is defendants' motion to dismiss or, in the alternative, for summary judgment.[1] The defendants' motion *6 to dismiss argues that: this Court lacks subject matter jurisdiction over the FTCA claims against the United States and all common law tort claims against individual defendants; sovereign immunity bars all claims against the United States Capitol Police, the United States Capitol Police Board and all non-FTCA claims against the United States; and ten counts in plaintiff's complaint are time-barred. The defendants have also moved to dismiss Mr. Saddler's constitutional tort claims for failure to state a claim on which relief can be granted.
Mr. Saddler's opposition to the motions to dismiss makes moot most of the claims pending in both Civil Actions 88-3188 and 88-2699.[2] Mr. Saddler states that he "agrees with the Defendants that the Federal Employees Liability Reform and Tort Compensation Act of 1988 ("FELRTCA"), Pub.L. No. 100-694, compels dismissal of nearly all of this case," although he states the dismissal should be without prejudice. Plaintiff's Opposition at 1. Mr. Saddler also states that "[p]laintiff's additional claims, other than tort claims should be litigated on the merits. The parties, except officer Philip P. D'Ambrosio, should be released." Plaintiff's Opposition at 2. Thus, the only remaining claims for the Court to consider in this pending motion are Mr. Saddler's common law claims against Officer D'Ambrosio, his Fourth Amendment and 42 U.S.C. § 1983 claims.
In consideration of the issues raised in the motions, the opposition and reply filed thereto, and for the reasons stated below, the Court shall deny in part defendants' motion to dismiss, or in the alternative, for summary judgment as to plaintiff's Fourth Amendment claims, and shall grant in part defendants' motion, as to plaintiff's 42 U.S.C. § 1983 and common law claims.
I. FACTUAL BACKGROUND
For purposes of the motion to dismiss, the Court must take Mr. Saddler's version of the facts as true. The plaintiff, W. Izal Saddler, alleges that the following events took place on September 23, 1985.[3] Mr. Saddler was standing outside of his automobile removing a glass panel from the T-top section of the roof of his automobile, when he entered into a verbal disagreement with a person standing in the window of a nearby apartment building. As Mr. Saddler was returning to his automobile, he saw the defendant, Capitol Police Officer, Philip D'Ambrosio, running across the street toward Mr. Saddler's vehicle. Mr. Saddler sat in his vehicle, closed the door and waited for the officer. Officer D'Ambrosio approached the driver's side of the vehicle and stated "What the (expletive) do you think you are doing?" Before Mr. Saddler answered, Officer D'Ambrosio swung a nightstick through the opening in the roof and struck the glass roof panel in the rear seat. Officer D'Ambrosio then struck Mr. Saddler behind his neck at the base of his skull. Mr. Saddler, in an attempt to prevent further assault by D'Ambrosio, shifted the transmission into drive and left the curb. Mr. Saddler, having recognized the uniform of Officer D'Ambrosio as that of a member of the United States Capitol Police force, decided to drive to the Capitol Police station located on First Street near D Street, N.E. Mr. Saddler drove to the intersection of First and D Streets, N.E., pulled to the curb and stepped out of his automobile. When Officer *7 D'Ambrosio arrived at the intersection, Mr. Saddler placed his hands in the air stating "I am not doing anything." Mr. Saddler alleges that Officer D'Ambrosio assaulted him and advised him that he was under arrest. Officer D'Ambrosio then allegedly pushed Mr. Saddler against his automobile, twisted Mr. Saddler's arms behind his back and tightened handcuffs around his wrist. Officer D'Ambrosio then lifted Mr. Saddler's arms as high as possible forcing him to bend over and forced Mr. Saddler to walk to the Capitol Police Station in this bent position. Here Officer D'Ambrosio confiscated Mr. Saddler's property and some articles of his clothing. Mr. Saddler alleges that as a result of the assault by Officer D'Ambrosio, he was in a semi-conscious state and thus he cannot clearly remember the events which occurred at the police station. However, Mr. Saddler does not believe he was given a reason for his arrest, read his Miranda rights, or allowed to make a phone call. Mr. Saddler was later transferred to the Metropolitan Police Department. Mr. Saddler alleges that he requested medical attention from the Capitol Police and from others during his imprisonment, but received no medical attention. Mr. Saddler was incarcerated for a period of seven days and was released on a surety posted by a bondsman.[4]
II. ANALYSIS
A. Fourth Amendment Claim
Mr. Saddler alleges that Officer D'Ambrosio violated the Fourth Amendment by unreasonably searching and seizing Mr. Saddler and by using excessive force in so doing. Defendants argue that summary judgment should be granted for the defendants on the Fourth Amendment claim against Officer D'Ambrosio. Defendants' Motion to Dismiss, or in the Alternative for Summary Judgment, Civil Action No. 88-2699, at 20. In support of their motion, defendants contend that Mr. Saddler was a violent, and highly dangerous suspect, and that he was arrested with only the requisite force required to subdue and handcuff him.
Pursuant to Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment must be granted "if the pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, show that there is no genuine issue of material fact." The standard for summary judgment mirrors the standard for a directed verdict. A trial judge must direct a verdict if, under the governing law, there can be but one reasonable conclusion as to the verdict. Anderson v. Liberty Lobby, 477 U.S. 242, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). The Court must view the evidence in the light most favorable to the non-moving party. Id.
Excessive force claims under the Fourth Amendment are to be judged by the standard of "`objective reasonableness' under the circumstances." Graham v. Connor, 490 U.S. 386, 109 S. Ct. 1865, 1873, 104 L. Ed. 2d 443 (1989). In resolving whether an officer's actions are "objectively reasonable," the Court inquires as to "whether *8 the officers' actions are `objectively reasonable' in light of the facts and circumstances confronting them, without regard to their underlying intent or motivation." Id. 109 S.Ct. at 1872. The Court must consider "that police officers are often forced to make split-second judgments in circumstances that are tense, uncertain, and rapidly evolving about the amount of force that is necessary in a particular situation." Id.
The defendants contend that the force used by Officer D'Ambrosio was reasonable, and that he did not violate Mr. Saddler's rights under the Fourth Amendment. The defendants argue that the plaintiff has failed to contest the material facts that made it reasonable for Officer D'Ambrosio to use force on Mr. Saddler in arresting him, and that summary judgment should be granted as a matter of law.
The plaintiff's version of the facts is markedly different than that of the defendants. Numerous issues of material fact exist, making summary judgment as to the Fourth Amendment claim inappropriate. The Court has strikingly different versions of what the circumstances were in which the officer was acting, creating a major obstacle to the resolution of this claim on summary judgment. Much of the resolution of the contradiction in the versions of events surrounding the arrest of Mr. Saddler will be based on the evaluation of the credibility of witnesses, something not available to the Court in the posture of a motion to dismiss, or a motion for summary judgment. The plaintiff has alleged facts that, if true, indicate that Officer D'Ambrosio's actions were objectively unreasonably and violated the plaintiff's Fourth Amendment rights. Whether or not Mr. Saddler's version will ultimately prevail is a question for another day.
Defendants further assert that Officer D'Ambrosio is immune from suit because Mr. Saddler cannot point and has not pointed to any action of D'Ambrosio that is violative of clearly established law or is unreasonable. The Supreme Court set the standard a plaintiff must meet in order to overcome a defense of qualified immunity in Anderson v. Creighton, 483 U.S. 635, 107 S. Ct. 3034, 97 L. Ed. 2d 523 (1987). A plaintiff must plead that no reasonable person in the defendant's position could have believed his actions to be lawful, in light of clearly established law. Id. at 641, 107 S.Ct. at 3039-40.
[T]he right the official is alleged to have violated must have been "clearly established" in a more particularized, and hence more relevant, sense: The contours of the right must be sufficiently clear that a reasonable official would understand that what he is doing violates that right.
Id., at 640, 107 S.Ct. at 3039. See also Siegert v. Gilley, 895 F.2d 797 (D.C.Cir. 1990).
This Court finds that Mr. Saddler has alleged specific facts that, if true, show that Officer D'Ambrosio violated clearly established law and no reasonable official in his position could have believed his conduct to be lawful. For example, no reasonable official in Officer D'Ambrosio's position would believe that it was lawful to swing a nightstick through the opening in a car roof, after approaching a citizen stopped illegally on a street, with no indication of violence on the part of the citizen. Thus, this Court holds that Mr. Saddler's Fourth Amendment claim against Officer D'Ambrosio is not barred by Officer D'Ambrosio's qualified immunity.
Accordingly, this Court denies the defendants' motion to dismiss, or in the alternative for summary judgment as to plaintiff's Fourth Amendment Bivens claim.
B. 42 U.S.C. § 1983
Mr. Saddler's 42 U.S.C. § 1983 claim against Officer Philip P. D'Ambrosio must be dismissed for failure to state a claim. 42 U.S.C. § 1983 creates a cause of action for deprivations under color of state law of Constitutional rights, privileges and immunities. Actions under color of federal law are not cognizable under 42 U.S.C. § 1983. Bivens v. Six Unknown Named Agents of Fed. Bur. of Narcotics, 403 U.S. 388, 398 *9 n. 1, 91 S. Ct. 1999, 2006 n. 1, 29 L. Ed. 2d 619 (Harlan, J., concurring).
Mr. Saddler fails to state a cause of action under 42 U.S.C. § 1983 because as a United States Capitol Police Officer, D'Ambrosio was acting under color of federal law, not under state law or District of Columbia law. At all times during this incident, Officer D'Ambrosio was acting in the course of his duties as a United States Capitol Police Officer. When the incident took place, Officer D'Ambrosio was on patrol in a United States Capitol Police patrol car, dressed in the uniform of the United States Capitol Police, acting under the authority of federal law. After Officer D'Ambrosio arrested Mr. Saddler, Officer D'Ambrosio took him to the United States Capitol Police Station.
Mr. Saddler suggests that because Officer D'Ambrosio first approached him near the intersection of Massachusetts Avenue and D Street, N.E., which is not formally within the boundaries of the United States Capitol, he was acting under color of the law of the District of Columbia, not under color of federal law.[5] Even if the Court were to find that Officer D'Ambrosio was one block outside his geographic jurisdiction, which the Court does not deem necessary to its decision, Officer D'Ambrosio would still be considered a federal official acting under color of federal law. Cf. Wirth v. Surles, 562 F.2d 319 (4th Cir. 1977), cert. denied, 435 U.S. 933, 98 S. Ct. 1509, 55 L. Ed. 2d 531 (When a highway patrolman crosses a state line to obtain custody of a suspect and returns the suspect without extradition to the state which the officer serves, he is acting under color of law, even if his acts constitute an abuse of authority conveyed upon an officer). Thus, Mr. Saddler's claim under 42 U.S.C. § 1983 must be dismissed for failure to state a claim.
C. Common Law Claims
Mr. Saddler's complaints include a number of common law claims against Officer D'Ambrosio. Only his negligence and replevin claims are viable under the statute of limitations.[6] Mr. Saddler's negligence and replevin claims must be dismissed for lack of jurisdiction, since he failed to satisfy the procedural prerequisite of filing a tort claim with the appropriate federal agency.[7]
Pursuant to the Federal Employees Liability Reform and Tort Compensation Act of 1988, Mr. Saddler's exclusive remedy for personal injury or loss of property arising from the negligent or wrongful act or omission of an employee of the federal government, while acting in the scope of his employment is against the United States, not against Officer D'Ambrosio. 28 U.S.C. § 2679(b)(1). Section 8(d) of FELRTCA provides that the period during which the claim shall be deemed to be timely under Section 2679(d)(5) shall be the period that the claim would be timely under state law.[8] Thus, his claims of negligence and replevin against Officer D'Ambrosio are untimely.
*10 These claims arise under 28 U.S.C. § 2679(d)(5), since the United States has been substituted as the party defendant. They will be dismissed for failure to first file a claim with the proper federal agency, pursuant to 28 U.S.C. § 2675. However, since Mr. Saddler filed his civil action within the three year statutory period, his claim is timely under Section 2679(d)(5)(A)[9] and will be deemed timely pursuant to Section 2401(b).[10]
Accordingly, this Court holds that Mr. Saddler may present his claims for negligence and replevin to the appropriate Federal agency within 60 days after these claims are dismissed.[11]
III. CONCLUSION
Based on the foregoing, defendants' motion to dismiss, or in the alternative for summary judgment, shall be denied in part and granted in part. Since Civil Action No. 88-3188 consists solely of common law tort claims against defendant Philip P. D'Ambrosio, Civil Action No. 88-3188 shall be dismissed.
NOTES
[1] A motion to dismiss Civil Action No. 88-3188 was filed on February 8, 1989, and a motion to dismiss, or in the alternative for summary judgment in Civil Action No. 88-2699 was fled on February 9, 1989. The Court has ordered these cases consolidated for all purposes, pursuant to F.R.Civ.P. 42(a).
[2] Since defendants filed their motions, Mr. Saddler has conceded several of the issues raised by the defendants, thus making them moot for the purposes of this opinion. Mr. Saddler filed an opposition to defendants' motion to dismiss in which he stipulated to the following: plaintiff's FTCA claims against the United States must be dismissed for lack of subject matter jurisdiction; all claims against the United States Capitol Police Board, and all non-FTCA claims against the United States, are barred by sovereign immunity; all common law tort claims against individual defendants must be dismissed for lack of subject matter jurisdiction; and since defendants Russ, Giugni, White and Kerrigan have qualified immunity, Mr. Saddler has no claim against these individual defendants. Plaintiff's Memorandum in Support of his Opposition to Defendant's Motion for Summary Judgment at 17-18.
[3] The Court notes that the defendants vehemently deny the plaintiff's version of the facts and have presented a markedly different scenario than that of the plaintiff's.
[4] The defendants' version of events is markedly different than that put forth by Mr. Saddler. Defendants claim that a United States Capitol Police detective approached Officer D'Ambrosio and informed him that there was a person who had left his vehicle in the middle of the road, blocking traffic, and was yelling obscenities at a person standing in front of a third floor apartment window. As Officer D'Ambrosio approached the man, the officer heard him shout to the person in the apartment, "I ain't fucking with your ass no more. I got something in my bag that will take care of you." The man then removed a black leather bag from his vehicle and began reaching into it. At this time, D'Ambrosio ordered him to move away from the bag. The man did not do so, but shouted at D'Ambrosio "It'll take care of you too." D'Ambrosio, fearing for his safety and that of others, pushed Mr. Saddler away from the bag and ordered him to place his hands on the roof of his vehicle. Mr. Saddler responded by shoving D'Ambrosio and made several attempts to strike him. At this point, Officer D'Ambrosio advised Mr. Saddler that he was under arrest. The plaintiff was subsequently arrested for assault on a police officer, assault with a deadly weapon, carrying a deadly weapon and other offenses. The following evidence was removed from inside Saddler's vehicle: a black leather bag containing a cross-bow and arrows with steel tips, a black metal-studded hand band, and two black wrist straps with metal studs.
[5] It is uncontested that Officer D'Ambrosio first approached Mr. Saddler outside Capitol Grounds near the intersection of Massachusetts Avenue and D Street, N.E., but was arrested inside Capitol Grounds near the intersection of 1st and D Streets, N.E.
[6] In the District of Columbia, the statute of limitations for actions for negligence and replevin is three years. Mr. Saddler brought Civil Action No. 88-2699 and the original state action, now 88-3188 (which was later removed to this Court), on September 22, 1988. All causes of action arose on September 23, 1985, except for his malicious prosecution claim, which the Government states arguably did not accrue until all charges against Mr. Saddler were dismissed for lack of prosecution, on or about March 2, 1987. Defendants' Motion to Dismiss 88-3188 at 6. Mr. Saddler's common law claims of assault, battery, malicious prosecution, false arrest, false imprisonment, slander and libel are barred by the statute of limitations. All of these claims must be brought within one year from the time the action accrues. D.C.Code § 12-301(4). The claims for negligence and replevin are the only ones with a statute of limitations of 3 years. Mr. Saddler brought these claims one day before the statutory time bar.
[7] An action in replevin sounds in tort. Totaro v. Lyons, 498 F. Supp. 621 (D.Md.1980).
[8] Section 8(d) applies to those claims which accrued before the Act was enacted, on November 18, 1988. Since Mr. Saddler's claims accrued before this date, Section 8(d) applies to his claims.
[9] 28 U.S.C. § 2679(d)(5) provides:
Whenever an action or proceeding in which the United States is substituted as the party defendant under this subsection is dismissed for failure first to present a claim pursuant to section 2675(a) of this title, such a claim shall be deemed to be timely presented under section 2401(b) of this title if (A) the claim would have been timely had it been filed on the date the underlying civil action was commenced, and (B) the claim is presented to the appropriate Federal agency within 60 days after dismissal of the civil action.
28 U.S.C. § 2679(d)(5).
[10] Pursuant to 28 U.S.C. § 2401(b), a tort claim against the United States is timely when "it is presented in writing to the appropriate Federal agency within two years after such claim accrues or unless action is begun within six months after the date of mailing, by certified or registered mail, of notice of final denial of the claim by the agency to which it was presented."
[11] Thus, Civil Action No. 88-3188 shall be dismissed since it consists solely of common law tort claims against Officer Philip D'Ambrosio. See Amended Complaint, Civil Action No. 88-3188.
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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
HALL & ASSOCIATES,
Plaintiff,
v. Civil Action No. 13-830 (JEB)
UNITED STATES ENVIRONMENTAL
PROTECTION AGENCY,
Defendant.
MEMORANDUM OPINION
This Freedom of Information Act case has its origins in Environmental Protection
Agency policies related to New Hampshire’s Great Bay estuary. Plaintiff Hall & Associates, a
consulting group that believes EPA has been too stringent, filed eighteen FOIA requests seeking
information related to the agency’s National Pollutant Discharge Elimination System permit
program. EPA produced three responsive records totaling 25 pages but withheld parts of one
two-page draft letter pursuant to FOIA Exemption 5; it also assessed Plaintiff $431 in fees.
Believing the withholding and fees improper, Plaintiff filed suit, and both parties have now
moved for summary judgment.
Plaintiff spills much ink castigating EPA for its policy decisions related to discharge into
the estuary. These are, of course, concerns the Court cannot adjudicate in this case; whatever the
merits of Plaintiff’s substantive claims, they have no bearing on EPA’s FOIA obligations. As to
the specific arguments that the Court may consider, it finds that EPA’s FOIA-related decisions
are amply supported by the record. As a result, it will grant Defendant’s Motion and deny
Plaintiff’s.
1
I. Background
This dispute arose from a series of decisions regarding the ecology of the Great Bay
estuary, which is located in the Granite State. In 2005, EPA directed the state’s Department of
Environmental Services to develop “numeric nutrient criteria” that would govern the water-
treatment obligations of the cities surrounding the estuary. From 2006 to 2008, EPA and the
Department worked to collect and review data that would inform those criteria. As Plaintiff tells
it – the Court does not endorse these facts but merely presents them, as they have little bearing
on the disposition of this FOIA case – EPA disregarded the evidence it collected and, “[d]espite
numerous objections from the regulated community and various [scientists],” promulgated
regulations based on certain causes of ecological deterioration that “no valid analysis” could
support. See Pl. Mot., Exh. 1 (First FOIA Request) at 3-4. Plaintiff and its clients, it would
appear, are unhappy with the rigor of these regulations.
In response to this “scientific fraud,” the major cities surrounding Great Bay formed the
Great Bay Coalition to review the regulatory and scientific bases for EPA’s actions. See Pl. Mot.
at 3. Noting numerous “fundamental scientific errors with the document,” id. at 4, the Coalition
sought to subject the agency’s decisions to peer review. EPA agreed but, according to Plaintiff,
“refused to allow any community involvement in the peer review” and “[u]ltimately . . . limited
the peer review to the skewed record previously developed.” Id.
The community’s response was swift. In a letter dated May 4, 2012, the Coalition,
through Plaintiff, notified the EPA Administrator and Inspector General that it believed EPA
Region 1 – the office that administers the NPDES program and issues water-related permits in
New Hampshire – had committed “science misconduct” during the development of the Great
Bay estuary rules. See Compl., ¶¶ 2, 12; First FOIA Request at 12. The Coalition demanded
2
that an independent panel of experts be appointed to take over an impending review of Great Bay
water-quality compliance and permitting. It asked, further, that the Inspector General open an
investigation into Region 1’s actions. See id., ¶ 12; Def. Mot., Exh. 1 (Declaration of Stephen
Perkins), ¶ 6; First FOIA Request at 1-2.
In a letter dated September 27, 2012, Nancy Stoner, EPA’s Acting Assistant
Administrator for the Office of Water responded to the Coalition’s allegations. Stoner notified
the Coalition that EPA had “initiated a careful review” of the concerns raised in the letter, and
she concluded that EPA “ha[d] not seen any evidence that Region I . . . engaged in scientific
misconduct.” Pl. Mot., Exh. 4 (Letter from Nancy Stoner to Great Bay Coalition) at 1.
Stoner’s correspondence did not placate the Coalition. According to Plaintiff, the letter
“did not offer any explanation as to why any of the specific factual allegations raised by the
Coalition were actually in error,” even though “it was these specific factual/scientific statements
that were the basis” for the scientific-misconduct allegations. Pl. Mot. at 7; Perkins Decl., ¶ 5.
Acting on its dissatisfaction, the Coalition then filed eighteen separate FOIA requests.
Following several weeks of correspondence seeking to clarify the scope of those requests, EPA
notified Plaintiff that “[d]ocuments transmitted by Region 1 to Headquarters to refute the
specific scientific allegations in the FOIA requests were deemed responsive.” Perkins Decl., ¶
11.
In total, EPA located four responsive records totaling 26 pages. See id., ¶ 16. Although
the Region claims that all four records contained deliberative material, it nonetheless released
three of the four after determining that doing so would cause no harm to EPA programs or the
individuals involved. It did, however, redact portions of one draft letter – namely, a draft
response to Plaintiff’s accusations of misconduct prepared by a Region 1 lawyer at the request of
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the central office. EPA indicated that it had redacted parts of the letter to protect the agency’s
deliberative process, and it invoked FOIA Exemption 5 to support that decision. See id., ¶¶ 16,
18.
Since FOIA regulations define Plaintiff as a “commercial requester,” see 40 C.F.R. §
2.107(c)(1), EPA assessed the organization $413.90 “for the time spent searching for records,
reviewing the records for possible disclosure, and for the cost of each page of duplication.” Def.
Mot., Exh. 2 (Declaration of Cristeen Schena), ¶ 6. That time included 1.5 hours EPA staff spent
searching for relevant documents and 8.5 hours a Region 1 attorney spent reviewing the
collected documents to determine whether they were responsive to Plaintiff’s FOIA requests,
deciding whether relevant exemptions applied, discussing with program staff whether materials
deemed deliberative should nonetheless be disclosed, summarizing his findings, and coordinating
the Region’s response with EPA headquarters. See id., ¶¶ 7-8.
After exhausting its administrative remedies, Plaintiff filed this action, arguing that the
agency’s decision to invoke the protection of Exemption 5 was improper and that the fees
charged were unreasonable. The Parties filed cross-motions for summary judgment, to which the
Court now turns.
II. Legal Standard
Summary judgment may be granted 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). A genuine issue of material fact is one that would change the outcome of the litigation.
See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986) (“Only disputes over facts that
might affect the outcome of the suit under the governing law will properly preclude the entry of
summary judgment.”). In the event of conflicting evidence on a material issue, the Court is to
4
construe the evidence in the light most favorable to the non-moving party. See Sample v. Bureau
of Prisons, 466 F.3d 1086, 1087 (D.C. Cir. 2006). Factual assertions in the moving party’s
affidavits or declarations may be accepted as true unless the opposing party submits his own
affidavits, declarations, or documentary evidence to the contrary. Neal v. Kelly, 963 F.2d 453,
456 (D.C. Cir. 1992).
FOIA cases typically and appropriately are decided on motions for summary judgment.
See Defenders of Wildlife v. U.S. Border Patrol, 623 F. Supp. 2d 83, 87 (D.D.C. 2009); Bigwood
v. U.S. Agency for Int’l Dev., 484 F. Supp. 2d 68, 73 (D.D.C. 2007). In FOIA cases, the agency
bears the ultimate burden of proof. See U.S. Dep’t of Justice v. Tax Analysts, 492 U.S. 136, 142
n.3 (1989). The Court may grant summary judgment based solely on information provided in an
agency’s affidavits or declarations when they describe “the documents and the justifications for
nondisclosure with reasonably specific detail, demonstrate that the information withheld
logically falls within the claimed exemption, and are not controverted by either contrary
evidence in the record nor by evidence of agency bad faith.” Military Audit Project v. Casey,
656 F.2d 724, 738 (D.C. Cir. 1981). Such affidavits or declarations are accorded “a presumption
of good faith, which cannot be rebutted by ‘purely speculative claims about the existence and
discoverability of other documents.’” SafeCard Servs., Inc. v. SEC, 926 F.2d 1197, 1200 (D.C.
Cir. 1991) (quoting Ground Saucer Watch, Inc. v. CIA, 692 F.2d 770, 771 (D.C. Cir. 1981)).
III. Analysis
Congress enacted FOIA in order “to pierce the veil of administrative secrecy and to open
agency action to the light of public scrutiny.” Dep’t of Air Force v. Rose, 425 U.S. 352, 361
(1976) (citation omitted). “The basic purpose of FOIA is to ensure an informed citizenry, vital to
the functioning of a democratic society, needed to check against corruption and to hold the
5
governors accountable to the governed.” John Doe Agency v. John Doe Corp., 493 U.S. 146,
152 (1989) (citation omitted). The statute provides that “each agency, upon any request for
records which (i) reasonably describes such records and (ii) is made in accordance with
published rules . . . shall make the records promptly available to any person.” 5 U.S.C. §
552(a)(3)(A). Consistent with this statutory mandate, federal courts have jurisdiction to order
the production of records that an agency improperly withholds. See 5 U.S.C. § 552(a)(4)(B);
Dep’t of Justice v. Reporters Comm. for Freedom of the Press, 489 U.S. 749, 755 (1989).
“Unlike the review of other agency action that must be upheld if supported by substantial
evidence and not arbitrary or capricious,” the Freedom of Information Act “expressly places the
burden ‘on the agency to sustain its action’ and directs the district courts to ‘determine the matter
de novo.’” Reporters Comm., 489 U.S. at 755 (quoting 5 U.S.C. § 552(a)(4)(B)). “At all times
courts must bear in mind that FOIA mandates a ‘strong presumption in favor of disclosure’. . . .”
Nat’l Ass’n of Home Builders v. Norton, 309 F.3d 26, 32 (D.C. Cir. 2002) (quoting Dep’t of
State v. Ray, 502 U.S. 164, 173 (1991)).
After briefly addressing whether EPA’s search for documents was reasonable and
adequate, the Court will turn to the gravamen of the Motions: whether the fees charged to
Plaintiff for that search were appropriate and whether EPA sufficiently justified its withholdings
under Exemption 5.
A. Adequacy of the Search
“An agency fulfills its [search] obligations under FOIA if it can demonstrate beyond
material doubt that its search was ‘reasonably calculated to uncover all relevant documents.’”
Valencia-Lucena v. U.S. Coast Guard, 180 F.3d 321, 325 (D.C. Cir. 1999) (quoting Truitt v.
Dep’t of State, 897 F.2d 540, 542 (D.C. Cir. 1990)). “[T]he issue to be resolved is not whether
6
there might exist any other documents possibly responsive to the request, but rather whether the
search for those documents was adequate.” Weisberg v. Dep’t of Justice, 745 F.2d 1476, 1485
(D.C. Cir. 1984). The adequacy of an agency’s search for documents requested under FOIA “is
judged by a standard of reasonableness and depends, not surprisingly, upon the facts of each
case.” Id. To meet its burden, the agency may submit affidavits or declarations that “set [] forth
. . . the type of search performed, and aver[] that all files likely to contain responsive materials (if
such records exist) were searched.” Oglesby v. U.S. Dep’t of Army, 920 F.2d 57, 68 (D.C. Cir.
1990). Such affidavits or declarations enjoy a presumption of good faith and, absent contrary
evidence, they are sufficient to show that an agency complied with FOIA. See Oglesby, 920
F.2d at 68.
Plaintiff does not challenge the adequacy of Defendant’s search for documents. The
Court, moreover, independently finds that EPA’s search was adequate. Stephen Perkins, Region
1’s Director of Ocean and Coastal Policy and Programs, explains the agency’s search as follows:
Plaintiff’s (revised) requests were received and forwarded to the Office of Ecosystem Protection,
the body responsible for NPDES permits and “the only office within EPA Region 1 involved in
developing technical responses in connection to the scientific misconduct allegations.” Perkins
Decl., ¶ 12. EPA lawyers instructed OEP Management – as well as rank-and-file staff members
– that they were to retrieve “any documents that were transmitted by Region 1 to Headquarters to
respond to the scientific misconduct allegations.” Id. Those were then provided to counsel, who
“reviewed the potentially responsive documents to determine whether they were in fact
responsive to the revised FOIA request and, furthermore, whether any of the information
contained therein was exempt from disclosure.” Id., ¶ 14.
7
This human-centered approach is entirely proper. Indeed, it is reasonable for an agency
to limit its search to asking staff members familiar with all aspects of a government program to
find the relevant documents. See Roman v. Dep’t of Air Force, No. 12-1381, 2013 WL
3388393, at *7 (D.D.C. July 9, 2013); see also Anderson v. U.S. Dep’t of State, 661 F. Supp. 2d
6, 11 n.2 (D.D.C. 2009) (holding that “[m]anually searching . . . records without using specific
search terms could reasonably be expected to produce the requested information given . . . that
those conducting the search were familiar with the request”). EPA’s efforts, therefore, were
“reasonably calculated to uncover all relevant documents.” Truitt, 897 F.2d at 542. The Court
thus finds that the search was adequate.
B. Reasonable Fees
Although it concedes that point, Plaintiff does object to the fees charged on the ground
that the amount of time EPA staff spent on the search was unreasonable. In a second declaration,
Cristeen Schena, the Region 1 FOIA Officer, avers that EPA’s request for payment of $413.90
was based on the following rates applicable to commercial requesters: (1) 1.5 hours of searching
by two managers at $41 per hour; (2) 8.5 hours of review by one manager at $41 per hour; and
(3) 26 hard-copy pages of the disclosed documents at 15 cents per page. See Schena Decl., ¶ 7.
Plaintiff does not contest that it is a commercial requester, nor does it dispute the 1.5 hours of
search time, the duplication costs, or that the hourly rates applied are consistent with EPA
regulations. Plaintiff’s challenge thus boils down to the argument that “the Region . . . claiming
it took 8.5 hours to read twenty-three pages . . . is inappropriate.” Pl. Mot. at 18.
That argument comes up short. As the agency explained, processing Plaintiff’s request
required that an attorney spend 8.5 hours reviewing the documents collected from Region 1
managers and staff, determining whether any FOIA exemption applied, conferring with program
8
staff – through multiple rounds of discussion – about whether materials deemed deliberative
should nonetheless be disclosed on a discretionary basis, summarizing the attorney’s analysis in
a memorandum, and coordinating the Region’s response with EPA headquarters. See Schena
Decl., ¶ 8. Plaintiff offers no substantive response to EPA’s argument, instead asserting that
some of the documents reviewed “clearly” do not fall within any FOIA exemption, see Pl. Mot.
at 19, and that the 8.5 hours the agency spent reviewing 26 pages of responsive records is
“inappropriate.” Id. at 20. A plaintiff’s bare allegation that a fee assessment is unreasonable,
however, is insufficient to avoid summary judgment. See Nat’l Treas. Empl. Union v. Griffin,
811 F.2d 644, 650 (D.C. Cir. 1987). As Plaintiff has offered nothing more, and as Defendant’s
explanation seems eminently reasonable on its face, the Court finds for EPA on this issue.
C. Exemption 5
Plaintiff’s case, therefore, comes down to the application of Exemption 5. Under that
provision, an agency need not disclose “inter-agency or intra-agency memorandums or letters
which would not be available by law to a party other than an agency in litigation with the
agency.” 5 U.S.C. § 552(b)(5). Exemption 5 thus protects documents that would be unavailable
to an opposing party through discovery. See United States v. Weber Aircraft Corp., 465 U.S.
792, 800 (1984); Martin v. Office of Special Counsel, 819 F.2d 1181, 1184-85 (D.C. Cir. 1987)
(Exemption 5 “unequivocally” incorporates “all civil discovery rules”). Documents that fall
within the attorney-client privilege, the attorney work-product doctrine, and the deliberative-
process privilege are exempt from disclosure. See NLRB v. Sears, Roebuck & Co., 421 U.S.
132, 148–49 (1975); Coastal States Gas Corp. v. U.S. Dep’t of Energy, 617 F.2d 854, 862 (D.C.
Cir. 1980). Defendant invokes only the deliberative-process privilege here.
9
That particular privilege is intended “to enhance the quality of agency decisions by
protecting open and frank discussion among those who make them within the Government.”
Dep’t of Interior v. Klamath Water Users Protective Ass’n, 532 U.S. 1, 8 (2001) (internal
quotation marks and citation omitted). The privilege “rests on the obvious realization that
officials will not communicate candidly among themselves if each remark is a potential item of
discovery and front page news.” Id.; see also Dow Jones & Co., Inc. v. DOJ, 917 F.2d 571, 573-
74 (D.C. Cir. 1990). To fall under the protection of the deliberative-process privilege, withheld
material must be both “predecisional” and “deliberative.” Mapother v. DOJ, 3 F.3d 1533, 1537
(D.C. Cir. 1993). Material is “predecisional” if it was “generated before the adoption of an
agency policy.” Coastal States Gas Corp., 617 F.2d at 866. It is “deliberative” if it “reflects the
give-and-take of the consultative process.” Id.
Plaintiff launches two broad attacks on Defendant’s position. First, it argues that EPA
cannot avail itself of the deliberative-process privilege “to cover up agency misconduct.” Pl.
Mot. at 10. It then contends that, even if the privilege does apply to parts of the letter, it cannot
protect from disclosure the purely factual material contained therein. See id. at 11.
1. Government Misconduct
Under the government-misconduct exception to the deliberative-process privilege,
“where there is reason to believe the documents sought may shed light on government
misconduct, the privilege is routinely denied, on the grounds that shielding internal government
deliberations in this context does not serve the public’s interest in honest, effective
government.” In re Sealed Case, 121 F.3d 729, 738 (D.C. Cir. 1997) (internal quotation marks
omitted).
10
Although other courts have not been entirely consistent in applying the government-
misconduct exception to FOIA cases – most of the black-letter law on the issue comes from
cases dealing with grand-jury documents – the Court need bridge this divide, because Plaintiff’s
argument would not succeed even if the exception did apply.
The party seeking release of withheld documents under the government-misconduct
exception must “provide an adequate basis for believing that [the documents] would shed light
upon government misconduct.” Judicial Watch of Florida, Inc., v. U.S. Dep’t of Justice, 102 F.
Supp. 2d 6, 15 (D.C. Cir. 2000). While there is little case law to guide the Court on what
quantum of evidence must be shown to support the exception, courts have recognized the need to
apply the exception narrowly because
[i]f every hint of marginal misconduct sufficed to erase the
privilege, the exception would swallow the rule. In the rare cases
that have actually applied the exception, the “policy discussions”
sought to be protected with the deliberative process privilege were
so out of bounds that merely discussing them was evidence of a
serious breach of the responsibilities of representative government.
The very discussion, in other words, was an act of government
misconduct, and the deliberative process privilege disappeared.
ICM Registry, LLC v. U.S. Dep’t of Commerce, 538 F. Supp. 2d 130, 133 (D.D.C. 2008).
Although Plaintiff points to several instances of purported misconduct here, it has provided no
evidence rising anywhere close to this level. General criticisms of the merits of policy decisions
do not amount to evidence of misconduct.
The group begins by arguing that the agency acted improperly when it told “the 2010
peer reviewers not to address the Coalition’s factual and scientific concerns,” and that, as a
result, “the review was biased against the issues raised by Petitioners.” Pl. Mot. at 15-16. These
allegations are being litigated in other forums and are not before this Court. Even if they turned
11
out to be true, moreover, nothing in the redacted portions of the letter speaks to any potential
misconduct.
Next, Plaintiff asserts, without any basis in the record, that “it is clear that the Region did
more than just draft ‘recommended positions and language for consideration by EPA
Headquarters in responding to Plaintiff’s allegations [of] scientific error” but, in fact, “wr[ote]
the response to the Coalition’s scientific misconduct allegations.” Pl. Mot. at 17. This argument
is puzzling for two reasons. First, it is flatly contradicted by the record: Stephen Perkins’s
declaration establishes that the Region prepared only a draft for Headquarters’ review, and the
agency in fact produced to Plaintiff the limited portions of the draft that were left unchanged in
the final version of the letter. See Perkins Decl., ¶ 18. Second, it is unclear exactly what would
be different if Region 1 had written the response. Perhaps, in that case, Plaintiff would have had
a stronger argument that the agency should have disclosed the entire letter, but that claim would
have been nonsensical, as EPA already sent the final version of the letter to Plaintiff.
In these circumstances, the Court finds that the events Plaintiff cites “do not reflect any
governmental impropriety, but rather are ‘part of the legitimate governmental process intended to
be protected by Exemption 5.’” Dema v. I.R.S., No. 78–3992, 1979 U.S. Dist. LEXIS 9025, at
*6 (N.D. Ill. Oct. 22, 1979) (quoting Tax Reform Research Group v. I.R.S., 419 F. Supp. 415,
426 (D.D.C. 1976)).
2. Factual Material
Plaintiff argues next that Defendant improperly withheld factual information from the
letter that is not protected by Exemption 5. See Pl. Mot. at 16. Although the point is not made
with any precision, this is, in essence, a segregability argument, and the Court has a sua sponte
obligation to address such issues. See Johnson v. Executive Office for U.S. Attorneys, 310 F.3d
12
771, 776 (D.C. Cir. 2002). It is true that the deliberative-process privilege applies only to
documents “reflecting advisory opinions, recommendations and deliberations,” as opposed to
pure facts. Sears, 421 U.S. at 132 (citation omitted). That limitation makes sense, as the
privilege exists to “ensure[] that persons in an advisory role [will] be able to express their
opinions freely.” See McKinley v. Bd. Of Governors of Fed. Reserve Sys., 647 F.3d 331, 340
(D.C. Cir. 2011) (emphasis added) (quoting Ryan v. Dep’t of Justice, 617 F.2d 781, 789-90
(D.C. Cir. 1980)).
Plaintiff’s argument on this front, however, consists mainly of conclusory statements that
are of no help. See Pl. Mot. at 12 (“letter must contain factual information due to the nature of
the allegations”) (emphasis added); id. (redacted portions are likely factual in nature”) (emphasis
added); id. (“the Region’s claim . . . is obviously false”) (emphasis added). Despite pages and
pages of hand-waving, the group does not address the sworn testimony of Stephen Perkins, who
explained in no uncertain terms that the withheld portions of the draft letter contain candid
opinions and potential counterarguments that the agency was considering including in its
response to Plaintiff’s allegations. See Perkins Decl., ¶ 19. Plaintiff has certainly not presented
sufficient evidence to rebut the presumption of good faith afforded to that declaration. See Elec.
Privacy Info. Ctr. v. Office of Director of Nat’l Intelligence, No. 12-1282, 2013 WL 5548809, at
*3 (D.D.C. Oct. 9, 2013) (declarations “are accorded a presumption of good faith, which cannot
be rebutted by purely speculative claims”) (internal quotation marks omitted) (quoting SafeCard
Servs., Inc. v. SEC, 926 F.2d 1197, 1200 (D.C. Cir. 1991)).
Nonetheless, out of an abundance of caution, the Court, at Plaintiff’s request, ordered
EPA to produce the unredacted letter for in camera review. Having now compared the redacted
and unredacted versions of the letter, the Court agrees with Perkins’s assertion that the portions
13
redacted contain the Region’s “proposed positions and recommended language for consideration
by EPA management in responding to Plaintiff’s allegations of scientific error,” the disclosure of
which would have a chilling effect on the Agency’s ability to hold open and frank discussions
regarding the Agency’s responses to inquiries. Perkins Decl., ¶¶ 18-19.
It is worth noting, in addition, that any doubts about the propriety of EPA’s actions in this
case should have been allayed by the care with which the agency segregated and disclosed the
portions of the letter that were arguably not exempt. Indeed, the Court is of the opinion that the
agency was perhaps more liberal with its disclosures that it had to be under the prevailing law.
3. Predecisional
Plaintiff’s Motion also makes passing reference to the established principle that the
privilege applies only to predecisional records. It does not, however, contain any reasoning on
that point. To the extent the Court can decipher an argument from the meager substantive
content in the Motion, the group seems to object to EPA’s withholding of the letter because it
relates to events that have already occurred – namely, Region 1’s 2006-2009 regulatory
decisions. That argument, if it is the one Plaintiff intended, holds no water. Deliberations over
how to respond to allegations concerning a past event are without a doubt “predecisional” to the
actual response – in this case, the final response letter that EPA issued on September 27, 2012.
The disputed draft letter contained recommended positions and language for consideration by
EPA Headquarters in responding to Plaintiff’s allegations of scientific error. That the letter was
written after Region 1 had made its regulatory decisions is obviously irrelevant. The Court,
accordingly, finds that EPA properly invoked Exemption 5 to justify withholding portions of the
Region’s June 5, 2012, draft response letter.
IV. Conclusion
14
For the foregoing reasons, the Court will grant EPA’s Motion for Summary Judgment
and deny Plaintiff’s. A separate Order to that effect will issue this day.
/s/ James E. Boasberg
JAMES E. BOASBERG
United States District Judge
Date: February 4, 2014
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834 F.Supp. 845 (1993)
N.B.A. CREDIT UNION, INC., Plaintiff,
v.
Sarah W. HARGROVE, et al., Defendants.
No. 93-4826.
United States District Court, E.D. Pennsylvania.
October 14, 1993.
*846 James A. Backstrom, North & Vaira, Philadelphia, PA, for plaintiff.
Sue Ann Unger, Office of Atty. Gen., Philadelphia, PA, for Sarah W. Hargrove.
Richard Mentzinger, Jr., Office of U.S. Atty., Philadelphia, PA, Margaret H. Plank, Dept. of Justice, Washington, DC, for Roger W. Jepsen.
*847 FINDINGS OF FACT AND CONCLUSIONS OF LAW
KATZ, District Judge.
PARTIES
1. Plaintiff N.B.A. Credit Union, Inc. ("Credit Union") is a non-profit Pennsylvania corporation chartered and regulated by the Pennsylvania Department of Banking ("Department").
2. Credit Union is comprised of a group that has a common bond of association through membership in the National Business Association, Inc. ("NBA"), a voluntary association of private and public employers and employees.
3. Defendant Sarah W. Hargrove ("Hargrove") is the Secretary of Banking of the Commonwealth of Pennsylvania, with responsibility for administration of the Department, including regulation of Pennsylvania-chartered credit unions. 17 Pa.C.S.A. §§ 101-1504.
4. The National Credit Union Administration ("NCUA") is an independent agency in the executive branch of the federal government, 12 U.S.C. § 1752a. Defendant Roger W. Jepsen ("Jepsen") is the appointed chairman of NCUA.
5. Credit Union is a federally-insured credit union subject to examination, supervision and regulation by the NCUA. 12 U.S.C. § 1752(7); 12 U.S.C. §§ 1784, 1786.
FIELD OF MEMBERSHIP DISPUTE
6. Pennsylvania chartered credit unions are permitted to accept and service members in accordance with Pennsylvania Law. Pursuant to 17 Pa.C.S.A. § 701 the Department has the duty to regulate membership of Pennsylvania chartered credit unions.
7. Credit Union was chartered on February 3, 1972 as D.V.B.A. Credit Union and was then sponsored by the Delaware Valley Business Association. Credit Union assumed its present name on October 31, 1986, reflecting the change in its sponsor. At that time, its field of membership was expanded to include all members of NBA. Pl.Ex. 1-4.
8. As of March 1990, Credit Union provided services to employer groups in approximately forty (40) states. Pl.Ex. 29, p. 1.
9. In September of 1990 it became apparent to Credit Union and Department that their respective views of Credit Union's authorized field of membership differed. Pl. Ex. 5, 30, p. 2.
10. Specifically, in September of 1990, Credit Union was operating under the view that its field of membership was constrained by Article 8 of its Amended Articles of Incorporation which reads in its entirety:
The membership of the credit union will be limited to: Members of the National Business Association; associations of such persons; employees of the credit union; retired members who retain their membership in the credit union; and members of their immediate families.
Pl.Ex. 4. Department was operating under the view that "Pennsylvania State Chartered Credit Unions are restricted in membership to common associational groups within well defined community or rural districts in Pennsylvania." Pl.Ex. 5.
11. Several discussions between NCUA, Department and Credit Union concerning Credit Union's field of membership culminated in a meeting on April 18, 1991, between the Credit Union Board of Directors, Mary D. France, then Deputy Chief Counsel for the Department, Victor H. Seesholtz, Pennsylvania Bureau of Supervision and Enforcement, and representatives of NCUA.
12. At the April 18, 1991 meeting, the Department presented a draft Cease and Desist Order (the "Order") to Credit Union. The Order addressed the disagreement over Credit Union's field of membership. Credit Union suggested changes to the Order and the Department agreed to some modifications.
13. On April 29, 1991, the Department mailed to Credit Union a copy of the Order which memorialized the modifications agreed to at the April 18, 1991 meeting.
14. On May 21, 1991, the Department received a joint Stipulation and Consent to Entry of Order to Cease and Desist ("Stipulation"), *848 signed by Department and Credit Union, and dated April 18, 1991.
15. The paragraph of the Order pertaining to Credit Union's field of membership ("Field Definition") reads in its entirety:
The Credit Union shall limit its field of membership to members of NBA in the following geographic locations:
(a) the counties of Bucks, Chester, Philadelphia, Delaware and Montgomery, or elsewhere in the Commonwealth of Pennsylvania if prior authorization is granted by the Department pursuant to the requirements of Section 701(a) of the Code.
(b) the counties of Camden, Mercer, Gloucester and Burlington in the State of New Jersey, if prior authorization is obtained from the New Jersey Department of Banking; and
(c) the State of Delaware north of the Delaware Canal, if prior approval is obtained from the appropriate state agency.
All individual members of the Credit Union and all business/employer members of the Credit Union enrolled as of May 1, 1991, not within the above described field of membership may remain members of the credit union if not in violation of the law of the state in which the member is located. No new employee members employed by existing business/employer members located outside the Commonwealth of Pennsylvania may be admitted to membership after May 1, 1991. No new business/employer members outside the field of membership may be admitted to membership after April 18, 1991.
Stipulation Ex. C.[1]
16. The present controversy centers on (a) the parties' differing interpretations of the Field Definition and (b) the parties' differing views regarding refinement or modification of the Field Definition by (i) discussions between the parties subsequent to the Stipulation and (ii) discussions between Credit Union and New Jersey regulators. Complaint ¶¶ 18-20, 34-45.
17. Specifically, the dispute is over the ability of New Jersey business/employer groups to enroll new members in Credit Union.
18. Credit Union maintains that the Order is ambiguous. In particular, Credit Union claims the phrase (the "Disputed Phrase"), "No new employee members employed by existing business/employer members located outside the Commonwealth of Pennsylvania may be admitted to membership after May 1, 1991," is inconsistent with provision (b) of the Field Definition which permits Credit Union to operate in four New Jersey counties (the "Four Counties").
19. Credit Union has operated under the assumption that the Disputed Phrase was not intended as a limit on Credit Union's authority, but rather an expression of what Department could authorize without infringing on New Jersey's regulatory authority.
20. Credit Union asserts that the validity of this assumption was confirmed by the Department.
21. Credit Union received a letter on August 8, 1991 from the New Jersey Department of Banking forbidding Credit Union from taking on "any new employee groups from the State of New Jersey," and permitting Credit Union to "service existing employees throughout the State of New Jersey who are members of NBA, Inc. This also includes adding new employees from the existing employee groups." Pl.Ex. 17.
22. After Credit Union received this information from the New Jersey Department of Banking, Credit Union considered its authorized field of operation to include New Jersey applicants from the following groups:
a) Employees of business/employer members located in Pennsylvania or the Four Counties ("Group 1"); and
b) Employees of business/employer members located in New Jersey and outside the Four Counties who were enrolled members of Credit Union as of May 1, *849 1991 and were admitted to membership prior to April 19, 1991 ("Group 2").
23. Credit Union maintains that it informed Department of this policy (considering eligible for membership all New Jersey applicants who were employees of legitimately serviced[2] New Jersey business/employer groups).
24. Credit Union claims this policy was authorized by Department examiners.
25. This policy resulted in the admission of new members from outside Pennsylvania and the Four Counties.
26. In April of 1993, Credit Union received a report of examination from Department that stated, in part:
# 4 Field of Membership A comprehensive review of approximately 4,000 membership cards revealed that the credit union is still accepting new members of existing employer groups in the entire state of New Jersey. During the examination, approximately fifty new accounts were found to be apparent violations of this section of the Order. Management believes it is in compliance based on its interpretation of the transcript of the meeting when the original Order was signed combined with the letter from the New Jersey Department of Banking of August 9, 1991,.... The [Department] limits the field of membership in New Jersey to the four counties of Camden, Mercer, Gloucester, and Burlington. This issue is unresolved as of the examination, and the remaining interpretational differences must be clarified and compliance requirements formalized in writing.
Pl.Ex. 23.
27. By letter of July 26, 1993, Department informed Credit Union that it was in non-compliance with the Order. Specifically, the Department asserted that the Order prohibits the enrollment of:
a) "new members who live outside Pennsylvania or the four [New Jersey] counties;" and
b) "new employee members employed by existing business/employer members located outside the Commonwealth."
Stipulation Ex. I.
28. The Department's letter of July 26, 1993 incorporates the Disputed Phrase which appears, on its face, to prohibit the acceptance of new members from the business/employer groups in the Four Counties.
29. The reference in the Disputed Phrase to employers "outside of the Commonwealth" was never meant to apply to New Jersey employers in the four New Jersey counties. Pl.Ex. 28, 30. See also Department Proposed Findings of Fact ¶ 36-38, 40; NCUA Proposed Findings of Fact ¶ 12.
30. More specifically, the present record establishes that Credit Union has accepted New Jersey applicants who work for employers located outside Pennsylvania and the Four Counties. The Department's position is that these Group 2 applicants are not eligible for membership under the Order.
31. The Department has informed Credit Union that approximately 1900 individuals (the "Unauthorized Individuals") served by Credit Union are not within its authorized field of membership.[3]
32. Since July 30, 1993, Credit Union has returned all applications for membership from New Jersey employer groups outside the Four Counties.
FEDERAL INSURANCE AND NOTIFICATION OF NON-INSURED
33. The Department's letter of July 26, 1993, also contained the following statement with regard to federal insurance: *850 Deposits received from members outside the field of membership are non-member deposits and consequently are not insured by the National Credit Union Share Insurance Fund. Thus, any losses incurred by the acceptance of non-member deposits are uninsured, which creates significant liability for the Credit Union as well as individual liability for the Board of Directors.
Id.
34. By letter of August 19, 1993, the NCUA informed Credit Union that deposits of new members outside Credit Union's authorized field of membership are not federally insured by the National Credit Union Share Insurance Fund.
35. The August 19, 1993 letter also stated NCUA's intent to notify the individuals involved of the uninsured status of their shares.[4]
36. Credit Union moved this court to grant a preliminary injunction prohibiting Department and the NCUA from taking any action affecting or related to the membership status of employees or employer groups currently served by Credit Union and from withdrawing or interfering with the federal insurance of deposits in Credit Union.
37. Credit Union sent a letter to each of the Unauthorized Individuals on September 3, 1993 informing them that "Credit Union may not be able to maintain you as a member and to provide your Credit Union accounts with Federal Insurance through the National Credit Union Administration." NCUA Supplemental Memorandum.
38. On September 3, 1993 Credit Union also dispatched a letter to New Jersey NBA business/employer members located outside the Four Counties informing them that "at the present time, we can no longer enroll your employees in the Credit Union." The letter also informs these New Jersey business/employer members of the contents of the September 3, 1993 letter from Credit Union to the Unauthorized Individuals. Id.
CLAIMS AND DEFENSES
39. Credit Union claims, on its own behalf and on behalf of its members, that the actions of Department and NCUA constitute a violation of:
(a) Due Process under the Fifth and Fourteenth Amendments of the Constitution of the United States and under Article V, Section 9 of the Pennsylvania Constitution. Complaint ¶¶ 58-64;
(b) the liberty and property interests guaranteed by the Fifth and Fourteenth Amendments of the Constitution of the United States and under Article V, § 9 of the Pennsylvania Constitution. Id. ¶¶ 65-67;
(c) the Commerce Clause, Art. I, § 8, Clause 3 of the United States Constitution. Id. ¶¶ 68-75;
(d) the Privileges and Immunities Clause of Art. IV, § 2 of the Constitution of the United States. Id. ¶¶ 76-80; and
(e) Pennsylvania state law. Id. ¶¶ 81-84.
40. Pennsylvania has responded by claiming that:
(a) The Order became a final adjudication when Credit Union did not appeal it pursuant to 17 Pa.C.S.A. § 503(c);
(b) The court should abstain from considering Credit Union's constitutional claims under the Burford doctrine;
(c) Credit Union lacks standing to represent the Unauthorized Individuals;
(d) Credit Union cannot establish the necessary conditions for a preliminary injunction; and
(e) Credit Union's state law claims are barred by the Eleventh Amendment of the United States Constitution.
41. In addition to the defenses set forth by Pennsylvania, NCUA asserts:
NCUA regulations provide a review and appeal process for shareholders whose shares are adjudged to be uninsured. NCUA has not made a final adjudication on the status of the disputed Credit Union accounts. Therefore, there has not been *851 any final reviewable agency action and this matter is not ripe for resolution.
ABSTENTION
Pennsylvania contends that the court should refrain from considering Credit Union's claims under the Burford and Pullman abstention doctrines. See New Orleans Public Service, Inc. v. Council of New Orleans, 491 U.S. 350, 109 S.Ct. 2506, 105 L.Ed.2d 298 (1989) (citing Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943)); Railroad Comm'n of Texas v. Pullman, 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971 (1941).[5]
There are some classes of cases in which federal courts should withhold authorized equitable relief to avoid undue interference with state proceedings because it is "the normal thing to do." New Orleans Public, 491 U.S. at 359, 109 S.Ct. at 2513 (citing Younger v. Harris, 401 U.S. 37, 45, 91 S.Ct. 746, 751, 27 L.Ed.2d 669 (1971)). However, the areas in which abstention is appropriate have been carefully defined, and abstention "remains the exception, not the rule." Id. (citations omitted). Abstention is not appropriate in this action.
The Burford doctrine establishes:
Where timely and adequate state-court review is available, a federal court sitting in equity must decline to interfere with the proceedings or orders of state administrative agencies: (1) when there are difficult questions of state law bearing on policy problems of substantial public import whose importance transcends the result in the case then at bar; or (2) where the exercise of federal review of the question in a case and in similar cases would be disruptive of state efforts to establish a coherent policy with respect to a matter of substantial public concern.
New Orleans Public, 491 U.S. at 361, 109 S.Ct. at 2514 (citing Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 814, 96 S.Ct. 1236, 1244, 47 L.Ed.2d 483 (1976)). Here, Pennsylvania's position is that the state administrative process is complete. Specifically, the Commonwealth asserts that the Order became a final adjudication when Credit Union did not appeal pursuant to 17 Pa.C.S.A. § 503(c). Pa. Proposed Conclusions of Law ¶ 9. Thus, the exercise of federal equitable jurisdiction by this court would not interfere with state administrative process. Burford abstention is not appropriate. Id., 491 U.S. at 361-363, 109 S.Ct. at 2514-2515.[6]
Where state law is uncertain and a clarification of state law might make a federal court's determination of a constitutional question unnecessary, Pullman requires the federal court to abstain until a state court has had an opportunity to resolve the uncertainty as to state law. Pullman, 312 U.S. at 501, 61 S.Ct. at 645.
Currently, while there is significant ambiguity in the applicability of settled state law to the murky "agreement" of the parties, there is no assertion that the viability of Credit Union's federal claims turns on this court's interpretation of unresolved principles of state law. Proposed Conclusions of Law ¶¶ 9, 10. State law is sufficiently clear for purposes of the preliminary injunctive phase of this case. Therefore, Pullman abstention is not presently appropriate.
PRELIMINARY INJUNCTION
I. Legal Standard
In order to support a preliminary injunction, plaintiff must show both a likelihood of success on the merits and a probability of irreparable harm. Bradley v. Pittsburgh Bd. of Educ., 910 F.2d 1172, 1175 (3d Cir.1990). Additionally, the effect of the issuance of a preliminary injunction on other interested persons and the public interest must be considered. Id. Furthermore, a showing of irreparable harm is insufficient if the harm *852 will occur only in the indefinite future; the moving party must make a clear showing of immediate irreparable harm. Hohe v. Casey, 868 F.2d 69, 72 (3d Cir.), cert denied, 493 U.S. 848, 110 S.Ct. 144, 107 L.Ed.2d 102 (1989).
Credit Union has not demonstrated a likelihood of success on the merits. Additionally, the interests of the Unauthorized Individuals weigh substantially in favor of denying Credit Union's motion for a preliminary injunction.
II. Standing of Credit Union to Assert Individual's Claims
Credit Union asserts claims on its own behalf and on behalf of its "members". The interests of the Unauthorized Individuals and Credit Union are not coextensive. Credit Union has an interest in retaining the accounts of the Unauthorized Individuals. However, it may be in the Unauthorized Individuals' best interest to forgo their relationship with Credit Union and establish a similar relationship with another financial institution.
Therefore, Credit Union is unlikely to have standing to assert claims on behalf of the Unauthorized Individuals. See Hunt v. Washington State Apple Advertising Comm'n, 432 U.S. 333, 343, 97 S.Ct. 2434, 2441, 53 L.Ed.2d 383 (1977). Thus, at this time, it is unnecessary to consider the merits of Credit Union's claims on behalf of the Unauthorized Individuals. Bradley, 910 F.2d 1172.
III. Likelihood of Success
The crux of Credit Union's claims is that Department's current position with regard to the Field Definition contained in the Order differs from the agreement reached when the Stipulation was executed.[7] This claim does not appear to implicate any constitutional concerns.
A. Procedural Due Process
The predicate for requiring a governmental entity to comply with the rudiments of procedural due process is a determination that some constitutional interest is at stake. Stana v. School Dist. of City of Pittsburgh, 775 F.2d 122, 125 (3d Cir.1985). Here, Credit Union claims a property interest in its business association with the Unauthorized Individuals.
To have a constitutionally protected property interest, there must be a legitimate claim of entitlement. Stana, 775 F.2d at 126. While, a clearly implied promise can give rise to a constitutionally protected property right, Cornell v. Higginbotham, 403 U.S. 207, 91 S.Ct. 1772, 29 L.Ed.2d 418 (1971), a person must have more than a unilateral expectation that such an entitlement exists. Board of Regents v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 2709, 33 L.Ed.2d 548 (1972). The present record does not establish a clear promise. Rather, there exists an ambiguous cease and desist order to which Credit Union consented and then aggressively construed.
An existing governmental rule with a mutually explicit understanding can give to property interests protected by procedural due process. Stana, 775 F.2d at 125-126. Here, there is no reasonable likelihood Credit Union could establish such a clear mutual understanding between itself and the state.
In short, plaintiff cannot derive a property right entitled to due process protection from what was likely a simple misunderstanding with Department. The Order made explicit provision for plaintiff's continuing business in the Four Counties. The New Jersey regulatory authority would not agree fully with that provision, but offered another, different opportunity for Credit Union to conduct business in New Jersey. The other, different opportunity continuing to service new employees of business/employer groups located outside the Four Counties was not authorized in the Order.
The court can understand the frustrations of Credit Union in dealing with a regulatory *853 bureaucracy in which the only person having any familiarity with its affairs had left the agency. However, Credit Union did not go back to the Pennsylvania regulatory authority to re-negotiate the Order. It simply relied on its own sense of what was just and seized the new opportunity authorized by New Jersey.
A subsequent audit by the Pennsylvania regulator simply missed the issue raised by plaintiff's engaging in New Jersey business which was not authorized by the Order. When the Pennsylvania regulatory eventually focused on what was happening, it objected. The New Jersey opportunity was unauthorized and violated the notion of a geographical core of common membership.
Having never "contracted" with Pennsylvania for the New Jersey opportunity, it is unlikely the plaintiff will prove a property interest derived from negotiations for a consent decree worded against the plaintiff's position, even supplemented by the inadvertence of an auditors failure to pick up plaintiff's aggressive business posture and by casual remarks in the negotiations leading to the consent decree.
Since Credit Union is unlikely to establish a constitutionally protected property right, its due process claim is unlikely to succeed.[8]
B. Substantive Due Process
Regulations do not violate substantive due process if they are rationally related to a legitimate state interest. Midnight Sessions Ltd. v. City of Philadelphia, 945 F.2d 667, 682 (3d Cir.1991). Substantive due process protects solely against government actions that are not within the legitimate purview of the state's power. Sinaloa Lake Owners Ass'n v. City of Simi Valley, 882 F.2d 1398, 1409 (9th Cir.), cert. denied, 494 U.S. 1016, 110 S.Ct. 1317, 108 L.Ed.2d 493 (1990). Department has the power to define Credit Union's field of operation. 17 Pa.C.S.A. § 701. NCUA has no authority to insure accounts outside Credit Union's field of operation. 12 U.S.C. § 1781. Therefore, to prevail, Credit Union must establish that the Department's regulation of Credit Union's field of operation bears no rational relation to a legitimate state interest. Credit Union is unlikely to succeed in proving this contention.
C. Commerce Clause
State laws that unreasonably burden interstate commerce are at odds with the commerce clause, U.S. Const., Art. I, Sec. 8. See Lewis v. BT Investment Managers, Inc., 447 U.S. 27, 36, 100 S.Ct. 2009, 2015, 64 L.Ed.2d 702 (1980). However, so long as a state regulates even-handedly to effectuate a legitimate local public interest, and the effects on interstate commerce are incidental, its regulation will be valid, unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits. Pike v. Bruce Church, Inc., 397 U.S. 137, 142, 90 S.Ct. 844, 847, 25 L.Ed.2d 174 (1970).
It is unlikely that Credit Union can establish that the Department's regulation of credit union eligibility unreasonably burdens interstate commerce.
D. Privileges and Immunities Clause
The privileges and immunities clause, U.S. Const., Art. IV, Sec. 2, was designed to ensure to a citizen of State A, who is subject to the regulation of State B, the same privileges that the citizens of State B enjoy. See e.g., Toomer v. Witsell, 334 U.S. 385, 395, 68 S.Ct. 1156, 1161, 92 L.Ed. 1460 (1948). There is no question that individuals inside Credit Union's authorized field of operation are treated similarly and without regard to their state citizenship. Likewise, there is no question that individuals outside Credit Union's authorized field of operation are treated similarly and without regard to their state citizenship. Therefore, it is unlikely that Credit Union can establish a violation of the privileges and immunities clause.
E. State Law
It is likely that the Eleventh Amendment of the United States Constitution bars this *854 court's jurisdiction over Credit Union's state law claims. Pennhurst State School and Hospital v. Halderman, 465 U.S. 89, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984). Credit Union's state law claims are not likely to succeed.
IV. Third Party Interests
Based on the September 3, 1993 letter dispatched by Credit Union to the Unauthorized Individuals, the Unauthorized Individuals believe their deposits may not be insured. NCUA believes that their deposits are not insured. A grant of injunctive relief would prevent the Unauthorized Individuals from knowing the stance of NCUA and Department.
Accurate information is of the utmost importance to investors. See e.g. Basic v. Levinson, 485 U.S. 224, 108 S.Ct. 978, 99 L.Ed.2d 194 (1988). Investment decisions based on incomplete or inaccurate information can result in substantial harm. Id. Therefore, the interests of the Unauthorized Individuals weigh in favor of denying preliminary injunctive relief.
NOTES
[1] Credit Union contends that the phrase, "if not in violation of the law of the state in which the member is located," was unilaterally inserted by Department and was not agreed to at the April 18, 1991 meeting.
[2] It is not disputed that under the Order Credit Union was permitted to: (a) fully service all New Jersey business/employer groups in the Four Counties; and (b) service the existing members of those New Jersey business/employer groups outside the Four Counties that were serviced by Credit Union on May 1, 1991 and were admitted to membership prior to April 19, 1991, subject to approval by the New Jersey Department of Banking.
[3] The Department's position is that current employer location is the only factor to be considered in determining applicant eligibility. In other words, the applicant's residence is irrelevant. Credit Union argues that an employer's former location and applicant residence should be considered in determining eligibility.
[4] NCUA agreed to refrain from notifying these individuals until Credit Union's preliminary injunction request has been ruled upon.
[5] This is an action under the Civil Rights Act of 1871, 42 U.S.C. § 1983. This court has jurisdiction pursuant to 28 U.S.C. § 1331 and 1343.
[6] Jepsen argues that this matter is not ripe for resolution because NCUA has not made a final adjudication with regard to the insured status of Credit Union accounts. In this instance, NCUA's actions with regard to Credit Union are dependent upon the actions of Pennsylvania and not federal administrative process. As discussed above, Pennsylvania's administrative process is complete. Therefore, this matter is ripe.
[7] Credit Union does not question the fundamental authority of either Department or NCUA to regulate its activity.
[8] Credit Union also claims a liberty interest in its business association with the Unauthorized Individuals. Again, an ambiguous cease and desist order cannot give rise to a constitutionally protected liberty interest. See Roth 408 U.S. at 572-576.
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F"I’i.ED
UNITED sTATEs DISTRICT coURT FEE 2 5 2014
FoR THE DISTRICT oF CoLUMBIA C§'j,'f§ §’d§t-hg'~'[»)flrs'§rrig g::ékrlup¢g¥
CU|'H 8
)
MICHAEL TYsoN LEE, )
)
Plaintiff, )
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v. ) Civil Action No. /jL "" `g/O
)
Cov1NGToN CoUNTY SHERIFF’S )
DEPARTl\/IENT, et al. , )
)
Defendants. )
)
MEMORANDUM OPINION
This matter is before the Court on the plaintiff’ s application to proceed in forma pauperis
and his pro se complaint. The Court will grant the application and dismiss the complaint.
According to the plaintiff, on May 4, 2004, he was arrested in Andalucia, Alabama, and
charged crimes he did not commit, namely unlawful manufacturing of a controlled substance,
possession of drug paraphemalia, and possession of marijuana Compl. at 3-6. He allegedly had
been detained for 10 months when, based on his "fear of spending several years of his life in
prison for a crime he did not commit," he "entered a coerced plea of guilty to obtain his
freedom." Ia'. at 8. Apparently because of his criminal conviction, the plaintiff lost a scholarship
to attend McArthur Technical College, Social Security benefits, and wages he would have earned
but for his incarceration. See id. at 9. "Due to the violation of [the plaintiff s] constitutional
rights" in the course of his unlawful arrest, imprisonment and conviction," id. at 3, the plaintiff
has demanded "$l,580,000 . . . for punitive and mon[e]tary damages," id. at l0.
"[A] criminal defendant may not recover damages under 42 U.S.C. § 1983 for ‘harm
caused by actions whose unlawfulness would render [his] conviction or sentence invalid’ unless
‘the conviction or sentence has been reversed on direct appeal, expunged by executive order,
declared invalid by a state tribunal authorized to make such determination, or called into
question by a federal court’s issuance of a writ of habeas corpus."’ Wl`lliams v. Hill, 74 F.3d
1339, 1340 (D.C. Cir. 1996) (citing Heck v. Humphrey, 512 U.S. 477, 487 (l994)). "The
rationale of Heck applies equally to claims against federal officials in Bz`vens actions." Id.
ln this case, the Court "must consider whether a judgment in favor of the plaintiff would
necessarily imply the invalidity of his conviction or sentence; if it would, the complaint must be
dismissed unless the plaintiff can demonstrate that the conviction or sentence has already been
invalidated." Heck, 512 U.S. at 487. If the plaintiff s allegations were proved true, the ruling
would undermine the validity of his criminal conviction. Because he has not shown that his
conviction or sentence has already been invalidated, this civil rights action for damages must be
dismissed.
An Order accompanies this Memorandum Opinion.
57a/s j /¢w
DATE; 11 /(‘//%
United States District Judge
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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
DARRELL JOSEPH JACKSON, JR.,
Petitioner,
v. Civil Action No. 13-1936 (JEB)
UNITED STATES PAROLE
COMMISSION,
Respondent.
MEMORANDUM OPINION
Darrell Joseph Jackson, Jr., filed this pro se Petition For a Writ of Habeas Corpus,
alleging that his term of supervised release had expired prior to the U.S. Parole Commission’s
issuance of a violation warrant in June 2012, thus rendering his return to confinement improper.
Although the Warrant Application does indicate an expiration date of April 29, 2012, the
government shows that this was plainly a typo and that the USPC had properly ordered that
Petitioner’s supervised release run until April 29, 2014. As a result, the Court will deny the
Petition.
I. Background
The U.S. Parole Commission does a commendable job in its Opposition of explaining the
lengthy procedural history of this D.C. Superior Court case, which this Court will briefly recap.
When he was released from incarceration in December 2007, Petitioner began service of a five-
year term of supervised release, which would terminate in December 2012. See Opp., Exh. 2
(Certificate of Supervised Release). After violating the terms of such release, Petitioner was
arrested in August 2008 and agreed to an additional 12 months’ imprisonment, followed by a
1
new 48-month term of supervised release. See Opp., Exh. 4 (Response to Expedited Revocation
Proposal). He then began his supervised release in August 2009, which term would run until
August 2013. See Opp., Exh. 6 (Certificate of Supervised Release). Arrest on a subsequent
violator warrant in September 2010 led to no additional punishment. See Opp., Exh. 8 (D.C.
Probable Cause Hearing Digest); Exh. 11 (SRAA Local Revocation). In October 2011, Jackson
was arrested on yet another violation warrant and agreed to a new 11-month term of
imprisonment, followed by a new 25-month term of supervised release. See Opp., Exh. 15
(SRAA Revocation). He was released on March 30, 2012, to begin this 25-month term, which
would expire on April 29, 2014. See Opp., Exh. 15-A (Certificate of Supervised Release).
When he violated this latest supervision on April 9, 2012 (only ten days after release), the
USPC issued its last violation warrant on June 5, 2012. This is where the error occurred. In the
date for “Termination of Supervision,” the warrant application lists “4/29/2012,” instead of the
correct date of 4/29/2014. See Pet. at ECF p. 7 (Warrant Application). For some reason,
Petitioner was not arrested on the June 2012 warrant until October 2013, and after his December
2013 hearing, he was sentenced to a 13-month term of imprisonment with no further supervised
release. See Opp., Exh. 19 (SRAA Local Revocation).
Jackson then brought this Petition for a Writ of Habeas Corpus.
II. Analysis
In his Petition, Jackson first claims a due-process violation in that his sentence expired
prior to the supervised-release warrant being issued. He also alleges: “Due process violation in
Accord with the American Disability Act under Mental Health[.] Defendant Richardson Rights
were violate in accord with mental health provisions under the color of law void ab initio [sic].”
Pet. at ECF p. 5.
2
District of Columbia prisoners are entitled to habeas corpus relief if they establish that
their “custody [is] in violation of the Constitution or laws or treaties of the United States.” 28
U.S.C. § 2241(c)(3). In this matter, Petitioner asserts that the foregoing alleged misconduct
deprived him of due process. A parolee has a Fifth Amendment liberty interest in maintaining
his conditional freedom and therefore is entitled to due process prior to revocation. See Ellis v.
District of Columbia, 84 F.3d 1413, 1420 (D.C. Cir. 1996) (citing Morrissey v. Brewer, 408 U.S.
471 (1972)).
As to Jackson’s first claim – i.e., that the issuance of the warrant occurred after the
expiration of his supervision – the Court has already explained that any confusion derives from
the typographical error on the Warrant Application. See Section I, supra. He does not contend
that he was improperly sentenced in November 2011 to an 11-month term of imprisonment to be
followed by a 25-month term of supervised release. Nor does he challenge that such release term
began in March 2012 and was set to end in April 2014. The fact that the Warrant Application
mistakenly said “4/29/2012” does not change that or somehow give rise to a due-process claim
here. See, e.g., Atkinson v. Guzik, No. 95-5261, 1995 WL 499502, at *2 (6th Cir. 1995) (“A mere
clerical error or misuse of semantics in a Commission document does not preclude the Commission’s
proper application of its regulations and the applicable statutes.”); Hammons v. Sheriff of Jefferson
County, Tex., 901 F.2d 59, 60 (5th Cir. 1990) (technical and non-prejudicial error in parole warrant
did not result in constitutional violation; “technical error which does not in any way prejudice the
prisoner does not serve to void the warrant”); Wenger v. Graber, No. 00-6212, 2001 WL 830970, at
*2 (N.D. Ill. 2001) (Report and Recommendation) (“Wenger is not entitled to benefit from a clerical
error on the certificate of parole. It is a well settled rule that a clerical error in a government agency
communication does not affect an otherwise valid judgment or sentence pronouncement.”).
3
Jackson’s second claim, which ostensibly relates to the Americans with Disabilities Act,
requires no analysis because it is incomprehensible. It refers to “Defendant Richardson,” the
“American Disability Act,” and “mental health provisions.” Pet. at ECF p. 5. As Petitioner does
not explain what he is complaining about and as the Court cannot on its own decipher the
problem, such allegation cannot proceed further.
III. Conclusion
The Court, therefore, will issue a contemporaneous Order denying the Petition.
/s/ James E. Boasberg
JAMES E. BOASBERG
United States District Judge
Date: February 21, 2014
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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
____________________________________
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SALIM BILAL-EDWARDS, )
)
Plaintiffs, )
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v. ) Civil Action No. 11-2220 (RBW)
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UNITED PLANNING )
ORGANIZATION, et al., )
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Defendants. )
____________________________________)
MEMORANDUM OPINION
The plaintiff in this civil case, Salim Bilal-Edwards, filed a six-count complaint against
the defendants, the United Planning Organization (“UPO”) and two individuals, De Angelo
Rorie and Andrea Thomas, alleging claims of wrongful termination, negligence, extreme and
outrageous conduct, hostile work environment, and retaliation under the Whistleblower
Protection Act, 5 U.S.C. § 2302(b) (2006), and violation of the Age Discrimination in
Employment Act of 1967 (“ADEA”), 29 U.S.C. §§ 621-634 (2006). The Court dismissed all the
claims except for the plaintiff’s ADEA claim in prior rulings. See Bilal-Edwards v. United
Planning Org., 896 F. Supp. 2d 88, 93-98 (D.D.C. 2012) (dismissing the plaintiff’s claims of
wrongful termination, negligence, extreme and outrageous conduct, and hostile work
environment); ECF No. 58 (dismissing the plaintiff’s Whistleblower Protection Act claim).
Currently before the Court are the parties’ cross motions for summary judgment on the plaintiff’s
remaining age discrimination claim. See generally Plaintiff’s Motion for Summary Judgment
1
(“Pl.’s Mot.”); 1 Defendants’ Motion for Partial Summary Judgment (“Defs.’ Mot.”). The
plaintiff also seeks leave to amend his complaint. See generally Motion to Amend Complaint
(“Pl.’s Amend Mot.”). Upon careful consideration of the parties’ submissions, 2 the Court
concludes that the defendants’ motion for summary judgment must be granted, and the plaintiff’s
motions for summary judgment and to amend his complaint must be denied.
I. BACKGROUND
The following facts are undisputed. 3 The UPO “is the Community Action Agency for the
District of Columbia,” and “is a 501(c)(3) tax exempt organization.” Defs.’ Facts ¶ 1. “During
[the] [p]laintiff’s period of employment at [the] UPO, it was comprised of” various programs and
1
The plaintiff’s filing includes several documents with duplicate titles. For ease of reference, the Court refers to the
entire filing by the title on the first page, Plaintiff’s Motion for Summary Judgment, and refers to the ECF page
numbers assigned when the filing was docketed.
2
In addition to the submissions already identified, the Court considered the following submissions made by the
parties in rendering its decision: (1) the Defendants’ Opposition to Plaintiff’s Motion for Summary Judgment
(“Defs.’ Opp’n”); (2) the Plaintiff’s Response to Defendants’ Opposition to Plaintiff’s Summary Judgment (“Pl.’s
Reply”); (3) the Defendants’ Statement of Material Facts as to Which There is no Genuine Issue (“Defs.’ Facts”);
(4) the Plaintiff’s Opposition to Defendants’ Motion for Partial Summary Judgment (“Pl.’s Opp’n”); (5) the
defendants’ Reply Memorandum in Support of Defendants’ Motion for Partial Summary Judgment (“Defs.’
Reply”); (6) the Plaintiff’s Response to Defendants’ Reply in Support of Defendants’ Motion for Partial Summary
Judgment; (7) the Sur-Sur-Reply Memorandum in Support of Defendants’ Motion for Partial Summary Judgment;
(8) the Defendants’ Opposition to Plaintiff’s Motion to Amend Complaint (“Defs.’ Amend Opp’n”); (9) the
Response to Defendants’ Opposition to Plaintiff’s Motion to Amend Complaint (“Pl.’s Amend Reply”); (10) the
plaintiff’s Request for Document to be Entered into Court Records (“Pl.’s Req.”); and (11) the Defendants’
Opposition to Plaintiff’s Request for Document to be Entered into Court Records.
Although the plaintiff’s Request for Document to be Entered into Court Records was filed well after the completion
of summary judgment briefing, the Court grants the plaintiff’s Request, which the Court construes as a motion to
supplement the exhibits submitted with his motion for summary judgment.
3
The plaintiff failed to file a separate statement of undisputed fact as required by Local Civil Rule 7(h)(1). To the
extent that he includes headings in his pleadings referencing the facts on which he is relying, he largely fails to cite
to the record. And although the plaintiff purports to support his arguments with the substance of what he contends
are “telephone depositions of several” UPO employees, Pls.’ Mot. at 12, the Court cannot consider them. This
proscription is required because the answers to the purported deposition questions were prepared by the plaintiff,
Defs.’ Facts, Ex. F (Salim Bilal-Edwards Deposition Transcript (“Pl. Dep. Tr.”)) at 16:9-17:25, and there being no
indication that the deponents or declarants adopted the statements, the statements constitute inadmissible hearsay.
See Fed. R. Evid. 801(c), 802. Accordingly, the Court must rely on the Defendants’ Statement of Material Facts as
to Which There is no Genuine Issue. Cf. Fed. R. Civ. P. 56(e) (“If a party fails to properly support an assertion of
fact or fails to properly address another party’s assertion of fact as required by Rule 56(c), the court may . . .
consider the fact undisputed for purposes of the motion.”).
2
divisions, including the Youth Services Division (“Division”). Id. The “UPO receives a variety
of grants and contracts from the federal government and the District of Columbia government,”
some of which support the activities of the Division. Id. ¶ 2; see also id. ¶¶ 3-4. Among the
grants and contracts was “a grant from the U.S. Dream Academy to help fund the programs at
the [UPO’s] James Creek location.” Id. ¶ 2. The “UPO also receives some private funding,”
including funding for the Division’s Beaver Scholarship program. Id. ¶ 4.
Defendant Andrea Thomas “was hired as the first Director of the” Division at the UPO in
2007. Id. ¶ 5. The Division expanded in 2009, and the “UPO hired an Assistant Director.” Id.
Thomas “and then Chief Operating Officer . . . , Gladys Mack, recommended [that the] [p]laintiff
be hired as the Assistant Director,” id. (citing Defs.’ Facts, Exhibit (“Ex.”) A (Declaration of
Andrea Thomas (“Thomas Decl.”)) ¶ 7), and the “[p]laintiff commenced his employment with
[the] UPO on March 23, 2009, as the Assistant Director of the” Division, id. ¶ 6 (citing Defs.’
Facts, Exs. C (New Hire Request Form dated March 23, 2009), D (March 13, 2009 Employment
Offer Letter (“Offer Letter”))). The plaintiff “was an at-will, salaried, exempt employee,” id.
(citing Defs.’ Facts, Ex. D (Offer Letter)), and he was initially supervised by Thomas, id. 6. The
plaintiff’s duties at the UPO included “assisting the [Division] Director in the daily
administration of [D]ivision projects as directed and assigned, and to work with other [Division]
staff to ensure coordinated efforts.” Id. (citing Defs.’ Facts, Ex. E (Youth Services Division
Assistant Director Job Description (“Job Description”)). In particular, the “[p]laintiff was
assigned the responsibility of overseeing and implementing the [Division’s] program at James
Creek,” which is a “community in southwest Washington, D.C.” Id. ¶ 11.
3
“In or about October 2009, some of the [Division] staff moved into [a] recently renovated
space commonly referred to within [the] UPO as the Alabama Avenue facility or just ‘Alabama
Avenue.’” Id. ¶ 43. Other staff from the Division also moved to the Alabama Avenue facility
“later in late 2009 or early 2010.” Id. Division employees “whose desks were adjacent to a rest
room area, noticed a periodic strong odor,” and “complained about the odor.” Id. “Of the five
[Division] staff located in the part of the building where the odor was strongest, only [the]
[p]laintiff” and another employee were over 40. Id. ¶ 44. The UPO “undertook efforts directly
and through the building management company to try to determine the source of the odor and
remediate it” after receiving a written complaint from an employee who was under the age of 40.
Id.
On October 1, 2009, Thomas became the UPO’s Chief of Staff. Id. ¶ 7. She “continued
to also serve as the Director” of the Division “until the new Director was hired and began
service.” Id. The “UPO hired De Angelo Rorie, the other individual defendant, as the new
Director of the [Division] on November 9, 2009.” Id. ¶ 10. Rorie then became the plaintiff’s
immediate supervisor. Id.
Around the same time that Rorie commenced his employment with the UPO, the Division
also selected Tina Dawson as “a part-time Youth Services Worker to operate the youth programs
at James Creek.” Id. ¶ 12. After Dawson was notified “that she had been selected for the . . .
position,” the UPO began a required “pre-employment screening including drug testing, and . . .
criminal background checks and the [District of Columbia] Child Protection Register check.” Id.
While the screening was ongoing, the “UPO considered other staffing options to move the
implementation of youth services at James Creek forward.” Id. ¶ 13.
4
Initially, “Rorie spoke with Jemeka Brown, a [Division] Case Manager for the Providing
Opportunities with Educational Readiness Program known as ‘P.O.W.E.R.’, about changing
positions in the [Division].” Id. ¶ 14. Rorie wanted Brown “to consider changing from her Case
Manager position with the P.O.W.E.R. program, to the Youth Services Worker position at James
Creek,” which “would have entailed a formal change in positions, responsibilities, and hours.”
Id. Brown “was not interested in changing positions,” because “she was a graduate student at
Howard University and also had an internship, and the scheduled hours for James Creek would
have conflicted.” Id. “As a result of those obligations, she informed [] Rorie that she was not
available for the times needed to staff James Creek and that she would resign if he directed her to
take the James Creek assignment.” Id. (citing Defs.’ Facts, Ex. K (Declaration of Jemeka Brown
(“Brown Decl.”)) ¶¶ 4, 6-7).
“[I]n late 2009 or early 2010, [] Rorie spoke with DeVita Lanham, another [Division]
Case Manager, about changing positions in the [Division].” Id. ¶ 15. He explained to Lanham
“that ongoing funding for her position” was “questionable” because of grant uncertainties. Id.
Rorie asked “if she was interested in changing jobs from her full-time Case Manager position to
the part-time Youth Services Worker position at James Creek.” Id. “Lanham declined the offer
to transfer positions and to go from full-time to part-time.” Id.
Also “[i]n late 2009 or early 2010,” Thomas spoke with both Lanham “and LaShawn
Reeder, a Retention Placement Specialist who shared duties with [] Lanham, regarding several
issues related to the [Division],” including the funding uncertainties surrounding both Lanham
and Reeder’s positions. Id. ¶ 16. Thomas additionally “raised the issue of needing to get the
youth program at James Creek up and running” and “indicated that the Division may need their
5
assistance with this project.” Id. Both Lanham and Reeder “agreed to help” and “understood
that they were not being offered the position and that their help would be temporary, since []
Dawson was selected for the position and was going through the pre-employment screening
process.” Id. (citing Defs.’ Facts, Exs. A (Thomas Decl.) ¶ 15, L (Declaration of LaShawn
Reeder (“Reeder Decl.”)) ¶ 11).
Rorie spoke with the plaintiff “on or about January 28 and 29, 2010, regarding [the
Division’s] need for [the] [p]laintiff to take a more active role to implement the program at
James Creek.” Id. ¶ 18. Rorie asked the “[p]laintiff to oversee the program and implement the
program, including recruiting youth and starting up performance of the services by working at
the site for several hours a day, three days per week, until the new Youth Services Worker
commenced employment.” Id. Rorie told the “[p]laintiff that this was a temporary
responsibility, it was not a demotion or job transfer, and it would not result in a reduction of
pay,” and that the “[p]laintiff was to get the program off the ground until the new Youth Services
Worker was hired.” Id. However, the “[p]laintiff refused to do what was necessary to
implement the program at James Creek by taking up those duties for the requested three days per
week for several hours each day.” Id. ¶ 19; see also Defs.’ Facts, Ex. O (Memoranda from Salim
Bilal-Edwards to Human Resources) at 8.
Rorie spoke with Thomas and personnel in the UPO’s Human Resources department
“regarding how to handle the [p]laintiff’s . . . response” to the request that he staff the James
Creek project. Defs.’ Facts ¶ 21. Human Resources personnel and Thomas “suggested [] Rorie
issue a written warning,” id., and “[o]n or about February 3, 2010, [] Rorie issued the written
warning to [the] [p]laintiff.” Id. (citing Defs.’ Facts, Ex. M (Employee Warning Notice)). The
6
warning stated that “[f]ailure to comply with the directive to oversee the start up operations and
implementation of the James Creek cite [sic] will result in further disciplinary action up to and
including termination.” Defs.’ Facts, Ex. M (Employee Warning Notice).
Subsequently, the “[p]laintiff sent an email to [] Rorie following up their conversation
about [the] [p]laintiff’s concerns with the [written warning], and also sent [Human Resources] a
copy of the e-mail.” Defs.’ Facts. ¶ 22. “On or about February 19, 2010, Nnenna Ugorji, then
UPO’s Human Resources Director, met with [the] [p]laintiff to discuss his concerns,” but the
meeting did not result in a withdrawal of the warning. Id. ¶ 23. “The next day, [the] [p]laintiff
sent a follow-up e-mail to [Human Resources] stating that the ‘real issue’ he tried to express in
his prior e-mail was that [] Rorie had engaged in an ‘unfair labor practice.’” Id. “Human
Resources offered to set up a meeting” between the plaintiff and Rorie, but the “[p]laintiff
declined, stating that a further meeting was unnecessary, as they understood each other’s
positions.” Id. Human Resources “advised [the] [p]laintiff that they found his concerns were
unfounded,” and “reminded [him] that servicing James Creek was an important obligation of
[the] UPO and [] Rorie had full authority to initiate discipline of insubordination by his staff.”
Id.; see also Defs.’ Facts, Ex. U (Email Correspondence).
“Later in February, [] Rorie met with [] Reeder and [] Lanham regarding James Creek,”
and asked if they would “help start the program at James Creek by sharing the load,” which
meant each would “cover one day at James Creek and [they would] split coverage for the third
day at James Creek, with the other covering their” other shared duties. Id. ¶ 24. “This request
did not involve a change in position or a reduction in pay,” and was a request “to temporarily
help with James Creek until the new employee was on board.” Id. Lanham “voiced displeasure
7
with this assignment,” but both she and Reeder “agreed to assist with the program at James
Creek.” Id. Rorie, Lanham, and Reeder “met with several other individuals from [the] UPO
involved with the other UPO programs at James Creek,” and some of these individuals “agreed
to help recruit local youth to participate in the [Division’s] programs. Id. ¶ 25.
“On or about March 1, 2010,” Lanham tendered her resignation, and her “last day [of
work] was scheduled for March 25, 2010.” Id. ¶ 27. “At or around this time, [] Dawson was
cleared to start her employment conditionally, and [Human Resources] issued an offer of
employment letter to her on March 11, 2010.” Id. ¶ 28. Dawson began working on March 15,
2010, but tendered her resignation the next day. Id.
Rorie “decided that he needed to insist that [the] [p]laintiff implement the program at
James Creek until another staff member could be hired to run the program or, if necessary, until
the program ended in July.” Id. ¶ 30. Rorie consulted Division “staff members who were
receiving help from [the] [p]laintiff with their programs. Those staff indicated that while [the]
[p]laintiff’s assistance would be missed, they could run their programs without him.” Id. ¶ 31;
see also Defs.’ Facts, Ex. G (Declaration of Tanya Henderson (“Henderson Decl.”)) ¶¶ 7, 14.
Rorie spoke with the plaintiff “on or about March 17, 2010” about “the organization’s need for
[the] [p]laintiff to implement the program at James Creek until someone was hired to work the
program,” and “indicated that he no longer had any options but to have [the] [p]laintiff begin to
implement the program.” Defs.’ Facts ¶ 32. The “[p]laintiff demanded that the meeting stop
until they had a third party to participate in the meeting.” Id. Subsequently, the plaintiff and
Rorie met with Human Resources personnel to discuss the matter. Id. The plaintiff ultimately
“would not agree to accept th[e] directive” to “run the James Creek program.” Id. ¶ 34.
8
Thereafter, Rorie, with the approval of Thomas, sent a memorandum to Human
Resources “recommending [the] [p]laintiff’s termination for insubordination and failure to
display a behavior standard that is conducive to a positive working atmosphere.” Id. ¶ 39; see
also Defs.’ Facts, Ex. X (April 19, 2010 Memorandum). Human Resources “approved the
recommendation to terminate [the] [p]laintiff,” Defs.’ Facts ¶ 39, and the plaintiff’s employment
was terminated on May 3, 2010, id. ¶ 40. The “UPO did not fill the position of Assistant
Director of the [Division] after [the] [p]laintiff’s termination and has no plans to do so.” Id. ¶ 42.
The “[p]laintiff filed a charge of discrimination against [the] UPO with the Equal
Employment Opportunity Commission (“EEOC”) on May 26, 2010, alleging discrimination
based on age and sex.” Id. ¶ 46; see also Defs.’ Facts, Ex. N (EEOC Complaint). The plaintiff’s
EEOC Complaint states:
I was asked by the Director along with two younger female employees to accept
another job assignment as a Youth Services Worker. The duties of the position
were directly related to the positions held by the female employees, but they
declined to accept the job assignment. However, the job assignment was a
different classification than mine and it was a demotion. On 05/03/2010, I was
the only employee that was reprimanded and terminated for refusing to oversee
and run a program. The female employees that were asked did not receive any
form of discipline or termination for refusing the job assignment.
Defs.’ Facts, Ex. N (EEOC Complaint). “On August 9, 2011, the EEOC issued a Dismissal and
Notice of Rights after determining that it was ‘unable to conclude that the information obtained
establishes violations of the statutes.’” Defs.’ Facts ¶ 47 (quoting Defs. Facts, Ex. CC
(Dismissal of Notice and Rights)).
9
II. STANDARDS OF REVIEW
A. Rule 56 Motion for Summary Judgment
A motion for summary judgment must be granted “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,” based upon the depositions, affidavits, and other factual materials in the record. Fed. R.
Civ. P. 56(a), (c). A fact is “material” if it “might affect the outcome of the suit under the
governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). And “a dispute
over a material fact is ‘genuine’ if ‘the evidence is such that a reasonable jury could return a
verdict for the nonmoving party.’” Arrington v. United States, 473 F.3d 329, 333 (D.C. Cir.
2006) (quoting Anderson, 477 U.S. at 248). The moving party bears the initial burden of
showing the absence of a disputed material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323
(1986). The burden then shifts to the opposing party to “set forth specific facts showing that
there is a genuine issue for trial.” Anderson, 477 U.S. at 248. “Although summary judgment is
not the occasion for the court to weigh credibility or evidence, summary judgment is appropriate
‘if the nonmoving party fails to make a showing sufficient to establish the existence of an
element essential to that party’s case, and on which that party will bear the burden of proof at
trial.’” Talavera v. Shah, 638 F.3d 303, 308 (D.C. Cir. 2011) (citations omitted). “[T]here is no
issue for trial unless there is sufficient evidence favoring the nonmoving party for a [reasonable]
jury to return a verdict for that party.” Anderson, 477 U.S. at 249. In making this assessment,
“[t]he evidence is to be viewed in the light most favorable to the nonmoving party and the court
must draw all reasonable inferences in favor of the nonmoving party.” Talavera, 638 F.3d at 308
(citing Anderson, 477 U.S. at 255).
10
B. Rule 15 Motion to Amend
“A party may amend its pleading once as a matter of course” before the adverse party has
filed a responsive pleading. Fed. R. Civ. P. 15(a). However, after a responsive pleading has
been filed, the initial pleading may be amended “only with the opposing party’s written consent
or the court’s leave.” Id. While the Court has sole discretion to grant or deny leave to amend,
“[l]eave to amend a [pleading] should be freely given in the absence of undue delay, bad faith,
undue prejudice to the opposing party, repeated failure to cure deficiencies, or futility.”
Richardson v. United States, 193 F.3d 545, 548-49 (D.C. Cir. 1999) (citing Foman v. Davis, 371
U.S. 178, 182 (1962)). The rationale for this perspective is that “[i]f the underlying facts or
circumstances relied upon by a plaintiff may be a proper subject of relief, he ought to be afforded
an opportunity to test his claim on the merits.” Foman, 371 U.S. at 182.
III. LEGAL ANALYSIS
A. The Plaintiff’s ADEA Claims
The plaintiff argues that he is entitled to summary judgment because the defendants have
not shown that younger employees were reprimanded and terminated for refusing requests to
staff the James Creek project. Pl.’s Mot. at 4. He further argues that the defendants’ failure to
respond to his complaints of an odor at the UPO’s Alabama Avenue office and subsequent
response to the complaints of a younger employee also evidences age discrimination. 4 Pl.’s
Opp’n at 8.
The ADEA provides in pertinent part that it is unlawful for an employer “to discharge
any individual or otherwise discriminate against any individual . . . because of such individual’s
4
The plaintiff also makes several arguments about his claim under the Whistleblower Protection Act, 5 U.S.C. §
2302(b). Because the Court has already dismissed the Whistleblower Protection Act claim with prejudice, see ECF
No. 58, these arguments are not addressed in this Memorandum Opinion.
11
age.” 29 U.S.C. § 623(a)(1). However, it is not “unlawful for an employer . . . to discharge or
otherwise discipline an individual for good cause.” Id. § 623(f)(3). To succeed on an ADEA
claim, the plaintiff “must prove, by a preponderance of the evidence, that age was the ‘but-for’
cause of the challenged adverse employment action.” Gross v. FBL Fin. Servs., 557 U.S. 167,
180 (2009). In the absence of direct evidence of discrimination, this Circuit applies the burden-
shifting framework set out in McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973), in cases
brought under the ADEA. See Chappell-Johnson v. Powell, 440 F.3d 484, 487 (D.C. Cir. 2006);
Paquin v. Fed. Nat’l Mortg. Ass’n, 119 F.3d 23, 26 (D.C. Cir. 1997). The first stem in the
McDonnell Douglas test is to determine whether the plaintiff has established a prima facie case
of discrimination. 411 U.S. at 802. In order to establish a prima facie case in the context of an
ADEA employment termination claim, the plaintiff must show that he (1) belongs to the
statutorily protected age group, (2) was qualified for the position, (3) was terminated, and (4)
was disadvantaged in favor of a younger person. Hall v. Giant Food, Inc., 175 F.3d 1074, 1077
(D.C. Cir. 1999); Jones v. Bernanke, 493 F. Supp. 2d 18, 27 (D.D.C. 2007), aff’d, 557 F.3d 670
(D.C. Cir. 2009). Once this first prong is satisfied, the burden of production shifts to the
defendant to identify a legitimate nondiscriminatory reason for the challenged employment
action. McDonnell Douglas, 411 U.S. at 802. If the defendant meets this burden of production,
the plaintiff must “prove by a preponderance of the evidence that the legitimate reasons offered
by the defendant were not its true reasons, but were a pretext for discrimination.” Texas Dep’t of
Cmty. Affairs v. Burdine, 450 U.S. 248, 253 (1981). However, “[i]t is not enough for the
plaintiff to show that a reason given for a job action is not just, or fair, or sensible. He must
show that the explanation given is a phony reason.” Fischbach v. Dep’t of Corrs., 86 F.3d 1180,
12
1183 (D.C. Cir. 1996) (quoting Pignato v. Am. Trans Air, Inc., 14 F.3d 342, 349 (7th Cir.
1994)).
At the summary judgment stage, however, the plaintiff’s ability to establish a prima facie
case is of little concern to the Court. As the Circuit held in Brady v. Office of the Sergeant at
Arms, 520 F.3d 490, 494 (D.C. Cir. 2008), 5 “where an employee has suffered an adverse
employment action and an employer has asserted a legitimate, non-discriminatory reason for the
decision, the district court need not—and should not—decide whether the plaintiff actually made
out a prima facie case under McDonnell Douglas.” Thus where, as here, an employer moves for
summary judgment, the Court is confronted with “one central question: Has the employee
produced sufficient evidence for a reasonable jury to find that the employer’s asserted non-
discriminatory reason was not the actual reason” for the adverse employment action, and that the
real reason for the employer’s action was to “intentionally discriminate[] against the employee
on the basis of [age].” Id.
1. The Plaintiff’s Claims Against the Individual Defendants
The defendants argue first that the individual defendants are entitled to summary
judgment because individuals cannot be liable under the ADEA. Defs.’ Mem. at 8. Another
member of this Court agreed recently with the defendants’ position, holding that “there is no
individual liability under . . . the ADEA.” Smith v. Janey, 664 F. Supp. 2d 1, 8 (D.D.C. 2009),
aff’d sub nom, Smith v. Rhee, No. 09-7100, 2010 WL 1633177 (D.C. Cir. 2010). And although
this Circuit has not directly addressed the issue, several other federal circuit courts agree that the
ADEA does not contemplate individual liability. See, e.g., Parikh v. UPS, 491 F. App’x 303,
5
Although Brady considered the McDonnell Douglas test in the context of a claim brought under Title VII of the
Civil Rights Act of 1964, 42 U.S.C. § 2000e-2, the logic of Brady applies in the ADEA context as well. See Jones
v. Bernanke, 557 F.3d 670, 678 (D.C. Cir. 2009) (applying Brady framework to retaliation claim under the ADEA).
13
308 (3d Cir. 2012) (“Neither Title VII nor the ADEA provides for individual liability.”); Guerra
v. Jones, 421 F. App’x 15, 17 (2d Cir. 2011) (“[D]ismissal of the . . . ADEA claims against the
individual [d]efendants was appropriate as [the] statute [does not] subject[] individuals, even
those with supervisory liability over the plaintiff, to personal liability.”); Jones v. Sternheimer,
387 F. App’x 366, 368 (4th Cir. 2010) (“[T]he ADEA . . . do[es] not provide for causes of action
against defendants in their individual capacities.”). This Court agrees with those courts, and
accordingly grants summary judgment to the defendants on the plaintiff’s ADEA claims against
the individual defendants.
2. The Plaintiff’s Claims Against the UPO
The defendants next argue that that the UPO has articulated a legitimate, non-retaliatory
reason for reprimanding and terminating the plaintiff. Defs.’ Mem. at 10. Specifically, they
contend that the UPO disciplined and subsequently terminated the plaintiff “based upon conduct
that [the] [p]laintiff does not dispute and acknowledges was insubordinate.” Id. at 11. During
his deposition, the plaintiff conceded that he “didn’t do the directive that he was given to [him]
for James Creek.” Defs.’ Facts, Ex. F (Pl. Dep. Tr.) at 78:14-19. The defendants submitted
declarations with their motion for summary judgment indicating that the UPO’s request that the
plaintiff staff the James Creek project “was well within [the plaintiff’s] job description and
management’s prerogative to direct employees to provide needed services to fulfill its
obligations.” Defs.’ Facts, Ex. A (Thomas Decl.) ¶ 18. Indeed, the job description for the
Assistant Director position includes as part of the position’s “duties and responsibilities” the task
of “[a]ssist[ing] the Director in the daily administration of division projects as directed or
14
assigned, including but not limited to staff supervision [and] program facilitation as needed.” 6
Defs.’ Facts, Ex. E (Job Description). And the plaintiff’s termination of employment letter states
that “[t]he reason for” terminating his employment was his “continuing insubordination and
conduct which impugns or compromises the integrity of [the] UPO” and specifies that he had
“repeatedly refused to oversee and operate the James Creek project of the . . . [Division] as
repeatedly directed which [was] part of [his] duties and responsibilities as Assistant Director” of
the Division. Defs.’ Facts, Ex. Y (Termination Letter).
It is well established that a court “may not second guess an employer’s personnel
decision absent demonstrably discriminatory motive.” Fischbach, 86 F.3d at 1183 (internal
quotation marks and citation omitted). In light of the defendants’ assertion that the plaintiff was
reprimanded and later terminated for insubordination and not because of his age, as well as the
plaintiff’s own concession that he refused his supervisor’s request to staff the James Creek
project, the Court finds that the defendants have proffered a sufficiently nondiscriminatory
reason for the termination.
The burden thus shifts to the plaintiff to demonstrate that the defendants’ proffered
explanation is pretextual. Burdine, 450 U.S. at 253-55. “‘[T]o survive summary judgment the
plaintiff must show that a reasonable jury could conclude from all the evidence that the adverse
employment decision was made for a discriminatory [or retaliatory] reason.’” Geleta v. Gray,
645 F.3d 408, 413 (D.C. Cir. 2011) (alteration in original) (citation omitted).
6
The plaintiff provides a slightly different version of his job description. See Pl.’s Req. at 7. However, his
description states that a “major dut[y]” of the Assistant Director is to “[a]ssist Director in day to day management
and operations of Youth Services Divisions Programs and oversee special projects.” Id. His description also lists
among the “specific duties and responsibilities” the task of “[a]ssisting Director with daily administration of division
projects and staff supervision.” Id. The plaintiff’s description of his duties are therefore consistent with the job
description provided by the defendants.
15
First, the plaintiff argues that if his job performance “during the six month introductory
period of his employment . . . . was an issue[,] [the] [d]efendants[] would have terminated him on
those grounds and not insubordination.” Pl.’s Opp’n at 2. This argument, however, does not
undermine the defendants’ stated reasons for the plaintiff’s termination. Simply because the
plaintiff had performed adequately during his first six months with the UPO does not preclude
the determination that he was thereafter insubordinate.
The plaintiff next outlines his positive contributions to Division projects other than the
James Creek project, presumably in an attempt to argue that those positive contributions indicate
that he was not insubordinate and thus should not have been reprimanded or terminated. Pl.’s
Opp’n at 3-6. Again, this reasoning is not helpful to the plaintiff. The defendants’ contention is
that the plaintiff was insubordinate with respect to specific repeated requests concerning the
James Creek project and not that his performance was unacceptable in other respects. Defs.’
Mem. at 11-12; see also Defs.’ Facts, Ex. A (Thomas Decl.) ¶¶ 16-18.
Next, the plaintiff notes that other younger employees were or should have been available
to staff the James Creek project, and argues that the fact that those other employees were not
reprimanded or terminated for refusing to staff the project supports his position that the UPO’s
decision to terminate his employment was discriminatory. Pl.’s Mot. at 4, 7-8; Pl.’s Opp’n at 6-
8. Where a plaintiff seeks an inference of discrimination based on “disparate treatment,” he must
show that “all of the relevant aspects of [his] employment situation were ‘nearly identical’ to
those” of the other employees who did not suffer similar adverse employment actions. See
Neuren v. Adduci, Mastriani, Meeks & Schill, 43 F.3d 1507, 1514 (D.C. Cir. 1995) (finding that
a female plaintiff failed to demonstrate disparate treatment where comparator was both male and
16
“lower in seniority” than the plaintiff); see also Barbour v. Browner, 181 F.3d 1342, 1345 (D.C.
Cir. 1999) (finding that two employees were not similarly situated where one was a GS-12 and
the other a GS-13); Holbrook v. Reno, 196 F.3d 255, 261-62 (D.C. Cir. 1999) (holding that
employees of differing seniority levels were not similarly situated). Here, the other employees
the plaintiff contends were treated differently—i.e., those who were not terminated for refusal to
staff the James Creek project—were either case managers in the UPO’s Youth Services Division
or in one case, a Retention Placement Specialist who “shared duties” with one of the case
managers. See Defs.’ Facts, Ex. A (Thomas Decl.) ¶ 15; Pl.’s Opp’n at 6-7. The plaintiff, on the
other hand, was the Assistant Director of the Youth Services Division. See Defs.’Facts, Ex. D
(Offer Letter) (“Your position will be Assistant Director, Youth Services . . . .”). The plaintiff
and the other employees he references were therefore not similarly situated, and an inference of
discrimination is not created by his dissimilar treatment.
The plaintiff also contends that he “agreed to work the James Creek Project one day a
week on Mondays.” Pl.’s Mot. at 10 (citing Pl.’s Mot., Ex. 5 (Email Correspondence)). He
argues, without any citations to the record, that this “would have left seven staff members
including defendant Rorie who were under the age of 40 to work the remaining two days as
required by the grant.” Id. However, the plaintiff was asked to staff the James Creek project for
three days a week, and thus his willingness to work one day a week does not undermine the
defendants’ stated reason for terminating his employment.
Finally, the plaintiff argues that the UPO was “aware of the odor in the Alabama Avenue
site prior to” receiving an email from a younger, female employee. Pl.’s Opp’n at 8. And to
support his position that he was the victim of discrimination based on his age, the plaintiff
17
contends that his complaints were ignored “until a couple months later when [the defendants]
received” the younger employee’s email. Id. The defendants respond that these claims are not
properly before the Court as potential evidence of age discrimination because the plaintiff’s
complaints about the odor were not included in his EEOC complaint. Defs.’ Mem. at 27 (citing
Defs.’ Facts, Ex. N (EEOC Complaint)). To be sure, as this Circuit has noted in the Title VII
context, “‘[t]he goals behind the requirement of prior resort to administrative relief would be
frustrated if the filing of a general charge with the EEOC would open up the possibility of
judicial challenges to any related conduct that took place in connection with the employment
relationship.’” Park v. Howard Univ., 71 F.3d 904, 908 (D.C. Cir. 1995) (citation omitted). And
the Fifth Circuit has explicitly held in the ADEA context that “[i]n assessing whether a charge
properly exhausts a particular claim,” courts “‘construe[] an EEOC complaint broadly,’ but []
will only find a claim was exhausted if it could have been ‘reasonably . . . expected to grow out
of the charge of discrimination.’” Jefferson v. Christus St. Joseph Hosp., 374 F. App’x 485, 490
(5th Cir. 2010). But neither case directly addresses the inclusion in an EEOC complaint of the
particular conduct from which a plaintiff seeks an inference of discrimination. In other words,
the cases stand for the proposition that an EEOC complaint must include allegations concerning
the type of discrimination alleged, but they do not indicate that a plaintiff must include each and
every fact supporting his discrimination charge. See Park, 71 F.3d at 908 (finding that plaintiff’s
EEOC complaint failed to exhaust claim of hostile work environment where complaint included
neither the words “hostile work environment” nor any allegations to support such a claim);
Jefferson, 374 F. App’x at 490 (finding that plaintiffs had failed to exhaust claims of retaliation
or of race, age, and national origin discrimination where EEOC complaints made no mention of
18
the alleged retaliation or discrimination and the plaintiffs additionally failed to check a box on
the complaint form indicating that they wished to pursue such claims).
Here, the plaintiff’s EEOC complaint clearly alleges age discrimination, and so the Court
will consider the plaintiff’s claims about the odor at the Alabama Avenue facility as the basis for
a possible inference of discrimination. Unfortunately for the plaintiff, his allegations about the
delay in addressing the odor are insufficient to permit an inference of age discrimination. In
particular, the plaintiff’s allegations do not explain how he was treated differently from any other
employee. The UPO’s failure to address the source of the odor when the plaintiff complained
impacted not only the plaintiff, but also the other employees working at the Alabama Avenue
facility. Defs.’ Facts ¶ 43. While the UPO could have responded to the complaints in a more
timely fashion, the fact remains that the defendant eventually responded to not only the
plaintiff’s complaints, but also the complaints of the other employees who were affected by the
odor. Id. ¶¶ 43-44. The Court therefore finds that the plaintiff’s allegations about the odor at the
Alabama Avenue facility do not create an inference of discrimination.
Because the plaintiff has failed to produce evidence sufficient for a reasonable jury to
conclude that the defendants’ stated reasons for terminating his employment amount pretext, and
because his claims against the individual defendants are deficient as a matter of law, the Court
must grant the defendants’ motion for summary judgment and deny the plaintiff’s motion for
summary judgment.
B. The Plaintiff’s Motion to Amend his Complaint
The plaintiff seeks leave to amend his complaint to include claims under the False Claims
Act, 31 U.S.C. §§ 3729-3730 (2006), and the Fair Labor Standards Act, 29 U.S.C. § 201 (2006).
19
Pl.’s Amend Mot. at 1-3. The defendants urge the Court to deny the plaintiff’s motion for failure
to comply with this Court’s local rules, as well as on the grounds of undue delay, prejudice, and
futility. Defs.’ Amend Opp’n at 1.
As an initial matter, the Court agrees that the plaintiff has failed to comply with Local
Civil Rules 7(i) and 15.1, both of which require a party seeking leave to amend a pleading to
furnish the Court with a copy of the proposed amended pleading. See Local Civ. R. 7(i); Local
Civ. R. 15.1. And as the defendants correctly note, Defs.’ Amend Opp’n at 5, the Court
previously admonished the plaintiff of his responsibility to be familiar with this Court’s local
rules, and with Rule 7 in particular. See August 23, 2013 Minute Order (providing an internet
address for the Court’s Local Civil Rules).
Even if the plaintiff had provided the Court with a copy of his proposed amended
complaint, the representations he makes in his motion make clear that neither statutory provision
referenced in his motion is a proper basis for relief. As to the False Claims Act, the plaintiff
believes that “the [d]efendants retaliated against [him] because he blew the whistle on” the
defendants for “filing false claims as it relates to the Stimulus grant they received from the
Federal Government.” Pl.’s Amend Reply at 1-2. These allegations are not materially different
from those made in reference to the plaintiff’s Whistleblower Protection Act claim, and as the
defendants rightly note, Defs.’ Amend Opp’n at 6, the plaintiff has been on notice for well over a
year that his Whistleblower Protection Act claim was deficient, as this Court indicated in its
October 10, 2012 Memorandum Opinion dismissing several of his claims, Bilal-Edwards, 896 F.
Supp. 2d at 93 n.8.
20
The plaintiff faults the Court for failing to account in its prior Memorandum Opinion for
the fact that he “had protection under the American Recovery and [Rei]nvestment Act of 2009.”
Pl.’s Amend Reply at 2. This is unreasonable. The plaintiff’s reply memorandum in support of
his motion to amend his complaint is the first time that the American Recovery and
Reinvestment Act has been referenced, and even if it were not the case, the plaintiff’s complaint
included no allegations that he “complied with the prerequisites to bringing suit that are specified
in detail in the statute.” Williams v. New York City Dep’t of Ed., __ F. Supp. 2d __, __, 2013
WL 5226564, at *15 (S.D.N.Y. 2013) (dismissing plaintiff’s American Recovery and
Reinvestment Act retaliation claim for failure to exhaust administrative remedies). In short, the
plaintiff has been in possession of facts necessary to bring his various retaliation claims since he
was terminated on May 3, 2010, and he has also been on notice that his existing retaliation
claims were deficient since those claims were dismissed on October 10, 2012. Further, allowing
an amendment at this late juncture would prejudice the defendants given that discovery has now
been closed for nine months and both parties have filed dispositive motions. Indeed, the plaintiff
was the first party to move for summary judgment, having done so six months before he filed his
motion to amend his complaint. This constitutes undue delay, and the Court therefore denies the
plaintiff’s motion to amend his complaint to include claims under the False Claims Act.
In any event, the defendants argue that an amendment adding the FLSA claims would be
futile because they are time-barred. Defs.’ Amend Opp’n at 10. “The statute of limitations
under both the [District of Columbia Wage Payment and Collection Law (“DC Wage Law”)] and
[the] FLSA . . . is only three years.” Ventura v. Bebo Foods, Inc., 738 F. Supp. 2d 8, 30 (D.D.C.
2010) (citing 29 U.S.C. § 255(a); D.C. Code § 32-1013). And this Circuit has held that FLSA
21
claims accrue with each pay period. Figueroa v. D.C. Metro. Police Dep’t (Figueroa I), 633 F.3d
1129, 1135 (D.C. Cir. 2011); see also Dover v. Medstar Wash. Hosp. Ctr., Inc., __ F. Supp. 2d
__, __, 2013 WL 5824075, at *2-3 (D.D.C. 2013) (dismissing DC Wage Law claims as time-
barred). Thus, the last date on which the plaintiff’s FLSA claims could have accrued was the
date of his termination, which was May 3, 2010. Because it is now almost four years from that
date, the plaintiff’s FLSA claims are time-barred.
Moreover, Rule 15(c)(1)(B) cannot save the plaintiff’s FLSA claim. The Rule allows
amendments to “relate back” to the date of the original pleading only where the amendment
“asserts a claim or defense that arose out of the conduct, transaction, or occurrence set out—or
attempted to be set out—in the original pleading.” Fed. R. Civ. P. 15(c)(1)(B). But “[r]elation
back is improper when the amended claim ‘asserts a new ground for relief supported by facts that
differ in both time and type from those the original pleading set forth.’” Dover, __ F. Supp. 2d at
__, 2013 WL 5824075, at *3 (quoting Mayle v. Felix, 545 U.S. 644, 650 (2005)). “The
underlying question is whether the original complaint adequately notified the defendants of the
basis for liability the plaintiffs would later advance in the amended complaint.” Meijer, Inc. v.
Biovail Corp., 533 F.3d 857, 866 (D.C. Cir. 2008).
“An employee is entitled to the federal minimum wage and overtime unless specifically
exempted by the FLSA,” and “[t]he employer bears the burden of demonstrating that its
employee is exempt . . . .” Cannon v. District of Columbia, 717 F.3d 200, 204 (D.C. Cir. 2013).
Both the D.C. Wage Law and the FLSA “provide [] cause[s] of action for employees to sue their
employers for unpaid minimum wages or overtime compensation.” Ruffin v. New Destination,
800 F. Supp. 2d 262, 268 (D.D.C. 2011). There are “two elements of an FLSA overtime claim . .
22
. : (1) performance of work, and (2) improper compensation.” Figueroa v. District of Columbia
(Figueroa II), 923 F. Supp. 2d 159, 168 (D.D.C. 2013) (citing Figueroa I, 633 F.3d at 1135); see
also D.C. Code § 32-1302 (“Every employer shall pay wages earned to his employees . . . .”)
(emphasis added). Here, the allegations contained in plaintiff’s complaint could not adequately
put the defendants on notice of the FLSA claims the plaintiff now wants to raise. The complaint
does allege in passing that “[d]efendant Thomas falsely stated that [the] [p]laintiff would not
receive overtime for the extraordinarily time consuming work project.” Compl. ¶ 67. However,
the most that the allegation communicates is the plaintiff’s belief that he deserved more
compensation, not, as he argues in his motion to amend, that he intended to challenge whether
his position was classified as exempt or non-exempt under the FLSA. See Pl.’s Amend Mot. at
2. Further, a FLSA claim would need to be “‘supported by facts that differ in both time and type
from those the original pleading set forth.’” Dover, __ F. Supp. 2d at __, 2013 WL 5824075, at
*3 (quoting Mayle v. Felix, 545 U.S. 644, 650 (2005)). The plaintiff would need to adduce facts
concerning the number of alleged overtime hours worked, the compensation he believed he was
owed, and whether the FLSA grants employees in the plaintiff’s position the right to overtime
compensation. By contrast, the original pleading in this case set forth allegations of
discrimination based on age, retaliation based on whistleblowing, and tortious conduct, none of
which involved the plaintiff’s compensation or right to overtime compensation. See Compl. ¶¶
81-102. Accordingly, the Court finds that the plaintiff’s proposed FLSA claims do not relate
back to his original complaint, and denies as futile the plaintiff’s motion to amend his complaint
to add FLSA claims. 7
7
In any event, the plaintiff has been in possession of the facts underlying a potential FLSA claim since he first filed
his complaint. To allow amendment at this time, after the conclusion of discovery and the filing of dispositive
(continued . . . )
23
IV. CONCLUSION
For the reasons set forth above, the Court will grant the defendants’ motion for summary
judgment, and deny both the plaintiff’s motion for summary judgment and his motion to amend
his complaint. 8
SO ORDERED this 21st day of February, 2013.
REGGIE B. WALTON
United States District Judge
( . . . continued)
motions, would prejudice the defendants.
8
The Court will contemporaneously issue an order consistent with this Memorandum Opinion.
24
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01-03-2023
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04-03-2014
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https://www.courtlistener.com/api/rest/v3/opinions/2659644/
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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
__________________________________________
)
LOUIS P. CANNON, et al., )
)
Plaintiffs, )
)
v. ) Civil Action No. 12-0133 (ESH)
)
DISTRICT OF COLUMBIA, )
)
Defendant. )
)
MEMORANDUM OPINION
Plaintiffs represent a class of retired District of Columbia police officers subsequently
rehired by the District for different jobs. Following their retirements, plaintiffs received pension
benefits from the District of Columbia Police Officers and Firefighters’ Retirement Plan
(“PFRP”). After being rehired, they continued to receive these benefits in addition to their new
salaries (a practice commonly referred to as “double dipping”). In early 2012, pursuant to D.C.
Code§ 5-723(e), the District began reducing plaintiffs’ salaries by the amounts they received
from their PFRP pensions. Plaintiffs sued for injunctive relief and damages. This Court denied
plaintiffs’ motions for injunctive relief and dismissed all of plaintiffs’ constitutional and federal
claims. The Court remanded plaintiffs’ remaining D.C. law claims to Superior Court. See
Cannon v. District of Columbia, 873 F. Supp. 2d. 272, 287-88 (D.D.C. 2012). On appeal, the
Circuit affirmed the dismissal of all of plaintiffs’ federal claims except the Fair Labor Standards
Act (“FLSA”) claim brought by three particular class plaintiffs. On this claim, the Court of
Appeals directed that summary judgment be entered for plaintiffs and remanded to this Court for
the determination of damages. Because a federal claim remained, the Court of Appeals also
vacated the decision not to exercise supplemental jurisdiction over the D.C. law claims. See
Cannon v. District of Columbia, 717 F.3d 200, 206-09 (D.C. Cir. 2013).
Upon remand, plaintiffs filed a Second Amended Complaint adding an additional claim
for relief under the Public Tax Act, 4 U.S.C. § 111(a). Soon thereafter, defendants filed a motion
to dismiss all claims except the FLSA claim, as well as a notice of calculation of FLSA damages.
For the reasons set forth below, the Court will grant defendant’s motion to dismiss plaintiffs’
constitutional claims (Counts I, III, and X-XI) and Public Tax Act claim (Count V) and will
remand plaintiffs’ D.C law claims (Counts IV, VI-IX, and XII-XV) to Superior Court. The
Court will also enter summary judgment for plaintiffs Ford-Hayes, Neill, and Weeks on liability
for their FLSA claim (Count II) and set a briefing schedule for the determination of back pay and
damages.
FACTUAL BACKGROUND
The material facts relevant to this case were described in detail in the Court’s prior
opinion and the opinion of the Court of Appeals. Therefore, an abbreviated version will suffice.
Plaintiffs were police officers hired by the D.C. Metropolitan Police Department (“MPD”) prior
to September 30, 1987 that participated in the District of Columbia Police Officers’ and
Firefighters’ Retirement Plan. Cannon, 873 F. Supp. 2d. at 275. Under federal law, the PFRP is
jointly administered by the United States and the District of Columbia. See District of Columbia
Retirement Board, District of Columbia Police Officers and Firefighters’ Retirement Plan,
Summary Plan Description, available at http://dcrb.dc.gov/sites/default /files/dc/sites/dcrb/
publication/attachments/SPD_PoliceFirePlan2012Final.pdf, at 1-2, 73 (last visited January 6,
2
2014) (“Summary Plan”). 1 The United States Treasury Department is responsible for all benefits
attributable to services performed by plaintiffs prior to July 1, 1997. The D.C. Retirement Board
(“DCRB”) is responsible for benefits attributable to services performed after that date. Id. Upon
retirement, plaintiffs began receiving benefits from their PFRP pensions.
Beginning in 2004, plaintiffs were rehired by the District of Columbia Department of
General Services (“DGS”). Cannon, 873 F. Supp. 2d. at 275. Upon returning to work for the
District, plaintiffs received both their pension benefits and their full salaries simultaneously. Id.
In the fall of 2011, however, the District informed plaintiffs that it had mistakenly failed to
enforce D.C. Code § 5-723(e), a provision which expressly forbids this sort of double-dipping,
and it would soon begin reducing their DGS salaries accordingly. 2 Id. at 276.
On January 25, 2012, the District began reducing plaintiffs’ paychecks by the amount
they received from their PFRP pensions. In response, plaintiffs immediately filed for a
temporary restraining order and preliminary injunction to enjoin the offset. Plaintiffs also sued
for damages under the United States Constitution, federal law, and D.C. law. At a hearing on
January 31, 2012, plaintiffs’ motion for injunctive relief was denied. Id. On July 6, 2012, this
Court issued a Memorandum Opinion and Order granting defendant’s motion to dismiss all of
plaintiffs’ federal and constitutional claims. See id. at 287. With the absence of federal claims in
1
Like the Court of Appeals, this Court takes judicial notice of the contents of this summary. See Cannon
717 F.3d at 205, n.2. The summary explains the federal-district relationship in the following way,
Under Title XI of the Balanced Budget Act (Act) of 1997, Public Law 105-33, as amended, the
Federal Government and the D.C. Government share responsibility for the Plan. The Treasury
Department is responsible for paying benefits attributable to police officer or firefighter service
performed on or before June 30, 1997. DCRB is responsible for paying benefits attributable to
police officer or firefighter service performed after June 30, 1997 and for lateral transfer service.
2
The District did not seek to recover the amounts already paid, but rather sought to fix the problem going
forward only. See Cannon, 873 F. Supp. 2d at 276.
3
the case, the Court declined to exercise supplemental jurisdiction over plaintiffs’ D.C. law claims
and remanded them to Superior Court. Id. (citing 28 U.S.C. § 1367(c)(3)). The Court reasoned
that “[r]emand to Superior Court [wa]s particularly appropriate . . . because plaintiffs’ remaining
claims raise novel and complex issue[s] of [District] law.” Id. at 288 (citing 28 U.S.C. §
1367(c)(1)).
On appeal, the D.C. Circuit affirmed this Court’s dismissal of all of plaintiffs’
constitutional claims. Cannon, 717 F.3d at 206 (“The district court found the plaintiffs’
constitutional claims meritless, and we agree.”); see also id. at 208 (“We affirm the district
court’s judgment on the constitutional claims . . . .”). However, the Court of Appeals reversed
this Court’s dismissal of the FLSA claim brought by three plaintiffs—Sheila Ford-Haynes,
Gerald Neill, and Harry Weeks. While this Court had held that these plaintiffs’ pension benefits
constituted “compensation” for purposes of the minimum wage to which they were entitled
under the FLSA, see Cannon, 873 F. Supp. 2d. at 279, the Court of Appeals held that this was
“not a reasonable reading of the D.C. Code Section 5–723(e) [which] provides no authority for
the District to claim that pension payments may be ‘included as salary’ . . .” Cannon, 717 F.3d at
205. The Court of Appeals “direct[ed] that summary judgment be entered for th[ese] three
plaintiffs on that claim” and remanded as to “the extent of the District’s FLSA liability” because
“the parties ha[d] not briefed the issues of back pay and liquidated damages” under 29 U.S.C. §
216. Id. at 206. “Because the district court’s decision not to exercise supplemental jurisdiction
over the plaintiffs’ D.C. law claims was premised on the dismissal of all federal claims from this
case,” the Court of Appeals also vacated “that part of the district court's order dismissing the
D.C. law claims and remand[ed] for further proceedings.” Id. at 208-09.
4
On remand, plaintiffs filed a Second Amended Complaint alleging fifteen counts
(including six federal law counts and nine D.C. law counts). (Second Amend. Compl., Sept. 24,
2013 [ECF No. 50].) Though most of plaintiffs’ claims were previously pled, this Complaint
introduced one additional federal claim under the Public Tax Act (Count V). On October 18,
defendant filed a motion to dismiss (Def. the District of Columbia’s Mot. to Dismiss [ECF No.
51] (“Mot.”)) and a notice of calculation of back pay (Notice of Def.’s Calculation of FLSA
Back Pay [ECF No. 52] (“Notice”)). Plaintiffs filed an opposition (Opp. to Def.’s Mot. to
Dismiss, Nov. 8, 2013 [ECF No. 53]) in which they did not respond to defendant’s calculation of
back pay. Defendant then filed a reply (District of Columbia’s Reply, Nov. 22, 2013 [ECF No.
54] (“Reply”)) in which it argued that its FLSA back pay calculations were conceded. This
Court instead issued an Order to Show Cause to plaintiffs to explain why it “should not enter a
judgment in the amount calculated by defendants in their notice.” (Order to Show Cause, Dec.
11, 2013 [ECF No. 55], at 1) In response, plaintiffs did not respond directly to defendant’s
damage calculations, but instead, they challenged the propriety of calculating the FLSA damages
at this stage in the litigation. (Response to the Court’s Order of Dec. 11, 2013, Dec. 19, 2013
[ECF No. 56] (“Response”).)
ANALYSIS
I. LEGAL STANDARD
When ruling on a motion to dismiss pursuant to Rule 12(b)(6), courts must first assume
the veracity of all “well-pleaded factual allegations” contained in the complaint. Ashcroft v.
Iqbal, 556 U.S. 662, 679 (2009); see also Atherton v. D.C. Office of Mayor, 567 F.3d 672, 681
(D.C. Cir. 2009). Next, courts must determine whether the allegations “plausibly give rise to an
entitlement to relief.” (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570). “A claim has
5
facial plausibility when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged. The plausibility
standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility
that a defendant has acted unlawfully.” Iqbal, 556 U.S. at 663. “Where a complaint pleads facts
that are ‘merely consistent with’ a defendant's liability, it ‘stops short of the line between
possibility and plausibility of entitlement to relief.’ ” Id. (quoting Twombly, 550 U.S. at 557).
“Although for the purposes of a motion to dismiss [a court] must take all of the factual
allegations in the complaint as true, [a court is] not bound to accept as true a legal conclusion
couched as a factual allegation.” Iqbal, 556 U.S. at 663 (internal quotation marks omitted)).
Thus, “[w]hile legal conclusions can provide the framework of a complaint, they must be
supported by factual allegations.” Id.
II. FEDERAL CLAIMS
Of the fifteen counts in plaintiffs’ second amended complaint, the six that arise under the
United States Constitution or federal law include: Count I (Deprivation of Property); Count II
(FLSA); Count III (Equal Protection Clause); Count V (Public Tax Act); and Counts X-XI (First
Amendment). For the reasons discussed below, the Court will dismiss Counts I, III, V, and X-
XI. On Count II, the Court will enter summary judgment for plaintiffs as to liability and issue an
order setting a briefing schedule on the issue of damages.
A. Constitutional Claims Previously Dismissed
In its prior opinion, this Court dismissed all of plaintiffs’ constitutional claims (Counts I,
III, and X-XI). See Cannon, 873 F. Supp. 2d at 280-87. The Court of Appeals affirmed. Cannon,
717 F.3d at 206 (“The district court found the plaintiffs’ constitutional claims meritless and we
agree.”); id. at 208 (“We affirm the district court’s judgment on the constitutional claims . . . .”).
6
Plaintiffs seem to think that despite this affirmance, the Court is free to reconsider these
constitutional claims anew because “the D.C. Circuit made a summary conclusion that D.C.
Code § 5-723(e) is in some way applicable to the Plaintiffs in the present day . . .[which] ignored
the entire tortured legislative history of public safety pension funding in the District of Columbia
. . . [and] [i]n remanding the case to this Court for further consideration . . . the D.C. Circuit left
the majority of their theories of relief unaddressed.” (Opp. at 31-32.) In plaintiffs’ view, the
Court of Appeals’ discussion of their constitution claims was nothing but “dicta.” (Id. at 31.)
In so arguing, plaintiffs misconstrue both the Court of Appeals opinion and the relevant
standard for the reconsideration of issues previously decided by a district court and affirmed on
appeal. Under the doctrine known as the law of the case, “a court involved in later phases of a
lawsuit should not re-open questions decided . . . by that court or a higher one in earlier phases.”
Crocker v. Piedmont Aviation Inc., 49 F.3d 735, 739 (D.C. Cir. 1995). Where the appeals court
has “affirmatively decided the issue,” the trial court is generally precluded from reconsidering
that issue. See id. (citing Women’s Equity Action League v. Cavazos, 906 F.2d 742, 751 & n.14
(D.C. Cir. 1990)). 3 In its prior opinion, this Court directly considered plaintiffs’ constitutional
claims and determined that dismissal was justified. See Cannon, 873 F. Supp. 2d at 280-87. On
appeal, the Circuit considered and affirmed the dismissal of each of these constitutional claims.
See Cannon, 717 F.3d at 206-08. Accordingly, this Court rejects plaintiffs’ unjustified attempt to
3
Plaintiffs argue incorrectly that the “law of the case doctrine only applies to the prior rulings of a
different judge in the same case.” (Opp. at 30.) See In re Subpoena Duces Tecum Issued to Commodity
Futures Trading Comm’n, 439 F.3d 740, 749 (D.C. Cir. 2006) (“Law of the case doctrine applies within
the same case, proceeding, or action.”) The D.C. Court of Appeals opinion cited by plaintiffs, Nunnally v.
Graham, 56 A.3d 130, 142 (D.C. 2012), is not binding on this Court and also does not stand for the
proposition that plaintiffs say it does. It does not hold that the law of the case doctrine only applies to the
prior rulings of a different judge in the same case, rather it simply holds that when a new judge enters a
case, the law of the case doctrine still applies.
7
reopen these claims on remand and will once again dismiss with prejudice Counts I, III, and X-
XI.
B. Federal Public Tax Claim Act Claim
Plaintiffs’ second amended complaint introduces a new federal claim alleging that by
reducing their salaries by the amounts they received from their PFRP pensions, the District
violated the Public Tax Act, 4 U.S.C. § 111(a). (See Second Amend. Compl., Count V, at ¶¶ 98-
106.) In relevant part, the Public Tax Act provides,
[t]he United States consents to the taxation of pay or compensation for personal service
as an officer or employee of the United States, a territory or possession or political
subdivision thereof, the government of the District of Columbia, or an agency or
instrumentality of one or more of the foregoing, by a duly constituted taxing authority
having jurisdiction, if the taxation does not discriminate against the officer or employee
because of the source of the pay or compensation.
Passed in 1939, prior to the establishment of District Home Rule, the Act serves as “a partial
congressional consent to nondiscriminatory state taxation of federal [and D.C.] employees.” See
Davis v. Michigan Dep’t of Treasury, 489 U.S. 803, 813 (1989). It also prohibits taxation that
discriminates “based on the source of the pay or compensation being taxed.” See id.
In Count V, plaintiffs argue that the District violated the anti-discrimination clause of the
Act by taxing plaintiffs’ PFRP pensions by an amount equal to one-hundred percent of their
benefits. (See Second Amend. Compl. at ¶¶ 98-106; Opp. at 10.) They allege that this is “source
discrimination” because the District of Columbia Civil Service Retirement System, which is
funded by the District, is statutorily exempt from the offset provision, whereas PFRP, which is
funded in part by the United States Treasury, is not. (See Opp. at 10-11.) In response, defendant
argues that the source of plaintiffs’ pension is not “federal” simply because parts of the pension
benefits are paid by the United States Treasury and, in addition, that the salary offset “does not
8
‘tax’ [plaintiffs’ retirement] benefits, but merely reduces their District salaries.” (See Reply at 4
(emphasis in original).)
The Court agrees that the plaintiff has failed to state a claim under the Public Tax Act, 4
U.S.C. § 111(a), for two reasons. First, the offset scheme outlined in § 5-723(e) does not
constitute a tax on plaintiffs’ pension benefits earned for work done during the course of their
prior employment with the MPD. At most, the offset represents a tax on plaintiffs’ current
salaries earned for work done at DGS. 4 Plaintiffs explicitly recognize as much in their
Opposition when they state that the District has no means of actually taxing plaintiffs’ annuity
benefits, “since such benefits are paid directly by the United States Treasury.” (Opp. at 17.) This
conclusion is further supported by the fact that plaintiffs are entitled to one hundred percent of
their pension benefits regardless of whether they are rehired by the District. 5 To be sure, the
question of whether the District is entitled to withhold parts of plaintiffs’ DGS salaries is
important for the adjudication of plaintiffs’ other legal claims, however, because plaintiffs’
pension benefits were never reduced, they cannot constitute a tax in violation of the Public Tax
Act.
The Court of Appeals’ prior decision on plaintiffs’ FLSA claim supports, if not compels,
this conclusion. In the context of their FLSA claim, plaintiffs argued that their “compensation”
for work at DGS did not include the amounts they received from their PFRP pensions. Cannon,
4
In their Opposition plaintiffs spend a great deal of time discussing whether the offset is a “tax.” (See
Opp. at 7-9.) However, this argument is misplaced. The legal issue here is not whether the offset
constitutes a tax, but rather what income is being taxed (plaintiffs’ PFRP benefits or their DGS salaries).
5
This fact, that plaintiffs state wages are reduced and not their pension benefits, also distinguishes the
present case from Davis v. Michigan Dept. of Treasury, 489 U.S. 803 (1989). In that case, the Supreme
Court did not hold, as plaintiffs argue that “annuity payments are compensation subject to the public tax
act,” (Opp. at 9, n.2), but rather held that the state of Michigan could not exempt its own state retirement
benefits from taxation and still tax federal benefits directly. Id. at 817.
9
717 F.3d at 205. The Court of Appeals agreed holding that “[t]here is no connection between
their pensions and the work they currently perform for the District, and thus no sense in which
their annuities constitute ‘compensation’ for that work.” Id. “The District could not force the
plaintiffs to suspend the receipt of the pension payments.” Id. at 206. Now plaintiffs seek to
have it both ways. For purposes of the FLSA, they argued (and the Court of Appeals agreed)
that the offset applied to their new salaries such that they were not paid the minimum wage to
which they were entitled. For purposes of the Public Tax Act, they now switch gears and argue
that the offset constitutes an impermissible tax on their pension benefits. (See Opp. at 10.) As
the Court of Appeals explained, “plaintiffs have no entitlement to both full salary and their
annuities,” Cannon, 717 F.3d at 207, and therefore, plaintiffs cannot now claim that the offset
constitutes a tax on their pension benefits and not a reduction of their DGS salaries.
Second, even if the offsets under § 5-723(e) were to be considered “taxes” on plaintiffs’
pension benefits, the District cannot have violated the Public Tax Act because the alleged
taxation did not discriminate against the officer or employee “because of the source of the pay or
compensation.” Plaintiffs base their source discrimination argument on the fact that under the
District of Columbia Retirement Protection Act of 1997, “[p]laintiffs are paid from a Federal
system to which the United States government is directly responsible” for work done on or
before June 30, 1997. (Opp. at 10.) However, as plaintiffs’ own reading of the Act recognizes,
the purported tax is also applied to plaintiffs’ pension benefits for work done after June 30, 1997,
paid for by the District. D.C. Code § 5-723 does not differentiate between pre- and post-1997
benefits. Therefore, even under plaintiffs’ view, non-federal pension benefits—benefits paid for
work done after 1997 by the District—are “taxed” and the alleged “discrimination” is not based
10
on the federal or non-federal source of the funds. For these reasons, Count V will be dismissed
with prejudice.
C. FLSA Claim of Plaintiffs Ford-Haynes, Neill, and Weeks
Plaintiffs Sheila Ford-Haynes, Gerald Neill, and Harry Weeks alleged in their initial
complaint that by reducing their DGS salaries by the amounts received from their PFRP
pensions, the District had failed to pay them the minimum salary required by the FLSA. Cannon,
717 F.3d at 204. Under § 13(a)(1) of the FLSA and 29 C.F.R. § 541.600(a), employees that
serve in a “bona fide executive, administrative, or professional capacity” must be “compensated
on a salary basis at a rate of not less than $455 per week . . . .” While the parties agreed that these
particular plaintiffs work in such capacities at DGS, they disagreed on whether the pension
benefits they received constituted “compensation” for FLSA purposes. See Cannon, 717 F.3d at
204. On appeal, the Circuit held that “the District may not count these plaintiffs’ annuities as
compensation for purposes of the salary basis test [because u]nder no reasonable reading of the
term can the pension payments be considered ‘compensation’ for these plaintiffs’ current work.”
Id. at 205. Therefore, the Circuit “direct[ed] that summary judgment be entered for those three
plaintiffs on th[eir FLSA] claim” and remanded for a determination of back pay and liquidated
damages because the parties had not yet briefed the issue “[such that] the extent of the Districts’
FLSA liability remain[ed] to be determined.” Id. at 206.
Under Fed. R. Civ. P. 54(b), “the court may direct entry of a final judgment as to one or
more, but fewer than all, claims or parties only if the court expressly determines that there is no
just reason for delay.” Based on the Court of Appeal’s explicit instructions, this Court finds no
reason to delay entering judgment as to liability on these plaintiffs’ FLSA claim. Therefore,
11
pursuant to the Court of Appeals decision, summary judgment will be entered for plaintiffs Ford-
Haynes, Neill, and Weeks on Count II.
The issue of damages, however, is not yet ripe for review. On October 28, 2013,
defendant filed its “Notice of [] Calculation of FLSA Back Pay” which it referenced in its motion
to dismiss filed on the same day. (See Mot. at 10.) Plaintiffs, however, chose not respond to the
calculations contained in the Notice in their opposition. Defendant alleged in its Reply that the
Court should therefore treat the calculations as conceded. (See Reply at 2.) The Court instead
issued an Order to Show Cause as to why it “should not enter a judgment in the amount
calculated by defendants in their notice.” (Order to Show Cause, Dec. 11, 2013.) In response,
plaintiffs once again chose not to respond to defendant’s calculation and instead argued that it
was premature to respond to defendants’ Notice at the present stage of litigation. (See Response
at 3.)
Under Fed. R. Civ. P. 12(d), “[i]f on a motion under Rule 12(b)(6) . . . matters outside
the pleadings are presented to and not excluded by the court, the motion must be treated as one
for summary judgment under Rule 56. All parties must be given a reasonable opportunity to
present all the material that is pertinent to the motion.” Defendant filed the Notice (which
included a signed declaration and exhibits) contemporaneously with their motion to dismiss and
referenced the Notice in that motion. (Mot. at 10.) Therefore, the Court will treat defendants’
Notice as a motion for summary judgment on damages. The Court will give plaintiffs twenty
days to respond with “all the material that is pertinent” for a determination of damages. 6
Defendant then will have fourteen days to file a reply.
6
This holding should resolve the disagreement between the parties as to the appropriate time for
calculating the FLSA damages to which plaintiffs Ford-Haynes, Neill, and Weeks are unquestionably
12
III. D.C. LAW CLAIMS
Besides the calculation of FLSA damages, the only claims which remain in the case are
the nine D.C. law counts not previously considered by this Court or the Court of Appeals. They
include: Count IV (Home Rule) 7, Count VI (Breach of Contract), Count VII (Unjust
Enrichment), Count VIII (Detrimental Reliance and Promissory Estoppel), Count IX (Intentional
or Negligent Misrepresentation), Count XII (Defamation), Counts XIII-XIV (D.C. Whisteblower
Law), and Count XV (Constructive Termination). Plaintiffs argue that this Court has exclusive
jurisdiction and venue over at least one of these claims under D.C. Code § 1-815.02(a) and that
they are therefore prevented from “claim splitting.” (Opp. at 17-22.) Plaintiffs further argue that
this Court must exercise supplemental jurisdiction over these remaining D.C. law claims under
28 U.S.C. 1367(a). (Opp. at 1-5.) However, for the reasons discussed below, the Court
concludes that it does not have exclusive jurisdiction over any of plaintiffs’ claims and it will
decline to exercise supplemental jurisdiction over the remaining D.C. law claims. Accordingly,
these claims will be remanded to D.C. Superior Court.
A. Exclusive Jurisdiction Under D.C. Code § 1-815.02(a)
Plaintiffs allege, as they did in their prior pleadings, that “[i]n at least one instance, this
Court has exclusive jurisdiction over the Plaintiffs’ claims.” (Opp. at 11 (citing D.C. Code § 1-
815.02).) However, as this Court explained in its earlier opinion, in so arguing plaintiffs have
entitled. In response to this Court’s Order to Show Cause, plaintiffs argued that “[w]ith regards to the
Plaintiffs’ FLSA claims, Defendant now specifically seeks judgment, not dismissal” and “[s]hould the
Defendant seek judgment on the FLSA claims, a Rule 56 motion for summary judgment is appropriate
and necessary.” (Response at 3.) By treating defendant’s Notice as a Rule 56 motion for summary
judgment on damages, the Court prevents the needless step of requiring defendants to re-file its Notice as
a separate motion for summary judgment and gives plaintiffs sufficient notice under Fed. R. Civ. P. 12(d)
to respond accordingly.
7
In plaintiffs’ Opposition Brief, plaintiffs refer to their Home Rule claim as a “Commuter Tax” claim.
(See Opp. at 15)
13
“misread that statute.” Cannon, 873 F. Supp. 2d. at 288. This provision of Chapter 8 of the D.C.
Code (“District of Columbia Retirement Funds”) provides that the district court shall have
exclusive jurisdiction over cases related to the payment of federal pensions. See D.C. Code § 1-
815.02(a) (providing jurisdiction only for actions arising under Chapter 8). However, for the
same reasons discussed above regarding plaintiffs’ Public Tax Act claim, this case does not deal
with the “payment of federal pensions,” but rather it concerns a reduction in present salary. See
also Cannon, 717 F.3d at 206. Plaintiffs have not articulated any reason why the Court should
reconsider its prior holding and thus, for the reasons explained in its earlier opinion, the Court
holds that D.C. Code § 1-815.02(a) remains inapplicable to this case. 8
B. Supplemental Jurisdiction Under 28 U.S.C. § 1367
Plaintiffs argue that even if this Court does not have exclusive jurisdiction, this Court
must exercise supplemental jurisdiction under 28 U.S.C. § 1367(a). 9 (See Opp. at 1-5.) Under
this statute, a district court is required to exercise supplemental jurisdiction over related state law
claims, unless it finds that one (or more) of the statutory exceptions in 28 U.S.C. § 1367(c) is
present,
8
Without citation to binding authority, plaintiffs also argue that this Court is “completely precluded”
from “claim splitting” based on § 1-815.02(a) and therefore must consider plaintiffs state law claims.
(Opp. at 18-22). Though the Court believes plaintiffs’ claim splitting argument is likely without merit,
because the Court rejects the application of § 1-815.02 to this case, it need not consider the issue but
instead will proceed to its supplemental jurisdiction analysis under 28 U.S.C. § 1367(c).
9
Under 28 U.S.C. § 1367(a),
[I]n any civil action of which the district courts have original jurisdiction, the
district courts shall have supplemental jurisdiction over all other claims that are
so related to claims in the action within such original jurisdiction that they form
part of the same case or controversy under Article III of the United States
Constitution. Such supplemental jurisdiction shall include claims that involve the
joinder or intervention of additional parties.
14
(1) the claim raises a novel or complex issue of state law,
(2) the claim substantially predominates over the claim or claims over which the district
court has original jurisdiction,
(3) the district court has dismissed all claims over which it has original jurisdiction, or
(4) in exceptional circumstances, there are other compelling reasons for declining
jurisdiction.
Two of these exceptions represent independent bases for refusing to exercise
supplemental jurisdiction over plaintiffs’ pendant state law claims in this case. First, under §
1367(c)(1), the Court finds that several of the remaining claims raise novel issues of D.C. law
best suited to adjudication by the D.C. Superior Court. Plaintiffs core challenge to the offset
requires the interpretation of D.C. Code § 1-611.03(b), as amended by the D.C. Government
Reemployed Annuitant Offset Elimination Amendment Act of 2004, Act 15-489)) and D.C.
Code § 5-723(e). Questions of statutory interpretation involving local statutes are best resolved
in the first instance by the local courts. See Barnes v. Dist. of Columbia, 611 F. Supp. 130, 136
(D.D.C. 1985) (“The plaintiffs’ claims under the D.C. Code and the personnel manual involve
unexplored questions of state law which are best left to the local courts. In this situation, ‘a
federal District Court opinion is no substitute for an authoritative decision by the courts of the
District of Columbia.’”) (quoting Doe v. Bd. on Prof’l Responsibility of the D.C. Court of
Appeals, 717 F.2d 1424, 1428 (D.C. Cir. 1983)). Moreover, as other courts within this District
have held, retaliation under the D.C. Whistleblower Protection Act, D.C. Code § 1-615.53(a), is
an undeveloped body of law that should be interpreted by the D.C. Superior Court. See, e.g.,
Lowe v. Dist. of Columbia, 669 F. Supp. 2d 18, 31-32 (D.D.C. 2009) (remand of Whistleblower
Protection Act claims is especially appropriate given the undeveloped state of the law).
15
Second, under § 1367(c)(2), D.C. law claims “substantially predominate[] over the claim
or claims over which the district court has original jurisdiction.” The only federal claim which
still remains in the case is the determination of FLSA damages for plaintiffs Ford-Haynes, Neill,
and Weeks. This is a narrow, largely mathematical question, which has little if anything to do
with the nucleus of facts common to plaintiffs’ nine D.C. law claims. It would therefore be
imprudent for the Court to exercise supplemental jurisdiction over these D.C. law claims. See
United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 727 (1966) (“Once it appears that a state
claim constitutes the real body of a case, to which the federal claim is only an appendage, the
state claim may fairly be dismissed.”); Oneida Indian Nation of N.Y. v. Madison Cnty., 665 F.3d
408, 439 (2d Cir. 2011) (“Even if the existence of one narrow surviving federal claim means that
not all claims over which [the district court] has original jurisdiction have been dismissed it has
nonetheless become clear that the state-law claims now substantially predominate[ ] in this
litigation) (internal citations and quotation marks omitted); Dargis v. Sheahan, 526 F.3d 981,
991 (7th Cir.2008) (not exercising supplemental jurisdiction over case with one narrow federal
claim and seven state-law claims). 10 For these reasons, the Court will once again remand the
remaining D.C. law claims to D.C. Superior Court.
10
This is particularly appropriate in light of the goal of judicial economy. Neither this Court nor the Court
of Appeals has considered previously the issues presented by plaintiffs’ D.C. law claims. Nor does the
determination of the FLSA damages have anything to do with defendant’s liability on the remaining
claims. See Runnymede-Piper v. District of Columbia, 2013 WL 3337797, *7 (D.D.C. July 3, 2013)
(“The Court has not yet invested significant time and resources on the state law claims, and the District of
Columbia Superior Court would naturally have greater familiarity and interest in the issues that remain
insofar as they require interpretation of the District’s own statutory and common law.”).
16
CONCLUSION
Accordingly, and for the reasons stated above, the motion to dismiss will be granted as to
Counts I, III, V, and X-XI. Summary judgment on liability will be entered for plaintiffs Ford-
Haynes, Neill, and Weeks on their FLSA claim (Count II). They will have twenty days to file an
opposition to defendant’s damage calculations as presented in its Notice, which the Court is
treating as a Rule 56 motion for summary judgment. Defendant then will have fourteen days
thereafter to file a reply. Two separate Orders accompany this Memorandum Opinion.
/s/
ELLEN SEGAL HUVELLE
United States District Judge
Date: January 6, 2014
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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
___________________________________
)
DARRYL HARROD, JR., )
)
Plaintiff, )
)
v. ) Civil Action No. 13-774 (RMC)
)
U.S. PAROLE COMMISSION, )
)
Defendant. )
___________________________________ )
MEMORANUM OPINION
On April 24, 2013, Mr. Harrod, proceeding pro se, filed a Complaint in D.C.
Superior Court, alleging that the U.S. Parole Commission held him without cause for forty days
after failing to credit his time served. See Notice of Removal [Dkt. 1], Complaint [Dkt. 1-1].
The Government filed a motion to dismiss on June 28, 2013, which argued that Mr. Harrod
failed to exhaust administrative remedies, the U.S. Parole Commission was immune from
common law tort suits, and Mr. Harrod failed to properly serve the United States. See Mot. to
Dismiss [Dkt. 4]. Over a five month period, Mr. Harrod filed a motion to quash, Dkt. 6, a
motion for a bench hearing, Dkt. 9, and a motion for a trial date, Dkt. 11. On January 13, 2014,
the Court issued an Order to Show Cause to Mr. Harrod as to why his Complaint should not be
dismissed for lack of subject matter jurisdiction. See Order to Show Cause [Dkt. 13]. In
response, Mr. Harrod wrote that this Court is the “proper venue for the federal [t]ort [c]laim,”
and that he was “denied a duty owed by defendants.” Response to Show Cause [Dkt. 15] at 1.
Because Mr. Harrod failed to exhaust his administrative remedies before filing the instant case,
his Complaint will be dismissed for lack of subject matter jurisdiction.
1
Before filing a lawsuit under the Federal Tort Claims Act (FTCA), a plaintiff
must first present his or her claims to the appropriate government agency. 28 U.S.C. § 2675(a).
In other words, “[t]he FTCA bars claimants from bringing suit in federal court until they have
exhausted their administrative remedies.” McNeil v. United States, 508 U.S. 106, 113 (1993);
see also Simpkins v. D.C. Gov’t, 108 F.3d 366, 371 (D.C. Cir. 1997) (treating exhaustion
requirement as jurisdictional). The district court lacks subject matter jurisdiction over any FTCA
suit filed prematurely, that is, at any time before the appropriate federal agency either denies a
claim “in writing and sent by certified or registered mail,” 28 U.S.C. § 2675(a), or fails “to make
final disposition of a claim within six months after it is filed,” id. “[A]s a general rule, a
premature ‘complaint cannot be cured through amendment, but instead, plaintiff must file a new
suit.’” Duplan v. Harper, 188 F.3d 1195, 1199 (10th Cir. 1999) (quoting Sparrow v. U.S. Postal
Serv., 825 F. Supp. 252, 255 (E.D. Cal. 1993)); see also Edwards v. District of Columbia, 616 F.
Supp. 2d 112, 117 (D.D.C. 2009) (concluding that the Court “lack[ed] subject matter jurisdiction
over Plaintiff’s FTCA claims, which were filed before the exhaustion requirement under section
2675(a) was satisfied, and that this jurisdictional defect cannot be cured by the filing of an
amended complaint”).
Mr. Harrod’s Complaint is construed as one bringing a common law tort claim
against the United States Parole Commission. As such, the FTCA is his sole avenue for
recovery. Mr. Harrod filed this lawsuit on April 24, 2013, and he filed an administrative claim
with the Bureau of Prisons on December 4, 2013. See Response to Show Cause, Ex. 1 [Dkt. 15]
at 4. However, Mr. Harrod did not present his claim to the appropriate government agency prior
to filing this action as the FTCA requires. See 28 U.S.C. § 2675(a). Thus, his failure to exhaust
administrative remedies deprives this Court of subject matter jurisdiction over his claim. See
2
McNeil, 508 U.S. at 113 (“The FTCA bars claimants from bringing suit in federal court until
they have exhausted their administrative remedies.”). Mr. Harrod filed this suit prematurely, and
the jurisdictional defect was not cured by filing an administrative claim during the pendency of
the lawsuit.
This case is dismissed under Federal Rule of Civil Procedure 12(b)(1) for lack of
subject matter jurisdiction. Accordingly, the Court will grant Defendant’s motion to dismiss,
Dkt. 4, deny Plaintiff’s motions, Dkts. 6, 9 & 11, as moot, and dismiss this civil action. 1 A
memorializing Order accompanies this Memorandum Opinion.
Date: February 18, 2014 /s/
ROSEMARY M. COLLYER
United States District Judge
1
Defendant’s motion to dismiss for insufficient service of process under Federal Rule of Civil
Procedure 12(b)(5) is denied. Because Plaintiff is proceeding pro se and in forma pauperis, he
may rely on the Clerk of Court and the United States Marshals Service to effect service of
process on his behalf. See 28 U.S.C. § 1915(d); Fed. R. Civ. P. 4(c)(2). He will not be penalized
for any errors or failure to effect proper service. See Hardy v. Joseph I. Sussman, P.C., 953 F.
Supp. 2d 102, 107–08 (D.D.C. 2013); Rowe v. District of Columbia, 892 F. Supp. 2d 174, 180
(D.D.C. 2012).
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FILED
UNITED sTATEs 1)1STRICT CoURT FEB ‘ 2 299
F()R THE DISTMCT GF C()LUMBIA clerk, u.s. nismcr a. sankruprcy
Courts for the District ot Columbia
JOSEPH KINARD, )
)
Plaintiff, )
)
v_ ) Civil Action No.12
)
UNITED STATES OF AMERICA, el al., )
)
Defendants. )
MEMORANDUM OPINION
This matter is before the Court on the plaintiffs application to proceed in forma pauperis
and his pro se complaint. The Court will grant the application and dismiss the complaint.
According to the plaintiff, the Assistant United States Attomey who prosecuted the
criminal case against him in the Superior Court of the District of Columbia in l997 committed
acts of misconduct and otherwise engaged in inappropriate behavior. For this reason, the
plaintiff seeks reversal of his conviction.
"Under D.C. Code § 23-110, a prisoner may seek to vacate, set aside, or correct sentence
on any of four grounds: (l) the sentence is unconstitutional or illegal; (2) the Superior Court did
not have jurisdiction to impose the sentence; (3) the sentence exceeded the maximum authorized
by law; or (4) the sentence is subject to collateral attack." Alston v. United Slates, 590 A.2d 5 l l,
513 (D.C. l99l). Such a motion must be filed in the Superior Court, see D.C. Code § 23-1 l0(a),
and "shall not be entertained . . . by any Federal . . . court if it appears that the [prisoner] has
failed to make a motion for relief under this section or that the Superior Court has denied him
relief, unless it also appears that the remedy by motion is inadequate or ineffective to test the
legality of his detention." D.C. Code § 23-1 l0(g); see Wz`lliams v. Martinez, 586 F.3d 995, 998
(D.C. Cir. 2009) ("Section 23-1 l0(g)’s plain language makes clear that it only divests federal
courts of jurisdiction to hear habeas petitions by prisoners who could have raised viable claims
pursuant to section 23-1 lO(a)."). Nothing in the complaint suggests that the plaintiffs available
remedy under D.C. Code § 23-110 is inadequate or ineffective. Moreover, this court is without
the authority to review or overturn any judgment of the Superior Court. See D.C. Code § ll-
72l(a)(l) ("The District of Columbia Court of Appeals has jurisdiction of appeals from . . . all
final orders and judgments of the Superior Court of the District of Columbia.").
The complaint fails to state a claim upon which relief can be granted, and it will be
dismissed under 28 U.S.C. §§ l9l5(e)(2)(b) and l9l5A(b). An Order accompanies this
Memorandum Opinion.
Uni tat%trict Judge
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FILED
UNITED STATES DISTRICT COURT
FOR THE DISTRICT 0F COLUMBIA _]AN 3 1 2012
Clark, U.S. Distdct & Bankruptcy
Courts for the District ot columbia
LEONARD RAY SMITH, )
)
Plaintiff, )
)
v. ) Civil Action N0.
)
UNITED STATES OF AMERICA, )
)
Defendant. )
MEMORANDUM OPINION
This matter comes before the Court on the plaintiffs application to proceed in forma
pauperis and his pro se civil complaint. The court will grant the application, and dismiss the
complaint.
The court must dismiss a complaint if it is frivolous, malicious, or fails to state a claim
upon which relief can be granted. 28 U.S.C. § l9l5(e)(2)(B)(i). In Neitzke v. Wz`lll`ams, 490 U.S.
319 (1989), the Supreme Court states that the trial court has the authority to dismiss not only
claims based on an indisputably meritless legal theory, but also claims whose factual contentions
are clearly baseless. Claims describing fantastic or delusional scenarios fall into the category of
cases whose factual contentions are clearly baseless. Id. at 328. The trial court has the discretion
to decide whether a complaint is frivolous, and such finding is appropriate when the facts alleged
are irrational or wholly incredible. Denton v. Hernana’ez, 504 U.S. 25, 33 (1992).
According to plaintiff, he is "the victim of illegal contract injuries and ha[s] suffered
personal injury from collateral damage" stemming from services rendered to four federal
government agencies. Compl. at 1. Plaintiff declines to "disclose the specifics of these
innovations here or in an open court room" because he has "been threatened personnally [sic] by
unknown individuals not to file this complaint." Id. He demands "4.1 trillion us dollars" as
compensation for his services, as well as "reasonable protection that will not interfere with [his]
lifestyle . . . after [he gets] relief and recovery from this complaint." Id. at 2. ln addition, among
other relief, plaintiff demands that members of his immediate family to "be cleared of any wrong
doing if they have been incriminated," and he wants "the woman that may have had [his]
children . . . to be compensated separately from [his] relief and recovery." Id
Mindful that a complaint filed by a pro se litigant is held to a less stringent standard than
that applied to a formal pleading drafted by a lawyer, see Haz'rzes v. Kerner, 404 U.S. 519, 520
(1972), the Court concludes that the factual contentions of the plaintiff s complaint are irrational
and wholly insufficient to state a cognizable civil claim. Accordingly, the Court will dismiss
this action under 28 U.S.C. § l9l5(a)(2)(B)(i) as frivolous.
An Order consistent with this Memorandum Opinion will be issued on this same date.
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475 F. Supp. 875 (1979)
Ray MARSHALL, Secretary of Labor, United States Department of Labor, Plaintiff,
v.
AMERICAN MOTORS CORPORATION, a corporation, Defendant.
No. 77-71249.
United States District Court, E. D. Michigan, S. D.
August 1, 1979.
On Motion for Clarification and Reconsideration September 20, 1979.
*876 *877 Allen H. Bean, U. S. Dept. of Labor, Detroit, Mich., for plaintiff.
W. Robert Chandler, Cross, Wrock, Miller & Vieson, Detroit, Mich., for defendant.
OPINION AND ORDER
CORNELIA G. KENNEDY, Chief Judge.
Plaintiff Ray Marshall, Secretary of Labor, commenced this action on May 20, 1977, on behalf of a number of employees whom he alleges were discharged, retired, demoted, not promoted, or otherwise discriminated against by defendant in violation of the Age Discrimination in Employment Act, 29 U.S.C. §§ 621-634. Plaintiff has now filed a Motion for Leave to File an Amended Complaint and a Motion for Partial Summary Judgment. Defendant has filed a Motion for Summary Judgment on the following issues: (1) Plaintiff's failure to conciliate as required by the ADEA; (2) Plaintiff's failure to file charges with the state agency at least sixty days before commencing suit; (3) The time barring of certain employees' claims; (4) The retirement of certain employees within the terms of the ADEA permitting employer discretion; and (5) Plaintiff's failure to sue the actual employer of certain employees.
Conciliation Requirements
The defendant asks this court to grant its motion for summary judgment on the grounds that the Secretary failed to engage in conciliation efforts as required by the Age Discrimination in Employment Act. The act provides: "Upon receiving such a charge, the Secretary shall promptly . . seek to eliminate any alleged unlawful practice by informal methods of conciliation, conference, and persuasion." 29 U.S.C. § 626(d). According to the defendant, this requirement of conciliation is jurisdictional and thus no action may be maintained without adequate efforts to achieve a solution by amicable means. Those courts which have considered the question have generally found the requirement's fulfillment *878 to be necessary to the maintenance of an action. However, they have held that dismissal is too drastic a sanction to impose for less than strict compliance with the requirement. The courts have therefore not dismissed in such a case but have granted a stay pending conciliation efforts. See, e. g., Marshall v. Baltimore & Ohio Railroad, 461 F. Supp. 362, 369 (D.Md.1978).
The parties in this matter undertook a series of discussions which extended over two years before the suit was filed. During that time there were at least five meetings between representatives of the plaintiff and defendant, on November 20, 1975, December 9, 1975, January 26, 1976, June 30, 1976, and January 17, 1977. In addition, there were a number of contacts by letter and telephone throughout the period. These meetings and discussions failed to bring about an amicable resolution of the grievances, and, as a result, the present suit was filed. According to the plaintiff, although conciliation efforts failed, the requirements of the statute were met. The Secretary states that agents of the Department of Labor informed the defendant of the nature and extent of the violations, explained the relief sought, and gave the defendant an opportunity to respond. Finally, the Secretary's agents told the defendant that the case would be reviewed for possible legal action if conciliation failed. Case law has interpreted the conciliation statute to require just these sorts of statements and actions as conciliatory efforts. Brennan v. Ace Hardware Corp., 495 F.2d 368 (8th Cir. 1974); Marshall v. Hartford Fire Ins. Co., 78 F.R.D. 97 (D.Conn.1978). The plaintiff contends that it was not required to negotiate individually in a pattern and practice case but could seek a blanket make-whole remedy. If the Secretary seeks only prospective relief, then a period of conciliation dedicated to generalized discriminatory practices would be adequate. In such a case the concern is with establishing nondiscriminatory practices and guidelines to be applied to all employees in the future. However, if it seeks retrospective relief, such as back pay, then it follows that there must be some discussion of the merits of individual cases.
The Secretary states, however, that he was unable to achieve a settlement with AMC as a result of actions of the defendant which hampered the plaintiff in his negotiating efforts. According to the Secretary, AMC refused to admit that any discrimination existed or could exist and documented its position with a ten-page statistical analysis. (Benedict Affidavit ¶ 4). In addition, AMC refused to discuss the claims of those individuals which AMC considered to be barred by the statute of limitations. (Benedict Affidavit ¶ 6; Bean Affidavit ¶ 8). The plaintiff also contends that the defendant failed to supply information requested by the Secretary as necessary to its investigation. (See generally Bean Affidavit). The result of these actions, according to the plaintiff, was to render any settlement negotiations fruitless.
According to the defendant, conciliation efforts failed because the Secretary improperly conducted them in the following respects:
As prerequisites for conciliation discussions, the Secretary required that:
(a) AMC admit its guilt;
(b) AMC submit a blanket offer to make whole all employees within the protected age class who have been terminated, demoted or refused hire since 1970;
(c) AMC waive its rights under the statute of limitations;
(d) AMC abandon its position that the three-year limitations period applied to ADEA claims.
Defendant's Brief at 13.
It is evident from the statements of the parties that they are in substantial disagreement as to the tenor of the discussions which took place and the requirements they were to meet. It does not appear from the frequency of the parties' contacts that the discussions were clearly inadequate to meet minimum requirements of the statute. Cf. Hodgson v. Approved Personnel Service, Inc., 529 F.2d 760, 764 (4th Cir. 1975). There is no requirement in the statute that *879 the conciliation process be in the nature of an adjudicative process, complete with a presentation of evidence and marshalling of defenses. In fact, courts have held that the Secretary is not required to continue efforts after the defendant has stated that it believes it has not been guilty of wrongdoing but may proceed to litigation to determine that issue. See Marshall v. Hartford Fire Insurance Co., 78 F.R.D. 97, 105 (D.Conn. 1978). It therefore does not appear that the conciliation requirements have not been met as far as efforts to conciliate are involved. The case should proceed to trial and a presentation of the proofs on this issue.
Accordingly, the defendant's Motion for Summary Judgment on the issue of conciliation is DENIED.
Section 4(f)(2)
The defendant asks also for summary judgment on the claims of eighteen individuals who were retired under the terms of the Salaried Employees Retirement Pension Plan. The defendant claims that any retirements under the terms of the plan, including those at the discretion of the employer based on the employee's age, do not violate the ADEA. The defendant interprets various court decisions, and in particular United Airlines v. McMann, 434 U.S. 192, 98 S. Ct. 444, 54 L. Ed. 2d 402 (1977), to permit such retirements if the plan was instituted before the ADEA was enacted, provides for the payment of substantial benefits, and is not a subterfuge to evade the intent of the act. In the instant case, the pension plan was established in July 1950 and provides for early retirement at the option of the corporation of employees over fifty-five years of age and with more than ten years of continuous service. According to the Hinsberg Affidavit, the retirees involved in this case received benefits in the following ranges: less than $250 a month1; $250-$3002; $300-$4004; $400-$5002; above $5008, amounts, which the defendant believes satisfy the requirement of substantiality. Finally the defendant contends that it relied in its actions upon the interpretation of this section provided by the Department of Labor and set forth in the Code of Federal Regulations.
According to the Secretary, the actions taken by the defendant are not protected by 29 U.S.C. § 623(f)(2). That section formerly stated:
It shall not be unlawful for an employer . . .
. . . . .
(2) to observe the terms of a bona fide seniority system or any bona fide employee benefit plan such as a retirement, pension, or insurance plan, which is not a subterfuge to evade the purposes of this chapter, except that no such employee benefit plan shall excuse the failure to hire any individual;
(3) to discharge or otherwise discipline an individual for good cause.
It was revised in 1978 to read as follows:
It shall not be unlawful for an employer . . .
. . . . .
(2) to observe the terms of a bona fide seniority system [to] any bona fide employee benefit plan such as a retirement, pension, or insurance plan, which is not a subterfuge to evade the purposes of this chapter, except that no such employee benefit plan shall excuse the failure to hire any individual, and no such seniority system or employee benefit plan shall require or permit the involuntary retirement of any individual specified by section 631(a) of this title because of the age of such individual.
The Secretary contends that the defendant's interpretation of congressional intent is incorrect. According to the Secretary, it was the intent of Congress to promote the hiring of older workers without necessarily including them in normal retirement plans established for younger workers. See also [1978] U.S.Code Cong. & Admin.News, pp. 504, 512. The act itself states that Congress was concerned with the problems older workers experienced in retaining and regaining employment, with the setting of *880 arbitrary age limits not related to job performance, and with the incidental effects of unemployment on older workers. 29 U.S.C. § 621. In the present case, the Secretary argues, the result of the defendant's actions was to force upon these workers the sorts of privations about which Congress had expressed concern. These former AMC workers who were involuntarily retired experienced loss of social security and pension benefits and were forced to seek employment elsewhere at an advanced age.
The Sixth Circuit Court of Appeals has held that although there can be more than one cause in a decision to discharge an employee, the employee is "nevertheless entitled to recover if one such factor was his age and if in fact it made a difference in determining whether he was to be retained or discharged." Laugesen v. Anaconda Co., 510 F.2d 307, 317 (6th Cir. 1975). More recently that court upheld a discharge pursuant to a pension plan which permitted employer discretion when the employer observed the terms of the plan, which was not a subterfuge, and when the employer acted in good faith. However, the court held that the plan satisfied the requirements and policies of the act because it required "consideration of other factors which are related to an employee's ability to perform work satisfactorily [and was thus] in harmony with the stated purpose of the Act." Thompson v. Chrysler Corp., 569 F.2d 989, 993 (6th Cir. 1978); Carpenter v. Continental Trailways, 446 F. Supp. 70, 73-74 (E.D.Tenn.1978). The court found in Thompson that adequate factfinding on the pertinent issue was engaged in to satisfy the act. This interpretation obviously differs in critical aspects from that urged by defendant.
Considering the Sixth Circuit Court of Appeals' interpretation of the act, the defendant cannot argue that its decision to terminate these employees is or was in strict compliance with the ADEA. Furthermore, its statement that it acted in reliance upon McMann cannot support its behavior here. First, the McMann decision was not handed down by the Supreme Court until some time after the present litigation began and after the alleged acts of discrimination. It therefore could provide only an after-the-fact justification at best. Furthermore, and a critical difference, the McMann case, unlike the present one, concerned an employee who had been retired pursuant to a plan for mandatory retirement of employees at age sixty. McMann, supra, at 194. Thus the employer did not exercise discretion to force the employee to retire at an age earlier than that provided for all employees in his classification under the plan.
In the present case, it cannot be argued that the retirements were taken in good faith to observe the requirements of the plan. The plan did not mandate retirement at the age at which it was taken by all but one of the employees in question. Rather the plan provided for the exercise of discretion by the employer. After the passage of the act, one element of the employer's discretion was removed. That was the right to consider age as a relevant factor in the decision to terminate an employee. Age can enter into the decision only if it is actually linked with a decline in ability which otherwise constitutes good cause to terminate the employee. The only exceptions provided for in the act are for bona fide plans which are not subterfuges to evade the purposes of the act. An interpretation of an existing plan, which allows an employer to terminate an employee solely on the basis of age rather than good cause would obviously be in direct contravention of Congress' intent in passing the ADEA. Congress intended by that act to expand, not limit the rights of older employees, and it is thus not possible to arrive at an interpretation of the act permitting the abrogation of those rights.
The defendant also asserts that it acted in reliance upon the Department of Labor's own interpretation of § 623(f)(2). The regulation provides, in part:
Thus, the Act authorizes involuntary retirement irrespective of age, provided that such retirement is pursuant to the terms of a retirement or pension plan meeting the requirements of section *881 4(f)(2). The fact that an employer may decide to permit certain employees to continue working beyond the age stipulated in the formal retirement program does not, in and of itself, render an otherwise bona fide plan invalid insofar as the exception provided in section 4(f)(2).
29 C.F.R. § 860.110. The regulation clearly states that any involuntary retirement must meet the requirements of § 623(f)(2). As stated above, that section's terms do not support the defendant's actions in this matter. Were the court to read into the regulation and the act a provision for the employer's exercise of unlimited discretion, exercised without regard for the purposes of the act, it would introduce an exception so broad as to swallow the rule. The Sixth Circuit Court of Appeals has stated that the act is "remedial legislation designed `to promote employment [by] older persons based on their ability rather than age.' 29 U.S.C. § 621(b), and is entitled to a liberal construction." Gabrielle v. Chrysler Corp., 573 F.2d 949, 954 (6th Cir. 1978), vacated, ___ U.S. ___, 99 S. Ct. 2819, 61 L. Ed. 2d 273 (1979). Thus, neither precedent nor the regulation reasonably suggest that the actions of the defendant comply with the ADEA.
The Secretary further asks this court to note that the recent amendment to § 623(f)(2) was given immediate effect by Congress because it was seen as merely clarifying rather than creating new standards. See also [1978] U.S.Code Cong. & Admin.News, pp. 504, 513. The Secretary urges that even if the amendment were seen as creating new standards, the application of the amendment in this case does not work an undue hardship because it involves not a mere private case but a matter of great national concern. Thus, the withdrawal of the right to discriminate unjustly does not work an injustice. However, the court need not go so far as to find the amendment should be applied retroactively, considering the precedent which this court is bound to follow. Now that Congress has clarified its original intention in enacting the provision, it is even more incumbent upon the court to follow compatible Sixth Circuit precedent. Cf. Davis v. Boy Scouts of America, 457 F. Supp. 665, 673 (D.N.J. 1978). In this circuit's view too "forced retirement extinguishes an individual's right to employment and is thus not excused by section 4(f)(2) unless the retirement is based on some reason other than age, such as disability or poor performance." [1978] U.S.Code Cong. & Admin. News, pp. 504, 513.
Accordingly, the defendant's Motion for Summary Judgment on the forced retirement of its employees is DENIED.
Deferral to the State
The defendant argues that before the Secretary could proceed in Federal Court, he was required to meet a jurisdictional requirement that he file a grievance with the State of Michigan sixty days before filing the present suit. The ADEA provides:
In the case of an alleged unlawful practice occurring in a State which has a law prohibiting discrimination in employment because of age and establishing or authorizing a State authority to grant or seek relief from such discriminatory practice, no suit may be brought under section 626 of this title before the expiration of sixty days after proceedings have been commenced under State law, unless such proceedings have been earlier terminated.
29 U.S.C. § 633(b).
Michigan has such a law and state authority, which do not appear to preclude such resort by the Secretary, Mich.Comp.L.Ann. §§ 37.2101-37.2804. According to the Secretary, this section is not jurisdictional, even if it may be so applied to private actions. Suits by the Secretary are encouraged, Dean v. American Security Insurance Co., 559 F.2d 1036, 1038 (5th Cir. 1977), cert. denied, 434 U.S. 1066, 98 S. Ct. 1243, 55 L. Ed. 2d 767 (1978), and the plaintiff suggests, therefore, that it was not the intent of Congress to require the Secretary to submit to state authority when bringing a pattern and practice suit. Finally, the Secretary urges, it was the intent of Congress *882 to give the Secretary the same right of direct action as given the Attorney General under Title VII.
In its report issued with the recent revision to the act, the Senate committee stated that the provision did not require individuals to seek relief from the state before they could proceed in a federal forum. [1978] U.S.Code Cong. & Admin.News, pp. 504, 508-509. Indeed, in construing the provision, the Third Circuit Court of Appeals noted that it was anomalous to accord deference to state proceedings when a federal right was sought to be vindicated. Holliday v. Ketchum, MacLeod & Grove, Inc., 584 F.2d 1221, 1230 (3d Cir. 1978); Gabrielle v. Chrysler Corp., 573 F.2d 949 (6th Cir. 1978), vacated, ___ U.S. ___, 99 S. Ct. 2819, 61 L. Ed. 2d 273 (1979). However, the Supreme Court has more recently held that at least in the case of individual suits brought under the ADEA, a charge must be first filed with a state meeting the requirements of § 633(b). Oscar Meyer & Co. v. Evans, ___ U.S. ___, 99 S. Ct. 2066, 60 L. Ed. 2d 609 (1979). In that decision, the Court held that the requirement is met by merely filing a charge, commencing state proceedings, whether or not such a charge is within the time limits set by state law. In the Evans case, the Court then required a sixty day stay of proceedings following the commencement of state proceedings.
Although the decision in Evans clarifies the requirements of individual suits, it does not clearly apply to suits brought by the Secretary. The Supreme Court has stated that the ADEA provides for two enforcement mechanisms: suits brought by the Secretary on behalf of an individual and suits similar to those provided in §§ 16, 17 of the Fair Labor Standards Act. (29 U.S.C. §§ 216, 217); Lorillard v. Pons, 434 U.S. 575, 579, 98 S. Ct. 866 (1978); Marshall v. Goodyear Tire & Rubber Co., 554 F.2d 730, 731 n.1 (5th Cir. 1977). The Supreme Court in Evans held that the enforcement mechanism in § 4(b) of the ADEA was similar to that of Title VII of the Civil Rights Act, 42 U.S.C. § 2000e-5(d). It has been held under Title VII that in a class action suit, which is similar to the sort of case filed here, not every member of the class must file a charge. See, e. g., Gill v. Monroe County Department of Social Services, 79 F.R.D. 316, 331 (W.D.N.Y.1978), vacated on other grounds, 547 F.2d 31 (2d Cir. 1976). Indeed, the Sixth Circuit Court of Appeals has held that the Attorney General is not required to file any charge with the state in order to commence a civil proceeding. United States v. Masonry Contractors Ass'n., 497 F.2d 871, 876 (6th Cir. 1974).
In order to determine the question of whether the Secretary is required to file a charge with the state, it is necessary to consider the act as a whole and the act as interpreted by the Supreme Court in past cases. Section 633(b) is very clear and inclusive. It states that no suit can be brought under § 626 unless a charge is first filed with the state. The Third Circuit Court of Appeals recently held when considering this issue that the Secretary brings his suit under the FLSA, not under § 626. Thus § 633(b) can impose no requirement of filing a charge. Marshall v. Chamberlain Manufacturing Corp., 601 F.2d 100 (3d Cir. 1979). However, such an argument is ingenuous and does not reflect the language of the act. For example, § 626(b) states: "Before instituting any action under the section, the Secretary shall . . .." Other parts of that section further limit or define the role the Secretary is to play. Thus, it is not possible to exempt the Secretary from the requirement on the grounds that he does not bring actions under § 626. Furthermore, the ADEA gives the Secretary the power "to cooperate with . . . State . . . agencies . . . to aid in effectuating the purposes of this chapter." 29 U.S.C. § 625(b).
There are, however, good and sufficient reasons to conclude that no filing is required of the Secretary. First, it is clear that the Secretary is not in the same situation as other litigants under the ADEA. Suits brought by the Secretary supersede those of private litigants. § 626(c)(1); Reich v. Dow Badische Co., 575 F.2d 363, 368 (2d Cir. 1978). The act also provides a role for the Secretary which is the equivalent *883 of that played by most state agencies, and it is not logical to conclude that Congress determined duplication of effort was advisable. Furthermore, many pattern and practice suits brought by the Secretary, such as the present one, will involve employees who reside in many states. In such a case, the purposes of the act would best be served by maintaining the integrity of the class in order to eradicate the entire problem.
More important, though, is the interpretation of the ADEA provision in light of Supreme Court interpretation of other parts of the ADEA. In Lorillard v. Pons, 434 U.S. 575, 579, 98 S. Ct. 866, 55 L. Ed. 2d 40 (1978), the Supreme Court stated that the ADEA follows the enforcement mechanism of the FLSA. As noted above, the Court in Evans stated that the deferral mechanism is modeled after Title VII. It thus follows that the method followed under one or the other of those two acts must indicate whether deferral here is necessary. It appears that much of § 626, and § 626(c)(1) in particular, tracks the FLSA, specifically § 216. It is clear that there is no deferral requirement under the FLSA.
Analogy to Title VII provides the same conclusion.
Neither the Attorney General nor the EEOC is required to resort to state conciliatory agencies before commencing pattern or practice suits under Title VII of that Act. When the ADEA was passed in 1967, public enforcement authority was vested not in the Attorney General but in the Secretary of Labor, who had exercised similar responsibility under the Fair Labor Standards Act (FLSA) since 1938.
Marshall v. West Essex General Hospital, 575 F.2d 1079, 1084-85 (3d Cir. 1978) (Gibbons, J., concurring). In the Reorganization Plan No. 1 of 1978 § 2, [1978] U.S.Code Cong. & Admin.News, p. 9799, all relevant functions of the Secretary of Labor with regard to the ADEA were transferred to the Equal Employment Opportunity Commission. Section 5 of that plan further provided: "Any function of the Equal Employment Opportunity Commission concerning initiation of litigation with respect to State or local government . . . are hereby transferred to the Attorney General." In explaining the purpose of the reorganization, President Carter stated: "The Justice Department and the EEOC will cooperate so that the Department sues on valid referrals, as well as on its own `pattern and practice' cases." [1978] U.S.Code Cong. & Admin.News, pp. 9795, 9798. Nevertheless, whether the suit is brought by the Attorney General or the EEOC, see United States v. Board of Education of Garfield Heights, 581 F.2d 791 (6th Cir. 1978), there is no deferral requirement for pattern and practice cases under Title VII. Considering that the same conclusion is reached either under Title VII or the FLSA, both of which were models for the ADEA and closely allied, it is not logical to impose such a requirement in this case. The Secretary may, however, choose to exercise his discretion and file a charge with the State of Michigan as a precaution.
Accordingly, the defendant's Motion for Summary Judgment on the grounds that the Secretary failed to file a grievance with a state agency is DENIED.
Statute of Limitations
The defendant in its motion for summary judgment contends that the statute of limitations applies to bar a number of the claimed acts of discrimination. It asks the court to dismiss those claims which allege violations before May 20, 1974, as barred by the three year statute of limitations, 29 U.S.C. §§ 255(a), 626(e)(1). The defendant further asks that claims which arose before May 20, 1975 be dismissed as barred by the two year statute of limitations, since the alleged violations were not willful. The question of the defendant's willfulness is an issue of fact which must be determined after a weighing of the facts and is thus not appropriately decided on a motion for summary judgment. Marshall v. Hills Brothers, 432 F. Supp. 1320, 1322 (N.D.Cal.1977).
The limitation in § 255 is a procedural limitation barring the remedy but not *884 the right and must therefore, as it is here, be pleaded as an affirmative defense. Mumbower v. Callicott, 526 F.2d 1183, 1187 n.5 (8th Cir. 1975); Hodgson v. Humphries, 454 F.2d 1279, 1283 (10th Cir. 1972). In an appropriate case, a court might find that some equitable consideration, such as estoppel, applies to prevent the defendant's asserting the statute of limitations as a defense. Ott v. Midland-Ross Corp., 600 F.2d 24 (6th Cir. 1979); cf. Kephart v. Institute of Gas Technology, 581 F.2d 1287, 1289 (7th Cir. 1978). However, after careful review of the affidavits, etc., it appears there are no facts in this case which would permit a finding that estoppel could be appropriately applied. Viewing the affidavits in the light most favorable to plaintiffs and drawing all inferences in his favor there is no indication that the plaintiff relied upon any act of the defendant in allowing the statute to run. The plaintiff asked the defendant to agree to a tolling of the statute, and the defendant plainly did not concur. Thus the Secretary cannot claim he was misled. Estoppel therefore cannot bar the assertion of the statute of limitations as a defense. The ADEA, as amended April 6, 1978, now provides for a tolling of the statute during conciliation for a period of one year. § 626(e)(2). However, Congress provided in enacting the amendment that the tolling was to affect only conciliation efforts commenced after the enactment. Act of April 6, 1978, Pub.L. No. 95-256, § 4(c)(2). Thus there is no statutory tolling provision upon which the Secretary can rely to prevent the bar of those claims which arose before May 20, 1974.
Plaintiff urges that the court extended the statute of limitations through a finding that a continuing violation has occurred. This argument has been rejected by the Sixth Circuit Court of Appeals in analogous Title VII cases. In Krzyzewski v. Metropolitan Government, 584 F.2d 802, 805 (6th Cir. 1978) it held that the date on which an employee knows or should know that the employer has made a final decision to terminate him or her is the date upon which the violation occurs. Although the victim may continue to feel the effect of the illegal act, the question is whether any present violation exists. United Airlines, Inc. v. Evans, 431 U.S. 553, 558, 97 S. Ct. 1885, 52 L. Ed. 2d 571 (1977). In a recent age discrimination case, the Sixth Circuit found that a seniority system which is discriminatory as to age may be a continuing violation as long as it is maintained. However, the employee's cause of action accrues at the time his employment opportunities are adversely affected by the application of the seniority system to him. Morelock v. NCR, 586 F.2d 1096 (6th Cir. 1978). Therefore, although some effects may still exist as the result of discriminatory discharges or demotions, if there is a reasonably ascertainable date on which the act occurred, that is the day on which the statute began to run. Therefore, any illegal acts which resulted in termination, demotion, or a failure to promote must have occurred after May 20, 1974, in order to avoid the application of the statute.
The plaintiffs urge yet another theory for this court's finding the statute of limitations inapplicable to claims of illegal acts occurring before May 20, 1974. The applicable statute of limitations, found in the Portal-to-Portal Act provides that it applies to actions for unpaid minimum wages, unpaid overtime compensation, or liquidated damages. 29 U.S.C. § 255. Based on this language, the plaintiff concedes that actions for these sorts of damages are barred for some of the claimed violations. However, it believes that it may still assert claims on behalf of these people for other sorts of relief. The ADEA provides for broad ranging legal and equitable relief to promote its policies. These remedies include equitable relief, such as reinstatement and promotion. § 626(b). It can be argued that these sorts of remedies may be of peculiar aid in promoting the purpose of the ADEA to preserve employment and prevent deterioration of skill and morale among older workers. § 621.
No statute of limitations expressly applies to equitable relief, particularly that which is prospective in application. Hodgson *885 v. Approved Personnel Service, Inc., 529 F.2d 760, 765 (4th Cir. 1975). The enforcement provision of the ADEA merely states that "the court shall have jurisdiction to grant such legal or equitable relief as may be appropriate to effectuate the purposes of this chapter, including without limitation . . .." § 626(b); see Gifford v. Diagnostics, 456 F. Supp. 462, 464 (N.D.Ohio 1978); cf. Franks v. Bowman Transportation Co., 424 U.S. 747, 770-75, 96 S. Ct. 1251, 47 L. Ed. 2d 444 (1976); Marshall v. Goodyear Tire & Rubber Co., 554 F.2d 730, 733 (5th Cir. 1977). Indeed it can be argued that some sort of monetary damages which reflects the amount of wrongdoing should be included in a remedy in order to deter more certainly illegal employment practices and to recompense victims of discrimination. Rodriguez v. Taylor, 569 F.2d 1231, 1237 (3d Cir. 1977), cert. denied, 436 U.S. 913, 98 S. Ct. 2254, 56 L. Ed. 2d 414 (1978). An appropriately fashioned remedy which includes either reinstatement or promotion as part of its prospective relief may ensure greater compliance than a simple order mandating compliance with the act. For this reason, it is argued, it may best accord with justice for the court not to dismiss those parties whose claims are time barred until the time has come to fashion a remedy.
It is true that evidence of illegal employment practices present in the cases of those individuals whose claims are time barred may be relevant to those claims which are not barred. The defendant's actions vis-a-vis those employees may constitute relevant background evidence of violations. United Airlines, Inc. v. Evans, 431 U.S. 553, 558, 97 S. Ct. 1885, 52 L. Ed. 2d 571 (1977). The courts have held that discriminatory intent as to one individual may be inferred from a totality of the circumstances, including actions taken by the defendant in other cases. Laugesen v. Anaconda Co., 510 F.2d 307, 314 (6th Cir. 1975); Carpenter v. Continental Trailways, 446 F. Supp. 70, 73-74 (E.D. Tenn.1978); Marshall v. Hills Brothers, 432 F. Supp. 1320, 1325 (N.D.Cal.1977). The Secretary's suit alleges a pattern and practice of discrimination on the basis of age, and he must therefore prove a systemwide pattern which has existed and which continues. Teamsters v. United States, 431 U.S. 324, 338, 97 S. Ct. 1932, 52 L. Ed. 2d 396 (1977). Indeed, providing the names to the defendant gives it notice of the specific claims which it will have to meet at trial. However, although these proofs of discriminatory acts may be relevant to the Secretary's case and may affect the remedy fashioned, it must be found that the claims of employees discriminated against within the meaning of the ADEA are time barred if the act occurred before May 20, 1974. There is no evidence Congress intended there to be no end to employer liability. Thus the statute must apply to bar these claims.
Accordingly, the defendant's motion to dismiss certain employees is GRANTED as to those employees as to which the claimed discriminatory act occurred before May 20, 1974.
Employees Employed by American Motors Sales Corporation
AMC contends in its written motions that the court should dismiss those individuals who were not employed by it but by American Motors Sales Corporation, a wholly owned subsidiary of AMC. The plaintiff filed a motion to amend its complaint to add AMSC as a party defendant. At oral argument defendant withdrew its motion and acquiesced in the granting of the plaintiff's motion to amend.
Accordingly, the plaintiff's motion to add AMSC as a party defendant is GRANTED as long as to the employees whose claims are not barred by the statute of limitations requirements as decided in the other motions. The defendant's motion to dismiss the employees is DENIED.
OPINION AND ORDER GRANTING PLAINTIFF'S MOTION FOR CLARIFICATION, DENYING PLAINTIFF'S MOTION FOR RECONSIDERATION, AND STRIKING AFFIRMATIVE DEFENSE
Plaintiff filed this Motion for Reconsideration and Clarification on various *886 points of the Court's opinion and order filed August 1, 1979. The plaintiff first urges the court to reconsider its decision that prospective equitable relief is barred by the statute of limitations provided in 29 U.S.C. § 255(a). According to the plaintiff no statute expressly bars such relief, thus laches rather than a statute of limitations should be applied. Under this interpretation, the defendant would be required to demonstrate the inequity of having to defend itself as a result of unreasonable delay and prejudice. This would be a more flexible bar than any statute of limitations. No case discussing this issue in the context of the ADEA has been presented to the court by either party, nor has the court been able to find any authority on the question.
As stated in the Court's opinion and order, interpretations of Title VII of the Civil Rights Act has often been useful in guiding courts faced with analogous questions under the ADEA. Recent Title VII cases in this circuit have held that equitable prospective relief is barred by untimely filing of a claim. The Sixth Circuit Court of Appeals recently held that an action alleging a violation of Title VII based on a 1970 job reclassification was barred by the untimely filing of the Title VII charge. Trabucco v. Delta Airlines, 590 F.2d 315 (6th Cir. 1979). Similarly, the District Court for the Southern District of Ohio held that two devices may be used to extend the time limit: the concepts of continuing violation and tolling. Neither was applicable in that case, however, to prevent the dismissal of a case involving a challenge to a seniority system. Furr v. Trans World Airlines, 461 F. Supp. 58, 58 (S.D. Ohio 1978).
The United States Supreme Court has also denied prospective equitable relief on the grounds that the cause of action was barred by the statute of limitations in United Airlines, Inc. v. Evans, 431 U.S. 553, 97 S. Ct. 1885, 52 L. Ed. 2d 571 (1977). In that case, the Court stated that such a result was mandated by the intent of Congress in enacting the act. "A contrary view would substitute a claim for seniority credit for almost every claim which is barred by limitations. Such a result would contravene the mandate of § 703(h)." Id. at 560, 97 S.Ct. at 1890. There is no reason to believe that the intent of Title VII would be abridged by such an application of the statute of limitations of congressionally created rights while that of the ADEA would be furthered. Indeed, the Portal-to-Portal Act strongly supports the application of the statute of limitations to such equitable relief. It was the action of courts in applying the act in cases not contemplated by Congress, thus creating liability where none had existed, which led to its enactment. The act very clearly states an intent to provide a uniform period to promote "the sound and orderly conduct of business and industry." § 251(a). The limitations statute itself states very clearly that "every . . . action shall be forever barred unless commenced" within the limitations period. § 255(a).
Accordingly, the plaintiff's motion for reconsideration of the opinion rendered on the application of the statute of limitations to prospective equitable relief is denied.
The plaintiff also has asked for a clarification of the court's opinion on the application of the statute of limitations to demotions and failures to promote. The plaintiff states that the court's opinion was too broad in finding that the statute applied to bar relief for those people with claims arising before May 20, 1974. In addition, it is urged, broader factual questions apply to such claims, which must be determined at trial. The plaintiff's contention on both points is correct and not at variance with the court's opinion. In that opinion, the court discussed various factors such as the concept of continuing violation which apply particularly to claims of discrimination in failure to promote. See generally Shehadeh v. Chesapeake & Potomac Tel. Co., 193 U.S.App.D.C. 326, 339-340, 595 F.2d 711, 724-25 (1978). As stated in the court's opinion, "the employee's cause of action accrues at the time his employment opportunities are adversely affected," citing Morelock v. NCR, 586 F.2d 1096 (6th Cir. 1978). They are not thus subject to dismissal for *887 failure to comply with the statute of limitations in the same manner as terminations, since facts concerning the application and effects of the actions must be adduced.
The plaintiff has also asked the court to enter an order granting summary judgment in its favor on the question of deferral to the state. In its opinion and order, the court denied the defendant's motion for summary judgment on that question. It appears to the court that the plaintiff's request is more appropriately treated under F.R.Civ.P. 12(f). In light of the court's decision denying the defendant's motion for summary judgment on the issue, it is ordered that any defense based on a failure to comply with jurisdictional prerequisites of deferral to the state is properly struck.
Accordingly, IT IS ORDERED that the defendant's Sixth affirmative defense of failure to comply with § 14(b) of the ADEA be struck.
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987 F. Supp. 953 (1997)
Gregory HAMILTON, and Dana Hamilton, plaintiffs,
v.
Larry YORK d/b/a HLT Check Exchange, LLP, defendant.
No. Civ.A. 97-361.
United States District Court, E.D. Kentucky.
December 11, 1997.
*954 Addison Parker, Appalachian Research & Development Fund, Richmond, KY, Stephen A. Sanders, Deborah A. Schmedemann, Appalachian Research & Defense Fund of Ky., Inc., Prestonsburg, KY, Ned Pillersdorf, Pillersdorf, DeRossett & Barrett, Prestonsburg, KY, Ned Pillersdorf, Pillersdorf, DeRossett & Barrett, Prestonsburg, KY, for Plaintiffs.
J. Clarke Keller, Daniel E. Danford, Stites & Harbison, Lexington, KY, for Defendant.
MEMORANDUM OPINION AND ORDER
HOOD, District Judge.
The defendant, Larry York D/B/A HLT Check Exchange, LLP ("HLT"), has moved the Court [Record No. 4] to dismiss the plaintiffs' claims. The plaintiffs, Gregory and Dana Hamilton ("Hamiltons"), have responded [Record No. 7], to which HLT has *955 replied [Record No. 8]. This matter is now ripe for decision.
The following are the pertinent facts. On August 22, 1996, the Hamiltons began doing business with HLT, a licensed check cashing company, in Pikeville, Kentucky. The Hamiltons engaged in two types of transactions with HLT: (1) "check cashing" transactions, and (2) "deferral" transactions.
The following is how the "check cashing" transactions worked. The Hamiltons would give HLT a document in the form of a check in exchange for cash. HLT agreed to hold the "check" for two weeks before presenting it for payment or before requiring the Hamiltons to "pick up" the check by paying the face amount. HLT's charge for cashing and holding the check for two weeks was 20% of the sum advanced. The Hamiltons' incurred the 20% charge for the use of HLT's money and the ability to delay the payment of the check.
In the "deferral" transactions, upon the expiration of two weeks, HLT would allow the Hamiltons to defer presentment of their check in exchange for an additional 10% of the sum originally advanced for each week of deferral. The "deferral" fees were incurred by the Hamiltons in order to have more time to pay off their original "check". The Hamiltons allege that HLT knew or reasonably should have known that at the time of the "check cashing" and "deferral" transactions that they did not have sufficient funds in the bank to cover the checks given to HLT.[1] Based on the above facts, the Hamiltons have made numerous claims against HLT, and HLT has moved to dismiss all of them.
The case of LRL Properties v. Portage Metro Housing Authority, 55 F.3d 1097, 1104 (6th Cir.1995) sets out the applicable law on motions to dismiss pursuant to Fed. R.Civ. P. 12(b)(6):
"`A complaint should not be dismissed unless it appears beyond doubt that plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'" (citation omitted)
"A complaint need only give `fair notice of what the plaintiff's claim is and the grounds upon which it rests.'" In re DeLorean Motor Co., 991 F.2d 1236, 1240 (6th Cir.1993).
One of the Hamiltons' first claims involves Kentucky's Interest and Usury Statutes, KRS 360.010-.020. In order to state a claim under KRS 360.020, a person must knowingly take, receive, reserve, or charge a rate of interest greater than is allowed in KRS 360.010. Based on the above facts, the Hamiltons claim that HLT charged a 520% annual interest rate, which more than exceeds the rate allowed in KRS 360.010.
HLT, relying heavily on the check cashing statutes, argues that it was not charging interest but only service fees for cashing checks.[2] The pertinent check cashing provision, KRS 368.100(2), states that:
Any fee charged by a licensee for cashing a check shall be disclosed in writing to the bearer of the check prior to cashing the check, and the fee shall be deemed a service fee and not interest.
The Hamiltons, however, argue that their "check cashing" and "deferral" charges were incurred in exchange for extra time to pay back their original check, not fees for cashing a check.
In analyzing this issue, the Court notes the case of Hurt v. Crystal Ice & Cold Storage Co., 215 Ky. 739, 286 S.W. 1055, 1056-57 (1926). In Hurt, the court stated that:
"The cupidity of lenders, and the willingness of borrowers to concede whatever may be demanded or to promise whatever may be exacted in order to obtain temporary relief from financial embarrassment, as would naturally be expected, have resulted in a great variety of devices to evade the usury laws; and to frustrate such evasions the courts have been compelled to look beyond the form of a transaction to its substance, and they have laid it down as an inflexible rule that the mere form is immaterial, but that it is the substance *956 which must be considered. No case is to be judged by what the parties appear to be or represent themselves to be doing, but by the transaction as disclosed by the whole evidence; and, if from that it is in substance a receiving or contracting for the receiving of usurious interest for a loan or forbearance of money the parties are subject to the statutory consequences, no matter what device they may have employed to conceal the true character of their dealings."
Id., 286 S.W. at 1056-57 (citation omitted). In looking at the substance of the transactions between the Hamiltons and HLT, as opposed to the form, the Court finds that the transactions were nothing more than interest bearing loans. HLT was not cashing the Hamiltons' checks, but rather, it was giving them short-term loans that could be deferred for an additional 10% per week. See Harding v. Kentucky Title Trust Co., 269 Ky. 622, 108 S.W.2d 539, 548-49 (1937) (noting that a loan is usurious if it is in bad faith and is meant to conceal usury).[3]
It also seems clear that KRS 368.100(2) was written so there would be no confusion that if a person walked into a check cashing establishment with a government check for $1,000 and the business gave him $900 for the check that the business would not be subject to usury statutes because the $100 payment would be a service fee, not discounted interest. The above $100 charge is considered a service fee because the business is not receiving the $100 for the use of its money, but rather the service of processing and providing instant cash to unbanked people.
Moreover, a well-known legal dictionary defines "loan" as "[d]elivery by one party to and receipt by another party of sum of money upon agreement, express or implied, to repay it with or without interest." Black's Law Dictionary 844 (5th ed.1979). It goes on to define "interest" as "the compensation allowed by law or fixed by the parties for the use or forbearance or detention of money." Id., at 729. Based on the above definitions, it is clear that the charges incurred by the Hamiltons were interest from short-term loans, not service fees.[4]
HLT also argues that the legislative intent behind KRS 368.100 encompasses short-term loans. The Court notes, however, that HLT cannot cite any substantive authority for this proposition.[5] Additionally, if HLT's interpretation of KRS 368.100(2) was correct, "check cashing" companies would not have to stop with short-term loans they could make long-term loans as long as it was under the guise of cashing a check.[6] Therefore, based on the above analysis, the Hamiltons' claims under Kentucky's Usury statute will not be dismissed.[7]
The Hamiltons also assert claims under the Kentucky Consumer Loan Act, KRS 288.991. They allege that the interest and fees charged by HLT exceeded the limitations of Chapter 288. HLT, once again, argues that KRS 368.100(2) prevents the charges from being considered interest. As *957 noted above, the Court rejects this argument; hence, the Hamiltons' claims under the Kentucky Consumer Loan Act will not be dismissed.[8]
As to the Hamiltons' claims under the Civil RICO statute, 18 U.S.C. § 1964(c), it is clear that they have alleged the necessary facts. For instance, 18 U.S.C. § 1962(b) states that:
It shall be unlawful for any person through a pattern of racketeering activity or through collection of an unlawful debt to acquire or maintain, directly or indirectly, any interest in or control of any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce.
Additionally, 18 U.S.C. § 1961(6)(B) states that:
"unlawful debt" means a debt ... (B) which was incurred in connection with the business of gambling in violation of the laws of the United States, a State, or political subdivision thereof, or the business of lending money or a thing of value at a rate usurious under State or Federal law, where the usurious rate is at least twice the enforceable rate....
The Hamiltons have alleged that HLT charged a 520% interest rate. It is also clear that the Hamiltons are alleging that HLT attempted to collect their debt in order to carry on and maintain its enterprise.[9] Therefore, the Hamiltons' civil RICO claims will not be dismissed.
In regard to the claims under the federal Truth in Lending Act ("TILA"), 15 U.S.C. § 1640, et seq., and Regulation Z, it is clear that the Hamiltons have alleged sufficient facts to state a claim. The Hamiltons allege that the defendant failed to disclose the terms of their transactions, such as the 520% annual rate, in the manner required by TILA. The defendant argues that it did not have to conform to TILA because the transactions were not covered by the statute. This argument ignores the nature of the deferred-repayment transactions and does not reflect the broad wording of TILA or its underlying policy.
For example, 15 U.S.C. § 1602 states that:
(e) The term "credit" means the right granted by a creditor to a debtor to defer payment of debt or to incur debt and defer its payment.
(f) The term "creditor" refers only to a person who both (1) regularly extends, whether in connection with loans, sales of property or services, or otherwise, consumer credit which is payable by agreement in more than four installments or for which the payment of a finance charge is or may be required, and (2) is the person to whom the debt arising from the consumer credit transaction is initially payable on the face of the evidence of indebtedness...
Furthermore, 15 U.S.C. § 1605(a) broadly defines "finance charge" as:
the sum of all charges, payable directly or indirectly by the person to whom the credit is extended, and imposed directly or indirectly by the creditor as an incident to the extension of credit.... Examples of charges which are included...
(1) Interest, time price deferential, and any amount payable under a point, discount, or other system of additional charges
(2) Service or carrying charge.
(3) Loan fee, finder's fee, or similar charge.
(4) Fee for an investigation or credit report.
(5) Premium or other charge for any guarantee or insurance protecting the creditor....
(6) Borrower-paid mortgage broker fees, including fees paid directly to the broker or lender (for delivery to the broker) whether such fees are paid in cash or financed.
*958 The deferred-repayment transactions between the Hamiltons and HLT involved payments by the Hamiltons of substantial sums of money over time for the privilege of obtaining cash from HLT today. Thus, since the Hamiltons were incurring debt and deferring its payments, these transactions would fall under the language in 15 U.S.C. § 1602(e)-(f). Additionally, the alleged fees paid by the Hamiltons to the defendant would be considered finance charges under the broad definition in 15 U.S.C. § 1605(a).[10]
The Hamiltons also claim that HLT disguised their consumer loan business as a check cashing operation, failed to disclose their interest rates and finance charges, and threatened criminal prosecution for writing bad checks when HLT had to have known that the Hamiltons could not have been prosecuted for failing to pay usurious loans. Based on the above charges and other false statements that the Hamiltons allegedly relied on to their detriment, the Hamiltons have made out claims for fraud, deceit, and misrepresentation. Furthermore, the above allegations are also sufficient to state a claim under the Kentucky Consumer Protection Act, KRS 367.110-.310.
Finally, HLT argues that the Hamiltons named the wrong party, and the case should be dismissed. It argues that the real party in interest is "HLT Check Exchange, LLP," not Larry York D/B/A HLT Check Exchange, LLP. The defendant, however, did not allege that it was prejudiced by the alleged misnomer. Hence, the Court will allow the Hamiltons to file an amended complaint if they have made an error. Accordingly,
IT IS ORDERED that the defendant's motion to dismiss [Record No. 4] be, and the same hereby is, DENIED.
NOTES
[1] If the Hamiltons had enough money in the bank to cover the amount they were asking for plus 20%, they would not have needed to borrow any money from HLT.
[2] It should be emphasized that whether HLT's charges are considered to be interest or service fees is the central issue behind all of the Hamiltons' claims, both state and federal.
[3] The Court notes that HLT cites Harding in support of its proposition. However, the transactions between the Hamiltons and HLT were short-term loans without any independent consideration for the exorbitant fees. For example, the fees incurred in performing a title search on real estate that was going to be pledged as security for a loan would be independent consideration; hence, they would be deemed service fees, not interest.
[4] It is hard to imagine how charges for exchanging money today for more money at a later date could be classified as anything but interest on a loan when the transactions do not include a sale of property.
[5] Although the Court reviewed the affidavit from Rick Jones, Acting General Counsel for the Department of Financial Institutions, it does not find Jones's affidavit to be persuasive. Since Jones is advising the check cashing companies in Kentucky to engage in short-term deferred loans, it is not surprising that he believes what he is saying is legal. However, his opinion is unpersuasive considering his constituents are the check cashing companies, and his opinion does not correlate to the true substance of KRS 368.100(2).
[6] It should be noted that the language in KRS 368.100(2) is general.
[7] Surely, the Kentucky legislature did not intend for businesses to be able to "get around" the usury statute and charge exorbitant interest rates by simply obtaining a "check cashing" license. However, if this is what the legislature wanted, it will have to clarify its intentions.
[8] Given the potentially lengthy duration of these deferred-repayment transactions and the cumulative effect of the fees, consumers are entitled to the protection of Kentucky's Usury statute and other state and federal laws.
[9] Although it is not necessary for the Hamiltons to allege two predicate acts because they are going under the unlawful debt section of the statute, the Court notes that the Hamiltons claim that they had at least twenty-five transactions with HLT.
[10] It should be noted that HLT's fees would be considered "finance charges" in connection with an "extension of credit" under TILA.
|
01-03-2023
|
10-30-2013
|
https://www.courtlistener.com/api/rest/v3/opinions/2662183/
|
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
____________________________________
)
DAVID OLABAYO OLANIYI, )
)
Plaintiff, )
) Civil Action No. 05-455 (RBW)
v. )
) Consolidated with:
)
) Civil Action No. 06-2165 (RBW)
DISTRICT OF COLUMBIA, et al., )
)
Defendants. )
____________________________________)
MEMORANDUM OPINION
Plaintiff David Olabayo Olaniyi brings this action against the District of Columbia
(“District”) and the United States, asserting constitutional and common law claims arising from
his detention in March of 2003, and a separate incident involving a traffic stop in January of
2004. See generally Second Amended Complaint (“2d Am. Compl.”); Complaint (“United
States Compl.”). 1 Currently before the Court are motions for summary judgment filed by the
District and the United States. Upon careful consideration of the parties’ submissions, 2 the Court
concludes for the following reasons that the defendants’ motions must be granted.
1
Olaniyi instituted two lawsuits that were subsequently consolidated by the Court. The complaint in Civil Action
No. 05-455 asserts claims against the District as well as several federal and District employees, and will be referred
to in this Memorandum Opinion as the Second Amended Complaint. The complaint in Civil Action No. 06-2165
asserts claims solely against the United States government, and will be referred to as the United States Complaint.
2
In addition to the filings identified, the Court considered the following documents and their supporting exhibits in
rendering its decision: (1) the District’s Memorandum of Points and Authorities (“District’s Mem.”); (2) the District
of Columbia’s Statement of Undisputed Facts (“District’s Facts”); (3) the Memorandum of Points and Authorities in
Support of United States’ Motion for Summary Judgment (“United States’s Mem.”); (4) the United States’s
Statement of Undisputed Material Facts (“United States’s Facts”); (5) the Plaintiff’s Memorandum of Points and
Authorities in Opposition to Defendant District of Columbia’s Motion for Summary Judgment (“Pl.’s District
Opp’n”); (6) Plaintiff David Olabayo Olaniyi’s Statement of Genuine Issues of Material Fact in Dispute (“Pl.’s
Response to District’s Facts”); (7) the Plaintiff’s Memorandum of Points and Authorities in Opposition to Defendant
United States’ Motion for Summary Judgment (“Pl.’s United States Opp’n”); (8) the Plaintiff’s Statement of
(continued . . .)
I. BACKGROUND
A. Facts
Many of Olaniyi’s claims have already been dismissed by the Court. See Olaniyi v.
District of Columbia, 416 F. Supp. 2d 43, 59-60 (D.D.C. 2006); Olaniyi v. District of Columbia,
763 F. Supp. 2d 70, 78 (D.D.C. 2011). Olaniyi’s remaining claims in this case arise from the
following two events: the alleged forcible injection of Olaniyi by District personnel with an
unknown drug in March of 2003, and a traffic stop conducted by the United States Capitol Police
(“Capitol Police”) in January of 2004. The following facts recounting these two events are
undisputed unless otherwise noted, and are presented in the light most favorable to Olaniyi.
1. The March 2003 Forcible Injection
Olaniyi, a native of Nigeria, describes himself as “an artist, philosopher, scholar,
performer, and director.” 2d Am. Compl. ¶ 3. On March 6, 2003, Olaniyi and his now-wife,
Reena Patel Olaniyi (“Patel”), visited the United States Capitol Building “to tour and conduct
research for his stage play.” Id. ¶¶ 65-66. Olaniyi was wearing “an artistic garment that he made
out of cardboard, empty bottles, newspaper, a book, and other common materials secured with
duct tape.” Pl.’s Response to District’s Facts ¶ 1. “He also carried a stone sculpture.” Id. Upon
entering the Capitol Building with this paraphernalia, Olaniyi “began to sing and dance,” which
“attracted the attention of the Capitol Police.” District’s Facts ¶¶ 2-3. The Capitol Police
“detained and thereafter arrested [Olaniyi] and searched his car on suspicion that he was going to
(. . . continued)
Material Facts in Dispute (“Pl.’s Response to United States’s Facts”); (9) Defendant District of Columbia’s Reply to
the Plaintiff’s Opposition to the District’s Motion for Summary Judgment (“District’s Reply”); and (10) the Reply to
Plaintiff’s Memorandum of Points and Authorities in Opposition to Defendant United States’ Motion for Summary
Judgment (“United States’s Reply”).
2
bomb the Capitol.” Id. ¶ 3. “Olaniyi appeared before a Federal Magistrate Judge on the morning
of March 7, 2003, who held him over until March 10, 2003.” Id. ¶ 4.
Olaniyi was detained at the Mental Health Unit of the District of Columbia Jail (“D.C.
Jail”) during the period of his detention under the Magistrate Judge’s order. Id. ¶ 5; Pl’s
Response to District’s Facts ¶ 5. According to Olaniyi, at some point during his detention at the
D.C. Jail, he was forcibly injected with a drug that caused him to lose consciousness. See Pl.’s
District Opp’n, Exhibit (“Ex.”) D (Deposition of Olabayo David Olaniyi (“Olaniyi Dep.”)) at
187:4-190:25, 196:1-3. Specifically, he claims that a D.C. Jail employee gave him an injection
in his left arm while a guard restrained him, despite his verbal objections to receiving the
injection. See id. Olaniyi maintains that prior to giving him the injection “[t]hey told [him] they
were treating [him] for diabetes,” which they claimed had been detected by testing conducted
during his detention. Id. at 194:10-13. Olaniyi explained that he did not have diabetes, but they
nonetheless administered the injection. See id. at 194:13-16. The medical personnel did not tell
Olaniyi what drug they used, and Olaniyi does not know what it was. See id. at 190:10-17.
Olaniyi claims that “when the injection was given, things calm[ed] down, and . . . everything just
whitewashed out.” Id. at 190:24-25. He then “lost consciousness.” Id. at 198:20-23. Olaniyi’s
next memory is waking up in his jail cell “the following morning.” Id. at 196:3. Olaniyi
acknowledges that no medical record exists documenting the injection, attributing the lack of
documentation to deficient record-keeping practices at the D.C. Jail. See Pl.’s Response to
District’s Facts ¶ 34. The District denies that this incident occurred, asserting that “Olaniyi was
tested, but not treated[,] for diabetes.” District’s Facts ¶ 25.
On March 10, 2003, federal prosecutors charged Olaniyi and Patel with “False Bomb
Threats, Disorderly Conduct on Capitol Grounds, Aiding and Abetting, and Assault or
3
Threatened Assault.” Id. ¶ 6. Olaniyi was then released from the D.C. Jail on March 11, 2003.
District’s Facts ¶ 31. The government dismissed all charges against Olaniyi and Patel in August
of 2003. 2d Am. Compl. ¶ 78.
2. The January 2004 Traffic Stop
On January 20, 2004, Olaniyi, his two minor children, and Patel traveled to the District
from Michigan. United States’s Facts ¶¶ 1-2. The purpose of the trip was to retrieve several
pieces of artwork that had been confiscated by the Capitol Police as a result of the March 2003
event at the Capitol Building. United States Compl. ¶ 34. During their cross-country trip,
Olaniyi’s vehicle, a white van, “accumulated dirt and grime from driving through snow.” United
States’s Facts ¶ 3. The van’s license plate had “accumulated dirt and grime as well.” Id. ¶ 4. In
addition to “the dirt covering the windows, the windows themselves were tinted a dark shade.”
Id. ¶ 5.
Olaniyi’s trip to the District coincided with former President George W. Bush’s State of
Union Address. Id. ¶ 6. The Capitol Police were accordingly “on high alert and fully staffed” on
that date. Id.
Olaniyi claims that while he and his family were riding in his van in the District, a
Capitol Police officer, Sergeant Jessica Gissubel, 3 signaled him to stop the van in front of
Capitol Police headquarters. 4 See Pl.’s Response to United States’s Facts ¶ 7; Pl.’s United States
Opp’n, Ex. 1 (Olaniyi Dep.) at 70:6-16. Capitol Police headquarters “is located directly adjacent
to the United States Capitol, where the President planned to deliver his State of the Union
3
Sergeant Jessica Gissubel has since married and changed her name to Jessica Baboulis. United States’s Facts ¶ 9.
4
The United States maintains that Olaniyi’s van was already parked illegally in front of Capitol Police headquarters
when Sergeant Gissubel arrived on the scene, and that Sergeant Gissubel did not pull over the van. See United
States’s Facts ¶ 7; United States’s Mem. at 3 n.3. However, in moving for summary judgment, the United States
correctly assumes Olaniyi’s version of events as true (i.e., that Sergeant Gissubel pulled him over), and analyzes his
claims accordingly. See United States’s Reply at 2-3. The Court, as it must, will do the same.
4
address.” United States’s Facts ¶ 8. Sergeant Gissubel does not recall “being able to read the
license plate on [Olaniyi’s] van when she initially saw it.” Id. ¶ 10. After pulling the van over,
she “radioed headquarters and requested a canine unit and the hazardous device unit to ‘check
out [the] vehicle.’” Id. ¶ 11.
“When [Sergeant] Gissubel approached the vehicle, [Olaniyi] asked [for] Detective
Joseph DePalma,” id. ¶ 12, one of the officers who had “arrested and jailed” Olaniyi in
connection with the March 2003 incident at the Capitol Building, Pl.’s District Opp’n at 7. In
response to Olaniyi’s request, Sergeant “Gissubel called [Detective] DePalma, advising him of
the vehicle in front of [Capitol Police] headquarters and requested his presence on the scene.”
United States’s Facts ¶ 12. Detective “DePalma arrived on the scene shortly thereafter.” Id. ¶
13. “He spoke to [Olaniyi] and requested that [he] exit the vehicle.” Id. Olaniyi “obliged and
began to converse with [Detective] DePalma.” Id.
Olaniyi’s van was then searched by the Capitol Police’s canine unit. Id. ¶ 14. “Olaniyi’s
two minor children remained in the van while it was searched by police officers and two
canines.” Pl.’s Response to United States’s Facts ¶ 13; Pl.’s United States Opp’n, Ex. 1 (Olaniyi
Dep.) at 67:13-19. “[N]o [p]olice dog growled at or bit any member of [Olaniyi’s] family, and
the children were not heard crying or screaming in any way during the canine sweep of the van,
which last no more than 5 minutes.” United States’s Facts ¶ 14. And “the dog[] search did not
damage [Olaniyi’s] vehicle.” Id. The “canine sweep” took only “a few minutes . . . because it
was the day of the State of the Union Address and the canine officers were extremely busy, given
the large number of vehicles they were called upon to sweep.” Id. ¶ 29.
Following the canine sweep, Patel “began recording a video of the events that transpired
in front of [Capitol Police] headquarters.” Id. ¶ 15. “On the video recording, [Detective]
5
DePalma audibly tells [Olaniyi] that his license plate was dirty, obscuring an officer’s ability to
read it.” Id. ¶ 16; see United States’s Mem., Ex. 7 (Video of January 20, 2004 Traffic Stop).
Detective “DePalma then advised [Olaniyi] that he was likely to be pulled over again if his
vehicle remained in the same condition.” United States’s Facts ¶ 16. Heeding this advice,
Olaniyi “cleaned the partially obscured license plate with a rag while [Detective] DePalma
observed.” Id. ¶ 17. Detective DePalma also questioned Olaniyi about his presence in the
District, noting that the President’s State of the Union Address was scheduled for that evening
and asking Olaniyi “are you going to pull a stunt?” Pl.’s United States Opp’n, Ex. 2 (Deposition
of Reena Patel Olaniyi (“Patel Dep.”)) at 44:13-45:7. Detective DePalma then asked Olaniyi a
series of questions concerning the custody of his children. Id. at 45:21-23. During the
encounter, Olaniyi explained that he requested Detective DePalma’s presence so that his son
could “‘see the man who tried to make me lose my children,’ referring to [Detective] DePalma’s
. . . involvement in [Olaniyi’s] arrest in 2003 for false bomb threats.” United States’s Facts ¶ 18;
see United States’s Mem., Ex. 7 (Video of January 20, 2004 Traffic Stop).
After completing “a routine background check for outstanding warrants,” Sergeant
Gissubel returned Olaniyi’s driver’s license “and sent him on his way.” United States’s Facts ¶
19. The Capitol Police did not “issue [Olaniyi] a citation for the incident, nor did they seize any
of [Olaniyi’s] property.” Id. However, “as [Olaniyi] was leaving the scene of the incident,
[Sergeant] Gissubel issued [him] a verbal warning that he was parked illegally.” Id. ¶ 22. None
of the Capitol Police officers made threatening remarks, raised their voices, brandished weapons,
or physically restrained Olaniyi or his family during the January 20, 2004, encounter. Id. ¶¶ 20-
21. “The total duration of the incident was approximately 18 minutes.” Id. ¶ 23.
6
B. Procedural Background
Olaniyi instituted this action on March 3, 2005, asserting constitutional and common law
claims against the District and several federal defendants. By Memorandum Opinion and Order
dated February 17, 2006, the Court granted dismissal of many of Olaniyi’s claims on qualified
immunity grounds, but denied the federal defendants’ motion to dismiss with respect to Olaniyi’s
Fourth Amendment claims arising from a search of his van that was conducted following the
March 2003 incident at the Capitol Building. See Olaniyi v. District of Columbia, 416 F. Supp.
2d 43, 59-60 (D.D.C. 2006).
On October 31, 2006, Olaniyi filed his Second Amended Complaint, again asserting
constitutional and common law claims against the District, as well as various District and federal
employees. See generally 2d Am. Compl. These claims stem from his arrest and detention in
March 2003, and the traffic stop in January 2004. See id. Olaniyi then filed a separate
complaint against the United States on December 20, 2006, alleging tort claims pursuant to the
Federal Tort Claims Act (“FTCA”), 28 U.S.C §§ 1346(b), 2674 (2006), arising out of the March
2003 and January 2004 incidents. See generally United States Compl.
The Court issued a Memorandum Opinion on February 4, 2011, granting in part and
denying in part the United States’s motion to dismiss, denying the District’s motion for summary
judgment without prejudice pending further discovery, and granting summary judgment to the
individual defendants. See Olaniyi v. District of Columbia, 763 F. Supp. 2d 70, 78 (D.D.C.
2011). As a result of the Court’s rulings, Olaniyi’s remaining claims in this case are (1) a claim
against the District under 42 U.S.C. § 1983 and the Fifth Amendment of the United States
Constitution for the alleged forcible injection of Olaniyi by District authorities in March of 2003,
see id. at 96-99; and (2) a false arrest and imprisonment tort claim against the United States,
7
brought pursuant to the FTCA, arising out of the January 2004 traffic stop, see id. at 92-94. The
defendants have now moved for summary judgment on these two claims.
II. STANDARD OF REVIEW
A motion for summary judgment must be granted “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). The moving party bears the initial burden of showing the absence of
a disputed material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The party opposing
a motion for summary judgment “may not rest upon the mere allegations or denials of his
pleading, but . . . must set forth specific facts showing that there is a genuine issue for trial.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A material fact is one that “might
affect the outcome of the suit under the governing law.” Id. “The evidence is to be viewed in
the light most favorable to the nonmoving party and the court must draw all reasonable
inferences in favor of the nonmoving party.” Talavera v. Shah, 638 F.3d 303, 308 (D.C. Cir.
2011) (citing Anderson, 477 U.S. at 255). “Although summary judgment is not the occasion for
the court to weigh credibility or evidence, summary judgment is appropriate ‘if the nonmoving
party fails to make a showing sufficient to establish the existence of an element essential to that
party’s case, and on which that party will bear the burden of proof at trial.’” Id. (citations
omitted). “[T]here is no issue for trial unless there is sufficient evidence favoring the nonmoving
party for a [reasonable] jury to return a verdict for that party.” Anderson, 477 U.S. at 249. “The
mere existence of a scintilla of evidence in support of the plaintiff’s position will be insufficient;
there must be evidence on which the jury could reasonably find for the plaintiff.” Id. at 252
(emphasis added).
8
III. ANALYSIS
A. Olaniyi’s Claim Against the District Based on the March 2003 Forcible Injection
Olaniyi asserts a § 1983 claim against the District “predicated upon the deprivation of
due process he suffered when D.C. Jail personnel forcibly, and without consent, injected [him]
with an antipsychotic drug.” Pl.’s District Opp’n at 5. Section 1983 creates a private cause of
action against any person who, acting under color of state or District of Columbia law, deprives
another of a federal constitutional or statutory right. See 42 U.S.C. § 1983. Under the Supreme
Court’s decision in Monell v. Department of Social Services, 436 U.S. 658 (1978),
“municipalities are liable for their agents’ constitutional torts only if the agents acted pursuant to
municipal policy or custom . . . . Respondeat superior liability does not apply.” Warren v.
District of Columbia, 353 F.3d 36, 38 (D.C. Cir. 2004) (citing Monell, 436 U.S. at 694). Courts
therefore “conduct a two-step inquiry” in evaluating § 1983 claims against municipalities. Baker
v. District of Columbia, 326 F.3d 1302, 1306 (D.C. Cir. 2003). First, a court must determine
whether the plaintiff has offered proof of a “predicate constitutional violation.” 5 Id. Second, if
step one is satisfied, a court must then assess whether the plaintiff has provided evidence “that a
custom or policy of the municipality caused the violation.” Id. In this case, the Court need not
address whether Olaniyi has established a predicate constitutional violation because, even
assuming such a violation occurred, he has offered no evidence of a “custom or policy” of the
District that “caused the violation.” Id.
5
The Court previously rejected the District’s attempt to avoid liability by relying on the fact that the D.C. Jail
personnel were actually independent contractors, rather than District employees. See Olaniyi, 763 F. Supp. 2d at 97
n.23. As the Court reasoned, the “employees at the [D.C. Jail’s] Mental Health Unit were performing a municipal
function, in a municipal facility, under authority granted to them by municipal law,” and thus “the District cannot
avoid liability merely because [Olaniyi’s] alleged injury occurred at the hands of a third party contracted to perform
the services he claims caused him injury.” Id.
9
1. Municipal Liability of the District Under § 1983
A plaintiff can establish municipal liability under § 1983 by showing that (1) “the
municipality or one of its policymakers explicitly adopted the policy that was ‘the moving force
of the constitutional violation,’” Warren, 353 F.3d at 39 (quoting Monell, 436 U.S. at 694); (2)
“a policymaker ‘knowingly ignore[d] a practice that was consistent enough to constitute
custom,’” Jones v. Horne, 634 F.3d 588, 601 (D.C. Cir. 2011) (quoting Warren, 353 F.3d at 39);
or (3) the municipality “failed to respond to a need . . . in such a manner as to show ‘deliberate
indifference’ to the risk that not addressing the need will result in constitutional violations,” id.
(quoting Baker, 326 F.3d at 1306).
Olaniyi invokes the “deliberate indifference” theory of municipal liability, claiming that
“[t]here is ample evidence in the record that would allow a reasonable jury to conclude that the
deprivation of [his] constitutional rights, in the form of his forcible injection with a psychoactive
drug, was the direct result of the District’s deliberate indifference to the risks created by the state
of medical and mental health care at the D.C. Jail during the timeframe that Olaniyi was held
there.” Pl.’s District Opp’n at 11. Olaniyi argues that the District’s deliberate indifference was
manifested both in its failure to train medical personnel at the D.C. Jail, and its failure to monitor
the provision of medical services by contractors at the Jail. See id. at 11-20. He further contends
that “[t]he District received repeated notice of problems and abuses” at the D.C. Jail, but “failed
to do anything about it.” Id. at 11.
The Supreme Court recently expounded upon the standards governing municipal liability
based on a deliberate indifference theory in Connick v. Thompson, __ U.S. __, 131 S. Ct. 1350
(2011). The plaintiff in that case brought a § 1983 claim against a district attorney, Harry
Connick, in his official capacity, after his office “conceded that, in prosecuting [the plaintiff] for
10
attempted armed robbery, prosecutors failed to disclose evidence that should have been turned
over to the defense under Brady v. Maryland, 373 U.S. 83 . . . (1963).” Id. at 1355. According
to the plaintiff, “Connick had failed to train his prosecutors adequately about their duty to
produce exculpatory evidence and that the lack of training had caused the nondisclosure in [the
plaintiff’s] robbery case.” Id. at 1355. After a jury returned a verdict in the plaintiff’s favor and
the Fifth Circuit affirmed that verdict, the Supreme Court reversed. Id. at 1355-56.
The Court began its analysis in Connick by explaining that under the plaintiff’s “failure-
to-train theory, he bore the burden of proving both (1) that Connick, the policymaker for the
district attorney’s office, was deliberately indifferent to the need to train the prosecutors about
their Brady disclosure obligation with respect to evidence of this type and (2) that the lack of
training actually caused the Brady violation in this case.” Id. at 1358. Going no further than the
first prong of this analysis, the Court held that the plaintiff “did not prove that [Connick] was on
actual or constructive notice of, and therefore deliberately indifferent to, a need for more or
different Brady training.” Id. In so holding, the Court was guided by the following principles:
In limited circumstances, a local government’s decision not to train certain
employees about their legal duty to avoid violating citizens’ rights may rise to the
level of an official government policy for purposes of § 1983. A municipality’s
culpability for a deprivation of rights is at its most tenuous where a claim turns on
a failure to train. To satisfy the statute, a municipality’s failure to train its
employees in a relevant respect must amount to “deliberate indifference to the
rights of persons with whom the [untrained employees] come into contact.” Only
then “can such a shortcoming be properly thought of as a city ‘policy or custom’
that is actionable under § 1983.”
“‘[D]eliberate indifference’ is a stringent standard of fault, requiring proof that a
municipal actor disregarded a known or obvious consequence of his action.”
Thus, when city policymakers are on actual or constructive notice that a particular
omission in their training program causes city employees to violate citizens’
constitutional rights, the city may be deemed deliberately indifferent if the
policymakers choose to retain that program. The city’s “policy of inaction” in
light of notice that its program will cause constitutional violations “is the
functional equivalent of a decision by the city itself to violate the Constitution.”
11
A less stringent standard of fault for a failure-to-train claim “would result in de
facto respondeat superior liability on municipalities . . .”
A pattern of similar constitutional violations by untrained employees is
“ordinarily necessary” to demonstrate deliberate indifference for purposes of
failure to train. Policymakers’ “continued adherence to an approach that they
know or should know has failed to prevent tortious conduct by employees may
establish the conscious disregard for the consequences of their action—the
‘deliberate indifference’—necessary to trigger municipal liability.” Without
notice that a course of training is deficient in a particular respect, decisionmakers
can hardly be said to have deliberately chosen a training program that will cause
violations of constitutional rights.
Id. at 1359-60 (internal citations omitted). Applying these standards, the Court declined to
impose municipal liability because there was no evidence that would have “put Connick on
notice that the office’s Brady training was inadequate with respect to the sort of Brady violation
at issue.” Id. at 1360. Namely, the plaintiff “did not prove a pattern of similar violations that
would ‘establish that the policy of inaction [was] the functional equivalent of a decision by the
city itself to violate the Constitution.’” Id. at 1366 (citation omitted and emphasis added). The
Court also concluded that the case did “not fall within the narrow range of ‘single-incident’
liability hypothesized in Canton [v. Harris, 489 U.S. 378 (1989)] as a possible exception to the
pattern of violations necessary to prove deliberate indifference in § 1983 actions alleging failure
to train.” Id. at 1366.
In support of his failure-to-train theory, Olaniyi contends that “the record shows little if
any effort by the District . . . to ensure that the medical and mental health personnel at D.C. Jail
were adequately trained with respect to patient care in general, and inmates’ constitutional right
to refuse treatment in particular.” Pl.’s District Opp’n at 11. He focuses on the lack of evidence
from the District showing that it had effective “procedures and policies in place with respect to
training or mental health personnel prior to or during the time that Olaniyi was held in [the] D.C.
12
Jail, in March 2003,” id. at 12, and asserts that the District knew of the risk of constitutional
violations associated with its failure to train its employees, see id. at 16-20.
Olaniyi’s failure-to-train theory is flawed for several reasons. For starters, the evidence
offered by Olaniyi concerning deficiencies at the D.C. Jail “with respect to patient care in
general,” id. at 11 (emphasis added); see id. at 16-20 (detailing various deficiencies with medical
services at the D.C. Jail that the District allegedly failed to remediate), is insufficient to establish
deliberate indifference in this case. Showing a history of general problems with medical care at
the D.C. Jail does not suffice. Olaniyi must instead point to past incidents that were “similar to
the violation at issue here,” such that a reasonable jury could find that the District was “on notice
that specific training was necessary to avoid this constitutional violation.” Connick, __ U.S. at
__, 131 S. Ct. at 1360 (emphasis added). The necessity of a close link between the alleged
pattern of constitutional violations and the alleged injury was illustrated in Connick. There, the
Court rejected the plaintiff’s purported showing of deliberate indifference based on four prior
overturned convictions resulting from Brady violations by the same district attorney’s office that
subsequently violated the plaintiff’s Brady rights. Id. As the Court reasoned, “[t]hose four
reversals could not have put Connick on notice that the office’s Brady training was inadequate
with respect to the sort of Brady violation at issue here [because n]one of those cases involved
failure to disclose blood evidence, a crime lab report, or physical or scientific evidence of any
kind.” Id. “Because those incidents are not similar to the violation at issue here,” the Court
concluded, “they could not have put Connick on notice that specific training was necessary to
avoid this constitutional violation.” Id. Applying Connick’s rationale here, past alleged
deficiencies in medical services at the D.C. Jail that were unrelated to the unconstitutional forced
medication of inmates could not have put the District on notice of the need for training to avoid
13
the particular constitutional violation at issue, and thus cannot sustain a finding of deliberate
indifference in this case.
The Court must therefore examine whether Olaniyi has marshaled any evidence showing
a pattern of similar constitutional violations by untrained or inadequately trained employees at
the D.C. Jail that could have put the District on notice of the need for more training with respect
to forced medication of inmates. He has not. The closest Olaniyi comes to offering such
evidence is the deposition testimony of one of his treating nurses (Clarice Savoy) while he was
detained at the D.C. Jail, who Olaniyi claims admitted “that the forcible medication of inmates
with a doctor’s order ‘happens a lot’” at the D.C. Jail. Pls.’ District Opp’n at 14 (quoting id., Ex.
F (Deposition of Clarice Savoy (“Savoy Dep.”)) at 27:22-28:7). But Olaniyi’s selective
quotation of Savoy’s deposition takes her testimony of out of context. Savoy actually gave the
following testimony:
Q Let me ask you: Did you receive any training on when you were allowed
to administer medications to an inmate without that inmate’s consent?
A The reason that I’m hesitating is because sometimes, if the psychiatrist
evaluates a patient and the patient was not willing to take the medication
but he was in danger of himself or someone else, yes, he was given
medication. I will say that, but it always had to be ordered by the doctor
or the psychiatrist.
Q Do you remember specific instances when the doctor ordered medications
for a patient who refused it?
A Well, yes. It happens a lot. That’s when the psychiatrist was receiving the
call and said this patient is in danger of—and if there was a STAT Order
written for the medication, he was given the medication.
****
Q And can you describe for me one of the specific examples of specific
instances you remember when a patient was given medication without that
patient’s consent?
14
A If—this is not the incident that happened. [But i]f the patient was banging
his head against the wall and he was bleeding profusely, out of control, he
would get a STAT medication if there was one ordered.
Pl.’s District Opp’n, Ex. F (Savoy Dep.) at 27:11-28:7; 28:11-19. Viewed in context, Savoy’s
testimony indicates that medical personnel at the D.C. Jail administered medication to inmates
without their consent “a lot,” but only when the inmate presented a danger to himself or others
and a doctor ordered that the medication be administered. See id. Notably, forced medication
under such circumstances comports with established constitutional standards. See Washington v.
Harper, 494 U.S. 210, 227 (1990) (holding that, “given the requirements of the prison
environment, the Due Process Clause permits the State to treat a prison inmate who has a serious
mental illness with antipsychotic drugs against his will, if the inmate is dangerous to himself or
others and the treatment is in the inmate’s medical interest”). Thus, rather than indicating a
pattern of similar constitutional violations at the D.C. Jail, Savoy’s testimony suggests a history
of compliance with constitutional standards.
Similarly unavailing is Olaniyi’s reliance on the deposition testimony of another nurse
(Juanita Wilder) at the D.C. Jail. According to Olaniyi, Wilder testified that “she had no
obligation to inform inmates that they had a right to refuse medication.” Pl.’s District Opp’n at
14 (citing id., Ex. G (Deposition of Juanita M. Wilder, RN (“Wilder Dep.”)) at 64:8-12).
Wilder’s actual testimony, however, was as follows:
Q And why would a doctor order the use of psychotropic medication?
A Because the patient had medical—I mean a mental condition.
Q What type of mental condition?
A Oh, boy. Let me see. Maybe they are talking to voices. They hear
someone talking to them so they are talking, and there’s nobody else
around, but they are answering like they are talking to somebody else, you
know.
15
Q And so if someone was talking to voices or hearing voices—
A The doctor may order something.
****
Q . . . [P]sychotropic drugs?
A Yeah, psychotropic.
Q And how does it work when a patient is hearing voices? Are they able to
give consent to that medication?
A Oh, yes. They can say I want it or I don’t want it, or, just—you know, a
lot of times you say it’s time for your injection or time for your pills or,
whichever, and they say ok, and they just cooperate.
Q And do you tell as a matter of practice typically would you tell the patient
you don’t have to take this if you don’t want to?
A You don’t have to say that. They know that.
Q Okay.
A You don’t want to encourage a patient not to take something that the
doctor has ordered because a doctor has ordered it for his own good.
District’s Mem., Ex. 11 (Wilder Dep.) at 63:4-64:16. Fairly construed, Wilder’s testimony does
not reflect a belief that she generally “had no obligation to inform inmates that they had a right to
refuse medication,” as represented by Olaniyi. Pl.’s District Opp’n at 14. Rather, she testified
that when a doctor ordered psychotropic medication for a delusional patient, she would not
inform the patient of their right to refuse the medication under those particular circumstances,
because they know they have the right to do so. See District’s Mem., Ex. 11 (Wilder Dep.) at
63:4-64:16.
More to the point, Olaniyi does not explain how Wilder’s testimony suggests a pattern of
constitutional violations similar to the one alleged in this case. Nor could he, given that the
constitutional violation alleged here concerns the right to refuse medical treatment, not the right
16
to be informed of the right to refuse medical treatment. Olaniyi also overlooks passages from
Wilder’s deposition testimony demonstrating her awareness of and sensitivity to the right of
inmates to refuse medical treatment, which undermines a finding that there was a pattern of
unconstitutional forced medications at the D.C. Jail. See, e.g., Pl.’s District Opp’n, Ex. G
(Wilder Dep.) at 38:18-21 (“The patients always have a right to refuse medical treatment if they
don’t want it. And if you try to force it on, then you are abusing them.”); id. at 39:7-10 (“[Y]ou
don’t force a patient if they say no, you know. If they don’t want an injection and they refuse it,
you just write it in your notes that they refused.”); id. at 39:19-21 (“If the patient refuses
medication, you can’t just force it on them.”). In short, neither the testimony of Savoy nor
Wilder supports Olaniyi’s failure-to-train theory of liability.
Olaniyi also seeks to show deliberate indifference through the District’s alleged failure to
monitor its contractor at the D.C. Jail, the Center for Correctional Health Policy and Studies
(“CCHPS”). See Pls.’ District Opp’n at 14-16. But here again, Olaniyi fails to show a pattern
of unconstitutional forced medications by the CCHPS personnel at the D.C. Jail that could have
put the District on notice of the need for enhanced supervision. Olaniyi instead maintains that
the District generally failed to oversee the CCHPS’s operations, and that this “complete lack of
monitoring of [the] CCHPS led to Olaniyi’s forcible injection.” Id. at 15. Yet, without a history
of prior, similar violations, this claim essentially seeks to impose negligence liability on the
District for a single incident resulting from the District’s alleged inadequate supervision of the
CCHPS personnel. Such conduct does not rise to the level of deliberate indifference. See
Warren, 353 F.3d at 39 (“‘Deliberate indifference,’ . . . is an objective standard[] [that] involves
more than mere negligence. It does not require the city to take reasonable care to discover and
prevent constitutional violations. It simply means that, faced with actual or constructive
17
knowledge that its agents will probably violate constitutional rights, the city may not adopt a
policy of inaction.” (citations omitted and emphasis in original)); see also Connick, __ U.S. at
__, 131 S. Ct. at 1360 (“The city’s ‘policy of inaction’ in light of notice that its program will
cause constitutional violations ‘is the functional equivalent of a decision by the city itself to
violate the Constitution.’ A less stringent standard of fault for a failure-to-train claim ‘would
result in de facto respondeat superior liability on municipalities.’” (citations omitted)).
In sum, Olaniyi has not shown a pattern of unconstitutional forced medications at the
D.C. Jail that a reasonable jury could find put the District on notice that either more training or
enhanced supervision was necessary to prevent the specific constitutional violation at issue.
Because such evidence is “‘ordinarily necessary’” for a municipality to be held liable under §
1983 for failing to train or supervise its employees, 6 Connick, __ U.S. at__, 131 S. Ct. at 1360
(citation omitted), and because Olaniyi has presented no other basis for imposing municipal
liability, the District is entitled to summary judgment on Olaniyi’s § 1983 claim.
B. Olaniyi’s Claim Against the United States Based on the January 2004 Traffic Stop
Olaniyi asserts a common law tort claim against the United States for false arrest and
imprisonment arising from the January 2004 traffic stop conducted by the Capitol Police. See
United States Compl. ¶¶ 46-49. The FTCA makes the United States liable for torts committed
by its agents “in the same manner and to the same extent as a private individual under like
circumstances,” 28 U.S.C. § 2674, “in accordance with the law of the place where the act or
6
As noted, the Court in Connick did discuss, with some skepticism, a “narrow range of ‘single-incident’ liability,”
which was “hypothesized in Canton as a possible exception to the pattern of violations necessary to prove deliberate
indifference in § 1983 actions alleging failure to train.” __ U.S. at __, 131 S. Ct at 1366. Olaniyi does not assert
that this case fits the “narrow” category of single-incident liability “hypothesized” in Canton, and the Court
consequently will not consider that possibility. Nor will the Court address whether Olaniyi has presented sufficient
evidence on the element of causation, which requires proof “that the lack of training [or supervision] actually caused
the [constitutional] violation in this case.” Id. at 1359.
18
omission occurred,” id. § 1346(b)(1). Under District of Columbia law, the torts of false arrest
and false imprisonment are “indistinguishable as a practical matter,” Enders v. District of
Columbia, 4 A.3d 457, 461 (D.C. 2010), so the Court will treat Olaniyi’s claim simply as one for
false arrest. To prevail on a false arrest claim, a plaintiff must show that he was unlawfully
detained. Id. “The detention of a plaintiff by a defendant police officer is lawful if the officer
effected the detention constitutionally—that is, with probable cause if the detention was an
arrest, or upon reasonable suspicion if the detention amounted only to a Terry stop.” Zhi Chen v.
District of Columbia, 808 F. Supp. 2d 252, 257 (D.D.C. 2011). Alternatively, regardless of
whether the detention was constitutional, “‘a police officer may justify an arrest by
demonstrating that (1) he or she believed, in good faith, that his or her conduct was lawful, and
(2) this belief was reasonable.’” Weishapl v. Sowers, 771 A.2d 1014, 1020-21 (D.C. 2001)
(citation omitted); accord Minch v. District of Columbia, 952 A.2d 929, 937 (D.C. 2008). The
issues of probable cause and reasonable suspicion “‘ordinarily [present] mixed question[s] of law
and fact; however, where the facts are not in dispute , . . . the issue becomes a purely legal one
which the Court can answer on its own.’” Minch, 952 A.2d at 937 (citation omitted).
Noting that Olaniyi was not arrested during the January 2004 traffic stop, the United
States defends the detention as a permissible Terry stop supported by a finding of reasonable
suspicion. See United States’s Mem. at 8. “The Fourth Amendment prohibits ‘unreasonable
searches and seizures’ by law enforcement officials, and this protection extends to a brief
investigatory stop of persons or vehicles, whether or not an arrest follows.” United States v.
Bailey, 622 F.3d 1, 5 (D.C. Cir. 2010) (citing United States v. Arvizu, 534 U.S. 266, 273
(2002)). However, pursuant to Terry v. Ohio, 392 U.S. 1 (1968), “‘an officer may briefly detain
19
a citizen if he has a reasonable, articulable suspicion that ‘criminal activity may be afoot.’” Id.
(citation omitted). As the Circuit explained in Bailey:
A Terry stop requires only a “minimal level of objective justification.” . . . An
officer may initiate a Terry stop based not on certainty but on the need “to ‘check
out’ a reasonable suspicion.” Moreover, whether reasonable suspicion exists
depends on the totality of circumstances as “‘viewed through the eyes of a
reasonable and cautious police officer on the scene, guided by his experience and
training.’”
Id. (internal citations omitted). “[O]fficers’ actual motives do not bear on [the] objective
assessment of reasonable suspicion.” United States v. Brown, 334 F.3d 1161, 1166 (D.C. Cir.
2003) (citing Whren v. United States, 517 U.S. 806, 813 (1996)).
The Supreme Court has observed that “‘most traffic stops . . . resemble, in duration and
atmosphere, the kind of brief detention authorized in Terry.’” Arizona v. Johnson, 555 U.S. 323,
330 (2009) (quoting Berkemer v. McCarty, 468 U.S. 420, 439 n.29 (1984)); see also United
States v. Digiovanni, 650 F.3d 498, 506 (4th Cir. 2011) (“Because a traffic stop is more
analogous to an investigative detention than a custodial arrest, we treat a traffic stop, whether
based on probable cause or reasonable suspicion, under the standard set forth in Terry.”); United
States v. Everett, 601 F.3d 484, 488 n.4 (6th Cir. 2010) (noting that “traffic stops are governed
by Terry” under Sixth Circuit precedent, although the question has never been squarely
addressed by the Supreme Court). Terry sets forth a two-prong inquiry for determining whether
a stop is unreasonable: “[1] whether the officer’s action was justified at its inception, and [2]
whether it was reasonably related in scope to the circumstances which justified the interference
in the first place.” 392 U.S. at 20. Applying that inquiry here, the Court will first examine
whether the Capitol Police had reasonable suspicion for the initial stop of Olaniyi, after which it
will analyze whether the officers exceeded the permissible bounds of a Terry stop.
20
1. The Initial Stop
The United States maintains that Sergeant Gissubel had reasonable suspicion to pull over
Olaniyi because his van’s license plate was obscured by dirt and grime in violation of the
District’s traffic laws. See United States’s Mem. at 9-10. “As a general matter, the decision to
stop an automobile is reasonable where the police have probable cause to believe that a traffic
violation has occurred.” Whren, 517 U.S. at 810; see also United States v. Mitchell, 951 F.2d
1291, 1295 (D.C. Cir. 1991) (“The Fourth Amendment does not bar the police from stopping and
questioning motorists when they witness or suspect a violation of traffic laws, even if the offense
is a minor one.”). While not contesting this legal principle, Olaniyi disputes that “his license
plate was partially obscured.” Pl.’s United States Facts ¶ 4. But this bare assertion is refuted by
the record evidence, including Olaniyi’s own deposition testimony. See United States’s Mem.,
Ex. 1 (Olaniyi Dep.) at 88:20-89:1 (“Q I see at one point on the side of the van there is some dirt
or grime or salt that’s sort of caked on [the van]. Do you see that? A Yes. It’s from driving
through the snow. Q Was that the same kind of stuff that was on the license plate? A Probably,
yes, sir. (emphasis added)); id., Ex. 3 (Deposition of Joseph M. DePalma) at 63:17-18 (“You
could barely read the license plate [on Olaniyi’s van]. There was a lot of road grime, road
salt.”); id., Ex. 4 (Deposition of Jessica Baboulis (“Baboulis Dep.”)) at 24:5-7 (“I remember not
being able to read the [van’s] license plate. It was covered in like a salt-dirt mix and I was
unable to read it.”); id., Ex. 7 (Video of January 20, 2004 Traffic Stop) (showing Olaniyi wiping
his license plate with a rag after Detective DePalma stated that it was dirty). Thus, even viewing
the record in the light most favorable to Olaniyi, as the Court must, the undisputed facts
demonstrate that his van’s license plate was obscured by debris at the time of the January 2004
traffic stop.
21
This fact is not insignificant. The District’s traffic regulations provide that
“[i]dentification tags shall be maintained free from foreign materials and in a clearly legible
condition,” D.C. Mun. Regs. Tit. 18, § 422.5, and that “[n]o person shall operate a vehicle where
the identification tag’s identifying numbers or letters are covered with glass, plastic, or any other
type of material or substance,” id. § 422.8. And “[a] person operating a vehicle in violation of §
422.8 shall be subject to a fine of five hundred dollars ($ 500).” Id. § 422.9. Olaniyi was
therefore in violation of the District’s traffic laws when he operated a vehicle with an obscured
license plate. Consequently, Sergeant Gissubel’s initial stop of Olaniyi was permissible because
she not only had reasonable suspicion, but “probable cause to believe that a traffic violation
ha[d] occurred.” Whren, 517 U.S. at 810. At the very least, the undisputed facts reveal that
Sergeant Gissubel had a reasonable, good faith belief that Olaniyi’s license plate was illegible,
see United States’s Mem., Ex. 4 (Baboulis Dep.) at 24:5-7, thus precluding liability for false
arrest under District of Columbia common law, see Weishapl, 771 A.2d at 1021.
Resisting this conclusion, Olaniyi contends that the Capitol Police officers’ conduct
following the initial stop, including questioning his presence in the District and ordering his car
searched, indicates that the Capitol’s Police’s “interest in [him] was not limited to his allegedly
obscured license plate.” Pl.’s United States Opp’n at 6. Rather, Olaniyi claims that the obscured
license plate is a mere “pretextual, post hoc justification” for the January 2004 traffic stop. Id.
But this argument ignores the settled principle that “[s]ubjective intentions play no role in
ordinary, probable-cause Fourth Amendment analysis.” Whren, 517 U.S. at 813. Indeed,
whether the stop was a “mere pretext for a search” is irrelevant, for “a court must look to
objective circumstances in determining the legitimacy of police conduct under the Fourth
Amendment, rather than an officer’s state of mind.” Mitchell, 951 F.2d at 1295. Because the
22
objective circumstances here (namely, the van’s obscured license plate) justified the traffic stop
of Olaniyi, his initial seizure was reasonable under the Fourth Amendment.
2. Detention of Olaniyi Following the Initial Stop
Olaniyi challenges several aspects of his detention following the initial stop. According
to Olaniyi, “the evidentiary record suggests that [he] was targeted for . . . harassment and
investigation because of matters wholly unrelated to any alleged traffic or parking violation.”
Pl.’s United States Opp’n at 8. He adds that “[t]here are factual disputes between the parties as
to, among other things, the length of time of [his] detention, the scope of the canine search, and
the ability of Olaniyi and his family to freely leave police custody during this time.” Id. at 7.
Many of Olaniyi’s contentions must be dispensed with at the outset. First, any challenge
to the search of his van is not properly before the Court, given that the only remaining claim he
has against the United States is a tort claim for false arrest. See United States Compl. ¶¶ 46-49.
Since the gist of a false arrest claim is an “unlawful detention,” Enders, 4 A.3d at 461 (emphasis
added), the Court does not discern how the Capitol Police’s allegedly unlawful search of
Olaniyi’s van could form the predicate for such a claim. Second, contrary to Olaniyi’s assertion,
the factual question of whether Olaniyi was free to leave the location of the stop during the
period of his detention is not material. The relevant question is whether, assuming Olaniyi was
not free to leave, the Capitol Police were justified in detaining him under the Fourth
Amendment. Third, although Olaniyi asserts in his opposition brief that there is a factual dispute
concerning the length of his detention, see Pl.’s United States Opp’n at 7, he concedes in his
counterstatement of material facts that “[t]he total duration of the incident was approximately 18
minutes,” United States’s Facts ¶ 23; Pl.’s Response to United States’s Facts ¶ 23. He also
makes a similar concession earlier in his opposition brief. See Pl.’s United States Opp’n at 4
23
(“After approximately eighteen to twenty minutes of detention, Sergeant Gissubel returned
Olaniyi’s driver’s license and Olaniyi and his family were then able to depart the scene.”
(emphasis added)).
With these clarifications, the Court will examine whether the Capitol Police officers’
detention of Olaniyi was permissible in its scope and duration, recognizing that “‘a search [or
seizure] which is reasonable at its inception may violate the Fourth Amendment by virtue of its
intolerable intensity and scope.”” United States v. Vinton, 594 F.3d 14, 23-24 (D.C. Cir. 2010)
(quoting Terry, 392 U.S. at 18). It is undisputed that the Capitol Police detained Olaniyi for
roughly 18 minutes while they conducted a background check to determine whether he had a
valid license and any outstanding warrants in his name. See United States’s Facts ¶¶ 19, 22-23;
Pl.’s Response to United States’s Facts ¶¶ 19, 22-23. Upon validly stopping Olaniyi for a traffic
infraction, the officers plainly could detain him for a brief period to perform such a background
check. See Mitchell, 951 F.2d at 1295 (“‘Even a relatively minor offense that would not of itself
lead to an arrest can provide a basis for a stop for questioning and inspection of the driver’s
permit and registration.’” (citation omitted)).
Olaniyi nonetheless maintains that the Capitol Police “unlawfully extended” the detention
when they interrogated Olaniyi about matters unrelated to the alleged traffic violation, including
his presence in the District and the custody of his children. Pl.’s United States Opp’n at 8. Yet,
the Supreme Court has made clear that “[an] officer’s inquiries into matters unrelated to the
justification for the traffic stop . . . do not convert the encounter into something other than a
lawful seizure, so long as those inquiries do not measurably extend the duration of the stop.”
Johnson, 555 U.S. at 333 (citing Muehler v. Mena, 544 U.S. 93, 100-01 (2005)). In Muehler, the
Supreme Court held that an officer did not violate the Fourth Amendment by questioning a
24
lawfully-detained suspect about her immigration status, even though the detainee was not
suspected of violating any immigration laws. 544 U.S. at 101. The Court reasoned:
[The court of appeals’ holding], it appears, was premised on the assumption that
the officers were required to have independent reasonable suspicion in order to
question Mena concerning her immigration status because the questioning
constituted a discrete Fourth Amendment event. But the premise is faulty. We
have “held repeatedly that mere police questioning does not constitute a seizure.”
“[E]ven when officers have no basis for suspecting a particular individual, they
may generally ask questions of that individual; ask to examine the individual’s
identification; and request consent to search his or her luggage.” As the Court of
Appeals did not hold that the detention was prolonged by the questioning, there
was no additional seizure within the meaning of the Fourth Amendment. Hence,
the officers did not need reasonable suspicion to ask Mena for her name, date and
place of birth, or immigration status.
Id. at 100-101 (internal citations omitted). The Supreme Court later applied the reasoning from
Muehler in the context of a traffic stop in Johnson, finding no Fourth Amendment violation
where an officer questioned a car passenger about his possible gang affiliation, while a second
officer checked the driver’s license, registration, and insurance information. Johnson, 555 U.S.
at 328, 333. Although the cases arose in slightly different contexts, the common element of both
Muehler and Johnson was that the officers’ off-topic questioning did not substantially extend the
duration of the seizures. See id. at 333; Muehler, 544 U.S. at 100-01.
Here, as in Muehler and Johnson, there is no indication that Detective DePalma’s
questions regarding Olaniyi’s presence in the District and the custody of his children
“measurably extend[ed] the duration of the stop.” Johnson, 555 U.S. at 333. The record instead
reveals that Detective DePalma asked Olaniyi these off-topic questions while Sergeant Gissubel
conducted the license check, thus indicating that the stop was not prolonged at all by his
questions. See United States’s Mem., Ex. 4 (Baboulis Dep.) at 38:10-39:8. This version of
events is confirmed by the video of the January 2004 traffic stop, which depicts Olaniyi and
Patel conversing with Detective DePalma for several minutes while Sergeant Gissubel confers
25
with other officers, after which Sergeant Gissubel approaches Olaniyi and returns his license.
See United States’s Mem., Ex. 7 (Video of January 20, 2004 Traffic Stop). Detective DePalma
is even heard on the video as stating that Olaniyi and his family would be released once his
license check was complete, which they were. Id. Olaniyi has highlighted no evidence to the
contrary. Because “Muehler and Johnson make clear . . . that an officer may ask unrelated
questions to his heart’s content, provided he does so during the supposedly dead time while he or
another officer is completing a task related to the traffic violation,” Everett, 601 F.3d at 492
(collecting cases), Detective DePalma’s off-topic questioning did not effect an unlawful
detention of Olaniyi.
Nor has Olaniyi otherwise shown that the traffic stop was extended “beyond a reasonable
duration.” Vinton, 594 F.3d at 23. “To ‘assess[] whether a detention is too long in duration to
be justified as an investigative stop, [courts] . . . examine whether the police diligently pursued a
means of investigation that was likely to confirm or dispel their suspicions quickly.’” Id.
(quoting United States v. Sharpe, 470 U.S. 675, 686 (1985)). Sergeant Gissubel took
approximately 18 minutes to check Olaniyi’s license and, upon completing the check, she
returned the license to Olaniyi and sent him on his way. See Pl.’s United States Opp’n at 4.
Olaniyi has not shown that Sergeant Gissubel failed to act diligently in checking his license, nor
does the record support such a conclusion.
In short, Olaniyi has failed to produce any evidence from which a reasonable jury could
find that the Capitol Police unlawfully detained him during the January 2004 traffic stop.
Accordingly, the United States is entitled to summary judgment on Olaniyi’s false arrest claim.
26
IV. CONCLUSION
For the foregoing reasons, the defendants’ motions for summary judgment are granted.
SO ORDERED this 11th day of July, 2012. 7
REGGIE B. WALTON
United States District Judge
7
The Court will contemporaneously issue an Order consistent with this Memorandum Opinion.
27
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01-03-2023
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04-03-2014
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https://www.courtlistener.com/api/rest/v3/opinions/2662201/
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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
STANLEY SUMMER,
Plaintiff,
v. Civil Action No. 12-0907 (BAH)
Judge Beryl A. Howell
KIRK ANDREWS, et al.,
Defendants.
MEMORANDUM OPINION
On June 5, 2012, plaintiff Stanley Summer filed a pro se Complaint in this Court against
ten defendants, alleging violation of his constitutional rights stemming from an allegedly
fraudulent divorce proceeding between the plaintiff and his ex-wife. The plaintiff, however, has
already asserted the claims associated with his divorce proceeding in the Eastern District of
Tennessee, which granted motions to dismiss and for summary judgment in favor of the
defendants in that case. Consequently, for the reasons set forth below, the Court will dismiss,
sua sponte, the plaintiff’s Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) and
the doctrine of res judicata, which bars the plaintiff from re-litigating previously adjudicated
issues before this Court.
I. BACKGROUND
The plaintiff alleges numerous constitutional violations against the ten named
defendants.1 Specifically, the plaintiff asserts claims against Blount County, Tennessee, and six
County officials, including Captain Randall Mercks, Sheriff James Lee Berrong, Officers Lisa
1
The plaintiff’s Complaint also contains similar allegations against Judge W. Dale Young, the presiding judge
during the plaintiff’s divorce proceedings, even though the plaintiff has not named Judge Young as a defendant.
Page 1 of 9
Whitehead and James West of the Blount County Police Department, and Stephen Ogle and
Thomas Hatcher from the Blount County Clerk’s Office; as well as three private individuals, his
ex-wife Nancy Joan Summer and her two divorce attorneys, Kirk Andrews and Chris Ralls. The
factual allegations relevant to the plaintiff’s claims are difficult to decipher, but are generally
described below.
On February 20, 2003, the plaintiff’s wife, defendant Nancy Summer, filed for divorce
in the Circuit Court for Blount County in Tennessee. Compl. at 8.2 Defendant Summer was
represented in the divorce proceeding by defendants Kirk Andrews and Chris Ralls. The
plaintiff alleges that these three defendants filed a fraudulent divorce petition in which
defendant Summer represented that she had been married only once before when in fact her
marriage to the plaintiff was her fourth. Id. at 8-11. It appears from the Complaint that at the
time of the divorce proceedings the plaintiff was unaware that defendant Summer had been
married on two other occasions.
Defendant Summer successfully divorced the plaintiff, and the state court divided their
marital property, ordering the sale of some of the plaintiff’s asserts. Id. at 10-12. On June 22,
2009, the plaintiff’s house was sold at a Sheriff’s sale, and other personal items belonging to the
plaintiff were seized during the following two months. Id. at 13-14.
The plaintiff alleges in the instant Complaint that the four Blount County police offers
who participated in the seizure and sale of the plaintiff’s property violated his constitutional
rights when they took his property. Id. at 15-18. He further asserts that defendant Summer and
her two divorce attorneys engaged in a fraudulent scheme to deprive him of property when they
filed a false divorce petition. Finally, the plaintiff alleges that two employees of the Blount
2
While it is customary to cite to specific paragraphs in a complaint, the plaintiff has chosen to break his Complaint
into an excessive number of paragraphs in some parts, while declining to number other paragraphs entirely. Thus,
the Court will cite to the page number in the Complaint.
Page 2 of 9
County Clerk’s Office participated in the scheme to deprive the plaintiff of his constitutional
rights by failing to uncover the false statements in the divorce petition. In recompense for the
alleged violation of his rights, the plaintiff seeks $120 million in compensatory damages and
$10 million in punitive damages per defendant. Id. at 32.
The plaintiff’s Complaint before this Court, however, is not his first attempt to seek
redress for the alleged violation of his rights stemming from his divorce from defendant
Summer and the resulting sale of some of his assets. In 2010, the plaintiff initiated suit in the
Eastern District of Tennessee against numerous individuals, including Blount County, and
defendant police officers Mercks, Berrong, Whitehead, and West. That court granted summary
judgment in favor of these defendants after concluding that the officers were entitled to
immunity because they were acting in accordance with valid court orders. Summer v.
Cunningham, No. 3:10-cv-169, 2011 WL 52554, at *4-7 (E.D. Tenn. Jan. 7, 2011).
Upon review of the ruling issued by the Eastern District of Tennessee in the plaintiff’s
previously filed case, this Court concludes that the plaintiff’s allegations against Blount County,
the defendant police officers – Mercks, Berrong, Whitehead, and West – as well as its claims
against defendants Ogle and Hatcher from the Blount County Clerk’s Office are barred by the
doctrine of res judicata. Moreover, the plaintiff’s allegations against defendant Summer,
Andrews, and Ralls fail to state cognizable claims for relief. Consequently, the Court will
dismiss the plaintiff’s Complaint sua sponte.
II. STANDARD OF REVIEW
To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a plaintiff
need only plead “enough facts to state a claim to relief that is plausible on its face” and to
“nudge[ ] [his or her] claims across the line from conceivable to plausible.” Bell Atl. Corp. v.
Page 3 of 9
Twombly, 550 U.S. 544, 570 (2007); FED. R. CIV. P. 12(b)(6). “[A] complaint [does not] suffice
if it tenders naked assertions devoid of further factual enhancement.” Ashcroft v. Iqbal, 556 U.S.
662, 129 S. Ct. 1937, 1949 (2009) (internal quotation marks omitted) (citing Twombly, 550 U.S.
at 557). Instead, the complaint must plead facts that are more than “merely consistent with” a
defendant’s liability; “the plaintiff [must plead] factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 1940, 1949;
Rudder v. Williams, 666 F.3d 790, 794 (D.C. Cir. 2012). The Court must “assume all the
allegations in the complaint are true (even if doubtful in fact) . . . [and] must give the plaintiff the
benefit of all reasonable inferences derived from the facts alleged.” Aktieselskabet AF 21.
November 2001 v. Fame Jeans Inc., 525 F.3d 8, 17 (D.C. Cir. 2008) (internal quotations and
citations omitted).
In this Circuit, “[c]omplaints may . . . be dismissed . . . sua sponte . . . under Rule
12(b)(6) whenever the plaintiff cannot possibly win relief.” Best v. Kelly, 39 F.3d 328, 331
(D.C. Cir. 1994) (internal quotations omitted); see also Klute v. Shinseki, 797 F. Supp. 2d 12, 17
(D.D.C. 2011) (citing Best in dismissing, sua sponte, the plaintiff’s Americans with Disabilities
Act (“ADA”) claims against the federal government because the ADA does not consider the
federal government an employer); Moore v. Motz, 437 F. Supp. 2d 88, 94 (D.D.C. 2006) (citing
Best in dismissing, sua sponte, the plaintiff’s claim against government officials for failure to
fulfill campaign promises, as such a cause of action does not exist). Complaints filed by pro se
plaintiffs, however, “must be held to less stringent standards than formal pleadings drafted by
lawyers.” Erickson v. Pardus, 551 U.S. 89, 94 (2007). Even a pro se complainant, however,
must plead “factual matter” that permits the court to infer “more than the mere possibility of
misconduct.” Atherton v. D.C. Office of Mayor, 567 F.3d 672, 682 (D.C. Cir. 2009) (citing Iqbal,
Page 4 of 9
129 S. Ct. at 1950).
III. DISCUSSION
“The doctrine of res judicata prevents repetitious litigation involving the same causes of
action or the same issues.” Sheppard v. District of Columbia, 791 F. Supp. 2d 1, 4 (D.D.C.
2011) (citing I.A.M. Nat’l Pension Fund v. Indus. Gear Mfg. Co., 723 F.2d 944, 946 (D.C. Cir.
1983)). Under claim preclusion, a subsequent lawsuit will be barred if there has been prior
litigation (1) involving the same claims or cause of action, (2) between the same parties or their
privies, and (3) there has been a final, valid judgment on the merits, (4) by a court of competent
jurisdiction. See Porter v. Shah, 606 F.3d 809, 813 (D.C. Cir. 2010); Smalls v. United States,
471 F.3d 186, 192 (D.C. Cir. 2006) (citing Blonder-Tongue Labs., Inc. v. Univ. of Ill. Found.,
402 U.S. 313, 323-24 (1971); Comm’r of Internal Revenue v. Sunnen, 333 U.S. 591, 597 (1948));
Herrion v. Children’s Hosp. Nat’l Med. Ctr., 786 F. Supp. 2d 359, 368 (D.D.C. 2011).
Moreover, 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.” Drake v. FAA, 291 F.3d
59, 66 (D.C. Cir. 2002) (quoting Allen v. McCurry, 449 U.S. 90, 94 (1980)) (emphasis in
original). In order for issue preclusion to bar a claim, “(1), the same issue now being raised must
have been contested by the parties and submitted for judicial determination in the prior case; (2),
the issue must have been actually and necessarily determined by a court of competent
jurisdiction in that prior case; and (3), preclusion in the second case must not work a basic
unfairness to the party bound by the first determination.” Martin v. Dep’t of Justice, 488 F.3d
446, 454 (D.C. Cir. 2007).
A. The Plaintiff’s Allegations Against Blount County and Defendants Mercks,
Whitehead, Berrong, and West are Barred By Claim Preclusion
The plaintiff alleges that defendants Mercks, Whitehead, Berrong, and West violated his
Page 5 of 9
constitutional rights when they unlawfully seized his personal property, and that defendant
Blount County is also liable for its officers’ illegal acts. Compl. at 31. The plaintiff, however,
has already litigated these claims in the Eastern District of Tennessee and is thus precluded from
asserting them before this Court.
As stated above, claim preclusion applies (1) if there has been prior litigation involving
the same claims or cause of action, (2) between the same parties or their privies, and (3) there has
been a final, valid judgment on the merits, (4) by a court of competent jurisdiction. See Porter,
606 F.3d at 813. In this case, all four conditions are met.
In the Eastern District of Tennessee, the plaintiff alleged that the defendant officers
“improperly ‘initiated direct attachment and seizure upon [plaintiff’s] private property,’ assaulted
and arrested plaintiff without probable cause, and deprived plaintiff of his ‘right to privacy, to be
left alone, [and] peaceful ownership of his property.’” Summer, 2011 WL 52554, at *4 (quoting
plaintiff’s complaint in the Eastern District of Tennessee). These are precisely the
constitutional violations he alleges in this case. The Eastern District of Tennessee entered
judgment in favor of the defendant officers after concluding that they had immunity from suit
because the actions that allegedly violated the plaintiff’s constitutional rights were undertaken
pursuant to valid court orders issued by Blount County courts. Id. at *5 (stating that the Court
“has found no indication that the orders under which defendants were acting were not validly
issued or were not issued by a judge acting in his judicial capacity. Further, the Court has no
indication, beyond plaintiff’s allegations, that defendants improperly carried out the court
orders.”). The Eastern District of Tennessee also dismissed the plaintiff’s claims against Blount
County, stating that “Plaintiff has not pled that his alleged injuries were the result of a policy or
custom of the county.” Summer v. Cunningham, No. 3:10-cv-169 (E.D. Tenn. 2010) (Order
Page 6 of 9
dated July 20, 2010, ECF No. 41). Given that the Eastern District of Tennessee has already
concluded that the defendant officers are entitled to immunity, and dismissed the plaintiff’s
claims against Blount County, the plaintiff’s claims against these defendants must be dismissed.
B. The Plaintiff’s Claims Against Defendants Hatcher and Ogle Are Barred by
Issue Preclusion
The plaintiff alleges that defendants Hatcher and Ogle, both of whom are employees at
the Blount County Clerk’s Office, are liable for, inter alia, fraud by “acting in concert and under
color of [state] law with Defendant [Summer] and Defendant Andrews to create a fraudulent
court case.” Compl. at 22, 27-28. The main thrust of the plaintiff’s argument is that these
defendants knew that the divorce proceedings were fraudulent and “with forethought and malice,
for a profit and a gain for [themselves],” signed papers in furtherance of the fraudulent scheme.
Id. at 22. The Eastern District of Tennessee evaluated the same documents at issue in these
allegations and determined that the documents were valid and legitimate. Summer, 2011 WL
52554, at *7 (“The Court has reviewed the court orders and finds no indication, on the face of
the orders, that the orders are invalid, improperly issued, or issued by a judge acting outside of
his jurisdiction.”). The plaintiff himself placed this factual issue before that court and it would
work no unfairness for him to be bound by that court’s conclusions. The plaintiff is therefore
precluded from asserting claims against defendants Hatcher and Ogle because the validity of the
Court orders associated with the plaintiff’s divorce was already raised, contested, and actually
and necessarily decided in Tennessee. Martin, 488 F.3d at 454 (stating that in order for issue
preclusion to bar a claim, “(1), the same issue now being raised must have been contested by the
parties and submitted for judicial determination in the prior case; (2), the issue must have been
actually and necessarily determined by a court of competent jurisdiction in that prior case; and
(3), preclusion in the second case must not work a basic unfairness to the party bound by the first
Page 7 of 9
determination.”).
C. The Plaintiff has Failed to State a Claim against Defendants Summer, Andrews,
and Ralls
The plaintiff’s allegations against defendant Summer, Andrews, and Ralls are difficult to
untangle, but he asserts that by filing a divorce petition that contained fraudulent statements, they
deprived him of his “due process rights and His rights as guaranteed by the Bill of Rights
Articles 1, 4, 5, 6, 8 . . .” Compl. at 21. “It is among the most basic tenets of constitutional law,”
however, “that the Bill of Rights protects individuals from governmental interference with
enumerated rights and does not apply to disputes between private parties.” Marshall v.
Honeywell Tech. Solutions, Inc., 536 F. Supp. 2d 59, 66 (D.D.C. 2008) (citing Pub. Util.
Comm’n of D.C. v. Pollak, 343 U.S. 451, 461-62 (1952) (holding that the Fifth Amendment
applies to and restricts only the Federal Government); Browning-Ferris Indus. of Vermont, Inc.
v. Kelco Disposal, Inc., 492 U.S. 257, 258 (1989) (holding that “the Eighth Amendment places
limits on the steps a government may take against an individual”)).
In order to state a Section 1983 claim against defendants Summer, Andrews, and Ralls,
the plaintiff must show these defendants acted under color of state law. See West v. Atkins, 487
U.S. 42, 48 (1988) (“To state a claim under § 1983, a plaintiff must allege the violation of a right
secured by the Constitution and laws of the United States, and must show that the alleged
deprivation was committed by a person acting under color of state law.”). There are certain
circumstances in which a private individual may act under color of state law for the purposes of
bringing a claim pursuant to Section 1983. The D.C. Circuit has held that private parties “may
be deemed to have acted under color of law in two circumstances: when they conspire with state
officials, and when they willfully engage in joint activity with a state or its agents.” Hoai v. Vo,
935 F.2d 308, 313 (D.C. Cir. 1991) (citations omitted); see also Garay v. Liriano, No. 11-cv-
Page 8 of 9
1207, 2012 WL 898446, at *2 (D.D.C. Mar. 15, 2012) (finding that a private party had not
willfully engaged in joint activity with police officers).
Here, the plaintiff alleges that defendants Summer, Andrews, and Ralls “operating in
concert” with members of the Blount County Clerk’s Office “under the color of state law”
submitted a fraudulent divorce petition “for the purpose of generating a revenue.” Compl. at 10-
12. Nonetheless, the plaintiff supplies no factual allegations to support these conclusory
assertions. As discussed above, the Eastern District of Tennessee already concluded that
members of the Blount County Clerk’s Office were operating pursuant to valid court orders.
Accordingly, the plaintiff’s barebones allegations that defendants Summer, Andrews, and Ralls
operated in concert with these state officials to deprive him of his constitutional rights lacks any
foundation. The plaintiff’s claims against defendant Summer, Andrews, and Ralls must
therefore be dismissed because the plaintiff fails to plead facts sufficient for the Court to infer
“more than the mere possibility of misconduct.” See Atherton, 567 F.3d at 682. Given the
plaintiff’s failure to state cognizable claims against these defendants, his claims must be
dismissed.
IV. CONCLUSION
For the reasons explained above, the plaintiff’s Complaint is hereby dismissed, sua
sponte, pursuant to Federal Rule of Civil Procedure 12(b)(6), for failure to state a claim upon
which relief may be granted. An appropriate Order will accompany this Memorandum
Opinion.
DATED: JULY 6, 2012 Beryl A. Howell
BERYL A. HOWELL
United States District Judge
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The petitioners, who allege that they are "the duly appointed, confirmed, qualified and acting members of the board of trustees of the La Ballona High School District, formerly Union High School District," have instituted an original proceeding in mandate to compel the board of supervisors of the county of Los Angeles to include in the annual levy a special tax on property within certain territory of the county, on the theory that such territory constitutes La Ballona High School District. The board of supervisors has refused to levy the tax on the ground that the district did not, at any time between November 25, 1925, and the thirtieth day of June, 1927, establish or maintain, within the district, any high school whatever for the convenience of the day pupils of the district, but that during said period all of the high school pupils of the La Ballona District attended the Venice high schools of the Los Angeles City High School District, and *Page 652
that at no time between said dates was any high school instruction given or furnished within La Ballona High School District, other than that furnished by the Los Angeles City High School District; and on the further ground that, on the recommendation of the county superintendent of schools of Los Angeles County, La Ballona High School District has been declared to have lapsed, and the property of the district ordered sold.
There is no dispute concerning the facts. Prior to November 25, 1925, the La Ballona High School District, formerly Venice Union High School District, consisted of the Venice City, La Ballona and Playa del Rey elementary school districts, and was maintaining and conducting a fully equipped high school. On that date the city of Venice was annexed to the city of Los Angeles, and a large portion of the Venice Union High School District, including the land upon which the high school building was located, became part of the territory of the Los Angeles City High School District. The Venice Union High School District, being left without a high school building, thereupon entered into an agreement with the Los Angeles City High School District, under the terms of which the Venice Union High School District furnished the necessary money, personal property and the teachers to carry on the high school in the building for the remainder of the school year 1925-26.
When the time arrived for making plans for the school year 1926-27, no high school building having been provided and no other provision having been made for the education of its high school pupils, the Venice Union High School District entered into a new contract with the Los Angeles City High School District, whereby it was agreed that the latter district should permit the attendance at Venice junior and senior high schools of all pupils resident in the Venice Union High School District who were qualified to attend the seventh, eighth, ninth, tenth, eleventh, and twelfth grades of those schools, and should furnish such pupils the same advantages, equipment, supplies, and services as were furnished to other pupils doing similar work in the Los Angeles School District. As consideration for this service, the Venice Union High School District agreed to pay the Los Angeles City High School District a sum, computed at the rate of two hundred and fifty dollars per pupil, for the *Page 653
number of pupils represented by the total average daily attendance of pupils attending Venice junior and senior high schools from the Venice Union High School District during the school year beginning July 1, 1926. The Los Angeles City High School District agreed to credit to the Venice Union High School District the enrollment and average daily attendance at the Venice schools of all pupils residing in the Venice Union High School District and attending said schools, such enrollment and average daily attendance to be used as a basis of part of the income of the Venice Union High School District for the school year 1927-28. The Los Angeles City High School District also agreed to furnish transportation to pupils living in certain designated portions of the Venice Union High School District, with the understanding that it should not collect the usual amount from the pupils so transported, but that the Venice Union High School District should pay the sum of two hundred and twenty-five dollars per school month for the service. Under this arrangement no high school of any kind was maintained within the limits of the Venice Union High School District during the year 1926-27, but the pupils residing in the district, of high school rating, were given free instruction under the contract with the Los Angeles City High School District, which reported that thirty-three units of average attendance were earned by them.
That portion of La Ballona High School District formerly known as Playa del Rey Elementary District has been annexed to the city of Los Angeles for school purposes, and the name of the Venice Union High School District has been changed to La Ballona High School District, which now consists only of the territory within the La Ballona Elementary School District. Within the time and in the manner prescribed by the sections of the Political Code, and as the basis for the levy of a tax for the district for the school year 1927-28, the petitioners, as the board of trustees of the La Ballona High School District, made and filed with the county superintendent of schools of the county of Los Angeles an estimate or budget of the amount which would be required during the fiscal year 1927-28, for the purpose of meeting the current annual expenses of maintaining a high school in the district. The budget *Page 654
was approved by the superintendent, who, in turn, submitted to the board of supervisors the estimates, together with a statement showing the amount expended by the high school district for each item of estimate during the preceding year.
Subsequently, on September 1, 1927, the county superintendent, acting on the advice of the attorney-general that the thirty-three units of average daily attendance claimed by the La Ballona High School District did not belong to that district, but were "the earned property of the Los Angeles High School District, and that therefore the La Ballona District had no average daily attendance for the school year ending July 30, 1927," recommended to the respondent board of supervisors that La Ballona High School District be declared lapsed. The board of supervisors thereupon declared the district lapsed and ordered its property sold pursuant to the provisions of section 1735 of the Political Code.
On these facts the board of supervisors has refused to levy any tax for meeting the budget, and will not do so unless directed by the writ of this court.
[1] Petitioners have not shown us how it would be possible, at this time, for the board of supervisors to levy a special tax, spread the assessment over the taxable property in the district, if one exists, and collect the tax for the fiscal year 1927-28. The time has passed when that may be done, and this court will not issue its prerogative writs to compel the doing of idle acts. But, assuming that it were yet possible to direct that such a tax be levied and collected, petitioners are not in position to demand that it be done.
[2] Section 1720 of the Political Code provides, in part, that "each high school district must establish and maintain for the convenience of the day pupils of the district at least one four year high school, or in lieu thereof at least one junior high school and at least one senior high school." Petitioners contend that the contracts entered into between La Ballona and Los Angeles City High School Districts constitute a substantial compliance with this provision. We cannot approve the suggestion.[3] While section 1751 of the code permits one high school district to contract with another high school district for the education of its pupils *Page 655
entitled to attend a high school, in such subjects or in such grades as may be named in such contract or agreement, we are not prepared to say that the district may thus provide for the education of all its high school pupils in all subjects by another high school district. To accept such construction sought by petitioners would be to ignore the plain provisions of the law and to sanction the existence of high school districts without any high schools. We think it clear that the legislature has intended that every high school district shall establish and maintain a high school, as contemplated by section 1720 (supra), within its own boundaries. The conducting of a high school, or high schools, by Los Angeles City High School District is not such maintenance of a high school within the La Ballona District. (Bay View School District v. Linscott, 99 Cal. 25, 29 [33 P. 781].) It was there said that the sections of the code "do not expressly provide that such school shall be within the district but such is clearly the implication." The purpose governing such location, and the "unpleasant consequences" which might flow, "if a district may under the law maintain a school outside the district" are sufficiently commented on in the opinion. (See, also, Sunol School Dist. v. Chipman, 138 Cal. 251
[71 P. 340].) Since the annexation of the portion of Venice Union High School to the Los Angeles City High School District in November, 1925, no high school has been maintained in La Ballona High School District boundaries.
[4] Petitioners argue that the legislature "did not contemplate the actual construction or erection of a high school building at any particular time" within the district contracting for the education of its high school pupils in another district. That may be admitted, but it was the duty of the predecessor of La Ballona District, immediately upon the severance of the district by annexation becoming an accomplished fact, to make arrangements for the temporary location of the high school, as it was permitted to do under the provisions of section 1741 of the Political Code, until such time as it was ready to purchase a site and erect a suitable building. (Pol. Code, sec. 1755.)
[5] Petitioners have not complied with the law relating to the maintenance of a high school in La Ballona District, in another particular. Section 1750 of the Political Code *Page 656
requires each high school board to prepare a course of study, subject to the approval of the state board of education, and designed to fit the needs of its pupils. So far as the record indicates, that was not done in this case. The contract with the Los Angeles District, which provided that the latter should furnish to the pupils of La Ballona District the same advantages, equipment, supplies, and services as were furnished to other pupils doing work in the schools, was not a compliance with the requirement of the section relating to the adoption of a course of study.
Section 1756, under which the petitioners purported to act in filing with the county superintendent of schools their estimate of the amount of money required for the present fiscal year, provides that such estimate shall be "of the amount of money required for maintaining the high school in said district for the current school year, including rent or construction of temporary quarters, if any." (Italics added.) We deem it unnecessary to cite further sections of the code relating to the subject. It is plain that La Ballona District has not maintained within its boundaries, either in permanent or temporary quarters, a high school as required by the statute, and the action of the board of supervisors must be sustained.
The petition for a writ of mandate is denied.
Richards, J., Shenk, J., Curtis, J., Preston, J., Langdon, J., and Seawell, J., concurred.
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The appeal herein is taken from an order denying the application of the appellant Bocock for letters of administration with the will annexed, upon the estate of the decedent, and granting the application of David Beeson for letters testamentary thereon.
Jasper Kelley died, a resident of Los Angeles County, on August 29, 1918. He left a will wherein he named the respondent, David Beeson, as executor. At the time of the death of the decedent Beeson was a resident of Illinois, but he has come to California and has appeared and submitted himself to the jurisdiction of the superior court for the purposes of administration of the estate and intends to remain here as long as may be necessary to complete the administration.
The appellants opposed the appointment of Beeson as executor on the ground that he is a resident of Illinois, and that he is incompetent to perform the duties of the trust because of want of understanding and integrity. [1] The fact that he is not a permanent resident of California, but is here only for the purpose of administering upon the estate of the decedent, does not disqualify him from acting as executor, nor render him ineligible for appointment as such, and the order of the court appointing him executor upon his application therefor was authorized and required by the code. (Code Civ. Proc., secs. 1349, 1350.) These sections require the court to appoint the person named in the will as executor, provided he appears and submits himself to the jurisdiction of the court, regardless of the place of his residence. This question was before the court and was very fully considered and was so decided in Estate ofBrown, 80 Cal. 381, [22 P. 233]. The provisions of the code are plain and the decision is clear. Even if there was any doubt before that decision, it has been entirely removed thereby and the decision has ever since been considered as settling *Page 83
the law of the state on the subject. (Estate of Richardson,120 Cal. 346, [52 P. 832]; Estate of Brundage, 141 Cal. 540, [75 P. 175].)
[2] The claim that Beeson is incompetent by reason of want of integrity and understanding is wholly without support in the evidence. It is not claimed that he is not fully competent so far as his understanding is concerned. The only impeachment of his integrity is based on the claim that he was not courteous to the widow and that he disregarded her requests or wishes concerning the selection of an attorney to advise him in the administration of the estate. There was nothing in his conduct which in any respect indicated a want of integrity.
[3] The appeal was presented to the court in October, 1919, and the appellants were then allowed fifteen days thereafter within which to file a closing brief. The time elapsed and no brief was filed. The appeal is wholly without support or merit. It has occasioned a delay of at least a year in the settlement of the estate. It could not have been taken with any reasonable hope of success. Under the circumstances the appellant should pay a penalty to the respondent because of the appeal. We consider the sum of one hundred dollars a proper amount to be charged.
It is ordered that the orders appealed from be affirmed and that the respondent recover of appellants the sum of one hundred dollars as a penalty.
Lawlor, J., and Olney, J., concurred.
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J-S09041-17
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
COMMONWEALTH OF PENNSYLVANIA, IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellee
v.
RAYMOND V. WILLIAMS,
Appellant No. 638 EDA 2016
Appeal from the PCRA Order January 15, 2016
in the Court of Common Pleas of Philadelphia County
Criminal Division at No.: CP-51-CR-0204911-2005
BEFORE: SHOGAN, J., STABILE, J., and PLATT, J.*
MEMORANDUM BY PLATT, J.: FILED APRIL 17, 2017
Appellant, Raymond V. Williams, appeals pro se from the January 15,
2016 order denying his petition for a writ of habeas corpus. On appeal,
Appellant claims that the trial court erred in deeming his petition for a writ of
habeas corpus to be an untimely petition filed pursuant to the Post
Conviction Relief Act (PCRA), 42 Pa.C.S.A. §§ 9541-9546, and in finding
that, regardless, the petition lacked merit. After careful review, we affirm.
We take the underlying facts and procedural history in this matter
from the trial court’s January 15, 2016 opinion and our independent review
of the certified record. On April 7, 2005, Appellant entered an open guilty
plea to one count each of murder of the first degree and rape. The trial
____________________________________________
*
Retired Senior Judge assigned to the Superior Court.
J-S09041-17
court immediately sentenced Appellant to term of life imprisonment.
Appellant did not file a direct appeal.
On June 18, 2012, Appellant filed a petition for a writ of habeas
corpus. The PCRA court deemed Appellant’s filing to be an untimely PCRA
petition and dismissed it on August 27, 2012. Appellant initially filed an
appeal of the dismissal, but withdrew his appeal on January 11, 2013.
On February 27, 2013, Appellant filed the instant, pro se petition for a
writ of habeas corpus against Michael Wenerowicz, then Superintendent of
SCI Graterford, in the Court of Common Pleas of Philadelphia County,
Criminal Division. Appellant claimed his detention by the Department of
Corrections (DOC) was illegal on the basis that the DOC lacked the authority
to detain him because there was no written sentencing order. (See Petition
for Writ of Habeas Corpus, 2/27/13, at unnumbered page 2). Appellant filed
an amendment to the petition on May 21, 2014.
On November 17, 2015, the trial court, treating Appellant’s petition as
a PCRA petition, filed a notice pursuant to Pennsylvania Rule of Criminal
Procedure 907 stating its intention to dismiss the petition as untimely. See
Pa.R.Crim.P. 907(1). On December 3, 2015, Appellant filed an answer to
the Rule 907 notice. The court dismissed Appellant’s petition on January 15,
2016. In its decision, it acknowledged that it had been incorrect to deem
the petition to be an untimely PCRA petition, but found that the claim raised
by Appellant lacked merit. (See Trial Court Opinion, 1/15/16, at
-2-
J-S09041-17
unnumbered pages 2-3). Appellant filed a timely notice of appeal on
February 12, 2016.1
On appeal, Appellant raises five interrelated and repetitive claims,
chiefly arguing that the trial court erred in deeming his petition for a writ of
habeas corpus to be a PCRA petition, and contending that his claim is a
meritorious one. (See Appellant’s Brief, at 4-5).
Appellant appeals from the denial of his habeas corpus petition. We
have stated, “[H]abeas corpus is a civil remedy which lies solely for
commitments under criminal process.” Commonwealth v. McNeil, 665
A.2d 1247, 1249 (Pa. Super. 1995) (citation omitted). “Habeas corpus is an
extraordinary remedy and may only be invoked when other remedies in the
ordinary course have been exhausted or are not available.” Id. at 1250
(citation omitted). “Our standard of review of a trial court’s order denying a
petition for writ of habeas corpus is limited to abuse of discretion. Thus, we
may reverse the court’s order where the court has misapplied the law or
exercised its discretion in a manner lacking reason.” Rivera v. Pa. Dep't of
Corr., 837 A.2d 525, 528 (Pa. Super. 2003), appeal denied, 857 A.2d 680
(Pa. 2004) (citations omitted).
____________________________________________
1
The trial court did not order Appellant to file a concise statement of errors
complained of on appeal. See Pa.R.A.P. 1925(b). It did not issue any
additional opinions. See Pa.R.A.P. 1925(a).
-3-
J-S09041-17
Here, Appellant argues that the trial court erred in finding that his
petition was an improperly filed PCRA. (See Appellant’s Brief, at 9-14). We
agree.
As noted above, the claim raised in Appellant’s petition for writ of
habeas corpus is that his detention by the DOC is illegal based on the DOC's
purported lack of authority because there is no written judgment of
sentence. (See id. at 12-13). He does not assert his innocence or that his
sentence was illegal when imposed. (See id. at 9-14). Thus, Appellant
does not challenge the legality of his sentence, a claim cognizable under the
PCRA. See 42 Pa.C.S.A. § 9543; see also Commonwealth v.
Hockenberry, 689 A.2d 283, 288 (Pa. Super. 1997), appeal denied, 695
A.2d 784 (Pa. 1997) (holding, “[i]ssues relating to the legality of sentence
cannot be waived and are cognizable under the PCRA.”) (citation omitted).
The Pennsylvania Supreme Court “has never held that habeas corpus
cannot provide a separate remedy, in appropriate circumstances. Indeed,
the boundaries of cognizable claims under the PCRA can only be extended so
far as is consistent with the purposes of the statute[.]” Commonwealth v.
Judge, 916 A.2d 511, 520 (Pa. 2007), cert. denied, 552 U.S. 1011 (2007)
(citations omitted); see also Joseph v. Glunt, 96 A.3d 365, 368 (Pa.
Super. 2014), appeal denied, 101 A.3d 787 (Pa. 2014) (holding claim that
defendant’s confinement is illegal “due to the inability of the DOC to ‘produce
a written sentencing order related to [his] judgment of sentence’ constitutes
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J-S09041-17
a claim legitimately sounding in habeas corpus”) (citations omitted).
Therefore, we agree with Appellant that the trial court erred in deeming his
petition to be an improperly filed PCRA petition.
However, this does not end our inquiry. As discussed below, this
Court has held that claims such as those raised by Appellant are not
cognizable. See Joseph, supra at 371. Thus, we must affirm the dismissal
of Appellant’s petition.
As noted above, Appellant is principally testing the legality of his
confinement and detention, claiming that there is no written sentencing
order. (See Appellant’s Brief, at 12-13). Thus, in essence, he claims that
the DOC does not have the authority to detain him pursuant to 37 Pa. Code
§ 91.3 (Reception of inmates), which provides, in pertinent part, the “[DOC]
will accept and confine those persons committed to it under lawful court
orders . . . when information has been provided to the [DOC] as required by
42 Pa.C.S.A. § 9764 (relating to information required upon commitment and
subsequent disposition).” 37 Pa. Code § 91.3.
Section 9764 of the Sentencing Code provides, in pertinent part, as
follows:
(a) General rule.—Upon commitment of an inmate to the
custody of the [DOC], the sheriff or transporting official shall
provide to the institution’s records officer or duty officer, in
addition to a copy of the court commitment form DC–300B
generated from the Common Pleas Criminal Court Case
Management System of the unified judicial system, the following
information:
-5-
J-S09041-17
* * *
(8) A copy of the sentencing order and any detainers
filed against the inmate which the county has notice.
42 Pa.C.S.A. § 9764(a)(8).
In Joseph, this Court addressed a similar issue, a defendant
challenging the authority of the DOC to detain him when it had no copy of
his sentencing order pursuant to Section 9764(a)(8). We held:
The language and structure of section 9764, viewed in context,
make clear that the statute pertains not to the DOC’s authority
to detain a duly-sentenced prisoner, but, rather, sets forth the
procedures and prerogatives associated with the transfer of an
inmate from county to state detention. None of the provisions of
section 9764 indicate[s] an affirmative obligation on the part of
the DOC to maintain and produce the documents enumerated in
subsection 9764(a) upon the request of the incarcerated person.
Moreover, section 9764 neither expressly vests, nor implies the
vestiture, in a prisoner of any remedy for deviation from the
procedures prescribed within.
Joseph, supra at 371 (footnote omitted). Accordingly, the Joseph Court
affirmed the trial court’s denial of habeas corpus relief.
Furthermore, in his brief, Appellant admits he pleaded guilty to a
charge of murder in the first degree. (See Appellant’s Brief, at 6). He
acknowledges that he was immediately sentenced to a term of incarceration
of not less than life. (See id.). This is sufficient evidence of Appellant’s
sentence. See Joseph, supra at 371-72. Therefore, we conclude the trial
court’s dismissal of Appellant’s petition for writ of habeas corpus was legally
correct. See id. at 372. Accordingly, we affirm.
Order affirmed.
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J-S09041-17
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 4/17/2017
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01-03-2023
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04-17-2017
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https://www.courtlistener.com/api/rest/v3/opinions/2662210/
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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
CHARLES MILLER,
Plaintiff,
v.
Civil Action No. 05-1314 (RCL)
UNITED STATES DEPARTMENT
OF JUSTICE,
Defendant.
MEMORANDUM OPINION
This action, which is brought under the Freedom of Information Act (“FOIA”), 5 U.S.C.
§ 552, is before this Court on defendant’s Renewed Motion [45] for Summary Judgment. For the
reasons set forth below, the motion will be GRANTED.
I. Background
On or about March 16, 2003, plaintiff sent a FOIA request to the Federal Bureau of
Investigation headquarters office in Washington, D.C. (“FBIHQ”) seeking information about
himself including, but not limited to: “(1) arrest records, (2) investigation and/or investigatory
reports, (3) reports or evidentiary and/or scientific information findings, (4) wants, warrants,
and/or detainers, (5) final and closing investigation reports; and (6) any and/or all information,
data, or reports not otherwise exempt by statute.” Compl., Ex. A (FOIA Request). In response,
on September 8, 2004, FBIHQ released 191 pages of redacted records and indicated that the
redactions had been made pursuant to FOIA Exemptions 7(C) and 7(D). In addition, FBIHQ
notified plaintiff that it withheld another 62 pages of records pursuant to FOIA Exemption 3.
1
Plaintiff unsuccessfully appealed FBIHQ’s decision to the Justice Department’s Office of
Information and Privacy (“OIP”).
Plaintiff filed this action in June 2005. His response to defendant’s Motion for Summary
Judgment prompted FBIHQ to conduct a second search for records responsive to his FOIA
request. As a result of the second search, FBIHQ located a Bridgetown main file, and from this
file promptly released 63 pages of redacted public source documents, indicating that the
redactions had been made pursuant to FOIA Exemptions 1, 2, 5, 6, 7(A), 7(C), 7(D), and 7(F).
Later, FBIHQ released 323 pages, out of 1,440 pages reviewed, indicating that the redactions had
been made pursuant to FOIA Exemptions 1, 2, 5, 6, 7(C), 7(D), 7(E), and 7(F).
Among the responsive FBIHQ records were documents that originated in full or in part
with other government agencies or other components of the United States Department of Justice
(“DOJ”). These documents were referred to the DOJ’s Criminal Division, the Bureau of
Alcohol, Tobacco, Firearms and Explosives (“ATF”), the Defense Intelligence Agency (“DIA”),
the Drug Enforcement Administration (“DEA”), the Department of Defense (“DOD”), the State
Department, and the Department of the Army (“Army”) for direct response to plaintiff. In
addition, FBIHQ forwarded 312 pages of records to “another government agency for direct
response to plaintiff.” 4th Hardy Decl. ¶ 108. FBIHQ did not identify the agency and the record
of this case does not explain the disposition of these records. 1
This Court granted in part and denied in part defendant’s initial Motion for Summary
Judgment. See Mem. Op. [41] at 56. On May 10, 2012, defendant released an additional 19
pages in their entirety and 43 redacted pages to plaintiff. Def.’s Supplement to the R. on its
1
The Court’s original Opinion did not address these documents or ask for clarification the way it did for the other
documents now addressed in this Opinion. Plaintiff has not raised any objection to these documents in his
subsequent pleadings. Therefore, any objection is waived. See Klugel v. Small, 519 F. Supp. 2d 66, 72 (D.D.C.
2007) (citing Hopkins v. Women's Div. Gen. Bd. of Global Ministries, 238 F. Supp. 2d 174, 178 (D.D.C. 2002)).
2
Renewed Mot. Summ. J. and Mot. for Final J. in its Favor ¶ 5. Defendant withheld 43 pages in
their entirety, citing the Privacy Act Exemption j(2) and FOIA Exemptions 7(C), 7(D), 7(E), and
7(F). Id., Ex. X and Y.
This Court will first consider the newly-raised jurisdictional claims; second, the
remaining documents on which it directed defendant to clarify its rationale for withholding; and
finally, defendant’s supplement to the record and new withholdings.
II. Standard of Review
Summary judgment is appropriate when the moving party demonstrates that “there is no
genuine issue as to any material fact and that the moving party is entitled to judgment as a matter
of law.” Fed. R. Civ. P. 56(c). In determining whether a genuine issue of material fact exists,
the trier of fact must view all facts, and all reasonable inferences drawn therefrom, in the light
most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S.
574, 587 (1986). In order to defeat summary judgment, a factual dispute must be capable of
affecting the substantive outcome of the case and be supported by sufficient admissible evidence
that a reasonable trier of fact could find for the non-moving party. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 247–48 (1986).
An agency may be entitled to summary judgment in a FOIA case if it demonstrates that
no material facts are in dispute, it has conducted an adequate search for responsive records, and
each responsive record that it has located has either been produced to the plaintiff or is exempt
from disclosure. See Weisberg v. DOJ, 705 F.2d 365, 368 (D.C. Cir. 1980). To meet its burden,
a defendant may rely on reasonably detailed and non-conclusory declarations. See McGehee v.
CIA, 697 F.2d 1095, 1102 (D.C. Cir. 1983).
3
In a FOIA case, the court determines de novo whether an agency properly withheld
information under a claimed exemption. Mead Data Cent., Inc. v. Dep’t of Air Force, 566 F.2d
242, 251 (D.C. Cir. 1977). “The underlying facts are viewed in the light most favorable to the
[FOIA] requester,” Weisberg, 705 F.2d at 1350, and the exemptions must be narrowly construed.
FBI v. Abramson, 456 U.S. 615, 630 (1982). However, courts generally defer to agency
expertise in national security matters. See, e.g., Taylor v. Dep’t of the Army, 684 F.2d 99, 109
(D.C. Cir. 1982) (according “utmost deference” to classification affidavits); Krikorian v. Dep’t of
State, 984 F.2d 461, 464–65 (D.C. Cir. 1993) (acknowledging “unique insights” of executive
agencies responsible for national defense and foreign relations). While the agency must not
withhold information in bad faith, Military Audit Project v. Casey, 656 F.2d 724, 738 (D.C. Cir.
1981), the affidavits submitted by the agency to demonstrate the adequacy of its response are
presumed to be in good faith. Ground Saucer Watch, Inc. v. CIA, 692 F.2d 770, 771 (D.C. Cir.
1981).
III. JURISDICTION
a. Exhaustion of Remedies
In its Renewed Motion for Summary Judgment, defendant raises for the first time the
issue of plaintiff’s non-payment of fees, claiming that such non-payment strips the Court of
subject matter jurisdiction. Id. at 7. In response, plaintiff contends that the issue was raised
“prejudicially late, and consequently waived.” Pl.’s Opp. To Def.’s Renewed Mot. Summ. J.
(“Pl.’s Opp.”) at 15. Both parties’ sweeping assertions lack adequate legal support.
Before filing a lawsuit in federal court, plaintiffs must first exhaust their administrative
remedies, giving the agency “an opportunity to exercise its discretion and expertise on the matter
and to make a factual record to support its decision.” Oglesby v. Dep’t of Army, 920 F.2d 57, 61
4
(D.C. Cir. 1990). “Exhaustion [of administrative remedies] does not occur until the required fees
are paid or an appeal is taken from the refusal to waive fees.” Id. at 66. Exhaustion is not
jurisdictional, because Congress did not unequivocally state that the judiciary is barred from
hearing a decision prior to an administrative agency’s decision. Hidalgo v. FBI, 444 F.3d 1256,
1258 (D.C. Cir. 2003) (citing Oglesby, 920 F.2d at 61). However, the administrative scheme of
FOIA “favors treating failure to exhaust as a bar to judicial review.” Id. at 1259. “[F]ailure to
exhaust precludes judicial review if ‘the purposes of exhaustion’ and the ‘particular
administrative scheme’ support such a bar.’” Id. at 1258 (quoting Oglesby, 920 F.2d at 61); see
Wilbur v. CIA, 355 F.3d 675, 677 (D.C. Cir. 2004). This renders defendant’s assertion that this
Court de facto lacks subject matter jurisdiction incorrect. This Court finds that a requester’s
failure to exhaust his administrative remedies is neither jurisdictional nor, as plaintiff contends,
waived. 2 Following this Circuit’s precedent in Wilbur, this Court must factually determine
whether the purposes of exhaustion were fulfilled prior to plaintiff bringing his claim. If they
were, this Court will not be barred from deciding the FOIA dispute on its merits. See id. at 677.
The purposes of exhaustion are “preventing premature interference with agency
processes, . . . affording the parties and the courts the benefit of the agency’s experience and
expertise, [and] compiling a record which is adequate for judicial review.” Weinberger v. Salfi,
422 U.S. 749, 765 (1975) (original alterations omitted). In this case, plaintiff’s non-payment of
past fees does not thwart the purposes of exhaustion set forth in Weinberger.
First, this Court is not prematurely interfering with agency processes, because the
administrative scheme does not bar judicial review. This lawsuit was filed in June 2005, more
2
Plaintiff gives no legal support for his waiver argument. Instead, he contends that he constructively exhausted his
remedies upon defendant’s failure to release information in a timely fashion. Pl.’s Opp. at 15. However, this does
not comport with Oglesby, 902 F.2d at 132–33, in which this Circuit held that if an agency responds to a FOIA
request beyond the statutory period but before commencement of litigation, a plaintiff’s remedies must still be
exhausted. Since defendant responded before litigation, the issue of non-payment must still be resolved.
5
than two years after plaintiff’s initial FOIA request, at which time plaintiff did not owe any fees.
FOIA requires each agency to “specify[] the schedule of fees applicable to the processing of
requests under this section and establishing procedures and guidelines for determining when such
fees should be waived or reduced.” 5 U.S.C. § 552(a)(4)(A)(i). Defendant did so, establishing
that “no fee will be charged unless the cost of search in excess of two hours plus the cost of
duplication in excess of 100 pages totals more than $14.00.” 28 C.F.R. § 16.11(d)(5). “In cases
in which a requester has been notified that actual or estimated fees amount to more than $25.00,
the request shall not be considered received and further work shall not be done on it until the
requester agrees to pay the anticipated total fee.” 28 C.F.R § 16.11(e). In sum, defendant
established that requesters would not be charged for costs under $14.00, but that requesters must,
at minimum, promise to pay any costs over $25.00 before the any work shall be done on their
behalf. If fees are properly requested and remain unpaid, a federal lawsuit may not commence.
See Oglesby, 920 F.2d at 66.
In the instant case, defendant released responsive documents to plaintiff on two separate
occasions: September 8, 2004 and April 17, 2007. See Fifth Declaration of David M. Hardy
(“5th Hardy Decl.”), Ex. A and B. The 2004 release of 191 pages stated, “As a means of
releasing documents to you in a more timely and efficient manner, we are enclosing the
requested material in advance of your payment. At this time, we are requesting payment in the
amount of $9.10.” 5th Hardy Decl., Ex. A. Though defendant acknowledged 28 C.F.R. § 16.11
in its Motion, 3 it failed to account for § 16.11(d)(5), which states that “no fee will be charged
unless the cost of search in excess of two hours plus the cost of duplication of 100 pages totals
more than $14.00.” Id. Because the cost in excess of duplication of the first 100 pages was
$9.10, defendant’s request for payment was unfounded. Therefore, its argument that plaintiff
3
See Def.’s Renewed Mot. Summ. J. at 8.
6
failed to exhaust his administrative remedies prior to his filing of this lawsuit in 2005 is
unpersuasive. This lawsuit was not a premature interference with agency processes. In fact, it
has prodded the DOJ into making the appropriately extensive searches that it did not conduct
prior to this suit being filed.
Second, the parties and court have been afforded the agency’s experience and expertise.
At no time has defendant contended that plaintiff’s non-payment has been an impediment to its
ability to provide its expertise in this matter. On the contrary, defendant freely provided
responsive documents to plaintiff in advance of payment as recently as June 6, 2012. 4 Though
defendant asserts that this Court lacks jurisdiction due to the exhaustion of remedies doctrine, it
does not assert (for it cannot) that plaintiff’s failure to pay $41.40 will prevent it from providing
the disputed documents. Its history of providing documents in advance of payment belies its
argument. See Antonelli v. Bureau of Alcohol, Tobacco, Firearms & Explosives, 555 F. Supp. 2d
16, 23 (D.D.C. 2008) (holding that plaintiff’s payment three years into the litigation was
immaterial to whether the plaintiff was able to bring the original claim). This Court finds no
example of the instant litigation interfering with Department of Justice’s expertise.
Third, plaintiff’s non-payment did not preclude the compilation of an adequate record for
this Court’s review. Defendant provided responsive documents on two separate occasions
without plaintiff’s payment and continued to supplement the record regarding the FOIA
exemptions it invoked throughout the litigation. See, e.g., Def.’s Supplement to the R. on its
Renewed Mot. Summ. J. and Mot. for Final J. in its Favor (continuing to provide documents and
Vaughn indices several years into litigation). Plaintiff’s non-payment did little to prevent the
record from being built throughout litigation.
4
See Def.’s Supplement to the R. on its Renewed Mot. Summ. J. and Mot. for Final J. in its Favor.
7
To conclude, this Court finds (1) plaintiff did not owe defendant any fees at the
commencement of this lawsuit under 28 C.F.R. § 16.11(d)(5), and (2) plaintiff’s non-payment
following defendant’s second release years into the litigation did not strip this Court of
jurisdiction, because the purposes of exhaustion were met and particular administrative scheme
was satisfied at the time plaintiff filed his complaint. Having established jurisdiction, this Court
will decide the remaining FOIA disputes on their merits.
IV. PREVIOUSLY WITHHELD DOCUMENTS
In response to Defendant’s Motion for Summary Judgment, this Court ordered defendant
to provide more information regarding why several documents were withheld under particular
FOIA exemptions. Having reviewed defendant’s Renewed Motion for Summary Judgment
further explaining its rationale, this Court returns to each of these documents.
a. Exemption 1
Exemption 1 protects matters that are: “(A) specifically authorized under criteria
established by an Executive order to be kept secret in the interest of national defense or foreign
policy and (B) are in fact properly classified pursuant to such Executive order[.]” 5 U.S.C.
§ 552(b)(1). Pursuant to Executive Order 13292, 68 Fed. Reg. 15,315 (Mar. 28, 2003),
information may be classified only if all of the following conditions are met:
(1) an original classification authority is classifying the information;
(2) the information is owned by, produced by or for, or is under the control of the
United States Government;
(3) the information falls within one of more of the categories of information listed
in section 1.4 of this order; and
(4) the original classification authority determines that the unauthorized
disclosure of the information reasonably could be expected to result in
damage to the national security, which includes defense against transnational
terrorism, and the original classification authority is able to identify or
describe the damage.
8
Exec. Order No. 13292 § 1.1(a). 5 The phrase “damage to the national security” means “harm to
the national defense or foreign relations of the United States from the unauthorized disclosure of
information, taking into consideration such aspects of the information as the sensitivity, value,
utility, and provenance of that information.” Exec. Order. No. 13292 § 6.1(j). Information may
be classified either at the “top secret,” “secret,” or “confidential” level, id. § 1.2(a), and such
classified information must fall within one of the following categories:
(a) military plans, weapons systems, or operations;
(b) foreign government information;
(c) intelligence activities (including special activities), intelligence sources or
methods, or cryptology;
(d) foreign relations or foreign activities of the United States, including
confidential sources;
(e) scientific, technological, or economic matters relating to the national security,
which includes defense against transnational terrorism;
(f) United States Government programs for safeguarding nuclear materials or
facilities;
(g) vulnerabilities or capabilities of systems, installations, infrastructures,
projects, plans, or protection services relating to the national security, which
includes defense against transnational terrorism; or
(h) weapons of mass destruction.
Id. § 1.4.
i. Air Force Document Number One
Defendant withholds pursuant to Exemption 1 Air Force “Document Number One,” an
“intelligence report regarding the overseas location and activities of a particular fugitive from
justice.” Decl. of Michael L. Bietsch (“Bietsch Decl.”) ¶ 3. The report satisfies subsection (A)
of 5 U.S.C. § 552(b)(1) because it falls under Exec. Order No. 13292 § 1.4(c), which allows for
classification of “intelligence activities (including special activities), intelligence sources or
methods, or cryptology.” The intelligence report defendant withheld contains “specific
information provided by a source, and, if disclosed, reasonably could be expected to reveal the
5
Exec. Order 13292 further amends Exec. Order No. 12958, 60 Fed. Reg. 19,825 (Apr. 20, 1995), as amended.
9
identity of the contributing source.” Bietsch Decl. ¶ 8. This satisfies § 552(b)(1)(B) because the
document was properly classified as an intelligence document. In light of defendant’s
explanation and plaintiff’s failure to provide any legal objection, this Court finds that defendant
properly withholds Air Force Document Number One under Exemption 1.
Defendant argues, “redaction and/or segregation would serve to protect the identity of the
source.” 6 Pl.’s Opp. at 9. It is true that “reasonably segregable” portions of withheld documents
must be disclosed unless they are “inextricably intertwined with exempt portions.” Mead Data
Cent., 566 F.2d at 260. However, defendant asserts that exemption 1 protects more than just a
source’s identity. Def.’s Reply in Support of Renewed Mot. Summ. J. (“Def.’s Reply”) at 5.
The document is classified at the Secret level and contains foreign intelligence sources and
information. Id. Since it has been properly withheld under exemption 1, defendant argues that
the entirety of the document may be withheld. See Halperin v. CIA, 629 F.2d 144, 148 (D.C.
Cir. 1980) (holding that if agencies’ declarations were made in good faith, it was not the place of
the court “to conduct a detailed inquiry to decide whether it agrees” with them). Seeing no
evidence of bad faith, the Court will defer to defendant’s opinion about segregability and hold
that the entire document may be withheld.
b. Exemption 3
Exemption 3 covers records that are
specifically exempted from disclosure by statute . . ., provided that such statute
(A) requires that the matters be withheld from the public in such a manner as to
leave no discretion on the issue, or (B) establishes particular criteria for
withholding or refers to particular types of matters to be withheld.
6
In the Court’s original Opinion, it noted that it would defer “consideration of segregability until such time as it
receives further briefing” on the matters it addressed. Mem. Op. at 56 n.29. The additional briefing by both plaintiff
and defendant on the remaining documents and issue of segregability are adequate for the Court to now make a
determination.
10
5 U.S.C. § 552(b)(3). When an agency invokes Exemption 3, it must submit affidavits that
provide “the kind of detailed, scrupulous description [of the withheld documents] that enables a
District Court judge to perform a de novo review.” Church of Scientology of Cal., Inc. v. Turner,
662 F.2d 784, 786 (D.C. Cir. 1980). Though the affidavits need not contain factual descriptions
the public disclosure of which would endanger the agency’s mission, Vaughn v. Rosen, 484 F.2d
820, 826–27 (D.C. Cir. 1973), neither can they be vague or conclusory. Church of Scientology,
662 F.2d at 787. This Court seeks to balance the inherent tension between the public’s interest in
government goings-on with the protection of an agency’s legitimate need for privacy. As in
Vaughn, this Court relies on the agency to help strike the balance by providing an appropriately
detailed affidavit. See Vaughn, 484 F.2d at 826–27.
i. FBIHQ Main File 245-HQ-657
“Title III of the Omnibus Crime Control and Safe Streets Act of 1968 . . . ‘falls squarely
within the scope’ of Exemption 3.” Davis v. DOJ, 968 F.2d 1276, 1280–81 (D.C. Cir. 1992)
(quoting Lam Lek Chong v. DEA, 929 F.2d 729, 733–34 (D.C. Cir. 1991)). In response to the
withholding of FBI documents pursuant to Title III, this Court wrote, “FBIHQ’s declaration is
incomplete . . . as it neither explains that it had no discretion on the decision to withhold this
information nor sets forth the particular criteria in reaching its decision to withhold the wiretap
information in full.” Mem. Op. [41] at 28–29. In its latest pleadings, defendant reiterates that
disclosure of the FBI wiretap records is barred by Title III of 18 U.S.C. §§ 2510–20. Def.’s
Renewed Mot. Summ. J. at 7; 5th Hardy Decl. ¶¶ 5–6. This time, however, defendant specified
that the information pertained to “the identities of the individuals targeted for interception” and
“the physical location of the electronic microphone surveillance, the participants of some of the
intercepted conversations, and the summarized content of some of the intercepted
11
conversations.” 5th Hardy Decl. ¶ 6. This description makes it clear that Title III applies. See
18 U.S.C. § 2511(1)(c) (barring the disclosure of wiretaps). Defendant’s more detailed
description satisfies the its burden regarding Exemption 3.
However, plaintiff cites Cottone v. Reno, 193 F.3d 550 (D.C. Cir. 1990) in support of his
argument that “the applicable case law does allow for release of Title III wiretap information.”
Pl.’s Opp. at 10. However, Cottone does not control this case. Cottone focused on the public-
domain doctrine, which the court characterized as “an important, albeit narrow exception” to the
general premise that Title III information is not subject to disclosure. Cottone, 193 F.3d at 553–
54. “Under our public-domain doctrine, materials normally immunized from disclosure under
FOIA lose their protective cloak once disclosed and preserved in a permanent public record.” Id.
at 554. Unlike the wiretaps in Cottone, which were played in open court, plaintiff presented no
evidence in this case that the wiretaps in question have ever been publically disclosed. Because
plaintiff has not met his burden of affirmatively showing disclosure, Cottone does not support
the disclosure of these documents protected by Title III. See Davis, 968 F.2d at 1280 (holding
that documents could be withheld unless the plaintiff clearly showed that they were in the public
domain). This Court holds that Exemption 3 is properly invoked regarding FBIHQ Main File
245-HQ-657.
c. Exemption 5
Exemption 5 protects from disclosure “inter-agency or intra-agency memorand[a] or
letters which would not be available by law to a party other than an agency in litigation with the
agency.” 5 U.S.C. § 552(b)(5). “[T]he parameters of Exemption 5 are determined by reference
to the protections available to litigants in civil discovery; if material is not ‘available’ in
discovery, it may be withheld from FOIA requesters.” Burka v. U.S. Dep’t of Health & Human
12
Servs., 87 F.3d 508, 516 (D.C. Cir. 1996); see also NLRB. v. Sears, Roebuck & Co., 421 U.S.
132, 148 (1975).
The deliberative process privilege “shields only government ‘materials which are both
predecisional and deliberative.’” Tax Analysts v. IRS, 117 F.3d 607, 616 (D.C. Cir. 1997)
(quoting Wolfe v. Dep’t of Health & Human Servs., 839 F.2d 768, 774 (D.C. Cir. 1988) (en
banc)). To show that a document is predicisional, the agency need not identify a specific final
agency decision; it is sufficient to establish “what deliberative process is involved, and the role
played by the documents at issue in the course of that process.” Heggestad v. DOJ, 182 F. Supp.
2d 1, 7 (D.D.C. 2000) (quoting Coastal States Gas Corp. v. Dep’t of Energy, 617 F.2d 854, 868
(D.C. Cir. 1980)). A document is “deliberative” if it “makes recommendations or expresses
opinions on legal or policy matters.” Vaughn, 484 F.2d at 1143–44. The deliberative process
privilege is thought to “prevent injury to the quality of agency decisions.” Sears, Robuck & Co.,
421 U.S. at 151.
i. State Department Document F27A
Defendant invokes Exemption 5 regarding “draft telegrams in document F27A [that]
contain the Bridgetown Embassy’s recommendations to the DEA regarding arrangements for
plaintiff’s extradition.” Def.’s Renewed Mot. Summ. J. at 5; 2nd Declaration of Margaret P.
Grafeld (“Grafeld 2nd Decl.”) ¶ 4. Without legal objection from plaintiff, this explanation
satisfies the requirement of Exemption 5. It was predecisional because it was written prior to
plaintiff’s extradition, see Grafeld 2nd Decl. ¶ 4, and it was deliberative because it “makes
recommendations or expresses opinions on legal or policy matters,” namely whether and how to
extradite plaintiff to the United States. Grafeld 2nd Decl. ¶ 7. Defendant properly invokes
Exemption 5 regarding Document F27A.
13
d. Exemption 7
Exemption 7 protects from disclosure “records or information compiled for law
enforcement purposes,” but only to the extent that disclosure of such records would cause an
enumerated harm listed in Exemption 7’s subsections. 5 U.S.C. § 552(b)(7); see Abramson, 456
U.S. at 622. In assessing whether records are compiled for law enforcement purposes, the “focus
is on how and under what circumstances the requested files were compiled, and whether the files
sought relate[] to anything that can fairly be characterized as an enforcement proceeding.”
Jefferson v. DOJ, 284 F.3d 172, 176–77 (D.C. Cir. 2002) (citations and internal quotations
omitted). The connection between an individual and potential violation of federal law or security
risk must be “based on information sufficient to support at least a ‘colorable claim’ of
rationality.” King v. DOJ, 802 F.2d 210, 229 (D.C. Cir. 1987).
e. Exemption 7(C)
Exemption 7(C) protects from disclosure information in law enforcement records that
“could reasonably be expected to constitute an unwarranted invasion of personal privacy.”
5 U.S.C. § 552(b)(7)(C).
i. State Department Documents
In the instant case, defendant asserts Exemption 7(C) as a basis for its non-disclosure of
forty State Department documents. 7 Mem. Op. [41] at 41–42. The withholder must first satisfy
the threshold issue of whether the document was created for law enforcement purposes. In its
initial Motion for Summary Judgment, defendant did not cross this threshold, and this Court
requested a more in-depth explanation of the documents’ creation. Mem. Op. at 42. After
7
See Grafeld 1st Decl. (withholding F1, F2, F10, F10A, F11, F12, F13, F14, F18, F19, F20, F21, F22, F26, F28,
F44, F29, F30, F41, F45, F24, F36, F37, F47, F50, F51, F8, F31, F34, F39, F40, F42, F43, F32, F23, F25, F35, F52,
F27A, and F48). Defendant also invokes Exemption 6 for the same documents. Grafeld 2nd Decl. ¶ 6. However,
because this Court finds that Exemption 7(C) is appropriately invoked, it will not analyze Exemption 6.
14
reviewing its new submissions, this Court is satisfied with defendant’s more thorough evidence
that the documents were created for the purpose of law enforcement. See Grafeld 2nd Decl. ¶¶
6–8 (explaining that the documents were created for the purpose of facilitating plaintiff’s
extradition, which is a law enforcement proceeding).
Next, defendant must prove that an unwarranted invasion of privacy would occur if the
documents were disclosed. “The myriad of considerations involved in the Exemption 7(C)
balance defy rigid compartmentalization;” therefore, bright line rules are discouraged, and courts
must identify the specific circumstances relevant to each case. Stern v. FBI, 737 F.2d 84, 91
(D.C. Cir. 1984). In determining whether Exemption 7(C) applies to particular material, this
Court will balance the privacy interest of individuals mentioned in the records against the public
interest in disclosure. Beck v. DOJ, 997 F.2d 1489, 1491 (D.C. Cir. 1993); see also DOJ v.
Reporters Comm. for Freedom of the Press, 489 U.S 749, 762 (1989). Individuals have a
“strong interest in not being associated unwarrantedly with alleged criminal activity.” Stern, 737
F.2d at 91–92. “[T]he only public interest relevant for purposes of Exemption 7(C) is one that
focuses on ‘the citizens’ right to be informed about what their government is up to.’” Davis v.
DOJ, 968 F.2d 1276, 1282 (D.C. Cir. 1992) (quoting Reporters Comm., 489 U.S. at 773). “Even
if a particular privacy interest is minor, nondisclosure is justified where . . . the public interest in
disclosure is virtually nonexistent.” Id.
In this case, defendant persuasively explains the privacy concerns of those whose names
were redacted. First, defendant properly disclosed the names of the Ambassador and Deputy
Chief of Mission, redacting only lower-level employees’ names. See Stern, 737 F.2d at 92
(suggesting that federal employees’ privacy interests and rank within the agency are often
inversely proportional, and that high-ranking officials should more often be disclosed). But see
15
Southam News v. INS, 674 F. Supp. 881, 888 (D.D.C. 1987) (“[N]ondisclosure of the identities
of clerical personnel or other federal government employees who handled administrative tasks
related to official investigations cannot be predicated on exemption (b)(7)(C).”). Given this
apparent discrepancy in how much privacy lower-level employees can expect, this Court will
follow the Circuit’s lead and attribute them a greater privacy interest than their superiors.
Defendant asserts that the non-disclosed employees could face harassment and retaliation
if their names are disclosed. Grafeld 2nd Decl. ¶¶ 50, 57, 61, 67, 80, 84, 91, 98. Most of these
employees are “drafting and clearing officials.” Id. Because these are lower-level employees,
this Court recognizes their elevated privacy concerns. The risk of harassment and retaliation, in
light of the violent crimes being investigated, constitutes a legitimate privacy interest that is not
outweighed by any legitimate public interest in disclosure. See Stone v. FBI, 727 F. Supp. 662,
664, 666 (D.D.C. 1990) (finding that even decades-old grudges toward FBI officials can pose an
unreasonable risk of harassment if names were disclosed, and considering the public interest in
the names of lower-level employees to be minimal). In light of the employees’ privacy interests,
the violent nature of the crimes being investigated, and the lack of legitimate public interest in
the names of clerical employees, defendant properly withholds the State Department documents
under Exemption 7(C).
Defendant gives a separate explanation for its non-disclosure of document F12. The
detailed explanation of the document’s creation—as part of a telegram discussing plaintiff’s
extradition—is sufficient for this Court to hold that it was created for law enforcement purposes.
See Grafeld 2nd Decl. ¶ 8. Next, defendant demonstrates why disclosing the document would be
an unreasonable invasion of privacy, giving the same persuasive arguments as for the documents
discussed above. Id. Potential harm to the individuals whose names are withheld greatly
16
outweighs the nearly nonexistent public interest in disclosure. Therefore, this Court finds that
defendant properly withholds document F12 under Exemption 7(C).
f. Exemption 7(D)
Exemption 7(D) protects from disclosure those records or information compiled for law
enforcement purposes that
could reasonably be expected to disclose the identity of a confidential source . . .
[who] furnished information on a confidential basis, and, in the case of a record or
information compiled by a criminal law enforcement authority in the course of a
criminal investigation . . ., information furnished by a confidential source.
5 U.S.C. § 552(b)(7)(D). There is no assumption that a source is confidential for purposes of
Exemption 7(D) whenever a source provides information to a law enforcement agency in the
course of a criminal investigation. See DOJ v. Landano, 508 U.S. 165, 181 (1993). Rather, a
source’s confidentiality is determined on a case-by-case basis. Id. at 179–80. “A source is
confidential within the meaning of 7(D) if the source provided information under an express
assurance of confidentiality or in circumstances from which such an assurance could reasonably
be inferred.” Williams v. FBI, 69 F.3d 1155, 1159 (D.C. Cir. 1995) (citing Landano, 508 U.S. at
172).
Confidentiality can be established expressly or impliedly. Regardless of which type of
confidentiality is asserted, the focus should always be on whether the source of the information
spoke with the understanding of confidentiality, not whether the document is generally thought to
be confidential. Landano, 508 U.S. at 172. To claim express confidentiality, an agency must
offer “probative evidence that the source did in fact receive an express grant of confidentiality.”
Campbell v. DOJ, 164 F.3d 20, 34 (D.C. Cir. 1998) (quoting Davin v. DOJ, 60 F.3d 1043, 1061
(3d Cir. 1995)). This evidence can take many different forms, but it must “permit meaningful
17
judicial review by providing a sufficiently detailed explanation” for the invocation of Exemption
7(D). Id.
While express confidentiality is relatively easy to spot, implied confidentiality warrants a
more nuanced analysis. “A source is confidential within the meaning of Exemption 7(D) if the
source ‘provided information . . . in circumstances from which such an assurance [of
confidentiality] could be reasonably inferred.’” Landano, 508 U.S. at 172 (quoting S. CONF.
REP. 93-1200, 1974 U.S.C.C.A.N. 6285, 6291). Implied confidentiality exists when “the source
furnished information with the understanding that the FBI would not divulge the communication
except to the extent the Bureau thought necessary for law enforcement purposes.” Id. at 174.
While Landano focused particularly on the FBI, this Court finds its principles to be applicable to
all agencies engaged in law enforcement, including, in this case, the State Department. See
Grafeld 2nd Decl. ¶¶ 6–7 (explaining the law enforcement basis of the State Department’s work
in plaintiff’s extradition); see also Campbell, 164 F.3d at 34 (“Exemption 7(D) covers ‘records
or information compiled by criminal law enforcement authorities . . . .’” (quoting Computer
Prof’ls for Social Responsibility v. U.S. Secret Serv., 72 F.3d 897, 905 (D.C. Cir. 1996)).
This Court has stated that “[t]he nature of the crime investigated and informant’s relation
to it are the most important factors in determining whether implied confidentiality exists.”
Amuso v. DOJ, 600 F. Supp. 2d 78, 100 (D.D.C. 2009). The “violence and risk of retaliation
attendant to drug trafficking warrant an implied grant of confidentiality to a source who provides
information to investigators.” Lasko v. DOJ, 684 F. Supp. 2d 120, 134 (D.D.C. 2010). With
these principles in mind, this Court turns to the facts at hand.
18
i. State Department Documents
Defendant withholds ten State Department documents under Exemption 7(D). 8 This
Court determined that more evidence was needed regarding whether the documents were created
for law enforcement purposes. See Mem. Op. at 42. In response, defendant wrote, “The process
of international extradition . . . is an important law enforcement function. The Department of
State is a principal actor in the process. . . . All of the documents in which the (b)(7)(C) and (D)
exemptions have been asserted related to the extradition of Charles Miller to the United States.”
Grafeld 2nd Decl. ¶¶ 6–7. With its supplemental information, defendant has crossed the
Exemption 7 threshold by adequately describing the law enforcement purpose of the documents’
creation.
Defendant is also required to demonstrate the confidentiality of its sources. For all
withheld documents, the source provided information related to plaintiff’s drug trafficking, and
for some documents, there was an indication of fear of retaliation. See Grafeld 1st Decl. ¶¶ 58,
84, 92, 98. Regardless of whether an express fear of retaliation was documented, this Court will
uphold its precedent of implying confidentiality to sources who provide information about
violent crimes. See, e.g., Lasko, 684 F. Supp. 2d at 134; see also Fischer v. DOJ, 596 F. Supp.
2d 34, 49 (D.D.C. 2009) (implying confidentiality to cooperative witnesses in a narcotics
trafficking case). With no legal objection from plaintiff, this Court finds that defendant properly
withholds the ten State Department documents under Exemption 7(D).
ii. FBIHQ File 163A-BB-610
Defendant withholds documents from file 163A-BB-610 under Exemption 7(D). Hardy
5th Decl. ¶ 7. The FBI created the documents for a criminal drug investigation. Id. This
8
See Grafeld 2nd Decl. ¶ 5; Grafeld 1st Decl. ¶¶ 58, 85, 92, 98 (withholding documents F29, F30, F41, F45, F32,
F23, F35, F52, F27A, F48).
19
satisfies the threshold requirement that the document be created for the purpose of law
enforcement. Next, defendant explains that the FBI gave express assurances of confidentiality to
the sources in the withheld documents. Id. This bare assertion, without evidence of such an
express agreement, gives this Court pause. However, as in Fischer, this Court will infer
confidentiality due to the nature of the FBI’s relationship to foreign law enforcement authorities.
See id. at 49 (noting the “necessarily close cooperation between the FBI and foreign law
enforcement authorities” to support its inference of confidentiality). Because defendant satisfied
both prongs of Exemption 7(D) regarding document 163A-BB-610, it is properly withheld.
Plaintiff asserts that “this Court may still order release of redacted portions of the
material.” Pl.’s Opp. at 12. As noted earlier, the Court will defer to an agency’s good faith
determination regarding segregability. Halperin, 629 F.2d at 148. Defendant argues that
exemption 7(D) “does not require a balancing of public and private interests;” rather, “once the
agency receives information from a confidential source during the course of a legitimate criminal
investigation . . . all such information obtained from the confidential source receives protection.”
Def.’s Reply at 7 (quoting Parker v. DOJ, 934 F.2d 375, 380 (D.C. Cir. 1991)) (internal
quotations and citations omitted). Given this explanation, the Court concludes that the FBI
documents held under exemption 7(D) are not segregable and may be withheld in their entirety.
V. DEFENDANT’S SUPPLEMENT TO THE RECORD
Defendant recently completed the record with DEA disclosures provided to plaintiff on
May 12, 2012, and withholding some documents pursuant to Privacy Act Exemption j(2) and
FOIA Exemptions 7(C), 7(D), 7(E), and 7(F). 9 This Court first turns to the newly invoked
exemptions.
9
See Def.’s Supplement to the R. on its Renewed Mot. Summ. J. and Mot. for Final J. in its Favor, Ex. X (Def.’s
letter to Pl.).
20
a. Exemption 7(E)
In light of Milner v. Dep’t of the Navy, 131 S. Ct. 1259 (2011), defendant no longer relies
on the “High 2” Exemption for “multi-digit numbers assigned to drug violators and suspected
drug violators known to DEA and entities that are of investigative interest.” 10 Supp. Little Decl.
¶ 9. Instead, defendant now relies on Exemption 7(E) to protect both these numbers and United
States Immigration and Customs Enforcement (“ICE”) TECS numbers. Id. ¶¶ 14–15.
Exemption 7(E) protects from disclosure law enforcement records “to the extent that the
production of such law enforcement records or information . . . would disclose techniques and
procedures for law enforcement investigations or prosecutions, or would disclose guidelines for
law enforcement investigations or prosecutions if such disclosure could reasonably be expected
to risk circumvention of the law.” 5 U.S.C. § 552(b)(7)(E). See Morley v. CIA, 508 F.3d 1108,
1129 (D.C. Cir. 2007) (refusing to be overly formalistic and finding that withholding of
documents that would release insight into agencies’ investigatory or procedural techniques is
also proper).
i. NADDIS Numbers
As with all Exemption 7 provisions, defendant must first prove that the NADDIS
numbers were created for a law enforcement purpose. These numbers are “part of DEA’s
internal system of identifying information and individuals in furtherance of DEA’s enforcement
responsibilities.” Supp. Little Decl. ¶ 11. This Court finds no purpose in these numbers apart
from law enforcement. Therefore, the Exemption 7 threshold is crossed, and the analysis turns to
the enumerated harms in the second clause of § 552(b)(7)(E). Defendant claims that disclosure
of the NADDIS numbers, each of which are unique to one person, would allow sophisticated
10
Milner held that the “High 2” Exemption was invalid because it would allow the government to bypass the
Exemption 7 restrictions. The Court noted that the government still has many options for withholding documents
formerly withheld under “High 2,” particularly Exemptions 1 and 7. See Milner, 131 S. Ct. at 1270-71.
21
criminals to “avoid apprehension” and “be aware of how to respond in different situations where
detection and/or apprehension are imminent.” Id. ¶¶ 12–13. The numbers “reflect procedures
prescribed by the DEA Agents Manual,” which, according to defendant, identify law
enforcement techniques. Id. ¶ 11. Because the NADDIS numbers were created for a law
enforcement purpose and their disclosure may disclose techniques and procedures for law
enforcement investigation, this Court finds that they are properly withheld under Exemption
7(E).
ii. TECS Numbers
Again, this Court must first determine if the TECS numbers were created for a law
enforcement purpose. Defendant stated that the numbers “relate to procedures concerning the
use of law enforcement resources and databases . . ., as well as TECS case program and access
codes . . . .” Supp. Little Decl. ¶ 14. As with the NADDIS numbers, there is no discernable
purpose for these numbers apart from law enforcement. As for the enumerated harms of
Exemption 7(E), defendant asserts that disclosing TECS numbers would expose a law
enforcement technique, promote circumvention of the law by allowing criminals to conceal their
activity, or allow fraudulent access to DEA’s databases. Id. ¶¶ 14–15. This Court finds any of
these possibilities to be reasonably expected and therefore upholds defendant’s use of Exemption
7(E) regarding the TECS numbers.
b. Remaining Exemptions
Defendant withholds other information under Exemptions 7(C), 7(D), and 7(F). Supp.
Little Decl. ¶ 8. Defendant referred to the April 18, 2007 Wassom Declaration for an explication
of its rationale, id., which this Court has already upheld. See Mem. Op. [41] at 45–46, 52, n. 25
(also finding that a 7(F) analysis was unnecessary due to the applicability of the other
22
exemptions). Plaintiff brings forth no new arguments rebutting this Court’s previous decision in
favor of DEA. Having already been satisfied with defendant’s rationale on these matters, this
Court reiterates that these Exemptions were properly invoked.
VI. CONCLUSION
This Court concludes that there is no genuine issue of material fact remaining and that
summary judgment is proper. Specifically, this Court finds that: (1) plaintiff effectively
exhausted his remedies, (2) Air Force Document Number One was properly withheld under
Exemption 1, (3) FBIHQ Main File 245-HQ-657 was properly withheld under Exemption 3, (4)
State Department Document F72A was properly withheld under Exemption 5, (5) forty State
Department documents were properly withheld under Exemption 7(C), (6) ten State Department
documents and FBIHQ File 163A-BB-160 were properly withheld under Exemption 7(D), (7)
NADDIS numbers and TECS numbers were properly withheld under Exemption 7(E), and (8)
the remaining DEA exemptions continue to be valid under this Court’s previous analysis. For
the foregoing reasons, Defendant’s Renewed Motion [45] for Summary Judgment is hereby
GRANTED.
A separate order consistent with this Memorandum Opinion shall issue this date.
Signed by Royce C. Lamberth, Chief Judge, on July 3, 2012.
23
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01-03-2023
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04-03-2014
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https://www.courtlistener.com/api/rest/v3/opinions/2662212/
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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
CHARLES MAXWELL,
Petitioner,
v. Misc. No. 11-684 (JDB)
UNITED STATES and
INTERNAL REVENUE SERVICE,
Respondents.
MEMORANDUM OPINION & ORDER
Petitioner Charles Maxwell sues the United States and the Internal Revenue Service
(IRS) to prevent the IRS from accessing certain of his bank records in an investigation of his tax
liabilities. Now before the Court are Maxwell’s petition to quash a summons that IRS Revenue
Agent Ernest Schultz issued to his bank in November 2011, the government’s motion to dismiss
that petition, and petitioner’s motion to vacate or amend the court’s order denying him leave to
file under seal. For the reasons discussed below, the Court will deny both of petitioner’s requests
and will grant the government’s motion to dismiss.
I. Background
On November 22, 2011, the IRS issued an administrative summons to U.S. Bank, N.A. to
turn over certain bank records in Maxwell’s name. See Pet’r’s Pet. to Quash Summons (“Pet.”)
(Dec. 21, 2011) [Docket Entry 1] at 6. Maxwell, a notorious tax protester in his hometown of
Nashville, has previously filed a number of unmeritorious petitions to quash IRS summonses in
the Middle District of Tennessee. See Mem. of Law in Support of U.S.’s Mot. Dismiss Pet.
1
(“Resp’t’s Mem.”) (Jan. 18, 2012) [Docket Entry 6-1] at 1 & n.1. A judge of that district
ultimately penalized petitioner with sanctions for his repeated filing of frivolous claims. See
Maxwell v. IRS, No. 3:09-0308, 2009 WL 1681493, at *3 (M.D. Tenn. May 19, 2009).
In December 2011, Maxwell filed a petition to quash the IRS summons along with a
“Declaration by Affidavit,” Pet. at 1-4, 5, in response to which he was granted leave to proceed
in forma pauperis. Order Granting Mot. Leave to Proceed In Forma Pauperis (“Order”) (filed
Dec. 21, 2011) [Docket Entry 3]. The government now moves to dismiss Maxwell’s petition on
grounds that the Court lacks subject matter jurisdiction over it. U.S.’s Mot. to Dismiss Pet.
(“Resp’t’s Mot.”) (Jan. 18, 2012) [Docket Entry 6] at 1. In addition to asserting his claim for the
IRS summons to be quashed, Maxwell seeks leave to file his financial affidavit under seal. See
Pet’r’s Resp. in Opp’n to Resp’t’s Mot. Dismiss (“Pet’r’s Resp.”) (Feb. 7, 2012) [Docket Entry
7]; Pet’r’s Mot. to Vacate or Amend Order Denying Leave to File Under Seal (“Pet’r’s Mot.”)
(Jan. 10, 2012) [Docket Entry 5] at 1-4.
II. Standard of Review
As an initial matter, the Court recognizes that complaints submitted by pro se plaintiffs
are reviewed by the court under “less stringent standards than formal pleadings drafted by
lawyers.” Haines v. Kerner, 404 U.S. 519, 520 (1972). However, a pro se complaint must still
plead “factual matter that permits the court to infer more than the mere possibility of
misconduct.” Jones v. Horne, 634 F.3d 588, 596 (D.C. Cir. 2011) (internal citations omitted).
In adjudicating a motion to dismiss under Federal Rule of Civil Procedure 12(b)(1), “the
allegations of the complaint should be construed favorably to the pleader.” Scheuer v. Rhodes,
416 U.S. 232, 236 (1974); see Leatherman v. Tarrant Cnty. Narcotics & Coordination Unit, 507
U.S. 163, 164 (1993); Phillips v. Bureau of Prisons, 591 F.2d 966, 968 (D.C. Cir. 1979).
2
Therefore, the factual allegations in the complaint must be presumed true, and the petitioner must
be given every favorable inference that may be drawn from them. Scheuer, 416 U.S. at 236;
Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C. Cir. 2000). However, the court
need not accept as true “a legal conclusion couched as a factual allegation,” nor inferences that
are unsupported by the facts set out in the complaint. Trudeau v. Fed. Trade Comm’n, 456 F.3d
178, 193 (D.C. Cir. 2006) (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986)).
The party seeking to invoke a federal court’s jurisdiction in such a case (petitioner here)
bears the burden of establishing that the court has jurisdiction. See U.S. Ecology, Inc. v. U.S.
Dep’t of Interior, 231 F.3d 20, 24 (D.C. Cir. 2000). “‘[P]laintiff’s factual allegations in the
complaint . . . will bear close[] scrutiny in resolving a 12(b)(1) motion.’” Grand Lodge of
Fraternal Order of Police v. Ashcroft, 185 F. Supp. 2d 9, 13-14 (D.D.C. 2001) (quoting 5A
Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1350 (2d ed. 1987)).
As long as the court accepts the factual allegations in the complaint as true, it may also consider
other material in determining whether it has jurisdiction. See Jerome Stevens Pharms., Inc. v.
FDA, 402 F. 3d 1249, 1253-54 (D.C. Cir. 2005); EEOC v. St. Francis Xavier Parochial Sch., 117
F.3d 621, 624-25 n.3 (D.C. Cir. 1997); see also Bowe-Connor v. Shinseki, No. 10-2032, 2012
WL 601025 (D.D.C. Feb. 24, 2012).
II. Motion to Dismiss
The United States moves to dismiss Maxwell’s petition on the ground that this Court
lacks subject matter jurisdiction to adjudicate his claim. The Court agrees.
First, this Court has jurisdiction over a suit brought against the United States only to the
extent that the government has itself waived sovereign immunity with respect to the claim at
issue. United States v. White Mountain Apache Tribe, 537 U.S. 465, 472 (2003); see also Gray v.
3
Bell, 712 F.2d 490, 507 (D.C. Cir. 1983). Consequently, the “terms of its consent to be sued in
any court determine that court’s jurisdiction to entertain the suit.” United States v. Dalm, 494
U.S. 596, 608 (1990). Therefore, petitioner’s claims are justiciable only if they comply with
Section 7609 of the Internal Revenue Code (IRC) – which specifies when a party may challenge
the government’s authority to issue a third-party summons to a record-keeper. See Bell v. United
States, 521 F. Supp. 2d 456, 458 (D. Md. 2007), aff’d, 275 F. App’x 221 (4th Cir. 2008).
Section 7609(b)(2) of the IRC specifies that any person entitled to notice of a summons
may “begin a proceeding to quash such summons not later than the 20th day after the day such
notice is given.” IRC § 7609(b)(2). The IRS gave notice of the summons to the third party in this
case, Maxwell, on November 22, 2011. Decl. of Revenue Agent Ernest Schultz (Jan. 18, 2010)
[Docket Entry 6-2], ¶ 8. The twentieth day after that date was December 12, 2011; however,
Maxwell did not file his petition until December 21, 2011. Since he missed the statutory deadline
for instituting this proceeding, the conditions of the waiver of sovereign immunity have not been
met, and this Court must dismiss the petition for lack of subject matter jurisdiction. 1 See Clay v.
United States, 199 F.3d 876, 879 (6th Cir. 1999) (finding that the court lacks jurisdiction over a
motion to quash that is filed more than twenty days after notice is sent or directly served to the
plaintiff) (citing Faber v. United States, 921 F.2d 1118, 1119-20 (10th Cir. 1990); Stringer v.
United States, 776 F.2d 274, 275 (11th Cir. 1985)).
Even if Maxwell’s petition were timely, this Court would still lack jurisdiction over this
case. Section 7609 of the IRC specifies that jurisdiction to evaluate a proceeding brought under
subsection (b)(2) – such as that intended by petitioner – exists in the federal district court “for the
district within which the person to be summoned resides or is found.” IRC § 7609(h)(1). Hence,
1 Service upon petitioner of a copy of the summons is not governed by Federal Rule of Civil
Procedure 4(l)(2) (service “outside the United States”), so petitioner’s claim that the twenty days
in which a petition to quash may be filed was not tolled, Pet’r’s Resp. at 5-6, lacks merit.
4
a district court lacks jurisdiction over a petition to quash an IRS summons that is filed in a
district in which the entity receiving the summons neither resides nor is found. McCammon v.
United States, 569 F. Supp. 2d 78, 81 (D.D.C. 2008). That is precisely the situation here:
petitioner has filed his petition in this judicial district, whereas the record-keeper addressed by
the summons is a bank based in Minnesota that does not even have a branch office in the District
of Columbia. See Pet.; Decl. of Revenue Agent Ernest Schultz at ¶¶ 5-7.
Petitioner’s effort to prove that his bank is not within any judicial district of the United
States (so that the territorial lack of jurisdiction argued by the United States does not apply),
Pet’r’s Resp. at 4-5, is unavailing. U.S. Bank, N.A. is headquartered in Minneapolis, which is
located in the fourth judicial district of the state of Minnesota. MINNESOTA JUDICIAL BRANCH:
4TH DISTRICT COURTS, http://www.mncourts.gov/district/4/?page=354 (last visited June 29,
2012). These facts preclude this Court’s jurisdiction over the summons.
III. Petition to Quash IRS Summons
Even if this Court had appropriate jurisdiction, Maxwell’s petition to quash the IRS
summons at issue would fail. Maxwell makes a number of challenges to the IRS summons issued
to his bank, U.S. Bank, N.A. He alleges that the summons: (1) does not properly identify him as
the party to be investigated; (2) does not identify the party authorized to issue it; and (3) is
unauthorized as a matter of law. Pet. ¶¶ 14-17. Each of these arguments, similar to ones
previously dismissed by the Tennessee federal court, is without merit. See Maxwell v. IRS, No.
3:08-MC-0113, 2009 WL 920533, at *5 (M.D. Tenn. Apr. 1, 2009).
First, Maxwell asserts that he is not a citizen of the United States and has no “lawfully
assigned” Social Security number. Pet. ¶¶ 3, 6-7, 11. He claims the summons identifies “[b]y a
number . . . another other than [him],” presumably since he has claimed to have renounced his
5
Social Security number. See Pet. ¶ 14; Maxwell, 2009 WL 920533, at *2. However, the summons
can relate only to Maxwell's taxes, as it states it is “[i]n the matter of Charles Philip Maxwell”
and gives Maxwell's Social Security number. Maxwell, 2009 WL 920533, at *2; Pet. at 6.
Second, Maxwell argues that the summons does not identify its authorized source. Pet. ¶
15. Yet the summons issued to U.S. Bank, N.A. bears the IRS seal next to the word “Summons”
in large, bold type; the document also indicates that it is from the Commissioner of Internal
Revenue and is signed by Agent Schultz. Pet. at 6; see also Maxwell, 2009 WL 920533, at *1.
Third, Maxwell claims that there is no law or duty mandating that he is liable to pay an
individual income tax, so he is not subject to inquiry by officers or employees of the Treasury
Department pursuant to 26 U.S.C. § 7601(a). Pet. ¶¶ 16-17. But “the Supreme Court has
recognized that the [S]ixteenth [A]mendment authorizes a direct nonapportioned tax upon United
States citizens throughout the nation” and “efforts to argue otherwise have been sanctioned as
frivolous.” United States v. Collins, 920 F.2d 619, 629 (10th Cir. 1990) (citing Brushaber v.
Union Pac. R.R. Co., 240 U.S. 1, 12-19 (1916)).
Maxwell’s claim that the United States is not sovereign over him derives from a
distinction between “United States of America” and “The United States of America.” See Pet’r’s
Resp. at 1, 3. In effect, he claims that the former issued the summons, but he has pledged
allegiance only to the latter, concluding therefore that the summons has no effect on his records
and the IRC does not apply to him. Pet’r’s Resp. at 3. This argument is misguided, at the very
least. Maxwell, as a citizen residing in the United States, is subject to federal law. Courts
regularly reject arguments that one is a citizen of a state (in petitioner’s case, Tennessee) and
therefore not of the United States. See Maxwell, 2009 WL 920533, at *2 (citing Upton v. IRS,
104 F.3d 543, 545 (2d Cir. 1997); United States v. Hilgeford, 7 F.3d 1340, 1342 (7th Cir. 1993);
6
United States v. Jagim, 978 F.2d 1032, 1036 (8th Cir. 1992)).
As Judge Echols of the Middle District of Tennessee has explained, the IRS’s authority to
issue summons in a tax investigation is denoted in 26 U.S.C. § 7602(a)(2):
For the purpose of ascertaining the correctness of any return, making a return
where none has been made, determining the liability of any person for any
internal revenue tax or the liability . . . or collecting any such liability, the
Secretary is authorized . . . [t]o summon . . . any other person the Secretary may
deem proper, to appear . . . and to produce such books, papers, records, or other
data . . . as may be relevant or material to such inquiry.
Maxwell, 2009 WL 920533, at *3. Accordingly, Maxwell’s request that the Court report to the
Attorney General that Agent Schultz has committed a felony under 42 U.S.C. § 408 by issuing
the summons to his bank, see Pet. ¶ 18, does not withstand scrutiny. Finally, Maxwell’s other
claims similarly rely on misapplication of legal rules and documents. He misinterprets the
concept of self-determination, which, as highlighted by its appearance in a document submitted
to the United Nations, see Pet’r’s Resp. at 3-4, applies to international relations and not to the
relations of the U.S. government with its own people. Maxwell, who obtains the same benefits
from living in this country as does any other citizen, cannot choose not to have legal relations
with the government; that would lead to anarchy, which is certainly not what the Declaration of
Independence (to which he allegedly does subscribe, see Pet’r’s Resp. at 3-4) envisions.
IV. Denial of Leave to File Under Seal
Petitioner also moves to file his financial affidavit for proceeding in this case in forma
pauperis under seal. He claims this is his right under the Fifth Amendment, which bars self-
incrimination and ensures due process of law. Pet’r’s Mot. at 1.
Petitioner’s motion is unnecessary. He has already been granted court permission to
proceed in forma pauperis without prepayment of fees or costs. See Order. Since he already has
7
that status, he need not file any further affidavit; hence, there is no risk of self-incrimination.
Petitioner’s requested relief to vacate the denial and issue an order approving the filing of the
affidavit and declaration under seal will therefore be denied.
V. Conclusion
Upon consideration of [1] petitioner’s petition to quash the IRS summons for his bank
records, [6] respondent’s motion to dismiss the petition to quash the summons, [5] petitioner’s
motion for leave to file under seal, [7] petitioner’s response in opposition to respondent’s motion
to dismiss, and the entire record herein, and for the reasons discussed above, it is hereby
ORDERED that [1] petitioner’s petition to quash the IRS summons and [5] petitioner’s
motion for leave to file under seal are DENIED; it is further
ORDERED that [6] United States' motion to dismiss petition is GRANTED; and it is
further
ORDERED that the petition is DISMISSED.
/s/
JOHN D. BATES
United States District Judge
Dated: July 3, 2012
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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
IVAN FICKEN, :
:
Plaintiff, : Civil Action No.: 04-1132 (RMU)
:
v. : Re Document No.: 113
:
HILLARY RODHAM CLINTON, :
Secretary of State, :
:
Defendant. :
MEMORANDUM OPINION
GRANTING THE DEFENDANT’S MOTION FOR SUMMARY JUDGMENT
I. INTRODUCTION
The pro se plaintiff commenced this action against the Secretary of State based on his
non-selection for a position with the Foreign Service, and asserts various claims of employment
discrimination, including violations of the Age Discrimination in Employment Act (“ADEA”),
29 U.S.C. §§ 621 et seq. The court previously dismissed the bulk of the plaintiff’s claims,
including his disparate treatment claim. At this juncture, the only remaining claim is the
plaintiff’s disparate impact claim. More specifically, the plaintiff alleges that the defendant has
designed the oral portion of the Foreign Service Officer examination to favor younger
candidates, resulting in an adverse disparate impact on older candidates. Because a reasonable
juror could not conclude based on the evidence presented that the Foreign Service Officer
examination has a disproportionate adverse effect on older candidates, the court grants the
defendant’s motion.
II. FACTUAL AND PROCEDURAL BACKGROUND 1
In November 2000, the plaintiff applied to be a Foreign Service Officer with the
Department of State. Compl. ¶ 11. The initial step in the application process at that time required
applicants to pass the Foreign Service Written Exam (“FSWE”), which included both multiple-
choice and essay questions. Id. ¶ 10. Only those candidates that received a passing score on
both the multiple-choice and essay questions continued to the third stage of the hiring process:
the Oral Assessment. Id.
In 2000, the plaintiff, at the age of 57, first took the FSWE and failed. Id. ¶¶ 11, 16. At
the time, he believed that the sections “were timed extremely tightly” and was unable to
complete the exam. Id. ¶ 12. After taking the FSWE again in 2001, the plaintiff, at the age of
58, passed both the multiple-choice and essay portions and later underwent the Oral Assessment
in April 2002. Def.’s 1st Mot. for Summ. J., Ex. 2 ¶¶ 26.
The 2002 Oral Assessment included three modules: “the group exercise, the case
management study, and a structured interview.” Id., Ex. 3 ¶ 6. Candidates received the results
of the Oral Assessment during an exit interview. Id. ¶ 11. The passing score was 5.25 for each
module of the Oral Assessment. Id. ¶ 7. Any applicant who scored below the passing level was
dismissed and could not retake the Oral Assessment until the applicant had again passed the
written portion of the FSWE. Id., Ex. 8 at 4. The plaintiff received failing scores for each
module, and the defendant subsequently terminated the plaintiff’s application process. Id., Ex. 9.
In July 2004, the plaintiff filed the instant suit. See generally Compl. According to the
plaintiff, “the Oral Assessment is Age Discriminatory by design” because “[i]t was specifically
designed to cancel out any experience which an older person might have and . . . [the State
1
The background of this case is laid out in greater detail in the court’s previous Memorandum
Opinion. See Mem. Op. (Mar. 25, 2011) at 2-6. Those facts that are relevant here, however, are
repeated for convenience.
2
Department refuses] to accept any verification of competence or experience which was not
specifically requested by their paperwork or delved into by their questions during the structured
interview phase of the Oral Assessment.” Id. ¶ 51; see also Pl.’s Opp’n to Def.’s 1st Mot. for
Summ. J. at 29.
On June 30, 2010, the defendant moved for summary judgment as to the plaintiff’s
disparate treatment claim. See generally Def.’s 1st Mot. for Summ. J. Although the court
granted the defendant’s motion with respect to the plaintiff’s disparate treatment claim, the court
noted that the plaintiff had also alleged a disparate impact claim. See Mem. Op. (Mar. 25, 2011)
at 2 n.1. This disparate impact claim was based on allegations that the Oral Assessment was
designed to have a disproportionate impact on older candidates. See Compl. ¶ 51. Because the
defendant’s motion failed to address the disparate impact claim, the court granted leave for
parties to file dispositive motions as this unaddressed claim. See Mem. Op. (Mar. 25, 2011) at 2
n.1.
The defendant has now filed a second motion for summary judgment to address the
plaintiff’s disparate impact claim. See generally Def.’s 2d Mot. for Summ. J. The plaintiff
opposes this motion.2 See generally Pl.’s Opp’n to Def.’s 2d Mot. for Summ. J. With that
motion now ripe for adjudication, the court turns to the parties’ arguments and the applicable
legal standards.
2
The plaintiff filed a “motion for permitting this case to proceed as an age discriminatory disparate
impact claim.” See generally Pl.’s Opp’n to Def.’s 2nd Mot. for Summ. J. It is clear, however,
that this filing was intended to respond to the defendant’s motion for summary judgment as to the
disparate impact claim. Through this filing, the plaintiff asks the court to allow his case “to
proceed to trial.” Id. at 22. As such, the court construes and treats the plaintiff’s “motion” as an
opposition to the defendant’s motion for summary judgment.
3
III. ANALYSIS
A. Legal Standard for a Motion for Summary Judgment
Summary judgment is appropriate when the pleadings and evidence show “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 also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986), cert.
denied, 484 U.S. 1066 (1988); Diamond v. Atwood, 43 F.3d 1538, 1540 (D.C. Cir. 1995), aff’d,
132 F.3d 1481 (1997). To determine which facts are “material,” a court must turn to the
substantive law on which each claim rests. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). A “genuine dispute” exists when the resolution of a material fact could establish an
element of a claim or defense and, therefore, affect the action’s outcome. Celotex, 477 U.S. at
322; Anderson, 477 U.S. at 248.
In ruling on a motion for summary judgment, the court must draw all justifiable
inferences in the nonmoving party’s favor and accept the nonmoving party’s evidence as true.
Anderson, 477 U.S. at 255. A nonmoving party, however, must establish more than “the mere
existence of a scintilla of evidence” in support of its position. Id. at 252. To prevail on a motion
for summary judgment, the moving party must show that the nonmoving party “fail[ed] to make
a showing sufficient to establish the existence of an element essential to that party’s case, and on
which that party will bear the burden of proof at trial.” Celotex, 477 U.S. at 322.
The nonmoving party may defeat summary judgment through factual representations
made in a sworn affidavit if he “support[s] his allegations . . . with facts in the record,” Greene v.
Dalton, 164 F.3d 671, 675 (D.C. Cir. 1999) (quoting Harding v. Gray, 9 F.3d 150, 154 (D.C. Cir.
1993)), or provides “direct testimonial evidence,” Arrington v. United States, 473 F.3d 329, 338
(D.C. Cir. 2006). Indeed, for the court to accept anything less “would defeat the central purpose
4
of the summary judgment device, which is to weed out those cases insufficiently meritorious to
warrant the expense of a jury trial.” Greene, 164 F.3d at 675.
B. Legal Standard for Disparate Impact
To establish a prima facie case of disparate impact, the plaintiff must show that a facially
neutral employment policy has a disproportionately adverse effect on a protected class of
people. 3 See Ricci v. DeStafano, 129 S. Ct. 2658, 2673 (2009) (citing 42 U.S.C. § 2000e-
2(k)(1)(A)); Griggs v. Duke Power Co., 401 U.S. 424, 431 (1971)), aff’d, 530 F.3d 87 (2d Cir.
2008). To do so, the plaintiff must first identify the specific employment practice challenged.
Watson v. Fort Worth Bank & Trust, 487 U.S. 977, 994 (1988). Next, the plaintiff must establish
causation; “that is, the plaintiff must offer statistical evidence of a kind and degree sufficient to
show that the practice in question has caused the exclusion of applicants for jobs or promotions
because of their membership in a protected group.” Id.; see also Ricci, 129 S. Ct. at 2678
(observing that a prima facie case of disparate impact requires “a threshold showing of a
significant statistical disparity” (citing Conn. v. Teal, 457 U.S. 440, 446 (1982))).
To make the requisite showing of causation for a disparate impact claim under the
ADEA, a plaintiff “need not offer evidence that the employer’s action was the result of
discriminatory intent, but need only offer statistical evidence of a kind and degree sufficient to
show the employment decision disproportionately impacts older employees.” Aliotta v. Bair,
614 F.3d 556, 565 (D.C. Cir. 2010). This statistical evidence is often demonstrated by using a
3
In Smith v. City of Jackson, Miss., the Supreme Court held that the ADEA creates a cause of
action under a disparate impact theory because the language prohibiting discriminatory conduct
tracked the language of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. 544
U.S. 228, 233-40 (2005). Accordingly, the court is guided by the principles found in case law
related to Title VII disparate impact claims when analyzing the plaintiff’s ADEA disparate
impact claim.
5
standard deviation analysis that is designed to measure the statistical significance of disparities
between expected and actual selection rates of applicants from a protected group. See, e.g.,
Anderson v. Zubieta, 180 F.3d 329, 339-40 (concluding that a standard deviation of 1.96 or
higher indicates “a level of statistical significance . . . sufficient to establish a prima facie case of
both disparate treatment and disparate impact”). Whatever the method of analysis, the plaintiff
must demonstrate the existence of a statistical disparity significant enough to give rise to an
inference of discrimination. See Palmer v. Schultz, 815 F.2d 84, 91 (D.C. Cir. 1987) (observing
that “if the disparity between selection rates for men and women is sufficiently large so that the
probability that the disparities resulted from chance is sufficiently small, then a court will infer
from the numbers alone that, more likely than not, the disparity was a product of unlawful
discrimination” (citing Hazelwood Sch. Dist. v. United States, 433 U.S. 299, 307-08 (1977))); see
also Albermarle Paper Co. v. Moody, 422 U.S. 405, 425 (1975). Indeed, “[s]tatistical evidence
is crucial in disparate impact cases, where plaintiffs need not prove discriminatory intent but
must show that specific employment practices ‘select [some applicants . . . in a . . . pattern
significantly different from that of the pool of applicants.’” Krodel v. Young, 748 F.2d 701, 710
(D.C. Cir. 1984) (emphasis added) (quoting Albermarle Paper Co., 422 U.S. at 425)).
C. The Court Grants the Defendant’s Motion for Summary Judgment
The plaintiff alleges that “the administration of the State Department’s Oral Assessment
[is] a process which severely and illegally discriminates against older candidates,” Compl. ¶ 28,
and that the Oral Assessment “was specifically designed to cancel out any experience which an
older person might have,” id. ¶ 51; see also Pl.’s Opp’n to Def.’s 1st Mot. for Summ. J. at 30
6
(alleging that the exam’s consideration of an applicant’s prior ten-year employment history
“shows a bias toward a younger applicant”).
Insofar as these allegations raise a disparate impact claim, the defendant argues that
summary judgment should be granted in its favor because the plaintiff has “refused to provide
[statistical] evidence to the Court” to show that the Oral Assessment has a disproportionately
adverse effect on older individuals. Def.’s Reply at 7. Specifically, the defendant avers that the
plaintiff has not provided “statistical evidence of a kind and degree sufficient to show that the
practice in question has caused the exclusion of applica[nts] for jobs or promotions because of
[their] membership in the protected class.” Def.’s 2d Mot. for Summ. J. at 6. The defendant
further argues that the plaintiff’s claim must fail because 63% of Foreign Service officers are
over the age of 40, indicating that the Department of State does not discriminate against older
professionals. Id. at 6-7.
In response, the plaintiff submits that his disparate impact claim is adequately supported
by the calculations that he put forth in his opposition to the defendant’s first motion for summary
judgment. See Pl.’s Opp’n to Def.’s 2d Mot. for Summ. J. at 14-16; Pl.’s Opp’n to Def.’s 1st
Mot. for Summ. J. at 36-39; Def.’s 1st Mot. for Summ. J., Ex. 10. In preparing these
calculations, the plaintiff first determined the percentage of candidates who were scheduled to
take the Oral Assessment in 2002 and who were born before April 8, 1962 (or, in other words,
were over 40 years old). Pl.’s Opp’n to Def.’s 1st Mot. for Summ. J. at 37. The plaintiff
concluded that 523 applicants were older than 40 and 3184 applicants were younger than 40,
equaling 3707 applicants in total. Id. at 38. The plaintiff then noted that only 3150 applicants –
not 3707 applicants – actually participated in the Oral Assessment, and despite this discrepancy
in his calculations, continued with his analysis. Id. at 38 n.4. Finally, the plaintiff attempted to
7
show that a statistically significant difference exists between the number of older applicants
passing the Oral Assessment and the number of younger applicants doing the same. Id. at 38-39.
He concludes now, “ANY way that [the raw pass/fail data is] interpreted will demonstrate that
the pass rate for each age group gets progressively worse the older the group is.” Pl.’s Opp’n to
Def.’s 2d Mot. for Summ. J. at 15.
In determining whether the plaintiff has established a prima facie case, the court is
sensitive to the proposition that “statistics ‘come in infinite variety and . . . their usefulness
depends on all of the surrounding facts and circumstances.’” Watson, 487 U.S. at 995. As such,
the plaintiff must, at the very least, provide methodologically sound statistics based on valid data
that show a statistically significant disparity indicating that a disparate impact likely exists. See
Segar v. Smith, 738 F.2d 1249, 1268 (D.C. Cir. 1984) (“Typically the challenge will focus on the
integrity of the plaintiffs’ statistical methodology and the significance of the results shown.”).
In its March 2011 memorandum opinion, the court noted that the plaintiff’s statistics
appeared flawed or lacking in several respects. See Mem. Op. (Mar. 25, 2011) at 10 n.4. More
specifically, the court noted that the plaintiff failed to explain his method for deriving the figures
and did not control for extraneous variables in performing his calculations. Id. Indeed, the
plaintiff himself admitted that he did “[n]ot realize what criteria DOS used for their count,”
“didn’t have adequate remaining time to finish [the corrections to his calculations],” and could
not “fine tune” his numbers. Pl.’s Opp’n to Def.’s 1st Mot. for Summ. J. at 38 n.14.
Nevertheless, the plaintiff concluded that “[o]ne does not have to be a statistician to realize that
the ever (and dramatically) decreasing pass rate for groups over the age [of] 40 . . . is statistically
significant.” Id. at 39 (internal quotation marks omitted); see also Pl.’s Opp’n to Def.’s 2d Mot.
for Summ. J. at 14-16.
8
In his opposition to the defendant’s second motion for summary judgment, the plaintiff
reaffirms his confidence in his original calculations without addressing the court’s iterated
concerns about those calculations or the discrepancy between his “total” number of applicants
and the actual number of applicants taking the exam. See Mem. Op. (Mar. 25, 2011) at 10 n.4
(noting that the plaintiff failed to explain his method and to control for extraneous variables). In
short, the plaintiff has not clarified or otherwise explained his calculations. 4 Pl.’s Opp’n to
Def.’s 2d Mot. for Summ. J. at 14-16.
Even assuming arguendo that the calculations the plaintiff provides are correct, he
nonetheless fails to offer any measure of statistical significance. Pl.’s Opp’n to Def.’s 1st Mot.
for Summ. J. at 36-39. As such, he never addresses the probability that any alleged disparity in
his calculations exists by chance. See Segar, 738 F.2d at 2383. As the Circuit has indicated,
“[t]he notion of statistical significance addresses directly the question whether an inference of
discrimination is warranted. Statistical significance is a measure of the probability that the
outcome of a statistical analysis would have occurred by chance . . . .” Id. (emphasis added).
Without more, the court must conclude that a reasonable fact finder would not credit the
plaintiff’s calculations or his poorly supported conclusion. See Onyewuchi v. Mayorkas, 766 F.
Supp. 2d 115, 134 (D.D.C. 2011), aff’d, U.S. App. LEXIS 24211 (D.C. Cir. Dec. 2, 2011)
(stating that a failure to control for extraneous variables or explain baseline calculations rendered
the plaintiff’s calculations “simplistic [and] irrelevant” and insufficient to make out a prima facie
case of disparate impact). Because the plaintiff has failed to produce any evidence from which a
reasonable jury could find that age – and not his performance on the Oral Assessment – was the
4
The plaintiff had two opportunities to supply this court with calculations to support his disparate
impact claim. The court further notes that the plaintiff has not sought leave to file a sur-reply or
made any filing explaining his calculations since the defendant’s second summary judgment
motion was filed.
9
reason for his non-selection, the court grants summary judgment for the defendant on the
plaintiff’s claim of age discrimination based on disparate impact.
IV. CONCLUSION
For the foregoing reasons, the court grants the defendant’s second motion for summary
judgment. An Order consistent with this Memorandum Opinion is separately and
contemporaneously issued this 23rd day of January, 2012.
RICARDO M. URBINA
United States District Judge
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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
STEVEN MARTINEZ,
Plaintiff,
v. Civil Action No. 11-1105 (JEB)
UNITED STATES POSTAL SERVICE,
Defendant.
MEMORANDUM OPINION
Plaintiff Steven Martinez is currently serving a mandatory life sentence for the 1993 New
York murder of Guillermo Gonzalez, who worked for the United States Postal Service. In his
current Freedom of Information Act suit against USPS, he seeks release of Gonzalez’s
employment records. Although, in initially moving for summary judgment, USPS relied on
FOIA privacy exemptions, it now avers that it has no responsive records. If any exist, they are in
the possession of the National Records Center (NRC). As the Court cannot order USPS to
produce what it does not have, the Court will grant its Motion, and Plaintiff may submit an
appropriate request to the NRC.
I. Background
On Jan. 20, 2011, Plaintiff submitted a FOIA request to USPS “requesting employment
records [of Guillermo Gonzalez] who worked in New York, New York until 1993.” Mot., Decl.
of Christopher Klepac, Attach. A (Pl. letter of Jan. 20, 2011) at 1. Plaintiff never mentioned that
he had been convicted of killing Gonzalez or that the victim was even deceased. On Jan. 31,
USPS informed Plaintiff by letter that such information was protected by the Privacy Act, 5
U.S.C. § 552a, and he would thus have to obtain written consent from Gonzalez or a court order.
1
Id., Attach. B (Letter of Jan. 31, 2011) at 1. Until such time, USPS would not begin processing
his request. Id. After a subsequent FOIA appeal to USPS was denied, Plaintiff filed suit in this
Court on June 16, in which he finally mentioned Gonzalez’s 1993 demise, but not his role in the
affair. See Compl. at 3.
In moving for summary judgment, USPS initially argued that the Privacy Act barred
release of the employment records absent the written consent of Gonzalez, whose death it could
not even confirm based on the identifying information submitted by Plaintiff. See Motion at 4 &
n.2. In addition, USPS argued that FOIA Exemption 6 would also block the release, given that
disclosure would constitute an unwarranted invasion of personal privacy, and Plaintiff had
articulated no public interest to outweigh it. Id. at 5-6. In his Opposition (labeled a “Traverse”),
see ECF No. 11, Plaintiff explained that he had, in fact, been convicted of Gonzalez’s murder
and that he believed Gonzalez to have been a contract employee, rather than a full employee of
USPS, which was relevant to the jurisdiction of the court in his criminal case. See id. at 2-3.
Now furnished with this rather significant clarification, USPS conducted a search of its records
and could not find “any record of employment that an individual with this [Social Security]
number ever worked in the New York District.” Reply, Decl. of Vanessa Duncan-Smith at 1.
More significantly, USPS Human Resources Manager Vanessa Duncan-Smith pointed out that
Office Personnel Files “for former postal employees are retired to and then retained at the
National Records Center in St. Louis, MO.” Id. at 1-2. In fact, “[i]n responding to a request for
the OPF of a former postal employee, the regular practice in my office is to refer the requester to
the National Records Center for the requested OPF.” Id. at 2.
2
II. Legal Standard
Summary judgment may be granted 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 also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986); Holcomb v.
Powell, 433 F.3d 889, 895 (D.C. Cir. 2006). “A party asserting that a fact cannot be or is
genuinely disputed must support the assertion by citing to particular parts of materials in the
record.” Fed. R. Civ. P. 56(c)(1)(A). The moving party bears the burden of demonstrating the
absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
“[A] material fact is ‘genuine’ . . . if the evidence is such that a reasonable jury could return a
verdict for the nonmoving party” on an element of the claim. Liberty Lobby, Inc., 477 U.S. at
248. Factual assertions in the moving party’s affidavits or declarations may be accepted as true
unless the opposing party submits his own affidavits, declarations, or documentary evidence to
the contrary. Neal v. Kelly, 963 F.2d 453, 456 (D.C. Cir. 1992).
FOIA cases typically and appropriately are decided on motions for summary judgment.
Defenders of Wildlife v. U.S. Border Patrol, 623 F. Supp. 2d 83, 87 (D.D.C. 2009); Bigwood v.
United States Agency for Int'l Dev., 484 F. Supp. 2d 68, 73 (D.D.C. 2007). In a FOIA case, the
Court may grant summary judgment based solely on information provided in an agency’s
affidavits or declarations if they are relatively detailed and when they describe “the documents
and the justifications for nondisclosure with reasonably specific detail, demonstrate that the
information withheld logically falls within the claimed exemption, and are not controverted by
either contrary evidence in the record nor by evidence of agency bad faith.” Military Audit
Project v. Casey, 656 F.2d 724, 738 (D.C. Cir. 1981). Such affidavits or declarations are
accorded “a presumption of good faith, which cannot be rebutted by ‘purely speculative claims
3
about the existence and discoverability of other documents.’” SafeCard Servs., Inc. v. Sec. &
Exch. Comm’n, 926 F.2d 1197, 1200 (D.C. Cir. 1991) (quoting Ground Saucer Watch, Inc. v.
Cent. Intelligence Agency, 692 F.2d 770, 771 (D.C. Cir. 1981)).
III. Analysis
“An agency fulfills its obligations under FOIA if it can demonstrate beyond material
doubt that its search was ‘reasonably calculated to uncover all relevant documents.’” Valencia-
Lucena v. U.S. Coast Guard, 180 F.3d 321, 325 (D.C. Cir. 1999) (quoting Truitt v. Dep’t of
State, 897 F.2d 540, 542 (D.C. Cir. 1990)); see also Steinberg v. U.S. Dep’t of Justice, 23 F.3d
548, 551 (D.C. Cir. 1994). The adequacy of an agency’s search for documents requested under
FOIA is judged by a standard of reasonableness and depends upon the facts of each case.
Weisberg v. U.S. Dep’t of Justice, 745 F.2d 1476, 1485 (D.C. Cir. 1984). There is no
requirement that an agency search every record system in response to a FOIA request, but only
those records that are likely to have responsive documents. Oglesby v. U.S. Dep’t of the Army,
920 F.2d 57, 68 (D.C. Cir. 1990). To meet its burden, the agency may submit affidavits or
declarations that explain in reasonable detail the scope and method of the agency’s search. Perry
v. Block, 684 F.2d 121, 126 (D.C. Cir. 1982). In the absence of contrary evidence, such
affidavits or declarations are sufficient to demonstrate an agency’s compliance with FOIA. Id. at
127. On the other hand, if the record “leaves substantial doubt as to the sufficiency of the search,
summary judgment for the agency is not proper.” Truitt, 897 F.2d at 542.
Plaintiff here may be dissatisfied with USPS’s search, but he does not produce evidence
to undermine its adequacy. As explained in Section II, infra, USPS submitted the Declaration of
Duncan-Smith, who averred that she had searched “the applicable USPS database [that] contains
employment records such as those requested by Plaintiff.” Id at 1. Using the Social Security
4
number and date of birth for Gonzalez that were provided by Plaintiff, she was unable to locate
any personnel file or record of employment for Gonzalez. Id. The Court, therefore, cannot find
that USPS’s search was deficient.
It is significant that Duncan-Smith noted that records for former employees are retained
by the NRC. This provides another explanation for why records of Gonzalez would not be in
USPS custody. Plaintiff, of course, is free to submit a request to the NRC in hopes of achieving
better success.1
IV. Conclusion
As the Court finds that Defendant conducted an adequate search with respect to
Plaintiff’s FOIA request, the Court will grant Defendant’s Motion for Summary Judgment. A
separate Order consistent with this Opinion will issue this day.
/s/ James E. Boasberg
JAMES E. BOASBERG
United States District Judge
Date: Jan. 17, 2012
1
Plaintiff makes mention in his Complaint of 1998 efforts to obtain records from the NRC, which referred
him to USPS in 1999. See Compl. at 1-2. He never states what ultimately happened or why he then waited twelve
years to make his next FOIA request to USPS. Should he now make a request of the NRC, armed with this Court’s
decision, it seems unlikely that agency would refer him elsewhere.
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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
)
N.T., et. al. )
)
Plaintiffs, )
)
v. ) Civil Action No. 11-676 (RMC)
)
DISTRICT OF COLUMBIA, )
)
Defendant. )
)
MEMORANDUM OPINION
N.T. is a young child with attention-deficit hyperactivity disorder (“ADHD”). She
is currently attending a private school that educates disabled children, and her parents want the
District to pay for the tuition and costs of the school. The question is whether the District of
Columbia Public Schools (“DCPS”) can provide N.T. a free, appropriate public education
(“FAPE”) and, if not, to what extent it must reimburse N.T.’s parents for her private school
placement. Because DCPS can provide N.T. a free and appropriate education, the Court will
deny Plaintiffs’ request for reimbursement and grant Defendant’s motion for summary judgment.
I. FACTS
From pre-kindergarten through the end of first grade, N.T. attended The River
School in Northwest Washington, D.C. The River School is an “inclusion”-based private school
meaning that children with special educational needs who attend the school spend most of their
time learning with non-disabled students. N.T. was not initially placed in The River School as a
child with special educational needs and did not have an Individualized Education Program
(“IEP”) during any of the five years she attended The River School.1 At The River School, N.T.
was placed in small classes with approximately fourteen students, and the students were regularly
taught in smaller groups of one to four children.
During her first grade year (from 2008-2009), N.T. struggled academically and
socially. The River School recommended that N.T. repeat the first grade, and she did so. That
fall (in 2009), N.T.’s parents referred her to a psychologist for a neuropsychological assessment.
The psychologist diagnosed N.T. with ADHD. N.T. was able to make some progress
academically and socially, but she continued to struggle academically, had difficulty with her
peers, and was frequently physically aggressive. Accordingly, her parents began to look at other
school options – both public and private. Her parents visited Key Elementary School, the local
public school N.T. would otherwise have attended. Her parents met with the principal,
classroom teachers, and special education coordinator at Key Elementary. On April 23, 2010,
N.T.’s parents initiated a referral to DCPS to evaluate N.T.’s eligibility for special education
services.
In addition to visiting Key Elementary, N.T.’s parents also looked at The Lab
School of Washington, a private school that serves moderately to severely disabled students. In
the same month that N.T.’s parents initiated a referral to DCPS, they also signed an enrollment
contract and paid a deposit toward The Lab School’s annual tuition. As early as April 2010, after
having met multiple times with Key Elementary staff, N.T.’s parents decided to send her to The
Lab School.
1
The River School is “an ‘inclusion’ school where a small number of children with
hearing loss are instructed in the same classroom with mostly nondisabled peers. [N.T.] did not
attend [River School] as a hearing impaired student . . . .” Hearing on Decision (“H.O.D.) at 4.
2
On August 13, 2010, DCPS convened an IEP meeting to determine N.T.’s
eligibility under the Individuals with Disabilities Education Improvement Act (“IDEA”), 20
U.S.C. § 1400 et seq., for special education services. N.T.’s parents, educational consultant, and
attorney attended the meeting along with a DCPS psychologist, social worker, speech/language
pathologist, general education teacher, and special education teachers. The IEP team reviewed
N.T.’s evaluations and data and found her eligible for special education services based upon her
ADHD diagnosis. The team also decided that additional assessments were required to determine
if N.T. would qualify as a student with a specific learning disability. An educational assessment,
occupational therapy assessment, and classroom observation were ordered. The additional
assessments were completed without incident except that, based upon The Lab School’s
guidelines, only the occupational therapist from DCPS (and not the special education
coordinator, speech pathologist or psychologist) was able to conduct a classroom evaluation.
When the IEP team met on August 13th, N.T.’s mother had already decided that N.T. would
attend The Lab School and wanted DCPS to pay for that unilateral private placement.
On October 13, 2010, DCPS convened a follow up meeting and proposed an IEP
for the 2010-2011 school year. DCPS proposed that N.T. receive education in a general
education setting of fourteen hours per month of written expression, two hours per month of
speech language pathology, and one hour per month of behavioral support services. DCPS
further proposed six hours of written expression, two hours of speech language pathology, and
one hour of behavioral support services per month outside a general education setting. The IEP
did not include a requirement that N.T. be educated in smaller class sizes or provide for
occupational therapy or other services Plaintiffs desired. Plaintiffs rejected the IEP at the
3
October 13, 2010 meeting and indicated that they planned to continue N.T.’s placement at The
Lab School at DCPS’ expense.
Two weeks later, Plaintiffs filed a request for an administrative due process
hearing alleging that DCPS had denied N.T. a free, appropriate public education and seeking
reimbursement from DCPS for the tuition and costs of The Lab School. Specifically, Plaintiffs
presented five issues to be resolved at the hearing:
1. Whether DCPS failed to complete a special education evaluation and IEP
development within IDEA timelines;
2. Whether the omission of goals and services for reading, mathematics,
social and occupational therapy in the IEP was a denial of a FAPE;
3. Whether the Speech-Language services in the IEP were inadequate to
provide a FAPE;
4. Whether the proposed provision of IEP services in a general education
setting was a denial of a FAPE; and
5. Whether N.T.’s placement at The Lab School is proper under the IDEA.
The hearing was held in early January 2011, and the Hearing Officer found for
DCPS on four of the five issues. With respect to Issue # 4, whether the IEP’s proposed services
in the general education setting denied N.T. a FAPE, the Hearing Officer concluded that N.T.
needed a small group setting for all of her core academic subjects. Although DCPS’ special
educational coordinator testified that N.T. would be instructed in small groups at her level at Key
Elementary, the Hearing Officer found that the requirement for small group instruction in core
academic subjects needed to be explicit in the IEP. The Hearing Officer ordered DCPS to
4
reconvene N.T.’s IEP team and develop an IEP that provided for small group settings for core
subjects. Although the IEP deprived N.T. of a FAPE, the Hearing Officer did not order
reimbursement for private-school tuition because the IDEA requires disabled children to be
educated with nondisabled peers to the greatest extent appropriate. In this case, N.T. had shown
improvement at The River School, and The Lab School would not provide an inclusive education
environment.
The Plaintiffs disagreed with the Hearing Officer’s decision and filed the present
suit on April 6, 2011. Both parties move for summary judgment based on the administrative
record. Neither party has asked the Court to hear additional evidence.
II. LAW
The IDEA ensures that “all children with disabilities have available to them a free
appropriate pubic education that emphasizes special education and related services designed to
meet their unique needs and prepare them for further education, employment, and independent
living.” 20 U.S.C. § 1400(d)(1)(A). The IDEA guarantees children with disabilities the right to a
FAPE. Id. In seeking an appropriate education for students with disabilities, the child’s parents,
teachers, school officials, and other professionals collaborate to develop an IEP to meet the
child’s unique needs. See 20 U.S.C. § 1414(d)(1)(B). “The IEP must, at a minimum, ‘provide
personalized instruction with sufficient support services to permit the child to benefit
educationally from that instruction.’” Reid ex rel. Reid v. District of Columbia, 401 F.3d 516,
519 (D.C. Cir. 2005) (quoting Bd. of Educ. of the Hendrick Hudson Cent. Sch. Dist.,
Westchester County v. Rowley, 458 U.S. 176, 203 (1982)).
5
Local school officials utilize the IEP to assess the student’s needs and assign a
commensurate learning environment. See 20 U.S.C. § 1414(d)(1)(A). The IEP team, consisting
of the student’s parents, teachers, and other local education personnel, examines the student’s
educational history, progress, recent evaluations, and parental concerns prior to implementing a
free appropriate public education for the student. Id. To determine whether a FAPE has been
provided, courts must determine whether: (1) the school complied with the IDEA’s procedures;
and (2) the IEP developed through those procedures was reasonably calculated to enable the
student to receive educational benefits. Loren F. v. Atlanta Indep. Sch. Sys., 349 F.3d 1309,
1312 (11th Cir. 2003).
While the District of Columbia is required to provide students with a public
education, it does not guarantee any particular outcome or any particular level of education.
Rowley, 458 U.S. at 192; Dorros v. District of Columbia, 510 F. Supp. 2d 97, 100 (D.D.C. 2007).
If a parent objects to the identification, evaluation, or educational placement of a student, or the
provision of a FAPE, 20 U.S.C. § 1415(b)(6), the parent may seek an impartial due process
hearing. Id. § 1415(f)(1). If the parent is dissatisfied with the outcome of that hearing, (s)he may
appeal the decision to a state court or a federal district court. See 20 U.S.C. § 1415(i)(2)(A).
In evaluating a hearing officer’s decision in an IDEA case such as this one, the
court reviews the administrative record, may hear additional evidence at the request of a party,
and bases its decision on the preponderance of the evidence, granting such relief as deemed
appropriate. 20 U.S.C. § 1415(i)(2)(B)(iii). The court gives “due weight” to the hearing officer’s
decision and does not substitute its own view of sound educational policy for that of the hearing
officer. See Rowley, 458 U.S. at 206. Moreover, the burden of proof is with the party
6
challenging the administrative determination, who must “at least take on the burden of
persuading the court that the hearing officer was wrong.” Reid, 401 F.3d at 521.
III. ANALYSIS
Plaintiffs contend that the IEP at issue violated the IDEA because it did not
provide for small group instruction in core academic subjects. Plaintiffs therefore argue that
DCPS should be required to reimburse the tuition and cost for attending The Lab School.
Plaintiffs do not contest the other findings of the Hearing Officer (e.g., that Plaintiffs failed to
meet their burden in demonstrating that speech-language services in the IEP were inadequate, or
that the omission of reading and mathematics goals and services in the IEP did not deny N.T. a
FAPE). Accordingly, the Court will limit its analysis to whether the lack of required small group
instruction violated N.T.’s right to a FAPE, and if so, what constitutes the correct remedy.
Defendant seeks affirmance of the Hearing Officer’s decision on all respects.
DCPS does not challenge the determination that the IEP violated the IDEA by not providing for
small class sizes, but contends that reimbursement is improper because DCPS can provide N.T.
with a FAPE, the parents’ conduct should preclude reimbursement, and the parents have not
demonstrated that the The Lab School is an appropriate placement under the IDEA. Because
DCPS has waived any argument that the IEP provided N.T. a FAPE, see, e.g., Hopkins v.
Women's Div., Bd. of Global Ministries, 238 F.Supp.2d 174, 178 (D.D.C. 2002), the Court looks
to the appropriate remedy for the violation, see, e.g., N.S. ex rel. Stein v. District of Columbia,
7
709 F.Supp.2d 57, 73 (D.D.C. 2010).2 Reimbursement for tuition and cost at The Lab School is,
in this case, an inappropriate remedy for at least three reasons.
First, Plaintiffs incorrectly argue that private school placement is the appropriate
remedy solely because the IEP was inadequate. An inadequate IEP is a necessary but insufficient
condition for private school placement and reimbursement. Although the District must pay for
private school placement “[i]f no suitable public school is available[,] . . . if there is an
appropriate public school program available . . . the District need not consider private placement,
even though a private school might be more appropriate or better able to serve the child.”
Jenkins v. Squillacote, 935 F.2d 303, 305 (D.C. Cir. 1991) (citations and quotations omitted). In
the present case, the parents have not even argued, let alone demonstrated, that Key Elementary
or another D.C. public school could not provide N.T. an appropriate education with smaller class
sizes for N.T.’s core academic subjects. Indeed, DCPS’ special educational consultant
anticipated that N.T. would receive such instruction at Key Elementary, and the Hearing Officer
ordered that the IEP be modified to provide for small group instruction. If DCPS had been
unwilling or unable to modify the IEP to meet N.T.’s needs for small group instruction, then
private placement and reimbursement might be an appropriate remedy. See, e.g. Florence Cty.
Sch. Dist. Four v. Carter, 510 U.S. 7 (1993). That is simply not this case.
Second, as the Hearing Officer noted, The Lab School would not provide the least
restrictive environment (“LRE”) for N.T.’s education. “In addition to IDEA’s requirement the
2
Additionally, there is ample support in both the administrative hearing and the
administrative record that the IEP was deficient by not providing for small class sizes for N.T.
See, e.g., H.O.D. at 17; A.R. at 78 (“During core academic time, N.T. continues to benefit from
small group instruction . . . . She is able to focus better when she is in a small group.”)
8
state provide each student with some educational benefit, the student must be placed in the least
restrictive environment to achieve the FAPE.” 20 U.S.C. § 1412(a)(5)(A). Removing a child
with disabilities “from the regular education environment occurs only when the nature or severity
of the disability is such that education in regular classes cannot be achieved satisfactorily.” 34
C.F.R. § 300.550; see also 20 U.S.C. § 1412(a)(5)(A) (a disabled child is to participate in the
same activities as non-disabled children to the “maximum extent appropriate”); Roark ex rel.
Roark v. District of Columbia, 460 F.Supp.2d 32, 43 (D.D.C. 2006) (“The IDEA requires school
districts to place disabled children in the least restrictive environment possible.”)
Given Congress’s preference for inclusion-based education, Plaintiffs must show
that a non-general education is appropriate in N.T.’s case. They have failed to do so. As the
Hearing Officer found, N.T. was able to receive educational benefit at The River School, an
inclusion-based school, for five years. Even Plaintiffs’ educational consultant admitted that with
substantial intervention, N.T. was able to make educational progress in an inclusive setting.
H.O.D. at 5. N.T.’s written reports at River School confirm this. See, e.g., A.R. 59-60 (“N.T.
has made some progress socially since the beginning of the girl group. . . . [N.T.] has begun to
identify the beginning, medial, and final sounds of words . . . . [N.T.’s] visual recognition of first-
grade sight words is strong, and she correctly identified 95% of the Dolch Sight-Word list;”);
A.R. 78 (“[N.T.] continues to show improvement during English Language Arts . . . . [N.T.] is
becoming more successful in math . . . [and] is comfortable asking her teachers for help and is
open to suggestions for problem solving.”) Unlike The River School, the Lab School does not
9
accept non-disabled students. Thus, The Lab School would not be the least restrictive
environment for N.T. to learn.3
Third, although plaintiffs spend much time extolling the virtues of The Lab
School with its smaller class sizes and unquestioned expertise, the argument largely misses the
mark. The question before the Court is not whether The Lab School could better educate N.T.
than a public school but whether N.T. could receive a FAPE at a public school. See, e.g.,
Kerkhman, 931 F.2d at 88. Because DCPS can craft an appropriate IEP to provide a FAPE, it is
not required to pay for N.T.’s placement at The Lab School. Jenkins, 935 F.2d at 305; cf. School
Comm. of Town of Burlington, Mass. v. Dept. of Educ. of Mass., 471 U.S. 359, 373-74 (1985)
(parents who unilaterally place their children in private school “do so at their own financial
risk.”)
IV. CONCLUSION
For the reasons stated, Plaintiffs’ motion for summary judgment [Dkt. # 8] will be
denied and Defendant’s cross motion for summary judgement [Dkt. # 10] will be granted. A
memoralizing Order accompanies this Memorandum Opinion.
Date: January 11, 2012 /s/
ROSEMARY M. COLLYER
United States District Judge
3
Plaintiffs are correct that a parental placement need not be the least restrictive
environment. See Warren G. v. Cumberland County Sch. Dist., 190 F.3d 80, 83-84 (3rd Cir.
1999); Knable v. Bexley City Sch. Dist., 238 F.3d 775, 770 (6th Cir. 2001). They are incorrect,
however, in arguing that the Hearing Officer could not consider whether The Lab School was the
least restrictive environment in evaluating whether private placement was the proper remedy.
See, e.g., Branham v. District of Columbia, 427 F.3d 7, 12 (D.C. Cir. 2005); Kerkham v.
Superintendent, D.C. Public Schools, 931 F.2d 84, 87 (D.C. Cir. 1991).
10
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04-03-2014
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https://www.courtlistener.com/api/rest/v3/opinions/2709355/
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In the
United States Court of Appeals
For the Seventh Circuit
No. 12‐1632
UNITED STATES OF AMERICA,
Plaintiff‐Appellee,
v.
CHAD VINCENT IACONA,
Defendant‐Appellant.
Appeal from the United States District Court for the
Southern District of Illinois.
No. 11‐CR‐30120‐MJR — Michael J. Reagan, Judge.
ARGUED FEBRUARY 26, 2013 — DECIDED AUGUST 27, 2013
Before EASTERBROOK, Chief Judge, and ROVNER and
WILLIAMS, Circuit Judges.
ROVNER, Circuit Judge. On December 2, 2011, Chad Vincent
Iacona was convicted of fraud in connection with an access
device and aggravated identity theft, in violation of 18 U.S.C.
§§ 1029(a)(2) and 1028A respectively. Those charges stemmed
from his actions in obtaining a Wells Fargo Visa card using the
identification of another person, Nancy Clymer, without her
2 No. 12‐1632
authorization, and with the intent to defraud her and her
business, D & L Investigations.
Iacona worked as a process server for D & L Investigations
(“D&L”), a private investigation service owned by Nancy
Clymer. D&L was formed by Clymer and her husband Donald,
and Clymer continued to operate it after Donald’s death in
1989. The business mainly consisted of providing process
service for local attorneys, but also encompassed some surveil‐
lance and other investigative work.
In May 2005, Iacona agreed to purchase the business from
Clymer. Because Clymer had previously attempted to sell the
business only to have the purchasers default within a month,
she demanded the implementation of certain protections from
Iacona. In the purchase agreement with Iacona, Clymer
structured the arrangement so as to retain ownership of the
business while Iacona paid $2000 per month for two years
toward a total purchase price of $95,000, with a balloon
payment of the remaining balance after those two years.
During that payment period, Clymer would retain ownership
of the business, but Iacona would run the business. The
agreement also required Iacona to secure a line of credit in
order to pay the recurring monthly expense for an investiga‐
tive research service. Those terms were later renegotiated
when Iacona had difficulty paying, and Clymer ultimately
signed over the business to him in early 2008.
The testimony at trial established that Iacona quickly began
to establish numerous lines of credit in the name of D&L and
in Clymer’s name. Almost immediately after the purchase
agreement, Iacona obtained from George Weber Chevrolet a
No. 12‐1632 3
Chevrolet Malibu either in a lease or purchase arrangement
(the testimony diverged on that point). The paperwork for that
vehicle signed by Iacona listed him as the president of D&L
although Clymer was the president at that time, and indicated
that he had worked for D&L for 16 years even though at that
time he had worked at D&L for only about a month of its 16‐
year existence. The paperwork represented the gross annual
income of D&L as “$500,000 plus,” but Clymer testified that in
its best year D&L earned only approximately $50,000. When
Clymer learned of Iacona’s acquisition of the Malibu, and that
he had also opened a credit account with Office Depot, she had
her attorney send a letter to the dealership and to Office
Depot—with a copy to Iacona—informing them that Iacona
had no authority to open a line of credit in D&L’s name and
that he was not the president of D&L.
Iacona nevertheless proceeded to open up numerous other
credit cards, which he used to incur significant debt on
purchases unrelated to the business, and continued to do so for
the ensuing two years. The suspect purchases included
multiple charges at Bed, Bath & Beyond, Pet Smart, grocery
stores, restaurants, and charges related to a swimming pool
and the purchase of a pool table. One of those credit lines, with
Capital One, was obtained through an internet application in
which Clymer’s name, social security number, and date of
birth were used. Only one credit card, however, was the focus
of the criminal complaint—a Wells Fargo Visa card.
The testimony was undisputed that Rebecca Rasmussen,
Iacona’s sister who was hired by Iacona as a secretary for D&L,
applied for the Wells Fargo Visa by phone and represented
herself to be Clymer. Rasmussen used Clymer’s social security
4 No. 12‐1632
number and personal information as well as information about
D&L to obtain the Wells Fargo Visa with a credit limit of
$50,000, split evenly into a $25,000 account in Clymer’s name
and a $25,000 account in Iacona’s name. Under the terms of the
card, Clymer was personally liable for the debts on both
accounts. Iacona testified, however, that he was not present
when Rasmussen made that call and that she did not do so
under his direction. Instead, he asserts that he instructed her to
obtain a credit card with the lowest interest rate possible, and
that she obtained the Wells Fargo Visa on her own initiative.
The government presented the testimony of Rasmussen
that Iacona instructed her to call to obtain that Wells Fargo
Visa and that he was present during that call and supplied her
with Clymer’s personal information in response to the ques‐
tions during that phone application. The government also
played a recording of that call to allow the jury to hear pauses
in Rasmussen’s answers which she attributed to the delay in
obtaining the answers from Iacona.
In addition, the government presented testimony that
Iacona maintained control over the credit cards and payment
statements. Rasmussen testified that she only opened mail
related to the process serving business, and that credit card
mail was left in a pile for Iacona to open himself. Postal
inspector Matthew Murrow, who had investigated the allega‐
tion of identity theft, provided some corroboration for that
contention. He testified that when he executed a search
warrant at D&L, he observed a large pile of bills, credit card
statements, and mail collection notices, some opened and some
unopened, on the desk in Iacona’s office, and that the stack was
3 or 4 inches high. He further testified that in that stack was a
No. 12‐1632 5
credit card in Iacona’s name as an authorized user on an
account in Clymer’s name, and that a corresponding card for
Clymer on that account was found in the garbage can next to
Iacona’s desk.
As part of the investigation, Murrow contacted Iacona to
question him regarding the lines of credit opened in Clymer’s
name. Shortly after Murrow spoke with him, Iacona contacted
Wells Fargo and attempted to make arrangements to pay off
the debt for which Clymer was liable. He also called Clymer
and left her a voicemail which she played for Murrow. In that
recording, Iacona stated:
I’ve got some Postal Inspector calling me … about
credit cards under or it has your name on it or
something like—account so, uhm, it shouldn’t have
anything to do with your name. We took out some
accounts that were through D & L with the tax ID
number so—uhm, I don’t know if you know any‐
thing about that or not, but this guys [sic] calling me
—asking about your name, so. Call me back so I can
figure out what’s going on with this.
Trial Transcript, Vol. II, 11/29/11 at 203. Contrary to that
voicemail message in May 2009 by Iacona questioning whether
Clymer knew about the accounts, Iacona testified at trial that
he had discussed with Clymer the lines of credit years earlier.
Murrow also testified as to the debts incurred on the
Capital One and Wells Fargo accounts, and provided summary
exhibits indicating that the accounts were used overwhelm‐
ingly for personal rather than business‐related expenses.
Murrow testified that the Wells Fargo card with Clymer’s
6 No. 12‐1632
name, as opposed to the one with Iacona’s name on it, was
used solely for transactions that did not involve face‐to‐face
contact, such as internet purchases or ATM withdrawals.
Finally, he provided a summary chart demonstrating a pattern
of balance transfers from credit card accounts for which Iacona
or D&L was liable to the Capital One and Wells Fargo accounts
for which Clymer was personally liable.
Iacona’s defense was that the use of Clymer’s name to
obtain credit through Wells Fargo was done without his
knowledge by Rasmussen on her own initiative in response to
his directive merely to obtain a low interest credit card for the
business. Although initially acknowledging that he signed the
agreement at George Weber Chevrolet and the signature card
at the bank, he testified that those documents may have been
forwarded via fax or mail and that Rasmussen may have
signed them for him. He further testified that the signatures on
the checks paying the credit card bills were not uniform and
were not done by him. He stated that both Rasmussen and the
office assistant that eventually replaced her, Khara Moehle,
handled credit card statements and that they often forged his
name on checks to pay the bills when he was out of the office.
In response to that testimony, the government called as a
rebuttal witness Moehle, who, consistent with Rasmussen’s
testimony, declared that she only opened mail from attorneys
related to the process serving and investigative activities of the
business and that credit card statements were left for Iacona.
Other than his own testimony, the only other defense witness
presented by Iacona was his father‐in‐law who was presented
as a character witness.
No. 12‐1632 7
In closing argument, the prosecutor repeatedly highlighted
the contradictions between the testimony of Iacona, and that of
the other witnesses such as Rasmussen, Clymer, Murrow and
Moehle. On appeal, Iacona argues that those closing statements
went too far, and that by referring to Iacona as a liar the
prosecutor engaged in misconduct that denied him a fair trial.
Specifically, Iacona points to the following excerpts from the
closing argument, which we set forth verbatim because the
severity of the language and the context can be significant in
evaluating such claims of prosecutorial misconduct:
Did you hear them tell the kind of bold falsehoods
Mr. Iacona swore and told to you under oath, raise
your hand oath? He even denies it is his signature
on the signature card at the bank, and every single
payment to the credit card companies, not my
signature.
Trial Transcript, Vol. IV, 12/1/11 at 159‐60.
It is the same signature on all of the checks, both
when Rebecca Masmussen [sic] was there and when
Khara Moehle was there. I must say, ladies and
gentlemen, Khara came in as a rebuttal witness
because who could have imagined Mr. Iacona
would have denied writing any of the checks.
Id. at 160.
You know, you have heard evidence through the
testimony of the defendant himself and the examina‐
tion of the defendant himself where you kind of get
an idea about Mr. Iacona’s honesty, not just here in
8 No. 12‐1632
the courtroom or on the witness stand, but his
honesty in the dealings with all sorts of people that
he gets money from.
Id. at 161.
You are entitled to consider every bit of Mr. Iacona’s
testimony under oath here in this courtroom. It is
evidence too and I submit to you ladies and gentle‐
men that as you evaluate, you will agree amongst
yourselves that he damned himself with his false
testimony; not a mistake, not a misunderstanding.
Id. at 170.
Iacona also challenges an additional statement, but it is
clear that the reference in that statement is to Iacona’s charac‐
terization of the government witnesses as liars, not a reference
to Iacona’s dishonesty, and therefore it is irrelevant to this
argument. We note, however, that even if the statement were
directed at Iacona, the outcome of this appeal would be the
same.
In order to evaluate a claim of prosecutorial misconduct to
determine if it deprived a defendant of a fair trial, we conduct
a two‐part inquiry. United States v. Tucker, 714 F.3d 1006, 1012
(7th Cir. 2013). First, we determine whether the challenged
conduct was improper, and second, we evaluate the conduct
in light of the trial as a whole to decide if it deprived the
defendant of a fair trial. Id. Therefore, Iacona must establish as
an initial matter that the statements were improper, and if he
meets that hurdle then we consider whether the improper
statements operated to deny him due process.
No. 12‐1632 9
Iacona asserts that through those comments in closing
arguments, the prosecutor accused him of lying on the witness
stand multiple times and asked the jury to infer from those lies
that he was a dishonest person. He maintains that such
conduct was improper because it distracted the jury from its
duties through sheer repetition and was not based on a fair
reading of the evidence. Furthermore, he argues that the
statements were prejudicial because the misconduct was
severe, he did nothing to invite it, the impact was not amelio‐
rated by jury instructions or rebuttal opportunities, and the
case against him was weak.
In general, whether prosecutorial misconduct was sufficient
to require judgment as a matter of law is reviewed for abuse of
discretion. United States. v. Hills, 618 F.3d 619, 635 (7th Cir.
2010). Iacona failed to object to the statements made in closing
argument, however, and therefore we review only for plain
error. Accordingly, we will reverse only if Iacona can demon‐
strate an error that is plain, that affects his substantial rights,
and that seriously affects the fairness, integrity or public
reputation of the judicial proceeding, effectuating a miscar‐
riage of justice. United States v. Martin, 692 F.3d 760, 763 ‐764
(7th Cir. 2012); Tucker, 714 F.3d at 1011‐1012.
Iacona falters at the first step of the two‐part test, in that he
cannot show that the statements by the prosecutor were
improper. Iacona argues that there are several limits on the
ability of the government to call a defendant a liar, and that
two such limits were violated here: first, the attacks were so
repetitive as to go beyond the bounds of appropriate zealous
advocacy and to enter into the realm of unfounded character
attack; and second, the comments were not based on the
10 No. 12‐1632
evidence introduced at trial. An analysis of the record demon‐
strates that neither of those contentions are valid.
We have repeatedly held that “[w]here the character and
credibility of the defendant are at issue and the evidence
allows the inference that the defendant has been less than
truthful, the prosecutor does not err in closing argument by
referring to the defendant as a liar.” United States v. Catalfo, 64
F.3d 1070, 1080 (7th Cir. 1995); United States v. Turner, 651 F.3d
743, 752 (7th Cir. 2011). That does not mean the prosecutor is
without limits in pursuing such a line of attack. Indeed, we
have recognized that “where the terms ‘fabricated’ or ‘lies’ are
used repeatedly to the point of excessiveness, the line between
the ‘undignified and intemperate’ … and the hard or harsh but
fair may be crossed with a resultant impairment of ‘the calm
and detached search for the truth to which a criminal trial
should aspire.’” United States v. Craig, 573 F.2d 455, 494 (7th
Cir. 1977); Catalfo, 64 F.3d at 1080; United States v. Chaimson, 760
F.2d 798, 811 (7th Cir. 1985). Therefore, we consider whether
the references to Iacona’s veracity in this case crossed that line.
The central question in determining whether this was error
is whether the comments reflected reasonable inferences from
the evidence adduced at trial rather than an expression of the
prosecutor’s personal opinion, and whether the comments
became so excessive as to impair the jury’s detached search for
the truth. Turner, 651 F.3d at 752; Chaimson, 760 F.2d at 811;
Catalfo, 64 F.3d at 1080; United States v. Goodapple, 958 F.2d
1402, 1409‐1410 (7th Cir. 1992). If the evidence supports the
comments, a prosecutor is at liberty to speak harshly about the
defendant. Turner, 651 F.3d at 752. The statements made in this
case fall comfortably within the permissible zone.
No. 12‐1632 11
The testimony provided by Iacona was directly contra‐
dicted by the testimony of multiple government witnesses, as
well as by physical evidence. In each of the challenged state‐
ments, the prosecutor points out those contradictions. For
instance, in the first challenged statement, the prosecutor asks
the jury if it heard the bold falsehoods that Iacona swore under
oath, and then points to Iacona’s denial that it was his signa‐
ture on the signature card at the bank and on each of the
checks to the credit card companies. That was a fair character‐
ization of the evidence. Iacona’s contention that he did not sign
the signature card at the bank was contradicted by his own
testimony, in which he initially acknowledged that he accom‐
panied Clymer to the bank to become a signatory on the
account. Moreover, his statement that the checks were not
signed by him but were handled by his office assistants was
contradicted by both Rasmussen and Moehle, who testified
consistently that Iacona handled all such bills. There was
nothing presented at trial that would establish any motive for
those employees to lie, nor was there any testimony as to any
financial or other gain that accrued to them from those credit
cards. In fact, the undisputed testimony was that the purchases
made on the cards benefitted Iacona alone. All of that evidence
rendered his statements inherently incredible, and the prosecu‐
tor did not err in pointing out those credibility problems. The
second challenged statement covers similar ground, in that the
prosecutor again referenced the similarity between the
signatures on the checks, and the unlikelihood that signatures
during Rasmussen’s tenure would appear so similar to those
made during Moehle’s employment if signed by them and not
12 No. 12‐1632
Iacona. That is a fair commentary on the logical import of the
evidence.
The final two statements relating to Iacona’s truthfulness
were pleas to the jury to consider the testimony of Iacona and
the history of his dealings with people, and to determine his
honesty from all of that evidence. In those statements, the
prosecutor emphasized to the jury that it was entitled to
consider Iacona’s testimony under oath as evidence and to
evaluate it, and the prosecutor argued that such testimony
evidenced his guilt. Iacona has failed to point to anything in
those statements that is an inaccurate statement of the law.
Iacona’s testimony was evidence in the case, and the jury
properly could determine his credibility based on all of that
evidence. At no point did the prosecutor inject his personal
opinion as to Iacona’s credibility; instead, the prosecutor
pointed out the inconsistencies between Iacona’s testimony
and that of the other witnesses, and encouraged the jury to
consider all of that evidence in determining his credibility and
his guilt. That is neither improper nor excessive, particularly in
a case such as this in which the only defense presented was
Iacona’s testimony. In such a case, it is unremarkable that the
prosecutor in closing arguments would address the veracity of
the defendant’s testimony in light of the testimony of the other
witnesses.
As we noted in Turner, a “canonical statement in this field”
is that a prosecutor may strike hard blows as long as they are
not foul ones. Turner, 651 F.3d at 752; Berger v. United States,
295 U.S. 78, 88 (1935). Where the evidence supports an infer‐
ence that the defendant has lied, then a comment in closing
argument as to his credibility, including referring to him as a
No. 12‐1632 13
liar, is a hard but fair blow, as long as the argument is made
based on the evidence and not a comment as to the prosecu‐
tor’s personal opinion. Turner, 651 F.3d at 752; Catalfo, 64 F.3d
at 1080. That is precisely what occurred here, and accordingly
the statements were not improper. Because there was no error,
we need not consider the question of prejudice.
AFFIRMED.
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01-03-2023
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08-05-2014
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https://www.courtlistener.com/api/rest/v3/opinions/2709362/
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In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 12‐2652
JOHN E. and FRANCES L. ROGERS,
Petitioners‐Appellants,
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent‐Appellee.
____________________
Appeal from the United States Tax Court.
No. 22667‐07 — Harold A. Haines, Judge.
____________________
ARGUED APRIL 19, 2013 — DECIDED AUGUST 26, 2013
____________________
Before EASTERBROOK, Chief Judge, and POSNER and
WILLIAMS, Circuit Judges.
POSNER, Circuit Judge. A trial before the Tax Court result‐
ed in a determination that in 2003 John Rogers and his wife
had failed without justification to report $984,655 of taxable
income attributable to income of Portfolio Properties, Inc.
(PPI), an S corporation wholly owned by Mr. Rogers, and to
a distribution that he had received from PPI. T.C. Memo
2011‐277, 102 T.C.M. (CCH) 536 (2011). For tax purposes the
income of an S Corporation is deemed the personal income
2 No. 12‐2652
of the shareholders, 26 U.S.C. § 1366, in this case the share‐
holder. After the Tax Court rejected Rogers’ arguments—
repeated in this appeal—that the disputed income had been
held in trust for third parties and so wasn’t taxable to him,
the parties stipulated that if Rogers’ arguments were rejected
he had a tax deficiency of $269,107 and also owed the gov‐
ernment a $5000 penalty. (We disregard his wife. Although
the couple filed a joint return, she appears to have had noth‐
ing to do with the shenanigans that gave rise to the deficien‐
cy.) As a detail, we remark the minuteness of the penalty.
The Tax Court determined that Rogers’ $269,107 tax defi‐
ciency was attributable to his “substantial understatement of
income tax,” which is penalized by 26 U.S.C. § 6662(a). The
penalty specified in the statute is 20 percent of the deficien‐
cy, but the stipulation we mentioned states that only a 5 per‐
cent penalty would be imposed, we know not why.
This is a companion case to Superior Trading, LLC v.
Commissioner, Nos. 12‐37 et al., also decided today, in which
we uphold the disallowance of losses claimed by companies
created by Rogers to implement a distressed asset/debt tax‐
shelter (“DAD”) scheme. We also uphold the imposition of a
“gross valuation misstatement” penalty. Though the émi‐
nence grise of the unlawful tax shelter, Rogers was not a par‐
ty to that case, the deficiency and penalty assessed against
him in this case arose from his creation of the shelter.
Rogers had created a partnership called Warwick Trad‐
ing, LLC. The partners were a Brazilian retailer named Lojas
Arapuã S.A. that contributed receivables to the partnership
that were worth a small fraction of their face amount be‐
cause they were largely uncollectible, and a company owned
by Rogers named Jetstream Business Limited that was des‐
No. 12‐2652 3
ignated Warwick’s managing partner, responsible for col‐
lecting the receivables. Because property contributed to a
partnership retains its original basis no matter how far its
market value has fallen, the receivables had the potential to
generate losses that would be deductible from the taxable
income of U.S. taxpayers who later entered the partnership,
though in Superior Trading we hold that the potential could
not be realized because, among other reasons, the partner‐
ship was a sham.
Rogers had created PPI—which plays a critical role in
this case—to sit between himself and Jetstream. The tax shel‐
ter was sold to U.S. taxpayers for a total of $2.4 million. Half
was the purchase price of partnership interests in Warwick.
The other half appears to have been a payment to Rogers
(via PPI) for creating the shelter. Rogers directed the buyers
of the interests (the shelter investors) to wire the entire $2.4
million to PPI’s bank account rather than Warwick’s, telling
them that Warwick lacked adequate banking facilities. PPI
funneled half the money received from the investors to
Warwick to pay Arapuã for the receivables that undergirded
the partnership interests that the shelter investors were ac‐
quiring, but retained the other half. The Tax Court deems the
half (i.e., $1.2 million) retained by PPI taxable income of
Rogers; he reported less than half of it as income.
He argues that the $1.2 million retained by PPI (some of
which, however, PPI distributed to him) was held in trust for
the benefit of Warwick and that therefore the alleged tax de‐
ficiency was a “partnership item” and so should have been
resolved “at the partnership level,” 26 U.S.C. §§ 6221, 6225,
6226, and so not in this case, which is about personal not
partnership income. Superior Trading is the case that deals
4 No. 12‐2652
with the partnership level of Rogers’ tax shelter, and the is‐
sue of the Rogers’ alleged tax deficiency was not raised in
that case. But the Tax Court ruled in the present case that the
money received by PPI and either retained by it or distribut‐
ed to Rogers but not forwarded to Warwick was not held in
trust for Warwick—it was PPI’s money—and so the tax sta‐
tus of that money was not an issue for resolution in a part‐
nership‐level case.
There is no documentation evidencing a trust. Rogers de‐
scribes the money as “imprest [sic] with a trust for the bene‐
fit of Warwick.” That sounds a little like a constructive trust,
which indeed usually lacks documentation—because it’s not
a real trust. Restatement (Third) of Restitution & Unjust En‐
richment § 55, comment b (2011). It is a remedy for unjust en‐
richment: “When property has been acquired in such cir‐
cumstances that the holder of the legal title may not in good
conscience retain the beneficial interest equity converts him
into a trustee.” Beatty v. Guggenheim Exploration Co., 122 N.E.
378, 386 (N.Y. 1919) (Cardozo, J.); see also 1 Dan B. Dobbs,
Dobbs Law of Remedies § 4.3(2), pp. 589–90 (2d ed. 1993). But
Rogers is not arguing that PPI, which he controls, converted
or otherwise wrongfully deprived Warwick of any money or
other property; and if it had, that could hardly generate a tax
benefit for Rogers, for he would be the wrongdoer.
Nevertheless there is something to Rogers’ trust argu‐
ment, though not enough. An agent receiving funds on be‐
half of his principal has a fiduciary duty to maintain the
principal’s funds in a segregated account. Restatement (Third)
of Agency § 8.12 and comment c (2006); cf. Rodrigues v. Her‐
man, 121 F.3d 1352, 1356 (9th Cir. 1997). PPI appears to have
done that with regard to the $1.2 million that the shelter in‐
No. 12‐2652 5
vestors were paying for the partnership interests. For it for‐
warded that amount to Warwick for distribution to Arapuã
(and to another Brazilian company which had incurred costs
in helping to administer the tax shelter).
Rogers testified that the other half, the $1.2 million that
PPI did not forward to Warwick, was also held in trust for
Warwick, to pay expenses that Warwick might incur in the
future. The Tax Court wasn’t required to believe him, and
didn’t. Rogers had caused PPI to distribute to him $732,000
of the $1.2 million that PPI did not forward to Warwick, and
he argues that he held all $732,000 in trust for Warwick. But
he paid income tax on $513,501 of that amount, which he de‐
scribed as payment for his legal services to PPI. That charac‐
terization is inconsistent with his having held the money in
trust for Warwick. He says that he mistakenly reported it as
personal income, because 2003 was a difficult time for him
and he was confused. But he never sought to file an amend‐
ed return, and years later he stipulated that the $513,501 was
indeed personal income. He tried to withdraw the stipula‐
tion at the trial; the court refused to let him. That was sensi‐
ble. How could anyone believe that if the $513,501 was not
his personal income, he, though an experienced tax lawyer,
would nevertheless have paid income tax on it?
Worse, if Rogers was holding in trust the money he re‐
ceived from PPI and then using it to reimburse himself for
legal services, he was committing a grave breach of trust.
Wal‐Mart Stores, Inc. Associates’ Health & Welfare Plan v. Wells,
213 F.3d 398, 401 (7th Cir. 2000); see Ill. Rule of Professional
Conduct 1.15 (2011); ABA Model Rule of Professional Con‐
duct 1.15 (2013). He thus is driven to argue both that the
money was in trust and so not taxable to him and that it was
6 No. 12‐2652
his personal property and so he committed no ethical or le‐
gal violations in using it to defray personal expenses. That is
a tightrope that no one can walk. The Tax Court was justi‐
fied in inferring from his treatment of the bulk of the
$732,000 distribution that he caused PPI to pay him that only
the $1.2 million paid to Warwick (and not in issue in this
case) was trust money. This was more telling evidence than
the explanations Rogers offered after being caught with his
hand in the cookie jar.
One loose end remains to be tied up. The money that PPI
neither forwarded to Warwick nor deducted from its income
as payments to Rogers and others for services (i.e.,
$1,218,377 minus $513,501 paid to Rogers and $22,039 paid
to law firms for legal services rendered to PPI) was presum‐
ably intended to compensate Rogers for thinking up and or‐
ganizing the tax shelter. All that matters, though, is that it
was income to him because PPI was an S corporation and
Rogers its only shareholder, rather than being money held in
trust by PPI or by him.
AFFIRMED.
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01-03-2023
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08-05-2014
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https://www.courtlistener.com/api/rest/v3/opinions/2708846/
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In the
United States Court of Appeals
For the Seventh Circuit
No. 11-2706
N.L.A., H.O.P.M., and S.L.P.L.,
Petitioners,
v.
ERIC H. HOLDER, JR.,
Attorney General of the United States,
Respondent.
Petition for Review of Orders
Of the Board of Immigration Appeals.
ARGUED JANUARY 20, 2012 — DECIDED MARCH 3, 2014
Before FLAUM and ROVNER, Circuit Judges and CASTILLO,
District Judge.*
ROVNER, Circuit Judge. After Colombian guerillas from the
Revolutionary Armed Forces of Colombia (FARC) kidnapped
*
The Honorable Rubén Castillo, Chief Judge of the United States District
Court for the Northern District of Illinois, sitting by designation.
2 No. 11-2706
her father and killed her uncle, N.L.A.1 fled Colombia for the
United States. After entering the United States legally on a
tourist visa, N.L.A. and her family overstayed their visa and
then applied for asylum within the one year requirement of the
Immigration and Nationality Act (Act), claiming that they were
victims of persecution by the FARC and were in danger of
future persecution should they return to their native Colombia.
N.L.A.’s husband and daughter filed derivative claims claim-
ing that if N.L.A. should be granted asylum, by statute, they
would be as well.2 The immigration judge concluded that
N.L.A. failed to meet her burden of proof that she has suffered
from past persecution or that she would suffer from future
persecution on the basis of her membership in a social group
of land owners (or some permutation of that category) or
because of her political opinion. The Board of Immigration
Appeals (Board) affirmed. These decisions, however, do not
reasonably follow from the record evidence and compel a
contrary conclusion. For this reason we grant the petition for
review and remand to the Board for further consideration of
N.L.A.’s case and her family’s derivative claims.
1
N.L.A. has been granted permission to proceed using a pseudonym based
on N.L.A.’s claim that if she and her family are removed to Colombia,
identifying information would place them and her sister’s family (who
currently lives in hiding in Colombia) in danger of retaliation by the FARC.
Appellate Record at 2 and 5.
2
N.L.A. has two daughters, but only one is party to this appeal, as the
other was married and could not make a derivative claim at the time of
filing. The other daughter’s derivative claim remains as she was unmarried
and under twenty-one at the time of filing. 8 U.S.C. § 1158(b)(3)(B).
No. 11-2706 3
I.
There can be no doubt that the threat of violence to civilians
by guerilla groups in Colombia continues to some degree. The
question of who is persecuted by these threats and whether the
government is unable or unwilling to contain them is unre-
solved and presented in this case.
In Escobar v. Holder, we described in some detail the
ongoing conflict in Colombia attributable to the leftist revolu-
tionary FARC and its leaders’ attempts to overthrow the
Colombian government. Escobar v. Holder, 657 F.3d 537, 540
(7th Cir. 2011). FARC’s tactics are brutal. The FARC regularly
kidnaps and kills local party officials and members. Id. In
accordance with their leftist politics, the FARC often targets
landowners on the theory that land should not be privately
owned and should belong to the people. See Tapiero de Orejuela
v. Gonzales, 423 F.3d 666, 669, 672 (7th Cir. 2005); International
Protection Considerations Regarding Colombian Asylum Seekers, 15
INT’L J. REFUGEE L. 318, 319 (2003). (R. 615). Consequently,
members of FARC seek out landowners and subject them to a
“vacuna”—an extortion or a tax to remove wealth from land
owners and transfer it to the war chest for FARC’s cause.
(“vacuna” literally translates as “a vaccine,"—presumably
against FARC violence)
According to N.L.A.’s testimony, which the immigration
judge found to be credible (R. 72), N.L.A.’s father and her uncle
both owned farms in Colombia, about one hour away from
each other. In 2003, the FARC began targeting N.L.A.’s uncle,
stealing livestock, and demanding that the uncle pay the
vacuna. The uncle was opposed to financing the activities of the
4 No. 11-2706
FARC and thus refused to make the payments. Consequently,
on the night of September 13, 2003, the FARC abducted and
then killed him.3 The police performed an initial investigation
and determined that the FARC was responsible for the murder,
but the crimes were never solved. N.L.A. testified that because
both witnesses and the police fear retribution by the FARC, the
crimes they commit are rarely solved. In fact, the police
themselves are often victims of FARC kidnappings and
murder. See U.S. Department of State, Report on Human Rights
Practices: Colombia, 2, 7 (2003) (R. 908, 913); United Nations
Comm’n on Human Rights, Report of the High Commission for
Human Rights on the Situation of Human Rights in Colombia, 11,
23 (2005) (R. 495, 507); Luz E. Nagle, Colombian Asylum Seekers
and What Practitioners Should Know About the Columbian Crisis,
18 Geo. Immigr. L. J., 216 (2004) (R. 600); United Nations
Comm’n on Human Rights, Report of the High Commission for
Human Rights on the Situation of Human Rights in Colombia.
(2002) (R. 807, 819, 820, 827).
3
A Colombian newspaper reporting on the murder wrote: “The local
communist leader, ex town councilor and ex candidate of the Department
Assembly, Alfonso Lopez, was assassinated by heavily armed men in
uniforms on September 19, in the early morning hours, in his country house
on the San Francisco path, in the town of Tibacuy, in the Department of
Cundinamarea. The day before, in Silvaina, Tibaeuy and Viotá the Army
had carried out an unlawful entry and captured seventy people, accused of
collaborating with FARC, in one of the ‘miraculous catches,’ which the
Public Force has carried out throughout the country. In spite of this being
a militarized zone, these assassinations were performed with the most
complete impunity.” (R. 289)
No. 11-2706 5
Two months after members of FARC murdered the peti-
tioner’s uncle, the FARC kidnapped the petitioner’s father.
Unbeknownst to N.L.A., the FARC had been unsuccessfully
demanding money from her seventy-two-year-old father for
months. On November 18, 2003, while he was performing his
daily inspection of the farm, he was taken captive. A masked
man went to his house and told his wife that her husband was
fulfilling his duty by giving information to the FARC, and that
both she and her husband would be killed if the family
contacted the police. The FARC held N.L.A.’s father for eleven
days, during which time he was interrogated about who had
title to the farm, where his children lived, what they owned,
and where his grandchildren went to school. Under duress, the
father told the FARC where N.L.A. and her sister lived and
that they had title to the farm. The FARC threatened the father
that his daughters would be expected to pay the monthly
vacuna or hand over title to the farm, or they would be killed.
After eleven days, N.L.A.’s father was dropped off along a
highway and forced to walk home. The family testified that he
arrived at the farm weak, starved, dehydrated, and complain-
ing of kidney pain. As a result of the kidnapping and the fear
of future harm, N.L.A.’s parents and sister moved seven hours
away to another town and changed their names.4 The sister
and her husband opened a pharmacy in the town, but put the
pharmacy in the name of a third party. The family changes
apartments and phone numbers frequently to evade the FARC.
4
The record is contradictory as to whether the sister moved four or seven
hours away.
6 No. 11-2706
N.L.A. and her family also abandoned their home, discon-
nected their phone, and began living in hiding with the family
of N.L.A.’s husband, H.O.P.M. They moved between the
houses of various relatives and used a cell phone with an
unlisted number as their only means of telephone communica-
tion. In December 2003, shortly after the kidnapping, N.L.A.
visited the United States embassy to request asylum, but she
found that she would need an attorney to make the request.
The attorney advised N.L.A. that, because she and her family
already possessed valid U.S. visas, it would be easier for her to
enter the United States legally and request asylum from within.
Because N.L.A. believed that her family was in imminent
danger, the family immediately bought tickets, leaving their
home vacant, their business in the hands of a partner, and most
of their possessions behind. N.L.A. and her family entered the
United Sates with valid tourist visas on January 13, 2004, and
filed an application for asylum and withholding of removal on
January 11, 2005, within the one year application deadline.
Since they have left the farm, neighbors have reported
seeing “suspicious-looking people” poking around, but the
FARC has not managed to dole out threats or harm to N.L.A.’s
family—either the ones living here or the ones living in hiding
in a new town in Colombia.
The immigration judge denied the application for asylum
and withholding of removal and the Board affirmed with its
own written opinion, thus requiring us to review both
opinions—using the de novo standard for the legal conclusions
and deferentially for the factual conclusions, reversing only if
the evidence compels a different result. Cece v. Holder, 733 F.3d
662, 675-676 (7th Cir. 2013) (en banc). That is “we review the
No. 11-2706 7
Board’s findings under the substantial evidence standard,
which requires us to assess whether the Board’s determination
is supported by reasonable, substantial, and probative evi-
dence on the record considered as a whole and to reverse only
if the evidence compels a contrary conclusion.” Abdoulaye v.
Holder, 721 F.3d 485, 490 (7th Cir. 2013) (internal citations
omitted).
The immigration judge concluded that the FARC had only
threatened N.L.A.’s father and not N.L.A. and that therefore
her claim of past persecution was derivative to her father’s,
and thus not allowed under our case law. And because the
FARC had not threatened nor even contacted N.L.A.’s sister
since she moved to a new town, N.L.A. could not demonstrate
an objectively reasonable fear of future persecution. (R. 103-07).
The immigration judge equivocated as to whether the social
groups of “child[ren] of a[n] upper-middle class land owner
from Colombia” or “child[ren] or daughters[s] of a land owner
who has been kidnapped by the FARC” could qualify as
legitimate social groups under the Act. But because the judge
did not find any evidence of persecution, an ultimate decision
on the issue was not necessary. (R. 104). The Board agreed with
the immigration judge on all substantive points, but concluded
definitively that neither of the administrative judge’s proposed
social group categories were cognizable under the Act. (R. 5-6).
II.
To be eligible for asylum, an immigrant must demonstrate
that she “is unable or unwilling to return to” her country of
origin “because of persecution or a well-founded fear of
persecution on account of race, religion, nationality, member-
8 No. 11-2706
ship in a particular social group, or political opinion.” 8 U.S.C.
§ 1101(a)(42)(A). The persecution must be either that which she
has suffered in the past or a demonstration that she has a
well-founded—that is subjectively genuine and objectively
reasonable—fear of future persecution, or both. Bathula v.
Holder, 723 F.3d 889, 898 (7th Cir. 2013). If the applicant can
establish that she has suffered past persecution on the basis of
a protected ground, the existence of a well-founded fear is
presumed. 8 C.F.R. § 1208.13(b)(1); Bathula, 723 F.3d at 898. The
Government can rebut the presumption by showing either a
fundamental change in conditions in the applicant’s home
country or that, under all the circumstances, it would be
reasonable to expect the applicant to relocate to another part of
the applicant's country. 8 C.F.R. § 1208.13(b)(2)(ii); Bathula, 723
F.3d at 898. In cases in which the applicant has not established
past persecution and can only proceed by demonstrating fear
of future persecution, the asylum applicant bears the burden of
establishing that she cannot reasonably relocate to another part
of her home country to avoid persecution. Cece, 733 F.3d at 687.
In the estimation of the immigration judge and Board,
N.L.A.’s claim of past persecution is based largely on the harm
suffered by her uncle and father and thus is “derivative” and
not permitted in this Circuit. See Firmansjah v. Gonzales, 424
F.3d 598, 605 (7th Cir. 2005); Ciorba v. Ashcroft, 323 F.3d 539, 545
(7th Cir. 2003). The Board concedes that the FARC warned
N.L.A.’s father that N.L.A. and her sister would be harmed if
the family did not pay a vacuna or relinquish title to the farm,
but concluded that because N.L.A. herself was not harmed and
had no direct contact with any of its members, the claim was
only derivative to her father. The unfulfilled threat, not made
No. 11-2706 9
directly to N.L.A., was insufficient, the Board reasoned, to
constitute persecution.
This court has declared, however, that credible threats of
imminent death or grave physical harm can indeed be suffi-
cient to amount to past persecution, provided they are credible,
imminent and severe. Stanojkova v. Holder, 645 F.3d 943, 948
(7th Cir. 2011); Bathula, 723 F.3d at 900; Boykov v. INS, 109 F.3d
413, 416 (7th Cir. 1997) (acknowledging that threats “of a most
immediate and menacing nature might, in some circumstances,
constitute past persecution.”). The Board concluded that the
threats in this case failed to reach this level because they were
unfulfilled and were directed primarily toward N.L.A.’s uncle
and father, and not toward N.L.A. But the murder of N.L.A.’s
uncle and the kidnapping of her father were, in fact, part of the
threat to N.L.A. The FARC funds its war chest by threatening
to kill or harm landowners (or cattle breeders or farmers or
wealthy business persons) who do not pay a vacuna or relin-
quish title to their land or property. The threats have force
because the FARC backs them up with acts of violence when its
demands are not met. By killing the uncle and kidnapping the
father, the FARC was announcing to N.L.A. and her sister, “we
are targeting your family and this is what happens when you
fail to pay the vacuna.”
The threat of death or grave bodily harm was credible. The
FARC had threatened the family before and proved that they
would follow through on their threats by killing the uncle and
kidnapping the father—the gravest harms possible. And the
threat was imminent. The FARC had begun harassing N.L.A.’s
uncle only a few months before they killed him. And then, less
10 No. 11-2706
than one month later, they kidnapped his brother. The FARC
had stepped up its pace and N.L.A. and her sister reasonably
feared that they would be next. N.L.A.’s sister immediately
moved and began living in hiding, and N.L.A. initiated her
path to asylum the following month by visiting the United
States embassy in Colombia.
The Board erred by misconstruing the nature of the threat.
The Board, agreeing with the immigration judge, labeled
N.L.A.’s claim as a “derivative claim.” (R. 4). The term
“derivative,” however, has a different meaning in the asylum
context. Although the misnomer itself is not problematic, it
seems to have led to some confusion about the nature of the
persecution in this case. Ordinarily in asylum law we use the
term “derivative claims” to refer to a specific statutory provi-
sion that allows spouses and children of asylum applicants to
be granted the same status as the applicant even if the spouse
or child would not otherwise be eligible for asylum on his or
her own. See 8 U.S.C. § 1158 (b)(3)(A). In a second use of the
term “derivative claim,” we describe a situation in which harm
to an applicant’s spouse or child constitutes persecution of the
primary asylum seeker. Gatimi v. Holder, 578 F.3d 611, 617 (7th
Cir. 2009) (“Genital mutilation of one’s wife, unless one
happens to be a supporter of the practice, is a way to punish
one, and so the menace to [the spouse] is a legitimate compo-
nent of [the asylum seeker’s] case.”). In this sense, it might be
less confusing to describe this type of persecution as “persecu-
tion by proxy.” See Zhou Ji Ni v. Holder, 635 F.3d 1014, 1018 (7th
Cir. 2011). As we explained in Gatimi, “[i]f your house is
burned down, or your child killed, in order to harm you, the
fact that you are not touched does not mean that those acts
No. 11-2706 11
cannot constitute persecution of you.” Gatimi, 578 F.3d at 617.
In many instances, watching a loved one suffer is more
harmful than suffering oneself.
The harm that the immigration judge and Board described
as “derivative” in this case is not really derivative at all. The
harm to N.L.A.’s father was meant as a direct threat to N.L.A.
herself. The direct message from the FARC was, “if you do not
pay the vacuna, this will happen to you as well.”
In Ciorba v. Ashcroft, 323 F.3d 539, 545 (7th Cir. 2003), we
explained that an asylum applicant cannot rely solely on the
persecution of her family members to qualify for asylum, but
rather must show that her family's political opinions have been
imputed to her and that she has suffered or will suffer persecu-
tion as a result. The claims that we reject as “derivative,”are
those in which family members suffer legitimate persecution,
but the applicant’s suffering, although perhaps caused by the
family member’s persecution, does not itself, rise to the level of
persecution. For example, in Tamas-Mercea v. Reno, 222 F.3d
417, 424 (7th Cir. 2000), the applicant did not argue that he was
subjected to the persecutive acts lobbed against his family, but
“instead, claims a type of derivative persecution, that which
arose from the physical abuse of his family members and the
discrimination he personally endured because of his family's”
political opinion. Id. The applicant himself merely suffered in
the form of lesser grades and lesser jobs. The court found that
“if Mr. Tamas personally had suffered the type of harm
inflicted on his family members, we would have little trouble
concluding that he had suffered persecution within the
meaning of the statute.” Id. See also Bereza, 115 F.3d at 476
12 No. 11-2706
(rejecting the derivative nature of the claim where the appli-
cant’s mother was subject to persecution, but the petitioner had
been subjected only to adverse educational and employment
actions which did not, on their own, rise to the level of persecu-
tion).
The Board cites Firmansjah v. Gonzales for the proposition
that “we [reject] claims of derivative persecution,” but the
persecution alleged in that case had only been inflicted on the
petitioner’s parents and not used as a means to persecute the
petitioner. Firmansjah v. Gonzales, 424 F.3d 598, 605 (7th Cir.
2005). Firmansjah was ethnically Chinese but living in Indone-
sia with her parents where anti-Chinese violence was prevalent
and overlooked by the government. Id. at 600. Fitmansjah left
Indonesia to study in the United States and while she was there
her parents were forced to change their Chinese surnames to
Indonesian ones to prevent persecution. Id. at 600, 605. Neither
she nor any member of her family was ever threatened or
otherwise harmed in Indonesia. Id. at 605. This court concluded
that the parent’s name change did not establish that Firmansjah
had been persecuted, and that, in any event, although having
to change one’s name is reprehensible, it did not rise to the
level of persecution. Id. at 605. The Board also cites Ingmantoro
v. Mukasey, 550 F.3d 646, 650 (7th Cir. 2008) as an example of
the distinction between derivative claims, where the respon-
dent seeks relief on the basis of shared harm with a family
member, and claims where the respondent is the intended
target of harm leveled at a family member. In Ingmantoro,
however, this Court questioned whether Ms. Ingmantoro’s
claim was really a derivative claim at all. Id. at 649-50. When
anti-Chinese thugs burned down her father’s store, they did so
No. 11-2706 13
in the course of pursuing Ms. Ingmantoro herself. The court
noted that she did not simply share in the persecution leveled
against her family, she was, herself, the target of the persecu-
tion. Id. at 650. Instead of deciding that Ms. Ingmantoro had a
derivative claim, this court determined that it could not say,
with the record on hand, that the harm suffered by Ms.
Ingmantoro rose to the level of persecution. Id. at 649-50. The
panel also concluded that Ms. Ingmantoro presented a very
thin case that the acts occurred on the basis of her Christian
charity work. Id. More importantly, Ms. Ingmantoro did not
present any evidence linking the nefarious acts to government
action. Id. at 650. In sum, the Ingmantoro case supports N.L.A.’s
case by demonstrating how acts leveled against a family
member of an individual can indeed constitute persecution of
that individual. Thugs burned Ms. Ignamontoro’s father’s shop
as a way of threatening her, just as the FARC kidnapped
N.L.A.’s father as a way of sending a direct threat to N.L.A.
who held title, along with her sister to the land in question.
In contrast, one can imagine a situation in which one family
member is targeted because of specific activities or characteris-
tics that others in the family do not share. For example, the
government sponsored or encouraged execution of a high
ranking political leader in an unpopular political party does
not, without other evidence, indicate that the other members
of the family are at risk of death or serious injury. If the other
family members are not also leaders of the party, they are not
similarly situated and not necessarily targets. See, e.g., Mabasa
v. Gonzales, 455 F.3d 740, 746 (7th Cir. 2006).
14 No. 11-2706
In this case, the persecution of N.L.A.’s father was certainly
evidence that the FARC was gunning for N.L.A. and her
family. See Gatimi, 578 F.3d at 611. In fact, the entire purpose of
kidnapping and releasing the father was to send a message to
the family about what happens to land owners who will not
pay the vacuna. If there was any doubt, the FARC made it clear
by specifically telling N.L.A.’s father to carry the message
home that the daughters would be killed if they failed to pay
the tax.
N.L.A. testified that during her father’s time in captivity,
the FARC threatened him that “if he didn’t hand over the farm
or pay the monthly vacuna, it would cost the lives of his
daughters and grandchildren.” (R. 383) (aff. of N.L.A. at 6). The
threat to N.L.A. was serious and severe. It is true that the
FARC did not make the threat to N.L.A. personally, that is by
speaking to her face-to-face, by phone, or mail. The threat was
issued to her directly by messenger—her kidnapped and
vulnerable father. We can think of no more direct a threat than
one made to a parent about harming a child. Such a threat
becomes a threat to both the parent and the child.
It is no surprise that N.L.A. did not receive any threats
personally. Immediately after her father was released from the
captivity during which he revealed his daughters’ interest in
the farm, N.L.A. and her sister both disappeared. N.L.A. and
her family went into hiding with her husband’s family,
abandoning their home and telephone number. N.L.A.’s sister
moved to a different town, changed her name, opened a
business under a third party’s name, and changes homes every
six months. N.L.A. and her family fled to the United States
No. 11-2706 15
approximately one and a half months after the FARC released
her father—with barely enough time for the FARC to find her.
The Board accepted as credible N.L.A.’s testimony about
the threat made to her through her father, but fumbled the
analysis by misidentifying N.L.A.’s claim as derivative and
concluding that N.L.A. herself was not harmed and never had
any contact with members of the FARC. As we have estab-
lished, N.L.A. received a credible threat of imminent
harm—one that was backed by the most proof of seriousness
that one could require—the actual killing of one family
member and kidnapping of another. No reasonable fact finder
could conclude otherwise.
The Board also based its “derivative claim” analysis on the
fact that there was no evidence that N.L.A. ever held title to
her father’s farm and that if she did obtain title, it was not until
her father died in 2009. Both of these points may, in fact, be
true. The relevant fact, however, is that, while he was kid-
napped, N.L.A.’s father, under extreme pressure, told the
FARC that he had to talk to his daughters before making any
arrangement because they had the title to the farm. (R. 168)
(tr. 10/31/09 at 53); (R. at 383) (aff. of N.L.A. at 6). It certainly
would make no difference to the FARC that N.L.A.’s father
may have been legally incorrect.
An applicant who successfully proves that she was subject
to past persecution is presumed to have a well-founded fear of
future persecution, which the Attorney General can rebut by
demonstrating a change in conditions in the applicant’s home
country. 8 C.F.R. § 1208.13(b)(1); Cece, 733 F.3d at 668. The
Board did not have to rebut any findings, as it determined that
16 No. 11-2706
N.L.A. had not faced past persecution. An applicant who has
not been found to have faced past persecution, however, can
qualify for asylum by demonstrating an objectively reasonable,
well-founded fear of future persecution. 8 C.F.R. § 208.16(b)(2);
Kllokoqi v. Gonzales, 439 F.3d 336, 345 (7th Cir. 2005).
Because we find past persecution, we can presume that
N.L.A. would face future persecution, but we would find a
legitimate fear of future persecution regardless. The Board’s
determination that N.L.A. had not demonstrated an objectively
reasonable fear of future persecution was not supported by
reasonable and probative evidence on the record. See
Abdoulaye, 721 F.3d at 490. The Board’s conclusion was that in
the seven years since the murder of the uncle and the kidnap-
ping of the father, the FARC had never contacted N.L.A. or her
sister directly. It further concluded that the reports from the
neighbors that the FARC is still monitoring the farm and
searching for the family come from multiple levels of hearsay
and have not been substantiated with declarations from the
neighbors or the sister.
As we have already noted, it is unsurprising that the FARC
never contacted N.L.A. or her sister. N.L.A. has left Colombia
for the United States and the FARC has likely lost interest.5 The
5
Of course it is theoretically possible for the FARC to contact N.L.A. in the
United States. The fact that it has not may simply be a reflection of several
factors, including the fact that the government in the United States may be
more aggressive about and more successful in pursuing terrorist activity,
and that the FARC, like any organization, knows that its pursuit of N.L.A.
and her family would be costly and lead to little chance of financial or other
gain.
No. 11-2706 17
sister moved to another town seven hours away, changed her
name, moves her home every few months, changes her mobile
telephone number frequently, and runs a pharmacy under a
third party’s name. It simply defies logic to conclude that
potential guerilla targets who continually move apartments,
change their phone number and operate a business under an
assumed name are not living in hiding because they work
“openly” (using an assumed name) in the business and the
children leave the home to attend school.
In other cases we have assumed that such behavior consti-
tutes hiding. See e.g. Castilho de Oliveira v. Holder, 564 F.3d 892,
895 (7th Cir. 2009) (describing the family’s behavior of moving
homes and children’s school frequently as “hiding”); Iao v.
Gonzales, 400 F.3d 530, 533 (7th Cir. 2005) (noting that we may
infer “hiding” even when the word is not used, when an
applicant states that village officials repeatedly visited her
home and she managed to evade them each time.); Agbor v.
Gonzales, 487 F.3d 499, 505 (7th Cir. 2007) (living in hiding does
not constitute safe relocation); Giday v. Gonzales, 434 F.3d 543,
555 (7th Cir. 2006), superceded by statute on other grounds, (“[I]t
is an error of law to assume that an applicant cannot be entitled
to asylum if she has demonstrated the ability to escape the
persecution only by chance or by trying to remain unde-
tected.”); Min Ning Lin v. Mukasey, 313 Fed. Appx. 854, 855 (7th
Cir. 2008) (unreported but helpful in describing hiding as
moving from place to place for a year). The Board’s reliance on
the fact that the petitioners had not been contacted by the
FARC is not a reasonable one when her sister lives in hiding in
Colombia and N.L.A. has fled to the United States—outside the
reach of the FARC.
18 No. 11-2706
The neighbors have informed N.L.A.’s sister that the FARC
still visits the family farm searching for the family. The Board
concluded that since this claim was hearsay and unsupported
by declarations from the neighbors, the sister’s friends or the
sister herself, the claims were entitled to reduced weight.
Reduced from what or as compared to what, we might ask? In
any event, the Federal Rules of Evidence do not apply in
removal proceedings, and hearsay is admissible unless its use
renders the hearing “fundamentally unfair.” Ogbolumani v.
Napolitano, 557 F.3d 729, 734 (7th Cir. 2009); Pronsivakulchai v.
Holder, 646 F.3d 1019, 1022 (7th Cir. 2011).
As our colleagues in the Third Circuit have stated in
an en banc opinion,
[Al]though the hearsay nature of evidence certainly
affects the weight it is accorded, it does not affect its
admissibility in immigration removal proceedings.
By matter-of-factly dismissing the evidence as ‘hear-
say,’ the IJ failed to explain why it should be ac-
corded no weight. We submit that such seemingly
reliable hearsay evidence should not be rejected in
such a perfunctory manner.
Dia v. Ashcroft, 353 F.3d 228, 254 (3d Cir. 2003) (en banc). The
immigration judge and Board were not required to find the
hearsay evidence sufficient, but neither could they ignore the
evidence simply because it was hearsay without considering
whether it had any indicia of reliability. See Gu v. Gonzales, 454
F.3d 1014, 1021 (9th Cir. 2006) (hearsay may not be rejected out
of hand); see also Sosnovskaia v. Gonzales, 421 F.3d 589, 594 (7th
Cir. 2005) (a fair hearing requires due consideration to the
No. 11-2706 19
arguments). In fact, the visit to the farm squares with the
modus operandi of the members of the FARC who previously
had paid frequent visits to the farms of the uncle and father to
make certain the weight of the threat was continuously felt.
The evidence also jibes with the assessment of expert Dr.
John Green, who opined that N.L.A. would be in “mortal
danger” if forced to return to Colombia because the FARC
would eventually find her. (App. 11). Dr. Green explained that:
Thanks to their nation-wide network of fronts and
spies, the FARC would have no trouble finding
[N.L.A.] and relocating in Colombia is, therefore,
unlikely to offer much protection. Given the Colom-
bian government’s poor record of protecting even
high profile FARC targets, average citizens know
how futile it is to seek official protection. If she were
to return, they would eventually find her. Though
the FARC does not practice the same kind of brutal
and indiscriminate massacres as the paramilitary
militias, they do regularly assassinate or kidnap
people they have designated as military targets. The
FARC tends to see the world in very black and white
terms; if one is not with them, one is against them,
and therefore a military target.
(R. 133-134).
Of course persecution alone is not enough. The persecution
must be “on account of race, religion, nationality, membership
in a particular social group, or political opinion.” 8 U.S.C.
§ 1101(a)(42)(A); Cece, 733 F.3d at 668. In this case, the peti-
tioner claims she has been persecuted based on her member-
20 No. 11-2706
ship in a social group and political opinion.6 Several iterations
of the social group have been bandied about in this case. The
different iterations of the social group do not upset the claim,
as the various characteristics of each have been considered by
the immigration judge and Board below. See Cece, 733 F.3d at
670. Petitioners originally proposed a social group of children
of upper-middle class landowners in Colombia. The immigra-
tion judge considered that category as well as one consisting of
children or daughters of land owners who have been kid-
napped by the FARC. (R. 104). The Board considered both of
these groups and concluded that neither was a cognizable
social group under the Act. (R. 5). N.L.A.’s current claim on
appeal is that she belongs to the social group of “landowners
of means who had refused to cooperate with the FARC.”
(Petitioners’ Brief at 18).
This en banc court has recently explored the boundaries of
cognizable social groups under the Act. Cece, 733 F.3d at 668-
677. A social group is one in which membership is defined by
a characteristic that is either immutable or is so fundamental to
individual identity or conscience that a person ought not be
6
N.L.A. asserts that she was denied due process because the Board
considered social group without briefing from the petitioners. The
petitioners, however, did in fact brief the issue (R. 41-42). Furthermore, the
matter had not been conclusively decided in N.L.A.’s favor by the
immigration judge as the petitioners claim. The immigration judge stated
only that the petitioner “could well” establish her position in a social group
(and then equivocated by saying that it seemed “overly broad”), (R. 75), but
then based his decision on a finding of lack of persecution instead. In any
event, the issue was briefed and in play and N.L.A. was not denied due
process.
No. 11-2706 21
required to change it. Id. at 669; Matter of Acosta, 19 I. & N. Dec.
211, 233-34 (BIA 1985). Our cases have made clear that some-
times an asylum applicant acquires membership in a group
with a qualifying immutable characteristic because a shared
past experience or status cannot be undone. For this reason, the
educated, landowning class of cattle farmers targeted by the
FARC constitutes a social group. Tapiero de Orejuela v. Gonzales,
423 F.3d 666, 672 (7th Cir. 2005). See also Escobar v. Holder, 657
F.3d 537, 545–46 (7th Cir. 2011) (former truckers—or, more
generally, those with a special skill needed by the persecu-
tors—constitute a social group because their past actions and
acquisition of skills are unchangeable); Sepulveda v. Gonzales,
464 F.3d 770, 771–72 (7th Cir. 2006) (subordinates of the
attorney general of Colombia who had information about
insurgents plaguing that nation); Gatimi, 578 F.3d at 614
(former members of a violent and criminal faction in Kenya);
Benitez Ramos v. Holder, 589 F.3d 426, 428–29 (7th Cir. 2009)
(tattooed, former Salvadoran gang members who had since
turned to God); Lwin v. INS, 144 F.3d 505, 512 (7th Cir. 1998)
(parents of Burmese student dissidents).
In addition to this Circuit’s decision in Tapiero de Orejuela,
other courts have found that land ownership may be the basis
for a social group. See Cordoba v. Holder, 726 F.3d 1106, 1114
(9th Cir. 2013) (“Both our court and other circuits have fol-
lowed the BIA's lead in recognizing that landownership may
be the basis of a particular social group.”). In fact, the seminal
case in which the Board defined “social group” directly
addressed the issue of land ownership stating: “The shared
characteristic might be an innate one such as sex, color, or
kinship ties, or in some circumstances it might be a shared past
22 No. 11-2706
experience such as former military leadership or land owner-
ship.” Matter of Acosta, 19 I. & N. Dec. at 233 (emphasis sup-
plied).
The Board considered two social groups first, “a child or
daughter of a land owner who has been kidnapped by the
FARC,” and second, “landowners of means who refuse to
support the FARC.” In both cases the Board rejected the
categories as being too broad, too amorphous and unspecific.
The Board criticized the first category as being “too broad, as
it could apply to any child of a kidnapped landowner, regard-
less of the child's age, location, or life circumstances, particu-
larly regardless of whether the child holds or will inherit title
to the family property, which is the feature that the respondent
contends makes her a target of the FARC.” (R. 5). The Board
distinguished the second category from the social group of
wealthy and educated land owning cattle farmers targeted by
FARC in Tapiero de Orejuela by stating that the group in the
latter case was narrower and more particular because it was
defined not simply as “wealthy landowners, but as wealthy
and educated cattle farmers.” (R. 6). The Board’s distinction,
however, is one without a difference. To begin, the Board has
rejected the idea of wealth as a social group, distinguishing it
from landowning by its relative nature. As another circuit
explained:
For purposes of determining a social group, land-
ownership may appear to be indistinguishable from
wealth in many aspects. The BIA has held, however,
that the latter attribute does not, standing alone,
generally form the basis of a particular social group.
No. 11-2706 23
See A–M–E, 24 I. & N. Dec. at 73–76. Its reason for so
holding was that it found wealth to be too “indeter-
minate,” in that it might “vary from as little as 1
percent to as much as 20 percent of the population,”
and that it would be too difficult to determine who
the members of the purported class would be. Id. at
76. The BIA noted, nevertheless, that “in appropriate
circumstances, “wealth” may be a shared character-
istic of a social group,” when the group is more
“defined” (such as when a government or an uncon-
trolled rebel group targets individuals above an
established income level). Id. at 75 n. 6. The BIA has
recognized that, in contrast, “land ownership” is an
“easily recognizable trait[ ],” see C–A–, 23 I & N.
Dec. at 959–60, and, even in its decisions distinguish-
ing wealth, has recognized landownership as a
“common, immutable characteristic,” see A–M–E–,
24 I. & N. Dec. at 73.
Cordoba, 726 F.3d at 1116. In short, wealth drops out of the
comparison and the only distinction left in Tapiero de Orejuela
is the “highly educated” one—a trait that likely is of little
interest to the FARC whose main concern is the need to fund
its war chest and the uneven accumulations of land and
wealth.
More importantly, however, is the fact that this court does
not determine the legitimacy of social groups by the narrow-
ness of the category. In Cece we specifically rejected “broad-
ness” as a per se bar to protected status. Cece, 733 F.3d at 674.
In Cece we catalogued a long list of very broad categories that
24 No. 11-2706
have passed muster as social groups. Id. at 674-75 (citing cases
involving women in tribes that practice genital mutilation,
persons who oppose forced sterilization in China, Somalian
subclans, homosexuals in Cuba, and Filipinos of Chinese
ancestry living in the Phillipines). We also noted that it would
be antithetical to asylum law to deny refuge to a group of
persecuted individuals who have valid claims merely because
too many have valid claims. Id. at 675. This would be akin to
saying that the victims of widespread governmental ethnic
cleansing cannot receive asylum simply because there are too
many of them. Id. citing Singh v. I.N.S., 94 F.3d at 1353 (“Thus,
we reject the notion that an applicant is ineligible for asylum
merely because all members of a persecuted group might be
eligible for asylum.”). We have stated in no uncertain terms
that denying legitimate asylum applications merely because
the group of applicants might be too great is unreasoned and
impermissible: “the United States has every right to control
immigration. But Congress has not authorized the immigration
service to do so by denying asylum applications in unreasoned
decisions.” Iao v. Gonzales, 400 F.3d 530, 533 (7th Cir. 2005).
In any event, broad categories need not open the floodgates
of immigration. Demonstrating that one belongs to a social
group is only the first step in determining asylum and says
nothing about whether the applicant will be able to establish
the nexus between that membership and the persecution
required to warrant asylum. Cece, 733 F.3d at 674. As the Board
itself explained “the fact that almost all Somalis can claim clan
membership and that interclan conflict is prevalent should not
create undue concern that virtually all Somalis would qualify
for refugee status, as an applicant must establish he is being
No. 11-2706 25
persecuted on account of that membership.” In re H-, 21 I. & N.
Dec. 337, 343 (BIA 1996).
The Board also rejected N.L.A.’s proposed social groups
because “[t]he characteristic of being a ‘landowner of means’
is not immutable, as one can change one’s status by selling,
losing or abandoning one’s property, as the respondent did
here.” (R. 6). Having cited Tapiero de Orejuela earlier, this was
an odd assertion for the Board to make, as we addressed that
issue directly in Tapiero de Orejuela and readily dismissed it by
noting that “even if the family were to give up its land, its
cattle farming, and even its educational opportunities, there is
no reason to believe that they would escape persecution.”
Tapiero de Orejuela, 423 F.3d at 672-73. The court went on to
note that a family could be targeted for persecution based on
past membership in the cattle farmer, landowning class—a
category which is undoubtedly immutable. Id.
Although the issue was not raised by the Board, it warrants
mentioning that the fact that N.L.A. and her family belong to
a category of persons targeted by the FARC does not disqualify
their otherwise valid social group consisting of Colombian
land-owning farmers. As we emphasized in Cece, “[a] social
group cannot be defined merely by the fact of persecution or
solely by the shared characteristic of facing dangers in retalia-
tion for actions they took against alleged persecutors. That
shared trait, however, does not disqualify an otherwise valid
social group.” Cece, 733 F.3d at 671 (internal citations omitted).
We need not decide whether the social group of “child[ren]
or daughters of a land owner who has been kidnapped by the
FARC” is a cognizable social group as N.L.A. has demon-
26 No. 11-2706
str at e d me mbe r ship in one legitimate so cial
group—Colombian land owners who refuse to cooperate with
the FARC. Likewise, just as in Tapiero de Orejuela, it is possible
that N.L.A. and her family were also members of a smaller
social group consisting of the close family members of the
father and uncle, but we need not decide that now.
In sum, there can be no rational reason for the Board to
reject a category of “land owners” when the Board in Acosta
specifically used land owning as an example of a social group
and this Circuit has made clear that the category of educated
land owning cattle farmers targeted by the FARC qualifies as
a social group.
For this reason we also do not need to determine whether
the FARC targeted N.L.A. based on her family’s anti-FARC
political opinion. The petitioner contended that her father
refused to support the FARC based on his political opinion, but
N.L.A. would have had to show that “politics rather than
many other likely reasons lay behind [her] unwillingness to
support FARC.” Tapiero de Orejuela, 423 F.3d at 674. In this case,
we are told that N.L.A.’s father refused to pay the vacuna based
on his objection to the FARC cause, but we are not told about
N.L.A.’s own political opinion on the matter.
For the final hurdle, N.L.A. must demonstrate that the
government of Colombia acquiesced in the persecution.
Persecution does not include the actions of private citizens
unless the government is complicit in those acts or is unable or
unwilling to take steps to prevent them. Cece, 733 F.3d at 675
(citing Bitsin v. Holder, 719 F.3d 619, 628 (7th Cir. 2013)).
No. 11-2706 27
The Board concluded that N.L.A. had not demonstrated
that the FARC is a group that the government cannot or will
not control. The Board reasoned that the FARC had been
considerably weakened by the government’s ramped up
military and police operations, by the assassination of the
FARC’s leaders, and desertions caused by the weakened
leadership.
The fact that the Colombian government is, of late, engaged
in more concerted and successful efforts to control the FARC,
however, does not necessarily mean that it cannot also remain
willfully blind to the torturous acts of the FARC.
Where a government contains officials that would be
complicit in torture, and that government, on the
whole, is admittedly incapable of actually prevent-
ing that torture, the fact that some officials take
action to prevent the torture would seem neither
inconsistent with a finding of government acquies-
cence nor necessarily responsive to the question of
whether torture would be inflicted by or at the
instigation of or with the consent or acquiescence of
a public official or other person acting in an official
capacity.
De La Rosa v. Holder, 598 F.3d 103, 110 (2d Cir. 2010).
On the other side of the scale, the Board considered the
testimony of Dr. Green about the ongoing strength of the
FARC in Colombia. Dr. Green testified that despite Colombia’s
efforts to extinguish the FARC, the FARC “has demonstrated
an amazing ability to survive and assert itself” and that “the
FARC is very far from defeated.” (R. 1031). Neither the
28 No. 11-2706
immigration judge nor the government questioned Dr. Green’s
credentials. As a researcher, Dr. Green studied and compiled
the opinions of other experts in supporting his opinion. The
Board discounted Dr. Green’s testimony as being based on
various levels of hearsay. As we discussed above, hearsay is
admissible in removal proceedings as long as it is probative
and not fundamentally unfair. See Ogbolumani, 557 F.3d at 734.
And in any event, Federal Rule of Evidence 703 allows experts
to rely on hearsay if it is the kind of facts or data upon which
“experts in the field would reasonably rely.” Fed. R. Evid. 703;
U.S. v. Fenzl, 670 F.3d 778, 782 (7th Cir. 2012). Someone like Dr.
Green, who studies the FARC as the Colombia Country
Specialist for Amnesty International and as Senior Research
Fellow of the Council on Hemispheric Affairs, could certainly
assess the reliability of other researchers’ reports and rely on
them in the ordinary course of his work. Moreover, Dr. Green’s
opinion is supported by the U.S. Department of State Country
Reports both at the time he testified in 2008 and the most
current Country Report which indicates that the FARC
continue to commit a not insignificant number of unlawful
killings and kidnappings (R. 907); U.S. Department of State,
Colombia 2012 Human Rights Report, available at the permalink
at http://www.state.gov/j/drl/rls/hrrpt/humanrightsreport/
index. htm?year=2012&dlid=204438.7
7
According to the 2012 report:
Guerrilla groups were also responsible for unlawful killings of
government security forces and civilians. On January 21, FARC
guerrillas employed a bomb concealed on a live horse to attack a
passing patrol, killing one soldier and wounding two others. On
(continued...)
No. 11-2706 29
This type of evidence is precisely what convinced this court
in 2011 that “[g]iven the strength of FARC in Colombia, its
state-like status, its ongoing war with the Colombian govern-
7
(...continued)
February 3, FARC guerrillas detonated a motorcycle bomb in front
of a police station in the city of Tumaco, Narino Department,
killing 11 police officers and wounded more than 70 police and
civilians. On March 9, a FARC ambush in the department of Arauca
resulted in the deaths of 11 army soldiers patrolling the area. On
April 7, on the road between Quibdo, Choco Department, and
Medellin, Antioquia Department, FARC guerrillas placed a false
emergency call summoning army assistance; when the soldiers
arrived, the FARC ambushed the unit, killing seven and wounding
two others.
In many areas of the country, the FARC and ELN worked together
to attack government forces or demobilized paramilitary members;
in other areas they fought each other. Various courts convicted
members of the FARC secretariat in absentia on charges including
aggravated homicide.
The FARC killed persons it suspected of collaborating with
government authorities or rival drug-trafficking groups. The CNP
reported that through September the FARC had killed at least 163
civilians. For example, on January 28, FARC forces in the depart-
ment of Antioquia killed two civilians and then ambushed CNP
forces that attempted to respond and investigate the crime.
All guerrilla groups killed some kidnapping victims.
* * *
The government reported that guerrillas kidnapped 33 persons
(17 by the FARC and 16 by the ELN) during the year.
See http://www.state.gov/j/drl/rls/hrrpt/humanrightsreport/index.htm#
wrapper
30 No. 11-2706
ment, and the impotence of the government over FARC, the
‘state action’ element of Escobar's claim is easily met by the
evidence showing that FARC has persecuted him.” Escobar, 657
F.3d at 543 (internal citations omitted).
The Country Reports (even if relied on with a grain of salt,
see Koval v. Gonzales, 418 F.3d 798, 807-08 (7th Cir. 2005)) do not
support the notion that there has been a significant reduction
in killings and kidnapping since the decision in Escobar.
Compare U.S. Department of State, Colombia 2008 Human Rights
Report, available at http://www.state.gov/j/drl/rls/hrrpt/ 2010/
wha/154499.htm (129 killings and 64 kidnappings by the
FARC) with U.S. Department of State, Colombia 2012 Human
Rights Report, available at http://www.state.gov/j/drl/rls/
hrrpt/humanrightsreport/index.htm?year=2012&dlid= 204438
(163 killings and 33 kidnappings by the FARC).
The Board also ignored the testimony of the family that
they could not rely on the police to protect them. N.L.A.’s
husband, H.O.P.M., testified that “it is common knowledge in
Colombia that the FARC has informants in all parts of the
government, even the police department. I even heard that
they have computers in which they can type someone’s
number and get that person’s entire record.” (R. 392) (aff. of
H.O.P.M. at p. 5). N.L.A. testified that when her father was
kidnapped the family opted not to seek police help, as the
police would be ineffective and could not protect them from
the repercussions of contacting the authorities: “we never
called the police because the FARC ‘doesn’t forgive’ and we
feared even stronger repercussions if they found out we sought
help. They are everywhere in Colombia and we feared they
No. 11-2706 31
would find out if we spoke to the authorities, and that the
police could do little to protect us.” (R. 384) (aff. of N.L.A. at 7).
Fear of repercussions, and the inability of the police to protect
the family from them, fueled many decisions not to call police
for help. See (R. 381-82) (aff. of N.L.A. at 4-5); (R. 391-92) (aff. of
H.O.P.M. at 4-5); (R. 404) (aff. of N.L.A.’s daughter at 2.) (R.
380) (aff. of N.L.A. at p. 3). N.L.A. testified:
My aunt called the police, and the police investi-
gated after she told them that it was the FARC who
killed her husband. The police, however, did not do
much else because they also fear the FARC. The best
they did for my aunt was to tell her that it was
“under investigation.”… The police have questioned
my uncle’s neighbors, but they give very little
information, if any, under the “law of silence,” a fear
which the FARC has instilled in everyone.
Id.
The Board states that it considered the record as a whole in
evaluating government acquiescence, but then cites in great
detail reports that the power of the FARC has been reduced,
but fails to mention even one piece of the testimony from the
family about their experiences with the FARC or any of the
evidence from Country Reports that the FARC kidnapping and
murder rates have changed very little. And as the Second
Circuit noted, it is not inconsistent for some parts of a govern-
ment to be involved in efforts to reduce private persecution,
while others continue to turn a blind eye, or worse yet, aid in
that persecution. De La Rosa, 598 F.3d at 110; see also
Pieschacon-Villegas v. Attorney General of U.S., 671 F.3d 303, 312
32 No. 11-2706
(3d Cir. 2011) (“The mere fact that the Colombian government
is engaged in a protracted civil war with the FARC does not
necessarily mean that it cannot remain willfully blind to the
torturous acts of the FARC.”)
Finally, the Board concluded that N.L.A. could safely
relocate in Colombia just as her sister had. The Board stated,
“Although the respondent’s sister and her family apparently
move and change their phone numbers often, and have
registered their pharmacy under a third party’s name, the
sister and her family routinely leave their home to work and
attend school.” (R. 8). This is quite an extensive “although.”
One need not be secreted in an attic behind a hidden bookcase
to be living in hiding. As we explained above, moving fre-
quently, changing phone numbers and living under an
assumed identity is a horrible way to live and certainly
constitutes living in hiding. It is an error of law to assume that
an applicant cannot be entitled to asylum if she has demon-
strated the ability to escape persecution only by chance or by
trying to remain undetected. Giday v. Gonzales, 434 F.3d 543,
555 (7th Cir. 2006). N.L.A.’s sister has not demonstrated that
she has safely relocated. The Board’s conclusion that N.L.A.
could indeed relocate, which is based on what the Board views
as her sister’s success, is not reasoned or logical.
For these reasons, we GRANT the petition for review and
REMAND this matter to the Board for further proceedings
consistent with this opinion.
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2
1
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 June 18, 2014∗
Decided June 23, 2014
Before
FRANK H. EASTERBROOK, Circuit Judge
ANN CLAIRE WILLIAMS, Circuit Judge
DAVID F. HAMILTON, Circuit Judge
Appeal from the United
No. 14-‐‑1410
States District Court for the
HEALIX INFUSION THERAPY, INCORPORATED, Northern District of Illinois,
Plaintiff-‐‑Appellant, Eastern Division.
v. No. 10 C 3772
James B. Zagel, Judge.
HHI INFUSION SERVICES, et al.,
Defendants-‐‑Appellees.
Order
After we affirmed the district court’s judgment, see 733 F.3d 700 (7th Cir. 2013),
HHI Infusion Services, the prevailing party, asked the district court to award costs. It
did. Healix Infusion Therapy has appealed. It does not contend that any of the district
∗ This successive appeal has been submitted to the original panel under Operating Procedure 6(b). After
examining the briefs and the record, we have concluded that oral argument is unnecessary. See Fed. R.
App. P. 34(a); Cir. R. 34(f).
No. 14-‐‑1410 Page 2
court’s award is unsupported by 28 U.S.C. §1920 or otherwise excessive. Instead its sole
argument is that HHI’s request was untimely.
Local Rule 54.1(a) of the Northern District of Illinois gives the prevailing party 30
days from “the entry of judgment allowing costs” to file a bill of costs. It adds that the
court may extend the time on motion filed within those 30 days. HHI did not file a bill
of costs within 30 days of the judgment. Nor did it ask for extra time. Instead it waited
until this court had affirmed the district court’s judgment, then sought costs as soon as
our mandate returned the case to the district court.
Healix contended that the bill of costs was untimely. The district judge disagreed,
stating that his regular practice is to postpone consideration of costs until any appeal
had been completed. Healix nonetheless insists that, to take advantage of the district
judge’s practice, HHI needed to request more time by motion within the original 30
days.
But if such a motion would have been granted as a matter of course, where’s the
injury? A district court can enforce its rules meticulously but also has discretion to
extend their deadlines, as the judge did here. See Harmon v. OKI Systems, 115 F.3d 477,
481 (7th Cir. 1997). If treating one side’s notice of appeal as extending the other side’s
time to seek costs was an error, it was harmless—and harmless errors must be
disregarded. Fed. R. Civ. P. 61. Healix has not identified any prejudice it suffered by the
delay in awarding costs until after resolution of its appeal.
Moreover, Local Rule 54.1(a) starts the time with entry of a “judgment allowing
costs.” The judgment in this case did not speak to costs one way or the other. Silence
about costs appears to be the way in which this judge implements his practice of
deferral. A district court is entitled to treat a silent judgment as one allowing costs,
given the presumption in Fed. R. Civ. P. 54(d)(1), and prudent counsel therefore will
treat a silent judgment as starting the time to seek costs, but a particular judge may
approach things otherwise, and a party who relies on that judge’s practice ought not be
penalized. Cf. Fed. R. Civ. P. 83(a)(2).
AFFIRMED
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COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-05-407-CV
RICHARD AND ANN GREENE APPELLANTS
V.
HAYES, COFFEY & BERRY, P.C. APPELLEE
----------
FROM COUNTY
COURT AT LAW NO. 2 OF DENTON COUNTY
----------
MEMORANDUM OPINION
(footnote: 1) AND JUDGMENT
----------
We have considered the parties’ “Joint Motion To Dismiss Appeal.” 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)(2), 43.2(f).
Costs of the appeal shall be paid by the appellants, for which let execution issue.
PER CURIAM
PANEL D: MCCOY, J.; CAYCE, C.J.; and LIVINGSTON, J.
DELIVERED: January 26, 2006
FOOTNOTES
1:See
Tex. R. App. P. 47.4.
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674 F. Supp. 2d 39 (2009)
OCEANA, INC., Plaintiff,
v.
Gary F. LOCKE, et al., Defendants.
Civil Action No. 08-318 (ESH).
United States District Court, District of Columbia.
November 25, 2009.
*41 Eric A. Bilsky, Oceana, Inc., Washington, DC, for Plaintiff.
Ethan Carson Eddy, U.S. Department of Justice, Washington, DC, for Defendants.
MEMORANDUM OPINION AND ORDER
ELLEN SEGAL HUVELLE, District Judge.
Plaintiff Oceana, Inc. ("Oceana") has filed for summary judgment on its claim that defendants Secretary of Commerce Gary F. Locke, the National Oceanic and Atmospheric Administration, and the National Marine Fisheries Service ("NMFS") (collectively, "the agency") violated the Magnuson-Stevens Fishery Conservation and Management Act, 16 U.S.C. §§ 1801-1884; the National Environmental Policy Act ("NEPA"), 42 U.S.C. §§ 4321-4370f; and the Administrative Procedure Act ("APA"), 5 U.S.C. § 706, through the issuance of a final rule regarding an amendment to the agency's standardized bycatch reporting methodology ("SBRM" or "the SBRM Amendment") for the thirteen federal fisheries in the northeastern United States. Exhibit 3 to plaintiff's summary judgment motion consists of a declaration and October 8, 2008 report from Dr. Murdoch McAllister. Defendants have moved to strike plaintiff's motion for summary judgment on the grounds that the materials comprising Exhibit 3 are not part of the administrative record and therefore are not properly before the Court. For the reasons set forth below, the Court grants defendants' motion.
BACKGROUND
In June 2007, defendants prepared a final draft of the proposed SBRM amendment. (See Administrative Record ["AR"] 2346-2983.)[1] The draft's Executive Summary *42 explains that "[g]enerally, an SBRM can be viewed as the combination of sampling design, data collection procedures, and analyses used to estimate bycatch in multiple fisheries." (AR 2351.) The primary sources of information about fishery discards are "at-sea fishery observers" (i.e., scientists who board commercial fishing vessels to observe and record discards occurring on the trip), surveys of recreational fisheries, and reports from fishing vessel trips, which can be supplemented with information from other sources. (Id.; see also Pl.'s Mot. for Summ. J. ["Pl.'s SJ Mot."] at 7.) This information can be used to assess fishery stock and give scientific advice to fishery managers. (AR 2351.)
The SBRM was developed to "evaluat[e] the effectiveness of the allocation of fisheries observer effort across multiple fisheries to monitor a large number of species." (AR 2351.) The SBRM consists of seven principal components: mechanisms for collecting discard data; techniques for analyzing that data in order to allocate discard observers; a performance standard, known as a coefficient of variation ("CV"), for measuring the precision of the bycatch estimates; and four means of reviewing and refining the SBRM's effectiveness. (AR 2352, 2487 n. 28.)
On September 24, 2007, the final day for public comment on both the proposed SBRM amendment and the proposed implementing regulations, the Lenfest Ocean Program submitted a report by Dr. McAllister that "focused primarily on the problem of bias in the SBRM's sampling design and statistical method."[2] (Pl.'s SJ Mot. at 9; see AR 3120-61 ("2007 McAllister Report").) McAllister's report expressed "serious reservations about the apparent low degree of scientific rigor in the determination of the SBRM." (AR 3124.) That same day, plaintiff submitted similar comments and also included a copy of the McAllister report. (AR 3186-3200 (Oceana Comments); see also AR 3188 & n. 9.)
On October 18, 2007, Patricia Kurkul, the regional administrator of NMFS, received an analysis by Dr. Nancy Thompson, head of the NMFS's New England Fisheries Science Center ("Science Center"), of the 2007 McAllister Report. (See generally AR 3882-85.) Dr. Thompson concluded that although McAllister raised important issues, his criticisms did not "provide a sufficient basis to disapprove the SBRM Amendment." (AR 3882.) Thompson also stated that the Science Center would provide "a more detailed response" to the McAllister report "for inclusion in the response to public comments in the preamble to the final rule." (AR 3885.)
On October 22, 2007, the NMFS approved the SBRM amendment. (AR 3916; see also 3239-3880 (final SBRM amendment).) On December 20, Thompson presented Kurkul with her further analysis of McAllister's concerns. (See AR 3919-28.) Thompson's analysis provided "additional technical justification for the approaches" taken by the agency, summarized the additional *43 work conducted since the first analysis, and reached similar conclusions as before. (AR 3919-20.) Thompson observed that "[i]n addition to the methods described in the SBRM" for measuring the potential biases in observer data, the agency's preferred "combined ratio" method of estimating discards was "validated" by a working paper authored by Paul Rago (and others) that was presented for peer review at an October 2007 Groundfish Assessment Review Meeting ("GARM"). (AR 3924-25; see AR 4713-49 (Rago paper).) Thompson also noted that the agency had conducted simulation studies which supported the SBRM's estimation methods, and she singled out a working paper by Chris Legault that was also presented for peer review at the GARM. (AR 3925-26; see AR 4750-61 (Legault paper).) The GARM committee characterized Dr. Legault's paper as concluding that the agency's combined ratio estimator was more "pragmatic" than the "direct estimator" advocated by McAllister, because McAllister's method relied upon data that is often unknown and whose estimates are not as "reliable" as the agency's preferred data estimates. (AR 3926.)
On January 28, 2008, the agency issued the final rule implementing the SBRM amendment. See 73 Fed. Reg. 4,736 (Jan. 28, 2008) (codified at 50 C.F.R. pt. 648). (See also AR 3952-74 (final rule).) The rule's preamble presented the agency's responses to a variety of public comments, including the 2007 McAllister report. (AR 3962-66.) On February 25, plaintiff initiated this lawsuit. On October 8, McAllister issued a report to plaintiff's counsel that reviewed the final SBRM rule, entitled "Follow-up review of the NMFS' Standardized Bycatch Reporting Methodology: is something fundamentally wrong with the SBRM approach which is likely to result in serious error?" (See Pl.'s SJ Mot., Ex. 3 at 34-76 ("2008 McAllister Report").)
On January 5, 2009, plaintiff moved to compel the inclusion of certain documents (but not the 2008 McAllister Report) in the administrative record. See generally Oceana, Inc. v. Locke ("Oceana III"), 634 F. Supp. 2d 49 (D.D.C.2009) (affirming magistrate judge's denial of plaintiff's motion to compel inclusion), aff'd No. 08-CV-318, 2009 WL 1491516 (D.D.C. May 28, 2009). On September 25, plaintiff filed its summary judgment motion and several supporting exhibits. Exhibit 3 to that motion consisted of the 2008 McAllister Report, an eleven-page declaration by McAllister, and his curriculum vitae (collectively, "the McAllister testimony"). (See Pl.'s SJ Mot., Ex. 3 at 1-11 ("McAllister Declaration").) In a footnote, plaintiff's motion argues that the Court may consider the McAllister testimony under Esch v. Yeutter, 876 F.2d 976 (D.C.Cir.1989). (See Pl.'s SJ Mot. at 12 n. 6.) In Esch, the D.C. Circuit observed the general rule that "judicial review of agency action is normally to be confined to the administrative record," but also observed that in eight situations, courts have departed from the general rule and permitted the introduction of extra-record information. 876 F.2d at 991 & n. 166. Plaintiff contends that the McAllister testimony falls under three of the eight situations described in Esch, because (1) "it provides background information to help the court understand the complex issues before it" relating to the precision of the agency's discard estimation methods; (2) "it addresses relevant factors that the agency failed to consider" relating to statistical bias in the agency's discard estimation methods; and (3) "it highlights environmental consequences and reasonable alternatives neglected in the agency's [environmental assessment]. . . ." (Pl.'s SJ Mot. at 12 n. 6 (citing Esch, 876 F.2d at 991).)
*44 On October 15, 2009, defendant moved to strike the McAllister testimony, arguing that even if plaintiff's footnote were the proper vehicle for seeking its admission, (1) Esch's discussion of exceptions to the administrative record rule is not controlling law, and (2) even if it were, plaintiff "`must first establish that the agency acted in bad faith or otherwise behaved improperly, or that the record is so bare that it prevents effective judicial review.'" (Defs.'s Mot. to Strike at 5 (quoting County of San Miguel v. Kempthorne, 587 F. Supp. 2d 64, 79 (D.D.C.2008)) (emphasis omitted).) Plaintiff responds that Esch correctly describes the state of the law in this Circuit, and that no showing is required before it may submit McAllister's testimony. In the alternative, plaintiff contends that the agency committed "procedural irregularities" in promulgating the SBRM rule which constitute "bad faith or improper behavior" that would justify admission of the testimony. (See Pl.'s Opp'n to Mot. ["Pl.'s Opp'n"] at 10-11 (citing Fund for Animals v. Williams, 391 F. Supp. 2d 191, 199 (D.D.C.2005)).)
ANALYSIS
I. APPLICABLE STANDARD
Judicial review of agency actions "is confined to the full administrative record before the agency at the time the decision was made." Camden County Council on Econ. Opportunity v. U.S. Dep't of Health & Human Servs., 563 F. Supp. 2d 262, 265 (D.D.C.2008) (citing Envtl. Def. Fund, Inc. v. Costle, 657 F.2d 275, 284 (D.C.Cir.1981)). "When reviewing that record, the Court considers `whether the agency has considered the relevant factors and articulated a rational connection between the facts found and the choice made.'" Id. (quoting Jifry v. FAA, 370 F.3d 1174, 1180 (D.C.Cir.2004)).
The parties dispute the legal principles governing the Court's potential consideration of the McAllister testimony. As recently explained by Chief Judge Lamberth in The Cape Hatteras Access Preservation Alliance v. U.S. Department of Interior, some of that confusion is attributable to the case law's discussion of "supplementing" an administrative record in two analytically distinct situations. See 667 F. Supp. 2d 111, 113 (D.D.C.2009); see also Pac. Shores Subdivision v. Army Corps of Eng'rs, 448 F. Supp. 2d 1, 6 (D.D.C.2006). One situation involves a claim "that some information that should have properly been included in the administrative record was not," while the other involves a request for judicial consideration of evidence that exists apart from the administrative record, on the theory that if the Court did not consider that evidence, "reviewing agency action would be unnecessarily difficult." Cape Hatteras, 667 F.Supp.2d at 113-14; see also Pac. Shores, 448 F.Supp.2d at 6 (distinguishing "seek[ing] to include evidence in the record" from "moving the Court to review evidence out-side of or in addition to the administrative record"). Plaintiff's submission of the McAllister testimony falls into the latter category of "extra-record" evidence, because those documents were not before the agency when it issued the final rule.
This Court has previously observed that Esch's discussion of eight exceptions to the general rule regarding consideration of extra-record evidence was dicta. See Oceana II, 384 F.Supp.2d at 218 n. 17. Upon further consideration of Chief Judge Lamberth's opinion in Cape Hatteras, see 667 F.Supp.2d at 114-15, this Court is persuaded that Esch should be read narrowly. This result is consistent with the D.C. Circuit's decision in IMS, P.C. v. Alvarez, which only identified four "accepted exceptions to the principle that the *45 court cannot consider information that falls outside the agency record." 129 F.3d 618, 624 (D.C.Cir.1997); see Cape Hatteras, 667 F.Supp.2d at 115-16 (same). There, the Court of Appeals rejected the proposed submission of extra-record affidavits because the plaintiff had neither "made the `strong showing of bad faith or improper behavior' required to justify" considering extra-record evidence, IMS, 129 F.3d at 624 (quoting Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 420, 91 S. Ct. 814, 28 L. Ed. 2d 136 (1971)), nor shown that "the agency failed `to explain administrative action [so] as to frustrate effective judicial review'" by failing "to examine all relevant factors" or "to adequately explain its grounds for decision." Id. (quoting Camp v. Pitts, 411 U.S. 138, 142-43, 93 S. Ct. 1241, 36 L. Ed. 2d 106 (1973)). Accordingly, the Court will only permit the submission of the McAllister testimony if plaintiff has shown that the agency (1) acted in bad faith in reaching its decision, (2) engaged in improper behavior in reaching its decision, (3) failed to examine all relevant factors, or (4) failed to adequately explain its grounds for decision. See id.
II. THE MCALLISTER TESTIMONY WILL BE STRICKEN
A. Plaintiff Has Not Demonstrated the Agency's Bad Faith or Improper Behavior.
As an initial matter, the Court is not persuaded by plaintiff's contention that defendants engaged in "procedural irregularities" that constitute evidence of "bad faith or improper behavior" sufficient to justify admission of the McAllister testimony. (See Pl.'s Opp'n at 10.)
Plaintiff suggests that the agency's procedural decision not to prepare an Environmental Impact Statement ("EIS") demonstrates defendants' bad faith. (Pl.'s Opp'n at 10-11.) The Court rejects this argument. While plaintiff is free to challenge the legal merits of that decision, the mere fact of that decision, without any specific allegations of impropriety, does not show bad faith. Cf. Fund for Animals, 391 F.Supp.2d at 198 (permitting supplementation of record where plaintiffs made prima facie showing that agency knowingly excluded relevant and adverse information from record).
Plaintiff also argues that the agency "chiefly relie[d]" upon the Rago and Legault working papers, which were neither completed nor made public "until after the close of the comment period and after the agency had made its final decision," thereby depriving Oceana of an "opportunity to review or respond to these studies on the record." (Pl.'s Opp'n at 10; see also Pl.'s SJ Mot. at 29-30.) The Court disagrees. Based upon its review of the record, the Court concludes that neither the SBRM amendment nor its implementing rule "chiefly rel[y]" on the Rago and Legault papers.
First, the SBRM amendment does not cite either the Rago or Legault working paper.[3] Nor could it have done so. The agency approved the amendment on October 22, 2007, before those two papers were completed on October 24 and later presented for peer review at the GARM. (See Def.'s Notice of Filing Am. Supplement to Admin. R., Ex. 1 (Supplemental AR Index) at 2 (listing October 24, 2007 date for both papers).)
Second, the agency's final rule, issued in January 2008, cites fourteen peer-reviewed publications by name when responding to *46 McAllister's concerns, but not the Rago or Legault working papers, which are only discussed indirectly by reference to their consideration during the October 2007 GARM. (See AR 3962-66 & nn. 1-15.) Rago's findings are cited merely as "another" way to validate the SBRM's methods, "[i]n addition to the methods described in the SBRM" (AR 3965), and Legault's simulation study of six discard estimation methods is referenced as one of multiple simulation studies. (See AR 3965) ("[S]imulation tests of alternative estimators have been conducted for several species. . . . NMFS has also conducted studies to estimate total landings from the observed sample data and have found good agreement for the methods used in the SBRM." (emphasis added).)
Accordingly, the Court concludes that plaintiff has not made the "strong showing" of bad faith or improper behavior required to justify admission of the McAllister testimony.
B. McAllister's Recent Criticisms of the Agency's Quantitative Analyses Are Inadmissible.
1. "Background information" on "complex issues"
Plaintiff argues that the McAllister testimony provides helpful background information regarding complex quantitative issues relating to the precision of the agency's discard estimation methods and the Rago and Legault papers. The Court construes this argument as one that the agency failed "to adequately explain its grounds for decision." IMS, 129 F.3d at 624. Nonetheless, plaintiff has not shown that the agency's rationale cannot be understood because of the technical issues involved. On the contrary, there are a number of instructive discussions in the SBRM amendment, the 2007 McAllister Report, and the final SBRM rule itself. If, at a later date, the Court concludes that the record does not contain sufficient explanations, it may then be appropriate for the Court to seek clarification from the agency, "`either through affidavits or testimony, such additional explanations of the reasons for the agency decision as may prove necessary.'" Envtl. Def. Fund, 657 F.2d at 285 (quoting Pitts, 411 U.S. at 143, 93 S. Ct. 1241). However, these "new materials should be merely explanatory of the original record and should contain no new rationalizations" for the agency's decision. Id. "If the agency action, once explained by the proper agency official, is not sustainable on the record itself, the proper judicial approach has been to vacate the action and to remand the matter back to the agency for further consideration." Id.
In the alternative, "[a]lthough the subject matter of this case does have a highly technical aspect," the McAllister testimony is not "primarily explanatory in nature." Corel Corp. v. United States, 165 F. Supp. 2d 12, 31 (D.D.C.2001). It is primarily "argumentative," and thus inappropriate for the Court to consider. Id. The title of McAllister's 2008 report "quite accurately encapsulates the purpose and nature of his submissions," id., since it asks: "[I]s something fundamentally wrong with the SBRM approach which is likely to result in serious error?" (2008 McAllister Report at 1 (italics added).) The report itself "attack[s] the merits" of the agency's analytical choices and conclusions and then "conduct[s] [its] own . . . analysis," from which McAllister concludes that the agency should have chosen different inputs when developing the SBRM. Corel, 165 F.Supp.2d at 31. (See, e.g., 2008 McAllister Report at 12 ("The NMFS' replies were examined, classified according to the specific points in the [2007 McAllister Report] that they address and are summarized below. We evaluate their substance *47 in the context of the SBRM and of the terms of reference provided by Oceana." (emphasis added)).)[4]
The mere fact that McAllister disputes the agency's responses to his initial comments and "reiterate[s] scientific criticisms" already in the record (Pl.'s Opp'n at 3) does not transform the reasons for his disagreement into relevant "background information." Nor is this Court's prior opinion in Oceana II to the contrary. (See id. at 12.) There, the Court denied a motion to strike plaintiff's submission of a post-decisional extra-record letter by a scientist who was one of the "original developers" of the analytical model used by the agency in its challenged action and who criticized the agency's reliance upon her work. 384 F.Supp.2d at 217-18 & n. 17. Where a scientist challenges the manner in which an agency has relied upon her own research, her unique familiarity with the meaning of that research can constitute "particularly relevant" background information about the basis for the agency's decision. See id. (internal quotation marks omitted); cf. Carlton v. Babbitt, 26 F. Supp. 2d 102, 108, 111 (D.D.C.1998) (ruling that agency should have considered scientist's declaration, which was submitted prior to agency's decision, because agency ultimately relied solely upon that scientist's research article for certain conclusions, yet his declaration "explicitly disclaim[ed] the [agency's] optimistic reading of his article," making "his understanding of his own article . . . particularly relevant"). But that is not the case here; McAllister's testimony about the agency's discard estimation method is "offered primarily to attack the propriety of the challenged agency action, [and therefore, it] will be stricken." Corel, 165 F.Supp.2d at 32.
2. Agency's failure to consider "relevant factors"
Plaintiff suggests that the McAllister testimony "addresses relevant factors that the agency failed to consider" relating to the accuracy of the agency's discard estimation methods. (Pl.'s SJ Mot. at 12 n. 6.) Specifically, McAllister asserts that the agency failed to consider how systematic biases in discard estimates and their variance could significantly skew the number and allocation of bycatch observers that the agency deems necessary to achieve its chosen 30 percent CV measure of performance. (McAllister Decl. ¶ 23.) However, bias is hardly a "factor not considered" by the agency. (Id.) To the contrary, Chapter 5 of the draft SBRM amendment, entitled "Sampling Design and Estimation of Precision and Accuracy" (see AR 3381-3436), thoroughly discusses issues of bias. (See, e.g., AR 3383 (citing "non-representative sampling" and "statistical properties of the consistency of the estimators" as "two primary potential sources of bias in a sampling program such as the at-sea observer program"); AR 3411 ("Several analytical tests were conducted *48 to evaluate the potential sources of bias in the 2004 observer data.").) McAllister's chief criticism actually appears to be that the agency concluded "that neither the data nor the statistical estimators showed significant bias. . . ." (2008 McAllister Report at 25.) He argues that the evidence which the agency invoked "to support the hypothesis of no bias" was "far from . . . conclusive" and "could actually be used to reject that same hypothesis." (Id.) Thus, McAllister's testimony as to bias "does not add factors that [the agency] failed to consider as much as it questions the manner in which [the agency] went about considering the factors it did." Corel, 165 F.Supp.2d at 31-32.
Plaintiff also argues that the McAllister testimony should be considered because it purportedly raises issues that the agency "neglected" during its NEPA analysis (Pl.'s SJ Mot. at 12 n. 6), which the Court will construe as a claim that the agency failed "to examine all relevant factors." IMS, 129 F.3d at 624.[5] Specifically, plaintiff claims that the agency failed to account for "cumulative impacts" of the SBRM amendment "related to bias and error over time. . . ." (Pl.'s Opp'n at 16; see also Pl.'s SJ Mot. at 31.) "Cumulative impact" is one of the factors to be considered in determining whether a proposed action will significantly affect the environment and is defined as "the impact on the environment which results from the incremental impact of the action when added to other past, present, and reasonably foreseeable future actions regardless of what agency (Federal or non-Federal) or person undertakes such other actions." 40 C.F.R. § 1508.7 (emphasis added). The McAllister Declaration contends that the SBRM's 30 percent CV performance standard is too imprecise to accurately detect changes in discard levels, and that this imprecision could prevent the agency from adequately managing discards over time. (McAllister Decl. ¶¶ 27-29.)
Plaintiff mischaracterizes the agency's treatment of the cumulative impact issue. The final SBRM rule notes that Section 7.3 of the SBRM amendment "explicitly provides a discussion of the expected cumulative effects associated with the action." (AR 3960.) Section 7.3 explains that the SBRM amendment is an administrative measure focusing on processes for collecting and analyzing existing levels of bycatch, and that the establishment of an SBRM performance standard was a change from the status quo, which lacked such a standard. (AR 3514.) The agency concluded that because the performance standard was a "purely administrative feature[]," it would not presently affect the environment any differently than the status quo's baseline. (AR 3514-15.) Nor would the "CV-based performance standard," on its own, have any cumulative impact over time, because the SBRM amendment would not implement any changes to fishing operations. (See AR 3515.) Such operational changes would only be implemented if the SBRM yielded evidence that discard levels were too high *49 and the agency subsequently took "a new management action" to reduce bycatch. (AR 3516.) The agency observed that such a management action was not "reasonably foreseeable," and that it was therefore "not practicable to conduct a NEPA analysis on these potential impacts at this time." (Id.) See also Izaak Walton League, 655 F.2d at 377 ("NEPA does not require federal agencies to examine every possible environmental consequence. Detailed analysis is required only where impacts are likely.").
The agency considered the issue of cumulative impact and concluded that no cumulative impact was posed by the SBRM amendment and its performance standard. McAllister's attack upon the supposedly insufficient precision of the 30 percent CV merely re-argues plaintiff's original criticism that "the less precise the methodology, the greater the risk to the environment." (AR 3198 (Oceana Comments).) Thus, the testimony does not offer "proof of an environmental factor inappropriately excluded from consideration by the assessing agency." The Humane Soc. of U.S. v. Dep't of Commerce, 432 F. Supp. 2d 4, 15 (D.D.C.2006).[6]
CONCLUSION
For the aforementioned reasons, the Court grants defendants' motion to strike [Dkt. 36] plaintiff's motion for summary judgment. Plaintiff may re-file its motion for summary judgment on or before December 15, 2009, but it may not include the 2008 McAllister Report or the McAllister Declaration.
SO ORDERED.
NOTES
[1] Plaintiff's present challenge to the SBRM arose out of two challenges to defendants' approval of Amendments 10 and 13 to the agency's northeast region fishery management plans ("FMPs") and related regulations. In Oceana, Inc. v. Evans ("Oceana I"), No. 04-CV-811, 2005 WL 555416 (D.D.C. Mar. 9, 2005), and Oceana, Inc., v. Evans ("Oceana II"), 384 F. Supp. 2d 203 (D.D.C.2005), this Court granted summary judgment for defendants on most of plaintiff's claims. However, the Court concluded that the FMPs did not establish an SBRM as required by the MSA and remanded the matter to the agency for further action. See Oceana I, 2005 WL 555416, at *43; Oceana II, 384 F.Supp.2d at 256.
[2] The final SBRM amendment defines bias "as a systematic difference between the expected value of a statistical estimate and the quantity it estimates." (AR 3383 (emphasis in original).) Thus, bias is a measure of "accuracy," or the closeness of a measured value to the actual value, while the CV performance standard is a measure of "precision," or the amount of variability among observations. (See AR 3382-83.)
[3] Although the SBRM amendment frequently cites other research by Rago (and by one of the co-authors of his working paper), the specific papers presented at the October 2007 GARM are not cited. (See also AR 3545-51 (references).)
[4] Similarly, the McAllister Declaration asserts (1) that notwithstanding Thompson's conclusion that the agency's combined ratio discard estimation method was validated through a comparison of certain datasets from the Rago paper (see AR 3924-25), McAllister's own comparison of different datasets from the Rago paper "refute[s] the NMFS' conclusion that the technique exhibited little evidence of bias"; (2) that it was "inappropriate" for the agency to claim that the Legault paper "shows no bias" in the agency's preferred discard estimation method, because McAllister's own review of the underlying datasets "suggest[s]" that the agency's method "would perform poorly" when applied to certain species; and (3) that McAllister's own review of the data shows that the agency's choice of a 30 percent CV performance standard "is not very precise" when applied to certain species. (McAllister Decl. ¶¶ 14-15, 19, 20.)
[5] It is arguable that the D.C. Circuit's opinion in Izaak Walton League of America v. Marsh provides a separate legal basis for considering extra-record evidence where, as here, a plaintiff challenges an environmental assessment under NEPA, because "[s]uits challenging environmental impact statements seek to ensure compliance with a statute other than the APA." 655 F.2d 346, 369 n. 56 (D.C.Cir. 1981). However, as a practical matter, the analysis under Izaak Walton League is essentially the same as the IMS "relevant factors" analysis. See id. ("The reviewing court must ensure that the agency decision adequately discusses environmental effects and alternatives. Allegations that an impact statement fails to consider serious environmental consequences or realistic alternatives raise issues sufficiently important to warrant introduction of new evidence in the District Court.").
[6] The Court's analysis is equally applicable to plaintiff's claim that the McAllister testimony should be considered because it pertains to whether defendants violated NEPA. (See Opp'n at 17-19.) Plaintiff's citation to this Court's prior opinion in Humane Society is inapposite. (See id. at 18.) In that case, the Court considered extra-record evidence which suggested that the agency reversed its earlier position that an EIS was not required. See 432 F.Supp.2d at 15. Unlike that situation, McAllister's testimony does not have a "direct bearing on the correctness" of the agency's conclusion that the SBRM (and its 30 percent CV performance standard) would have no cumulative impact. Id. Therefore, his testimony is not "directly relevant to a determination of whether an EIS is required in this case." Id.
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01-03-2023
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10-30-2013
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https://www.courtlistener.com/api/rest/v3/opinions/2114750/
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804 F. Supp. 2d 615 (2011)
Hilary BRICKER, et al., Plaintiffs,
v.
R & A PIZZA, INC., et al., Defendants.
Case No. 2:10-cv-278.
United States District Court, S.D. Ohio, Eastern Division.
April 8, 2011.
*616 Rayl L. Stepter, Columbus, OH, for Plaintiffs.
Mark H. Troutman, Timothy Edward Miller, Joanne S. Peters, Isaac Brant Ledman & Teetor, Columbus, OH, Robert E. Dezort, R. Scot Harvey, Millisor & Nobil, *617 Christopher Grant Kuhn, Millsor & Nobil LPA, Cleveland, OH, for Defendants.
OPINION AND ORDER
MICHAEL H. WATSON, District Judge.
This employment discrimination case is before the Court on Defendant Domino's Pizza LLC's motion to dismiss the amended complaint. For the following reasons, the motion (ECF No. 45) will be granted.
I. BACKGROUND
The Brickers filed their original complaint on April 1, 2010, alleging claims for sexual harassment and retaliation under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-5 et seq. and Ohio law, as well as state law negligence claims. Domino's, which stands in a franchisor-franchisee relationship with Defendant R & A Pizza, Inc., filed a motion to dismiss the original complaint contending that the complaint did not allege that the Brickers were employed by Domino's or that any Domino's employees committed any of the acts in question. The Brickers then sought leave to amend the original complaint to add allegations which supposedly support the existence of an agency or joint venture relationship between Defendants. That motion was granted, and the amended complaint was filed on October 4, 2010, 2010 WL 3910758.
The amended complaint contains the following allegations. Russ Mentzer is the owner, or part owner, of R & A Pizza in Mount Vernon, Ohio. (Amend. Compl., ECF No. 29, ¶ 2.) Mr. Mentzer, and perhaps R & A Pizza, is the owner of three Domino's Pizza franchise stores. Id. Hilary Bricker has been employed by Defendants since August 25, 2005. (Id., ¶ 1.) Katherine Bricker has been employed by Defendants since August 8, 2008. (Id.)
During the Brickers' employment with the Defendants, they have been subjected to several instances of inappropriate and unwelcome conduct of a sexual nature by Mr. Mentzer. (Am. Compl., ¶ 9.) Specifically, this conduct has included "grabbing," "touching," and "kissing" as well as "sexual advances" and "requests for sexual favors." (Id.) R & A Pizza and Domino's have not responded to the Brickers' complaints about Mr. Mentzer's actions. (Id., ¶¶ 11-12.) Instead, these Defendants have retaliated against the Brickers for raising the complaints. (Id., ¶¶ 20-21.)
The amended complaint further alleges that Domino's knew or should have known about Mr. Mentzer's inclinations and that his "personal traits" caused him to be an "inappropriate candidate" for a franchisee. (Amend Compl., ¶ 37.) Additionally, the amended complaint alleges that Domino's owed the Brickers a duty of care to protect them from Mr. Mentzer which Domino's has breached by permitting Mr. Mentzer's conduct to continue. (Id., ¶¶ 38-44.) Similarly, the amended complaint asserts that Domino's breached a duty of care which it allegedly owed to the Brickers by its negligent supervision of Mr. Mentzer. (Id., ¶¶ 46-50.)
II. STANDARD OF REVIEW
A claim survives a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) if it "contain[s] sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007)). "The plausibility standard is not akin to a `probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. A complaint's "[f]actual allegations must be enough to raise a right to relief above the speculative level, *618 on the assumption that all the allegations in the complaint are true." Twombly, 550 U.S. at 555-56, 127 S. Ct. 1955 (internal citations omitted).
A court also must "construe the complaint in the light most favorable to the plaintiff." Inge v. Rock Fin. Corp., 281 F.3d 613, 619 (6th Cir.2002) (citing Turker v. Ohio Dep't of Rehab. & Corr., 157 F.3d 453, 456 (6th Cir.1998)). In doing so, however, a plaintiff must provide "more than labels and conclusions, and a formulaic recitation of the elements of a cause will not do." Twombly, 550 U.S. at 555, 127 S. Ct. 1955. See also Iqbal, 129 S.Ct. at 1949 ("Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice."); Ass'n of Cleveland Fire Fighters v. City of Cleveland, Ohio, 502 F.3d 545, 548 (6th Cir.2007). The court must read Twombly in conjunction with Federal Rule of Civil Procedure 8(a)(2), which requires only a "short and plain statement of the claim showing that the pleader is entitled to relief." Gunasekera v. Irwin, 551 F.3d 461, 466 (6th Cir.2009). "[A] naked assertion... gets the complaint close to stating a claim, but without some further factual enhancement it stops short of the line between possibility and plausibility...." Twombly, 550 U.S. at 557, 127 S. Ct. 1955. Thus, "something beyond a mere possibility of [relief] must be alleged lest a plaintiff with a largely groundless claim be allowed to take up the time of a number of other people, with the right to do so representing an in terrorem increment of the settlement value." Id. at 557-58, 127 S. Ct. 1955 (internal citations omitted).
III. DOMINO'S MOTION TO DISMISS
Domino's contends that all claims against it should be dismissed because the Brickers, in amending their complaint, did nothing more than add the words "and Domino's" twenty-four times to the allegations of the original complaint. As a result, Domino's argues that these allegations are nothing more than conclusory and do not satisfy the pleading requirements of Twombly and Iqbal. Specifically, Domino's asserts that, as a franchisor, it generally is not liable for violations of employment statutes by its franchisees, and the Brickers have not alleged any other legal relationship which would make it liable.
Further, Domino's argues that the Brickers have failed to demonstrate that they have met the statutory prerequisites for pursuing a Title VII claim against it. As with the Brickers' other claims, Domino's claims that the Brickers' assertion that they have "complied with the administrative prerequisites" is insufficient under the standards of Twombly and Iqbal. Finally, Domino's contends that the Brickers do not sufficiently allege any relationship among the Defendants beyond that of franchisor/franchisee and that such a relationship cannot support Domino's liability for negligence.
In response, the Brickers argue that Domino's can be held liable for the actions of the other Defendants under theories such as actual agency, apparent agency, or agency by estoppel. Further, the Brickers contend that this suit can proceed against Domino's, even though Domino's was not named in the administrative charge, because Domino's shares an "identity of interest" with the party named in the charge. Finally, they assert that their allegation of a franchisor-franchisee relationship is sufficient to establish Domino's liability for the wrongful acts of R & A Pizza. In support of their position, the Brickers have submitted several exhibits including an affidavit from Katherine Bricker.
In reply, Domino's argues that the Court cannot consider documents beyond *619 the complaint in addressing a motion to dismiss, and that the complaint, standing alone, does not satisfy the pleading standards established in Twombly and Iqbal. Specifically, Domino's contends that the Brickers have not pled any facts demonstrating that Domino's was their employer for purposes of liability under Title VII or Ohio law. Domino's contends that, to the extent the Brickers suggest that Domino's could be liable under a single or joint employer theory, these theories also have been pled insufficiently.
Further, Domino's asserts that, to the extent the Brickers contend that Domino's can be liable based on an agency theory, they have not alleged facts in the complaint sufficient to plausibly suggest an agency relationship between Domino's and the other Defendants. According to Domino's, the sole agency allegation is found in paragraph 8 of the amended complaint and is nothing more than conclusory. On the other hand, Domino's notes that the Brickers acknowledged the franchisor-franchisee relationship between Domino's and R & A Pizza nine times in the amended complaint.
Additionally, Domino's argues that the Brickers have not alleged an "identity of interest" between it and the other Defendants sufficient to overcome their failure to file an EEOC charge against Domino's. Domino's points out that the single case cited by the Brickers in support of their position, Baetzel v. Home Instead Senior Care, 370 F. Supp. 2d 631 (N.D.Ohio 2005), supports the conclusion that a franchisor/franchisee relationship, on its own, does not establish an identity of interest.
Finally, with respect to the Brickers' negligence claims, Domino's contends that they have made only conclusory assertions insufficient to satisfy the pleading standards of Twombly and Iqbal. Specifically, Domino's argues that the Brickers have not pled any facts demonstrating that Domino's owed them any duty of care.
IV. ANALYSIS
Initially, the Court will address the issue raised by Domino's in its reply relating to the exhibits attached to the Brickers' response. There is no question that a motion to dismiss under Rule 12(b)(6) is directed to the "sufficiency of the plaintiffs claim" and a court "may consider only matters properly part of the complaint or pleadings in deciding the motion." Armengau v. Cline, 7 F.Appx. 336, 344 (6th Cir.2001) (citations omitted); see also Riggs Drug Co., Inc. v. Amerisourcebergen Drug Corp., 2010 WL 3630123, at *1 (E.D.Tenn. Sept. 13, 2010). Consequently, before proceeding, the Court must determine whether the exhibits attached to the Brickers' response are materials "outside the pleadings." See Fed.R.Civ.P. 12(d). Under the Sixth Circuit's `liberal view of what matters fall within the pleadings for purposes of Rule 12(b)(6)," certain documents may be considered without converting the motion into one for summary judgment. Armengau, 7 Fed.Appx. at 344. "If referred to in a complaint and central to the claim, documents attached to a motion to dismiss form part of the pleadings." Id.; see also Willcox v. Tennessee Dist. Attorneys Gen. Conference, 2008 WL 4510031 (E.D.Tenn. Sept. 30, 2008) (applying same standard to documents attached to response to motion to dismiss).
To the extent the materials attached to their response could be considered "central" to the Brickers' claims, they are not specifically referred to in the complaint. Under this circumstance, the Court finds these materials to be outside the pleadings. As a result, if these materials were considered, the Court would be required to convert the motion to one for summary judgment under Fed.R.Civ.P. 56. The *620 Court sees no reason to do that here. The issues raised by Domino's can be addressed properly under Fed.R.Civ.P. Rule 12(b)(6). Accordingly, the Court will not consider the materials attached to the Brickers' response.
A. Title VII Claim
Turning to the merits of the motion to dismiss, the Court will first address Domino's argument that the Brickers cannot succeed on their Title VII claims against it because of their failure to name Domino's in their EEOC charge. The Brickers do not dispute their failure to name Domino's in their charge. Both parties agree, however, that the failure to name a defendant as a respondent in an EEOC charge does not mandate dismissal. Rather, an unnamed party will not be dismissed from a Title VII suit when it shares an "identity of interest" with a party named in the charge. Baetzel v. Home Instead Senior Care, 370 F. Supp. 2d 631, 636 (N.D.Ohio 2005) (citing Romain v. Kurek, 836 F.2d 241, 245 (6th Cir.1987)); see also E.E.O.C. v. Jeff Wyler Eastgate, Inc., 2006 WL 2785774 (S.D.Ohio Jan. 9, 2006).
The Sixth Circuit uses two methods to determine whether an identity of interest exists between a named and unnamed party. Baetzel, 370 F.Supp.2d at 636. First, an identity of interest may exist if an unnamed party "has been provided adequate notice of the charge under circumstances which afford him [sic] an opportunity to participate in conciliation proceedings aimed at voluntary compliance." Id. (internal citation omitted). The second method requires a court to consider the following factors in making its determination: (1) whether the unnamed party, through reasonable effort by the complainant, could be ascertained at the time of filing; (2) whether the interests of the unnamed party are so similar that for purposes of obtaining voluntary conciliation and compliance it would be necessary to include the unnamed party in the EEOC proceedings; (3) whether the absence from the EEOC proceedings resulted in actual prejudice to the unnamed party's interests; and (4) whether the unnamed party has somehow represented to the complainant that its relationship with the complainant is to be through the named party. Id. at 636-37; see also Glus v. G.C. Murphy Co., 562 F.2d 880 (3rd Cir.1977).
In their amended complaint, the Brickers do not make any allegations addressed to the identity of interest between Domino's and the Defendants named in the EEOC charge. They simply allege that they are "employed with defendants." Further, they allege that they "have complied with administrative prerequisites by filing a dual charge of discrimination with the Ohio Civil Rights Commission and the Equal Employment Opportunity Commission ("EEOC"). (Amend. Compl., ¶ 5.) These allegations, without any factual support, are insufficient to establish that the Brickers have met the prerequisites for bringing suit under Title VII against Domino's.
B. Title VII and State Law Sexual Harassment and Retaliation Claims
Even assuming that the Brickers had met the Title VII prerequisites, for the reasons that follow, they still have failed to state a claim against Domino's for violations of either Title VII, R.C. Chapter 4112, or Ohio common law. The focus of Domino's motion to dismiss is that the Brickers' claims for sexual harassment and retaliation cannot succeed because they have failed to plead facts sufficient to demonstrate that Domino's, as a franchisor, is their employer.
"Title VII makes it `an unlawful employment practice for an employer ... to fail or refuse to hire or to discharge any individual, *621 or otherwise to discriminate against any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's race, color, religion, sex, or national origin.'" Arbaugh v. Y & H Corp., 546 U.S. 500, 504, 126 S. Ct. 1235, 163 L. Ed. 2d 1097 (2006) (quoting 42 U.S.C. § 2000e-2(a)(1)). Further, Title VII "prohibits an employer from retaliating against an employee who has `opposed' any practice by the employer made unlawful under Title VII...." Schramm v. Slater, 105 Fed.Appx. 34, 41 (6th Cir.2004); see also 42 U.S.C. § 2000e-3.
Ohio Revised Code § 4112.02(A) contains similar language making it an "unlawful discriminatory practice" for an "employer" to discriminate on the basis of sex with respect to "hire, tenure, terms, conditions, or privileges of employment, or any matter directly or indirectly related to employment." Further, R.C. § 4112.02(1) prohibits an employer from retaliating against an employee "because that person has opposed any unlawful discriminatory practice ...."
In recognizing the common law tort of sexual harassment, Ohio courts require proof of the same elements as under R.C. § 4112.02(A). Minnich v. Cooper Farms, Inc., 39 Fed.Appx. 289 (6th Cir.2002); Gallagher v. C.H. Robinson Worldwide, Inc., 567 F.3d 263 (6th Cir.2009). Further, Title VII "is generally applicable to retaliation cases under Ohio common law." Johnson v. General Motors Corp., 2008 WL 323151, at *3 (N.D.Ohio Feb. 4, 2008). Consequently, there is no question that Domino's status as the Brickers' employer is a "threshold matter." Baetzel v. Home Instead Senior Care, 370 F. Supp. 2d 631, 639 (N.D.Ohio 2005).
Generally, "a franchisor is not the employer of employees of the franchisee." Raines v. Shoney's, Inc., 909 F. Supp. 1070, 1078 (E.D.Tenn.1995) (citing Armbruster v. Quinn, 711 F.2d 1332, 1337-38 (6th Cir.1983)). However, the Sixth Circuit has adopted a four-part test for determining employer status relevant to the consideration of whether a franchisor can be considered an employer of its franchisee's employees. Baetzel, 370 F.Supp.2d at 639. Under that test, courts will treat two entities as a single employer where the following circumstances are found to exist: (1) interrelation of operations, (2) common management, (3) centralized control over labor relations, and (4) common ownership or financial control. Id. (citing Armbruster, supra).
In their complaint, the Brickers, while alleging a franchisor/franchisee relationship between "Mentzer and/or R & A Pizza" and Domino's, also allege that "[d]efendants Domino's, R & A Pizza and Mentzer were a single employer and or/were involved in a joint venture." Am. Compl. at ¶ 3, ¶ 8. The allegations that the Defendants are a single employer or involved in a joint venture are conclusory statements, and are also legal conclusions rather than factual averments. The Court believes that some "factual enhancement" beyond such statements is required under the standards set forth in Twombly and Iqbal. This is especially true where, as here, the amended complaint also alleges that Domino's is a franchisor. Absent any supporting factual allegations, the Court cannot conclude that the amended complaint demonstrates the plausibility of the Brickers' assertion that the Defendants operate as a single employer.
Similarly, these conclusory statements do not demonstrate the plausibility of the Brickers' assertion that the Defendants are engaged in a joint venture or, stated more accurately, acted as a joint employer. The Sixth Circuit has "recognized that the single employer and joint *622 employer doctrines [are] analytically distinct." Sanford v. Main Street Baptist Church Manor, Inc., 327 Fed.Appx. 587, 592-593 (6th Cir.2009) Two employers may be considered joint employers when they "`handle certain aspects of their employer-employee relationship jointly.'" Id. (quoting Arculeo v. On-Site Sales & Mktg., LLC, 425 F.3d 193, 198 (2d Cir.2005)). Under this doctrine, "`an employee, formally employed by one entity, who has been assigned to work in circumstances that justify the conclusion that the employee is at the same time constructively employed by another entity, may impose liability for violations of employment law on the constructive employer, on the theory that this other entity is the employee's joint employer.'" Id. The Brickers have made no factual allegations in their amended complaint suggesting that they were constructively employed by Domino's.
The Brickers' reliance on an agency theory to establish Domino's "employer" status fares no better. The sole agency allegation of the amended complaint is the following language found in paragraph 8: "Defendants R & A Pizza and /or Mentzer, were agents of Defendant Domino's." Again, this is a conclusory statement of a legal proposition without any supporting factual allegations to demonstrate its plausibility.
In short, the Brickers have failed to include any factual allegations in the amended complaint supporting their claim that Domino's was or can be deemed to have been their employer. Absent such factual allegations, the Brickers have failed to cross the line from the possibility to the plausibility that Domino's is their employer for purposes of their Title VII and state statutory or common law claims. Consequently, Domino's motion to dismiss will be granted as to these claims.
C. State Law Negligence Claims
The Brickers also have asserted two state common law negligence claims. The first claim, captioned as a simple negligence claim, can more accurately be described as a negligent hiring or retention claim. The second claim is a claim for negligent supervision. Under Ohio law, the elements for all three claims are the same. Lutz v. Chitwood, 337 B.R. 160, 169 (S.D.Ohio 2005). These elements are: "(1) the existence of an employment relationship; (2) the employee's incompetence; (3) the employer's actual or constructive knowledge of such incompetence; (4) the employer's act or omission causing plaintiffs injuries; and (5) the employer's negligence in hiring or retaining the employee as the proximate cause of plaintiffs injuries." Id. (citing Peterson v. Buckeye Steel Casings, 133 Ohio App. 3d 715, 729, 729 N.E.2d 813 (1999)). In short, "if an employer, without exercising reasonable care, employs an incompetent person in a job that brings him into contact with others, then the employer is subject to liability for any harm the employee's incompetency causes." Abrams v. Worthington, 169 Ohio App. 3d 94, 98, 861 N.E.2d 920 (10th Dist.2006) (internal citation omitted).
As the Abrams court explains, in order to prevail on such claims, a plaintiff must prove the basic elements of negligence including the existence of a duty of care. Abrams, 169 Ohio App.3d at 99, 861 N.E.2d 920. Under Ohio law, "the existence of a duty depends upon the foreseeability of injury to the plaintiff." Id. (citing Jeffers v. Olexo, 43 Ohio St. 3d 140, 142, 539 N.E.2d 614 (1989)). A duty to act does not arise from foreseeability alone, however. Id. (internal citations omitted). For example, "a defendant has no duty to protect a plaintiff from or to control the conduct of a third person." Id. However, if a "special relationship" exists, requiring *623 such a duty may be justified. Id. As is relevant to this case, the employer-employee relationship is generally considered such a special relationship. Id.
Here, in order to state a negligence claim against Domino's, the Brickers must allege, among other things, that Domino's is their employer. They must also provide some factual allegations in support of such an assertion to meet the requirements of Twombly and Iqbal. As discussed above, however, the amended complaint does not contain any factual allegations supporting the Brickers' conclusory assertion that they are employed by Domino's.
On the other hand, the amended complaint alleges, and Domino's does not dispute, the existence of a franchisor/franchisee relationship between Domino's and Mr. Mentzer. "`Under Ohio law a franchisor may be vicariously liable for a franchisee's tortious conduct under a theory of apparent agency or agency by estoppel....'" Coleman v. Chen, 712 F. Supp. 117, 124 n. 6 (S.D.Ohio 1988) (quoting Broock v. Nutri/System, Inc., 654 F. Supp. 7, 10 (S.D.Ohio 1986)). That is, "`the existence of a franchisor-franchisee relationship between persons does not in itself preclude the existence of a principal-agent relationship between them.'" Id. (quoting Taylor v. Checkrite, Ltd., 627 F. Supp. 415, 416 (S.D.Ohio 1986)). To determine whether a principal-agent relationship exists, courts consider the same factors as "in the absence of a franchisor-franchisee relationship." Id. Further, "[u]nder Ohio law, `[t]he determinative factor in deciding whether an agency relationship exists between a franchisor and a franchisee is the degree of control the franchisor has over the operations of the franchisee's business.'" Id. (internal citation omitted). As discussed above, the amended complaint does not contain any factual allegations of an agency relationship between Domino's and the other Defendants. Without any factual averments supporting either the claim that Domino's acted as the Brickers' employer or that their actual employer was Domino's agent (and not just its franchisee), no special relationship could be inferred that would give rise to a duty of care owed by Domino's to the Brickers, at least with respect to either the hiring, retention, or supervision of Mr. Mentzer, who is concededly not a Domino's employee. Consequently, Domino's motion to dismiss will be granted as to the Brickers' negligence claims.
V. CONCLUSION
Based on the foregoing, the motion to dismiss filed by Domino's Pizza LLC (ECF No. 45) is GRANTED. Plaintiffs' claims against Defendant Domino's Pizza, LLC are dismissed WITH PREJUDICE. In light of this, the motion for leave to file a supplemental affidavit (ECF No. 60) is DENIED AS MOOT.
IT IS SO ORDERED.
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669 F. Supp. 529 (1987)
Alfred U. McKENZIE, et al., Plaintiffs,
v.
Ralph E. KENNICKELL, Jr., Defendant.
Civ. A. No. 73-0974.
United States District Court, District of Columbia.
September 10, 1987.
*530 Douglas L. Parker, Institute for Public Representation, William A. Bradford, Jr., Elliot M. Minceberg, Craig A. Hoover, Hogan & Hartson, Roderic V.C. Boggs, Wash. Lawyers' Committee for Civil Rights Under Law, Washington, D.C., for plaintiffs.
John Bates, Asst. U.S. Atty., Washington, D.C., for defendant.
MEMORANDUM OPINION
BARRINGTON D. PARKER, Senior District Judge:
The specific question presented and resolved in this Memorandum Opinion is whether or not class plaintiffs in this Title VII protracted litigation who have prevailed on the merits and clearly proved that black workers employed at the United States Government Printing Office ("GPO") were victims of racial discrimination, are entitled to an interim award of attorneys' fees and legal expenses. The interim award is requested pending a determination by the Court of their full entitlement. Counsel for the GPO have stubbornly resisted payment of such an award.
The legal memoranda of counsel for the parties have been fully considered. For the reasons set forth below, the arguments advanced by the government are rejected.
I. BACKGROUND
This Title VII litigation commenced in early 1973. For close to 15 years, the case has been vigorously pursued and hotly contested before both the trial and the appellate courts. On July 2, 1987 the Court approved a Stipulation and Final Order resolving all pending substantive issues. At a fairness hearing, immediately preceding the approval of the Stipulation and Final Order, several plaintiffs testified and summed up the significance of the litigation and the results achieved towards eliminating racial discrimination at the Government Printing Office. Mr. Willis E. Jones, one of the original class plaintiffs who had been employed at the GPO for 24 years before retiring in 1986, announced in open court that the law suit brought "a tremendous amount of improvements in the employment of black employees" and that the litigation resulted in "quite a victory for us."[1] The law suit brought about changes leading to eradication of long-existing discriminatory and unlawful employment policies and practices. Plaintiffs' counsel also negotiated a reasonable and fair award of monetary damages for their clients.
Having ultimately prevailed in their efforts, plaintiffs' counsel now seek reasonable compensation for services rendered over the course of this proceeding. On September 12, 1986 counsel were awarded an interim payment covering legal services provided and expenses advanced on behalf of plaintiffs for an earlier period of the litigation, from 1973-1980. McKenzie v. Kennickell, 645 F. Supp. 437 (D.D.C.1986). Now that the litigation has been finally resolved on the merits, they seek compensation for legal services rendered and expenses incurred since 1981.
The government concedes that plaintiffs are entitled to an additional award. Indeed, government counsel stipulated to a provision in the final order of July 2, 1987, that it would attempt to agree on the amount of costs, including reasonable attorneys' fees, to which plaintiffs were entitled. Prior to that commitment, which the Court viewed as having been made in good faith, the government had on hand for review since April 20, 1987, full documentation and support for plaintiffs' fee request. Plaintiffs submitted the data to allow the government to evaluate and determine the reasonableness of the amount requested by plaintiffs and, hopefully, to facilitate a settlement. Yet, five months later, no progress has been made. Contrary to the *531 representation that it would make good faith attempts to agree on an award, it has contested and vigorously challenged every amount claimed. At a recent hearing, government counsel marshalled the usual array of arguments to support its position that plaintiffs' requests were excessive. It reiterated those objections raised in connection with the September 12, 1986 award, contending that the hours claimed were unreasonable, that the request improperly included charges for non-attorney time, that plaintiffs sought compensation for issues upon which they did not prevail, that plaintiffs failed to exercise appropriate billing judgment and cost containment, and that the billing rates exceeded prevailing community rates. Many of the objections could be characterized as minute, feckless and unjustified criticism.
Following the latest rejection of their fee request, plaintiffs petitioned the Court for immediate relief and requested payment at the very least, of that amount of the total request which the government could not reasonably dispute. Concerned that the request would escalate into a piece of full fledged litigation resulting in further delay of compensation earned and properly due, on August 10, 1987, this Court directed the government to identify an amount that in its opinion represented an irreducible minimum lodestar fee[2] to which plaintiffs were entitled. The order required that such amount should be paid "forthwith." That ruling was made because of the government's earlier affirmation that plaintiffs' counsel were entitled to a reasonable award for their efforts. Under the circumstances, it appeared to the Court that the government was in a position to identify an amount that it could not in good faith dispute. In accordance with the August 10 ruling, the government reported that $200,000 was an irreducible minimum award to which plaintiffs were entitled.
However, on the heels of that representation, the government moved for a modification or a stay of the "forthwith" payment provision of the order claiming that it did not allow time for proper consideration of whether or not to pursue appellate review. A stay for a period of 60 days pending such a determination was requested. Alternatively, it requested that the order be modified to provide that payment be made within 60 days.
Two grounds were advanced to support the motion. Counsel characterized the August 10 ruling as an interim order and contended that it was neither necessary nor appropriate; that interim fees are properly awarded only when counsel have become impoverished as a result of efforts and investment in an action and would otherwise have to abandon the litigation. Since the merits of this proceeding and the substantive litigation have been finally resolved, the government suggested that an interim award would only serve as a "fee-generation technique" to fund and encourage long-term fee litigation. As a second reason, counsel argued that the Court is not empowered to order interim fee awards against the federal government; that the provisions of 31 U.S.C. § 1304(a), governing payment of judgments against the United States, prohibit such awards and only permits payment when a judgment is final under 28 U.S.C. § 2414. The government maintains that the August 10 order was not final until "the Attorney General determines that no appeal shall be taken from a judgment or that no further review will be sought from a decision affirming the same...." 28 U.S.C. § 2414. Since Rule 4(a), Fed.R.App.P., grants the government 60 days to file a notice of appeal, the government argues that, at the very least, it should be granted a stay for 60 days to make a determination whether to appeal the August 10 order.
In opposing the government's motion, plaintiffs countered and argued that a motion for a stay to permit time to decide whether to appeal is futile because the August 10 ruling is not a final appealable judgment. They also pointed out that the government has conceded that plaintiffs deserve a reasonable award and thus its refusal to pay an undisputed minimum *532 amount is a clear demonstration of bad faith.
The practical effect of the government's tactics to delay payment is to reduce the value of any award and increase unnecessarily plaintiff's litigation costs. Indeed, the government's present actions are a replay of the same scenario that followed the September 12, 1986 fee award. After that award was made, the government waited until the 59th day before filing a "protective" notice of appeal. The notice automatically stayed the entry of judgment. It then dallied an additional month, until mid-December 1986, before it finally decided to dismiss the appeal. Even then, plaintiffs did not receive the award until March 27, 1987, a delay of more than six months after the Court's opinion was issued.
II. ANALYSIS
A.
The government's "pauperization" principle is contrary, both to case law and the purposes behind the fee shifting statute. 42 U.S.C. § 2000e-5(k). The principle would require counsel to litigate themselves into the poor house before they could collect an interim fee. It would reduce the availability of interim awards and result in discouraging counsel from taking on deserving Title VII litigation.
Both our Circuit and the Supreme Court have affirmed "the propriety of an interim award once discrimination has been established." Grubbs v. Butz, 548 F.2d 973, 977 (D.C.Cir.1976). In Bradley v. School Board of City of Richmond, 416 U.S. 696, 94 S. Ct. 2006, 40 L. Ed. 2d 476 (1974), Justice Blackmun, in speaking for the Supreme Court, explicitly endorsed the liberal use of interim awards to minimize losses due to delay in payment when he concluded
[t]o delay a fee award until the entire litigation is concluded would work substantial hardship on plaintiffs and their counsel, and discourage the institution of actions despite the clear congressional. intent to the contrary evidenced by the passage of [the act].
Bradley, 416 at 723, 94 S. Ct. at 2022. Indeed, Justice Blackmun's analysis undermines the government's claim that interim awards are only justified if counsel would otherwise run out of money to continue the litigation. The government's theory contravenes the very purpose behind the fee shifting statute to ensure effective access to the judicial process for persons who have claims under the civil rights laws. S.Rep. No. 1011, 94th Cong., 2d Sess. 2-6 (1976), U.S.Code Cong. & Admin.News 1976, 5908, 5909-5913. In enacting the fee provision, Congress recognized that
in many cases ... the citizen who must sue to enforce the law has little or no money with which to hire a lawyer. If private citizens are able to assert their civil rights, and if those who violate the Nation's fundamental laws are not to proceed with impunity, then citizens must have the opportunity to recover what it costs them to vindicate these rights in court.
S.Rep. at 2; U.S.Code Cong. & Admin. News at 5910. To promote these goals of effective access and encourage attorneys to accept Title VII cases, Congress explicitly affirmed the propriety of interim awards. The Senate Report accompanying the Act, cited Bradley for the proposition that "counsel fees may be awarded pendente lite. Such awards are especially appropriate where a party has prevailed on an important matter in the course of the litigation." S.Rep. at 5; U.S.Code Cong. & Admin.News at 5912. More recently see also Hanrahan v. Hampton, 446 U.S. 754, 758, 100 S. Ct. 1987, 1989, 64 L. Ed. 2d 670 (1980). ("Congress intended to permit the interim award of counsel fees ... when a party has prevailed on the merits of at least some of his claims.")
The availability of interim fees mitigates the otherwise prohibitive costs involved in litigating a complex Title VII class action. As this proceeding illustrates, such actions are often extremely protracted. Frequently, counsel are required to invest substantial time and resources without any certainty that they will be compensated. In this action, plaintiffs have performed with competence and skill to put an end to impermissible *533 employment policies and practices at the GPO. Despite their efforts and lasting results, they have yet to be compensated for a substantial amount of their work. Interim awards ameliorate the hardships caused in pursuing litigation of this nature. Otherwise, prospects of facing long delays dampens the enthusiasm of the public interest bar for accepting such cases and ultimately undermines the underlying remedial purposes of our civil rights laws.[3]
To foster and encourage acceptance of Title VII cases, our Circuit has authorized payment of interim awards for a lodestar amount which the parties do not dispute. In Parker v. Lewis, 670 F.2d 249 (D.C.Cir. 1981) our Circuit explicitly required the government to pay the amount which it did not contest. In a per curiam opinion, the Court expressed concern that
the public policy dictating that attorneys' fees be awarded not be completely undercut by routine delays in payment of fees that are properly due and owing. Such delays have the potential to dampen substantially attorneys' enthusiasm to undertake discrimination cases. The court should not allow delay in cases such as this one to undermine the efficacy of Title VII policy.
Id. at 250.
Availability of interim awards is even more important in light of a later ruling, Library of Congress v. Shaw, ___ U.S. ____, 106 S. Ct. 2957, 92 L. Ed. 2d 250 (1986). There, the Supreme Court prohibited levying interest against the United States for delay in payment. Our Circuit has interpreted Shaw to bar awards based upon current hourly billing rates to compensate for work completed at an earlier date when rates were lower as "simply a forbidden award of interest under another name." Save Our Cumberland Mountains, Inc. v. Hodel, 826 F.2d 43, 52 (D.C. Cir.1987), 622 F. Supp. 1160 (D.D.C.1985) (J. Richey). However, both Shaw and Cumberland involved actions where the parties were disputing the total fee request. In such cases where the parties refuse to agree on any irreducible minimum due plaintiffs no fees may be awarded until the fee litigation is resolved. Obviously, the longer the disputes are drawn out, the longer payment is delayed and the smaller the real value of the award. Speedy decisions on fee petitions and frequent grants of interim awards are necessary to minimize the loss in value of the total award. In instances when the government concedes that it owes the plaintiffs a reasonable fee award and identifies a representative amount, an interim award of that uncontested amount preserves at least the current value of that sum and reduces losses due to delay.
Finally, the government has failed to cite or refer to any proceeding in this or any other jurisdiction where the propriety of interim awards has been successfully challenged. Earlier in the proceedings of this very case, the government did not dispute an order granting an interim award. McKenzie v. Kennickell, 645 F.Supp. at 442. Similarly, in Save Our Cumberland Mountains, Inc. v. Hodel, No. 81-2134 (D.D.C. August 4, 1986) (J. Parker), the government did not challenge plaintiff's request for immediate payment of the amount which the government did not dispute. As in the present case, the government agreed to a final settlement on the merits and conceded that the plaintiffs were entitled to reasonable fees and costs. Accordingly, the Court granted plaintiffs an interim award an amount to which the government did not dispute. The government's decision to take issue with the propriety of interim awards appears as another *534 example of intransigent and unreasonable attempts to delay and extend this fee litigation.[4]
Awarding plaintiffs interim fee is fully consistent with the goals of Title VII, and with the case law in this jurisdiction.
B.
The government's other basis for resisting the August 10 Order, presents interesting issues. Our Circuit has not addressed whether 31 U.S.C. § 1304(a) and 28 U.S.C. § 2414 prohibit the assessment of an interim award against the United States. Nor did the parties cite authority from other jurisdictions addressing the question. Case law is extremely sparse. However, in a recent and well reasoned opinion, District Judge Joe Fish of the Northern District of Texas resolved this precise issue and upheld an interim fee against the United States. Jurgens v. Equal Employment Opportunity Commission, 660 F. Supp. 1097 (N.D.Tex.1987).
Both Title 28 U.S.C. § 2414 and 31 U.S.C. § 1304(a) are general provisions which authorize the appropriation of federal funds to pay final judgments against the United States. In contrast, Title VII is a more narrow statute which in relevant part extends liability to the federal government for unlawful discrimination against its employees. As Judge Fish noted in Jurgens
[to] the extent of any conflict ... the specific provision governing fees awards in Title VII cases 42 U.S.C. § 2000e-5(k), .. must prevail over the provisions in 28 U.S.C. § 2414 [and 31 U.S.C. § 1304(a)] governing payment of judgments generally. This conclusion is strengthened by the fact that § 2414 predates § 2000e-5(k) by several years. Under general principles of statutory construction, the newer, more specific provisions of 2000e-5(k) must prevail over the older, more general provisions of 28 U.S.C. § 2414 [and 31 U.S.C. § 1304(a)].
Id. at 1102. The court considered the strong policies underscoring the narrower Title VII fee provisions in arriving at its decision. That statute specifically provides that the "United States shall be liable for costs [including attorneys' fees] the same as a private person." § 2000e-5(k). Originally, Title VII did not apply to the federal work force. But, recognizing that the federal government should lead rather than trail in the march against racial discrimination, Congress amended the Act in 1972 to extend liability for attorneys' fees and costs to the federal government. § 717 of Title VII, 42 U.S.C. § 2000e-16(d). In enacting the amendment, Congress clearly intended to provide federal employees with the same legal protections against employment discrimination as plaintiffs in the private sector. The Senate Report accompanying the Act stated "aggrieved [federal] employees or applicants will have the full rights available in the courts as are granted to individuals in the private sector under Title VII." S.Rep. No. 92-415 (1971).
To carry out the statute's express instruction that the United States "shall" be treated identically with private persons for purposes of awarding attorneys' fees and costs, courts must award interim fee awards against the United States on the same terms as against a private employer. Any other interpretation of the statute would distort its plain language and violate Congress's intent. Indeed, if the general appropriation provisions, 28 U.S.C. § 2414 and 31 U.S.C. § 1304(a), were to prohibit an award of interim fees, then the government would no longer be treated identically with private parties. Therefore, application of the general provisions would undermine the very purpose of the amendment to Title VII and render it a nullity.[5]
*535 The government's oblique suggestion that interim awards against the federal government are barred by the doctrine of sovereign immunity has no merit. Only this past term, the Supreme Court concluded that "[i]n making the Government liable as a defendant under Title VII, Congress effected a waiver of the Government's immunity from suit, and from costs including reasonable attorney's fees." Library of Congress v. Shaw, 106 S.Ct. at 2966. Unlike an award of interest, which the Court determined was historically viewed as a separate element of damages requiring an express and discrete waiver of sovereign immunity, an interim award is an integral part of the final judgment. No separate waiver is required. Moreover, the Court cannot stress enough that in this case, the interim award merely constitutes that amount which the government concedes it owes the prevailing party. Though principles of sovereign immunity bar charging interest against the United States, these principles do not entitle the government to retain funds it admittedly owes.
C.
Finally, the Court is not persuaded that the government needs a 60 day stay to determine whether to appeal the August 10 Order. Under Rule 62(a), Fed.R.Civ.P., execution of judgment is automatically stayed 10 days to afford litigants time to consider whether to appeal or to seek some other form of review. 7 Moore, Federal Practice § 62.03 (1983). This period provides ample opportunity for a party to file a notice of appeal and obtain a stay under Rule 62(d). The government has not offered any good reason why it should be granted greater protections than those provided under the federal rules and be granted a 60 day stay to decide whether to appeal.[6] To the contrary, the government's past track record in this proceeding raises serious concerns and leads to the conclusion that it will use a 60-day stay merely to pursue questionable delaying tactics.
Further, the Court is disturbed over the government's intransigent opposition to the August 10th Order. That Order merely directed the government to pay plaintiffs that amount which its legal representatives conceded were due. Since plaintiffs will ultimately receive at least that award, the only benefit to the government in staying and possibly appealing the Order would be to gain the time value of that sum. Conversely a stay would serve to reduce the ultimate value of the fee award to plaintiffs.[7] On its most sinister level, the government's strategy appears to be another veiled attempt to discourage the public interest bar from representation in Title VII cases. Granting a stay would thwart the policy goals underlining Title VII and frustrate the public's interest in private enforcement of our civil rights laws. Certainly the government has the right to appeal the Order and has 60 days to make its decision. If it chooses to file a notice of appeal then it may invoke the stay protection of Rule 62(d).
III. CONCLUSION
Availability of interim awards serves to prevent our civil rights laws from becoming "mere hollow pronouncements which the average citizen cannot enforce." S.Rep. No. 1011 at 6; U.S.Code Cong. & *536 Admin.News at 5913. Given the constraints of current case law, interim awards are even more vital to encourage the eradication of discrimination through the vigorous enforcement of our nation's civil rights laws.
On basis of the above, it is this 10th day of September, 1987,
ORDERED
That the government's motion for a stay or alternatively for modification of the August 10, 1987 Order is denied.
That the government shall forthwith undertake all steps required to secure immediate payment of an interim award of $200,000 to the plaintiffs. Counsel for the government shall file by September 17, 1987 a written report setting forth the efforts pursued to carry out this order.
NOTES
[1] Transcript of the Fairness Hearing at 9, 11 (July 1, 1987).
[2] Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S. Ct. 1933, 1939, 76 L. Ed. 2d 40 (1983).
[3] In several recent cases the Supreme Court has severely restricted the total fee recovery against the United States government. See, Pennsylvania v. Delaware Valley Citizens Council, ___ U.S. ____, 107 S. Ct. 3078, 97 L. Ed. 2d 585 (1987); Blum v. Stenson, 465 U.S. 890 (1984). According to the Court's pronouncements in Delaware Valley, plaintiffs are only entitled to an enchancement of the lodestar if they can demonstrate that they have had difficulty finding counsel to pursue their action. If on top of this trend parties were prohibited from securing limited interim fees, lawyers would be severely discouraged from taking Title VII contingency fee cases. In an ironic twist, the long term effect of this trend might lead to a higher frequency in the award of multipliers.
[4] Contrary to the government's claim that an interim award would merely serve as a fee-generation technique, the plaintiffs have no incentive to prolong the fee litigation. Since the plaintiffs cannot collect interest for losses due to delay, Library of Congress v. Shaw, ___ U.S. ____, 106 S. Ct. 2957, 92 L. Ed. 2d 250 (1986), the longer they pursue their fees, the less valuable the ultimate award becomes.
[5] This concession could form the basis for an alternative reading of § 1304(a) which would avoid any conflict with the Title VII fee provision in this action. Since the government has conceded it owed plaintiffs $200,000, that amount could be construed as a "compromise settlement" for purposes of § 31 U.S.C. § 1304(a). That statute expressly authorizes appropriations for "compromise settlements." However, since the $200,000 figure does not completely resolve and settle the fee request, it is not technically a compromise settlement.
[6] One District Court has held that courts are prohibited from staying execution of judgment beyond the 10 day period unless the party has filed a notice of appeal. See United States v. One 1962 Ford Galaxie Sedan, 41 F.R.D. 156 (S.D.N.Y.1966).
[7] As an alternative to requiring the government to pay an irreducible minimum fee to plaintiffs' counsel directly, courts might consider requiring the government to pay that sum into an interest-bearing escrow account. This solution should satisfy the concerns of both parties. By placing the money into an escrow account, plaintiffs would not access the money to "fuel their fee litigation." Further, if the government were successful on appeal, repayment would pose no problems. Meanwhile, the plaintiffs would not lose the present value of the award when it is ultimately turned over to them.
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746 F. Supp. 2d 1232 (2010)
UNITED STATES of America
v.
William IREY.
Case No. 6:06-cr-237-Orl-31DAB.
United States District Court, M.D. Florida, Orlando Division.
October 22, 2010.
*1233 Cynthia A. Hawkins, U.S. Attorney's Office, Orlando, FL, for United States of America.
MEMORANDUM OPINION AND ORDER
GREGORY A. PRESNELL, District Judge.
This matter comes before the Court on the Unopposed Motion for Continuance of Resentencing Hearing Pending Review in United States Supreme Court (Doc. 80). As the motion's title suggests, the parties seek to have this Court delay its resentencing of the Defendant, William Irey ("Irey"), on the chance that the Supreme Court will grant his petition for writ of certiorari, due to be filed on October 27, 2010. As things now stand, this Court is obligated by the July 29, 2010 decision of the United States Court of Appeals for the Eleventh Circuit (henceforth, the "July 29 Order") to impose a 30-year sentence on Irey. Given that Irey is in the early stages of serving the 17-and-a-half-year sentence originally imposed by this court, there is no pressing need to impose the longer sentencea fact apparently recognized by the Government, which does not oppose the motion. For these reasons, the motion will be granted, and the resentencing will be continued.
* * *
Under normal circumstances, that would be the end of the matter. But these are not normal circumstances. The July 29 Order raises a host of important issues, a fact recognized both by the Defendant in the instant motion and by the appellate court in the order itself. The pendency of the petition for a writ of certiorari provides the Court with a rare opportunity to respond to certain aspects of the appellate decision, prior to its possible review by the *1234 Supreme Court, with information that only the undersigned possesses. In addition, the July 29 Order has certain implications that affect the courts that are tasked with the imposition of criminal sentencesimplications that might not be apparent to the parties themselves. The Court believes that a discussion of these points may assist the Supreme Court in determining whether the petition ought to be granted.
It is for these reasons, and not out of any disrespect for the Circuit Court's authority to reverse the sentence I imposed, that I will take this opportunity to respond to certain portions of the July 29 Order.
* * *
Background
On December 13, 2006, a grand jury returned an indictment charging Irey with one count of violating 18 U.S.C. § 2251, which proscribes sexual exploitation of children. (Doc. 1 at 1). In particular, Irey was charged with violating subsection (c) of that section, which provides that
(1) Any person who, in a circumstance described in paragraph (2), employs, uses, persuades, induces, entices, or coerces any minor to engage in, or who has a minor assist any other person to engage in, any sexually explicit conduct outside of the United States, its territories or possessions, for the purpose of producing any visual depiction of such conduct, shall be punished as provided under subsection (e).
(2) The circumstance referred to in paragraph (1) is that
(A) the person intends such visual depiction to be transported to the United States, its territories or possessions, by any means, including by using any means or facility of interstate or foreign commerce or mail; or
(B) the person transports such visual depiction to the United States, its territories or possessions, by any means, including by using any means or facility of interstate or foreign commerce or mail.
18 U.S.C. § 2251(c). With certain exceptions not applicable in this case, the penalty for a first-time offender under this section is a prison term of not less than 15 years nor more than 30 years. 18 U.S.C. § 2251(e). On July 10, 2007, Irey pled guilty to the single count with which he had been charged. (Doc. 49).
On January 29, 2008, Irey, then 50 years old, appeared before this Court for sentencing. As set forth in the Presentence Investigation Report ("PSR") prepared by the United States Probation Office, a straight application of the United States Sentencing Guidelines ("USSG") would have resulted in a guideline sentence of life imprisonment. Because the statute provided for a maximum sentence of only 30 years, the guideline sentence was automatically reduced to that amount.
The Court conducted a lengthy hearing, which included evidence of psychological evaluations conducted by two mental health professionals (and live testimony from one of them), plus live testimony and recorded statements from Irey's wife and three sons, as well as other members of Irey's family and friends, plus argument from the prosecutor and defense counsel.[1] Afterward, I sentenced Irey to 210 months17 and a half yearsin prison, plus a lifetime of supervised release and other restrictions.
The Government appealed. Initially, a three-judge panel unanimously affirmed the decision, finding that the Government had failed to establish that the sentence was unreasonable. See United States v. *1235 Irey, 563 F.3d 1223 (11th Cir.2009) (henceforth, "Irey I"). Four months later, the Circuit Court sua sponte decided to rehear the case and vacated the panel's opinion. See United States v. Irey, 579 F.3d 1207 (11th Cir.2009) (en banc) (henceforth, "Irey II"). After additional briefing and oral argument, a sharply divided court reversed and remanded with instructions to impose the maximum sentence permitted by the statute30 years. See United States v. Irey, 612 F.3d 1160 (11th Cir. 2010) (en banc) (henceforth, "Irey III").
The Sentencing Factors
In vacating the sentence I had imposed, the Circuit Court found no procedural irregularities, and noted that my factual findings and explanations were among the most specific and detailed that they had encountered in reviewing a sentence. Irey III at 1195. Instead, the decision to vacate the sentence was based on substantive grounds. Accordingly, the discussion that follows will address the sentencing factors of 18 U.S.C. § 3553(a) in the context of substantive reasonableness.[2]
18 U.S.C. § 3553(a)(1)the Nature and the Characteristics of the Offense and 18 U.S.C. § 3553(a)(2)(A)the Seriousness of the Offense
Section 3553(a)(1) and § 3553(a)(2)(A) contain similar requirements that the sentencing court begin its determination of an appropriate sentence by considering the nature and seriousness of the offense. As charged by the Government, the offense committed by Irey was the production of child pornography outside the United States for transportation into this country, in violation of 18 U.S.C. § 2251(c). The offense conduct is set forth in paragraphs four through 18 of the PSR. Paragraphs four through 17 discuss the investigation of internet child pornography that led agents to Irey, and the execution of the search warrant that revealed the images depicting Irey engaging in sex acts with children. Those images are described in paragraph 18 of the PSR.
I recognized that Irey's offense was seriousindeed "horrific"in that the victims were numerous and vulnerable, and the conduct occurred over an extended period of time. (Tr. at 58).[3] Accordingly, I concluded that the seriousness of the offense did not mitigate in favor of any leniency. (Tr. at 58). However, in the opinion of a majority of the Circuit Court, the 17-anda-half-year sentence was substantively unreasonable, primarily because of the nature and extent of Irey's criminal conduct. Irey III at 1166. In other words, the Circuit Court concluded that I gave insufficient weight to the seriousness of the offense.
Perhaps the disconnect between my judgment and that of the Circuit Court is a matter of perspective. The offense, as I viewed it, was the production and transportation of child pornography, as charged. The circumstances surrounding that offense were certainly relevant, and I considered them. As I said during the sentencing hearing, "These young children were victims who may never, never overcome *1236 their abuse." (Tr. at 58). Conversely, the primary focus of the majority in Irey III was on Irey's sexual conductthe rape, sodomy and torture of childrenwith the child pornography production almost an afterthought. See Irey III at 1166 (graphically detailing Irey's sexual conduct, then adding that he "also ... starred in [and] produced ... child pornography"). See also Irey III at 1209-10 (describing Irey's production and distribution of child pornography as "additional criminal behavior"). Such a difference in perspective can certainly lead to a different conclusion as to the seriousness and weight to be accorded Irey's criminal conduct.
There are a number of things in the Irey III decision with which I take issue. However, I have no disagreement with the fundamental proposition underlying the majority opinion: that Irey's conduct, his filming (and subsequent distribution) of himself having sex with dozens of children, under the most revolting of circumstances, was utterly vile. The bottom line for the majority appears to be that Irey raped and tortured fifty or more children, and that this fact so outweighs every other sentencing consideration that only a maximum sentence could be reasonable. But Irey was not charged with 50-plus counts of rape and torture; he was charged with, and pled guilty to, a single count of violating 18 U.S.C. § 2251(c), which prohibits foreign production of child pornography for distribution in the United States. The horrifying circumstances surrounding the production of this child pornography were certainly relevant, and I tried to take those circumstances into consideration when crafting Irey's sentence. But the implicit holding of the majority opinion is that I was obligated to sentence Irey for the surrounding conduct, rather than the particular crime with which he was charged.
In any event, in the majority's view, the heavy weight to be accorded to the seriousness of Irey's offense trumps any mitigating factors that could support a below-guideline sentence. That said, I will turn to the other statutory factors.
18 U.S.C. § 3553(a)(1)The History and Characteristics of the Defendant
The PSR describes Irey as a good husband and supportive father of four children, who remain supportive of him.[4] He has no prior criminal record. The PSR also notes that Irey was residing at a psychiatric hospital and receiving intensive treatment for his "sexual addiction." (PSR, ¶ 63). A psychological evaluation performed by Dr. Fred Berlin was attached to the PSR. In it, Dr. Berlin concluded that Irey had a psychiatric disorder known as "heterosexual pedophilia" and was in need of "appropriate professional treatment." (PSR, ¶ 63).
Dr. Ted Shaw, who also performed a psychological evaluation, testified at the hearing. Dr. Shaw stated that Irey had a "long-standing problem with sexual obsession," which in lay terms could be described as "sexual addiction." (Tr. at 11). Dr. Shaw testified that he had found Irey to be "amenable to treatment" and that he had made "observable progress." (Tr. at 12).
According to the majority opinion, my biggest error in judgment with regard to this factor resulted from a vastly mistaken, too-sympathetic view of Irey's character. In reaching this conclusion, the majority focuses on an extemporaneous remark I made while imposing the sentence, in which I referred to Dr. Shaw's testimony *1237 that the Internet has fueled an epidemic of child pornography. Irey III at 1198. Had I prepared a written sentencing opinion, I would not have described Irey as one of the "victim[s]" of this phenomenon.[5] However, in speaking from the bench, I made an ill-advised word choice. Relying on that single word, the majority states that I made an "implicit finding" that the internet caused Irey to sexually abuse children, that I (also apparently implicitly) recast Irey from "criminal" to "victim," and that somehow I found that he was on the same "moral plane" as his young victims. Id. at 1198-99. I made no such findings, implicitly or explicitly. And to suggest that I viewed Irey as not responsible for his conduct is absurd. Yet, based on findings I did not make and views I do not hold, the Circuit Court concludes that I saw Irey as a victim and that this perception "permeated [my] reasoning and tainted [my] weighing of the 3553(a) factors." Id. at 1199. That simply is not true.[6]
I engaged Dr. Shaw in a colloquy in an effort to understand the nature of pedophilia from the standpoint of a mental health professional. He described it as a treatable disorder, stating that it is "something that is within you and you have some tendency towards it" (Tr. at 17). He went on to say that the Internet has fueled an "epidemic of pedophilia." (Tr. at 18). Later in the proceeding, I carried this notion forward by noting the Internet's effect on the increase (epidemic) of child pornography. Reflecting on the report and testimony of Dr. Berlin and Dr. Shaw, I also said that Mr. Irey's acts were not purely volitional in that they were the product of a recognized "illness."[7] I concluded that thought by saying, "And while it does not excuse his conduct and he will still be held accountable for it, I think it would be inappropriate to ignore that fact." (Tr. at 59).[8]
Irey did possess some characteristics and history that I thought were relevant to sentencing, and I noted them in my remarks. But the majority brusquely dismisses any evidence of Irey's positive qualities as a husband, father and friend, *1238 asserting that "[n]o one who committed such heinous crimes has good character." Irey III at 1203. The majority even cites Ted Bundy, who apparently spent some time working at a suicide prevention line, as an example. Id. By this logic, once a defendant's criminal conduct reaches a certain point, nothing else can be considered in imposing a sentence. Among other things, such an approach would render meaningless the statutory obligation to consider the characteristics and history of the defendant.
In addition, contrary to the majority's assertions, I did not find that Irey "had good character." Rather, I recognized that, by all accounts, he had been a good husband, father and friend, and except for the offense conduct (and its cover-up) he had not engaged in any other sort of criminal conduct or conduct representing poor character.[9] These facts were uncontroverted and I gave them some weight, as I believe the statute requires me to do.[10]
I also considered Irey's age. He was fifty when he was sentenced, and I noted that he would be an old man67 years old, to be precisewhen he was released from prison. (Tr. at 60). The Circuit Court held that it was unreasonable to consider this fact. Irey III at 1205. The age of the defendant is clearly one of the personal characteristics that may be considered under § 3553(a). The real issue is how much weight should be given to it. I chose to give some weight to Irey's age, so that he and his family might have some hope of life together after his prison term. The majority finds it was unreasonable for me to do so. In its view, Irey's age is not relevant, and if a guideline sentence is effectively a life sentence, this makes no difference. The majority's pronouncement on this pointthat "[w]e fail to see how those facts show that Irey is any different from any other person who commits horrendous crimes in middle age and faces a long prison sentence" is difficult to square with any notion of deferential review.
The majority attempts to undermine my finding as to Irey's age upon release by deducting the two and a half years of "gain time" he might earn in prison pursuant to 18 U.S.C. § 3624(b). Id. The United States Sentencing Commission does not use this calculation in the data that it compiles, nor am I aware of any sentencing case law that does so. Introducing this factor distorts comparisons between different defendants' sentences, likely rendering them meaningless. Despite this, the majority appears to have concluded that this modified figure is more relevant to a sentencing determination than the actual sentence imposed.
*1239 Such a conclusion has significant implications at the district court level. Are sentencing judges now supposed to calculate the possible "net" sentence to determine whether it falls within the guideline range, or to carry out any of the remainder of the § 3553(a) analysis? And how would we do so? Are we to assume that everyone we sentence will earn gain time, and adjust our sentences to take this into account? Stated differently, should judges impose longer sentences because of the "threat" that the defendant will behave himself in prison? Will an otherwise unreasonable, above-guideline sentence be deemed reasonable if the defendant may earn enough gain time to bring the "actual" sentence within the guideline range?
18 U.S.C. § 3553(a)(2)(B)Deterrence
This subsection deals with the need for the sentence to afford adequate deterrence to criminal conduct, and should be considered in the context of the parsimony principle.[11] As the majority noted, the more serious the crime and the greater the defendant's role in it, the more important it is to send a strong and clear message that will deter others. Id. at 1212. In this case, I believed that a 17 and a half-year sentence sent a strong message. As described in the panel opinion, "no serious person should regard it as a trifle." Irey I at 1226.
Nonetheless, the majority concluded that I failed to give enough weight to this factora conclusion that follows, almost by necessity, from the premise that I failed to give enough weight to the seriousness of the offense. But the opinion goes on to suggest that the weight I gave this factor was affected by my "idiosyncratic doubts about whether pedophiles could be deterred". Irey III at 1211. According to the majority, my skepticism as to the deterrent effect amounted to a "policy disagreement with the guideline recommendations," a disagreement that was only permitted if I provided "sufficiently compelling" reasons to justify it. Id.
A fair reading of the sentencing transcript, however, does not support this notion. In discussing the deterrence factor, I did question the vitality of deterrence for this type of crime,[12] but in doing so I was not mounting an attack on the guideline policy.[13] Expressing some misgivings as to the likelihood of deterrence is not at all the same thing as "questioning the value of deterrence" or "downplaying the importance *1240 of deterring this type of crime," as the majority puts it. Id. at 1212 (emphasis added).
In support of its conclusion that I did not reasonably consider the deterrence factor, the majority compares the sentence I imposed with those imposed in United States v. Lychock, 578 F.3d 214 (3rd Cir. 2009) and United States v. Goldberg, 491 F.3d 668 (7th Cir.2007). Lychock, who was convicted of possessing child pornography, had a guideline sentencing range of 30-37 months. Lychock at 216. The district court judge imposed a probation-only sentence, stating that a person with this "kind of psychological problem ... is not going to be deterred by a jail term." Id. at 217. Similarly, the defendant in Goldberg faced a guideline range of 63-78 months for possession of child pornography but received a single-day sentence from a district judge who stated that "the life that I'm concerned with here, the life I can affect, is Mr. Goldberg's life." Goldberg at 670.
The statements I made while sentencing Irey do not even remotely resemble these flat rejections of the possibility of a deterrent effect. To the contrary, I stated that deterrence was "an appropriate consideration in this case," adding that a stiff sentence would be "in keeping with the seriousness of this offense." (Tr. at 60). Moreover, it should be noted, I made these statements in the course of sentencing Irey to more than 17 years in prisona far cry from the probation-only and singleday sentences imposed in Lychock and Goldberg. With these facts in mind, it should be clear that I did give significant weight to considerations of deterrence, and that I imposed a sentence that, by almost any measure, is harsh enough to have such an effect.
18 U.S.C. § 3553(a)(2)(C)Protection of the Public
This subsection addresses the need for the sentence to protect the public from further crimes of the defendant. I viewed this as a mitigating factor for three basic reasons. First, because of Irey's age and the length of the sentence, he would be relatively old when released and, as a consequence, somewhat less likely to reoffend. In addition, the mental health professionals who evaluated him believed that Irey had a low risk of recidivism. Finally, after his release, Irey would be subject to a lifetime of supervision.
Once again, it appears that I expressed my view in a manner that the majority finds objectionable. After crediting the opinion of the experts, as noted above, I said, "of course, all that is somewhat academic because by the time he gets out of prison, he'll be most likely at an age where recidivism would be unlikely, just from a physiological standpoint." (Tr. at 59-60) (emphasis added). Obviously, this was just my inartful way of recognizing Dr. Shaw's testimony that, after spending 15 or more years in prison, Irey would naturally experience reductions in testosterone and in his sex drive, which could affect his urge to commit similar crimes. (Tr. at 15). I did not say, nor would a reasonable reader infer that I suggested, that Irey would be "too old to do it again" or that any risk of recidivism in Irey's case was entirely "academic." Irey III at 1213.
The majority then proceeds to refute these "conclusions," which were not made by me, by citing information which was not presented to me. This information includes reported opinions of criminal cases involving older sex offenders, and studies suggesting older pedophiles generally have a high risk of recidivism. Id. at 1213-15. Next, the majority discusses cases and law review articles showing that *1241 some criminals commit additional crimes despite being on supervised release or other restrictions, and therefore such post-release conditions do not "guarantee" that Irey will not commit more crimes when he gets out of prison. Id. at 1215-16. Summing up, the majority expresses disbelief that, in the face of all this contrary evidence (which, again, was not presented to me before sentencing), I could possibly find that Irey would pose a low risk of recidivism upon his release. Id. at 1216.
Notwithstanding this lengthy, critical dissection, and an explicit statement that my finding on this point was "wrong," the majority then stated that my finding was unassailable, because the government had never challenged it (or any others) as clearly erroneous. Id. Thus, the majority was obligated to accept my finding that after serving his term, Irey would pose a low risk of reoffending. Id. And then, after doing so, the majority concluded that I erred by failing to increase his sentence in response to this risk. Given the level of harm that would be inflicted, the majority asserted, any risk of recidivism was too great to bear: "The district court imposed not one extra month . . . for the purpose of protecting society and its children from further crimes by Irey. . . . Given the magnitude of the harm that will occur if Irey does commit more sexual crimes against children, that was a clear error in judgment." Id. at 1217.
In plain English, the majority found that a mitigating factor, supported by substantial evidence and unchallenged by the government, was trumped by its aversion to Irey's crime. Stated in terms of sentencing law, the majority again imported a § 3353(a)(1) factorspecifically, the nature and circumstances of the offense into the analysis of a separate factorthe need to deter others. I see nothing in § 3353(a) that permits such double-counting, much less any indication that, as the majority sees it, such double-counting is required.[14]
18 U.S.C. § 3553(a)(4) and (5)The Sentencing Guidelines and Policy Statements
The majority opined that I "effectively gave the guidelines range no real weight in imposing the sentence." Irey III at 1218. In support of this opinion, the majority simply asserts that my explanation for deviating from the guidelines was so weak, that I effectively gave them no weight. However, the appellate court has repeatedly held that a simple statement that the sentencing judge considered all of the § 3553(a) factors was enough. See, e.g., United States v. Sanchez, 586 F.3d 918, 935-36 (11th Cir.2009). Logically, even a weak explanation of the reasons for deviating from the guidelines is implicitly a statement that those guidelines were considered and ought to suffice under this Circuit's precedent.
The majority also states that I ran afoul of § 3553(a)(5) because I ignored Sentencing Commission policy statements relating to such matters as age, good works, aberrant behavior and mental health. Irey III at 1218-19. The majority concluded that, though these policy statements were not binding on me, they all advised against a below-guideline sentence. But these policy statements, by their own terms, apply only to departure-related decisions. For *1242 example, U.S.S.G. 5H1.1 states, "Age (including youth) is not ordinarily relevant in determining whether a departure is warranted." (Emphasis added). Yet the majority would have this policy statement that places limits on departures also apply where a sentencing court seeks to exercise its (post-Booker) discretion and impose a variancea very different situation. I am not aware of any authority or rationale for doing so.
Under the pre-Booker mandatory guideline scheme, the only realistic way to ameliorate an unduly harsh guideline sentence was by way of a departure. But because of limiting policy statements, departures (except for those sponsored by the prosecution) were hard to come by. Personal factors such as age, physical and mental health, aberrant behavior, diminished capacity, employment and military service were deemed not ordinarily relevant in determining whether a departure was warranted. See generally, U.S.S.G. Chap. 5H. In the wake of Booker, however, departures have lost almost all of their significance, while these personal factors have gained significance. They are inherent in the court's consideration of the nature and circumstances of the offense and the history and characteristics of the defendant and can, post-Booker, lead a judge to impose a sentence below the guideline range. 18 U.S.C. § 3553(a)(1). See also United States v. Gray, 453 F.3d 1323, 1325 (11th Cir.2006) (affirming downward variance in child pornography case, noting that district court took defendant's age, minimal prior criminal record, and medical condition into account in imposing sentence below guideline range, and stating that these were "all valid considerations because they relate to the `history and characteristics of the defendant.'"). The antideparture policy statements simply have no application to the issue of a belowguideline variance. Thus, I did not consider them as a limitation on my sentencing discretion.
18 U.S.C. § 3553(a)(6)Sentencing disparity
As set forth in this subsection, the sentencing judge is required to consider "the need to avoid unwarranted sentencing disparities among defendants with similar records who have been found guilty of similar conduct." In the ordinary case, the Guidelines serve as a useful aid, providing the sentencing court with a "rough approximation of sentences that might achieve § 3553(a)'s objectives." Rita v. United States, 551 U.S. 338, 350, 127 S. Ct. 2456, 2465, 168 L. Ed. 2d 203 (2007). But the Guidelines are advisory, and judges have discretion to reach a result outside their suggested range based on, among other things, policy considerations. Kimbrough v. United States, 552 U.S. 85, 101-02, 128 S. Ct. 558, 570, 169 L. Ed. 2d 481 (2007).
Describing Irey's criminal behavior as the "worst of the worst," the majority stated that it was "difficult to find a case involving sexual abuse of children that compares to this one."[15]Irey III at 1219-20. In the end, the majority cited thirteen Eleventh Circuit opinions where longer sentences were imposed on defendants whose criminal behavior was not as extreme as Irey's. Id. at 1220-21. On their face, however, all of these cases differed from Irey's in more areas than simply that of the defendant's behavior. One of the *1243 cited cases[16] occurred under the mandatory sentencing scheme that was in place prior to Booker, and therefore is of little relevance to this analysis. All of the others presented at least some differences that appear to weigh in favor of a longer sentence.[17] Some involved crimes other than (or in addition to) the one Irey was convicted of.[18] Other cases involved defendants convicted of multiple counts,[19] rather than the single count to which Irey pled guilty, or who had a higher criminal history,[20] among other meaningful (or, at least, potentially meaningful) distinctions.[21] And those are just the distinctions that appear in the Circuit Court opinionsas opposed to, for example, the sentencing court's opinion, or the PSR or the credibility determinations on which the sentence was based.
The Sentencing Commission maintains data that provides some basis for an empirical analysis of the disparity issue.[22] Most of the data pertains to sentences imposed pursuant to U.S.S.G. § 2G2.2 for possession and distribution of child pornography. For the three-year period of Fiscal Year 2007 through Fiscal Year 2009, 3,654 sentences were imposed nationwide pursuant to § 2G2.2. Of those sentences, 43.5 percent were below the minimum sentence recommended by the Guideline, and these below-minimum sentences were, on average, 36.4 percent less than the minimum recommended sentence. Judges within the Eleventh Circuit followed essentially the same pattern, imposing below-Guideline sentences 44.2 percent of the time, and varying downward by an average of 35.2 percent when they did so. See Appendix A. This downward variance trend has increased dramatically, presumably reflecting increased criticism of and policy concerns with this Guideline. Nationwide *1244 in FY 2007, 30.8 percent of these sentences were below the low end of the Guideline range nationwide, while in FY 2009, 51.6 percent fell below that recommended minimum. Within this Circuit, this figure increased from 42.2 percent in FY 2007 to 51.4 percent in FY 2009.[23]
Irey was sentenced under a related but different Guideline § 2G2.1, which covers the crime of sexual exploitation of a minor by production of sexually explicit material. During the three-year period tracked by the Sentencing Commission, only 436 sentences were imposed pursuant to § 2G2.1. The Commission staff declined to draw conclusions based on this sample, saying it was too small to do so. (See Appendix B). With that caveat, it is worth noting that sentences imposed under this Guideline do reflect that a significant number of courts15.6 percent, or about one in siximposed a below-guideline sentence, with an average reduction from the recommended minimum of 26.4 percent. This figure is consistent with the results of a recent survey of district judges, which found that 16 percent of the responding judges believed that guideline to be too high.[24]
These concerns are also reflected in the substantial number of reported opinions that find that the Guidelines for child pornography sentences are fundamentally flawed. As stated by Judge Adelman in United States v. Hanson, 561 F. Supp. 2d 1004, 1009 (E.D.Wis.2008), "Much like the crack guideline criticized by the Supreme Court in Kimbrough, guideline 2G2.2 is not representative of the Commission's typical role or of empirical study." Judge Adelman also noted that, at least in some cases, the Guideline operated to suggest sentencing ranges that are "far greater than necessary to protect the public and deter defendant[s] from re-offending." Id. at 1011. In addition, these Guidelines require enhancements for factors that are present in almost all child pornography cases, with the result that almost all defendants end up with a guideline sentence "range" of the statutory maximum. The flawed nature of these particular guidelines has also been noted by at least one other Circuit Court. See United States v. Dorvee, 616 F.3d 174 (2nd Cir.2010)
I share these policy concerns, which I have expressed in numerous prior cases dealing with sentences for the possession and distribution of child pornography pursuant to § 2G2.2. This was a production case, not a possession/distribution case, and as such the sentence was imposed under § 2G2.1 rather than § 2G2.2. Although I did not express any policy concern in regard to § 2G2.1, it is possible that my reservations about § 2G2.2 colored my judgment as to the weight that this Guideline merited. Were I given the opportunity on remand, I would reconsider the extent to which § 2G2.1 might be subject to policy-related objections.
Conclusion
I normally conclude the sentencing process by coming back to a consideration of the need for the sentence imposed to promote respect for the law and to provide just punishment for the offense. 18 U.S.C. § 3553(a)(2)(A). These are subjective factors that overlay the other statutory considerations. As I said at the sentencing, *1245 "I just do the best I can under the circumstances. It comes down to my view of what promotes respect for the law and provides just punishment. And here, as indicated, I think that a thirty year sentence.. . is greater than necessary to accomplish the statutory objectives." (Tr. at 61).
The Circuit Court acknowledged that I properly calculated the guideline score, committed no procedural error, and gave thorough and thoughtful consideration to the statutory sentencing factors.[25] Nevertheless, after demonizing Irey with over 100 references to uncharged conduct (child abuse), the Circuit Court either misconstrued or exaggerated my comments, or took them out of context, considered numerous facts and arguments never presented to me, and concluded that there were no mitigating circumstances to justify any sentence other than the 30-year guideline sentence.
This is an extraordinary and unprecedented result.[26] The Circuit Court has effectively usurped my sentencing discretion and raised serious questions regarding Irey's right to due process. I concede that the majority opinion has raised valid concerns about the reasonableness of the sentence I imposed. Were this case remanded to me for re-sentencing, I would take these concerns into account and exercise my discretion accordingly. But as it now stands, I will not be given that opportunity. Nor, it appears, will Irey be given the opportunity to confront the facts and arguments raised for the first time on appeal, which resulted in a 12 and a half year increase in his sentence.
In his separate opinion, Judge Tjoflat states that the majority opinion's approachi.e., resentencing defendants on appealdoes "immense and immeasurable institutional damage." Irey III at 1267. In my opinion, it also undermines the basic tenets of sentencing law developed over the past five years, and opens a Pandora's box of new sentencing issues. I regret that my sentencing of this defendant including any errors I made in doing so appears to have led to this result.
* * *
It is, therefore
ORDERED that the Unopposed Motion for Continuance of Resentencing Hearing Pending Review in United States Supreme Court (Doc. 80) is GRANTED.
June 15, 2010
Judge Gregory A. Presnell
United States District Court
Middle District of Florida
401 West Central Boulevard, Suite 5750
Orlando, Florida XXXXX-XXXX
Re: U.S.S.G. 2G2.2
*1246 Dear Judge Presnell:
In response to your request, attached are 14 tables presenting information on cases sentenced pursuant to U.S.S.G. 2G2.2 receiving a non-government sponsored below range sentence for the fiscal years 2007, 2008, and 2009. There is a table for the nation as a whole, each Federal Circuit, and the Middle District of Florida. Each table presents information on the total number of cases, the number receiving a non-government sponsored below range sentence, the average applicable guideline minimum for these cases, the average sentence imposed, and the average percent reduction below the bottom of the guideline range.
The DC and 1st Circuits have very few of these cases and conclusions regarding that data should be made very cautiously. The remaining circuits and the Middle District of Florida have more such cases for analysis. For the nation as a whole, the percent reduction in fiscal year 2007 was, on average, 36.3 percent below the bottom of the applicable guideline range for those cases receiving a non-government sponsored below range sentence. The corresponding national average percent reduction in fiscal year 2008 is 38.5 percent and 40.3 percent in fiscal year 2009. While there is some variation among the circuits, the data indicate greater similarity among the circuits than differences.
I hope that this is responsive to your request. Should you have any questions or would like any additional information, please feel free to contact me at 202-502-4533, or by email (lreedt@ussc.gov) if that is more convenient.
Respectfully
Lou Reedt, ScD
Office of Research and Data
Below Range Sentences[1] for Child Pornography Cases (§ 2G2.2) All Districts Fiscal Year 2007 through 2009[2]
_______________________________________________________________________________________________________
Below Guideline Range
________________________________________________________________________________
Average Average
Guideline Average Percent
Year Total Number Percent Minimum[3] Sentence[4] Reduction
_______________________________________________________________________________________________________
2007 853 263 30.8 107 71 36.3
_______________________________________________________________________________________________________
2008 1,255 528 42.1 106 67 38.5
_______________________________________________________________________________________________________
2009 1,546 797 51.6 111 68 40.3
_______________________________________________________________________________________________________
Below Range Sentences[9] for Child Pornography Cases (§ 2G2.2) Middle District of Florida Fiscal Year 2007 through 2009[10]
*1247
_______________________________________________________________________________________________________
Below Guideline Range
________________________________________________________________________________
Average Average
Guideline Average Percent
Year Total Number Percent Minimum[11] Sentence[12] Reduction
_______________________________________________________________________________________________________
2007 27 15 55.6 109 72 34.8
_______________________________________________________________________________________________________
2008 53 26 49.0 106 62 41.4
_______________________________________________________________________________________________________
2009 51 36 70.6 111 70 38.8
_______________________________________________________________________________________________________
Below Range Sentences[13] for Child Pornography Cases (§ 2G2.2) DC Circuit Fiscal Year 2007 through 2009[14]
_______________________________________________________________________________________________________
Below Guideline Range
________________________________________________________________________________
Average Average
Guideline Average Percent
Year Total Number Percent Minimum[15] Sentence[16] Reduction
_______________________________________________________________________________________________________
2007 2 0 0.0 NA NA NA
_______________________________________________________________________________________________________
2008 7 3 42.9 135 87 48.4
_______________________________________________________________________________________________________
2009 19 13 68.4 130 76 46.1
_______________________________________________________________________________________________________
Below Range Sentences[17] for Child Pornography Cases (§ 2G2.2) 1st Circuit Fiscal Year 2007 through 2009[18]
_______________________________________________________________________________________________________
Below Guideline Range
________________________________________________________________________________
Average Average
Guideline Average Percent
Year Total Number Percent Minimum[19] Sentence[20] Reduction
_______________________________________________________________________________________________________
2007 29 5 17.2 85 63 38.2
*1248
_______________________________________________________________________________________________________
2008 26 10 38.5 85 63 31.3
_______________________________________________________________________________________________________
2009 28 11 39.3 92 56 50.9
_______________________________________________________________________________________________________
Below Range Sentences[21] for Child Pornography Cases (§ 2G2.2) 2nd Circuit Fiscal Year 2007 through 2009[22]
_______________________________________________________________________________________________________
Below Guideline Range
________________________________________________________________________________
Average Average
Guideline Average Percent
Year Total Number Percent Minimum[23] Sentence[24] Reduction
_______________________________________________________________________________________________________
2007 65 26 40.0 127 61 55.8
_______________________________________________________________________________________________________
2008 115 64 55.6 101 59 41.2
_______________________________________________________________________________________________________
2009 115 65 56.5 112 62 47.0
_______________________________________________________________________________________________________
Below Range Sentences[25] for Child Pornography Cases (§ 2G2.2) 3rd Circuit Fiscal Year 2007 through 2009[26]
_______________________________________________________________________________________________________
Below Guideline Range
________________________________________________________________________________
Average Average
Guideline Average Percent
Year Total Number Percent Minimum[27] Sentence[28] Reduction
_______________________________________________________________________________________________________
2007 57 20 35.1 88 65 29.2
_______________________________________________________________________________________________________
2008 102 97 36.3 73 53 31.1
_______________________________________________________________________________________________________
2009 128 84 65.6 107 63 42.4
_______________________________________________________________________________________________________
Below Range Sentences[29] for Child Pornography Cases (§ 2G2.2) 4th Circuit Fiscal Year 2007 through 2009[30]
_______________________________________________________________________________________________________
Below Guideline Range
*1249
________________________________________________________________________________
Average Average
Guideline Average Percent
Year Total Number Percent Minimum[31] Sentence[32] Reduction
_______________________________________________________________________________________________________
2007 72 15 20.8 85 59 32.7
_______________________________________________________________________________________________________
2008 109 36 33.0 112 73 35.4
_______________________________________________________________________________________________________
2009 142 67 47.2 102 68 35.1
_______________________________________________________________________________________________________
Below Range Sentences[33] for Child Pornography Cases (§ 2G2.2) 5th Circuit Fiscal Year 2007 through 2009[34]
_______________________________________________________________________________________________________
Below Guideline Range
________________________________________________________________________________
Average Average
Guideline Average Percent
Year Total Number Percent Minimum[35] Sentences[36] Reduction
_______________________________________________________________________________________________________
2007 86 8 9.3 130 76 47.4
_______________________________________________________________________________________________________
2008 108 23 21.3 133 82 38.4
_______________________________________________________________________________________________________
2009 142 43 30.3 114 70 40.2
_______________________________________________________________________________________________________
Below Range Sentences[37] for Child Pornography Cases (§ 2G2.2) 6th Circuit Fiscal Year 2007 through 2009[38]
_______________________________________________________________________________________________________
Below Guideline Range
________________________________________________________________________________
Average Average
Guideline Average Percent
Year Total Number Percent Minimum[39] Sentence[40] Reduction
_______________________________________________________________________________________________________
2007 90 34 37.7 127 85 33.6
_______________________________________________________________________________________________________
2008 118 53 44.9 120 80 37.1
_______________________________________________________________________________________________________
2009 126 64 50.8 121 72 41.5
_______________________________________________________________________________________________________
Below Range Sentences[41] for Child Pornography Cases (§ 2G2.2) *1250 7th Circuit Fiscal Year 2007 through 2009[42]
_______________________________________________________________________________________________________
Below Guideline Range
________________________________________________________________________________
Average Average
Guideline Average Percent
Year Total Number Percent Minimum[43] Sentence[44] Reduction
_______________________________________________________________________________________________________
2007 57 12 21.0 115 82 30.5
_______________________________________________________________________________________________________
2008 75 33 44.0 126 83 37.8
_______________________________________________________________________________________________________
2009 76 31 40.8 137 100 30.6
_______________________________________________________________________________________________________
Below Range Sentences[45] for Child Pornography Cases (§ 2G2.2) 8th Circuit Fiscal Year 2007 through 2009[46]
_______________________________________________________________________________________________________
Below Guideline Range
________________________________________________________________________________
Average Average
Guideline Average Percent
Year Total Number Percent Minimum[47] Sentence[48] Reduction
_______________________________________________________________________________________________________
2007 82 11 13.4 94 68 35.2
_______________________________________________________________________________________________________
2008 139 50 36.0 108 72 36.9
_______________________________________________________________________________________________________
2009 192 87 45.3 121 74 37.2
_______________________________________________________________________________________________________
Below Range Sentences[49] for Child Pornography Cases (§ 2G2.2) 9th Circuit Fiscal Year 2007 through 2009[50]
_______________________________________________________________________________________________________
Below Guideline Range
________________________________________________________________________________
Average Average
Guideline Average Percent
Year Total Number Percent Minimum[51] Sentence[52] Reduction
*1251
2007 152 71 46.7 93 64 33.9
2008 227 122 53.7 99 57 44.2
2009 310 192 61.9 101 61 40.8
Below Range Sentences[53] for Child Pornography Cases (§ 2G2.2) 10th Circuit Fiscal Year 2007 through 2009[54]
Below Guideline Range
Average Average
Guideline Average Percent
Year Total Number Percent Minimum[55] Sentence[56] Reduction
2007 59 18 30.5 103 66 38.3
2008 92 47 51.1 96 63 35.1
2009 93 50 53.8 91 54 41.0
Below Range Sentences[5] for Child Pornography Cases (§ 2G2.2) 11th Circuit Fiscal Year 2007 through 2009[6]
Below Guideline Range
Average Average
Guideline Average Percent
Year Total Number Percent Minimum[7] Sentence[8] Reduction
2007 102 43 42.2 122 82 34.6
2008 137 50 36.5 114 74 36.0
2009 175 90 51.4 128 80 39.1
UNITED STATES SENTENCING COMMISSION
ONE COLUMBUS CIRCLE, N.E.
SUITE 2-500, SOUTH LOBBY WASHINGTON, D.C. XXXXX-XXXX (202) 502-4500
*1252 FAX (202) 502-4699
August 23, 2010
Judge Gregory A. Presnell
United States District Court
Middle District of Florida
401 West Central Boulevard, Suite 5750
Orlando, Florida XXXXX-XXXX
Re:USSG 2G2.2
Dear Judge Presnell:
In response to your request, attached are 14 tables presenting information on cases sentenced pursuant to U.S.S.G. 2G2.1 receiving a non-government sponsored below range sentence for the fiscal years 2007, 2008, and 2009. There is a table for the nation as a whole, each Federal Circuit, and the Middle District of Florida. Each table presents information on the total number of cases, the number receiving a non-government sponsored below range sentence, the average applicable guideline minimum for these cases, the average sentence imposed, and the average percent reduction below the bottom of the guideline range.
As was noted in the request, there are substantially fewer cases available for this analysis than in the previous request. There are only 436 cases nationally for all three years combined. The number of cases sentenced within each Circuit for fiscal year 2009 ranged from zero (District of Columbia) to 33 cases (Eighth Circuit). These are very small numbers indeed and I would strongly suggest that no conclusions be drawn from the annual and Circuit based numbers (as well as the numbers from the Middle District of Florida). Because there are so few cases, it is impossible to determine a `national' view of the courts. Even if each of these cases was heard by a different judge, that would still result in approximately one third of all federal judges not hearing such a case within the three year window. I have only forwarded these tables along in order to fully comply with your request. I believe the data values are too small to draw any conclusions.
I hope that this is responsive to your request. Should you have any questions or would like any additional information, please feel free to contact me at 202-502-4533, or by email (lreedt@ussc.gov) if that is more convenient.
Respectfully
Lou Reedt, ScD
Office of Research and Data
Below Range Sentences[1] for Child Pornography Cases (§ 2G2.1) All Districts Fiscal Year 2007 through 2009[2]
Below Guideline Range
Average Average
Guideline Average Percent
Year Total Number Percent Minimum[3] Sentence[4] Reduction
*1253
2007 125 18 14.4 286 215 28.0
2008 145 27 18.6 339 269 22.3
2009 166 23 13.9 307 240 28.9
Below Range Sentences[5] for Child Pornography Cases (§ 2G2.1) 11th Circuit Fiscal Year 2007 through 2009[6]
Below Guideline Range
Average Average
Guideline Average Percent
Year Total Number Percent Minimum[7] Sentence[8] Reduction
2007 21 3 14.3 335 284 16.4
2008 19 3 15.8 433 383 13.9
2009 16 2 12.5 264 208 21.3
NOTES
[1] The Court also considered sentencing memoranda submitted by the parties.
[2] As noted by the Circuit Court, no one has suggested that the factors set forth in § 3353(a)(2)(D) (the need to provide training, medical care, or other treatment), § 3553(a)(3) (the kind of sentences available), or § 3553(a)(7) (the need to provide restitution) are relevant in this case. Irey III at 1217 n. 36. Accordingly, they will not be addressed in this opinion.
[3] References to the transcript of the sentencing hearing will be given in the format "(Tr. at [page number])". A copy of the transcript was filed in the instant case at docket number 65.
[4] A number of Irey's friends and family members testified at the hearing and corroborated this point.
[5] I was attempting to point out that society at large (including Irey and his family) had suffered harm resulting from the easy availability of this type of material. I concede, in retrospect, that my effort was clumsy. However, in 2009, I sentenced 51 individuals. I could not possibly write an opinion for every sentence I imposethough, in hindsight, I should have done so in this case.
[6] Common sense should suffice to establish that I could not and did not find any sort of equivalence between Irey and his victims. But if not, a review of the transcript should do so. Such a review shows that I made that remark while discussing the effects of the internet in the context of an assessment of the nature and circumstances of the offense, not the history and characteristics of the defendant. (Tr. at 58). And after doing so, and after mentioning the severity of the penalties we impose for conduct such as Irey's, I explicitly found that nothing in this offense mitigated in favor of any leniency. (Tr. at 58).
Thus, two sentences after I clumsily referred to Irey as a victim, I made a no-leniency finding. (Tr. at 58). This simply does not square with the majority's analysis of what motivated my choice of sentence.
To the same end, if I truly considered Irey to be a victim rather than a criminal, one would expect that I would have at least mentioned this point during my analysis of the history and characteristics of the defendant (Tr. at 58-60). But that analysis is devoid of any reference to victimhoodbecause I did not consider Irey to be a victim in any sense that could influence my sentencing decision.
[7] In retrospect, I should have used the term "psychiatric disorder known as heterosexual pedophilia."
[8] The Circuit Court concluded that I made an implicit finding that it was the Internet that caused Irey to sexually abuse children. Irey III at 1198. I made no such finding, express or implied.
[9] The majority makes much of the fact that Irey cheated on his wife with prostitutes, including doing so on a weekly basis in his hometown. Id. at 1204. Though unsavory, this behavior is not a federal crime, and his wife and family were apparently willing to forgive him for it. While certainly not evidence of good character, it may be viewed as a manifestation of what Dr. Shaw referred to as Irey's "sexual addiction."
[10] The majority also concludes that "no significant weight can be given" to Irey's positive qualities as a husband and father, because he cheated on and lied to his wife, and because his family suffered financially and emotionally as a result of his "depraved criminal misconduct." Id. I understood this suffering because I heard the testimony and I saw the emotion. Yet Irey's family members testified that they remain supportive of him, and there is no evidence to the contrary. Despite this, the Circuit Court would have me discredit this fact because, in its view, his family was detached from reality, and because any credit due Irey was outweighed by his criminal conduct. Id. at 1205. Simply put, I gave some weight to this evidence, while the Circuit Court would give it none.
[11] The majority opinion takes issue with any use of "parsimony principle" to describe § 3553(a)'s requirement that one impose a sentence "sufficient, but not greater than necessary, to comply with the purposes set forth in paragraph (2)" of that subsection. Id. at 1196-97. The majority asserts that the term is inaccurate in that it ignores § 3553(a)'s command that the sentence be "sufficient" in favor of the command that it not be "greater than necessary," and accuses those who employ it of doing so because they hope "to slant the discussion toward shorter sentences by emphasizing only that part of the twin requirements." Id. at 1197.
Without purporting to speak for all of the judges who have used the termwhich has been routinely employed without criticism by, among others, the courts of appeal in the First, Second, Third, Sixth, Seventh, Eighth, Ninth, Tenth, and, until Irey III, Eleventh CircuitsI can say I am not attempting to "slant the discussion" by doing so. Rather, in my understanding, "parsimony principle" is simply a widely recognized label for both of the requirements of § 3553(a). It is also more appropriate in the context of a criminal sentencing than alternative terms, such as the "Goldilocks principle." See id.
[12] This, in my opinion, is a legitimate subject for rational discussion in connection with the imposition of sentence.
[13] I do have policy concerns regarding the child pornography guidelines (discussed infra), but they are not related to the issue of deterrence.
[14] The majority cited a single case as supporting its "adequate protection" analysis: United States v. Boyd, 475 F.3d 875 (7th Cir.2007). Boyd was not a § 3553(a) case. Rather, the question in Boyd was whether someone who randomly fired off a pistol in a vacant lot created a "substantial risk of bodily injury," thereby committing a felony under Indiana law. Id. at 876.
[15] As noted previously, Irey was charged with and convicted of a single count of violating 18 U.S.C. § 2251(c), which prohibits "sexual exploitation of children," rather than, for example, 18 U.S.C. § 2243(a), which bars "sexual abuse of a minor."
[16] United States v. Hersh, 297 F.3d 1233 (11th Cir.2002).
[17] Stated differently, all of the other cited cases involved facts and circumstances that, had they been present in Irey's case, would likely have led me to impose a longer sentence.
[18] For example, the defendant in United States v. Frank, 599 F.3d 1221 (11th Cir. 2010), was convicted of eight counts, including traveling in interstate and foreign commerce for the purpose of engaging in illicit sexual conduct with a minor (18 U.S.C. § 2423(b)) and obtaining custody or control of a minor with the intent to engage in sexually explicit conduct (18 U.S.C. § 2251A(b)(2)(A)). The statutory penalty range for each of these crimes was 30 years to life. Frank was sentenced to 40 years on three of the counts and 30 years on the other five counts, to run concurrently.
[19] See, e.g., United States v. Sarras, 575 F.3d 1191 (11th Cir.2009) (defendant sentenced to 100 years after being convicted at trial on three counts of violating 18 U.S.C. § 2251(a) and one count of violating 18 U.S.C. § 2252A(a)(5)(B)).
[20] See e.g., United States v. Harris, 291 Fed. Appx. 300, 302 (11th Cir.2008) ("With a criminal history category of II and a statutory maximum term of imprisonment of 30 years for each charge, the report provided a sentencing range between 360 and 720 months of imprisonment.").
[21] It is also worth noting that in all of the cited cases, the applicable maximum statutory penalty exceeded 30 years. One of these casesUnited States v. Foster, 209 Fed.Appx. 942 (11th Cir.2006)resulted in a life sentence. In the others, the defendants were sentenced to an average of 67 years, well above the 30-year maximum applicable to Irey.
[22] The Sentencing Commission data and explanatory material in regard to § 2G2.2 are attached to this opinion as Appendix A, while the data and explanatory material with regard to § 2G2.1 are attached as Appendix B. The tables in Appendix B are limited to one that covers all districts and one that covers the Eleventh Circuit. (Note that the "Re:" line in the cover letter in Appendix B mistakenly refers to § 2G2.2 rather than § 2G2.1.)
[23] The amount of downward variance of these sentences increased slightly during this period, going from about 35 percent to about 40 percent, both nationwide and within this Circuit. See Appendix A.
[24] United States Sentencing Commission, Results of Survey of United States District Judges, January 2010 to March 2010, http://www.ussc. gov/Judge_Survey/2010/JudgeSurvey_201006. pdf.
[25] As noted previously, the government did not contest any of my findings; thus, for purposes of this appeal, they were unassailable.
[26] Since Booker, as the majority acknowledged, the Eleventh Circuit has reversed four sentences as being unreasonably lenient: U.S. v. Crisp, 454 F.3d 1285 (11th Cir.2006) (five hours imprisonment for bank fraud); U.S. v. Martin, 455 F.3d 1227 (11th Cir.2006) (seven-day sentence for billion-dollar securities fraud); U.S. v. Pugh, 515 F.3d 1179 (11th Cir.2008) (probation for receiving and distributing child pornography); and U.S. v. Livesay, 587 F.3d 1274 (11th Cir.2009) (probation for participant in billion-dollar fraud scheme). Needless to say, a 17 and a half year sentence is substantially greater than the sentences originally imposed in these cases. Moreover, in none of these cases did the Circuit Court itself determine the sentence to be imposed on remand.
[1] "Below Range Sentences" do not include substantial assistance departures or Early Disposition departures.
[2] Only cases in which all sentencing documents were submitted to the Sentencing Commission are included in this analysis. Also, the Child Pornography guidelines were drastically amended on November 1, 2004, and only cases that are subject to these amended guidelines are used in this analysis.
[3] Any guideline minimum greater than 470 months, including "Life", were capped at 470 months.
[4] Any sentence greater than 470 months, including "Life" sentences, were capped at 470 months.
[9] "Below Range Sentences" do not include substantial assistance departures or Early Disposition departures.
[10] Only cases in which all sentencing documents were submitted to the Sentencing Commission are included in this analysis. Also, the Child Pornography guidelines were drastically amended on November 1, 2004, and only cases that are subject to these amended guidelines are used in this analysis.
[11] Any guideline minimum greater than 470 months, including "Life", were capped at 470 months.
[12] Any sentence greater than 470 months, including "Life" sentences, were capped at 470 months.
[13] "Below Range Sentences" do not include substantial assistance departures or Early Disposition departures.
[14] Only cases in which all sentencing documents were submitted to the Sentencing Commission are included in this analysis. Also, the Child Pornography guidelines were drastically amended on November 1, 2004, and only cases that are subject to these amended guidelines are used in this analysis.
[15] Any guideline minimum greater than 470 months, including "Life", were capped at 470 months.
[16] Any sentence greater than 470 months, including "Life" sentences, were capped at 470 months.
[17] "Below Range Sentences" do not include substantial assistance departures or Early Disposition departures.
[18] Only cases in which all sentencing documents were submitted to the Sentencing Commission are included in this analysis. Also, the Child Pornography guidelines were drastically amended on November 1, 2004, and only cases that are subject to these amended guidelines are used in this analysis.
[19] Any guideline minimum greater than 470 months, including "Life", were capped at 470 months.
[20] Any sentence greater than 470 months, including "Life" sentences, were capped at 470 months.
[21] "Below Range Sentences" do not include substantial assistance departures or Early Disposition departures.
[22] Only cases in which all sentencing documents were submitted to the Sentencing Commission are included in this analysis. Also, the Child Pornography guidelines were drastically amended on November 1, 2004, and only cases that are subject to these amended guidelines are used in this analysis.
[23] Any guideline minimum greater than 470 months, including "Life", were capped at 470 months.
[24] Any sentence greater than 470 months, including "Life" sentences, were capped at 470 months.
[25] "Below Range Sentences" do not include substantial assistance departures or Early Disposition departures.
[26] Only cases in which all sentencing documents were submitted to the Sentencing Commission are included in this analysis. Also, the Child Pornography guidelines were drastically amended on November 1, 2004, and only cases that are subject to these amended guidelines are used in this analysis.
[27] Any guideline minimum greater than 470 months, including "Life", were capped at 470 months.
[28] Any sentence greater than 470 months, including "Life" sentences, were capped at 470 months.
[29] "Below Range Sentences" do not include substantial assistance departures or Early Disposition departures.
[30] Only cases in which all sentencing documents were submitted to the Sentencing Commission are included in this analysis. Also, the Child Pornography guidelines were drastically amended on November 1, 2004, and only cases that are subject to these amended guidelines are used in this analysis.
[31] Any guideline minimum greater than 470 months, including "Life", were capped at 470 months.
[32] Any sentence greater than 470 months, including "Life" sentences, were capped at 470 months.
[33] "Below Range Sentences" do not include substantial assistance departures or Early Disposition departures.
[34] Only cases in which all sentencing documents were submitted to the Sentencing Commission are included in this analysis. Also, the Child Pornography guidelines were drastically amended on November 1, 2004, and only cases that are subject to these amended guidelines are used in this analysis.
[35] Any guideline minimum greater than 470 months, including "Life", were capped at 470 months.
[36] Any sentence greater than 470 months, including "Life" sentences, were capped at 470 months.
[37] "Below Range Sentences" do not include substantial assistance departures or Early Disposition departures.
[38] Only cases in which all sentencing documents were submitted to the Sentencing Commission are included in this analysis. Also, the Child Pornography guidelines were drastically amended on November 1, 2004, and only cases that are subject to these amended guidelines are used in this analysis.
[39] Any guideline minimum greater than 470 months, including "Life", were capped at 470 months.
[40] Any sentence greater than 470 months, including "Life" sentences, were capped at 470 months.
[41] "Below Range Sentences" do not include substantial assistance departures or Early Disposition departures.
[42] Only cases in which all sentencing documents were submitted to the Sentencing Commission are included in this analysis. Also, the Child Pornography guidelines were drastically amended on November 1, 2004, and only cases that are subject to these amended guidelines are used in this analysis.
[43] Any guideline minimum greater than 470 months, including "Life", were capped at 470 months.
[44] Any sentence greater than 470 months, including "Life" sentences, were capped at 470 months.
[45] "Below Range Sentences" do not include substantial assistance departures or Early Disposition departures.
[46] Only cases in which all sentencing documents were submitted to the Sentencing Commission are included in this analysis. Also, the Child Pornography guidelines were drastically amended on November 1, 2004, and only cases that are subject to these amended guidelines are used in this analysis.
[47] Any guideline minimum greater than 470 months, including "Life", were capped at 470 months.
[48] Any sentence greater than 470 months, including "Life" sentences, were capped at 470 months.
[49] "Below Range Sentences" do not include substantial assistance departures or Early Disposition departures.
[50] Only cases in which all sentencing documents were submitted to the Sentencing Commission are included in this analysis. Also, the Child Pornography guidelines were drastically amended on November 1, 2004, and only cases that are subject to these amended guidelines are used in this analysis.
[51] Any guideline minimum greater than 470 months, including "Life", were capped at 470 months.
[52] Any sentence greater than 470 months, including "Life" sentences, were capped at 470 months.
[53] "Below Range Sentences" do not include substantial assistance departures or Early Disposition departures.
[54] Only cases in which all sentencing documents were submitted to the Sentencing Commission are included in this analysis. Also, the Child Pornography guidelines were drastically amended on November 1, 2004, and only cases that are subject to these amended guidelines are used in this analysis.
[55] Any guideline minimum greater than 470 months, including "Life", were capped at 470 months.
[56] Any sentence greater than 470 months, including "Life" sentences, were capped at 470 months.
[5] "Below Range Sentences" do not include substantial assistance departures or Early Disposition departures.
[6] Only cases in which all sentencing documents were submitted to the Sentencing Commission are included in this analysis. Also, the Child Pornography guidelines were drastically amended on November 1, 2004, and only cases that are subject to these amended guidelines are used in this analysis.
[7] Any guideline minimum greater than 470 months, including "Life", were capped at 470 months.
[8] Any sentence greater than 470 months, including "Life" sentences, were capped at 470 months.
[1] "Below Range Sentences" do not include substantial assistance departures or Early Disposition departures.
[2] Only cases in which all sentencing documents were submitted to the Sentencing Commission are included in this analysis. Also, the Child Pornography guidelines were drastically amended on November 1, 2004, and only cases that are subject to these amended guidelines are used in this analysis.
[3] Any guideline minimum greater than 470 months, including "Life", was capped at 470 months.
[4] Any sentence greater than 470 months, including "Life" sentences, was capped at 470 months.
[5] "Below Range Sentences" do not include substantial assistance departures or Early Disposition departures.
[6] Only cases in which all sentencing documents were submitted to the Sentencing Commission are included in this analysis. Also, the Child Pornography guidelines were drastically amended on November 1, 2004, and only cases that are subject to these amended guidelines are used in this analysis.
[7] Any guideline minimum greater than 470 months, including "Life", was capped at 470 months.
[8] Any sentence greater than 470 months, including "Life" sentences, was capped at 470 months.
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01-03-2023
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10-30-2013
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https://www.courtlistener.com/api/rest/v3/opinions/2562875/
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450 F. Supp. 2d 335 (2006)
Robert WRIGHT, et al., Plaintiffs,
v.
Henry J. STERN, et al., Defendants.
No. 01 Civ. 4437(DC).
United States District Court, S.D. New York.
September 15, 2006.
*336 *337 *338 *339 *340 *341 *342 *343 Beldock Levine & Hoffman LLP by Cynthia Rollings, Esq., Jody L. Yetzer, Esq., Lewis M. Steel, Esq., NAACP Legal Defense & Education Fund, Inc. by Robert H. Stroup, Esq., Melissa S. Woods, Esq., New York City, for Plaintiffs.
Michael A. Cardozo, Esq., Corporation Counsel of the City of New York by Barbara B. Butler, Esq., Kathleen M. Cornfrey, Esq., Sherri R. Rosenberg, Esq., New York City, for Defendants.
OPINION
CHIN, District Judge.
In this action, plaintiffs allege that the New York City Department of Parks and Recreation ("Parks") violated federal, state, and city discrimination laws. Plaintiffs, eleven African-American and Hispanic current and former Parks employees, allege that defendants engaged in a pattern and practice of employment discrimination on the basis of race, color, and national origin. They allege also that defendants engaged in a pattern or practice of retaliation against employees who attempted to oppose the discriminatory practices. Plaintiffs sue on their own behalf as well as on behalf of similarly situated individuals.
Before the Court is defendants' motion for summary judgment dismissing certain class claims and certain individual claims. As part of the motion, defendants also seek to exclude the reports and testimony of plaintiffs' expert witnesses, pursuant to Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 589, 113 S. Ct. 2786, 125 L. Ed. 2d 469 (1993).
Except to the extent set forth below, defendants' motion is denied, for plaintiffs have presented substantial, concrete evidence *344 to support their claims of discrimination and retaliation. Plaintiffs' statistics, for example, show that in 2000, the year before this lawsuit was filed, 92.9% of the Parks employees earning less than $20,000 per year were African-American or Hispanic, while only 14.2% of those earning between $50,000 and $60,000 per year were African-American or Hispanic. Plaintiffs have also presented evidence of discriminatory remarks by high-ranking Parks officials as well as evidence of subjective and ad hoc employment practices that created roadblocks to advancement, including, for example, the filling of vacancies based on personal connections without posting or other public announcement. Plaintiffs have also presented evidence that Parks officials repeatedly retaliated against class members who complained of discrimination. Class members, for example, were denied promotions and raises after they complained. Indeed, two of the named plaintiffs were assigned to work in basements after they complained.
A reasonable jury could find from this and other evidence in the record that Parks engaged in widespread discrimination against African-American and Hispanic employees, in terms of promotions and compensation, and that Parks engaged in widespread retaliation against those who opposed what they believed to be discriminatory practices. I conclude, however, that plaintiffs have not presented sufficient evidence to sustain their claims that defendants engaged in a pattern or practice of assigning employees and allocating funds based on race. Likewise, I conclude that plaintiffs have not presented sufficient evidence to support their hostile environment racial harassment claim. Accordingly, defendants' motion for summary judgment is denied in part and granted in part. Defendants' request for preclusion of the testimony of plaintiffs' experts is denied.
BACKGROUND
A. The Facts
Construed in the light most favorable to plaintiffs as the parties opposing summary judgment, the facts are as follows:
1. The Parties
a. Plaintiffs
The named plaintiffsCarrie Anderson, Walter Beach, Jacqueline Brown, Angelo Colon, Paula Loving, Odessa Portlette, David Ray, Elizabeth Rogers, Henry Roman, Kathleen Walker, and Robert Wrightare current and former Parks employees who are African-American or Hispanic.[1]
The named plaintiffs are long-time Parks employees, some of whom have been employed at Parks for as many as twenty-five or thirty years. All but one (Beach) were denied promotions because they applied for positions and were rejected or they were unable to apply because the positions were not posted. Eight of the eleven (Brown, Colon, Loving, Portlette, Rogers, Roman, Walker, and Wright) contend they were paid less and/or received fewer discretionary pay raises than comparably *345 situated Caucasian employees. Seven of the eleven (Beach, Brown, Colon, Portlette, Roman, Walker, and Wright) contend that after they complained of discrimination, they were subjected to adverse and retaliatory treatment.
b. Defendants
Parks is an agency of defendant City of New York (the "City"). (Compl.[2] ¶ 16). Defendant Henry Stern, who was Executive Director of Parks in 1966, served as Commissioner of Parks during the Koch and Giuliani mayoral administrations, from in or about 1983 until 1989 and from 1995 until February 2002. (Stern Dep. at 38, 43, 49, 61). Defendant Adrian Benepe has been the Parks Commissioner since February 2002. Benepe worked at Parks as a seasonal employee for several years during the 1970s. After joining Parks full-time as an Urban Park Ranger in 1982, Benepe served in a variety of positions before his appointment as Commissioner by Mayor Bloomberg. (Benepe 12/23/05 Decl. ¶¶ 4-8). Stern and Benepe are sued in both their individual and official capacities.
2. Parks
a. Overview
Parks is responsible for the care of more than 4,000 City properties, covering almost 29,000 acres of parklands, 7 public beaches, 993 playgrounds, 608 ball fields, 63 swimming pools, 36 recreation areas or senior citizen centers, 17 golf courses and driving ranges, 6 ice skating rinks, 5 major stadia, more than 500 tennis courts, 22 historic house museums, hundreds of statues and monuments, and more than 600,000 street trees. (Id. ¶ 2). Parks' mission is to keep the City's parklands safe and clean, while also providing quality recreational opportunities to the public. (Id. at ¶ 3).
The Commissioner is responsible for the overall operation of the agency. The Commissioner appoints Deputy, Borough, and Assistant Commissioners who are responsible for managing the agency divisions. (Id. ¶ 9). During Stern's term as Commissioner, the third floor of the Arsenal in Central Park served as the main headquarters for central management and high-level employees ("Arsenal Officials"). (Moss Dep. at 16-17, 202-04; Garafola Dep. at 52-53; Spiegel Dep. at 311). In addition, each borough has its own headquarters and a management team, composed of a Borough Commissioner, Chief of Operations, and a Deputy Chief of Operations. (Benepe 12/23/05 Decl. ¶¶ 10, 25-26; Stark Decl. ¶ 35; Stern Dep. at 66-67).
b. The Workforce
Although the numbers fluctuated over time, Parks employed roughly 3,400 to 5,000 full-time year-round employees at a time during the period in question. Some 2,000 to 4,000 were formal year-round employees and some 1,400 to 1,600 were "seasonal" employees who were paid from the seasonal budget but worked year-round. An additional 3,000 to 7,000 employees worked on a seasonal basis only. (Benepe Decl. ¶ 9; Schneider Report Table C-1; Stark Dep. at 481-82, 486; Stark Dep. at 327-30; Stark Decl. ¶ 22). In addition, there are "seasonal step-up" positions, which involve a year-round employee receiving a temporary, seasonal promotion to a supervisory function. (Stark Decl. ¶ 24). When an employee receives a seasonal step-up, his regular salary is paid out of the full-time budget but the temporary *346 increment is paid out of the seasonal budget. (Id.).
Between January 1, 1997, and December 31, 2003, Parks employed 6,295 full-time, year-round employees. Of these, 15 were Native American, 227 were Asian-American, 1,163 were Hispanic, 2,124 were African-American, 2,753 were White, and 13 were unknown. (Schneider Decl. ¶ 13 (class members approximately 52.2%; White 43.7%); cf. Stark Decl. ¶ 13 (48% class members)).
c. Employment Classifications and Regulations
The terms and conditions of employment at Parks are subject to both the civil service structure and the union contracts in place in New York City. (Stark Decl. ¶ 6). As of December 2005, 94.3% of full-time Parks employees were unionized. (Id. ¶ 12). Each union contract sets salaries, including minimum and maximum salaries where applicable, and provides for non-discretionary salary increments. (Id. ¶ 14). Employees covered by unions work in non-management positions. (Terhune Dep. at 44). For managerial employees, compensation is determined by the "Managerial Pay Plan," which sets minimum and maximum salaries for employees at eight assignment levels. (Stark Decl. at ¶ 16). The Mayor's Personnel Order sets forth revision to those salaries. (Id.).
Under the New York State Constitution, all public employees are "civil service" employees. (Id. ¶ 7). There are 220 civil service job titles at Parks, 184 of which are actively held by Parks employees. (Id. ¶ 8; Schneider Decl. ¶ 15). One position, "Commissioner," is "unclassified," and all other positions are "classified." Classified service is divided into four classesexempt, non-competitive, labor, and competitive, with "[t]he majority of titles . . . in the competitive class." (Stark Decl. ¶¶ 8-9). Employees in different classes are subject to different terms of employment with exempt and non-competitive classes serving at the will of the appointing officer. (Id. ¶ 10).
Under civil service law, appointments and promotions of employees in the competitive class are to be made either permanently from a civil service list of employees who have passed an examination or, where no employees are on the civil service list, by provisional appointment. (Stark. Decl.¶ 10).[3] The Parks Working Conditions Agreement, which was in force during the times relevant to this lawsuit, provides that provisional promotions shall be made by seniority. (Pl. Dep. Ex. 42 ¶ 7; Stark Dep. at 337-38).
For most or all of Stern's term as Commissioner, citywide examinations were not given for a number of positions. From at least as early as 1995 until 2000 or 2001, the City did not administer civil service examinations for the title of Park Supervisor, Principal Park Supervisor, Associate Park Service Worker, Urban Park Ranger, Recreation Assistant, and Recreation Supervisor. (Def.Resp.Pl.RFA ## 258-59, 277-78, 280-81).[4] As a result, employees *347 in the competitive class frequently served on a provisional basis, which allowed them to advance without passing a civil service examination. (Terhune Dep. at 154; Lawless Dep. at 291-92).
In addition to civil service titles, Parks uses "in-house" titles for its employees. Typically, in-house titles are more descriptive of the employee's actual role and responsibilities at Parks. (Terhune Dep. at 133-35). Though there may sometimes be a correlation between certain in-house titles and civil service titles, there is no Parks document setting forth which inhouse titles correspond to which civil service titles. (Id. at 143-48).
3. Evidence of Discrimination
In support of their claims of discrimination, plaintiffs have offered evidence of: (a) statistical imbalances, (b) discriminatory comments purportedly made by Stern and other Parks management officials, (c) displays of nooses, (d) discriminatory practices in awarding wage increases, (e) discriminatory practices in promotions, postings of vacancies, and the interview process, (f) the discriminatory nature of the "Class Of" program, and (g) discriminatory decisions regarding assignments, funding, and staffing.
a. Statistics
In terms of salary, plaintiffs' statistics show a significant disparity, as the lower-paid positions are overwhelmingly held by class members while class members hold only a small percentage of the higher paid positions. For example, class member composition by income group in 2000 was as follows:
Percentage
Salary Class Members
Less than $20,000 92.9%
$20,000-$30,000 68.8%
$30,000-$40,000 54.3%
$40,000-$50,000 30.2%
$50,000-$60,000 14.2%
$60,000-$70,000 20.7%
$70,000 + 13.3%
(Schneider Rebut. App. Table A-6; Ex. ETH-00001; see also Pl. Dep. Exs. 64 & 186).[5] Likewise, controlling for job title, class members were paid between $16.44 and $32.59 less than Caucasian members on a bi-weekly basis between 1997 and 2003. (Schneider Rebut. Table 2). Without controlling for job title, class members were paid from $283.25 to 8364.09 less than Caucasians on a bi-weekly basis over the same time period. (Id.).
With respect to pay growth from a starting salary of $30,000 in January 1997, the salaries of Caucasians increased, on average, at a 4% higher rate than class members' salaries. (Schneider Rebut. Table 4; App. Table A-14). Similarly, Stern and Benepe recommended salary increases 2.5% greater for non-class members than for class members. (Schneider Report ¶;¶ 72-73). Moreover, non-class members received significantly higher average salaries than class members for each year from 1996 to 2003. For non-managers, the difference in salaries ranged from $6,909 in 1996 to, increasing steadily each year, $9,994 in 2003. (Schneider Rebut. App. Table A-9). For managers, the difference ranged from $5,284 in 1996 to $7,957 in 2001 to $3,407 in 2003. (Schneider Rebut. App. Table A-8).
With respect to promotions, class mem bers suffered statistically significant lower probabilities of receiving "wage promotions"[6] than Caucasians, controlling for *348 job title, experience, and tenure. (Pl. Mem. at 25; Schneider Rebut. Table 3 (ranging from 4.2 to 5.23 standard deviations)). From 1996 until 2003, class members made up between 50% and 56% of the non-"Class Of' Parks workforce. (Schneider App. Table A-5). Nevertheless, they constituted only some 18 to 23% of the managerial workforce from 1996 to 2001. After the filing of this lawsuit, the number of class members in the managerial workforce increased to around 25% in 2002 and 2003. (Schneider Rebut. Fig. 4, App. Table A-4). A review of the in-house rosters shows that non-class members received 70.9% of the managerial in-house promotions from July 1995 to August 2004 while class members received 29.1% of those promotions. (Schneider Rebut. Fig. 13). Though the parties dispute what constitutes a promotion, defendants' own records show 77% of promotions going to non-class members in 1998 and 82% of promotions going to non-class members in 1999. (Pl. Dep. Ex. 85 (41 out of 53 promotions went to non-class members in 1998 and 53 out of 65 promotions went to non-class members in 1999)). As of February 2000, all 27 Principal Parks Supervisors were Caucasian and approximately 72% of Parks Supervisors were Caucasian. (Ex. ETH 0078).
Moreover, plaintiffs' expert Kathleen Lundquist, Ph.D., created a database containing overall panel interview scores for applicants for certain positions between 1995 and January 2004. (Lundquist Report at 12). The race of each applicant was tracked according to the DCAS database or the interview panel summary rating form. Based on her analysis of this database, Lundquist concluded that class members received statistically significant lower interview scores than Caucasians. (Id. at 12-13).
As EEO Officer, Lesley Webster met weekly with Stern and submitted investigation reports and status reports to Stern. Webster testified that she informed Stern that minorities were underutilized in Parks management positions. (Webster Dep. 280-86). Indeed, in January 1997, the City Equal Employment Practices Commission ("EEPC") issued a report finding significant underrepresentation of class members in numerous job titles and managerial titles at Park. (Pl.Ex. 67 at 7-9). Parks' reports to the EEPC for the years 1998-1999 contained a section describing the steps Parks would take to address the underutilization of women and minorities in certain positions. (See Pl. Dep. Ex. 89bh).
b. Comments
i. Stern
Stern's former employees describe him as "eccentric" (e.g., Ricciardone 12/04/02 Dep. at 21) and a "combination of Groucho Marx and Woody Allen" (Benepe DOJ Int. at 57), and there is much in the record to support these characterizations. For example, Stern developed "Parks nicknames" for Parks employees, which were included in the agency-wide manual and by which he referred to employees, even during depositions. (E.g., Def. Vol. II, Ex. 24; Stern Dep. at 35 ("Gorilla" and "Gorilla Gorilla"), 135 ("Zorro"), 258 ("Igor"), 386 ("Home Boy")). Various Parks employees reported that Stern made fun of everyone, regardless of race, including himself. (Benepe DOJ Int. at 57-58; Castro DOJ Int. at 81). Stern prides himself on not being politically correct. (Stern Dep. at 250-54).
*349 From the evidence on the record, a reasonable jury could find the following:[7]
Stern said to Tanya Bowers, a former employee of Parks who is Jewish and African-American, "It's wonderful, Tanya. You look black, but when you talk, I know you're Jewish. I can bring you home and know that the silverware will still be there when you leave." (Bowers Dep. at 203).
Responding to a complaint of discrimination in promotions forwarded from the Mayor's office, Stern asked the complainant, Bernard Lewis, whether he was a drug addict or drank on the job. (Lewis Aff. ¶¶ 7-9).
Stern attributes the lack of African-Americans in managerial positions to the "smaller number of blacks who are able to perform managerial positions." (Stern Dep. at 150). He further explained that this was because of "background, because they have not in a sense climbed the ladder." (Id. at 150-51).
Stern believed, as he testified, that class members "racialized" conflicts with non-class member employees. (Id. at 159).
At a going away party for a Parks employee who was leaving to attend Yale Law School, Stern said that he was "pleased" the departing employee would be attending Yale "where he could meet and rub arms with important people like the DuPonts and the Rockefellers and also he could rub elbows with the quota kids." (Beach 4/3/03 Dep. at 196-97; Stern Dep. at 257-59; Castro Dep. at 152-53 (testifying that he interpreted "quota kids" as referring to African-Americans and Hispanics)).
While walking with his dog, Boomer, Stern told a group of Chinese children that "they could pet Boomer, but not eat him." (Stern Dep. at 33). Stern described the incident as "warm and affectionate" and "clearly a joke rather than a remark denigrating anyone." (Id. at 33, 37). Nevertheless, he apologized when an adult complained about the incident, clarifying that he had not meant to offend anyone. (Id. at 36).
Stern recommended that "Class Of" employeeswho are recruited primarily from elite colleges through a program described in more detail belowread The Bell Curve, a book describing purported differences in levels of intelligence among racial groups. (Bowers Dep. at 133-34).
Other Parks officials testified that they had heard that Stern had a reputation for making racial remarks. Castro testified that he occasionally heard Stern use "racial references" in a derogatory manner. (Castro Dep. at 155). Likewise, Moss admitted that Stern had a reputation for making derogatory remarks. (Moss Dep. at 148).
ii. Other Parks Employees
Plaintiffs also point to statements and conduct of other Parks employees. For example,
Robert Garafola, a Deputy Commissioner under Stern, wrote "incompetent people accusing racism" though he admitted that he did not know all of the plaintiffs who had filed lawsuits. (Garafola 9/10/03 Dep. at 122-23). Further, Garafola admitted that there was merit in the statement that minorities had been underrepresented *350 in management and middle management at Parks. (Id. at 30; Garafola Dep. at 12/30/02 at 285). Though Garafola attempted to attribute this underrepresentation to few minorities passing the required tests, he admitted that Parks employees were promoted without taking civil service tests. (Garafola 9/10/03 Dep. at 30-33).
Charlie Cousins, a Caucasian Parks Supervisor in Manhattan, said to class member Jose Cintron, "[Y]ou people are a bunch of animals" in reference to the Puerto Rican Day Parade. (Cintron Dep. at 48-49). He also repeatedly referred to Cintron as a "stupid spic." (Id. at 56). In the presence of Cintron, Cousins also said to class member Richie Laylock, "you are a stupid black Mother Fucker." (Id. at 53-55).
In March 1999, in a Brooklyn Parks facility, Greg Dawson, Brooklyn's Deputy Chief of Operations, said to Henry Roman, "[W]hat kind of Puerto Rican are you that you don't carry a knife." (Roman Dep. 9/4/02 Dep. at 73; Roman 1/16/03 Dep. at 213-14).
Patricia Gracia, a Caucasian supervisor, muttered "black bitch" under her breath when class member Arlene Dunbar refused to sign a supervisory conference report dated August 15, 1998. (Dunbar Dep. at 123-24, 139).
Class member Dennis Moody heard that Phil Rabena, a Caucasian Supervisor on Staten Island, asked an AfricanAmerican WEP worker named Montgomery to pull down his pants to see if black men had larger penises than whites. Moody learned this from three workers who were present at the incident and the WEP worker. Verne Reilly, a Caucasian Parks Supervisor and EEO representative on Staten Island, encouraged the WEP worker to report the incident. (Moody Dep. at 30-34; Pl. Dep. Ex. 537).[8] Thereafter, Reilly informed Webster that he was concerned Rabena would retaliate against him. (Pl. Dep. Ex. 537; Webster Dep. at 620-22). Indeed, Reilly was transferred shortly thereafter from Staten Island, where he lived, to Harlem, purportedly for disciplinary reasons. (Reilly Dep. at 58).
In August 2001, Jack Bero, a Caucasian supervisor, made a joke containing the phrase, "It's time to get the niggers out of here." (As Salaam Dep. at 88-89).
Following a catered special event at the Historic House in the Bronx, Kathleen Walker overheard Commissioner Linn say, "[I]f you give them maybe the bottles that are halfway open, . . . maybe they won't steal the rest of the bottles." (Walker 9/17/02 Dep. at 106).
iii. Nooses
In 1998, a noose was found hanging from a pipe in the Forestry Office in Staten Island. (Webster Dep. at 315; Moody Dep. at 124-28). A picture of a black man was on the wall behind the pipe so that the head of the man in the picture could be seen through the opening of the noose. (Moody Dep. at 124-28). The noose was removed after a Parks employee complained. Though a complaint was filed, it is unclear whether an investigation was conducted. No one was disciplined for hanging the noose. (Webster Dep. at 315-16).
In 2000, a noose was hung on a forestry truck in Queens. (Webster Dep. at 319-20, 688-90; Pl. Dep. Ex. 9). Webster testified that she "conducted an investigation[,] . . . found . . . that the noose was taken . . . down, that they were not sure *351 who put the noose up and how long it had been there, and that was it." (Webster Dep. at 320). Again, no one was disciplined. Webster did not refer either allegation to the City's Advocate's Office, and she was unable to specify whether she dealt with the nooses in subsequent trainings. (Id. at 320-22, 692).
Each October, between 1995 and 1997 or 1998, Susan Silvestro, a Caucasian supervisor, hung a noose in her office at Five-Boro on Randalls Island, apparently as part of a Halloween display. (Silvestro 4/15/03 Dep. at 180-81, 185; Portlette 8/26/02 Dep. at 89-90; Green Dep. at 124-36). Silvestro continued to display the noose even after an African-American employee complained. (Green Dep. at 125-36).
Stern acknowledged that he was aware that a noose was placed on Parks property in 1998 or 1999 and that McCoy had complained about it, but he did not know if Parks investigated it. (Stern Dep. 159-63). Stern explained that McCoy was of "limited capacity." (Id. at 160). Further, while he understood that nooses could be offensive to African-Americans, Stern did not order any investigation of the nooses on Parks property though he considered them "childish" and "silly." (Id. at 163-68). From January 1, 1995, until August 20, 2004, defendants did not discipline any Parks employee for displaying a noose on Parks property. (Def. Resp. Pl. RFA # 457).
iv. Wage Increases and Promotions
When an employee was recommended for a wage increase or promotion, a Planned Action Report form ("PAR") was prepared identifying the candidate and proposing an increase or promotion but leaving a blank for the salary and Stern's signature. (Stark Dep. at 64-65, 69, 259-61, 274-81). David Stark, who oversees the Personnel Department as Chief Fiscal Officer of Parks, would bring these forms to Stern, and together they would review the proposed action. (Id. at 273-74). If Stern approved a request, he would determine a salary and write it on the PAR form. (Id. at 221, 270-78; Terhune Dep. at 56, 65). Generally, Stern did not consult Civil Service law or collective bargaining agreements in determining the salary. (Stark Dep. at 276-78 (observing that Stern filled in salary on PAR forms without consulting any guidelines but also noting that Stern knew the salary structure of the agency)).
After Stern approved a planned action and determined a salary, Stark and Terhune would select a civil service title that matched the salary selected by Stern. (Id. at 285-89). Thus, the salary determined the civil service title the employee would receive. (Id.). In some circumstances, employees would have received a change in their in-house titles prior to a PAR being submitted and approved. These individuals, however, would not be eligible for a salary promotion until the PAR was approved. (Id. at 264).
In the case of year-round employees paid from the seasonal budget, the PAR would be implemented after Stern signed it. (Id. at 288). In the case of employees paid from the regular Parks budget, Stark and his associates would fill in the "justification" on the PAR after Stern set the salary and signed the form. (Id. at 257-59, 288-89). The completed PARs for these employees would then be sent to City Hall for approval. (Id. at 293).
Stern had ultimate authority to approve or disapprove a job action. (Id. at 270-78; Stern Dep. at 18). In practice, he generally approved the action recommended by his subordinates though sometimes he did not approve salary increases at the level recommended by them. (Stern Dep. at 18; *352 Stark Dep. at 280-85). The level of the raise was almost always determined by the Commissioner. (Stark Dep. 276-68 ("I never knew what [number] he was going to put in there until he did it.")).
Stern said he did not want "to stigmatize" minorities by giving them a plus for diversity, but he nonetheless stated that all things being equal, he would give a slight preference to a minority to help to create diversity. He could not think of an employee to whom he had given that benefit. (Stern Dep. at 315-16).
v. Postings and Interviews
The City of New York Affirmative Employment Plan for 1991 requires that Parks notify employees when job openings occur. (Pl. Dep. Ex. 3 at 5). The City's Personnel Policy, dated June 30, 1998, requires that vacancy notices be posted. (Id. Ex. 45). Likewise, the Citywide Contract, which applied to Parks as of May 24, 1998, and the Parks Working Conditions Agreement require that Parks post notices of job positions, including promotional provisional vacancies, two weeks before the positions are filled. (Def. Resp. RFA ## 60-62; Pl. Dep. Ex. 42 at 2). Since 1994, Stark has maintained a policy that all job vacancies are to be posted. (Stark Dep. at 83-88).
Despite these requirements and policies, Parks did not have an official policy regarding the posting of vacancies and regularly failed to post vacancies prior to the filing of this lawsuit.[9] (Terhune Dep. at 180, 405-06; Stark Dep. at 83-88). Indeed, when the personnel department received notice of a vacancy, Terhune would ask whether he had "the go ahead" to post the position. (Terhune Dep. at 406). Between 1995 and March 1999, there were no postings for the following in-house positions: Borough Chief of Operations; Chief of Recreation; Chief/Director of Recreation; Deputy Chief of Operations; Assistant to the Commissioner; and Chief of Staff. (Def. Resp. Pl. RFA # 74). There were no postings for Principal Parks Supervisor ("PPS") positions during 1995, 1997, or 1999 (Def. Resp. Pl. RFA # 76), and the majority of the PPS positions available during these years went to non-class employees. (Ex. ETH 00078). Terhune counted 34 postings for 1995; 11 for 1996; 32 for 1997; 36 for 1998; 62 for 1999; 97 for 2000; 111 for 2001; and 222 for 2002. (Terhune Dep. at 442, 447, 449, 453, 456, 467; Terhune 1/6/03 Dep. at 146, 165). For at least some of these years, many more promotions occurred than were posted. (Pl. Dep. Ex. 85. (at least 53 promotions in 1998)).
Parks did not have any formal policy for selecting employees for non-posted positions. (Def. Resp. Pl. RFA # 232). Promotions to managerial positions were sometimes made by Arsenal Officials without the knowledge or input of Borough Commissioners. (Spiegel Dep. at 215-17, 237-39). Further, it was not unusual for Stern or other officials to personally choose employees for seasonal step-ups. (Terhune 1/6/03 Dep. at 34-37).
Even when a position was posted, interviews were not always held. During the relevant time period, Parks did not have a written policy regarding when interviews should be used to fill vacant positions or how to determine which applicants should be interviewed. (Def.Resp.Pl.RFA ## 130-31, 144-45). Sometimes an interview would serve only as a formality; an employee previously selected for a position would interview while other employees *353 would not be given the opportunity to interview. For example, in 1995, Wright approached Assistant Commissioner of Recreation, Rosemary O'Keefe, to request a transfer to the Asser Levy Center, a top facility in Manhattan, which had posted an open position. (Wright 3/26/03 Dep. at 33-35). After making his initial request, Wright was told that Asser Levy was no longer available. In fact, Lynda Ricciardone, a Caucasian, had accepted the position at Asser Levy. In contrast to Wright, however, Ricciardone had not applied for the position or even been aware of or had an interest in the position when the Manhattan Chief of Recreation called her to offer her the position. (Ricciardone Dep. at 91-98).
When interviews were conducted, the interviewers rated the candidates and these ratings were then given to Garafola or Moss, depending on the department in which the promotion fell. (Stark Dep. at 611-12). Parks did not provide interviewers with standard guidelines for conducting interviews, or instructions on how to evaluate and rate answers or how to arrive at an overall rating. (Def.Resp.Pl.RFA ## 194-95, 204). Parks did not have a formal policy establishing what weight the interviewers' scores would be given, and the person selected for promotion was not necessarily the applicant with the highest interview rating. (Id. RFA # 140; Stark Dep. at 614-15). Indeed, on one occasion, a Caucasian applicant with the lowest interview scores was selected over an African-American applicant with the highest score. (Pl. Dep. Ex. 118 at 2).
In its January 1997 report, the EEPC required that Parks review "[s]election, evaluation, and promotion devices/criteria . . . to determine if they have a disparate impact on protected group members." (Pl. Ex. 67 at 12). Between the issuance of that report and the initial filing of this action, Parks did not conduct a disparate impact analysis. (Def.Resp.Pl.RFA ## 237-38). Between 1995 and August 2004, neither Parks nor any other city agency has conducted any validity study[10] regarding the interview processes used by Parks for selection of candidates for job vacancies. (Id. RFA ## 173, 181).
The Uniform Federal Guidelines provide that
Where the user has not maintained data on adverse impact as required by the documentation section of applicable guidelines, the Federal enforcement agencies may draw an inference of adverse impact of the selection process from the failure of the user to maintain such data, if the user has an underutilization of a group in the job category, as compared to the group's representation in the relevant labor market, or, in the case of jobs filled from within, the applicable work force.
(Lundquist Report at 6 (quoting Uniform Guidelines, Section 4D, pp. 38297-98 (1978))). Between 1995 and August 2004, Parks failed to keep records: (a) of forms indicating ratings given to interviewees; (b) of the numbers of applicants meeting minimal qualifications for vacant positions; (c) identifying the applicants accepted for interviews for posted jobs; and (d) identifying who was hired as part of the "Class Of' program. (Def.Resp.Pl.RFA ## 193, 223-24, 368).
Personnel practices did not change when Benepe became commissioner. (Terhune Dep. at 343; Benepe Dep. at 462). Benepe *354 operated Parks under the same policies and practices as former Commissioner Stern until around June 2005 when Parks entered a consent decree with the United States Department of Justice ("DOJ") in the companion action, discussed below.
vi. The "Class Of" Program
In 1994, Stern created the "Class Of" program to "expose recent college graduates to Parks and to city government." (Pl. Dep. Ex. 18 at 2). "Class Of" employees were recruited from colleges across the country, including many Ivy League schools and similar elite, private institutions. (Id. Exs. 27 & 28). The recruitment brochure promised that "[decent graduates who come to Parks work closely with senior officials, learning from them on a daily basis," and "take on a high-level of responsibility within the agency." (Id. Ex. 18 at 2). According to a "Class Of" employee quoted in the brochure, recruits may be "considered for positions normally given to individuals with more experience." (Id. at 8). Beginning in 1995, Parks hired between ten and more than forty recent college graduates to work for the "Class Of" program each year. (Def. Resp. Pl. RFA # 314). Though these employees worked full-time on a year-round basis for Parks, Parks paid the majority of them from the seasonal budget and therefore they were not included in Parks' headcount. (Stark Dep. at 234-35; Def. Resp. Pl. RFA ## 316, 321, 324). Until August 2000, "Class Of" employees were promised and received an approximate 20% raise (roughly $5,000) following their first year of employment with Parks. (Pl. Dep. Ex. 24; Def. Resp. Pl. RFA # 326; Kay Dep. at 220-21). Further, "Class Of" employees had first priority for junior manager vacancies. (Terhune 1/6/03 Dep. at 101). Several "Class Of" employees were assigned to work directly with Stern or his deputies on the third floor of the Arsenal; these "Class Of" employees were predominantly or exclusively non-class members. (Stern Dep. at 264).
Though Stern testified that there was a policy to hire all minority applicants who applied to the program, the "Class Of" recruiter testified that she had not been so instructed. (Id. at 388-89; Kay Dep. at 49-50, 55). The racial and national origin composition of "Class Of" employees was approximately: 72.1% Caucasian; 6.3% Hispanic; 11.0% African-American; 0.4% Native American; 7.4% Asian; and 2.8% Unidentified. (Def. Resp. Pl. RFA # 378). Parks never conducted any analysis to determine if Parks' method of recruitment, hiring, or selection of "Class Of" employees had a disparate impact on African-Americans or Hispanics. (Id. RFA ## 369-71).
vii. Segregation, Underfunding, and Understaffing
With the exception of the EEO officer, Webster, and one or two class members who served in secretarial or administrative jobs, all thirty to forty employees on the third floor of the Arsenal were non-class members. (Weizmann Dep. at 67-68; Moss Dep. at 44; Sahl Dep at 191-92). Noting the absence of class member employees working at the Arsenal, Danny Weizmann, a "Class Of" employee, described Parks as being run like it was a "private club" for whites only. (Id. at 69-71).
Benepe, as well as other high-level Parks personnel, acknowledged that Parks sometimes assigned employees on the basis of race and/or linguistic abilities to neighborhoods reflecting that language or race because of demands from the neighborhood. (Benepe 7/19/01 Interview at 46 ("It's true that we have placed people by demand from a community, both implied *355 and stated."); see also Spiegel Dep. at 126-28; Ricciardone Dep. at 196-98). As an example of an implied request, Benepe noted that community groups would ask that Parks' employees understand the needs and interests of the community. Beyond these requests, some community groups would "be as bold as to say [someone] who looks like us, who speaks our language, who belongs to our community." (Benepe 7/19/01 Interview Tr. at 46-47). Likewise, the recruiter for the "Class Of' Program acknowledged that the "Class Of' Program, at the request of supervisors, took race into account in making assignments. (Kay Dep. at 49-51). Further, multiple high-level Parks personnel noted that the staff of a facility often reflected the racial composition of the area. (Moss Dep. at 40-41; Stern Dep. at 342-67).
Many class members worked in one or more boroughs where they did not reside, and Terhune did not have a policy of assigning people to locations near their homes. (E.g., Wright Aff. ¶¶ 1-3; Lewis Aff. ¶ 2; Clark Aff. ¶ 3; Henry Aff. ¶¶ 1-2, 5; Terhune Dep. at 293). At least some class members indicated that they would not mind moving work locations or working outside the borough in which they lived if it would facilitate their Advancement at Parks. (Jacobs-Pittman Dep. at 174-75; Wright 3/26/03 Dep. at 33-35; Brown 1/3/03 Dep. at 216).
All named plaintiffs and additional class members observed that the Parks workforce was geographically segregated by race or national origin. (See Pl. Additional Facts at 29 # 17-18 (collecting citations)). Throughout the relevant time period, the few African-American and Hispanic Park and Recreation Managers and Center Managers were assigned to predominantly African-American and Hispanic neighborhoods. (Wright Aff. ¶ 12; Henry Aff. ¶ 2; Ex. G00616-620; Ex. G00905-953; Ex. REC000072-73). Conversely, Parks' facilities and districts in non-African-American or Hispanic neighborhoods were supervised and managed almost exclusively, if not exclusively, by non-class employees. (Wright Aff. ¶ 12; Roman Dep. at 57-58; Ex. G00616-620; Ex. G00905-953; Ex. REC000072-73). Indeed, when Beach recommended certain class members for a Center Manager position at a pool in Williamsburg, Brooklyn, a predominantly Caucasian neighborhood, the Borough Commissioner informed Beach that he and Garafola would make the decision, a step the Borough Commissioner had not taken with any other Center Manager promotion Beach had made. (Beach 4/3/03 Dep. at 156-65 (noting that he had unilaterally selected employees for Center Manager positions in the past); 9/29/02 Dep. at 109). Similarly, African-American and Hispanic supervisors have supervised predominantly African-American and Hispanic crews. (Wright 9/12/02 Dep. at 65; Beach 9/29/02 Dep. at 108-09).
Multiple class members testified that many facilities and parks in predominantly African-American and Hispanic neighborhoods were in disrepair and underfunded and understaffed by Parks. (See, e.g., Anderson 9/5/02 Dep. at 80-83; Brown 8/28/02 Dep. at 75-78). Stark testified that there are no documents reflecting the budget allocation or funding of individual centers, and Parks does not conduct a cost analysis for each park. (Stark Dep. at 304, 681).
4. Evidence of Retaliation
When Webster, who has served as Parks EEO Officer since 1995, began in the position, no one told her what her functions were. (Webster Dep. at 393-95).
In 1996, the City issued a report card on City agencies' discrimination complaint *356 and investigation practices. (Pl.Dep. Ex.66). The report noted that Parks'
EEO officer[11] expressed a preference for the "quick solution" approach to resolving complaints of discrimination, which is evidenced in the majority (93%) of the 15 formal complaint files available for review. . . . Complaints involving serious allegations of race discrimination, sexual harassment and retaliation were resolved within one to two days and often did not reflect any components of the Plan's investigation procedures had been performed . . . The file displays an apparent misunderstanding that race discrimination laws may be violated even while civil service laws and rules have been complied with.
(Id. Ex. 66 at 11-12). Commenting on the poor record-keeping at Parks, the report further observed that the summaries of the complaints and investigations "appear to have been written up for purposes of our review." (Id. at 12).
Many class members did not feel comfortable filing complaints with the EEO Office. (Anderson 9/5/02 Dep. at 106-08; Brown 8/28/02 Dep. at 102-06; Roman 9/4/02 Dep. at 99-102; Walker 9/17/02 Dep. at 94-100; Wright 9/12/02 Dep. at 107-110). Anderson explained that "most blacks and Latinos [who] work in the agency do not go to Leslie Webster, because she wasn't going to do anything about it." (Anderson 9/5/02 Dep. at 107-08). Those who did file complaints did not feel that Webster took those complaints seriously. (Cintron Dep. at 114 (she seemed incompetent); Beach 4/3/03 Dep. at 118-24 (never responded to his allegations); Brown 8/28/02 Dep. at 102-05).
Employees who filed complaints were at least sometimes left in the dark regarding the outcome of those investigations or the basis for the outcome. In a 2001 report, the EEPC observed that notices to parties did not state explanations for the EEO's decision. In a survey conducted by the EEPC, seven of eleven respondents indicated that they did not receive written notification of their complaints. (Pl. Dep. Ex. 78 at 4-5). Webster was not aware of a single case where anything beyond a supervisor's conference was sought. (Webster Dep. at 603-05).
Approximately thirty separate Parks employees filed retaliation complaints with agencies outside of Parks between 1995 and 2003seven named plaintiffs brought individual retaliation claims, and between twenty and twenty-five claims were filed by other Parks employees. (Def.Ex.37).
Multiple class members, including Brown, Colon, Portlette, Roman, Walker, and Wright, indicated they were denied promotions and/or salary increases after filing complaints. Additionally, Portlette was moved to a basement office after filing her complaint and Wright's pay was cut when he was promoted.
Various class members testified that Parks officials either implicitly or explicitly indicated Parks' disapproval of the filing of discrimination complaints. In 1997, Webster told Brown that complaining was frowned upon by the agency. (Brown 8/28/02 Dep. at 103-05). In 2001 and 2002, Colon's supervisor, Christopher Caropolo, repeatedly conditioned any salary increases on the termination of this lawsuit. (Colon 9/9/02 Dep. at 7-8; Colon 4/17/03 Dep. at 27-35). After filing charges with the EE OC, Roman was informed that his request for a transfer to Staten Island would be approved if he withdrew his claims. *357 (Roman 1/16/03 Dep. at 173-74; Pl. Dep. Ex. 438). Benepe told Wright that he should not file EEOC charges to avoid "any bad feelings." (Wright 9/12/02 Dep. at 122-23; Wright 3/26/03 Dep. at 155-57).
B. Prior Proceedings
Plaintiffs filed charges of discrimination with the Equal Employment Opportunity Commission (the "EEOC") beginning in March 1999. The same year, the United States Department of Justice ("DOJ") commenced its own investigation into plaintiffs' claims. On January 30, 2001, the EEOC issued a Determination, amended on March 14, 2001, finding reasonable cause to believe that Parks engaged in a pattern and practice of racial discrimination through its promotions and assignments, and referred its findings to DOJ. Specifically, the EEOC concluded that:
The evidence of record shows that since 1997 a greater proportion of Caucasians were placed in permanent positions in at least six (6) out of eight (8) categories where permanent positions were offered. In comparison, African American and Hispanic employees filled a higher percentage of provisional, seasonal, noncompetitive and labor class positions in twelve (12) out of sixteen (16) job categories.
The record also shows that the promotion ratios for Hispanics and Blacks do not correspond with the entire workforce profile ratios. For example, for fiscal years 1998 and 1999, 70% of the employees given promotions were Caucasian while only 50% of Respondent's workforce was Caucasian. In contrast, in 1998 and 199.9, respectively[,] Blacks got 17% and 11% of promotions while representing the workforce[12] and Hispanics got 1.5% and 11% [of promotions] while comprising 16% of the workforce.
Examination of the evidence further reveals that Respondent's supervisory lines of authority are almost completely segregated by race and color. The investigation has revealed that all of the managers and directors at the Recreation Centers are Caucasian. The investigation also uncovered that almost no Caucasian employees report to minority supervisors.
Based on the above, there is reasonable cause to believe that Respondent has unlawfully discriminated on the basis of race and national origin through promotion and assignment. The investigation also reveals that certain individuals were retaliated against for attempting to protect their rights as employees under Title VII. . . .
(First Am. Compl. Ex. 3).
Plaintiffs commenced their lawsuit on May 24, 2001. On June 19, 2002, the United States filed an action against the City and Parks alleging a pattern and practice of racial and national origin discrimination in promotional decisions. By order of this Court dated July 15, 2002, the two cases were consolidated. Following extensive discovery, I certified the class by memorandum decision dated July 9, 2003. Wright v. Stern, No. 01 Civ. 4437(DC), 2003 WL 21543539, at *1 n. 1 (S.D.N.Y. July 9, 2003). On June 8, 2005, DOJ and Parks entered into a consent decree in which Parks agreed to implement certain personnel practices, and the DOJ action was closed.
On August 4, 2005, plaintiffs filed their Third Amended Complaint, in which they assert pattern or practice and individual *358 disparate impact and disparate treatment claims based on alleged failures to promote and compensate, segregation in work assignments, discriminatory allocation of resources, and discouragement of the filing of discrimination claims. Plaintiffs further assert a pattern or practice hostile work environment claim. Finally, plaintiffs assert pattern or practice and individual claims that Parks retaliated against class members who filed complaints.[13]
This motion followed.
DISCUSSION
Defendants move to exclude the reports and testimony of plaintiffs' experts and for summary judgment on the class claims and most of the individual claims. First, I address defendants' Daubert challenges. Second, I discuss defendants' motion for summary judgment dismissing the various class claims. Third, I discuss defendants' motion for summary judgment dismissing the individual claims.
A. Plaintiffs' Expert Witnesses
Plaintiffs rely on the testimony of three expert witnesses, as follows:
Dr. Donald Tomaskovic-Devey, who holds a Ph.D. in Sociology, is a Professor of Sociology at the University of Massachusetts and the former Director of Graduate Programs of Sociology at North Carolina State University. He has served as an expert in numerous employment discrimination cases. Additionally, he served as a consultant to DOJ for cases involving automobile stops. His research focuses primarily on gender and racial workplace inequality and organizational research methodologies. (T-D Report[14] at 2; PI. Mem. at 73). Dr. Stephen Schneider, who holds a Ph.D. in Business and Applied Mathematics, has served as an expert in multiple federal actions, including actions involving employment discrimination and wage and hour dispute cases. (Schneider Report at 1-2). Dr. Kathleen Lundquist, who holds a Ph.D. in Psychology, has extensively researched, designed and conducted statistical analysis, and provided consultation in the areas of job analyses, test validation, performance appraisal, employment testing, and research design. She has served as an expert on testing and validation for both the U.S. Department of Labor and the DOJ. (Lundquist Report at 2-3).[15]
Defendants move to preclude these experts from testifying, and argue that their reports are so flawed that the Court may not consider them in ruling on defendants' motion for summary judgment. I discuss the law governing the admissibility of expert reports and then apply it to the reports here.
*359 1. Applicable Law
A witness qualified as an expert will be permitted to testify if his or her testimony "`will assist the trier of fact to understand the evidence or to determine a fact in issue.'" United States v. Lumpkin, 192 F.3d 280, 289 (2d Cir.1999) (quoting Fed.R.Evid. 702). To be admissible, expert testimony must be both relevant and reliable. Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 589, 113 S. Ct. 2786, 125 L. Ed. 2d 469 (1993).
To be reliable, expert testimony must be based on sufficient facts or data, and it must be the product of reliable principles and methods properly applied. Figueroa v. Boston Scientific Corp., 254 F. Supp. 2d 361, 365 (S.D.N.Y.2003). The trial court's task
is to make certain that an expert, whether basing testimony upon professional studies or personal experience, employs in the courtroom the same level of intellectual rigor that characterizes the practice of an expert in the relevant field.
Kumho Tire Co. v. Carmichael, 526 U.S. 137, 152, 119 S. Ct. 1167, 143 L. Ed. 2d 238 (1999). In other words, expert testimony should be excluded if it is "speculative or conjectural," or if it is based on assumptions that are "`so unrealistic and contradictory as to suggest bad faith.'" Boucher v. U.S. Suzuki Motor Corp., 73 F.3d 18, 21 (2d Cir.1996) (quoting Shatkin v. McDonnell Douglas Corp., 727 F.2d 202, 208 (2d Cir.1984)). An expert's opinion is inadmissible if it "is connected to existing data only by the ipse dixit of the expert." Gen. Elec. Co. v. Joiner, 522 U.S. 136, 146, 118 S. Ct. 512, 139 L. Ed. 2d 508 (1997).
The trial court has latitude in deciding how to test an expert's reliability. Daubert listed a number of factors, but this "list of factors was meant to be helpful, not definitive." Kumho Tire, 526 U.S. at 151, 119 S. Ct. 1167. Hence, factors that a trial court may consider include, among others: whether a theory or technique relied on by an expert can be and has been tested; whether the theory or technique has been subjected to peer review and publication; whether there is a known or potential rate of error; whether the theory or technique has been generally accepted in the relevant community; whether the discipline itself lacks reliability; where an expert's methodology is experience-based, whether the methodology has produced erroneous results in the past and whether the methodology has been generally accepted in the relevant community; and whether an expert's method is of a kind that others in the field would recognize as acceptable. Daubert, 509 U.S. at 593, 113 S. Ct. 2786; Kumho Tire, 526 U.S. at 151, 119 S. Ct. 1167.
In addition to being reliable, expert testimony must be relevant. An expert opinion is relevant if it "will assist the trier of fact to understand the evidence or to determine a fact in issue." Fed.R.Evid. 702; see Daubert, 509 U.S. at 591, 113 S. Ct. 2786 ("This condition goes primarily to relevance."). Ultimately, an expert's role is to assist the trier of fact by providing information and explanations.
The proponent of expert testimony must establish its admissibility by a preponderance of the evidence. See Astra Aktiebolag v. Andrx Pharms., Inc., 222 F. Supp. 2d 423, 487 (S.D.N.Y.2002) (citing Fed.R.Evid. 104(a) and Bourjaily v. United States, 483 U.S. 171, 175-76, 107 S. Ct. 2775, 97 L. Ed. 2d 144 (1987)); Fed.R.Evid. 702 advisory committee's note (2000 Amendments) ("[T]he proponent has the burden of establishing that the pertinent admissibility requirements are met by a preponderance of the evidence."). Rejection of expert testimony, however, is still "the exception rather than the rule," Fed. *360 R.Evid. 702 advisory committee's note (2000 Amendments), and "the trial court's role as gatekeeper is not intended to serve as a replacement for the adversary system." United States v. 14.38 Acres of Land, 80 F.3d 1074, 1078 (5th Cir.1996); see also Lippe v. Bairnco Corp., 288 B.R. 678, 685-87 (S.D.N.Y.2003). Thus, "in a close case the testimony should be allowed for the jury's consideration. In a close case, a court should permit the testimony to be presented at trial, where it can be tested by cross-examination and measured against the other evidence in the case." Lippe, 288 B.R. at 700 n. 6.
2. Application
a. Tomaskovic-Devey
In his report, Tomaskovic-Devey summarizes relevant scientific literature in the field of cognitive bias. In the context of the work environment, Tomaskovic-Devey reports that research has demonstrated that cognitive errors such as stereotyping, in-group bias, and attribution are more likely to arise when evaluation criteria are "vague, ambiguous, and subjective." (T-D Report at 6). Tomaskovic-Devey further reports that employers can "substantially reduce cognitive bias in personnel decisions" if they implement "[a] well designed system for posting job vacancies, for collecting reliable, timely, and job relevant information on candidates for promotion, and for systematically assessing candidates' qualifications relative to valid criteria." (Id. at 7). Applying the scientific literature to the personnel practices of Parks, he concludes that "the policies and practices at [Parks] allow decisions to be made in an arbitrary and racially biased manner. . . . Managerial practice at [Parks] was ideally suited to produce and tolerate racial discrimination in employment, promotion, and job assignment." (Id. at 25-26) (emphasis added).
In response, defendants have offered the expert report of Winship, who attacks Tomaskovic-Devey's report on multiple grounds, on the basis of which defendants seek exclusion of Tomaskovic-Devey's report and testimony. Specifically, defendants argue: first, Tomaskovic-Devey failed to review all relevant evidence before forming an opinion; second, Tomaskovic-Devey summarized the evidence in an argumentative, one-sided manner; third, Tomaskovic-Devey failed to present evidence that is inconsistent with his own; fourth, Tomaskovic-Devey's reliance on stranger-to-stranger interactions was misplaced; and fifth, Tomaskovic-Devey offered his personal evaluation of the testimony.
Though several of these arguments have merit, they do not warrant exclusion of the testimony of Tomaskovic-Devey nor do they preclude the Court from considering the report at summary judgment. Instead, these arguments go to the weight rather than the admissibility of this evidence. Tomaskovic-Devey's conclusions are based on research examining the effect of cognitive errors on personnel decisions. The scientific research relied upon by Tomaskovic-Devey has "been developed through laboratory, field, and survey research . . . [and] has been replicated repeatedly and . . . validated through peer review." (Id. at 3). The proper course of action therefore is to permit Tomaskovic-Devey to testify, subject to "[v]igorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof[, which] are the traditional and appropriate means of attacking shaky but admissible evidence." Daubert, 509 U.S. at 596, 113 S. Ct. 2786.
To the extent Tomaskovic-Devey will testify that, based on his understanding of the relevant scientific literature, Parks' personnel practices "allow decisions to be *361 made in an arbitrary and racially biased manner" and that they were "suited to produce and tolerate racial discrimination in employment, promotion, and job assignment" (T-D Report at 25-26), his testimony is both relevant and reliable. Accordingly, defendants' request to exclude the testimony of Tomaskovic-Devey is denied.
b. Schneider
Using the personnel data from the three databases provided by Parks,[16] Schneider performed a series of regression analysesanalyses controlling for variables that might impact the results of the data, such as job title, job tenure, and tenure with the City and employee age (as a proxy for work experience). These regression analyses evaluate full-time, yearround employeeswhether paid out of the seasonal budget or the regular budget who were paid for at least six months of the year.[17] (Schneider Report at 4-5). Schneider's report also includes "simple statistics"statistics showing the breakdown of Parks personnel without controlling for variables other than race. For example, Schneider compared the salaries of class members and non-class members without controlling for title, tenure with Parks, or any variables other than race.
Based on his analyses, Schneider concludes as follows: (1) class members are systematically underpaid relative to similarly situated non-class members; (2) class members are systematically placed in lower paying job titles, resulting in a significant salary gap; (3) class members are denied their proportionate share of wage promotions, i.e., a one-time increase in salary of a pre-determined amount; (4) class members receive systematically smaller wage increases; and (5) class members have experienced a slower growth in pay rate over time than their similarly-situated Caucasian counterparts. (Id. at 25). In response, defendants offer the expert report of Erath, who criticizes Schneider's report on various grounds. Schneider rebutted Erath's report, responding to the various criticisms and modifying some of his data based on Erath's report.
Defendants seek to exclude Schneider's report, arguing that "his flawed methodology precludes consideration of his opinions." (Def. Mem. at 8; see also Erath Report at 1) (the data set created by Schneider contains "so many errors that the ultimate analyses are rendered meaningless"). The request for preclusion is denied. First, most of the alleged errors cited by defendantssome of which also existed in Erath's reportresult from the nature of the raw data maintained and provided to plaintiffs by Parks. (Schneider Rebut. at 3). For example, some yearround employees are consistently coded as temporary seasonals while some who received seasonal step-ups are not tracked on the Parks Seasonal Tracking System. (Id. at 4). Second, to the extent *362 errors existed in Schneider's initial report, Schneider's rebuttal report adopted Erath's revised database, with minor modifications, and still reaches the same conclusions. Hence, whatever the alleged deficiencies of his report, the rebuttal report is sufficiently reliable. Even Erath concedes that the database in the rebuttal report would permit experts to "perform statistical analysis and obtain meaningful results." (Erath Dep. at 83). As to the remaining criticisms, they go to the weight rather than the admissibility of the evidence.
Defendants argue, for example, that Schneider should have used "applicant flow figures" rather than the "wage promotion" methodology he adopted. (Def. Mem. at 9). But Schneider's wage promotion analysis reflects the hiring practices at ParksParks' routine failure to post vacancies severely limited the applicant pool and its practices with respect to changing titles made it difficult to create databases reflecting applications. See, e.g., Malave v. Potter, 320 F.3d 321, 326-27 (2d Cir. 2003) (allowing alternative statistical methodologies where defendants' failure to maintain proper records created impediments to statistical analyses); cf. Wards Cove Packing Co. v. Atonio, 490 U.S. 642, 651, 109 S. Ct. 2115, 104 L. Ed. 2d 733 (1989) (noting that alternative statistical proof is permissible where preferred statistical proof would be difficult or impossible to ascertain).
Schneider's conclusions are neither speculative nor conjectural. As with Tomaskovic-Devey's testimony and report, defendants may challenge Schneider's analyses through cross-examination and the admission of the testimony of their own experts. Defendants' request to exclude Schneider's testimony is denied.
c. Lundquist's Report
Finally, defendants move to exclude Lundquist's report and testimony for three reasons: (1) Lundquist's statistics are based on a small sample; (2) the sampling was not random; and (3) her conclusions are based on improperly aggregated data. (Def. Mem. at 54-55). These arguments do not require exclusion.
Lundquist and defendants' experts dispute whether sufficient data was available to create a database depicting applicant pools. (Compare Lundquist Rebut. at 2-4 (Cline improperly failed to aggregate data) with Cline Report at 20-25 (explaining her analysis of interviews)). According to Lundquist, Parks "failed to provide complete data and documentation on the selection procedures as required by Federal guidelines. The Parks Department has not produced records of all vacancies, listings of candidates for all vacancies, and was unable to identify the selected candidates for all the positions filled." (Lundquist Rebut. at 1). Further, both sides contest the appropriate method for evaluating small samples such as the interview data, and I cannot say as a matter of law that only one or the other is permissible. Both sides may challenge the methods employed by the opposing party's experts at trial; however, the conclusions are sufficiently reliable to be admissible.
In short, defendants' motion to exclude the testimony of plaintiffs' expert witnesses is denied, although the written reports themselves will not be received into evidence. Plaintiffs' experts may testify to their conclusions and will be subject to cross-examination and specific objections under the Federal Rules of Evidence. The experts will not allowed to bridge the gap between their conclusions and the ultimate question of whether Parks unlawfully discriminated; they will not be permitted to testify in an argumentative manner; *363 and they will not be permitted to opine on the credibility of fact witnesses.
B. Class Claims
Under Title VII, "pattern or practice" claims present a means by which plaintiffs may challenge systemic discrimination in the work place. Plaintiffs have brought pattern or practice disparate treatment, disparate impact, hostile work environment, and retaliation claims. Defendants move for summary judgment on these claims.
1. Disparate Treatment
a. Applicable Law
Pattern or practice disparate treatment claims involve "allegations of widespread acts of intentional discrimination against individuals." Robinson v. Metro-North Commuter R.R., 267 F.3d 147, 158 (2d Cir.2001). To prevail on a pattern or practice disparate treatment claim, whether brought individually or on behalf of a class, plaintiffs must demonstrate that intentional discrimination was the employer's "standard operating procedure." Ina Bhd. of Teamsters v. United States, 431 U.S. 324, 336, 97 S. Ct. 1843, 52 L. Ed. 2d 396 (1977) ("Teamsters "); see also Robinson, 267 F.3d at 158. Proof of random or isolated acts of discrimination will not be enough to make out such a claim. See Teamsters, 431 U.S. at 336, 97 S. Ct. 1843. Instead, plaintiffs must present sufficient evidence to meet their prima facie burden of showing that defendants had a policy, pattern, or practice of intentionally discriminating against a protected group. Robinson, 267 F.3d at 158. To meet this burden, plaintiffs typically rely on two types of evidence: "`(1) statistical evidence aimed at establishing the defendant's past treatment of the protected group, and (2) testimony from protected class members detailing specific instances of discrimination.'" Id. (quoting 1 Arthur Larson et al., Employment Discrimination § 9.03[1], at 9-18 (2d ed.2001)); see also 1 Merrick T. Rossein, Employment Discrimination Law and Litigation § 2:28, at 2-94 (2006) ("It is important always to present stories of actual discrimination against individuals to make the statistics come alive. . . . ").
For statistics to give rise to an inference of discrimination, they must be statistically significant, for disparity among protected and unprotected groups will sometimes result by chance. Ottaviani v. State Univ. of N.Y., 875 F.2d 365, 371 (2d Cir.1989). Though not dispositive, statistics demonstrating a disparity of two standard deviations outside of the norm are generally considered statistically significant. See, e.g., Smith v. Xerox Corp., 196 F.3d 358, 365-66 (2d Cir.1999) (disparate impact claim); Ottaviani, 875 F.2d at 371 (disparate treatment claim, collecting cases). "A finding of two standard deviations corresponds approximately to a one in twenty, or five percent, chance that a disparity is merely a random deviation from the norm. . . ." Ottaviani, 875 F.2d at 371. Where plaintiffs demonstrate "gross statistical disparities" between the protected and unprotected groups, statistics "alone may . . . constitute prima facie proof of a pattern or practice of discrimination." Hazelwood Sch. Dist. v. United States, 433 U.S. 299, 307-08, 97 S. Ct. 2736, 53 L. Ed. 2d 768 (1977) (citing Teamsters, 431 U.S. at 339, 97 S. Ct. 1843).
If plaintiffs meet their prima facie burden, "[t]he burden then shifts to the employer to . . . demonstrat[e] that the [plaintiffs] proof is either inaccurate or insignificant." Teamsters, 431 U.S. at 360, 97 S. Ct. 1843; see Robinson, 267 F.3d at 159. For example, a defendant might introduce evidence challenging "the source, *364 accuracy, or probative force" of the statistics offered by plaintiffs or counter plaintiffs' statistics with their own statistical evidence. Robinson, 267 F.3d at 159 (quotations and citation omitted). Consequently, the parties in pattern or practice litigation frequently engage in "the well-known phenomenon of `statistical dueling' between . . . highly-paid experts." McReynolds v. Sodexho Marriott Servs., Inc., 349 F. Supp. 2d 1, 6 (D.D.C.2004).
Though "statistics are not irrefutable," Teamsters, 431 U.S. at 340, 97 S. Ct. 1843, errors in statistical evidence do not necessarily render them meaningless. See EEOC v. Joint Apprenticeship Comm. of Joint Indus. Bd. of Elec. Indus., 186 F.3d 110, 116 (2d Cir.1999) (finding that even though EEOC's statistics were not "flawless," they were sufficient to establish prima facie case of discrimination). Whether plaintiffs' statistical analyses "carry the plaintiffs' ultimate burden will depend . . . on the factual context of each case in light of all the evidence presented by both the plaintiff[s] and the defendant[s]." Bazemore v. Friday, 478 U.S. 385, 400, 106 S. Ct. 3000, 92 L. Ed. 2d 315 (1986) (per curiam). Moreover, "statistics come in infinite variety and . . . their usefulness depends on all of the surrounding . . . circumstances." Watson v. Fort Worth Bank & Trust, 487 U.S. 977, 994 n. 3, 108 S. Ct. 2777, 101 L. Ed. 2d 827 (1988) (citation and quotation omitted).
b. Application
I apply the law first to plaintiffs' promotion and compensation claims and second to plaintiffs' segregation and underfunding claims.
i. Promotion and Compensation
From the evidence before the Court, a reasonable jury could find that defendants engaged in a pattern or practice of discriminating against African-American and Hispanic employees in promotions and compensation. That evidence includes the following:
First, plaintiffs' statistical evidence shows, as summarized above, that class members were systemically placed in lower-paying jobs, were systemically underpaid relative to similarly situated Caucasians, and experienced slower growth in pay compared to similarly situated Caucasians. For example, between 1996 and 2003, class members held roughly 85% of the positions paying less than $20,000 while holding less than 16% of the positions paying more than $50,000 and barely holding 10% of the positions paying more than $70,000.[18] Controlling for job title, class members were paid between $16.44 and $32.59 less than Caucasian members on a bi-weekly basis between 1997 and 2003statistically significant disparities. (Schneider Rebut. Table 2). Salaries of Caucasians increased, on average, at a 4% higher rate than class members' salaries again, a statistically significant level.
With respect to promotions, compared to Caucasians, there was a statistically significant lower probability that class members would receive a wage promotion. Although more than 50% of Parks' non-managerial workforce consisted of class members, *365 for the five-year period from 1996 through 2001, class members made up only 18 to 23% of the managerial workforce. Even the EEOC, the EEPC, and DOJ concluded that the statistics showed significant underrepresentation of class members in managerial and higher-paid positions.
Second, plaintiffs offer anecdotal evidence of specific instances of discrimination and retaliation in promotions and compensation. For example, Rogers earned approximately $27,000 per year when she was the Center Manager of the East 54th Street Recreation Center, while Lynda Ricciardone's salary was $35,000 per year one month after securing the Center Manager Position at the Asser Levy facility. (Pl.Dep.Ex.140). Moreover, Wright's salary was decreased when he received a promotion to Parks Recreation Manager; he therefore earned between $6,000 and $8,000 less than Caucasian Parks Recreation Managers. Even though she had been working as WEP Citywide Coordinator for several years, Loving was denied the chance to even apply for a newly created "Director of WEP" position. A Caucasian employee with less experience than she was awarded the position instead.
Third, plaintiffs have offered evidence of numerous statements by Stern and other Parks officials that demonstrate discriminatory and racially hostile attitudes on the part of decision-makers. A reasonable jury could conclude that these comments reflected a discriminatory animus.
Finally, plaintiffs have offered evidence of personnel practices at Parks that would permit discrimination to flourish. Managerial positions were routinely filled without announcement or posting. Stern had unilateral authority to determine salaries, which would then drive the assignment of civil service titles. Moreover, Stern and other senior officials would sometimes personally select employees for promotions, including for low-level positions. Parks did not have policies in place for determining which vacant positions should be posted, who would be given interviews, or how interviewees should be rated; Parks only haphazardly followed the policies and procedures that were in place.
Defendants offer several arguments in response, but defendants fail to demonstrate that no genuine issue of material fact exists for trial. For example, defendants contend that "[t]he mere absence of minority employees in upper-level positions does not suffice to prove a prima facie case of discrimination without a comparison to the relevant labor pool." (Def. Mem. at 8 (quoting Carter v. Ball, 33 F.3d 450, 456-57 (4th Cir.1994))). In this case, however, plaintiffs do not rely solely on the absence of class members in upper-level positions. Rather, they rely on other statistics, personnel practices, and anecdotal evidence as well. Though several of these statistics do not take into account factors other than race, they nevertheless provide support for plaintiffs' regression analyses and weaken defendants' challenges to those analyses. Moreover, again, many of defendants objectionsincluding their objections to Schneider's wage promotion analysisgo to weight rather than admissibility, and it will be up to the jury to decide whether to accept these criticisms.
Defendants also argue that there is nothing inherently sinister about subjective or ad hoc employment practices. Such "subjective and ad hoc" employment practices, however, bolster plaintiffs' claim that defendants discriminated against class members. Multiple courts have observed that " [g]reater possibilities for abuse . . . are inherent in subjective definitions of employment selection and promotion criteria,'" such as those in place at Parks. Davis v. Califano, 613 F.2d 957, 965 *366 (D.C.Cir.1979) (quoting Rogers v. Int'l Paper Co., 510 F.2d 1340, 1345 (8th Cir.1975)) (omission in original); accord Grant v. Bethlehem Steel Corp., 635 F.2d 1007, 1016 (2d Cir.1980) (recognizing that subjective hiring practices might mask racial bias). Indeed, plaintiffs argue that the dangers inherent in subjective employment practices are even greater at Parks because Stern was at the helm, citing Stern's alleged "racist statements, racially discriminatory acts by him and others, and his indifference to EEO matters, including his racially discriminatory justifications for Parks' failure to promote class members." (Pl. Mem. at 6). Defendants respond that plaintiffs have "embarked on a diatribe against Henry Stern" (Def. Reply at 1) and describe some of his statements as neutral or ambiguous (Def. Mem. at 34). Though Stern's various statements and actions are susceptible to multiple interpretations, a reasonable jury could conclude that he held racial, prejudices and that these prejudices influenced his treatment of Parks employees. Though certainly not determinative, evidence of Parks' personnel practices further support plaintiffs' prima facie case.
Defendants have offered meritorious criticisms of many of the statistical analyses offered by plaintiff's. Nevertheless, though plaintiffs' analyses are imperfect, the variety of analyses and the consistency of the results, decrease the risk and degree of harm of potential errors. Because material issues of fact exist as to whether Parks' intentionally discriminated in granting promotions and setting wages, defendants' motion for summary judgment with respect to plaintiffs' disparate treatment compensation and promotion claims is denied.
ii. Segregation and Underfunding
Defendants also move for summary judgment on plaintiffs' disparate treatment claims based on purported segregation in assignments and underfunding of Parks in predominantly African-American or Hispanic neighborhoods. Plaintiffs have raised fair concerns, particularly in light of admissions of Parks management officials that, on occasion, employees were placed in work locations based on race. Work assignments based on race generally run afoul of the Constitution. See Patrolmen's Benevolent Ass'n of N.Y. v. City of N.Y., 310 F.3d 43, 52 (2d Cir.2002) (upholding jury finding that police department violated Equal Protection Clause in assigning policemen to precinct based on race). Even where clients, in this case New York City residents, request that an assignment be based on race, a government employer does not have "carte blanche to dole out work assignments based on race." Patrolmen's Benevolent Ass'n, 310 F.3d at 52-53. Rather, the employer must demonstrate that the racially-based assignment was "`motivated by a truly powerful and worthy concern and that the racial measure . . . adopted is a plainly apt response to that concern.'" Id. (quoting Wittmer v. Peters, 87 F.3d 916, 918 (7th Cir.1996)). Where an agency assigns employees based on race, even if only occasionally, it gives effect to racial prejudices. Palmore v. Sidoti, 466 U.S. 429, 433, 104 S. Ct. 1879, 80 L. Ed. 2d 421 (1984) ("Private biases may be outside the reach of the law, but the law cannot, directly or indirectly, give them effect.").
Despite these concerns, the motion to dismiss the segregation claim is granted because plaintiffs have failed to present sufficient evidence that it was Parks' standard operating procedure to make assignments based on race. Plaintiffs have relied primarily on anecdotal evidencetestimony of class members who note that in their experience assignments *367 are based on race, and that park crews correspond to the ethnicity of the neighborhoods in which the parks were located. But plaintiffs have not presented sufficient statistical evidence to support their claim, as the only statistics offered in this respect are the flawed statistics of Schneider based on the mistaken belief that employees worked in the zip codes used in his analysis when they did not. Nor have plaintiffs offered any evidence to show that, even assuming there are statistical disparities, the disparities resulted from a practice or policy of assigning employees based on race.
Likewise, plaintiffs' underfunding claim primarily relies on the testimony of class members that parks in African-American and Hispanic neighborhoods were in worse condition and received repairs and new equipment less frequently than parks in Caucasian neighborhoods. This conclusory testimony, however, is not supported by concrete particulars, or by any statistical analysis. Plaintiffs have not presented sufficient evidence to demonstrate that Parks had a policy, pattern, or practice of underfunding parks in predominantly African-American or Hispanic neighborhoods. Accordingly, defendants' motion is granted in this respect.
2. Disparate Impact
Plaintiffs also allege that Parks' policy regarding the posting of positions and the application and interview process disparately impacted class members. Defendants move for summary judgment as to this claim.
a. Applicable Law
Title VII prohibits not only overt and intentional discrimination, but also facially neutral practices that have a disparate impact on protected groups. Malave v. Potter, 320 F.3d 321, 325 (2d Cir.2003); Smith v. Xerox Corp., 196 F.3d 358, 364 (2d Cir.1999) ("[D]isparate impact theory targets practices that are fair in form, but discriminatory in operation.") (citation and internal quotation marks omitted). Thus, disparate impact claims offer a means to erase "employment obstacles, not required by business necessity, which create built-in headwinds and freeze out protected groups from job opportunities and advancement." Robinson v. Metro-North Commuter R.R., 267 F.3d 147, 160 (2d Cir.2001) (quoting EEOC v. Joe's Stone Crab, Inc., 220 F.3d 1263, 1274 (11th Cir.2000)).
To meet their prima facie burden in a disparate impact case, plaintiffs must demonstrate that the employer "uses a particular employment practice that causes a disparate impact on the basis of race, color, religion, sex, or national origin." 42 U.S.C. § 2000e-2(k)(1)(A)(I). Specifically, plaintiffs "must (1) identify a policy or practice, (2) demonstrate that a disparity exists, and (3) establish a causal relationship between the two." Robinson, 267 F.3d at 160; see also Gulino v. New York State Educ. Dep't, 460 F.3d 361, 382 (2d Cir.2006). In identifying a specific employment practice, plaintiffs must do more "than rely on bottom line numbers in an employer's workforce." Smith, 196 F.3d at 365. Rather, plaintiffs must demonstrate a statistical disparity "`sufficient to show that the practice in question has caused the exclusion of applicants for jobs or promotions because of their membership in a protected group.'" Id. (quoting Watson v. Fort Worth Bank & Trust, 487 U.S. 977, 994, 108 S. Ct. 2777, 101 L. Ed. 2d 827 (1988)). As in pattern or practice disparate treatment cases, statistics must be statistically significant to give rise to an inference of causation. Id. Statistical results cannot be "persuasive," however, "absent a close fit between the population used to measure disparate impact and the *368 population of those qualified for a benefit." Carpenter v. Boeing Co., 456 F.3d 1183, 1197 (10th Cir.2006)
In disparate impact cases, parties frequently disagree on the proper populations or markets to be compared in statistical analyses. For cases involving allegations of discriminatory hiring, the relevant comparison is "between the racial composition of [the at-issue jobs] and the racial composition of the qualified . . . population in the relevant labor market." Malave, 320 F.3d at 326 (quoting Wards Cove Packing Co. v. Atonio, 490 U.S. 642, 650-51, 109 S. Ct. 2115, 104 L. Ed. 2d 733 (1989)) (alterations in original). In contrast, for cases alleging discrimination in promotions, the relevant comparison "is customarily between the composition of candidates seeking to be promoted and the composition of those actually promoted." Id. Despite these principles, the Supreme Court has clarified that alternative comparisons may be appropriate where such statistics "will be difficult if not impossible to ascertain." Wards Cove, 490 U.S. at 651, 109 S. Ct. 2115.
b. Application
i. Plaintiffs' Prima Facie Case
Plaintiffs have identified policies and practices that they contend are discriminatory; they allege that class members have been adversely impacted by Parks' failure to regularly post and interview for vacancies and Parks' interview procedures. Plaintiffs further allege that class members have been adversely impacted by the "Class Of" Program.
Plaintiffs have also presented evidence of statistically significant disparities between class members and non-class members with respect to promotions, compensation, and the "Class Of" Program, as discussed above. The numbers are stark, as there are far lower percentages of class members in the higher-paid positions than there are in the lower-paid positions. Class members received statistically significant lower interview scores than Caucasians. Notably, the level of disparity dramatically increased after the time period in which this lawsuit was filed. (Lundquist Report at 13).
Plaintiffs have also presented evidence of a causal connection between the policies and practices in question and the statistical disparities. First, plaintiffs' statistics are statistically significant and therefore give rise to an inference of causation. See Smith, 196 F.3d at 365.
Second, Parks failed to examine the validity of its interview process or its minimum requirements for jobs. (Lundquist Report at 16-32). The Uniform Federal Guidelines provide that "an inference of adverse impact of the selection process" may be drawn where an employer fails to maintain data on adverse impact where an employer "has an underutilization of a group in the job category, as compared to the group's representation in . . . the applicable work force." (Id. at 6 (quoting Uniform Guidelines, Section 4D, p. 38298)). Here, Parks repeatedly indicated an awareness of underutilization of class members in certain job categories in its annual reports to the EEPC, and yet failed to maintain data.
Third, as numerous Parks officials acknowledged, Parks did not regularly post available positions. With the exception of Beach, all of the named plaintiffs identified positions for which they would have applied had they been posted. Further, Parks officials conceded that it did not have any policies regarding when interviews should be conducted or how interviewees' scores should be evaluated.
As Tomaskovic-Devey concluded, Parks' subjective personnel practices could "allow *369 decisions to be made in an arbitrary and racially biased manner" and were "ideally suited to produce and tolerate racial discrimination in employment, promotion, and job assignment." (T-D Report at 25-26). A reasonable jury could accept these conclusions and find that plaintiffs have met their prima facie burden of demonstrating that Parks' subjective employment practices adversely impacted class members.
ii. Defendants' Contentions
Defendants move for summary judgment on this claim because: (1) it was not included in the named plaintiffs' EEOC charges; (2) it is not truly a disparate impact claim; and (3) plaintiffs have failed to make the requisite statistical showing of disparate impact. (Def. Mem. at 49-50).
Defendants' first argument fails. Though federal courts generally do not have jurisdiction over claims not alleged in an EEOC charge, it is well settled that there is jurisdiction where a claim is "reasonably related" to the EEOC charges. See Brown v. Coach Stores, Inc., 163 F.3d 706, 712 (2d Cir.1998). Here, the disparate impact claim is clearly reasonably related to the EEOC charges, for Parks' promotion policies "`would fall within the scope of the EEOC investigation . . . of the charge that was made.'" Williams v. N.Y.C. Housing Auth., 458 F.3d 67, 70 (2d Cir.2006) (per curiam) (quoting Fitzgerald v. Henderson, 251 F.3d 345, 359-60 (2d Cir.2001) (internal quotation marks omitted)).
Defendants' next argument that the disparate impact claim alleges that defendants acted with discriminatory intent and, therefore, they have not identified a facially neutral policy or practice (Def. Mem. at 52)also fails. First, disparate impact and disparate treatment theories are "simply alternative doctrinal premises for a statutory violation," Maresco v. Evans Chemetics, Div. of W.R. Grace & Co., 964 F.2d 106, 115 (2d Cir.1992), and "[e]ither theory may . . . be applied to a particular set of facts," Teamsters, 431 U.S. 324, 335 n. 15, 97 S. Ct. 1843, 52 L. Ed. 2d 396 (1977). There is nothing inconsistent in acting with intent to discriminate while adopting a facially neutral policy that has a disparate impact; the two are not mutually exclusive.
Second, defendants' argument misconstrues the facially neutral practice alleged by plaintiffs. Plaintiffs' disparate impact claim focuses on Parks' subjective promotion practices, the type of practice that the Supreme Court has held can give rise to a disparate impact claim. Watson, 487 U.S. at 990-91, 108 S. Ct. 2777. These practicesfailing to post, failing to interview, the interview procedures used by Parks, and the "Class Of" Programare not discriminatory on their face, for they apply regardless of an employee's race. As these subjective practices were employed, however, plaintiffs allegeand a reasonable jury could conclude based on the statistical and other evidencethat class members were disparately impacted.
Finally, defendants challenge plaintiffs' disparate impact statistics. For the reasons stated in the discussions of the experts' reports and the disparate treatment claims above, defendants' objections are overruled. This prong of defendants' motion is denied.
3. Hostile Work Environment
a. Applicable Law
"[W]hen the workplace is permeated with discriminatory intimidation, ridicule, and insult, that is sufficiently severe or pervasive to alter the conditions of the victim's employment and create an abusive working environment, Title VII is violated." National R.R. Passenger Corp. *370 v. Morgan, 536 U.S. 101, 116, 122 S. Ct. 2061, 153 L. Ed. 2d 106 (2002) (quoting Harris v. Forklift Sys., Inc., 510 U.S. 17, 21, 114 S. Ct. 367, 126 L. Ed. 2d 295 (1993)) (internal quotation marks omitted); see also Schiano v. Quality Payroll Sys., Inc., 445 F.3d 597, 604 (2d Cir.2006).[19] In the context of individual hostile work environment claims, it is well settled that for a plaintiff to recover, her working environment "must be both objectively and subjectively offensive, one that a reasonable person would find hostile or abusive, and one that the victim in fact did perceive to be so." Faragher v. City of Boca Raton, 524 U.S. 775, 787, 118 S. Ct. 2275, 141 L. Ed. 2d 662 (1998) (citing Harris, 510 U.S. at 21-22, 114 S. Ct. 367). Where plaintiffs allege a pattern or practice of a hostile work environment, however, the legal standards become murkier. Though neither the Supreme Court nor the Second Circuit has clarified the requirements plaintiffs must meet to satisfy their prima facie burden in a pattern or practice hostile work environment action,[20] several district court opinions provide guidance.
In EEOC v. Mitsubishi Motor Manufacturing of America, Inc., 990 F. Supp. 1059 (C.D.Ill.1998), plaintiffs alleged that defendants engaged in a pattern or practice of sexual harassment. Defendant moved for summary judgment, arguing that, because hostile work environment claims require proof that conduct was subjectively offensive, they are inconsistent with the pattern or practice framework. The district court rejected defendants' argument, concluding that it did "not need to make a great leap of faith to state the obvious: Title VII authorizes a pattern or practice action for sexual harassment." Id. at 1070.
Next, the court turned to how such a claim should be proven. Adopting the two-stage liability process used in pattern or practice disparate treatment and disparate impact claims, the court found that at the liability stage, plaintiffs must demonstrate, "by a preponderance of the evidence, that an objectively reasonable person would find the existence of: (1) a hostile environment of sexual [or racial] harassment within the company (a hostile environment pattern or practice) . . .; and (2) a company policy of tolerating (and therefore condoning and/or fostering) a workforce permeated with severe and pervasive sexual [or racial] harassment." Mitsubishi, 990 F.Supp. at 1073. Multiple district courts have since adopted this two-pronged standard in evaluating claims for sexual or racial hostile work environment pattern or practice claims. See, e.g., Employees Committed for Justice v. Eastman Kodak Co., 407 F. Supp. 2d 423, 430 (W.D.N.Y.2005) ("Rather, the issue under the pattern or practice framework is whether there was a systemic culture of harassment and whether it was `standard operating procedure' to permit such conduct without consequences or discipline to those responsible."); EEOC v. Dial Corp., 156 F. Supp. 2d 926 (N.D.Ill.2001) (denying summary judgment for defendants on pattern *371 or practice hostile work environment claim, concluding that triable issue of fact existed as to whether a reasonable person would find the working environment at issue severely or pervasively hostile).
As to whether a hostile work environment existed under the first prong, summary judgment will only be appropriate "if it can `be concluded as a matter of law that no rational juror could view [the alleged conduct] as . . . an intolerable alteration of . . . working conditions.'" Holtz v. Rockefeller & Co., Inc., 258 F.3d 62, 75 (2d Cir.2001). Sporadic or episodic instances of harassment will generally not be sufficient to survive summary judgment on a claim of hostile work environment harassment; "Mather, the [employee] must demonstrate either that a single incident was extraordinarily severe, or that a series of incidents were `sufficiently continuous and concerted' to have altered the conditions of [the] . . . working environment." Cruz v. Coach Stores, Inc., 202 F.3d 560, 570 (2d Cir.2000) (quoting Perry v. Ethan Allen, Inc., 115 F.3d 143, 149 (2d Cir.1997)). Factors to be considered in evaluating whether a work environment is sufficiently hostile include "the `frequency of the discriminatory conduct; its severity; whether it is physically threatening or humiliating, or a mere offensive utterance; and whether it unreasonably interferes with an employee's work performance.'" Holtz, 258 F.3d at 75 (quoting Faragher, 524 U.S. at 787-88, 118 S. Ct. 2275). Though these standards have been articulated in the context of individual hostile work environment claims, they are equally useful in determining whether a work environment was sufficiently hostile for a pattern or practice claim.
The totality of the circumstances must be considered, for a hostile work environment "occurs over a series of days or perhaps years and . . . a single act of harassment may not be actionable on its own. Such claims are based on the cumulative effect of individual acts." Morgan, 536 U.S. at 115, 122 S. Ct. 2061; see also Mitsubishi, 990 F.Supp. at 1073 (trier of fact must consider totality of circumstances); Jenson v. Eveleth Taconite Co., 824 F. Supp. 847, 885 (D.Minn.1993) (factfinder should consider that "each successive episode has its predecessors, that the impact of the separate incidents may accumulate, and that the work environment . . . created may exceed the sum of the individual episodes"). In the context of pattern or practice cases, the focus is on the "the landscape of the total work environment, rather than the subjective experiences of each individual claimant." Mitsubishi, 990 F.Supp. at 1074.[21]
Even where a hostile work environment exists, plaintiffs must demonstrate a specific basis for imputing liability to the employer. In individual actions, an employer is not liable if it demonstrates that (1) it took reasonable steps to prevent and to promptly remedy harassing conduct, and (2) the harassed employee unreasonably failed to avail herself of any corrective or preventive opportunities made available by the employer. See Burlington Indus., Inc. v. Ellerth, 524 U.S. 742, 760-61, 118 S. Ct. 2257, 141 L. Ed. 2d 633 (1998); Faragher, 524 U.S. at 807, 118 S. Ct. 2275. In a pattern or practice case, plaintiffs must demonstrate that the company had notice of the hostile work environment and was negligent in its response to the environment. Mitsubishi, 990 F.Supp. at 1074. "When harassing behavior *372 occurs frequently enough and is both common and continuous, a company can reasonably be said to be on `notice' of a severe and pervasive problem of . . . harassment that constitutes a hostile environment." Id. (citing Robinson v. Jacksonville Shipyards, Inc., 760 F. Supp. 1486, 1531 (M.D.Fla.1991) ("an employer incurs liability when harassing behavior happens frequently enough that the employer can take steps to halt it")). To demonstrate negligence, plaintiffs must show that the employer knew or should have known that the work environment was hostile and nevertheless failed to take steps to correct the problem on an agency-wide basis. Id. at 1075.
b. Application
Although plaintiffs have offered evidence of sporadic or episodic incidents of discriminatory conduct, they have not presented evidence from which a reasonable jury could find a systemic culture of harassment or that racial harassment was standard operating procedure at Parks. On the record before the Court, no reasonable jury could find that Parks was permeated with discriminatory conduct of a severe or pervasive nature, sufficient to alter the conditions of employment on a classwide basis.
Parks was spread out over the five boroughs, with employees working in more than 4,000 locations. Though plaintiffs have offered evidence of offensive statements made by Stern and others, this evidence is insufficient to show that racial harassment was standard operating procedure at Parks. The statements were spread out over a period of time and many were made in private. In fact, several of the named plaintiffs denied being subjected to a hostile work environment.[22]
It would be mere speculation for a jury to conclude that a significant number of class members were subjected to severe or pervasive conduct or that the conditions of employment for a significant number of class members were altered, both subjectively and objectively.
4. Pattern or Practice Retaliation
a. Applicable Law
Title VII prohibits an employer from subjecting an employee to adverse consequences "because he has opposed any practice made an unlawful employment practice . . . or because he has made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under this subchapter." 42 U.S.C. § 2000e-3(a). Thus, Title VII has two different clauses that each protect a different type of activity; the "opposition clause" protects an employee's opposition to an unlawful employment practice, while the "participation clause" protects participation in a proceeding under Title VII. See Deravin v. Kerik, 335 F.3d 195, 203 n. 6 (2d Cir.2003). Further, "Title VII is violated when `a retaliatory motive plays a part in adverse . . . actions toward an employee, whether or not it was the sole cause.'" Terry v. Ashcroft, 336 F.3d 128, 140-41 (2d Cir.2003) (internal citations omitted).
On a motion for summary judgment, a plaintiff must first demonstrate that "[he] was engaged in protected activity . . . [and that] the employer was *373 aware of that activity." Distasio v. Perkin Elmer Corp., 157 F.3d 55, 66 (2d Cir.1998); see also Reed v. A.W. Lawrence & Co., 95 F.3d 1170, 1178 (2d Cir.1996). The term "protected activity" refers to action taken to protest or oppose statutorily prohibited discrimination. See 42 U.S.C. § 2000e-3; see also Wimmer v. Suffolk County Police Dep't, 176 F.3d 125, 134-35 (2d Cir.1999). Informal as well as formal complaints constitute protected activity. Sumner v. United States Postal Serv., 899 F.2d 203, 209 (2d Cir.1990). Moreover, to establish that his activity is protected, a plaintiff "need not prove the merit of his underlying discrimination complaint, but only that he was acting under a good faith, reasonable belief that a violation existed." Id.; see also Grant v. Hazelett Strip-Casting Corp., 880 F.2d 1564, 1569 (2d Cir.1989).
Next, as the Supreme Court recently clarified, a plaintiff must demonstrate that he was subject to an action "that a reasonable employee would have found . . . materially adverse, `which in this context means it well might have dissuaded a reasonable worker from making or supporting a charge of discrimination.'" Burlington N. & Santa Fe Ry. v. White, ___ U.S. ___, ___ - ___, 126 S. Ct. 2405, 2414-15, 165 L. Ed. 2d 345 (2006) (quoting Rochon v. Gonzales, 438'F.3d 1211, 1219 (D.C.Cir.2006)) (quotation omitted). Thus, the category of challenged actions that might be considered retaliatory is broader than "adverse employment actions" or "ultimate employment decisions," for the scope of Title VII's "anti-retaliation provision extends beyond [the] workplace-related or employment-related retaliatory acts and harm" prohibited by Title VII's antidiscrimination provision. Id.
An adverse action is not defined "solely in terms of job termination or reduced wages and benefits[.] . . . [L]ess flagrant reprisals by employers may indeed be adverse." Wanamaker v. Columbian Rope Co., 108 F.3d 462, 466 (2d Cir.1997). At the same time, however, "`not every unpleasant matter short of [discharge or demotion] creates a cause of action' for retaliat[ion]." Id. (quoting Welsh v. Derwinski, 14 F.3d 85, 86 (1st Cir.1994)); see also Burlington N. & Santa Fe Ry., ___ U.S. ___, ___ - ___, 126 S. Ct. 2405, 2414-15, 165 L. Ed. 2d 345 (noting that petty slights and minor annoyances will not suffice). Whether a particular action is considered retaliatory will "often depend on the particular circumstances," for "[c]ontext matters." Burlington N. & Santa Fe Ry., ___ U.S. ___, ___ - ___, 126 S. Ct. 2405, 2415-16, 165 L. Ed. 2d 345. Courts must examine closely "each case to determine whether the challenged employment action reaches the level of `adverse,'" Wanamaker, 108 F.3d at 466, for an action that makes little difference to one employee may be materially adverse to another employee, Burlington N. & Santa Fe Ry., ___ U.S. ___, 126 S. Ct. 2405, 2415-16, 165 L. Ed. 2d 345.
Finally, a plaintiff must show that "there was a causal connection between the protected activity" and the allegedly retaliatory action. Distasio v. Perkin Elmer Corp., 157 F.3d 55, 66 (2d Cir. 1998). A plaintiff may prove causation either "(1) indirectly, by showing that the protected activity was followed closely by discriminatory treatment, or . . . (2) directly, through evidence of retaliatory animus directed against the plaintiff by the defendant." Gordon v. N.Y. City Bd. of Educ., 232 F.3d 111, 117 (2d Cir.2000); see also Cosgrove v. Sears, Roebuck & Co., 9 F.3d 1033, 1039 (2d Cir.1993). Although the burden that a plaintiff must meet to establish a prima facie case at the summary judgment stage is de minimis, the plaintiff must at least proffer competent evidence of circumstances that would be sufficient *374 to permit a rational finder of fact to infer a retaliatory motive. See Cronin v. Aetna Life Ins., 46 F.3d 196, 203-04 (2d Cir. 1995).
Here, plaintiffs allege that Parks engaged in a pattern or practice of retaliating against employees who engaged in protected activity. Accordingly, plaintiffs must demonstrate that retaliation in response to protected activity was Parks' standard operating procedure. Teamsters, 431 U.S. 324, 336, 97 S. Ct. 1843, 52 L. Ed. 2d 396 (1977).
b. Application
Plaintiffs have presented evidence from which a reasonable jury could find that Parks engaged in a pattern or practice of retaliating against employees who engaged in protected activity.
First, class members engaged in protected activity of which defendants were aware both informally by complaining to supervisors and more formally by filing charges or complaints of discrimination with the Parks' EEO office or the EEOC as well as by filing this lawsuit.
Second, a reasonable jury could find that class members were subjected to adverse, material consequences, including, for example, the following:
Walter Beach, the Chief of Recreation in Brooklyn until May 1999, was asked by the Brooklyn Commissioner to resign after Beach wrote memoranda in August 1998 and March 1999 expressing concern over Parks' treatment of class members and several named plaintiffs filed charges with the EEOC. (Beach 4/3/03 Dep. at 84-89).
Jacqueline Brown received a negative performance evaluation after she complained to the EEO officer of discriminatory treatment; the evaluation referred to her complaints. (Brown 1/30/03 Dep. at 140-41).
Angelo Colon received warnings and a downgraded performance evaluation after he filed discrimination charges with the EEOC. (Ex. G00462-63, G00403; Colon 4/17/03 Dep. at 268-70). In 2001 and 2002, Colon's supervisor repeatedly conditioned salary increases on the termination of this lawsuit. (Colon 9/9/02 Dep. at 7-8; Colon 4/17/03 Dep. at 28-35).
After she complained about being denied a position, Odessa Portlette was assigned to work in the basement for six months. (Portlette 2/12/03 Dep. at 117-19).
Kathleen Walker was also moved to a basement office after she filed charges with the EEOC. (Walker Dep. 9/17/02 Dep. at 100-02).
Third, a reasonable jury could also find a causal connection between the adverse actions and the protected activity. Plaintiffs have offered, for example, direct evidence of causation, as some supervisors explicitly offered raises, promotions, or desired transfers in return for the dropping of claims of discrimination. Plaintiffs have offered evidence directly showing retaliatory animus: Jacqueline Brown was told by Webster that complaining was frowned upon by Parks and Benepe asked Wright not to file this lawsuit. Plaintiffs have also offered circumstantial evidence of causation, including, for example, the timing of adverse actions shortly after a class member engaged in protected activity.
Finally, the record also contains evidence that retaliation occurred on an agency-wide basis. Between 1995 and 2003, for example, some thirty Parks employees filed retaliation complaints with outside agencies. Seven of the named plaintiffs have offered specific evidence of retaliation against them. Moreover, the record contains evidence of lack of receptiveness to discrimination complaints, not just from *375 individual Parks supervisors, but an attitude flowing from the top down. The EEPC also found a number of flaws in Parks' EEO complaint processing procedures.
This prong of the motion is denied.
C. Individual Claims
1. Teamsters Presumption versus McDonnell Douglas Burden Shifting
Where a trier of fact concludes that an employer engaged in a pattern or practice of discrimination, individual class members are entitled to a presumption "that any particular employment decision, during the period in which the discriminatory policy was in force, was made in pursuit of that policy." Teamsters, 431 U.S. at 362, 97 S. Ct. 1843. A class member therefore need only show that she was subjected to an adverse employment decision. Robinson v. Metro-North Commuter R.R., 267 F.3d 147, 159 (2d Cir.2001). The employer may then rebut this presumption by offering admissible evidence from which a jury could conclude that the employment decision was made for lawful reasons. Id. at 159-60; see also Ghosh v. N.Y. City Dep't of Health, 413 F. Supp. 2d 322, 335-36 (S.D.N.Y.2006) (holding that defendants did not meet burden of articulating non-discriminatory reason for employment decision where they did not submit admissible evidence to support their articulation) (citing Mandell v. County of Suffolk, 316 F.3d 368, 380 (2d Cir.2003)).
The Teamsters presumption generally arises in the context of determining the parties' burdens at trial rather than on summary judgment. Nevertheless, defendants have conceded that, for the purposes of summary judgment only, the individual plaintiffs' claims are entitled to the Teamsters presumption should the class claims survive summary judgment. (Def. Opp. to Mot. to Bifurcate at 7). Hence, because I have found that material issues of fact exist with respect to the pattern or practice disparate treatment, disparate impact, and retaliation claims, plaintiffs receive the benefit of the Teamsters presumption as to their individual compensation, promotion, and retaliation claims.
2. Compensation
Defendants move for summary judgment dismissing the compensation claims of Jacqueline Brown, Angelo Colon, Paula Loving, Odessa Portlette, Elizabeth Rogers, Henry Roman, Kathleen Walker, and Robert Wright.
To survive a motion for summary judgment on the compensation claims under the Teamsters presumption, each plaintiff must first present evidence from which a reasonable jury could find that she was subjected to an adverse employment decision, i.e., that defendants failed to compensate her equally. Specifically, a plaintiff must demonstrate that she was paid less than a member of a non-protected group for work requiring substantially the same responsibility. See Belfi v. Prendergast, 191 F.3d 129, 139 (2d Cir.1999); Wright v. Milton Paper Co., No. 99 Civ. 5724(SJ), 2002 WL 482536, at *8 (E.D.N.Y. Mar. 26, 2002). A plaintiff need not demonstrate that two positions are identical; rather, it is sufficient to show that the positions are substantially equivalent. Tomka v. Seiler Corp., 66 F.3d 1295, 1310 (2d Cir.1995).
If the plaintiff meets this minimal burden, defendants must then offer admissible "evidence that a legitimate nondiscriminatory reason existed" for the employment decision. Robinson, 267 F.3d at 162. The employer's asserted nondiscriminatory reason is "subject to further evidence *376 by the [plaintiff] that the purported reason for . . . [the adverse employment decision] was in fact a pretext for unlawful discrimination." Teamsters, 431 U.S. at 362 n. 50, 97 S. Ct. 1843 (citing McDonnell Douglas Corp. v. Green, 411 U.S. 792, 804-06, 93 S. Ct. 1817, 36 L. Ed. 2d 668 (1973)).
For most of plaintiffs' compensation claims, the analysis turns on whether plaintiffs have identified an appropriate comparator. Whether positions are "substantially equivalent" is usually a question of fact for the jury. Lavin-McEleney v. Marist Coll., 239 F.3d 476, 480 (2d Cir. 2001) (equal pay claim); see also Tomka, 66 F.3d at 1312 ("A claim of unequal pay for equal work under Title VII . . . is generally analyzed under the same standards used in an EPA claim.").
Defendants' motion for summary judgment dismissing the individual compensation claims is denied, for each of the individual plaintiffs in question has presented sufficient evidence to raise a genuine issue of material fact for trial. Jacqueline Brown, for example, received only one discretionary pay increasea $3,000 raise in 1988in more than twenty years at Parks, while arguably comparably situated Caucasian employees received more discretionary pay increases. (Brown 8/28/02 Dep. at 66; Def. Exs. 41, 79; Pl. Mem. at 118). Angelo Colon, a Center Manager, points to at least four Caucasian Center Managers who received higher salaries than he did from May 1977 through October 2000. (See Pl. Mem. at 114; Compl. ¶ 122). A reasonable jury could conclude that Odessa Portlette was similarly situated to Brian Clark and Sarah Horowitz, Caucasian employees who were paid more than Portlette. (Pl. Mem. at 103; Portlette 8/26/02 Dep. at 18-19; Portlette 2/12/03 Dep. at 17-18; XXXXXX-XX). Elizabeth Rogers earned $27,148 as Recreation Director of Thomas Jefferson Recreation Center, while non-class member Thomas Medich earned $32,985 as the Recreation Director of the Carmine Street Center. (Def.Ex.41). Though Rogers has earned $27,962 since 1999, her Caucasian replacement as Recreation Director of the 54th Street Center, Christopher Miller, earned $31,314 shortly after taking over the position. (Id.; Pl. Mem. at 99).
Some of the purported comparators relied on by plaintiffs are not similarly situated, as a matter of law, but I do not take the time now to discuss each purported comparator. Plaintiffs will not be permitted at trial to put into issue an unreasonable number of comparators. The Court will set a limit, and defendants may also move in limine to narrow the number of comparators plaintiffs may put into issue at trial.
3. Promotion Claims
With the exception of Robert Wright and Elizabeth Rogers, defendants move for summary judgment on plaintiffs' promotion claims.
To survive summary judgment on their failure to promote claims under the Teamsters presumption, each plaintiff must first demonstrate evidence from which a reasonable jury could find that he or she was subjected to an adverse employment decision, i.e., that defendants failed to promote him or her, during the relevant time period. Where a position was posted, the plaintiff must therefore demonstrate that he applied for that position but was rejected. Where a position was not posted, the plaintiff must demonstrate either that he would have applied for the position had he known of its availability or that he did apply through the employer's informal processes and was rejected. See Petrosino v. Bell Atl., 385 F.3d 210, 227 (2d Cir.2004); Mauro v. S. *377 New Eng. Telecomms., Inc., 208 F.3d 384, 387 (2d Cir.2000) (per curiam). Defendants may then offer evidence demonstrating a legitimate, non-discriminatory reason for the employment decision, which the plaintiffs may argue is pre-textual.
Defendants' motion is also denied to the extent it seeks dismissal of the individual promotion claims. With the backdrop of the statistical, anecdotal, and other evidence that supports the pattern and practice claims, the individual plaintiffs have presented sufficient additional evidence to meet the minimal Teamsters burden. All of the individual plaintiffs have identified positions for which they were qualified, and for which they were rejected or of which they were not aware because of Parks' failure to post them. Issues of fact exist as to whether the explanations offered by defendants were pretextual. Some examples are illustrative:
Carrie Anderson testified that she submitted an application for the position of Parks Recreation Manager to Chief of Operations Dorothy Lewandowski and identified, the job posting to which she responded. (Anderson 9/5/02 Dep. at 63-64; Anderson 1/09/03 Dep. at 168-69; Ex. P00029). She did not receive this promotion. Likewise, Anderson produced evidence that she applied for a PPS position but was also denied. (Anderson 9/5/02 Dep. at 96-97; D00705-706). Thus, Anderson has demonstrated that she was subject to adverse employment decisions with respect to these positions. Defendants have not offered any non-discriminatory explanation for the failures to promote. Indeed, defendants do not contest that Anderson was qualified, instead arguing that Anderson did not apply for these positions or that these positions did not exist. (Def. Mem. at 79). But these are factual arguments to be made to the jury.
Jacqueline Brown asserts that she was denied promotions to the posted positions of Queens Deputy Chief of Recreation in 1999 and Deputy Chief of Operations in 2001 and to the unposted or improperly posted positions of Director of Central Recreation, Director of Urban Parks Rangers, Assistant to the Commissioner, Parks Administrator, Chief of Operations, PRM, and Chief of Recreation. Defendants have not addressed Brown's claims as to the unposted or not properly posted positions.
Paula Loving's supervisor testified that Loving was smart, ambitious, reliable, a good communicator, and a very good worker. Indeed, he nominated her for and she was awarded the January 1997 employee of the month award, because she had coordinated the WEP Program, which had grown from 250 participants to more than 4,000 participants, supervised the WEP coordinators in all five boroughs, acted as a liaison with HRA, and produced reports documenting the program's growth. (Pl.Dep.Ex.95A). Loving had worked as Citywide WEP Coordinator for four years when Parks created a Director of WEP Operations position in 1997. Leimas, who had been working on a WEP-related matters for less than one year, was awarded the position. Because the position was not posted, Loving could not even apply for the new position. When Leimas left Parks one year later, Parks appointed Feldersteina 1997 college graduate who had worked at Parks for less than one yearwithout posting the position. As to both positions, a reasonable jury could certainly conclude that defendants' explanations for these decisions are pretextual, for Loving had significantly more experience performing substantially the same responsibility.
Robert Wright received a decrease in salary from $55,433 to $49,920 when he *378 received a promotion to Park Recreation Manager. (Def. Resp. Pl. RFA # 697). In contrast, similarly situated Caucasians received raises upon their promotions. As a result, Wright was paid between six and eight thousand dollars less annually than Caucasian PRMs. (RW St. ¶¶ 144-49; compare R10383 and R20011). Defendants have not offered a non-discriminatory explanation for Wright's treatment.
Again, defendants have asserted fair arguments as to a number of the positions put into issue by plaintiffs. I do not take the time to review all the positions now, for plaintiffs will not be permitted to put a limitless number of positions into issue at trial. Rather, each plaintiff will be limited to a reasonable number of positions, drawn from positions that were the subject of discovery, which will have to be identified in advance of trial.
4. Retaliation
The legal standards applicable to retaliation claims are set forth above. The individual plaintiffs asserting retaliation claims have submitted evidence from which a reasonable jury could find all three elements: (1) plaintiffs engaged in protected activity of which defendants were aware; (2) plaintiffs were subjected to materially adverse consequences; and (3) the existence of a causal connection between the protected activity and the allegedly retaliatory action.
Each of the plaintiffs in question engaged in protected activity. For example, Brown sent a letter to Webster complaining of discriminatory treatment by her supervisor. Brown, Colon, Roman, and Walker filed EEOC charges. Portlette complained to Cafaro about a denial of a promotion. Wright wrote letters raising concerns about discrimination.
Each of the plaintiffs in question was subjected to material adverse employment actionsor at least a reasonable jury could so find. Some were given negative evaluations. Some were denied promotions or raises or transfers. Some were disciplined. Two were allegedly banished to working in basements. A reasonable jury could find that these actions "`well might have dissuaded a reasonable worker from making or supporting a charge of discrimination.'" Burlington N. & Santa Fe Ry. v. White, ___ U.S. ___, ___ - ___, 126 S. Ct. 2405, 2414-15, 165 L. Ed. 2d 345 (2006) (quoting Rochon v. Gonzales, 438 F.3d 1211, 1219 (D.C.Cir.2006)).
A reasonable jury could also find, with respect to each plaintiff in question, a causal connection between the protected activity and the material adverse actions. The direct and circumstantial evidence in support of such a conclusion is discussed above, and includes, for example: Webster's comments to Brown that complaints were frowned upon; the timing and sequence of events; the conditioning of salary increases or transfers on the dropping of claims; the arguably vindictive nature of some of the actions taken after complaints were made; and the apparent general unreceptiveness of Parks to the filing of discrimination complaints. Again, here plaintiffs are also assisted by the Teamsters presumption.
Defendants' motion is denied in this respect as well.
CONCLUSION
For the foregoing reasons, defendants' motion for summary judgment is granted in part and denied in part. Plaintiffs' claims of (i) discriminatory assignment of employees and allocation of funding and (ii) a racial hostile work environment are dismissed; their remaining c:aims survive. The request to preclude plaintiffs' experts from testifying is denied, to the extent set *379 forth above. A pretrial conference will be held on October 13, 2006, at 2:00 p.m.
SO ORDERED.
NOTES
[1] As discussed in the decision certifying the class, plaintiffs inexplicably refer to non-class members as "Caucasian" even though this group includes Asian Americans, Native Americans, and others who do not identify themselves as White. See Wright v. Stern, No. 01 Civ. 4437(DC), 2003 WL 21543539, at *1 n. 1 (S.D.N.Y. July 9, 2003). In contrast, Stephen Schneider, plaintiffs' expert, uses "Caucasian" to refer to White employees. (See, e.g., Schneider Report at 10 n. 13). As the class is now certified, I refer to employees who are not African-American or Hispanic collectively as "non-class members." Where I use the term "Caucasian," I am referring to White employees.
[2] References to "Compl." are to the Third Amended Complaint and Supplemental Class Action Complaint, filed on August 4, 2005.
[3] Under Department of Citywide Administrative Services rules, provisional appointments are limited to nine months. According to David Stark, the Chief Fiscal Officer of Parks, all city agencies ignore this rule because "if anyone upheld that rule, twenty-six thousand people would be terminated in the city." (Stark Dep. at 332-33).
[4] After a lawsuit was filed in New York Supreme Court alleging that Parks unlawfully employed employees in provisional positions beyond the eleven-month cap, the positions of Principal Park Supervisors and Park Supervisors were merged into the title Supervisor of Parks Maintenance and Operations. A Civil Service test was conducted for this position. The majority of those who passed the test were non-class members. (Def.Resp.Pl.RFA ## 260-61, 270).
[5] While the numbers varied slightly from year to year, the numbers for 2000the year before this suit was filedare representative.
[6] A wage promotion occurs when an employee's salary is increased by a specified percentage, for example ten percent. Schneider compared incidents of 5-10% wage increases, at 2.5% intervals, received by Caucasian employees and non-class members.
[7] Plaintiffs offer a statement purportedly made by Stern in 1978 to a friend that African-Americans had "smaller brain pans" and were therefore intellectually and genetically inferior. (Newfield Dep. at 9-12). Defendants argue that this statement is inadmissible. (Def. Reply at 15). Defendants' objection is sustained. Assuming the statement was made, it is a classic stray remark unrelated to any employment decision and was made almost thirty years ago.
[8] To the extent plaintiffs rely on Moody's testimony regarding this incident, it is hearsay. At trial, they must offer evidence of a witness who heard Rabena make this statement.
[9] As a term of the consent decree in the related action, discussed below, Parks adopted a new policy for posting and filling vacancies. Parks increased the number of jobs it posted after EEOC charges were filed. (Garafola DOJ Int. at 271-72,287).
[10] "The current thinking in the field of Industrial Psychology is that validity is the accumulation of evidence about the appropriateness of the test (or in this case the interview and minimum qualification selection procedures) as a measure of job performance." (Lundquist Report at 8).
[11] It is unclear whether the report card refers to Webster or her predecessor. Though the report was issued after Webster had assumed the EEO Officer position, the complaint refers to the Officer as a "he."
[12] The amended determination omits the percentage of the workforce made up by African-Americans.
[13] Plaintiffs also purport to assert "First Amendment" and "Freedom of Speech" claims. (Compl. pp. 66, 69). Plaintiffs do not appear to be pursuing these claims, which, in any event, are more properly treated as retaliation claims. Accordingly, the "First Amendment" and "Freedom of Speech" claims are dismissed, without prejudice to plaintiffs' retaliation claims under the employment statutes.
[14] References to "T-D Report" and "T-D Rebut." are to the report and rebuttal report of Tomaskovic-Devey.
[15] Defendants offer their own experts. Dr. Catherine S. Cline holds a Ph.D. in Psychology and has worked for twenty-five years in the areas of job analysis and test construction. (Cline Report at 2-3). Dr. Christopher Erath, who holds a Ph.D. in Economics, is Senior Vice President at National Economic Research Associates in Boston, Massachusetts. (Erath Report at 1). Dr. Christopher Winship holds a Ph.D. in Sociology from Harvard University, where he serves as the Norman Tishman and Charles M. Diker Professor of Sociology. (Winship Report at 1-2).
[16] Schneider relied on Department of Citywide Administrative Services ("DCAS") data, Payroll Management System ("PMS") data, and Parks Seasonal Tracking System ("STS") data. PMS and DCAS are both databases maintained by the City; DCAS is the repository of personnel information for City employees, and PMS is the system used by the City to pay its employees. STS is maintained by Parks to track seasonal personnel. Because STS only provides usable data starting in 1996, Schneider's analysis focuses on the period between January 1996 and December 2003. (Schneider Report at 3).
[17] Parks Opportunity Program ("POP") workers were excluded from his database. The POP was implemented to provide on the job training to persons on public assistance. POP workers are paid out of the Human Resources Administration budget rather than the Parks budget. Further, POP workers work only temporarily for Parks. (Schneider Report at 5-7).
[18] Though these figures do not take into account factors other than race, "simple statistics" may be considered in evaluating discrimination claims. See Stratton v. Dep't for the Aging for the City of New York, 132 F.3d 869, 877 (2d Cir.1997). Moreover, plaintiffs' regression analysesanalyses taking into account factors other than raceshow statistically significant disparities in the wages and promotions received by class members and non-class members. Thus, plaintiffs' statistical evidence taken as a whole demonstrate a pattern or practice of discrimination at Parks.
[19] The same standards govern hostile work environment claims whether such claims are based on race or sex. Morgan, 536 U.S. at 116 n. 10, 122 S. Ct. 2061.
[20] Indeed, as defendants observe, the Supreme Court and Courts of Appeal have not held that hostile work environment claims are consistent with the pattern or practice framework. (Def. Reply at 12 n. 8). In the absence of contrary authority, I agree, as held in EEOC v. Mitsubishi Motor Manufacturing of America, Inc., 990 F. Supp. 1059 (C.D.Ill. 1998), and EEOC v. Dial Corp., 156 F. Supp. 2d 926 (N.D.Ill.2001), that, where an employer has a policy or practice of tolerating a hostile work environment, a pattern or practice claim is an appropriate mechanism by which employees may challenge that discriminatory conduct.
[21] Although a single "extraordinarily severe" incident may be sufficient to create a hostile environment in an individual case, Cruz, 202 F.3d at 570, it is hard to conceive of any single incident that could support a pattern and practice claim.
[22] Plaintiffs have also offered admissible evidence of three noose incidents in the late 1990s. These incidents, however, were few in number and remote in time and location. Only a small number of employees observed the nooses. Moreover, one of the noose incidents involved a supervisor displaying a noose in her workplace as part of her annual Halloween decorations.
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01-03-2023
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10-30-2013
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https://www.courtlistener.com/api/rest/v3/opinions/2708603/
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In the
United States Court of Appeals
For the Seventh Circuit
____________________
Nos. 13-2091, -2133, -2136, -2162, -2202
KENT EUBANK, et al.,
Plaintiffs-Appellants,
and
LEONARD E. SALTZMAN, et al.,
Plaintiffs-Appellees,
v.
PELLA CORPORATION and PELLA WINDOWS
AND DOORS, INC.,
Defendants-Appellees.
APPEALS OF: RON PICKERING and MICHAEL J. SCHULZ,
Objecting class members.
____________________
Appeals from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 06 C 4481 — James B. Zagel, Judge.
____________________
ARGUED APRIL 22, 2014 — DECIDED JUNE 2, 2014
____________________
2 Nos. 13-2091, -2133, -2136, -2162, -2202
Before POSNER, WILLIAMS, and TINDER, Circuit Judges.
POSNER, Circuit Judge. The class action is an ingenious
procedural innovation that enables persons who have suf-
fered a wrongful injury, but are too numerous for joinder of
their claims alleging the same wrong committed by the same
defendant or defendants to be feasible, to obtain relief as a
group, a class as it is called. The device is especially im-
portant when each claim is too small to justify the expense of
a separate suit, so that without a class action there would be
no relief, however meritorious the claims. Normally only a
few of the claimants are named as plaintiffs (sometimes only
one, though there are several in this case). The named plain-
tiffs are the representatives of the class—fiduciaries of its
members—and therefore charged with monitoring the law-
yers who prosecute the case on behalf of the class (class
counsel). They receive modest compensation, in addition to
their damages as class members, for their normally quite
limited services—often little more than sitting for a deposi-
tion—as class representatives. Invariably they are selected
by class counsel, who as a practical matter control the litiga-
tion by the class. The selection of the class representatives by
class counsel inevitably dilutes their fiduciary commitment.
The class action is a worthwhile supplement to conven-
tional litigation procedure, David L. Shapiro, “Class Actions:
The Class As Party and Client,” 73 Notre Dame L. Rev. 913,
923–24 (1998); Arthur R. Miller, “Of Frankenstein Monsters
and Shining Knights: Myth, Reality, and the ‘Class Action
Problem’,” 92 Harv. L. Rev. 664, 666–68 (1979), but it is con-
troversial and embattled, see Robert H. Klonoff, “The De-
cline of Class Actions,” 90 Wash. U. L. Rev. 729, 731–33
(2013), in part because it is frequently abused. Martin H. Re-
Nos. 13-2091, -2133, -2136, -2162, -2202 3
dish, Wholesale Justice: Constitutional Democracy and the Prob-
lem of the Class Action Lawsuit 1–2 (2009); Jonathan R. Macey
& Geoffrey P. Miller, “The Plaintiffs’ Attorney’s Role in
Class Action and Derivative Litigation: Economic Analysis
and Recommendations for Reform,” 58 U. Chi. L. Rev. 1, 3–4
(1991); John C. Coffee, Jr., “Rethinking the Class Action: A
Policy Primer on Reform,” 62 Ind. L.J. 625, 627 (1987). The
control of the class over its lawyers usually is attenuated, of-
ten to the point of nonexistence. Except for the named plain-
tiffs, the members of the class are more like beneficiaries
than like parties; for although they are authorized to appeal
from an adverse judgment, Smith v. Bayer Corp., 131 S. Ct.
2368, 2379 (2011); Devlin v. Scardelletti, 536 U.S. 1, 9–10 (2002),
they have no control over class counsel. In principle the
named plaintiffs do have that control, but as we’ve already
hinted this is rarely true in practice. Class actions are the
brainchildren of the lawyers who specialize in prosecuting
such actions, and in picking class representatives they have
no incentive to select persons capable or desirous of moni-
toring the lawyers’ conduct of the litigation.
A high percentage of lawsuits is settled—but a study of
certified class actions in federal court in a two-year period
(2005 to 2007) found that all 30 such actions had been settled.
Emery G. Lee III et al., “Impact of the Class Action Fairness
Act on the Federal Courts” 2, 11 (Federal Judicial Center
2008). The reasons that class actions invariably are settled are
twofold. Aggregating a great many claims (sometimes tens
or even hundreds of thousands—occasionally millions) often
creates a potential liability so great that the defendant is un-
willing to bear the risk, even if it is only a small probability,
of an adverse judgment. At the same time, class counsel, un-
governed as a practical matter by either the named plaintiffs
4 Nos. 13-2091, -2133, -2136, -2162, -2202
or the other members of the class, have an opportunity to
maximize their attorneys’ fees—which (besides other ex-
penses) are all they can get from the class action—at the ex-
pense of the class. The defendant cares only about the size of
the settlement, not how it is divided between attorneys’ fees
and compensation for the class. From the selfish standpoint
of class counsel and the defendant, therefore, the optimal
settlement is one modest in overall amount but heavily tilted
toward attorneys’ fees. As we said in Creative Montessori
Learning Centers v. Ashford Gear LLC, 662 F.3d 913, 918 (7th
Cir. 2011), “we and other courts have often remarked the in-
centive of class counsel, in complicity with the defendant’s
counsel, to sell out the class by agreeing with the defendant
to recommend that the judge approve a settlement involving
a meager recovery for the class but generous compensation
for the lawyers—the deal that promotes the self-interest of
both class counsel and the defendant and is therefore opti-
mal from the standpoint of their private interests. Reynolds v.
Beneficial National Bank, [288 F.3d 277, 279 (7th Cir. 2002)];
Culver v. City of Milwaukee, [277 F.3d 908, 910 (7th Cir. 2002)];
Greisz v. Household Bank (Illinois), N.A., 176 F.3d 1012, 1013
(7th Cir. 1999); Duhaime v. John Hancock Mutual Life Ins. Co.,
183 F.3d 1, 7 (1st Cir. 1999); In re General Motors Corp. Pick-Up
Truck Fuel Tank Products Liability Litigation, 55 F.3d 768, 805
(3d Cir. 1995); Plummer v. Chemical Bank, 668 F.2d 654, 658
(2d Cir. 1982).”
Fortunately the settlement, including the amount of at-
torneys’ fees to award to class counsel, must be approved by
the district judge presiding over the case; unfortunately
American judges are accustomed to presiding over adver-
sary proceedings. They expect the clash of the adversaries to
generate the information that the judge needs to decide the
Nos. 13-2091, -2133, -2136, -2162, -2202 5
case. And so when a judge is being urged by both adver-
saries to approve the class-action settlement that they’ve ne-
gotiated, he’s at a disadvantage in evaluating the fairness of
the settlement to the class. In re General Motors Corp. Pick-Up
Truck Fuel Tank Products Liability Litigation, supra, 55 F.3d at
789–90; Redish, supra, at 188.
Enter the objectors. Members of the class who smell a rat
can object to approval of the settlement. See, e.g., Reynolds v.
Beneficial National Bank, supra, 288 F.3d at 287–88; Edward
Brunet, “Class Action Objectors: Extortionist Free Riders or
Fairness Guarantors,” 2003 U. Chi. Legal F. 403, 411–12. If
their objections persuade the judge to disapprove it, and as a
consequence a settlement more favorable to the class is nego-
tiated and approved, the objectors will receive a cash award
that can be substantial, as in In re Trans Union Corp. Privacy
Litigation, 629 F.3d 741 (7th Cir. 2011).
In this case, despite the presence of objectors, the district
court approved a class action settlement that is inequitable—
even scandalous. The case underscores the importance both
of objectors (for they are the appellants in this case—without
them there would have been no appellate challenge to the
settlement) and of intense judicial scrutiny of proposed class
action settlements.
The suit was filed in the summer of 2006, almost eight
years ago. Federal jurisdiction was based on the Class Action
Fairness Act’s grant of federal jurisdiction over class actions
in which there is at least minimal (as distinct from complete)
diversity of citizenship. 28 U.S.C. § 1332(d)(2)(A). The de-
fendants are Pella Corporation and an affiliate that we can
ignore. Pella is a leading manufacturer of windows. The suit
alleges that its “ProLine Series” casement windows (a case-
6 Nos. 13-2091, -2133, -2136, -2162, -2202
ment window is a window attached to its frame by hinges at
the side) manufactured and sold between 1991 and 2006 had
a design defect that allowed water to enter behind the win-
dow’s exterior aluminum cladding and cause damage to the
window’s wooden frame and to the house itself. Pella’s sale
of the defective windows is alleged to have violated the
product-liability and consumer-protection laws of a number
of states in which the windows were sold.
The district judge certified two separate classes: one for
customers who had already replaced or repaired their defec-
tive windows, the other for those who hadn’t. The latter
class sought only declaratory relief and so was nationwide,
but the former sought damages and was limited to custom-
ers in six states, with a separate subclass for each state. We
upheld the certifications over Pella’s objections in Pella Corp.
v. Saltzman, 606 F.3d 391 (7th Cir. 2010) (per curiam).
Class counsel negotiated a settlement of the class action
with Pella in the fall of 2011. The district judge gave final
approval to the settlement in 2013, precipitating the objec-
tors’ appeals. The settlement agreement ignores the certifica-
tion of the two classes and purports to bind a single nation-
wide class consisting of all owners of Pella ProLine windows
containing the defect, whether or not the owners have al-
ready replaced or repaired the windows. This provision is
the first of many red flags that the judge failed to see: “the
adversity among subgroups requires that the members of
each subgroup cannot be bound to a settlement except by
consents given by those who understand that their role is to
represent solely the members of their respective subgroups.”
In re Joint Eastern & Southern District Asbestos Litigation, 982
F.2d 721, 743 (2d Cir. 1992); see also Amchem Products, Inc. v.
Nos. 13-2091, -2133, -2136, -2162, -2202 7
Windsor, 521 U.S. 591, 627–28 (1997); Smith v. Sprint Commu-
nications Co., 387 F.3d 612, 614–15 (7th Cir. 2004).
Initially there was only one named plaintiff, a dentist
named Leonard E. Saltzman. His son-in-law, Paul M. Weiss,
was lead counsel for the class, continuing in that role
throughout the district court proceedings that culminated in
the approval of the settlement. Technically the law firm of
which he is the founder and senior partner (Complex Litiga-
tion Group LLC) is a lead class counsel too, along with two
of his partners in the firm. The settlement agreement desig-
nates still another firm as a lead class counsel as well; but the
fee petition describes that firm as merely a class counsel. The
agreement gave lead class counsel “sole discretion” to allo-
cate the award of attorneys’ fees to which the parties had
agreed among the class counsel, and Weiss proposed to allo-
cate 73 percent of the fees to his own firm. Realistically he
was the lead class counsel.
Weiss’s wife—Saltzman’s daughter—is a lawyer too, and
a partner in her husband’s firm. Both spouses are defendants
in a lawsuit charging them with misappropriation of the as-
sets of their former law firm, Freed & Weiss LLC, and other
misconduct relating to that firm. Freed v. Weiss, No. 2011-
CH-41529 (Ill. Cook County Ch. Div.). Weiss is also a de-
fendant in a second, similar suit, Lang v. Weiss, No. 2012-CH-
05863 (Ill. Cook County Ch. Div.). (The two suits are dis-
cussed in Sarah Zavala, “Cook County Suits Involve Alleged
Takeover at Freed and Weiss,” Madison-St. Clair Record,
March 7, 2012, pp. 1, 8.) The Freed & Weiss firm was still an-
other class counsel in the present case; and one of the objec-
tors points out that “the dissolution and descent into open
warfare that consumed Freed & Weiss in 2011 and 2012
8 Nos. 13-2091, -2133, -2136, -2162, -2202
clearly rendered that firm inadequate class counsel, especial-
ly in light of the articulated financial needs of the partners
that drove the settlement of this case.” And six weeks ago
the Hearing Board of the Illinois Attorney Registration and
Disciplinary Commission recommended in a 94-page report
that the Supreme Court of Illinois suspend Weiss from prac-
ticing law for 30 months because of repeated misconduct. In
re Paul M. Weiss, No. 08 CH 116 (Ill. Att’y Registration &
Disciplinary Commission Hearing Board, Apr. 17, 2014). The
recommended penalty is severe by Illinois standards; the
state allows lawyers sanctioned with “disbarment” to apply
for reinstatement to the bar after 60 (in some cases just 36)
months. Ill. S. Ct. R. 767(a); Illinois Attorney Registration &
Disciplinary Commission, Annual Report of 2013, at 21, 25.
The impropriety of allowing Saltzman to serve as class
representative as long as his son-in-law was lead class coun-
sel was palpable. See Greisz v. Household Bank (Illinois), 176
F.3d 1012, 1014 (7th Cir. 1999); Petrovic v. Amoco Oil Co., 200
F.3d 1140, 1155 (8th Cir. 1999); Zylstra v. Safeway Stores, Inc.,
578 F.2d 102, 104 (5th Cir. 1978); Turoff v. May Co., 531 F.2d
1357, 1360 (6th Cir. 1976) (per curiam); “Developments in the
Law—Class Actions,” 89 Harv. L. Rev. 1318, 1585–86 n. 29
(1976). Weiss may have been desperate to obtain a large at-
torney’s fee in this case before his financial roof fell in on
him.
Early in the case four other class members had been add-
ed as plaintiffs, making a total of five including Saltzman.
When the settlement was presented to the district court for
preliminary approval, the four class members who had been
added as named plaintiffs opposed it, leaving only Saltzman
among the original class members to support it. But pursu-
Nos. 13-2091, -2133, -2136, -2162, -2202 9
ant to a motion filed by George Lang, who at the time was a
partner of Weiss, four other class members were added as
named plaintiffs. (Lang says that Weiss rather than he
picked them.)
Weiss removed the original four class members who had
opposed the settlement; naturally their replacements joined
Saltzman in supporting it.
Lang now represents the defrocked named plaintiffs,
who are four of the six objectors. A lawyer’s switching sides
in the same lawsuit would normally be considered a fatal
conflict of interest, but the courts are lenient when it is a
class action lawyer. E.g., Bash v. Firstmark Standard Life Ins.
Co., 861 F.2d 159, 161 (7th Cir. 1988). For often “only the at-
torneys who have represented the class, rather than any of
the class members themselves, have substantial familiarity
with the prior proceedings, the fruits of discovery, the actual
potential of the litigation. And when an action has continued
over the course of many years, the prospect of having those
most familiar with its course and status be automatically
disqualified whenever class members have conflicting inter-
ests would substantially diminish the efficacy of class ac-
tions as a method of dispute resolution.” In re “Agent Or-
ange” Product Liability Litigation, 800 F.2d 14, 18–19 (2d Cir.
1986).
As finally approved by the district judge, the settlement
directed Pella to pay $11 million in attorneys’ fees to class
counsel. The basis of this figure was the plaintiffs’ claim that
the settlement was worth $90 million to the class. Were that
so, then considering the multistate scope of the suit and per-
haps the length of time that elapsed between its filing and
the approval of the settlement by the district court in May
10 Nos. 13-2091, -2133, -2136, -2162, -2202
2013 (our “perhaps” reflecting doubt that the time was well
spent), the fee award, equal to 12 percent of the amount of
the settlement earmarked for the class members, would have
been defensible. But the settlement did not specify an
amount of money to be received by the class members as
distinct from class counsel. Rather it specified a procedure
by which class members could claim damages. So there was
an asymmetry: class counsel was to receive its entire award
of attorneys’ fees up front; class members were to obtain
merely contingent claims, albeit with a (loosely) estimated
value of $90 million (actually far less, as we’ll see).
The named plaintiffs were each awarded compensation
(an “incentive award,” as it is called) for their services to the
class of either $5,000 or $10,000, depending on their role in
the case. Saltzman, being the lead class representative, was
slated to be a $10,000 recipient.
Although the judge rightly made incentive awards to the
class representatives who had opposed the settlement as
well as to those who had approved it, the settlement agree-
ment itself had provided for incentive awards only to the
representatives who supported the settlement. This created a
conflict of interest: any class representative who opposed the
settlement would expect to find himself without any com-
pensation for his services as representative. Still another
questionable provision of the settlement, which the judge
refused to delete, made any reduction in the $11 million at-
torneys’ fee award revert to Pella, rather than being added to
the compensation of the class members.
Not only did the settlement agreement not quantify the
benefits to the class members, but the judge approved it be-
fore the deadline for filing claims. He made no attempt to
Nos. 13-2091, -2133, -2136, -2162, -2202 11
estimate how many claims were likely to be filed, though
without such an estimate no responsible prediction of the
value of the settlement to the members of the class could be
made. Furthermore, the judge’s approval of the settlement
(over the objection of the former class representatives and
other class members) is squeezed into two two-page orders
(the second addressed to the attorneys’ fee award) that ig-
nore virtually all the objections to the settlement. Unheeded
was our warning that “because class actions are rife with po-
tential conflicts of interest between class counsel and class
members, district judges presiding over such actions are ex-
pected to give careful scrutiny to the terms of proposed set-
tlements in order to make sure that class counsel are behav-
ing as honest fiduciaries for the class as a whole.” Mirfasihi v.
Fleet Mortgage Corp., 356 F.3d 781, 785 (7th Cir. 2004) (cita-
tions omitted).
The settlement should have been disapproved on multi-
ple grounds. To begin with, it was improper for the lead
class counsel to be the son-in-law of the lead class repre-
sentative. Class representatives are, as we noted earlier, fi-
duciaries of the class members, and fiduciaries are not al-
lowed to have conflicts of interest without the informed con-
sent of their beneficiaries, which was not sought in this case.
Only a tiny number of class members would have known
about the family relationship between the lead class repre-
sentative and the lead class counsel—a relationship that cre-
ated a grave conflict of interest; for the larger the fee award
to class counsel, the better off Saltzman’s daughter and son-
in-law would be financially—and (which sharpened the con-
flict of interest) by a lot. They may well have had an acute
need for an infusion of money, in light not only of Weiss’s
ethical embroilment, which cannot help his practice, but also
12 Nos. 13-2091, -2133, -2136, -2162, -2202
of the litigation against him by his former law partners and
his need for money to finance his new firm. The appellees
(primarily Saltzman, who is still a named plaintiff, and Pella)
point out that Saltzman was one of five class representatives,
and the other four didn’t have a conflict of interest. But the
four other original class representatives had opposed the set-
tlement, whereupon they had been replaced by new named
plaintiffs—selected by the conflicted lead class counsel.
Weiss’s ethical embroilment was another compelling rea-
son for kicking him and Saltzman off the case. The discipli-
nary proceeding against Weiss was already under way when
the settlement agreement was negotiated. It was very much
in his personal interest, as opposed to the interest of the class
members, to get the settlement signed and approved before
the disciplinary proceeding culminated in a sanction that
might abrogate his right to share in the attorneys’ fee award
in this case. He could negotiate a quick settlement only by
giving ground to Pella, which upon discovering the box that
Weiss was in would have stiffened its terms (it plays hard-
ball, as its conduct throughout this litigation has demon-
strated).
So Weiss’s ethical troubles should have disqualified him
from serving as class counsel even if his father-in-law hadn’t
been in the picture. Another suspicious feature of the settle-
ment, doubtless also related to Weiss’s woes, was Pella’s
agreeing to a $2 million advance of attorneys’ fees to lead
class counsel before notice of the settlement was sent to the
members of the class.
Counsel for a certified class is appointed by the district
judge presiding over the class action, and in deciding to ap-
point a lawyer to be class counsel the court “may consider,”
Nos. 13-2091, -2133, -2136, -2162, -2202 13
besides the lawyer’s competence, experience, and related
professional qualifications, “any other matter pertinent to
counsel’s ability to fairly and adequately represent the inter-
ests of the class.” Fed. R. Civ. P. 23(g)(1)(B), (g)(4). “When
class counsel have demonstrated a lack of integrity, a court
can have no confidence that they will act as conscientious
fiduciaries of the class.” Creative Montessori Learning Centers
v. Ashford Gear LLC, supra, 662 F.3d at 918. Weiss was unfit to
represent the class.
Rule 23(a)(4) of the Federal Rules of Civil Procedure re-
quires that “the representative parties will fairly and ade-
quately protect the interests of the class.” This both Saltzman
and the other class representatives who approved the set-
tlement failed to do. The settlement that the district judge
approved is stacked against the class. Pella itself estimates
the value of the settlement to the class at only $22.5 mil-
lion—and that is an overestimate. The settlement strews ob-
stacles in the path of any owner of a defective ProLine Series
casement window. A member of the class may either file a
claim with Pella, period, or file a claim that he must submit
to arbitration with Pella. If he chooses the first option, he is
limited to a maximum damages award of $750 per “Struc-
ture,” confusingly defined not as a window but as the entire
building containing the window. There’s also a per-window
damages cap that ranges from $60 to $100 (with an addition-
al $0 to $250 for the cost of installation), depending on when
the class member purchased his window and when he re-
placed it. And the cap falls to zero unless he gave “notice” to
Pella before replacing the defective window.
A class member who chooses arbitration can receive up
to $6000 per “Structure” (defined the same way), and doesn’t
14 Nos. 13-2091, -2133, -2136, -2162, -2202
have to prove that his window or windows were in fact de-
fective, only that they were in the category of Pella windows
that contained the design defect. But if Pella convinces the
arbitrator that the damage the claimant is seeking compensa-
tion for was not caused by the defect or by “any other defect
in the structure” (whatever that means), or that the claimant
was compensated for the damage from some other source,
the claimant gets nothing; and likewise if Pella successfully
interposes a complete defense, such as that the statute of lim-
itations had run. The settlement allows Pella to assert ten
categories of defenses, including “natural weathering.” And
the limitations periods applicable to the class members’
claims vary from three to five years and involve different
accrual and tolling rules. Statutes of repose are also in the
picture.
Pella also reserved in the settlement agreement the right
to plead and prove partial defenses such as comparative
fault and failure to mitigate damages. And some claimants
are entitled only to “coupons” (discounts on future purchas-
es of Pella windows, discounts that may be worth very little
to current owners of Pella’s defective windows)—a warning
sign of a questionable settlement. Synfuel Technologies, Inc. v.
DHL Express (USA), Inc., 463 F.3d 646, 654 (7th Cir. 2006); In
re HP Inkjet Printer Litigation, 716 F.3d 1173, 1179–80 (9th Cir.
2013); Christopher R. Leslie, “The Need to Study Coupon
Settlements in Class Action Litigation,” 18 Geo. J. Legal Ethics
1395, 1396–98 (2005); Geoffrey P. Miller & Lori S. Singer,
“Nonpecuniary Class Action Settlements,” Law & Contemp.
Probs., vol. 60, Autumn 1997, pp. 97, 108; cf. 28 U.S.C. § 1712
(Coupon Settlements).
Nos. 13-2091, -2133, -2136, -2162, -2202 15
Some class members may be entitled only to an extension
of warranty, under a program (the “ProLine Service En-
hancement Program”) that Pella had adopted before the set-
tlement and that requires class members to deduct $100 per
window from the cost of installation or other labor services
required to replace it. The $90 million estimate of the value
of the settlement to the class includes the value of these war-
ranty extensions even though they were a contractual enti-
tlement that preceded the settlement rather than being con-
ferred by it and thus were not part of the value created by
the settlement, although the settlement does forbid Pella to
revoke the extensions, which confers a bit of extra value.
The claim forms are long—12 pages for the “simple”
claim with its $750 ceiling, 13 pages for the claim that has the
higher ceiling ($6000) but requires the claimant to run the
gauntlet of arbitration, doubtless without assistance of coun-
sel or expert witnesses, because the legal fees and experts’
fees would quickly mount to or above $6000, leaving the
claimant with nothing or even less than nothing: additional
bills to pay. There is no provision for shifting the legal or ex-
pert-witness costs of a victorious claimant in the arbitration
proceeding to Pella.
Both forms require a claimant to submit a slew of arcane
data, including the “Purchase Order Number,” “Glass Etch
Information,” “Product Identity Stamp,” and “Unit ID La-
bel” of each affected window. The claim forms are so com-
plicated that Pella could reject many of them on the ground
that the claimant had not filled out the form completely and
correctly.
And that’s assuming that class members even attempt to
file claims. The notice of settlement that was sent to them is
16 Nos. 13-2091, -2133, -2136, -2162, -2202
divided into 27 sections, some with a number of subsections.
For example, the section on eligibility for benefits under the
settlement lists nine criteria that must be satisfied while the
section on “How Do I Get Out of the Settlement?” specifies
six requirements that must be met for a class member to be
allowed to opt out of the settlement. And to object to the set-
tlement the class member must satisfy seven other criteria,
one of which is again multiple, as it requires listing “each
specific reason for your objection.”
Considering the modesty of the settlement, the length
and complexity of the forms, and the unfamiliarity of the av-
erage homeowner with arbitration, we’re not surprised that
only 1276 claims (of which only 97 sought arbitration) had
been filed as of February 2013, out of the more than 225,000
notices that had been sent to class members. The claims
sought in the aggregate less than $1.5 million and were like-
ly to be worth even less because Pella would be almost cer-
tain to prevail in some, maybe most, of the arbitration pro-
ceedings. It’s been found that on average consumers prevail
in arbitration roughly half the time, and those who win are
awarded roughly half of what they seek. Christopher R.
Drahozal & Samantha Zyontz, “An Empirical Study of AAA
Consumer Arbitrations,” 25 Ohio St. J. Dispute Resolution 843,
898–900 (2010). The implication is that Pella would be able to
knock 75 percent off the damages sought by class members
who filed claims that were submitted to arbitration.
A class recovery of little more than $1 million is a long
way from the $90 million that the district judge thought the
class members likely to receive were the suit to be litigated.
It’s true that another 9500 or so simple claims were filed after
the district court entered its final judgment, plus another
Nos. 13-2091, -2133, -2136, -2162, -2202 17
1387 claims that would require arbitration. But Pella’s esti-
mate that the class will recover $22.5 million assumes against
all reason that every one of the claims will reap the maxi-
mum authorized benefits—$750 for the simple claims and
$6000 for the claims that go to arbitration. And that recovery
would be only $17 million, not $22.5 million (Pella contends,
however, that the extension of its warranty is worth another
$5.5 million to the class). There is no evidence that Pella
would pay the maximum benefits on all, or indeed on any,
of the claims.
If the average payment were half the amount of the
claim—a very generous assumption given the estimate of a
75 percent success rate for Pella—the aggregate value of the
settlement to the class ($8.5 million) would be less than the
attorneys’ fees ($11 million). Even the $8.5 million figure is
an exaggeration, because the settlement subtracts from the
award compensation received from any other source—and
one of the other sources is the warranty program.
We don’t understand the judge’s valuing the settlement
at $90 million or thinking the feeble efforts of class counsel
led by Weiss to obtain benefits for the class (as distinct from
benefits for themselves in the form of generous attorneys’
fees) worth $11 million. The restrictions that Pella was al-
lowed to place on the settlement would, if upheld, enor-
mously reduce the class members’ recovery of their losses,
and the residue is to be returned to Pella. Class counsel sold
out the class.
The class as we said could not expect to receive more
than $8.5 million from the settlement, given all the obstacles
that the terms of the settlement strewed in the path of the
class members. And even that figure seems too high. For if
18 Nos. 13-2091, -2133, -2136, -2162, -2202
the class received that amount, this would indicate that Pella
had agreed to pay attorneys’ fees equal to 56 percent of the
total settlement ($11 million = .56 × ($8.5 million + $11 mil-
lion)) in order to induce class counsel to settle the case on
terms that would minimize Pella’s overall liability.
We note the remarkable statement in Saltzman’s brief de-
fending the settlement that “in comparison to this $90 mil-
lion independent valuation of the Settlement, a trial of the
certified claims here, even with a complete victory, would
result in an award of $0.” Zero? But if Pella has no liability,
why would it agree to a $33.5 million settlement ($22.5 mil-
lion in estimated damages plus the $11 million in attorneys’
fees)? Saltzman appears to believe that the alternative of liti-
gating the class action to judgment would be infeasible be-
cause the court would go crazy trying to determine the
damages of each of several, maybe many, thousand class
members. He neglects to mention that we rejected this ar-
gument when we approved class certification. Pella Corp. v.
Saltzman, supra, 606 F.3d at 395–96; see also 1966 Advisory
Committee Notes to Fed. R. Civ. P. 23; Butler v. Sears, Roebuck
& Co., 727 F.3d 796, 801 (7th Cir. 2013); In re Whirlpool Corp.
Front-Loading Washer Products Liability Litigation, 722 F.3d
838, 860–61 (6th Cir. 2013); Tardiff v. Knox County, 365 F.3d 1,
6–7 (1st Cir. 2004); 2 Newberg on Class Actions § 4:54, pp. 205–
10 (5th ed. 2012). Pella argues that it would fight the indi-
vidual damages claims if the case were litigated. But the set-
tlement agreement allows it to fight the damages claims
submitted to it pursuant to the agreement.
In the district court Saltzman valued the case if it went to
trial at $50 million. If he was lying and actually thinks the
Nos. 13-2091, -2133, -2136, -2162, -2202 19
case worthless, how could he have been an effective class
representative even if he had had no conflict of interest?
The mystery deepens: Pella thinks the case if tried would
be worth only $14.5 million to the class members. If that is
so, why has it agreed to a settlement that it claims will cost it
$33.5 million? Because it would incur legal fees and other
expenses of more than $19 million ($14.5 million + $19 mil-
lion = $33.5 million)? But if the case were tried, class counsel
would incur heavy expenses as well, which would induce it
to settle for less than $14.5 million. The truth must be that,
protected by the bristling technicalities of the settlement
agreement, Pella does not believe that the settlement will
cost it anywhere near $14.5 million.
If Saltzman is right and damages if the case were tried
would be zero, a settlement of $90 million would be a re-
markable achievement. (Also an inexplicable one.) But the
district judge did not find that the trial would yield zero
damages. He didn’t estimate the likely outcome of a trial, as
he should have done in order to evaluate the adequacy of
the settlement. Reynolds v. Beneficial National Bank, supra, 288
F.3d at 285.
Saltzman as we said defends the $90 million figure as an
“independent valuation” of the settlement. But the only evi-
dence we can find supporting that valuation is the affidavit
of an accountant—hired and paid by Weiss’s law firm, so
hardly independent. Maybe by “independent” Saltzman is
referring (though he doesn’t say so) to the fact that the set-
tlement was mediated by two retired judges. One, however,
stopped mediating (we don’t know why) before the negotia-
tions were completed and the other limited his mediation to
issues of attorneys’ fees.
20 Nos. 13-2091, -2133, -2136, -2162, -2202
Saltzman and Pella argue that the objectors did not pre-
sent an expert witness to support their estimate of the value
of the litigation, and Saltzman did: the brother of one of
Saltzman’s lawyers! Anyway Saltzman has implicitly repu-
diated his expert, who did not testify that the value of the
suit if litigated was $0.
Saltzman and Pella point out that the notice of the set-
tlement sent to the class members provoked few objections.
Of course not; it was not intended to; it was incomplete and
misleading. It failed to mention that four of the five original
class representatives had opposed the settlement and been
promptly replaced by other persons, selected by class coun-
sel; that the only original representative who had supported
the settlement was the father-in-law of the lead class counsel
who was both in financial trouble and ethically challenged;
that up to half the recipients of the notice would if they filed
a claim and it was accepted receive only a coupon discount
on a future purchase of a Pella window; and that four of the
original class representatives believed the notice of the set-
tlement misleading because it implied that class members
would be guaranteed at least $750 or $6000 in response to
their claim, whereas these were ceilings and were not even
potential payments to those class members entitled only to
coupons. The judge was informed of these objections to the
notice but declined to order it modified. He said that the no-
tice was “fair,” that it was “a neutral communication from
the court.” It was not neutral and it did not provide a truth-
ful basis for deciding whether to opt out. The judge said the
objectors could send their own notice to the class members.
But what would the recipient of two conflicting notices do?
And it wouldn’t be just two. For if the objectors sent their
own notice class counsel would send out a rebuttal notice.
Nos. 13-2091, -2133, -2136, -2162, -2202 21
Better for the court to make sure that the single notice it sent
would be a responsible communication rather than an un-
candid communication from class counsel than to subject the
class members to a blizzard of conflicting notices.
All this is academic, however, because opting out of a
class action is very rare. Virtually no one who receives notice
that he is a member of a class in a class action suit opts out.
He doesn’t know what he could do as an opt-out. He’s un-
likely to hire a lawyer to litigate over a window. In fact the
opt-outs in this case were only one twentieth of one percent
of the recipients of the notice of approved settlement. A
study of other product-liability class actions found that the
average opt-out percentage was less than one tenth of one
percent. Theodore Eisenberg & Geoffrey Miller, “The Role of
Opt-Outs and Objectors in Class Action Litigation: Theoreti-
cal and Empirical Issues,” 57 Vand. L. Rev. 1529, 1549 (2004);
see also Mars Steel Corp. v. Continental Illinois National Bank &
Trust Co. of Chicago, 834 F.2d 677, 680–81 (7th Cir. 1987). Con-
trary to the statement in Pella’s brief, a low opt-out rate is no
evidence that a class action settlement was “fair” to the
members of the class.
In sum, almost every danger sign in a class action settle-
ment that our court and other courts have warned district
judges to be on the lookout for was present in this case. See,
e.g., Synfuel Technologies, Inc. v. DHL Express (USA), Inc., su-
pra, 463 F.3d at 654; Smith v. Sprint Communications Co., 387
F.3d 612, 614 (7th Cir. 2004); Mirfasihi v. Fleet Mortgage Corp.,
supra, 356 F.3d at 785–86; Reynolds v. Beneficial National Bank,
supra, 288 F.3d at 282–83; Crawford v. Equifax Payment Ser-
vices, Inc., 201 F.3d 877, 880 (7th Cir. 2000); In re Bluetooth
Headset Products Liability Litigation, 654 F.3d 935, 946–47 (9th
22 Nos. 13-2091, -2133, -2136, -2162, -2202
Cir. 2011); Weinberger v. Great Northern Nekoosa Corp., 925
F.2d 518, 525 (1st Cir. 1991). Most were not even mentioned
by the district judge, and those that were received a brush-
off. The settlement flunked the “fairness” standard by the
one-sidedness of its terms and the fatal conflicts of interest
on the part of Saltzman and Weiss. This is a case in which
“the lawyers support the settlement to get fees; the defend-
ants support it to evade liability; the court can’t vindicate the
class’s rights because the friendly presentation means that it
lacks essential information.” Kamilewicz v. Bank of Boston
Corp., 100 F.3d 1348, 1352 (7th Cir. 1996) (dissent from denial
of rehearing en banc).
A couple of loose ends remain to be tied up:
1. Saltzman has moved to dismiss the appeals on the
ground that the appellants—objectors to the settlement ap-
proved by the district judge—lack standing to litigate their
objections. Since absent objectors have standing to appeal
from an adverse judgment, Devlin v. Scardelletti, supra, 536
U.S. at 14, named objectors must as well. Even named plain-
tiffs who settle nevertheless have standing to appeal a denial
of class certification. Espenscheid v. DirectSat USA, LLC, 688
F.3d 872, 876 (7th Cir. 2012).
2. Objector Schulz asks us to sanction Saltzman’s lawyers
for filing the motion on standing. Saltzman’s removal as lead
plaintiff and his lawyers’ removal as class counsel are sanc-
tion enough; because the motion on standing was indeed
frivolous, little time was spent on it either by us judges or by
the objectors’ lawyers. Both motions (standing and sanc-
tions) are therefore denied.
To conclude:
Nos. 13-2091, -2133, -2136, -2162, -2202 23
After eight largely wasted years, much remains to be
done in this case. For starters, Saltzman, Paul Weiss, and
Weiss’s firm, Complex Litigation Group, must be replaced as
class representative (Saltzman), and as class counsel (Weiss
and his firm), respectively. And since we are rejecting the
settlement agreement, the plaintiffs named in the third
amended complaint, whom that agreement caused to be
substituted for the original named plaintiffs (other than
Saltzman), must be discharged and the four original named
plaintiffs (whom we’ve called the “defrocked” plaintiffs) re-
instated.
The judgment is reversed and the case remanded for fur-
ther proceedings in conformity with this opinion.
REVERSED AND REMANDED.
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01-03-2023
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08-05-2014
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https://www.courtlistener.com/api/rest/v3/opinions/2476376/
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731 F.Supp.2d 15 (2010)
The CAPE HATTERAS ACCESS PRESERVATION ALLIANCE, et al., Plaintiffs,
v.
U.S. DEPARTMENT OF the INTERIOR, et al., Defendants, and
Defenders of Wildlife, et al., Defendant-Intervenors.
Civil Action No. 09-0236 (RCL).
United States District Court, District of Columbia.
August 17, 2010.
*17 Lawrence R. Liebesman, Holland & Knight LLP, Washington, DC, for Plaintiffs.
Meredith L. Flax, U.S. Department of Justice, Washington, DC, for Defendants.
Jason C. Rylander, Defenders of Wildlife, Washington, DC, for Defendant-Intervenors.
Julia Furr Youngman, Chapel Hill, NC, Pro Hac, Vice.
MEMORANDUM OPINION
ROYCE C. LAMBERTH, Chief Judge.
I. Introduction
This case concerns environmental regulations designating critical habitat for the piping plover, a small shorebird. On October 21, 2008, defendants, the Department of the Interior and its Fish and Wildlife Service (collectively "the Service") published a final rule designating critical habitat for the wintering piping plover in North Carolina pursuant to the Endangered Species Act (ESA). The Service revised its critical habitat designation for the units after this Court vacated the Service's original designation in 2001. See Cape Hatteras Access Pres. Alliance v. U.S. Dep't of the Interior, 344 F.Supp.2d 108 (D.D.C. 2004) (CHAPA I). The revised designation includes approximately 2,053 acres in Dare and Hyde Counties, North Carolina and consists of four habitat units.
Plaintiffs challenge the revised critical habitat designations under the ESA and the National Environmental Policy Act (NEPA). Plaintiffs allege that the Service's revised designation fails to satisfy the Court's remand order in CHAPA I. Specifically, plaintiffs argue that the revised critical habitat designation (1) fails to address the statutory requirement that Primary Constituent Elements (PCE's) must be those that may require special management considerations; (2) improperly relied on a district court decision holding that if a habitat is already under some sort of management for its conservation, that particular habitat meets the definition of critical habitat; (3) fails to adequately consider other relevant information, including a 2007 off-road vehicle plan; and (4) fails to adequately consider the economic impacts of the designation. Finally, plaintiffs argue that the Service's Environmental Assessment (EA) and Finding of No Significant Impact pursuant to NEPA are inadequate.
Upon consideration of the parties' cross motions for summary judgment, the oppositions and replies thereto, the administrative record, and for the reasons set for in this Memorandum Opinion, plaintiffs' motion for summary judgment will be denied. Accordingly, the government defendants' cross-motion for summary judgment will be granted and intervening defendants' cross-motion for summary judgment will be granted.
*18 II. Factual and Procedural Background
a. The Piping Plover
The North Carolina coast is home to the piping plover, a small North American shorebird that "blends in well with beaches and sand flats, part of its primary habitat." 66 Fed. Reg. 36,038-36,143 (July 10, 2001). It nests and roosts directly on sandy beaches and spends much of its time foraging for small marine crustaceans and other prey in the wet and moist areas of beaches such as "mud flats, sand flats, algal flats, and washover passes (areas where banks in the sand dunes result in an inlet)." Id. at 36,038. Piping plovers are a migratory species; the members of all three of its breeding populations winter in coastal areas of the United States from North Carolina to Texas, as well as along the coasts of Mexico and on Caribbean islands. Id. In North America, the piping plover breeds in three geographic regions. The threatened Atlantic Coast population breeds on sandy beaches along the East Coast from Newfoundland to North Carolina. 66 Fed. Reg. at 36,038; see also 67 Fed. Reg. 57,638 (Sept. 11, 2002). "Piping plovers begin arriving on the wintering grounds in July, with some late-nesting birds arriving in September." Id. They begin leaving the wintering grounds to migrate back to breeding sites in late February, "and by late May most birds have left the wintering grounds." Id. at 36,039. Piping plovers spend up to 10 months of each year on the wintering grounds. Id. at 36,043. The piping plover can be observed in North Carolina every month of the year, and all three geographic populations of piping plovers are known to use the North Carolina coastline during the non-breeding season. AR 345 at 13-14, 86, 129-30, 211-12.
b. Plaintiffs' Interests
Plaintiff Cape Hatteras Access Preservation Alliance (CHAPA) is a coalition established for the purpose of "preserving and protecting a lifestyle and way of life historically prevalent on the Outer Banks of North Carolina." Pls.' Mot. Summ. J. 4. CHAPA members regularly operate offroad vehicles for both recreational and commercial purposes. Off-road vehicles provide recreational access to seashore beaches that is essential for the area's tourism-based economy. CHAPA's members are concerned that the Service's critical habitat designation will lead to substantial limits, or an outright ban, on off-road vehicle use within certain areas of the Cape Hatteras Seashore.
Plaintiffs Dare County and Hyde County are counties within the Outer Banks of North Carolina. Dare County encompasses seven of the seashore's eight unincorporated villages and six municipalities, Duck, Kill Devil Hills, Kitty Hawk, Manteo, Nags Head, and Southern Shores. While the county's permanent population is 29,000, the county's average daily population during the summer months ranges from 225,000 to 275,000. Dare County's 2001 revenue from tourism was over $365 million. Plaintiff Hyde County, home to only 5,500 people, includes the Ocracoke Island portion of the Outer Banks of North Carolina. The island depends on tourism, which generated $24 million in 2001.
c. The Service's Critical Habitat Designation
The Service first published its critical habitat designation for the piping plover in 2001. The designation came nearly 16 years after the Service published its final rule pursuant to the ESA listing the plover as endangered in the Great Lakes watershed and threatened in the remainder of its range, including on its migratory routes and its wintering grounds, where the plover spends up to 10 months each year. CHAPA I, 344 F.Supp.2d at 115 (citing Determination of Endangered and Threatened *19 Status for the Piping Plover, 50 Fed. Reg. 50,726 (Dec. 11, 1985)). Back in 1985, the Service declined to designate any critical habitat for the plover. In 1996, the Defenders of Wildlife filed suit to compel critical habitat designation for the Great Lakes and Northern Great Plains populations of piping plovers. In 2000, the Court ordered the Service to carry out these designations. CHAPA I, 344 F.Supp.2d at 115 (citing Defenders of Wildlife v. Babbitt, Nos. 96-CV-2695, 97-CV-777 (D.D.C Feb. 8, 2000)).
After the Service published its original final rule designating critical habitat for wintering piping plovers in 137 coastal areas, including 18 areas in North Carolina in 2001, plaintiffs filed suit challenging the designation of four units of critical habitat in the Outer Banks of North Carolina. In 2004, the Court remanded to the Service the 2001 designation of the four units. CHAPA I, 344 F.Supp.2d 108. The Court identified six errors or needs for clarification under the ESA and one error under NEPA. The Court found that (1) the Service failed to show that PCEs are found on all of the areas it designated as critical habitat; (2) the Service failed to analyze whether PCEs may require special management considerations or protections; (3) the Service must clarify its economic analysis, specifically its functional equivalence policy; (4) the Service must identify baseline costs in its economic analysis; (5) the Service's conclusions regarding off-road vehicles were arbitrary and capricious; (6) the Service must address consultation costs in its economic analysis; and (7) the Service erred by failing to complete an EA pursuant to NEPA.
In response to the Court's order in CHAPA I, the Service published a proposed rule re-designating portions of each of the four areas as critical habitat on June 12, 2006. 71 Fed. Reg. 33,703. On May 31, 2007, the Service announced the availability of a draft economic analysis and environmental assessment for the June 12, 2006 proposed rule. 72 Fed. Reg. 30,326. On May 15, 2008, the Service announced revisions to the proposed critical habitats to include several islands to one of the four units. 73 Fed. Reg. 28,084.
Meanwhile, environmental groups filed suit in the United States District Court for the Eastern District of North Carolina, alleging that the National Park Service (NPS) failed to promulgate a final regulation to manage off-road vehicle use at Cape Hatteras in violation of the ESA, two presidential executive orders, NPS regulations and the Migratory Bird Treaty Act. Defenders of Wildlife v. Nat'l Park Serv., No. 07-cv-45 (E.D.N.C.). The plaintiffs in the present lawsuit intervened in that lawsuit. The court approved a Consent Decree, which requires NPS to publish a final off-road vehicle management plan by April 1, 2011. Until then, NPS may continue off-road vehicle management derived in an Interim Plan.
The Service published its final revised critical habitat designation on October 21, 2008. 73 Fed. Reg. 62,815. The rule designates 2,043 acres of North Carolina shoreline, primarily located within the Cape Hatteras National Seashore. The revised final designation contains approximately 1,573 fewer acres than the original 2001 designation and no private land is included in the revised designation. On February 6, 2009, plaintiffs filed a Complaint for Declaratory and Injunctive Relief against the U.S. Department of Interior and the Service. Defenders of Wildlife and the National Audubon Society intervened in the lawsuit on the side of the federal defendants. Currently before the Court are plaintiffs' motion for summary judgment, and federal defendants and defendant-intervenors' cross motions for summary judgment.
*20 III. Standing
Federal defendants and defendant-intervenors assert that plaintiffs lack standing to bring this suit. To establish standing, plaintiffs must establish that they meet certain constitutional and prudential requirements. "The `irreducible constitutional minimum of standing contains three elements': (1) injury-in-fact, (2) causation, and (3) redressability." Jackson County, N.C. v. FERC, 589 F.3d 1284, 1288 (D.C.Cir.2009) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992)) (internal quotation omitted). Thus, to demonstrate constitutional standing, "a petitioner must allege (1) a personal injury-in-fact that is (2) fairly traceable to the defendant's conduct and (3) redressable by the relief requested." Int'l Bhd. of Teamsters v. Trans. Security Admin., 429 F.3d 1130, 1134 (D.C.Cir.2005).
In order to establish prudential standing, plaintiffs must demonstrate that the injury "arguably falls within the zone of interests protected or regulated by the statutory provision or constitutional guarantee invoked in the suit." Bennett v. Spear, 520 U.S. 154, 162, 117 S.Ct. 1154, 137 L.Ed.2d 281 (1997). The requirement that the interests of plaintiffs fall within the zone of interests protected or regulated by the statutes at issue is "not meant to be especially demanding" and does not require that a particular plaintiff be the intended beneficiary of the act. Clarke v. Securities Indus. Ass'n, 479 U.S. 388, 399-400, 107 S.Ct. 750, 93 L.Ed.2d 757 (1987). The test excludes only plaintiffs whose interests are "so marginally related to or inconsistent with the purposes implicit in the statute that it cannot reasonably be assumed that Congress intended to permit the suit." Id. The focus is "not on those who Congress intended to benefit, but on those who in practice can be expected to police the interests that the statute protects." Mova Pharm. Corp. v. Shalala, 140 F.3d 1060, 1075 (D.C.Cir.1998).
Here, plaintiffs have demonstrated both constitutional and prudential standing. As in CHAPA I, CHAPA members fear that the Service's administration of the critical habitat will result in use restrictions on vehicles and closure of beaches of access portions. This not only affects recreation but the livelihood of local fisherman who are dependent on the vehicles. The regulations could also impact tourism, which would have a severe impact on local business, many of which derive substantial revenue from tourism. Similarly, the counties assert harm related to their tourism economy and their ability to maintain and repair infrastructure and seashore. These injuries are causally related to the Service's critical habitat designation. Additionally, the Court can require the Service to revisit, again, its designation. Additionally, the Supreme Court recently held that "[a] party that obtains a judgment in its favor acquires a `judicially cognizable' interest in ensuring compliance with that judgment." Salazar v. Buono, ___ U.S. ___, 130 S.Ct. 1803, 1814-15, 176 L.Ed.2d 634 (2010) (citing Allen v. Wright, 468 U.S. 737, 763, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984)). Here, the plaintiffs obtained a judgment in their favor in CHAPA I and are seeking judicial review challenging whether the Service complied with the remand order. Therefore, plaintiffs have demonstrated constitutional standing.
Similarly, plaintiffs have established prudential standing. Plaintiffs acquire prudential standing in relation to their ESA claims pursuant to the citizen-suit provision of the ESA. See Bennett, 520 U.S. at 162, 117 S.Ct. 1154. In Bennett v. Spear, the Supreme Court held that the broad language of the citizen-suit provision of the ESA "negates the zone-of-interests *21 test" and expands standing "to the full extent permitted under Article III." 520 U.S. 154, 164, 117 S.Ct. 1154, 137 L.Ed.2d 281 (1997). Additionally, plaintiffs have established that their injuries fall within the zone of interests regulated by the statutory provision invoked in the suit. CHAPA's assertion of future recreational harms are within the zone of interests protected by the statute. Mountain States Legal Found. v. Glickman, 92 F.3d 1228, 1236 (D.C.Cir.1996) (noting that even those not "pure of heart" can assert, under NEPA, aesthetic and environmental interests in the quality of public lands for activities such as camping, hiking, and fishing). Similarly, the Counties' assertions of harms they suffered in relation to repair of area beaches and harms to the quality of life of residents related to the physical environment, see Hanly v. Mitchell, 460 F.2d 640 (2d Cir.1972) are sufficient to fall within the zone of interests.[1]
IV. Standard of Review
Generally, summary judgment should be granted only if the moving party has shown that there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56; Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Waterhouse v. District of Columbia, 298 F.3d 989, 991 (D.C.Cir.2002). In determining whether a genuine issue of material 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, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The non-moving party's opposition, however, must consist of more than mere unsupported allegations or denials and must be supported by affidavits or other competent evidence setting forth specific facts showing that there is a genuine issue for trial. Fed.R.Civ.P. 56(e); see Celotex Corp., 477 U.S. at 324, 106 S.Ct. 2548.
However, a federal agency's compliance with its statutory and regulatory obligations is subject to the Administrative Procedure Act (APA). The APA creates a cause of action for challenges to final agency decisions, findings or conclusions alleged to be "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law." 5 U.S.C. § 706(2)(A). While the court's review must be "searching and careful, the ultimate standard of review is a narrow one" and the court "is not empowered to substitute its judgment for that of the agency." Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971). The standard is deferential in order to guard against "undue judicial interference" with the lawful exercise of agency discretion and prevents "judicial entanglement in abstract policy disagreements which courts lack both the expertise and information to resolve." Norton v. Southern Utah Wilderness Alliance, 542 U.S. 55, 66, 124 S.Ct. 2373, 159 L.Ed.2d 137 (2004).
In applying this standard, an action will be set aside if the agency identified no "rational connection between the facts found and the choice made," if the "explanation for its decision [is] counter to the evidence before the agency, or is so implausible that is could not be ascribed to a difference in view or the product of agency expertise." Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d *22 443 (1983). Under the APA's standard of review, there is a presumption of validity of agency action. Ethyl Corp. v. EPA, 541 F.2d 1, 34 (D.C.Cir.1976) (en banc). In other words, so long as the agency considered the relevant factors and articulated an explanation establishing a rational connection between the facts found and the choice made, the court will not substitute its judgment for that of the agency. See CHAPA I, 344 F.Supp.2d at 119 (citing Wyo. Outdoor Council v. Bosworth, 284 F.Supp.2d 81, 89 (D.D.C.2003)).
V. ESA Critical Habitat Designation
The Endangered Species Act is "the most comprehensive legislation for the preservation of endangered species ever enacted by any nation." Tenn. Valley Auth. v. Hill, 437 U.S. 153, 180, 98 S.Ct. 2279, 57 L.Ed.2d 117 (1978). The ESA was enacted to "provide a means whereby the ecosystems upon which endangered species and threatened species depend may be conserved [and] to provide a program for the conservation of such endangered species and threatened species." 16 U.S.C. § 1531(b). The ESA defines the terms "conserve" and "conservation" as "the use of all methods and procedures which are necessary to bring any endangered species or threatened species to the point at which the measures provided pursuant to [the Act] are no longer necessary." Id. at 1532(3). In other words, as noted by the Fifth Circuit, the objective of the ESA "is to enable listed species not merely to survive, but to recover from their endangered or threatened status." Sierra Club v. United States Fish and Wildlife Serv., 245 F.3d 434, 438 (5th Cir. 2001).
The ESA makes the Secretaries of Commerce and of the Interior responsible for administering and enforcing the Act. The Secretary of the Interior is responsible for terrestrial and freshwater fish species, while the Secretary of Commerce is responsible for marine species. The Secretary of the Interior has delegated the responsibility for terrestrial species to the Service. Fisher v. Salazar, 656 F.Supp.2d 1357, 1358 (N.D.Fla.2009).
The ESA requires the Service to maintain a list of both endangered and threatened species. A species is "endangered" if it is "in danger of extinction throughout all or a significant portion of its range." 16 U.S.C. § 1532(6). A species is "threatened" if it is "likely to become an endangered species within the foreseeable future throughout all or a significant portion of its range." Id. at § 1532(20). Determinations as to whether a species should be listed as endangered or threatened must be made "solely on the basis of the best scientific and commercial data available." Id. at § 1533(b)(1)(A). Economic impacts are not factored into the determination to list a species as endangered or threatened.
In creating the ESA, "Congress started from the finding that `[t]he two major causes of extinction are hunting and destruction of natural habitat.'" Tennessee Valley Authority v. Hill, 437 U.S. 153, 179, 98 S.Ct. 2279, 57 L.Ed.2d 117 (1978). Of these two threats, "Congress was informed that the greatest was the destruction of natural habitat." Id. Accordingly, the Service is also required to make a determination to designate"to the maximum extent prudent and determination"the listed species' critical habitat. Id. at § 1533(a)(3)(A). Critical habitats are those lands that are essential to the listed species' conservation. Id. § 1532(5)(A). Specifically, critical habitat is defined as:
(i) the specific areas within the geographical area occupied by the species, at the time it is listed in accordance with the provisions of section 1533 of this title, on which are found those physical or biological features (I) essential to the conservation of the species and (II) *23 which may require special management considerations or protection; and
(ii) specific areas outside the geographical area occupied by the species at the time it is listed in accordance with the provisions of section 1533 of this title, upon a determination by the Secretary that such areas are essential for the conservation of the species.
16 U.S.C. § 1532(5)(A). The Service must designate critical habitat "on the basis of the best scientific data available and after taking into consideration the economic impact" of the designation. Id. § 1533(b)(2).
A critical habitat designation provides protection for threatened and endangered species by triggering what is termed a Section 7 consultation in response to actions proposed by or with a nexus to a federal agency. Id. § 1536(a)(2). Section 7(a)(2) of the ESA requires each federal agency, in consultation with the Service, to "insure that any action authorized, funded, or carried out by such agency ... is not likely to jeopardize the continued existence of any endangered species or threatened species or result in the destruction or adverse modification of habitat of such species... which is ... critical." Id. A Service regulation defines "[j]eopardize" as "an action that reasonably would be expected... to reduce appreciably the likelihood of both the survival and recovery of a listed species." 50 C.F.R. § 402.02. The same regulation defines "[d]estruction or adverse modification" as an "alteration that appreciably diminishes the value of critical habitat for both the survival and recovery of a listed species." Id.
If an agency action may adversely affect a listed species's critical habitat, the action agency and the Service enter into a formal consultation process, at the conclusion of which the Service issues a biological opinion as to the effect of the federal agency action. If the Service concludes that the action will likely result in adverse modification of critical habitat, the Service is required set forth any reasonable and prudent alternatives to the action. See 50 C.F.R. § 402.14; 16 U.S.C. § 1536(b)(3)(A).
Once the Service properly determines that a species occupies a candidate area for critical habitat, the Service must then determine that "those physical or biological features (I) essential to the conservation of the species and (II) which may require special management considerations or protection" are "found" on specific areas within that area. 16 U.S.C. § 1532(5)(A)(i). Such features that satisfy the act's requirements are called Primary Constituent Elements ("PCEs"). See 50 C.F.R. § 424.12(b)(5). The agency's regulations help guide the selection of PCEs:
[T]he Secretary shall focus on the principal biological or physical constituent elements within the defined area that are essential to the conservation of the species. Known primary constituent elements shall be listed with the critical habitat description. Primary constituent elements may include, but are not limited to, the following: roost sites, nesting grounds, spawning sites, feeding sites, seasonal wetland or dryland, water quality or quantity, host species or plant pollinator, geological formation, vegetation type, tide, and specific soil types.
Id.
In CHAPA I, the Court directed the Service to "show that PCEs are found on the areas it designates as critical habitat." CHAPA I, 344 F.Supp.2d at 123.
a. The Service Adequately Considered Specific Management Determinations For Each PCE
In CHAPA I, the Court directed the Service to "focus on the management requirements of the area's features, not those requirements of the land merely associated with activities on the land." *24 CHAPA I, 344 F.Supp.2d at 124. The Court vacated and remanded the four areas of designation because it found that the Service improperly designated areas that did not contain any PCE's that were essential to the conservation of the piping plover. The Court also ordered the Service to clarify its finding that the PCE's as designated require special management or protections. Id.
In designating occupied critical habitat, the Service is required to determine that the areas it designates contain PCEs "which may require special management considerations or protection." 16 U.S.C. § 1532(5)(A)(i). The Court explained in CHAPA I that "the word `may' indicates that the requirement for special considerations or protections need not be immediate" but must require special consideration or protection "in the future." CHAPA I, 344 F.Supp.2d at 123-24.
Plaintiffs contend that the Service has again failed to meet its clear statutory duty because the unit descriptions are "devoid of any ... analysis for each PCE." Pls.' Mot. for Summ. J. 17. Unlike the original designation rule, however, the new designation rule adequately discusses special management considerations and protections. The Service undertook a two step process. First, the Service evaluates the lands defined by those physical and biological features that are "essential to the conservation of the species" pursuant to the ESA. The final rule states:
Based on our current knowledge of the life history, biology, and ecology of the species and the requirements of the habitat to sustain the essential life history functions of the species, we have determined that wintering piping plover's PCEs are the habitat components that support foraging, roosting, and sheltering and the physical features necessary for maintaining the natural processes that support these habitat components. The primary constituent elements are:
(1) Intertidal sand beaches (including sand flats) or mud flats (between annual low tide and annual high tide) with no or very sparse emergent vegetation for feeding. In some cases, these flats may be covered or partially covered by a mat of blue-green algae.
(2) Unvegetated or sparsely vegetated sand, mud, or algal flats above annual high tide for roosting. Such sites may have debris or detritus and may have micro-topographic relief (less than 20 in (50 cm) above substrate surface) offering refuge from high winds and cold weather.
(3) Surf-cast algae for feeding.
(4) Sparsely vegetated backbeach, which is the beach area above mean high tide seaward of the dune line, or in cases where no dunes exist, seaward of a delineating feature such as a vegetation line, structure, or road. Backbeach is used by plovers for roosting and refuge during storms.
(5) Spits, especially sand, running into water for foraging and roosting.
(6) Salterns, or bare sand flats in the center of mangrove ecosystems that are found above mean high water and are only irregularly flushed with sea water.
(7) Unvegetated washover areas with little or no topographic relief for feeding and roosting. Washover areas are formed and maintained by the action of hurricanes, storm surges, or other extreme wave actions.
(8) Natural conditions of sparse vegetation and little or no topographic relief mimicked in artificial habitat types (e.g., dredge spoil sites).
73 Fed. Reg. at 62,828.
The PCEs were derived based on the finding that those physical and biological features essential to the conservation of *25 the species that may require special management considerations or protections include (1) space for population growth and normal behavior; (2) food, water, air, light minerals, or other nutritional or physiological requirements; (3) cover or shelter; (4) sites for breeding, reproduction, and rearing (or development) of offspring; and (5) habitats that are protected from disturbance or are representative of the historical geographical and ecological distributions of a species. Id. The final rule also identifies activities that may destroy or adversely modify critical habitat the piping plover including "[d]redging and dredge soil placement, and associated activities including staging of equipment and materials... construction of dwellings, roads, marinas and other structures ... beach nourishment, cleaning, and stabilization ... certain types of recreational activities, such as vehicular activity that impact the substrate, resulting in reduced prey or disturbance to the species." Id. More generally, the rule describes:
[S]uch activities could eliminate or reduce the habitat necessary for foraging by eliminating or reducing the piping plovers' prey base; destroying or removing available upland habitats necessary for protection of the birds during storms or other harsh environmental conditions; increasing the amount of vegetation to levels that make foraging or roosting habitats unsuitable; increasing recreational activities to such an extent that the amount of available undisturbed foraging or rooting habitat is reduced, with direct or cumulative adverse effects to individuals and completion of their life cycles.
Id. at 62,829.
Second, the Service details the reasons why each unit may need special management. The final rule describes the features of each unit and identifies the potential disturbance to applicable PCEs. Id. For the first unit, the Oregon Inlet, the Service describes how the "overall number of piping plovers ... has declined since the species was listed ... corresponds to increases in the number of human users ... and off-road vehicles." Id. at 62,831. It also describes how the location is one of "the first beach access points for off-road vehicles within Cape Hatteras National Seashore when traveling from the developed coastal communications of Nags Head, Kill Devil Hills, Kitty Hawk, and Manteo. As such, the inlet spit is a popular area for off-road vehicle users to congregate." Id. Further, one island located within the area "receives dredge sediments from ... maintenance dredging" and the "disposal of dredged sediments has the potential to disturb foraging and roosting plovers and their habitats." Id.
For the second unit, Cape Hatteras point, the Service describes how the location is located near the largest community on Hatteras Island and for that reason, is a popular area for off-road vehicle use and recreational fishing. As a result, the Service concluded that the sandy beach, mud, and sand flat habitats in the unit may require special management considerations. Id.
For the third unit, Hatteras Inlet, the Service describes how the location is southernmost point of Cape Hatteras National Seashore that can be reached without having to take a ferry. As such, the location is a popular off-road vehicle and recreational fishing area. Further, the adjacent islands are easily accessed by boats, which are launched from nearby marinas. As a result, the sandy beach, mud and sand flat habitats may require special management considerations. Finally, the Service describes how the fourth unit, Ocracoke Island, can only be accessed by ferry, and is thus a popular destination spot for vacationers in search of seclusion, which brings with it off-road vehicle use and recreational fishing. Id.
*26 The Service is required to determine that the areas it designates contain PCEs "which may require special management considerations or protection." The Service complied with this requirement by describing the natural features of each unit, the impact of increased visitor use for each unit as well as the potential from dredge and sediment deposits on units one and four. Simply put, the Service identified a rational connection between the facts found and the choices it made.
b. The Service Adequately Addressed Existing Management Plans in Designating Critical Habitat
Plaintiffs contend that the Service improperly relied on a district court decision holding that if a habitat is already under some sort of management for its conservation, that particular habitat requires special management considerations or protection and therefore meets the definition of critical habitat. See Center for Biological Diversity v. Norton, 240 F.Supp.2d 1090 (D.Ariz.2003) (CBD). The district court decision relied on by the Service explains that "the fact that a particular habitat does, in fact, require special management is demonstrative evidence that the habitat is `critical.' ... [T]he position that if a habitat is actually under `adequate' management, then the habitat is per se not critical ... makes no sense." CBD, 240 F.Supp.2d at 1099. In reaching this conclusion, the court reasoned that "[a] habitat would not be subject to special management and protection if it were not essential to the conservation of the species." Id. Specifically, the CBD court overturned the critical habitat designation for the Mexican spotted owl in part based on the Service's decision to exclude land from the designation after finding that existing management plans were adequate and thus that the lands did not meet the definition of critical habitat. CBD, 240 F.Supp.2d at 1097-1103.
Here, the Service did not initially propose certain areas under existing management plans for designation as critical habitat because it found that the management plans for the areas provided adequate protection to the species and thus did not meet the definition of critical habitat under the ESA. AR XXXXXX-XX. However, the Service reconsidered its initial determination in light of the CBD decision and determined that the previously excluded areas "should be proposed as critical habitat." AR 006152.
Plaintiffs contend that this policy shift is arbitrary and that the Service improperly relied on CBD. This Court disagrees. Primarily, the Service did not rely solely on the CBD decision. The Service gives adequate factual reasons, independent of the CBD decision, for changing its mind to include these previously excluded areas. The final rule provides that the "additional areas are located within the range of the population, were occupied at the time of listing and are currently occupied, and contain habitat features essential for the conservation of the wintering piping plover, as described in the `Primary Constituent Elements' section of our June 12, 2006, rule."[2] 73 Fed. Reg. at 62,817-18. Additionally, *27 the final rule designation determinations do not rely exclusively on the CBD decision. As noted above, the final rule explains the special management needs of the PCEs on the unit areas that plaintiff challenge.
Further, "[a]n agency's interpretation of a statute is entitled to no less deference ... simply because it has changed over time." Alabama Educ. Ass'n v. Chao, 455 F.3d 386, 396 (D.C.Cir.2006) (quoting Nat'l Home Equity Mortgage Ass'n v. Office of Thrift Supervision, 373 F.3d 1355, 1360 (D.C.Cir.2004)). "Rather, the question raised by the change is whether the [agency] has supported its new reading of [the statute] with a reasoned analysis sufficient to command our deference under Chevron." Id. The CBD decision supports its conclusions with reasoned analysis and the Service is permitted to adopt the CBD court's rationale for its shift in policy. Even if the Court were to believe the shift is not the best construction, the Court is "obliged to accept the agency's construction of the statute, even if the agency's reading differs from what the court believes is the best statutory interpretation." Id. (citing Nat'l Cable & Telecomms. Ass'n v. Brand X Internet Servs., 545 U.S. 967, 125 S.Ct. 2688, 162 L.Ed.2d 820 (2005)).
Finally, plaintiffs assert that the Service's "arbitrariness of this unexplained shift is reflected in an internal FWS staff email," which states that the change "clearly indicates ... that we've made some determination that existing management of these sites may be inadequate." AR 257. However, the Service never declared the reason in including previously excluded areas was based on the inadequacy of the existing management plans. To the contrary, in basing its decision on CBD, the Service determined only that these areas should be designated as critical habitat. As such, the Court finds the Service set forth a rational connection between the facts and the choice it made.
c. The Service Adequately Addressed the Interim Plan in Designating Critical Habitat
The ESA requires the Service to "designate critical habitat, and make revisions thereto, under subsection (a)(3) of this section on the basis of the best scientific data available and after taking into consideration the economic impact, the impact on national security, and any other relevant impact, of specifying any particular area as critical habitat." 16 U.S.C. § 1533(b)(2).
Plaintiffs contend that the Service was required to give consideration to NPS's interim plan regarding off-road vehicle usage as a relevant impact under the ESA. Plaintiffs assert that the plan was never thoroughly reviewed or adequately assessed. However, the Service has considerable discretion as to what it defines to be "other relevant impacts" under the ESA. The final revised rule provides:
We consider a number of factors in a section 4(b)(2) analysis. For example, we consider whether ... the landowners have developed any conservation plans for the area, or whether there are conservation partnerships that would be encouraged *28 by designation of, or exclusion from, critical habitat.... We also consider any social impacts that might occur because of the designation.
In this instance, we have determined that ... there are currently no habitat conservation plans.... We anticipate no impact ... habitat conservation plans from this critical habitat designation. Therefore, there are no areas excluded from this final designation based on non-economic impacts.
73 Fed. Reg. at 62,833-834.
The Service's conclusion is reasonable in relation to the role of the interim plan. The interim plan has nothing to do with the wintering piping plover; it focuses primarily on breeding piping plovers and other species of shorebirds and sea turtles. The interim plan also does not govern all of the areas subject to the Service's critical habitat designation. Further, the interim plan's focuses on off-road vehicle use, not all recreational uses that may impact the critical habitat of the piping plover. Finally, the interim plan is temporary.
Even if plaintiffs' argument did not suffer these fatal flaws, it is settled that the ESA does not authorize "nondesignation of habitat when designation would be merely less beneficial to the species than another type of protection." Natural Res. Def. Council v. U.S. Dep't of Interior, 113 F.3d 1121, 1127 (9th Cir.1997); see also N. Spotted Owl v. Lujan, 758 F.Supp. 621, 629 (W.D.Wash.1991) ("That [a coalition of government entities] was working to develop conservation strategies for the spotted owl did not relieve the Service of its obligation under the ESA to designate critical habitat to the maximum extent determinable."); Middle Rio Grande Conservancy Dist. v. Babbitt, 206 F.Supp.2d 1156, 1169 (D.N.M.2000) ("The [ESA] compels the designation [of critical habitat] despite other methods of protecting the species the Secretary might consider more beneficial.")
d. The Service Properly Exercised Its Discretion in Not Excluding Areas From the Critical Habitat Designation
The Service has discretion when it comes time to decide whether to exclude areas from a critical habitat designation. 16 U.S.C. § 1533(b)(2); 50 C.F.R. § 424.19; see also CHAPA I, 344 F.Supp.2d at 127. Specifically, "[t]he Secretary may exclude any area from critical habitat if he determines that the benefits of such exclusion outweigh the benefits of specifying such area as part of the critical habitat, unless he determines, based on the best scientific and commercial data available, that the failure to designate such area as critical habitat will result in the extinction of the species concerned." 16 U.S.C. § 1533(b)(2).
Here, the Service decided not to exclude any areas. 73 Fed. Reg. at 62,834 ("there are no areas excluded from this final designation based on non-economic impacts"); Id. at 62,835 ("Because our economic analysis did not identify any disproportionate costs that are likely to result from the designation, we did not consider excluding any areas from this designation of critical habitat for the wintering population of piping plover in North Carolina based on economic impacts.").
Although there is a strong presumption that agency action is reviewable, see Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 410, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971); Abbott Labs. v. Gardner, 387 U.S. 136, 140, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967), the APA codifies the traditional exception that agency action is not reviewable when it is "committed to agency discretion by law." 5 U.S.C. § 701(a); see Heckler v. Chaney, 470 U.S. 821, 828, 105 S.Ct. 1649, 84 L.Ed.2d 714 *29 (1985); Sec. of Labor v. Twentymile Coal Co., 456 F.3d 151 (D.C.Cir.2006). In Overton Park, the Supreme Court declared that this exception to the presumption of reviewability applies "in those rare instances where statutes are drawn in such broad terms that in a given case there is no law to apply." 401 U.S. at 410, 91 S.Ct. 814. As the Court subsequently explained in Heckler v. Chaney, "review is not to be had if the statute is drawn so that a court would have no meaningful standard against which to judge the agency's exercise of discretion." 470 U.S. at 830, 105 S.Ct. 1649. "In such circumstances, the courts have no legal norms pursuant to which to evaluate the challenged action, and thus no concrete limitations to impose on the agency's exercise of discretion." Drake v. FAA, 291 F.3d 59, 70 (D.C.Cir. 2002).
In the instant case, the Service's decision is unreviewable pursuant to the APA because there is no standard for the Court to apply to the agency's exercise of discretion to not exclude any areas. The statute states that the Service "may exclude any area from critical habitat if [it] determines that the benefits of such exclusion outweigh the benefits of specifying such area as part of the critical habitat, unless he determines ... the failure to designate such area as critical habitat will result in the extinction of the species concerned." 16 U.S.C. 1533(b)(2). The plain reading of the statute fails to provide a standard by which to judge the Service's decision not to exclude an area from critical habitat. The Court's decision is in accord with another district court faced with the same question. See Home Builders Ass'n of N. Cal. v. U.S. Fish & Wildlife Serv., 2006 WL 3190518, at *20 (E.D.Cal. Nov. 2, 2006). In that case, the court concluded that it had "no substantive standards by which to review the Service's decisions not to exclude certain tracts based on economic or other considerations, and those decisions are therefore committed to agency discretion." Id. This Court agrees and concludes the Service's decision not to exclude areas from the critical habitat designation is not reviewable pursuant to the APA.[3]
e. The Service Adequately Considered Economic Impacts in Designating Critical Habitat
The ESA directs that the "Secretary shall designate critical habitat ... on the basis of the best scientific data available and after taking into consideration the economic impact ... of specifying any particular area as critical habitat." 16 U.S.C. § 1533(b)(2). When using this and other relevant data to inform its decision, the Service has wide discretion in determining whether to exclude particular areas. Arizona Cattle Growers' Ass'n v. Kempthorne, 534 F.Supp.2d 1013, 1032 (D.Ariz.2008). To this effect, the ESA provides that the Service "may exclude any area from critical habitat if [it] determines that the benefits of such exclusion outweigh the benefits of specifying such area as part of the critical habitat." 16 U.S.C. § 1533(b)(2). This discretion is limited only to the extent that the Service may not exclude areas from a designation if it determines that *30 "failure to designate such area as critical habitat will result in the extinction of the species." Id.
In CHAPA I, the Court considered two approaches to conducting the economic analysis required as part of the process of designating critical habitat under the ESAthe "functional equivalence approach" and the "baseline approach." CHAPA I, 344 F.Supp.2d at 126-33. The Court concluded that the baseline approach was the appropriate method. Id. The baseline approach requires the Service to compare "the state of the world without or before the designation, the baseline, with the state of the world with or after the designation." Id. at 127. In other words, the Service must "consider[] those economic impacts that would not have occurred but for the critical habitat designation," not any and all economic impacts that were also attributable to the listing of the species. Arizona Cattle Growers' Ass'n, 534 F.Supp.2d at 1032. If the Service was to include those costs that are "attributable co-extensively to other causes," the economic impact method would be inconsistent with the ESA. Id. at 1033-35. As stated by the District of Arizona Court,
Where a coextensive approach is taken, the Service goes beyond the command of the ESA by examining impacts that exist independent of the critical habitat designation. This only inhibits the resolution of the ultimate question-whether economic impacts suggest that exclusion of certain areas outweighs the benefits of inclusion-and confuses the real costs of making the designation. Additionally, this Court agrees that the inclusion of coextensive costs implicitly violates the ESA's disallowance of consideration of economic factors at the time of listing. Consideration of coextensive impacts simply amounts to a backhanded method of recognizing costs which could not legally be examined during listing. Finally, an expansive interpretation of "economic impacts" is contradictory to the overall purpose of the ESA, which speaks only to conservation, without regard to costs or other economic considerations.
Arizona Cattle Growers' Ass'n, 534 F.Supp.2d at 1035.
In CHAPA I, the court remanded the critical habitat designation to the Service to clarify its approach pursuant to the baseline approach. The CHAPA I remand order required the Service to clarify whether its economic analysis included costs related to the effects of off-road driving on the beaches and consultation with NPS. CHAPA I, 344 F.Supp.2d at 132-33. In the instant case, plaintiffs do not challenge the Service's compliance with the court's order to clarify its economic analysis regarding consultation with NPS.
Plaintiffs contend that the revised final rule continues to rely on the functional equivalence doctrine and fails to clearly identify the baseline economic impacts or to perform a proper incremental baseline analysis to accurately assess the additional economic impacts of the designations. Specifically, plaintiffs state that the Service never considered how the costs of consultation for seven activities it lists which would require consultation would differ from Section 7 consultations for listing, given the lower consultation threshold necessary to meet the recovery objective of critical habitat. Plaintiffs also state the economic analysis fails to adequately address potential impacts to off-road vehicle usage and other administrative costs.
However, the revised Economic Analysis utilizes the baseline approach, albeit in a convoluted fashion. At the outset, the report explains that the "previous economic analysis failed to consider the effect of possible beach closures on off-road vehicle (ORV) use and potential administrative *31 costs to the National Park Service (NPS) resulting from section 7 consultation. The current analysis focuses on these two sources of economic impacts, and the incremental impacts that could result if additional beach closures are undertaken to protect plover critical habitat." Final Economic Analysis ES-1 ¶ 3; AR 7081.
i. Administrative Cost Assessments
The Final Economic Analysis states that the "economic impacts of critical habitat designation involve evaluating the `without critical habitat' baseline versus the `with critical habitat' scenario. Impacts of designation equal the difference, or increment, between these two scenarios." Final Economic Analysis 1.4 ¶ 23; see also 73 Fed. Reg. at 62826 ("it is important to distinguish between impacts resulting from actions taken pursuant to the Consent Decree, which are considered as baseline to this analysis, because these impacts are assumed to occur absent a designation of critical habitat."). The economic analysis goes on to define the range of incremental costs, from a high-end estimate that assumes that incremental impacts would result from NPS closing additional areas of the beach beyond those that would be closed under current NPS management (i.e., in the absence of designation) to a low-end estimate that assumes no trips will be lost. Id. As such, the baseline includes all closures resulting from current management by NPS. See 73 Fed. Reg. at 62826 ("closures [currently implemented] are considered baseline to this analysis in that they would be expected to occur regardless of the designation.") As such, the Service decided to make this the baseline based on the fact that all of the areas proposed for critical habitat designation are on land governed by NPS, thus subject to closure pursuant to the interim plan. Id. As a result the incremental costs used by the Service would be incurred only if there were additional closures based on critical habitat designation.
Additionally, the Service analysis evaluates baseline administrative costs in addition to future administrative costs. These administrative costs include environmental consultations. The economic analysis identifies a range of past formal, informal and technical assistance costs with the same costs proposed through 2026. See Final Economic Analysis 4-4. The report identifies that "[e]stimates of the cost of an individual consultation and technical assistance request were developed from a review and analysis of historical section 7 files from a number of Service field offices around the country conducted in 2002. These files addressed consultations conducted for both listings and critical habitat designations. Cost figures were based on an average level of effort of low, medium, or high complexity, multiplied by the appropriate labor rates for staff from the Service and other Federal agencies." Id. at 4-1. The report summarizes past administrative costs, including consultation costs and compares them to potential future administrative costs. In other words, the report compares "the state of the world without or before the designation, the baseline, with the state of the world with or after the designation." CHAPA I, 344 F.Supp.2d at 127.
Plaintiffs contend that the Service was required to identify a specific dollar amount in order to perform a mathematical calculation. See Pls.' Memo. In Opp'n to Defs.' Mot. for Summ. J. and in Supp. of Pls.' Mot. for Summ. J. at 6. Specifically, plaintiffs point to Arizona Cattle Growers' Ass'n v. Kempthorne, 534 F.Supp.2d 1013 (D.Ariz.2008), in which the court stated that "the economic impact created by a critical habitat designation is naturally the mathematical difference between [the world with the designation compared to the world without it]." Taken in isolation, the quote supports the position that a quantification of baseline costs is required. *32 However, the "mathematical difference" is being compared to a "coextensive approach," which is an approach that takes into account all of the economic impacts of the critical habitat designation, regardless of whether those impacts are caused coextensively by any other agency action and even if those impacts would remain in the absence of the designation. In effect, the court is simply comparing the baseline approach with the functional approach, rather than requiring a quantitative calculation of the baseline.
Federal defendants did not quantify the baseline costs. Instead, the Service followed the direction of the Court in CHAPA I by identifying a baseline, which in this case is a "no action baseline: what the world will be like if the proposed rule is not adopted." CHAPA I, 344 F.Supp.2d at 130. Similarly, in Arizona Cattle Growers' Ass'n v. Kempthorne, the court only required that the baseline impacts be excluded from the final calculations of costs. The Service conducted its baseline economic analysis in the same way a court upheld in Fisher v. Salazar, 656 F.Supp.2d 1357 (N.D.Fla.2009). In Fisher, the court determined that certain impacts were part of the baseline and that their costs were properly excluded from the costs attributed to the designation but did not require the agency to quantify the impacts with dollar amounts. Id. at 1372. Here, the Service identified and excluded similar baseline impacts. As such, plaintiffs fail to establish that the Service's administrative cost analysis is arbitrary and capricious.
ii. Off-Road Vehicle Cost Assessments
Similarly, the Final Economic Analysis calculates and evaluates the baseline and incremental costs of changes to off-road vehicle use stemming from the potential critical habitat designation. Plaintiffs contest the Service' analysis of the economic impact the critical habitat designation will have on off-road vehicles because (1) the Service impermissibly failed to consider future closing by attributing them to the interim plan and consent decree; and (2) the analysis relies on unreliable information in determining the economic impact on local business and governments caused by the critical habitat designation.
The Service concluded that NPS undertakes "various management actions for the piping plover, including seasonal closures for the breeding population, year-round closures of important foraging and roosting sites, continued predator removal, additional recreation use restrictions, and public outreach." Final Economic Analysis 2-6 ¶ 44. Further, "Because these costs were associated with a wide variety of species and still would be implemented absent the designation of critical habitat for the wintering population of the piping plover, this analysis does not attribute these costs to the designation of critical habitat." Id. The Court concludes that this is a reasonable conclusion. Plaintiffs can point to nothing in the record that demonstrates that the Service improperly attributed future closures to the Interim Plan of Consent Decree.
Plaintiffs also contend that the Service relied on flawed data. Specifically, plaintiffs contend that the methodology used in the analysis is flawed because (1) it fails to factor in impact variations due to the location of additional closures; (2) the study regarding off-road vehicles usage is inaccurate; and (3) the Service failed to consider information from business owners. Plaintiffs are incorrect that the data relied upon does not factor variations due to the location of the potential closure. In fact, the analysis assigns a uniform cost to all areas. Thus, the variations based on location are factored into the very beginning of the analysis. See Id. at 2-10-2-13. Additionally, plaintiffs do not identify any contrary data they want the Service to use in the *33 analysis. As such, the methodology satisfies the best available data requirement. See Center for Biological Diversity v. BLM, 422 F.Supp.2d 1115, 1150-51 (N.D.Cal.2006) (concluding that the approach usedassuming that off-road vehicle use was evenly distributed throughout the entire areawas consistent with the agency's obligation to use the best available data).
Similarly, plaintiffs contend that the Service improperly relied on a flawed study, the Vogelsong study, as the best available science and failed to explain why it did not rely on another study, the Neal study, which also contained flawed data. See 73 Fed. Reg. at 62824. Both studies contain data on off-road vehicles visitation numbers at the Cape Hatteras Seashore. However, the Service clearly addresses plaintiffs' concerns in the final rule: "Despite the issues raised in the peer review, [the Service] believes that the results contained in the [Vogelsong study] represent the best available information to support an understanding of the potential economic impacts of this proposed designation, and that the manner in which the information from this study are applied ... represents a reasonable application of the study consistent with the concerns raised in the peer review process." Id. The Final Economic Analysis contains further detail about the Service's decision to use to study. The Service acknowledged that "[t]his estimate has been criticized because: (1) it is based on a series of brief, on-site counts of ORVs rather than daily totals obtained from on-site observation throughout the entire day; and (2) it is not based on a "probability sample" of visitors (i.e., a sample in which each visitor has an equal probability of being selected to respond to the survey)." Final Economic Study 2-13 ¶ 70. Further, the report addressed the concerns with the study:
(1) The brief, on-site counts will provide reasonable estimates of the number of ORV visits if all ORV visitors spend the entire day at the beach. If visits tend to be shorter than a day, then these brief counts will likely miss a portion of the ORV visitors. In particular, ORV visitors will not be counted if their entire visit occurs either before or after the survey personnel arrive on site. This will lead to an underestimate of the total number of ORVs. It would be difficult to adjust the estimates from this survey to address this issue, as the degree of potential bias would depend on many unknown factors, including the distribution of ORV trip lengths, arrival/departure times, and the times selected for the on-site counts. While this analysis acknowledges that Vogelsong's approach may underestimate ORV visitation, these are the currently the best available data, the biases in the results obtained using these data are well understood and described herein.
(2) The Vogelsong report does not provide a detailed description of the sampling approach and estimation methodology. Lacking this, this analysis assumes that a probability sample was not used. However, it does appear that Vogelsong sampled on a reasonably large number of days (both weekdays and weekends) well distributed through the year, and that the sampling covered the major beach areas used by ORVs. While probability sampling is clearly preferable for this type of study, this analysis expects that the Vogelsong study is sufficiently representative for use in our analysis.
Final Economic Analysis X-XX-X-XX. Given a choice between two flawed studies, the Service adequately explained its choice to rely on the Vogelsong study.
Finally, plaintiffs contend that the economic analysis is flawed because it does not rely on information provided from local *34 business owners. The Service addresses this issue in the final rule: "A survey regarding the specific potential effects of management closures on individual business is beyond the scope of this analysis. The [draft economic analysis] used best available data on such factors as the size and annual sales of business collected ..." 73 Fed. Reg. at 62854. The Service was not required to conduct additional studies. See Sw. Ctr. For Biological Diversity v. Babbitt, 215 F.3d 58, 60 (D.C.Cir.2000); City of Las Vegas v. Lujan, 891 F.2d 927, 933 (D.C.Cir.1989).
f. NEPA
Congress passed the National Environmental Policy Act (NEPA) in 1969 in order to insure that all agencies of the federal government consider the environmental effects of proposed actions. Sierra Club v. Watkins, 808 F.Supp. 852, 858 (D.D.C. 1991). NEPA's primary purpose is to make certain "that the agency, in reaching its decision, will have available, and will carefully consider, detailed information concerning significant environmental impacts." Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 349, 109 S.Ct. 1835, 104 L.Ed.2d 351 (1989). In addition to providing information to the decisionmakers at the agency, NEPA also "guarantees that the relevant information will be made available to the larger audience that may also play a role in both the decisionmaking process and the implementation of that decision." Id. This audience includes the public because the documentation "gives the public the assurance that the agency has indeed considered environmental concerns in its decisionmaking process, and, perhaps more significantly, provides a springboard for public comment." Sierra Club v. Watkins, 808 F.Supp. at 858 (quoting Baltimore Gas & Electric Co. v. Natural Resources Defense Council, 462 U.S. 87, 97, 103 S.Ct. 2246, 76 L.Ed.2d 437 (1983); Robertson, 490 U.S. at 349, 109 S.Ct. 1835). Instead of "mandating particular environmental results, NEPA imposes procedural requirements on federal agencies to analyze the environmental impact of their proposals and actions." O'Reilly v. United States Army Corps of Engineers, 477 F.3d 225, 228 (5th Cir.2007).
At the heart of NEPA is § 4332(2)(C), which requires that a government agency prepare an environmental impact statement (EIS) whenever a proposed government action qualifies as a "major Federal action significantly affecting the quality of the human environment." See Balt. Gas & Elec. Co. v. Natural Res. Def. Council, 462 U.S. 87, 97, 103 S.Ct. 2246, 76 L.Ed.2d 437 (1983). Specifically, NEPA requires, "to the fullest extent possible," all agencies of the federal government to prepare environment impact statements for any "major Federal actions significantly affecting the quality of the human environment." 42 U.S.C. § 4332(2)(C). When it is not readily discernible how significant the environmental effects of a proposed action will be, federal agencies may prepare an Environmental Assessment ("EA"). 42 U.S.C. § 4332(2)(E); see also 40 C.F.R. § 1501.4(b). In other words, an environmental assessment (EA) is made in order to determine whether an EIS is required. See 40 C.F.R. § 1508.9; Grand Canyon Trust v. Federal Aviation Administration, 290 F.3d 339, 340 (D.C.Cir.2002). Specifically, an EA is a "concise public document... that serves to ... [b]riefly provide sufficient evidence and analysis for determining whether to prepare an [EIS] or a finding of no significant impact." 40 C.F.R. § 1508.9(a)(1). Federal agencies must comply with NEPA "to the fullest extent possible." 42 U.S.C. § 4332.
Under the "long-established standard in this circuit," the court reviews an agency's finding of no significant impact, or in other words, decision to not prepare an EIS, in order to determine whether the *35 agency has accurately identified the relevant environmental concerns and has taken a "hard look" at the potential environmental consequences of their actions. Grand Canyon Trust, 290 F.3d at 340. Specifically, the agency must (1) accurately identify the relevant environmental concern; (2) take a "hard look" at the environmental consequences of the action; (3) make a "convincing case" that the potential environmental impact is not significant enough to require a EIS; and (4) show that "even if there is an impact of true significance, [an EIS] is unnecessary because changes or safeguards in the project sufficiently reduce the impact to a minimum."[4]Mich. Gambling Opposition v. Kempthorne, 525 F.3d 23, 29 (D.C.Cir.2008) (citing TOMAC v. Norton, 433 F.3d 852, 861 (D.C.Cir.2006)); see also Robertson, 490 U.S. at 350, 109 S.Ct. 1835.
However, because NEPA is a procedural and not a results-driven statute, even agency action with adverse environmental effects can be NEPA-compliant so long as the agency has considered those effects and determined that competing policy values outweigh those costs. Ohio Valley Envtl. Coal. v. Aracoma Coal Co., 556 F.3d 177, 191 (4th Cir.2009) (citing Robertson, 490 U.S. at 350, 109 S.Ct. 1835.) Even if the court finds the contrary views more persuasive, the court will not secondguess the agency's decision so long as the agency followed NEPA's procedures. Marsh v. Or. Natural Res. Council, 490 U.S. 360, 378, 109 S.Ct. 1851, 104 L.Ed.2d 377 (1989).
Plaintiffs contend that the Service's EA is deficient because (1) its discussion of environmental consequences regarding impact to recreational, economic, and social resources relies heavily on a flawed economic analysis; and (2) it lacks sufficient information regarding the importance of the Cape Hatteras Seashore as wintering habitat and its relation to the wintering piping plover populations throughout the nation. Both contentions are unsupported by the record.
First, as already discussed, the Service adequately described its decision to use the flawed Vogelsong economic study and not the flawed Neal economic status. Further, the Service's methodology satisfies NEPA because NEPA allows the agency the discretion of what methodology to use and does not require the use of the best scientific methodology available. See Sierra Club v. DOT, 753 F.2d 120, 128-29 (D.C.Cir.1985) (it is "clearly within the expertise and the discretion of [the agency] to determine proper ... testing methods.") see also, Friends of the Boundary Waters Wilderness v. Dombeck, 164 F.3d 1115, 1130 (8th Cir.1999) ("[Courts] defer to the agency's choice of methodology as long as it is not arbitrary or without foundation."); Oregon Envt'l Council v. Kunzman, 817 F.2d 484, 496 (9th Cir.1987) ("NEPA does not require that we decide whether an [EIS] is based on the best scientific methodology available, nor does NEPA require us to resolve disagreements among various scientists as to methodology."). Additionally, the EA adequately considers the impact of critical *36 habitat designation on recovery of the wintering piping plover. See AR 7246; 7253; 7261.
VI. Conclusion
An agency decision is arbitrary and capricious "if the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise." Motor Vehicle Mfrs. Ass'n of U.S., Inc., 463 U.S. at 43, 103 S.Ct. 2856. Plaintiffs here have demonstrated nothing of the sort. The Service has fulfilled its statutory duties pursuant to ESA and NEPA. While plaintiffs have standing to bring this action, the Service properly designated and evaluated the special management considerations for each primary constituent element as required by the ESA. Further, the Service properly considered economic and other impacts as required by the ESA. Finally, after taking a "hard look" at the potential environmental consequences, the Service correctly determined that an EIS was not required pursuant to NEPA.
For the reasons set forth in this opinion, plaintiff's motion for summary judgment will be denied. Likewise, government defendants' cross-motion for summary judgment will be granted and intervening defendants' cross-motion for summary judgment will be granted.
A separate order shall issue this date.
NOTES
[1] As in CHAPA I, the Court notes that for each claim, if constitutional and prudential standing can be shown for at least one plaintiff, standing may extend to all plaintiffs, and the Court need not consider the standing of the other plaintiffs to raise that claim. CHAPA I, 344 F.Supp.2d at 118 n. 2 (citing Mountain States Legal Found., 92 F.3d at 1232).
[2] These essential features "include sand and/or mud flats with no or very sparse emergent vegetation. In some cases, these flats may be covered or partially covered by a mat of blue-green algae. Adjacent unvegetated or sparsely vegetated sand, mud, or algal flats above high tide are also essential, especially for roosting piping plovers. Such sites may have debris, detritus (decaying organic matter), or micro-topographic relief (less than 50 cm above substrate surface) offering refuge from high winds and cold weather. Essential components of the beach/dune ecosystem include surf-cast algae for feeding of prey, sparsely vegetated backbeach (beach area above mean high tide seaward of the dune line, or in cases where no dunes exist, seaward of a delineating feature such as a vegetation line, structure, or road) for roosting and refuge during storms, spits (a small point of land, especially sand, running into water) for feeding and roosting, salterns (bare sand flats in the center of mangrove ecosystems that are found above mean high water and are only irregularly flushed with sea water) and washover areas for feeding and roosting. Washover areas are broad, unvegetated zones with little or no topographic relief that are formed and maintained by the action of hurricanes, storm surge, or other extreme wave action. Several of these components (sparse vegetation, little or no topographic relief) are mimicked in artificial habitat types used less commonly by piping plovers, but that are considered critical habitat (e.g., dredge spoil sites)." 71 Fed. Reg. 33707.
[3] Even if the agency's decision was reviewable, the record supports the agency's decision not to exclude. See 73 Fed. Reg. at 62,835 (The FWS analysis "did not identify any disproportionate costs that are likely to result for the designation); Id. at 62,834 ("[W]e have determined that the lands designated as critical habitat for the wintering population of piping plover in North Carolina are not owned or managed by the Department of Defense, there are currently no habitat conservation plans, and the designation does not include any Tribal lands or trust resources. We anticipate no impact to national security, Tribal lands, partnerships, or habitat conservation plans from this critical habitat designation.).
[4] The additional requirement to make a "convincing case" differs somewhat from the requirements of Overton Park. The Court of Appeals determined that this additional requirement is appropriate in the context of the NEPA: "This burden should rest on the Government, both because of the high value placed on the protection of the environment by the National Environmental Policy Act of 1969, and because of the risk of error which results from not writing an impact statement on a project requiring one." Md.-Nat'l Capital Park & Planning Comm'n v. U.S. Postal Serv., 487 F.2d 1029, 1040 n. 10 (D.C.Cir. 1973) (citing Int'l Harvester Co. v. Ruckelshaus, 478 F.2d 615 (D.C.Cir.1973)).
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01-03-2023
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10-30-2013
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https://www.courtlistener.com/api/rest/v3/opinions/2660036/
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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
___________________________________
)
LENA T. KONAH, )
)
Plaintiff, )
)
v. ) Civil Action No. 10-904 (RMC)
)
DISTRICT OF COLUMBIA, et al., )
)
Defendants. )
___________________________________ )
OPINION
Lena T. Konah worked as a licensed practical nurse at the D.C. Jail until the
events that underlie this lawsuit caused her to take a leave of absence and eventually decide not
to return. On her last day of work, Ms. Konah was accosted by a group of semi-clothed inmates
who made repeated lewd comments and one of whom grabbed her buttocks. Totally unnerved
by the experience, Ms. Konah contends that the District of Columbia failed to train its
correctional employees to respond adequately to inmates’ sexual abuse of staff and thus violated
her right to equal protection under the Fifth Amendment’s Due Process Clause. The District
moves for summary judgment. For the reasons stated below, the Court will grant the motion.
I. FACTS
This case has previously been addressed by the Court. The facts and procedural
history are set forth in detail in Konah v. District of Columbia (Konah I), 815 F. Supp. 2d 61
(D.D.C. 2011) (granting in part and denying in part motion to dismiss; exercising supplemental
jurisdiction over state-law claims) and in Konah v. District of Columbia (Konah II), 915 F. Supp.
2d 7 (D.D.C. 2013) (granting summary judgment to Unity and Sgt. Robert Jefferson; granting
partial judgment on the pleadings to the District). There is now only one count remaining: a
1
claim against the District of Columbia under Monell v. Department of Social Services of the City
of New York, 436 U.S. 658, 691–92 (1978), alleging sexual harassment by inmates due to
inadequate training of correctional officers. See 3d Am. Compl. [Dkt. 64] ¶¶ 54–62. This
Opinion reviews only the facts relevant to the outstanding claim and states them in the light most
favorable to Ms. Konah. No additional discovery was conducted after Konah II was issued, and
that opinion was based on an extensive record, which included depositions of many key
witnesses, documentary evidence, and video recordings. Therefore, the Court cites to the facts as
set forth in Konah II except where additions are necessary or where the parties contend that a
material factual dispute remains.
A. Background
From November 2006 through September 2009, Ms. Konah worked as a Licensed
Practical Nurse (LPN) for Unity Health Care, Inc., which provides medical services to inmates at
the D.C. Central Detention Facility (CDF, also referred to as the D.C. Jail) under contract with
the District’s Department of Corrections (DOC). Konah II, 915 F. Supp. 2d at 12. One of the
duties of LPNs was to distribute medicine to inmates, which nurses typically did in the housing
units of the jail. Id. at 13. Correctional officers were required to accompany nurses at all times
when they dispensed medication, and if an officer was not immediately available, a nurse could
“just come back and wait for one.” Id. (quoting Konah Dep. at 100; other record citations
omitted). Waiting for an officer was Ms. Konah’s typical practice. Id.
It was not uncommon for inmates to insult or assault staff at CDF by cursing them
or using other inappropriate language, masturbating in front of them, or throwing urine, feces, or
other liquids at them. Id. at 13, 25. The targets of these attacks were both correctional
employees and contractors, including Unity nurses; both men and women were victims. Id.; see
also Jefferson Dep., Def. Mot. Summ. J. (Def. MSJ) [Dkt. 90], Ex. 2 [Dkt. 90-4] at 42–45, 91–92
2
(“Q. . . . [I]s the yelling, the cursing, the throwing of fecal matter, the throwing of urine, is that
only limited to female officers? A. No.”). As Dr. Benedict Kargbo, a CDF treatment specialist,
testified:
Q. Is the act of inmates throwing urine or feces at correctional
staff, is that common?
A. Yes. It happen[s] all the time.
Q. And does it happen in other jails that you’ve worked in?
A. Yes, it does.
Q. And is it directed at females only?
A. No.
Q. Is it directed at nurses only?
A. No.
Kargbo Dep., Def. MSJ, Ex. 5 [Dkt. 90-7] at 46–47, 62–63, 68–69. Sergeant Jefferson
acknowledged, however, that inmates did not masturbate “frequently” in front of males, directing
that behavior largely at female staffers. Jefferson Dep. at 42–44.
“Assault by Throwing Substances,” including “liquids, blood, waste, chemicals,
urine, etc.” was listed as a Class I Major Offense in the Inmate Handbook given to all CDF
inmates, and “[w]illfully subjecting an employee of the DOC to offensive bodily contact” was a
Class II Serious Offense. See Inmate Handbook, Def. MSJ, Ex. 6 [Dkt. 90-8] at 16, 20. These
violations were punishable with administrative penalties ranging from loss of privileges or work
assignment to disciplinary detention; for a Class I Major Offense, disciplinary detention could be
imposed for the remainder of an inmate’s time in custody. Id. at 19–20, 23. Class I Major
Offenses could also be prosecuted criminally. Id. at 16.
On April 21, 2009, several nurses, including Ms. Konah, sent a letter to Unity
management, complaining about security practices at the jail. Konah II, 915 F. Supp. 2d at 13;
see also April 21, 2009 Letter (4/21/09 Letter), Pl. Opp. Mot. Summ. J. (Pl. Opp.) [Dkt. 91], Ex.
5 [Dkt. 91-6] at 1. Titled “Deplorable Security Conditions During Medication Administration,”
the letter stated, in relevant part:
3
We are writing this notice because of the deplorable security
conditions we are facing during medication pass. On 4/11/09 feces
were thrown on nurse Igwulu Francisca. On 4/19/09 some
unknown liquid was thrown on nurse Tyler Ashly. Before then,
about a week ago, unknown liquid was thrown on nurse Akoto
Joyce. A similar incident happened to nurse Harper and nurse
Nwaobilor. Nurse Tangunyi was hit with a bar of soap from
behind. Unknown liquid was thrown on nurse Tandong.
Curiously notwithstanding all this incidents and all our pleas for
the situation to be looked into, nothing has been done. . . . We
keep wondering if a nurse needs to be stabbed or even killed here
before this issue will be looked into.
We had previously brought our predicaments to the nursing
administrator who promised to get in touch with the DOC
administration so that the officers will bring the inmates to the
bubble or to the sick call room to be medicated, but till this date we
have not hear of the out come. . . .
4/21/09 Letter at 1 (alteration in brackets; all other spelling and formatting as in original).
Nurses Tangunyi is male; Nurses Francisca Igwulu and Ashly (or Ashley) Tyler are females; Ms.
Konah is female, and the rest of the nurses’ genders are not in the record. Konah Dep., Def.
MSJ, Ex. 1 [Dkt. 90-3] at 70–72.
“The bubble” referenced in the 4/21/09 Letter is the glass-walled control module
staffed by corrections employees that sits at the entrance of each “open population” housing unit
in the D.C. Jail. Open-population inmates are often released from their cells to mingle and
congregate generally in their cell block. From the bubble, a corrections sergeant controls two
gates for each cell block: one gate connects the cell block to a narrow hallway called the “sally
port” 1 while the second gate connects the sally port to the main hallway of the jail. The sally
port is the ingress and egress to the cell block for inmates and corrections staff, and inmates are
not supposed to be in the sally port without a corrections officer as an escort. Only one gate in
1
A modern sally port is most often a controlled entrance into a secured and protected area, such
as a prison.
4
the sally port may be open at any given time because otherwise, inmates could run out into the
hallway of the jail, which would be a security breach. Also referenced in the 4/21/09 Letter are
“sick call rooms,” which are small rooms with Dutch doors adjacent to the sally ports. A nurse
can stand inside a sick-call room with the bottom half of the door closed and locked and dispense
medication through the open top half of the door. To access a sick-call room, a nurse would sign
out the key and return it when s/he was done. Konah II, 915 F. Supp. 2d at 12–13 (record
citations omitted).
The parties dispute the evolution of the policy on the use of sick-call rooms. It is
clear that prior to the 4/21/09 Letter, sick-call rooms were available for use, but the nurses’
prevailing practice was to enter the cell blocks and dispense medication to inmates in open
population or cell-to-cell. See Konah II, 915 F. Supp. 2d at 13. For example, CDF records show
that Ms. Konah signed out a key and used a sick-call room in March 2009, id. (citations omitted),
but she asserts that “the only policy on dispensing medications that she knew and understood
. . . [was] that nurses dispensed medications on the units walking around the tiers/units and that
there was no specific place to dispense medications,” Pl. Statement of Material Facts in Dispute
(Pl. SOF), Dkt. 91-1, ¶ 2.
After receiving the 4/21/09 Letter, Vali Zabiheian, Unity’s Health Services
Administrator and the senior management representative for Unity at the D.C. Jail, implemented
a “sick call room policy” for medication distribution. Konah II, 915 F. Supp. 2d at 13. Under
the new policy, “medication administration and dispensing by the nursing and pharmacy staff”
was to “take place in the sick call rooms on the housing units,” and Unity staff would “no longer
walk on the housing units to administer medicine in open population.” Id. (citing Apr. 22, 2009
Zabiheian Memo at 1). Despite the protection of a sick-call room, a corrections officer was
5
required to escort each nurse at all times. Id. This sick-call room policy was posted at CDF
where Unity employees clock in, in the nursing station, and in the medication room, and a copy
was sent to Warden Simon Wainwright. Id. In addition, at an April 30, 2009 meeting, all
nursing staff, including Ms. Konah, were instructed to use the sick-call rooms when dispensing
medicine. Id. at 13–14. Ms. Konah signed the attendance sheet for the April 30, 2009 training,
and the meeting record reflects her attendance. Id. at 14 (record citations omitted). Ms. Konah
further admitted that the signature is hers, but she equivocated during her deposition about
whether she was at the meeting. 2 Id. (record citations omitted). Ms. Konah’s counsel argues that
even after the sick-call room policy was instituted, Ms. Konah continued to pass medications in
the company of an officer in the housing unit because she did not understand that the policy had
changed. E.g., Pl. SOF ¶ 4.
B. August 5, 2009 Incident
Ms. Konah’s Monell claim derives from an incident that occurred on August 5,
2009, in which a crowd of semi-clad inmates in the sally port surrounded her and grabbed her
buttocks. 3 While the summary judgment record contains some disputes about details of the
2
As the Court noted in Konah II, Ms. Konah’s deposition testimony contained numerous
instances in which she claimed she could not remember or explain significant events or concepts,
both relevant and irrelevant to the case. See Konah II, 915 F. Supp. 2d at 16 n.7. Ms. Konah
relies on the exact same deposition testimony in opposing the District’s motion for summary
judgment. The Court again finds that Ms. Konah’s nonresponsive answers are insufficient to
create legitimate disputes of material fact. Id. at 16 (citing, inter alia, Bonieskie v. Mukasey, 540
F. Supp. 2d 190, 195 (D.D.C. 2008)).
3
Ms. Konah alleges that she filed other “complaints of sex harassment by inmates with her
supervisors” that “receiv[ed] no action or response.” Pl. SUF ¶¶ 10, 12. She cites pages 46 and
69–70 of her deposition as support, but the testimony at those pages states only that Ms. Konah
agreed that the “incidents in [the 4/21/09 Letter] happened to [her].” Importantly, the 4/21/09
Letter did not allege sexual harassment. Asked whether she had ever made other reports to a
supervisor about sexual harassment, Ms. Konah’s inconsistent testimony concluded with her
statement that she “can’t recall” doing so. Konah Dep. at 70. Ms. Konah has offered no other
evidence of such reports before her complaint to the D.C. Office of Human Rights. See DCOHR
6
incident, see Konah II, 915 F. Supp. 2d at 19–20, the Court views the essential facts in the light
most favorable to Ms. Konah as summarized in Konah II:
Ms. Konah was assigned to dispense medication to inmates on
August 5, 2009, in a CDF housing unit known as Southwest–1 or
SW 1. [Sergeant Robert] Jefferson was on duty at the Southwest–1
bubble that day. Ms. Konah varied from her usual practice of
waiting for an officer and entered the sally port unescorted. She
began to dispense medications to inmates in the sally port, close to
the front gate. While she was there, the bubble gate opened and
closed a few times, presumably to admit and discharge inmates
obtaining medications. However, a group of inmates from the
housing unit, dressed only in their undergarments, approached Ms.
Konah in the sally port, making especially lewd and sexually
threatening comments. She went to the bubble and asked Sgt.
Jefferson to open the front gate to the corridor outside the unit so
she could get away from the inmates, but he refused to respond or
to open the gate, leaving her trapped in the sally port. As Ms.
Konah returned to the front gate, the semi-clothed inmates
surrounded her, calling her names and using sexually explicit
language; one inmate grabbed her on the buttocks. Ms. Konah
asked him something to the effect of “why did you touch me?” and
screamed for help from Sgt. Jefferson. Dr. Benedict Kargbo, a
treatment specialist at the Jail, entered the sally port from the
housing unit, saw what was happening, and told the inmate to back
away from Ms. Konah, which he did immediately. Dr. Kargbo
joined Ms. Konah’s demands that the front gate be opened. Sgt.
Jefferson eventually opened the front gate. With a corrections
officer at the entrance, Ms. Konah and Dr. Kargbo left the sally
port at the front gate and entered the main hallway of the Jail.
Ms. Konah was immediately taken to the infirmary. She also met
with Unity and CDF management, including the Warden. She
declined to press criminal charges against the inmate, who had
been placed on lockdown and charged with several Class II Serious
Offenses.
Id. at 14–15 (record citations omitted).
Compl., Pl. Opp., Ex. 11 [Dkt. 91-12] at 1 (complaining that she had been “subjected to
derogatory comments and other sexually harassing acts by inmates”).
7
C. Ms. Konah’s Other Evidence Regarding CDF
Ms. Konah has submitted collateral materials that, she argues, support her Monell
claim. The Court finds that these materials deserve no significant weight because they are of
dubious relevance at best. Ms. Konah has submitted the District of Columbia Inspector
General’s 2009 “Report of Re-inspection of the Central Detention Facility,” Pl. Opp., Ex. 8, Dkt.
91-9 (OIG Report); a March 2009 report from the Commission on Accreditation for Corrections,
id., Ex. 9, Dkt. 91-10; and testimony from the Director of the D.C. Prisoners’ Project before the
D.C. Council, id., Ex. 15, Dkt. 91-16. Ms. Konah asserts that these documents show “DOC
officials and policy maker [sic] were aware that correctional officers at the CDF were not
adequately trained in sexual abuse or security, and that it was a practice and custom at the CDF
for the correctional officers not to follow DOC Post Orders, and that the failure to adequately
train the correctional officers would lead to harm and violations of constitutional rights.” Pl.
SOF ¶ 27. The cited documents, however, almost exclusively discuss inmate conditions and not
sexual abuse or security. 4 E.g., OIG Report at 4 (finding that “DOC had addressed key findings
and recommendations from a previous inspection,” listing as examples “decreasing vermin
contamination throughout the CDF” and “delivering proper dietetic meals to inmates”). Ms.
Konah also embellishes the OIG Report’s reference to inconsistent following of post orders,
which in reality bore no relation to inmate assaults on staff, much less sex-based harassment or
attacks. Id. at 18.
4
Ms. Konah’s opposition brief is disconcertingly rife with similar material misrepresentations of
fact. For example, citing pages “42–34 [sic]” of Sergeant Jefferson’s deposition, she asserts:
“[Sergeant Jefferson] further stated that he did not take sexual harassment seriously and if a staff
brought it to his attention he would not report it.” Pl. Opp. at 12. Absolutely nothing in Sergeant
Jefferson’s deposition—on page 42, nearby pages, or otherwise—supports that assertion.
8
The Court does not rely on other materials submitted by Ms. Konah because
tenuous relevance is the least severe of their infirmities. For example, she has offered two
newspaper articles from the Washington City Paper describing assaults on inmates by other
inmates, which are inadmissible hearsay. See Pl. Opp., Ex. 13 [Dkt. 91-14] & Ex. 14 [Dkt. 91-
15]. She has also included a conclusory report from a “Correctional Consultant” (whose
credentials are unrevealed and who has not been accepted as an expert by the Court) that asserts
that the District “acted in a manner that was inconsistent with and below the applicable standard
of care and accepted practices and procedures” on August 5, 2009, id., Ex. 17, Dkt. 91-18.
“[U]nsworn, unauthenticated documents cannot be considered on a motion for summary
judgment,” Akers v. Liberty Mutual Group, 744 F. Supp. 2d 92, 97 (D.D.C. 2010) (quoting Orsi
v. Kirkwood, 999 F.2d 86, 92 (4th Cir. 1993)), and “‘sheer hearsay . . . counts for nothing’ on
summary judgment.” Greer v. Paulson, 505 F.3d 1306, 1315 (D.C. Cir. 2007) (quoting Gleklen
v. Democratic Cong. Campaign Comm., 199 F.3d 1365, 1369 (D.C. Cir. 2000)). Were these
materials admissible on summary judgment, they would nonetheless remain irrelevant because
they do not bear on Ms. Konah’s Monell claim of a practice or custom of DOC that violated Ms.
Konah’s equal protection rights.
II. LEGAL STANDARD
Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment shall
be granted “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); accord Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). Moreover, summary judgment is properly
granted against a party who “after adequate time for discovery and upon motion . . . fails to make
a showing sufficient to establish the existence of an element essential to that party’s case, and on
9
which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317,
322 (1986).
In ruling on a motion for summary judgment, the court must draw all justifiable
inferences in the nonmoving party’s favor and accept the nonmoving party’s evidence as true.
Anderson, 477 U.S. at 255. A nonmoving party, however, must establish more than “the mere
existence of a scintilla of evidence” in support of its position. Id. at 252. In addition, the
nonmoving party may not rely solely on allegations or conclusory statements. Greene v. Dalton,
164 F.3d 671, 675 (D.C. Cir. 1999). Rather, the nonmoving party must present specific facts that
would enable a reasonable jury to find in its favor. Id. at 675. If the evidence “is merely
colorable, or is not significantly probative, summary judgment may be granted.” Anderson, 477
U.S. at 249–50 (citations omitted).
III. ANALYSIS
In Konah II, this Court denied the District’s motion for judgment on the pleadings
on Ms. Konah’s Monell claim because she had “alleged sufficient facts to state a claim that
District officials knew of the problem”—“that the District did not sufficiently train its employees
in the Department of Corrections to ensure that Unity nurses were not subjected to constant
gender-based lewd and nasty catcalls or acts by the inmates”—“and that their failure to address it
was deliberately indifferent.” Konah II, 915 F. Supp. 2d at 31–32. But allegations are not
evidence. The record on summary judgment shows no genuine disputes of material fact, and the
District is entitled to judgment as a matter of law. Accordingly, the motion for summary
judgment will be granted.
Constitutional claims against municipalities under 42 U.S.C. § 1983 are subject to
a two-step analysis. See Baker v. District of Columbia, 326 F.3d 1302, 1306 (D.C. Cir. 2003)
(citing Collins v. City of Harker Heights, 503 U.S. 115, 120 (1992)). First, a court must find that
10
the plaintiff suffered “a predicate constitutional violation.” Id. (citation omitted). At the second
step, a court must determine whether “a custom or policy of the municipality caused the
violation.” Id. (citing Collins, 503 U.S. at 120; other citations omitted); see also Monell, 436
U.S. at 694 (“[I]t is when execution of a government’s policy or custom, whether made by its
lawmakers or by those whose edicts or acts may fairly be said to represent official policy, inflicts
the injury that the government as an entity is responsible under § 1983.”).
The predicate constitutional violation that Ms. Konah allegedly suffered is sexual
harassment, which can constitute discrimination based on gender in violation of the equal
protection component of the Fifth Amendment’s Due Process clause. 5 See Pl. Opp. at 11. As
the Court stated in Konah II:
“[T]he Due Process Clause of the Fifth Amendment forbids the
Federal Government to deny equal protection of the laws.” Davis
v. Passman, 442 U.S. 228, 234 (1979) (citations omitted). “To
withstand scrutiny under the equal protection component of the
Fifth Amendment’s Due Process Clause,” gender classifications
must meet so-called “intermediate scrutiny,” meaning that they
“must serve important governmental objectives and must be
substantially related to achievement of those objectives.” Id. at
235; see also United States v. Virginia, 518 U.S. 515, 533 (1996)
(applying same test to Fourteenth Amendment equal protection
claim of gender discrimination). “The equal protection component
of the Due Process Clause thus confers . . . a federal constitutional
right to be free from gender discrimination which cannot meet
these requirements.” Passman, 442 U.S. at 235.
915 F. Supp. 2d at 30–31. A sexual harassment claim brought under the equal protection clause
is actionable under § 1983. See, e.g., Annis v. Cnty. of Westchester, N.Y., 36 F.3d 251, 254 (2d
Cir. 1994) (“[H]arassment that transcends coarse, hostile and boorish behavior can rise to the
5
Because the District is treated as a federal enclave and not a state for the purpose of analyzing
constitutional due process claims, such suits against the District “must be brought under the Fifth
and not the Fourteenth Amendment.” See Fisher v. Fulwood, 774 F. Supp. 2d 54, 55 n.1 (D.D.C.
2011).
11
level of a constitutional tort.”); Pontarelli v. Stone, 930 F.2d 104, 113–114 (1st Cir. 1991),
abrogated on other grounds by Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P’ship, 507
U.S. 380 (1993).
The record is clear that all staff at the D.C. Jail—whether employed by the
District of Columbia or Unity and whether male or female—were subject to some amount of
verbal abuse and noxious substances from inmates. It is also clear that masturbation by inmates
occurred most often in sight of female staff, although masturbation was not exhibited to Ms.
Konah on August 5, 2009, or, perhaps, ever during her tenure at the D.C. Jail. See Konah Dep.
at 68–73, 248–50 (referring to nonspecific incidents of “sexual remarks” that she “can’t recall”
but never mentioning exhibitionist self-gratification). Notably, the nursing staff employed by
Unity at the D.C. Jail in April 2009 was largely, although not exclusively, women, but they
attributed inmate misconduct to a lack of security, not sexual harassment directed against their
gender. Nonetheless, there is also no dispute that inmates directed lewd, sexually explicit
comments specifically at Ms. Konah and that one inmate grabbed her on the buttocks on August
5, 2009.
The Court is left with the complexity—through record evidence now or at a later
trial—of attempting to cull inmate misconduct directed to both sexes from that directed to
women due to the recipient’s gender. This complicated and time-consuming task could
ultimately be for naught because it is unclear that § 1983 would cover a claim of sexual
harassment when the offense arises from lewd inmate conduct. 6 The Court avoids this quagmire
6
In the context of an alleged hostile work environment in a jail, under Title VII, 42 U.S.C.
§ 2000e et seq., courts have ruled that an “employer may be liable if he ‘fails to take immediate
and appropriate corrective action in response to a hostile work environment of which the
employer knew or reasonably should have known.’” Konah II, 915 F. Supp. 2d at 24 (quoting
Beckford v. Department of Corrections, 605 F.3d 951, 957–58 (11th Cir. 2010)). But “[c]ourts
12
by moving instead to the second part of the Monell test, which proves to be dispositive even if
Ms. Konah had proved an equal protection violation.
Because a municipality is liable only “where the municipality itself causes the
constitutional violation at issue,” Simms v. District of Columbia, 587 F. Supp. 2d 269, 276
(D.D.C. 2008) (citing Monell, 436 U.S. at 694), there must be “an affirmative link . . . such that a
municipal policy was the moving force behind the constitutional violation,” Baker, 326 F.3d at
1306 (internal quotation marks and citations omitted). While a plaintiff may bring suit based on
an actual, identifiable policy or practice, an actionable policy may also exist when a municipality
fails “to respond to a need (for example, training of employees) in such a manner as to show
‘deliberate indifference’ to the risk that not addressing the need will result in constitutional
violations.” Baker, 326 F.3d at 1306 (citing City of Canton v. Harris, 489 U.S. 378, 390 (1989)).
The Supreme Court has cautioned that “[a] municipality’s culpability for a deprivation of rights
is at its most tenuous where a claim turns on a failure to train.” Connick v. Thompson, 131 S. Ct.
1350, 1359 (2011).
A municipality is deliberately indifferent when it has knowledge that its agents
are likely to violate constitutional rights, and the municipality “adopt[s] a policy of inaction.”
Warren v. District of Columbia, 353 F.3d 36, 39 (D.C. Cir. 2004). A court must determine
“whether the municipality knew or should have known of the risk of constitutional violations, an
objective standard.” Baker, 326 F.3d at 1307 (citing Farmer v. Brennan, 511 U.S. 825, 841
(1994)). A municipality is not deliberately indifferent simply because it fails to “take reasonable
care to discover and prevent constitutional violations.” Warren, 353 F.3d at 39. For liability to
have repeatedly declined to impose sexual harassment liability upon correctional institutions for
the sexually offensive conduct of inmates, as long as the defendant institution took proper
preventive and remedial steps with regard to inmate behavior.” Powell v. Morris, 37 F. Supp. 2d
1011, 1017 (S.D. Ohio 1999).
13
attach, “the identified deficiency in the city’s training program must be closely related to the
ultimate injury.” Harris, 489 U.S. at 391.
Ms. Konah cannot meet the “stringent standard of fault” for the alleged failure-to-
train for three reasons. See Thompson, 131 S. Ct. at 1360 (quoting Board of Comm’rs of Bryan
Cnty. v. Brown, 520 U.S. 397, 410 (1997)). First, setting aside her apparent violation of the new
sick-call room policy, the precipitating cause of the August 5, 2009 incident was Ms. Konah’s
own decision to violate longstanding policy and deviate from her standard practice of waiting for
a corrections officer to escort her before entering the housing unit. See Konah Dep. at 100 (“Q.
And do you typically wait for an officer if one is not available? A. Yes.”). This alone is
sufficient to grant summary judgment for the District because a Monell plaintiff must show that
“the identified deficiency in the city’s training program” was “closely related to the ultimate
injury.” Harris, 489 U.S. at 391. Ms. Konah seeks to expand this lawsuit into a referendum on
whether DOC officials “take sexual harassment or sexual abuse seriously,” Pl. Opp. at 12, or
whether DOC employees had “received sexual harassment or sexual abuse training,” id. at 10,
but the alleged harm was caused by Ms. Konah’s admitted choice to enter the sally port without
waiting for the security of a corrections officer. There is no suggestion that Ms. Konah was
forced to enter the housing unit without an escort or that she could not have waited for an officer
to accompany her, as she herself conceded at her deposition. 7 See Konah Dep. at 103–04. To
the extent that Ms. Konah complains that Sergeant Jefferson should have opened the gate to
allow her to escape the inmates in the sally port, as the Court concluded in Konah II, “[e]ven
7
The Third Amended Complaint alleges that Ms. Konah “was assigned by her supervisor to
dispense medications to inmates . . . without security escort,” 3d Am. Compl. ¶ 14, but at the
close of discovery, Ms. Konah pointed to no evidence to support that assertion. Mere
unsubstantiated allegations are insufficient to survive summary judgment. See Greene, 164 F.3d
at 675.
14
[Ms. Konah’s] deposition, viewed in the light most favorable to her and setting aside the many
inconsistencies and memory gaps, does not tend to show that Sgt. Jefferson ‘just did not open the
gate’ for any reason other than that there were inmates in the sally port who would have been
able to escape confinement.” 915 F. Supp. 2d at 23. It is worth noting that Ms. Konah conceded
at deposition that her claims are based on her belief that Sergeant Jefferson “did not open the
gate to let me out as I asked him before the inmate came and touched me.” Konah Dep. at 227–
28. There is no evidence tending to show that any municipal policy was the “moving force”
behind the August 5, 2009, incident, rather than Ms. Konah’s own decision to enter the unit
without a corrections officer escort, mandated by DOC policy and as per her typical practice.
The second fatal shortcoming in Ms. Konah’s Monell claim is the disconnect
between the sexual harassment she suffered on August 5, 2009, and the evidence she has offered
to show that the District was deliberately indifferent to a need for better corrections officer
training. Again, despite counsel’s attempt to transform this case into a sweeping review of
management of the D.C. Jail, the circumstantial evidence relied on by Ms. Konah does not show
“deliberate indifference to the risk that not addressing the need will result in constitutional
violations.” See Baker, 326 F.3d at 1306. Ms. Konah’s proffered evidence of deliberate
indifference supports two conclusions: first, in 2009, CDF had a general problem of inmates
cursing and throwing fecal matter or urine at staff, including nurses; and, second, in the late
2000s, the District was actively trying to remedy inmate conditions and overall management at
CDF. But none of this evidence shows that the District was deliberately indifferent to any
problem of sexual harassment of staff by inmates, which is the alleged constitutional violation at
issue. The 4/21/09 Letter, relied on by Ms. Konah, stated nurses’ concerns about security and
thrown bodily waste, not sexual harassment, and even the most relevant part of the OIG
15
Report—the section regarding correctional officer compliance with post orders—did not mention
staff security, much less sexual harassment of contractors. To the contrary, it primarily
addressed issues regarding “a safe, clean, secure, and human environment for inmates.” OIG
Report at 18. Generalized concerns about a need for increased safety at CDF are not sufficient to
prove deliberate indifference to sexual harassment of the kind experienced by Ms. Konah. Thus,
there is no evidence that the District “adopt[ed] a policy of inaction” that led to a violation of
constitutional rights. Warren, 353 F.3d at 39.
Third, even assuming that the ongoing, general concerns about conditions at CDF
somehow should have put the District on notice of the risk of nurses experiencing sexual
harassment, the record reflects that Unity and the District collaborated to address those concerns.
The day after receiving the 4/21/09 Letter, Unity determined that all nurses would be required to
distribute medication from within the sick-call rooms. This policy was distributed to Unity and
CDF staff and was the subject of the April 30, 2009 Unity staff meeting. Ms. Konah argues that
“she did not understand that the policy had changed,” Pl. SOF ¶ 4, but her subjective lack of
understanding is not evidence that the District “knew or should have known of the risk of
constitutional violations.” Baker, 326 F.3d at 1307; see also Konah II, 915 F. Supp. 2d at 26
(observing that Unity was bound by DOC security policies and concluding that “Unity took
reasonable and appropriate corrective steps to ensure that the environment for Unity nurses at
CDF would be as safe and non-hostile as a job situation in a jail requiring direct contact with
inmates could be”). Moreover, as the Court discussed in Konah II, “[t]he follow-up by Unity
and DOC to the August 5, 2009 incident was also comprehensive, including the immediate
medical evaluation of Ms. Konah by the infirmary, a meeting with the warden, the offer of
criminal prosecution, and the use of the internal CDF disciplinary system to which inmates are
16
subject.” 915 F. Supp. 2d at 26. These responses are far more robust than the failure to respond
that the Ninth Circuit found supported a correctional facility’s Title VII hostile work
environment liability for failure to respond to inmate sexual misconduct in Freitag v. Ayers, 468
F.3d 528, 540–41 (9th Cir. 2006), cited by Ms. Konah. In Freitag, for example, there were
specific complaints “by female officers about exhibitionist masturbation,” and the jail had
neither used its own disciplinary process sufficiently nor adopted any of the other corrective
measures available. Id. The responses to the 4/21/09 Letter and to the August 5, 2009 incident
do not reflect deliberate indifference.
There is no doubt that the August 5, 2009 incident justifiably unnerved Ms.
Konah. However, persons who work in close contact with inmates face dangerous and difficult
circumstances each day, even in the best-managed facilities. Were Ms. Konah able to prove that
inmate sexual harassment violated her rights to equal protection of the laws, there is no evidence
that the District failed to train correctional officers in a way that would have averted the incident,
and there is evidence that Ms. Konah could have avoided it by following known policy. On
these facts, Ms. Konah has not shown that the any custom or policy is to blame for her alleged
constitutional injury.
IV. CONCLUSION
For the foregoing reasons, the District of Columbia’s Motion for Summary
Judgment, Dkt. 90, will be granted. A memorializing Order accompanies this Opinion.
Date: September 20, 2013
/s/
ROSEMARY M. COLLYER
United States District Judge
17
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01-03-2023
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04-03-2014
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https://www.courtlistener.com/api/rest/v3/opinions/2663089/
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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
ANTHONY LESANE, et al.
Plaintiffs,
v. Civil Action No. 09-0891 (JDB)
DONALD C. WINTER, Secretary of the
Navy,
Defendant.
MEMORANDUM OPINION
Plaintiff Anthony Lesane and 19 other Navy police officers bring this collective action
under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq., alleging that they are
entitled to compensation for the time it takes them to don and doff their uniforms, protective
gear, and firearms.1 Currently before the Court is [32] Defendant Secretary of the Navy's
("Navy") motion for summary judgment. For the reasons set forth below, the Court will deny the
Navy's motion.
BACKGROUND
Plaintiffs are police officers with the Office of Naval Intelligence ("ONI") who patrol the
Naval Maritime Intelligence Center ("NMIC") in Suitland, Maryland. Three shifts of police
officers patrol NMIC around the clock. The day shift runs from 6:00 a.m. to 2:30 p.m.; the
1
Plaintiffs have withdrawn Count Two of their complaint, which claimed that the Navy
failed to pay them locality salary adjustments in violation of the FLSA. Pl.'s Mem. of Law in
Opp. to Def.'s Summ. J. ("Pl.'s Opp.") [Docket Entry 33] at 1 n.1; Am. Compl. [Docket Entry 11]
¶¶ 30-35.
1
"swing shift" runs from 2:00 p.m. to 10:30 p.m.; and the night shift runs from 10:00 p.m. to 6:30
a.m. Def.'s Sealed Mem. in Supp. of Mot. for Summ. J. ("Def.'s MSJ") [Docket 32], Lawton
Decl. ("Lawton Decl.") ¶ 3.
By the beginning of a shift, an officer must be wearing a uniform and carrying protective
gear. Under ONI Police Standard Operating Procedure No. 33, the uniform consists of
appropriate footwear, an undershirt, socks, a turtleneck or long-sleeved shirt and tie, ONI-issued
pants, a nameplate, rank insignia, and optional headwear. Def.'s MSJ, Ex. 1. The protective gear
includes a flashlight and a "Sam Brown belt," or a duty belt, which contains a radio case, pepper
mace, a baton strap, a magazine pouch, handcuffs, a holster, and a first responder's pouch. Id.
Officers are also required to wear a ballistics vest. Id.
Officers are given the option of putting on their uniforms and protective gear in a locker
room at the Security Operations Center at NMIC, or at home. Id. at 284; Lawton Decl. ¶ 9;
Def.'s MSJ, Ex. 2, Pls.' Supp. Ans. to Def.'s First Set of Disc. Requests, Nos. 1-2. If an officer
puts on her uniform at home, however, she must cover the uniform insignia until she arrives at
NMIC. Def.'s MSJ, Ex. 1. The evidence in the record indicates that most of the officers don
their uniforms at home, but put on their protective gear at NMIC. Def.'s MSJ, Ex. 3 (statements
from 18 plaintiffs). A few officers don most of the uniform at home, but put on the uniform shirt
and protective gear at NMIC. See id. (statements of Officers Hillard, Pittman, L. Boomer).
Finally, a few officers choose to don the entire uniform, and all of the protective gear, at NMIC.
See id.; Armwood Depo. at 13-14 (statements of Officers Cooper and Armwood). None of the
plaintiffs who submitted evidence put on the protective gear at home.
The officers are also required to carry a Navy-issued firearm during their shifts. Lawton
2
Decl., Exs. 1 & 2. Firearms and ammunition cannot be taken home, so the officers must obtain
them at the beginning of each shift from the NMIC armory. Lawton Decl. ¶ 10. Standard
Operating Procedure 20 governs the procedure for obtaining weapons. Lawton Decl., Exs. 1 and
2. Under SOP 20, the procedure runs as follows: An "issuing officer" hands the receiving officer
three duty magazines; the receiving officer places two of the magazines in the magazine pouch in
the utility belt. Lawton Decl. ¶ 11. The issuing officer obtains the assigned weapon for the
receiving officer, locks the slide to the rear, verifies that the magazine well and chambers are
empty and that the weapon has the action open, and hands the weapon to the receiving officer.
Id. The receiving officer inspects the weapon and re-verifies that the action is open and that the
magazine well and chamber are empty. Id. After the issuing officer approves, the receiving
officer inserts a magazine into the magazine well, releases the slide stop, ensures the safety is on,
decocks the handgun, and holsters it. Id. If an officer is on an assignment that requires carrying
a shotgun, the officer obtains the shotgun at the same time as the handgun. W. Boomer Depo. at
25-26; Lesane Depo. at 39.
After receiving the assigned weapon or weapons, the officers walk to the roll call room
for a briefing, which typically lasts around 15 minutes. Lawton Decl. ¶ 4. The officers then
walk to their assigned posts and relieve the officers from the outgoing shift. Id. ¶ 13. All of the
posts can be reached in five minutes or less. Id. Thus, the incoming officers will usually relieve
the outgoing officers by 20 minutes past the hour. Id. ¶ 14. The outgoing officers then return to
the Security Operations Center and turn in their weapons in a process that is essentially the
reverse of the arming-up process. Id. ¶ 12. The officers may then take off their protective gear
and change back into civilian clothes either at NMIC or at home. Def.'s MSJ, Ex. 3 (officers'
3
statements describing doffing process).
Plaintiffs are not paid for the time they spend donning their uniforms and protective gear
and obtaining their assigned weapons. As explained below, it is not clear whether they are paid
for doffing their weapons, gear, and uniforms. On May 13, 2009, plaintiffs filed this collective
action under the FLSA, 29 U.S.C. § 201 et seq., claiming that they should be compensated for
the time spent on those activities. Compl. [Docket 1].
STANDARD OF REVIEW
"Whether an activity is preliminary or postliminary to principal activities for purposes of
§ 254(a)(2) of the Portal-to-Portal Act is a mixed question of law and fact because the precise
nature of the employee's duties is a question of fact, while application of the FLSA to those
duties is a question of law." Baker v. Barnard Constr. Co., Inc., 146 F.3d 1214, 1216 (10th Cir.
1998); see also Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 741 n.19, 743
(1981).
Summary judgment is appropriate when the materials in the record show 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. In determining whether there exists a genuine issue of material fact
sufficient to preclude summary judgment, the court must regard the non-movant's statements as
true and accept all evidence and make all inferences in the non-movant's favor. See Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). A non-moving party, however, must establish
more than the "mere existence of a scintilla of evidence" in support of its position. Id. at 252.
Thus, the non-moving party cannot rely on mere speculation or compilation of inferences to
defeat a motion for summary judgment. See Hutchinson v. Cent. Intelligence Agency, 393 F.3d
4
226, 229 (D.C. Cir. 2005). Nor can the non-moving party rely on conclusory statements with no
evidentiary basis to establish a genuine issue of material fact. See Ass'n of Flight Attendants v.
Dep't of Transp., 564 F.3d 462, 465 (D.C. Cir. 2009). "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).
DISCUSSION
The FLSA mandates that employees be compensated for hours worked. Anderson v. Mt.
Clemens Pottery Co., 328 U.S. 680, 686-87 (1946). The question here is whether the time that
officers spend donning and doffing their uniforms, gear, and arms is compensable work.
Whether activities that occur before and after an employee's main tasks are compensable
has vexed courts since the 1940s. In 1944, the Supreme Court held in Tennessee Coal, Iron &
R.R. Co. v. Muscoda Local No. 123 that miners were entitled to compensation for the time they
spent in "compulsory travel" to subterranean mine shafts, noting that the travel occurred
"entirely on [the employer's] property and is at all times under [its] strict control and
supervision." 321 U.S. 590, 598 (1944). Two years later, the Supreme Court held that
employees had to be compensated for the time it took to walk from the plant entrance to their
work stations, as well as for the time they spent "pursu[ing] certain preliminary activities" at
their work stations, such as putting on aprons and overalls. Anderson, 328 U.S. at 692-93.
Congress reacted to Anderson with the passage of the Portal-to-Portal Act, which
significantly limited employer liability for activities before or after the main part of the
employee's workday. 29 U.S.C. § 254. The Portal-to-Portal Act provides that employers are not
required to compensate employees for
5
(1) walking, riding, or traveling to and from the actual place of performance of
the principal activity or activities which such employee is employed to perform,
and
(2) activities which are preliminary to or postliminary to said principal activity or
activities,
which occur either prior to the time on any particular workday at which such
employee commences, or subsequent to the time on any particular workday at
which he ceases, such principal activity or activities.
29 U.S.C. § 254(a) (emphasis added). The Portal-to-Portal Act does not define "principal
activity," but the Department of Labor issued regulations addressing that question shortly after
the passage of the Act. See 29 C.F.R. § 790.8. The regulations explained that "[t]he legislative
history . . . indicates that Congress intended the words 'principal activities' to be construed
liberally . . . to include any work of consequence performed for an employer, no matter when the
work is performed." Id. § 790.8(a). "[T]he term 'principal activities' includes all activities which
are an integral part of a principal activity," including "closely related activities which are
indispensable to its performance." Id. § 790.8(b), (c). In an example pertinent here, the
regulations explained that
[I]f an employee in a chemical plant . . . cannot perform his principal activities
without putting on certain clothes, changing clothes on the employer's premises at
the beginning and end of the workday would be an integral part of the employee's
principal activity. On the other hand, if changing clothes is merely a convenience
to the employee and not directly related to his principal activities, it would be
considered as a 'preliminary' or 'postliminary' activity rather than a principal part
of the activity.
Id. § 790.8(c).
The Supreme Court first addressed the meaning of "principal activity" in Steiner v.
Mitchell, 350 U.S. 247 (1956). Steiner involved workers in a battery plant who handled highly
toxic chemicals. Id. at 248-50. Under state law and the employer's rules, the employees were
6
required to change clothes and shower at the battery plant at the end of each shift. Id. at 250-51.
The Court held that "activities performed before or after regular hours of work" were
compensable if they were "an integral and indispensable part of the principal activities for which
covered workmen are employed . . . . " Id. at 255-56. Given the dangerousness of the chemicals,
the Court found that changing clothes and showering were "clearly" integral and indispensable to
the work of the battery plant employees, but noted that its opinion did not apply to changing
clothes and showering "under normal conditions." Id. at 249, 256.
The fundamental question before the Court is therefore whether the ONI officers'
donning and doffing of clothing, gear, and arms is "integral and indispensable" to their principal
activity, protecting NMIC. Since Steiner, several courts have addressed the compensability of
donning and doffing clothing and equipment under various conditions, but it is a question of first
impression in this Circuit. The compensability of the officers' three tasks -- changing uniforms,
donning protective gear, and acquiring a weapon -- will be assessed independently.
A. Uniforms
The Navy argues that changing uniforms is not "integral and indispensable" to the
officers' principal activity of guarding NMIC for two reasons. First, the Navy argues that
changing clothes is not integral and indispensable unless the employees are required to change
clothes on the employer's premises. Second, the Navy argues that uniforms are not integrally
related to the core activities the officers perform.
The regulations interpreting the Portal-to-Portal Act provide some support for the Navy's
first argument. The regulations state that "if an employee in a chemical plant . . . cannot perform
his principal activities without putting on certain clothes, changing clothes on the employer's
7
premises at the beginning and end of the workday would be an integral part of the employee's
principal activity." 29 C.F.R. § 790.8(c) (emphasis added). A footnote to the regulation adds that
"[s]uch a situation may exist where the changing of clothes on the employer's premises is
required by law, by rules of the employer, or by the nature of the work." 29 C.F.R. § 790.8(c)
n.65.
Although the regulation deals with changing clothes on the employer's premises, it does
not explicitly say that changing clothes is an integral and indispensable activity only if it must
take place on the employer's premises. The Department of Labor has, however, taken that
position in a 2006 advisory memorandum. There, the DOL wrote that "[i]t is our longstanding
position that if employees have the option and the ability to change into the required gear at
home, changing into that gear is not a principal activity, even when it takes place at the plant."
Wage & Hour Adv. Mem. No. 2006-2 (May 31, 2006). Such opinion letters "constitute a body
of experience and informed judgment to which courts and litigants may properly resort for
guidance," although they are not binding on courts. Skidmore v. Swift & Co., 323 U.S. 134, 140
(1944).
Courts have come to different conclusions as to whether the option of donning and
doffing a uniform at home necessarily makes the donning and doffing non-compensable.
Relying largely on the Department of Labor's view, a divided panel of the Ninth Circuit recently
held that police officers who had the option of changing clothes and gear at home were not
entitled to compensation. Bamonte v. City of Mesa, 598 F.3d 1217, 1232-33 (9th Cir. 2010).
Several district courts have relied on Bamonte in reaching the same conclusion. See, e.g., Reed
v. Cnty. of Orange, 716 F. Supp. 2d 876, 882-83 (C.D.Cal. 2010); Musticchi v. City of Little
8
Rock, Ark., 734 F. Supp. 2d 621, 626 (E.D. Ark. 2010). Other courts, however, have held that
the option to change at home is not determinative. Anderson v. Perdue Farms, Inc., 604 F. Supp.
2d 1339, 1355 (M.D. Ala. 2009) ("[The court] must consider three factors to determine whether
an activity is integral and indispensable, and none of those factors involves the location (at the
home or at the workplace) of the activity."); see also Rogers v. City & Cnty. of Denver, No. 07-
541, 2010 WL 1904516, at *4 (D. Colo. May 11, 2010).
In this case, the Court sees no reason to disagree with the DOL's view that employees
who genuinely have the "option and ability" to change clothes at home should not be
compensated for the time it takes to do so. In that situation, donning a work uniform is
analogous to putting on appropriate clothes for work, which nearly all employees do without
compensation every day. The task of donning an ONI-approved uniform -- consisting of ONI-
issued pants, an undershirt, turtleneck or long-sleeved shirt and tie, uniform shirt, socks,
footwear, a nameplate, insignia, and optional headwear -- is not significantly different or more
burdensome than putting on any other work-appropriate outfit, such as a business suit or a
McDonald's uniform. It is true that the officers must cover the insignia when they are traveling
to work, but the evidence indicates that most officers do put on their uniforms at home, so that
requirement does not appear to be a significant deterrent. See Def.'s MSJ, Ex. 3 (statements of
officers).
The Court therefore holds that because the ONI officers have the option to change into
their uniforms at home, and because most officers indeed do so, donning the uniform is not
integral and indispensable to their policing activities. Hence, the Court need not address whether
a police officer's uniform is "integral" to completing his assigned tasks in the same way that
9
items like handcuffs are integral to police work. See Martin v. City of Richmond, 504 F. Supp.
2d 766, 773-74 (N.D. Cal. 2007) (discussing this issue); Lemmon v. City of San Leandro, 538 F.
Supp. 2d 1200, 1204-05 (N.D. Cal. 2007) (same).
B. Gear
The officers' gear -- a "duty belt," a radio case, pepper mace, a baton strap, a magazine
pouch, handcuffs, a holster, a first-responders pouch, a flashlight, and a ballistics vest -- presents
a different question. The Navy concedes that the gear is "integral" to the officers' performance
of their duties, since it directly aids them in dealing with suspects, protecting NMIC, and
protecting the officers themselves. Def.'s MSJ at 24.
Donning and doffing gear is not covered by the regulations or the 2006 DOL advisory
memorandum. The regulations and the DOL memorandum refer to "clothes," and items like
pepper mace and flashlights do not fall within the plain meaning of "clothes."2 Hence, there is
no authority for the proposition that donning gear is not compensable if the officer has the option
to do so at home. The record evidence and common sense also suggest that donning gear should
be compensable despite the officers' option to don at home. Although officers may, in theory,
take all of their gear home and put it on there, none of the officers who submitted statements
does so. Def.'s MSJ, Ex. 3. The Navy has offered no evidence that any officers don or doff
protective gear at home. Given the bulk of the required equipment -- as well as the obvious
2
The DOL has taken conflicting positions on whether protective equipment counts as
"clothes." The Department's most recent memorandum states that such equipment is not
"clothes" under a plain-meaning definition of the term. Wage & Hour Adv. Mem. No. 2010-2
(June 16, 2010); but see Wage & Hour Adv. Mem. No. 2007-10 (May 14, 2007) ("clothes"
includes protective equipment); Wage & Hour Adv. Mem. No. 2002-2 (June 6, 2002) ("clothes"
includes protective equipment); Wage & Hour Adv. Mem. dated Dec. 3, 1997 ("clothes" does
not include protective equipment).
10
reasons that officers might prefer to keep items like pepper spray at work -- it is not clear
whether officers realistically have the "option and ability" to don their gear at home. Cf. Wage
& Hour Adv. Mem. No. 2006-2 (changing clothes is not compensable when workers have the
"option and ability" to do so at home) (emphasis added); 29 C.F.R. § 790.8(c) n.65 (changing
clothes may be compensable "where the changing of clothes on the employer's premises is
required by law, by rules of the employer, or by the nature of the work") (emphasis added). The
nature of the gear encourages, if it does not actually necessitate, changing at work. Hewing to a
bright-line rule that employers need not compensate employees who have the option to don gear
at home would ignore reality, and it would create perverse incentives for employers. See Martin,
504 F. Supp. 2d at 776.
Hence, donning and doffing protective gear is integral and indispensable to the officers'
principal activity, protecting NMIC. It is therefore compensable unless the time the officers
spend putting on and taking off gear is de minimis.
C. Arms
The Navy does not dispute that weapons are integral and indispensable to the officers'
tasks. Def.'s MSJ at 25-29. It also concedes that, by Navy regulation, arming up must be done at
NMIC. Id. at 25. Unless the time spent arming up is de minimis, then, it is compensable under
the FLSA and the Portal-to-Portal Act.
D. De Minimis Analysis
When the Supreme Court held in Anderson that workers had to be compensated for time
spent walking in the employer's factory, the Court added one important caveat:
We do not, of course, preclude the application of a de minimis rule where the
minimum walking time is such as to be negligible. The workweek . . . must be
11
computed in light of the realities of the industrial world. When the matter in issue
concerns only a few seconds or minutes of work beyond the scheduled working
hours, such trifles may be disregarded. Split-second absurdities are not justified
by the actualities of working conditions or by the policy of the Fair Labor
Standards Act. It is only when an employee is required to give up a substantial
measure of his time and effort that compensable working time is involved.
328 U.S. at 692. Under Anderson, the pertinent figure is the "minimum" time necessary to
complete the task. Id.; see also id. ("[C]ompensable working time [i]s limited to the minimum
time necessarily spent in walking at an ordinary rate along the most direct route from time clock
to work bench."). To compensate employees for more than the minimum required time would
reward inefficiency. See id.
Several circuits have now agreed that courts applying the de minimis rule should
consider three things: (1) the practical difficulty of recording the compensable time, (2) the
aggregate amount of time at issue, and (3) the regularity with which the task is performed. Rutti
v. Lojack Corp., 596 F.3d 1046, 1056-57 (9th Cir. 2010); DeAsencio v. Tyson Foods, Inc., 500
F.3d 361, 374 (3d Cir. 2007); Gorman v. Consol. Edison Corp., 488 F.3d 586, 594 n.7 (2d Cir.
2007); Brock v. City of Cincinnati, 236 F.3d 793, 804 (6th Cir. 2001); Reich v. Monfort, Inc.,
144 F.3d 1329, 1333 (10th Cir. 1998); Bobo v. United States, 136 F.3d 1465, 1468 (Fed. Cir.
1998). Most courts have found that tasks that take less than 10 minutes each working day are de
miminis. Lindow v. United States, 738 F.2d 1057, 1062 (9th Cir. 1984) (collecting cases); see
also Carter v. Panama Canal Co., 314 F. Supp. 386, 392 (D.D.C. 1970) (15 minutes is de
minimis). The Office of Personnel Management, which handles wages of federal civilian
employees, has adopted a 10-minute rule by regulation. 5 C.F.R. § 551.412(a)(1). However, a
bright-line ten minute rule might not be faithful to the three-part test for determining whether a
given activity is de minimis. If an employee spends exactly nine uncompensated minutes every
12
day on compensable activities, the time is de minimis under the bright-line rule but perhaps
compensable under the three-part test.
In this case, several plaintiffs submitted minute-by-minute timelines of their donning and
doffing activities. See Def.'s MSJ, Ex. 3. The timelines do not purport to show the minimum
time necessary to deal with the gear and weapons, only the amount of time the employees
actually spent doing so on a typical shift. Id. According to the timelines, the minimum time
needed to gear up was 3 minutes. Id. (Officer Hilliard). The minimum time needed to arm up
was 1 minute for a handgun alone, and 3 minutes for a handgun and a shotgun. Id. (Officers
King, Blye, and W. Boomer, 1 minute; Officer Conerly, 3 minutes with a shotgun). The
minimum time needed to disarm was 1 minute for officers with and without shotguns. Id.
(Officers King and L. Boomer, without shotgun; Officer Conerly, with shotgun). The minimum
time needed to doff gear was 1 minute. Id. (Officer Lindsay). The aggregate minimum time
needed for donning and doffing gear and arms was thus 6 minutes per shift without a shotgun, or
8 minutes per shift with a shotgun.
In addition to those times, however, the Court must also take into account some of the
time between activities. This is because the Supreme Court has held that
any activity that is "integral and indispensable" to a "principal activity" is itself a
"principal activity" under § 4(a) of the Portal-to-Portal Act. Moreover, during a
continuous workday, any walking time that occurs after the beginning of the
employee's first principal activity and before the end of the employee's last
principal activity is excluded from the scope of that provision, and as a result is
covered by the FLSA.
IBP, Inc. v. Alvarez, 546 U.S. 21, 37 (2005). Translated to the context of this case, Alvarez
means that donning and doffing protective gear, which the Court has concluded is "integral and
indispensable" to the officers' principal activities, is itself a "principal activity." Under the
13
"continuous workday" rule, then, officers must be compensated for all of their activities from the
time they gear up to the time they take off their gear. Most importantly here, under Alvarez,
officers must be compensated for the time they spend waiting in line to arm up at the beginning
of the day and waiting in line to disarm at the end of the day.3 The Department of Labor
confirmed this interpretation of Alvarez in an advisory memorandum, explaining that "Alvarez
. . . clearly stands for the proposition that where the aggregate time spent donning, walking,
waiting and doffing exceeds the de minimis standard, it is compensable." Wage & Hour Adv.
Mem. No. 2006-2 (May 31, 2006). Hence, in order to decide whether the amount of
uncompensated work the officers perform each day is de minimis, the Court must compute and
include the time the officers spend waiting to arm up and disarm.
Such a computation, however, cannot be made on the current record. For activities like
gearing up and arming up, the Court was able to review the officers' statements to determine the
minimum time necessary to complete the activity. The logic in using the minimum time was that
compensating officers for more than the minimum would encourage inefficiency. See Anderson,
328 U.S. at 692. The Court cannot, however, use the same logic to calculate waiting time. How
long an employee spends waiting in line at the armory depends on factors out of her control,
such as the number of officers already in line and the efficiency of the issuing official. Rather
than using the minimum waiting time, then, it seems that the Court should use an average of all
3
Officers must also be compensated for the time they spend walking from the locker
room to the armory, walking from armory to the roll call room, and reversing the procedure at
the end of the day, but plaintiffs have conceded that the amount of time spent walking is
negligible. Def.'s MSJ, Ex. 2, Nos. 5 & 10. The record also shows that nearly all officers spend
time picking up and returning radios after gearing up and before gearing down, but plaintiffs
have not claimed that this is a required activity for which they should be compensated.
14
officers' waiting times. But because most officers did not record their waiting time, or did not
separate out time spent waiting to arm and time actually spent arming, the Court cannot calculate
that average based on the evidence before it. Hence, it is impossible to say whether the time
officers spend "donning, walking, waiting and doffing exceeds the de minimis standard" under
the bright-line ten minute rule. See Wage & Hour Adv. Mem. No. 2006-2 (May 31, 2006). The
Court notes, however, that a review of the officers' timelines shows that most officers spend well
over ten minutes per shift on donning, doffing, and waiting in line, which suggests that the
properly compensable time needed to do so is also over ten minutes. See Def.'s MSJ, Ex. 3.
It is similarly impossible to make a determination that the aggregate uncompensated time
is de minimis under the three-part test. As previously explained, that test considers the practical
difficulty of recording the time, the regularity of the additional work, and the aggregate amount
of time. See Rutti, 596 F.3d at 1056-57. The first two factors favor plaintiffs. The practical
difficulty of recording the time here is not great: officers could simply clock in when they begin
donning gear, and clock out when they finish doffing gear. Given the continuous workday rule,
the Navy would not need to compensate officers for discrete chunks of time, which would be
much harder to measure. Additionally, the uncompensated work is very regular; it occurs every
shift. The final factor also does not help the Navy. As explained, this Court cannot calculate the
aggregate amount of time on the current record, although there is reason to believe that it is at
least ten minutes per shift.
In one additional argument against this conclusion, the Navy contends that time spent
disarming and doffing gear at the end of the day is already compensated. The Navy explains that
an officer is paid overtime whenever he is "relieved after his shift has concluded," and that if an
15
officer can return to the Security Operations Center and turn in his weapon before his shift
concludes, he may leave early. Def.'s MSJ at 7-8. Hence, the Navy contends, plaintiffs are
already paid for time spent doffing if they must stay beyond the end of their scheduled shift. Id.;
id. at 21 n.14. However, it is unclear whether overtime pay is available any time the officer
cannot depart NMIC by the end of his shift, or whether overtime is paid only when the officer is
relieved from his post late. See Def.'s MSJ at 21. Additionally, the record does not show
whether an officer's "shift" ends when he returns to the Security Operations Center, when he
disarms, or when he finishes doffing gear and leaves NMIC. Finally, there appears to be an
informal policy that overtime is not paid unless the officer has stayed significantly beyond the
end of his shift, i.e., for at least fifteen minutes. Armwood Depo. at 32; Gruny Depo. at 36-37;
King Depo. at 42. A review of the record evidence shows that most officers are able to disarm
and return their weapon by the time their shift ends, but most do not finish doffing their gear
until approximately five minutes after their shift ends. Def.'s MSJ, Ex. 3. That is, officers may
be paid for part, but are likely not paid for all, of the time it takes to disarm and doff their gear.
Hence, because it is not clear that disarming and doffing time is currently compensated in full,
the Court cannot grant summary judgment to the Navy on this ground.
Because the Navy has not shown that time spent in integral and indispensable activities is
de minimis, the Court must deny its summary judgment motion. This result is in line with the
results in other donning and doffing cases. Courts frequently grant summary judgment in cases
where it is clear, as a matter of law, that an employee's preliminary or postliminary activities are
not integral and indispensable to her principal tasks. See, e.g., Bamonte, 598 F.3d at 1233; Reed,
716 F. Supp. 2d at 883-84; Martin, 504 F. Supp. 2d at 776-77. Deciding whether the aggregate
16
time spent in compensable activities is de minimis, however, often requires trials, stipulations, or
experts. See, e.g., Perez v. Mountaire Farms, Inc., 650 F.3d 350, 370-71 (4th Cir. 2011); De
Asencio, 500 F.3d at 364 & n.5; Metzler v. IBP, Inc., 127 F.3d 959, 962 (10th Cir. 1997). Here,
as in those cases, more evidence is required to resolve this dispute.
CONCLUSION
For the foregoing reasons, the Court will deny the Navy's motion for summary judgment.
A separate Order accompanies this Memorandum Opinion.
/s/
John D. Bates
United States District Judge
Dated: December 30, 2011
17
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01-03-2023
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04-03-2014
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https://www.courtlistener.com/api/rest/v3/opinions/2660101/
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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
UNITED STATES OF AMERICA
Criminal No. 11-0106
v.
ALI MOHAMED ALI,
Defendant.
MEMORANDUM OPINION
Before the Court is Ali Mohamed Ali’s Renewed Motion for Pretrial Release. Ali has
been subjected to pretrial detention for over twenty-eight months, and his trial is not scheduled to
begin until November. There is a point in time at which due process can no longer tolerate
additional pretrial detention. For Ali, that time has come. Accordingly, the Court will grant
Ali’s renewed motion for pretrial release on the grounds that his continued pretrial detention
violates his rights to due process.
BACKGROUND
On November 7, 2008, pirates attacked and seized the M/V CEC Future as it was sailing
in the Gulf of Aden, near the Horn of Africa. They held the ship and its crew hostage in order to
secure a ransom from Clipper Group A/S, the ship’s owner. Clipper paid $1.7 million on
January 14, 2009, and the pirates disembarked the ship over the following two days.
Defendant Ali Mohamed Ali is accused of assisting the Somali pirates in their enterprise
by negotiating the pirates’ ransom demands directly with Clipper. Ali boarded the CEC
Future two days after it was taken by the pirates. An English-speaker, he communicated the
1
pirates’ demands to Clipper representatives during the remaining sixty-nine days while the vessel
was held and departed the ship after the ransom was received.
In April 2011, more than two years after the release of the CEC Future, Ali – then acting
Director General of the Ministry of Education in Somaliland, a self-declared republic within
Somalia – traveled from Somalia to the United States to attend an educational conference in
Raleigh, North Carolina. Unbeknownst to Ali, U.S. officials had concocted the conference as a
ruse to secure his presence within the United States. U.S. officials arrested Ali when he landed
at Dulles International Airport on April 20, 2011, and charged him in a three-count indictment
with conspiracy to commit piracy under the law of nations, in violation of 18 U.S.C. § 371,
aiding and abetting piracy under the law of nations, in violation of 18 U.S.C. §§ 1651 and 2, and
aiding and abetting attack to plunder vessel, in violation of 18 U.S.C. §§ 1659 and 2.
(Indictment, April 15, 2011 [Dkt. No. 6].)
On April 28, 2011, the government successfully moved for Ali’s detention pending trial,
arguing that Ali presented an “extraordinary risk of flight.” (See Gov’t Mot. in Support of
Pretrial Detention, April 28, 2011 [Dkt. No. 10] at 8.) Ali subsequently moved for pretrial
release. On June 24, 2011, the Honorable Paul L. Friedman denied Ali’s motion for release. See
United States v. Ali, 793 F. Supp. 2d 386 (D.D.C. 2011) (“Ali I”). In denying the motion, Judge
Friedman did not determine whether Ali’s release would endanger any person or the community.
Id. at 392 n.4. Instead, his determination was based entirely on risk of flight. Id. Judge
Friedman found that “the gravity of the charges, the potential length of Mr. Ali’s sentence, his
ties abroad, his past acts of misrepresentation [involving his immigration status in 1988 and
1995], and the presumption created by the charges against him all lead the Court to find by a
preponderance of the evidence that Mr. Ali poses a serious flight risk.” Id. at 392. Accordingly,
2
Judge Friedman concluded that “no condition or combination of conditions [could] reasonably
assure the appearance of the defendant” at trial, and denied Ali’s motion for bond. Id.
Over the next several months the government moved to delay the trial on two occasions.
Ali objected to the delays and continually asserted his speedy trial rights. On May 11, 2011,
only two weeks after Ali’s arraignment, the government sought to delay the trial by up to a year
to wait for evidence that it had requested through mutual legal assistance treaties with foreign
countries. (See Application for Exclusion of Time Within Which Trial Must Commence, May
11, 2011 [Dkt. No. 15] at 3-4.) Judge Friedman granted the motion in part, but only tolled the
speedy trial clock until May 31, 2011. (See Minute Entry, May 12, 2011.) On August 19, 2011,
the government made a second request to delay the trial, this time until February 1, 2012,
arguing, inter alia, that the “unusual and[] complex” nature of the case required additional time
to prepare for trial. (See Application for Exclusion of Time Within Which Trial Must
Commence Under the Speedy Trial Act, Aug. 19, 2011 [Dkt. No. 36] at 1.) Over Ali’s
opposition, Judge Friedman granted the motion. (Findings of Fact and Order, Sept. 6, 2011 [Dkt.
No. 42].)
On December 5, 2011, Ali, having now been detained for over seven months, renewed
his motion for pretrial release. (See Defs.’s Sealed Renewed Mot. for Pretrial Release, Dec. 5,
2011 [Dkt. No. 71].) In support of his motion, Ali argued that the record, as expanded since his
initial bond hearing, no longer supported his pretrial detention, or, in the alternative, that
continued pretrial detention violated his due process rights. (See generally Defs.’s Memo. of
Points and Authorities in Support of Defs.’s Renewed Mot. for Pretrial Release, Dec. 5, 2011
[Dkt. No. 72-2].) Judge Friedman heard arguments on the motion on December 20, 2011, and
from the bench he affirmed his prior ruling that Ali’s risk of flight necessitated a finding that no
3
condition or combination of conditions could reasonably assure his appearance at trial. See
United States v. Ali, 2011 WL 6748503, at *1 (D.D.C. Dec. 21, 2011). The next day, Judge
Friedman rejected Ali’s due process claim in a written opinion. Id. He concluded that “[w]hile
it may be true that at some point and under some circumstances, the duration of a defendant’s
pretrial detention becomes unconstitutional, . . . that point has not been reached in this case.” Id.
(citation omitted). In reaching this conclusion, Judge Friedman emphasized that “[w]hile the
defendant has been detained for seven (7) months, a firm trial date now has been set – May 21,
2012 – assuring that the defendant will not have been detained in advance of trial for more than
twelve (12) months.” Id. (emphasis added). During the December 20, 2011 hearing on the
motion, Judge Friedman also stated that he would “revisit . . . bond . . . [i]f [trial] is going to be
in the fall [of 2012]” because Ali was “not going to sit in jail until the fall [of 2012].” (12/20/11
Mot. Hr’g Tr. at 4.)
Ali appealed, and on March 14, 2012, the D.C. Circuit affirmed. See United States v. Ali,
459 F. App’x 2 (D.C. Cir. 2012). The Court of Appeals held that Judge Friedman “did not
commit reversible error in determining” that pretrial detention was necessary and that Ali “had
not established a due process violation based upon the length of [his] pretrial detention.” Id. at 3.
In its denial of Ali’s petition for rehearing, the Court of Appeals clarified that its panel decision
was “without prejudice to [Ali] raising in the district court his argument that new developments
warrant a new bond hearing.” United States v. Ali, No. 12-3001, Doc. No. 1373195 (D.C. Cir.
May 10, 2012) (emphasis added).
On December 30, 2011, the case was reassigned to the undersigned. This Court oversaw
the government’s production of classified and non-classified evidence, a host of evidentiary and
legal motions, and the full briefing on Ali’s motion to dismiss all counts of the first superseding
4
indictment. Given the extensive discovery, including classified information that had to be
produced, and an extensive motions practice, the May trial date was not realistic. (See 3/15/12
Status Hr’g Tr. [Dkt. No. 155] at 7.) Moreover, on May 8, 2012, the government filed a second
superseding indictment.1 Following the return of this second superseding indictment, renewed
and modified motions to dismiss were filed (see Omnibus Mot. To Dismiss Counts, May 29,
2012 [Dkt. No. 188]), and a two-month trial was set to commence on July 31, 2012.
On July 13, 2012, the Court granted in part and denied in part Ali’s motion to dismiss.
See United States v. Ali, 885 F. Supp. 2d 17 (D.D.C. 2012) (“Ali II”), vacated in part, 885 F.
Supp. 2d 55 (D.D.C. 2012) (“Ali III”), rev’d in part and aff’d in part, 718 F.3d 929 (D.C. Cir.
2013). The Court dismissed Count One of the indictment, which alleged conspiracy to commit
piracy under 18 U.S.C. §§ 1651 and 371. Id. at 33-35. The Court also narrowed the scope of
Count Two, holding that, while Ali’s prosecution for aiding and abetting piracy in violation of 18
U.S.C. §§ 1651 and 2, “may proceed as it is articulated in . . . the indictment,” “[i]t will be the
government’s burden to convince the jury beyond a reasonable doubt that Ali intentionally
facilitated acts of piracy while he was on the high seas.” Id. at 32. The Court then denied Ali’s
due process challenge to his prosecution for hostage taking under 18 U.S.C. §§ 1203 and 2, in
Counts Three and Four. Id. at 43-45. The Court’s determination that Counts Three and Four
could proceed was contingent in part on the fact that the hostage taking charges in those counts
“allege the same high-seas conduct for which Ali is lawfully subject to prosecution for piracy” in
Count Two. Id. at 45.
1
The superseding indictment charged Ali with four counts: conspiracy to commit piracy under the law of
nations in violation of 18 U.S.C. §§ 1651 and 371 (Count One); aiding and abetting piracy under the law
of nations in violation of 18 U.S.C. §§ 1651 and 2 (Count Two); conspiracy to commit hostage taking in
violation of 18 U.S.C. § 1203 (Count Three); and aiding and abetting hostage taking in violation of 18
U.S.C. §§ 1203 and 2 (Count Four). (See Superseding Indictment, May 8, 2012 [Dkt. No. 172].)
5
On July 19, 2012, the government filed a motion for reconsideration of the Court’s
limitation of the aiding and abetting piracy charge in Count Two. (Mot. for Reconsideration,
July 19, 2012 [Dkt. No. 242].)2 The next day, on July 20, 2012, the government admitted at a
status conference for the first time since the commencement of the case “that it had scant
evidence to show that Ali aided and abetted the pirates while he was on the high seas.” Ali III,
885 F. Supp. 2d at 58. Up until that point – and as recently as June 11, 2012 – the government
had taken the position that “the indictment alleges” and “the evidence will show that [Ali] was
acting as a negotiator for the pirates while the CEC Future was on the high seas.” (Gov’t Opp’n
to Def.’s Mot. to Dismiss Counts of the Indictment, June 11, 2012 [Dkt. No. 201] at 8-9.)
During the July 20, 2012 status conference, the government identified “a concern
government-wide about the [Court’s] interpretation” of Count Two, and informed the Court that
it was considering filing an interlocutory appeal of the Court’s July 13, 2012 decision. (See
7/20/12 Status Hr’g Tr. [Dkt. No. 280] at 83.) In response to the government’s representation,
the Court notified counsel of its intent to reconsider Ali’s bond status given the delay that would
necessarily be caused by an interlocutory appeal. (Id. at 78-80.)
By letter dated July 24, 2012, the government formally notified the Court that it intended
to pursue an interlocutory appeal of the Court’s July 13, 2012 decision. (See Letter Regarding
Intention to File a Notice of Appeal, July 24, 2012 [Dkt. No. 259].) That same day, the Court
reconsidered Ali’s pretrial detention. The Court orally ruled that new information substantially
2
The government requested that the Court address its motion for reconsideration “by midday on July 26”
in order to enable the government, if the Court were to deny its motion, “to decide promptly whether to
notice an [interlocutory] appeal.” (Mot. for Reconsideration at 13 n.12 (citing 18 U.S.C. § 3731).) It was
not until the government filed this motion for reconsideration that it provided any legal argument for the
position that an aider and abettor of piracy does not have to commit any acts on the high seas. (See
generally id. at 3-12.)
6
undermined the arguments the government had made to Judge Friedman as to risk of flight. (See
7/24/12 Status Hr’g Tr. at 28 (“[T]he weight of the evidence is no longer anywhere as
compelling as it was before.”).) In particular, the Court noted that Ali had less of an incentive to
flee to Somalia, because his son no longer resided there (id. at 17); he had a long history of
working with the U.S. government (id. at 9, 21); contrary to the government’s initial
representations, he had family and friends in the Washington, D.C. area (id. at 27); there was “no
evidence that [he] ever participated in any kind of violence” (id. at 25); and high-level executives
of Clipper “thought he did an excellent job and . . . recommended him for subsequent cases,” and
thus, the government’s main witness was “going to come on and say he likes him.” (Id. at 28.)
For these reasons, the Court ruled from the bench that Ali presented neither a flight risk (id. at
24, 28), nor a danger to the community. (Id. at 28.) The Court subsequently ordered Ali’s
release into home confinement with Mr. Said of Centerville, Virginia, under the Pretrial Service
Agency’s high-intensity supervision program. (Order Setting Conditions for High Intensity
Supervisory Program, July 24, 2012 [Dkt. No. 261].)
The next day, considering the government’s intention to file an interlocutory appeal, the
Court vacated its prior ruling with regard to the hostage takings charges, and dismissed Counts
Three and Four of the indictment. Ali III, 885 F. Supp. 2d at 58. On July 27, 2012, the
government filed its notice of appeal from that ruling, as well as the Court’s prior July 13, 2012,
ruling.
On the same day, the government appealed the Court’s order releasing Ali. The only
argument before the Court of Appeals raised by the government was risk of flight. (See
generally Appellant’s Memo. of Law and Fact Seeking Reversal of the District Ct.’s Order of
Release, United States v. Ali, No. 12-3057, Doc. No. 1386747 (D.C. Cir. July 31, 2012).) On
7
August 3, 2012, the Court of Appeals reversed and remanded to this Court to order Ali’s
immediate return to custody for detention pending trial. United States v. Ali, 473 F. App’x 6, 7
(D.C. Cir. 2012). The Court of Appeals stated only:
This court previously affirmed the district court’s December 21, 2011 order
determining that no condition or combinations of conditions will reasonably
assure appellee’s appearance if he is released, see United States v. Ali, 459 F.
App’x 2 (D.C. Cir. 2012), and the underlying reasons for this court’s prior
decision remain substantially unchanged.
Id. This Court subsequently committed Ali to the custody of the Department of Corrections.
(Order, Aug. 3, 2012 [Dkt. 275].) All told, Ali spent ten days under high-intensity supervised
home confinement without incident or reported violation.
On November 19, 2012, the Court of Appeals heard arguments on the government’s
appeal from this Court’s July 13 and July 27, 2012 decisions. On June 11, 2013, the Court of
Appeals affirmed this Court’s dismissal of Count One and reversed its dismissal of Counts Three
and Four and its limitation of Count Two to high seas conduct. United States v. Ali, 718 F.3d
929 (D.C. Cir. 2013). On July 2, 2013, Ali petitioned the Court of Appeals for rehearing and
rehearing en banc. On July 10, 2013, the Court of Appeals sua sponte ordered the government to
respond, United States v. Ali, No. 12-3056, Doc. No. 1445984 (D.C. Cir. July 10, 2013), and on
August 21, 2013, the Court denied rehearing and rehearing en banc. United States v. Ali, No. 12-
3056, Doc. Nos. 1452725, 1452726 (D.C. Cir. Aug. 21, 2013). The mandate issued on August
29, 2013.
Meanwhile, on July 25, 2013, while Ali’s petition for rehearing and rehearing en banc
was pending before the Court of Appeals, Ali filed his second renewed motion for pretrial
release. (Mot. for Pretrial Release, July 25, 2013 [Dkt. No. 284].) The Court had scheduled the
trial to begin on August 19, 2013; however, briefing on Ali’s petition for rehearing and rehearing
8
en banc delayed the issuance of the mandate and required the trial to be rescheduled to
November 4, 2013.3 At this point, Ali has been detained for over twenty-eight months and will
likely remain there for over thirty-one months before the trial is concluded (assuming that a
verdict is ultimately reached).
LEGAL STANDARD
Ali argues that he should be granted pretrial release because his detention of twenty-eight
months violates his due process rights. (Mem. of Points and Authorities in Support of Def.’s
Renewd Mot. for Pretrial Release (“Mot.”), July 25, 2013 [Dkt. No. 287].) Pretrial detention of a
defendant is permissible under the Due Process Clause only when its purpose is regulatory,
rather than punitive. See United States v. Salerno, 481 U.S. 739, 746-47 & n.4 (1987).
“Permissible regulatory purposes include preventing danger to the community, and ensur[ing] [a
defendant’s] presence at trial.” United States v. Briggs, 697 F.3d 98, 101 (2d Cir. 2012) (internal
quotation marks and citations omitted).
“[D]ue process places no bright-line limit on the length of pretrial detention.” Id.
Instead, courts undertake a case-by-case analysis balancing (1) the length of the pretrial
detention, (2) “the government’s responsibility for the delay in proceeding to trial,” and (3) “the
strength of the evidence justifying detention.” Id. As the Third Circuit has described
[D]ue process judgments should be made on the facts of individual cases, and
should reflect the factors relevant in the initial detention decision, such as the
seriousness of the charges, the strength of the government’s proof that defendant
poses a risk of flight or a danger to the community, and the strength of the
government’s case on the merits. Moreover, these judgments should reflect such
additional factors as the length of the detention that has in fact occurred, the
3
Since a trial could not be formally set until the mandate issued, November was the earliest possible date
to begin trial because a two-month delay is necessary for the jury office to have sufficient time to
summons enough jurors to empanel a jury that can sit for a four-to-six week trial.
9
complexity of the case, and whether the strategy of one side or the other has
added needlessly to that complexity.
United States v. Accetturo, 783 F.2d 382, 388 (3d Cir. 1986). In short, “[t]he longer the
detention, and the larger the prosecution’s part in prolonging it, the stronger the evidence
justifying detention must be if it is to be deemed sufficient to justify the detention’s
continuance.” Briggs, 697 F.3d at 101.
The “strength of the evidence justifying detention” inquiry refers to the weight of
evidence supporting a conclusion under the Bail Reform Act that “no condition or combination
of conditions will reasonably assure the appearance of the [defendant at trial] . . . and the safety
of any other person and the community.” 18 U.S.C. § 3142(e). To determine whether a
defendant poses either a risk of flight or represents a danger to the community, a court weighs
“(1) the nature and circumstances of the offense charged . . . ; (2) the weight of the evidence
against the [defendant]; (3) the history and characteristics of the [defendant] . . . ; [and] (4) the
nature and seriousness of the danger to any person or the community that would be posed by the
[defendant’s] release.” Id. § 3142(g)(1)-(4).
The government generally bears the burden of proving the necessity of pretrial detention.
United States v. Nikolow, 534 F. Supp. 2d 37, 38 (D.D.C. 2008). However, Congress created a
rebuttable presumption in favor of pretrial detention when a court finds that there is probable
cause to believe that the defendant committed an offense listed under 18 U.S.C. §
2332b(g)(5)(B) that also carries a maximum term of imprisonment of at least ten years. 18
U.S.C. § 3142(e)(3)(C). As Judge Friedman previously held, Ali’s charges trigger the §
3142(e)(3)(C) presumption in favor of pretrial detention. See Ali I, 793 F. Supp. 2d at 387-88.
However, the presumption places on Ali only a burden of producing evidence that he does not
10
pose a risk of flight or danger to the community. See United States v. Alatishe, 768 F.2d 364,
371 (D.C. Cir. 1985); see also United States v. Mercedes, 254 F.3d 433, 436 (2d Cir. 2001).
“Even in a presumption case, the government retains the ultimate burden of persuasion by clear
and convincing evidence that the defendant presents a danger to the community[,] . . . [and] by
the lesser standard of a preponderance of the evidence that the defendant presents a risk of
flight.” Mercedes, 254 F.3d at 436.
ANALYSIS
I. PRIOR RULINGS ON PRETRIAL RELEASE
In its opposition to Ali’s motion, the government argues that consideration of pretrial
release is precluded by prior decisions issued by Judge Friedman and the Court of Appeals.
(See Gov’t Opp’n to Def.’s Renewed Mot. for Pretrial Release (“Opp’n”), Aug. 5, 2013 [Dkt.
No. 290] at 2.) The Court cannot agree.
As an initial matter, Congress clearly intended that courts be able to reopen and
reconsider prior bond determinations. See 18 U.S.C. § 3142(f)(2)(B) (allowing a court to reopen
a bond hearing if “at any time before trial . . . the judicial officer finds that information exists that
was not known to the movant at the time of the [original] hearing and that has a material bearing
on the issue” of bond). In its May 2012 decision, the Court of Appeals explicitly embraced the
possibility of a renewed motion for pretrial release by clarifying that its decision affirming Judge
Friedman’s denial of bond was “without prejudice to [Ali] raising in the district court his
argument that new developments warrant a renewed bond hearing.” United States v. Ali, No. 12-
3001, Doc. No. 1373195 (D.C. Cir. May 10, 2012). The Court of Appeals did not abandon this
holding when it reversed this Court’s order releasing Ali to home confinement in August 2012.
11
Instead, the Court of Appeals merely found that “the underlying reasons for [its] prior decision
remain substantially unchanged.” Ali, 473 F. App’x at 7 (emphasis added).4
To this point, the government argues that the only new developments since Judge
Friedman’s and the Court of Appeals’ decisions is the passage of time. (See Opp’n at 3.) Even
assuming arguendo that this were true (which it is not), the additional passage of time alone can
be enough to require “a release from pretrial detention or, at a minimum, a fresh proceeding.”
Accetturo, 783 F.2d at 388; see also United States v. El-Gabrowny, 35 F.3d 63, 65 (2d Cir. 1994)
(“Needless to say, if the trial is substantially delayed, [the defendant] may renew his motion in
the district court.”). Indeed, in at least one circuit case the court reversed a pretrial detention
order it had once before affirmed because it did “not believe that due process c[ould] tolerate any
further pretrial detention in this case.” United States v. Ojeda Rios, 846 F.2d 167, 169 (2d Cir.
1988). Several other courts, although affirming pretrial detention orders, did so while
establishing timeframes for when the order would require reconsideration. See Briggs, 697 F.3d
at 104 (“[D]ue process demands that the district court begin Briggs’s trial, or set reasonable bail,
very soon.”); United States v. Warneke, 199 F.3d 906, 909 (7th Cir. 1999) (“[I]f the trial of this
case . . . is still not started when the flowers start to bloom next spring, we think the district court
will be obliged to consider ordering a less restrictive alternative to straight pretrial detention.”
4
In its June 2013 merits opinion, the D.C. Circuit stated:
Ali next targets the length of his pretrial detention. While he is correct that excessive
pretrial detention may in certain circumstances deprive a defendant of his right to a
speedy trial, “courts must still engage in a difficult and sensitive balancing process.”
Barker v. Wingo, 407 U.S. 514, 533 (1972). Beyond stating the length of his detention,
Ali has offered no specifics on how his rights have been violated or his defense
prejudiced.
Ali, 718 F.3d at 946-47. This statement was not made in the context of a review of a bond decision and
thus cannot be considered as an impediment to reconsideration of the issue. In addition, Ali does not need
to establish prejudice to demonstrate a due process violation, as opposed to a violation of the Speedy Trial
Act. See, e.g., Briggs, 697 F.3d at 101. And, the Court concludes that while Ali may not have offered
“specifics on how his [due process] rights have been violated,” he offers them here.
12
(footnote omitted)); United States v. Zannino, 798 F.2d 544, 549 (1st Cir. 1986) (“Any outcome
of the district court’s medical inquiry other than the setting of an immediate trial date may raise
anew the difficult constitutional issue discussed herein.”).
Finally, Judge Friedman’s December 21, 2011 ruling that Ali’s continued pretrial
detention did not violate due process was explicitly time-limited. See Ali, 2011 WL 6748503, at
*1. Judge Friedman based his decision in part on the fact that “a firm trial date now has been set
[for] May 21, 2012,” which assured that Ali would not be detained for more than twelve months
prior to trial. Id. From the bench, Judge Friedman also warned the government that he would
not tolerate further delays in the trial, and that he would “revisit . . . bond . . .[i]f trial is going to
be in the fall of 2012” because Ali was “not going to sit in jail until the fall [of 2012].”
(12/20/11 Status Hr’g Tr. at 4.) The trial is now set to begin long after the time when Judge
Friedman stated he would revisit bond. Accordingly, there is no merit to the government’s
argument that this Court cannot consider whether Ali’s continued pretrial detention in jail
violates his due process rights.
II. THE LENGTH OF DENTENTION
On the merits of Ali’s due process claim, the Court first considers the length of Ali’s
detention to date, as well as the non-speculative projected length of his detention before the end
of trial. Although “the Constitution imposes no bright-line limit on the length of pretrial
detention,” Briggs, 697 F.3d at 103, the Court concludes that this is clearly a case where the
length of pretrial detention “weighs heavily in [the defendant’s] favor in his argument that his
due process rights have been violated.” United States v. El-Hage, 213 F.3d 74, 80 (2d Cir.
2000).
13
Contrary to the government’s suggestion, this is not a case of merely a “few months” of
pretrial detention. (See Opp’n at 4.) Aside from his ten-day release in late-July and early-August
2012, Ali has been detained and awaiting trial for twenty-eight months and will be in detention
for at least another three or four months before his trial concludes. (See Mot. at 9; 8/14/13 Mot.
Hr’g Tr. [Dkt. No. 294] at 19.) Pretrial detention of twenty-eight months unquestionably raises
serious due process concerns. See Ojeda Rios, 846 F.2d at 169 (finding due process violation for
thirty-two months of pretrial detention); United States v. Gonzales Claudio, 806 F.2d 334, 343
(2d Cir. 1986) (same for twenty-six months). Indeed, many courts have suggested that much
shorter lengths of pretrial detention signal a due process violation. See Warneke, 199 F.3d at 908
(expressing “deep[] concern[]” about seventeen months of pretrial detention); United States v.
Jackson, 823 F.2d 4, 7 (2d Cir. 1987) (“[A] potentially long trial commencing over seven months
after detention has already begun raises grave due process concerns for the government to
allay.”); Zannino, 798 F.2d at 548 (“assum[ing] that in many, perhaps most, cases, sixteen
months would be found to exceed the due process limitations on the duration of pretrial
confinement”).
Moreover, the cases the government cites where courts have upheld comparable or longer
periods of pretrial detention, see, e.g., El-Hage, 213 F.3d at 80 (thirty to thirty-three months); El-
Gabrowny, 35 F.3d at 65 (twenty-seven months); United States v. Millan, 4 F.3d 1038, 1044 (2d
Cir. 1993) (thirty to thirty-one months), are distinguishable from this case. In each of those cases
the court found that the defendant’s pretrial release would pose a significant danger to the
community. See El-Hage, 213 F.3d at 80; El-Gabrowny, 35 F.3d at 65; Millan, 4 F.3d at 1047-
48. Both El-Hage and El-Gabrowny were charged with conspiracy to commit terrorist acts,
including the killing of U.S. citizens, see El-Hage, 213 F.3d at 77, 80, and the levying of war
14
against the United States and bombing conspiracy. See El-Gabrowny, 35 F.3d at 64. Similarly,
although Millan was charged with conspiracy to traffic narcotics, his role as a central figure in
the conspiracy, as well as past evidence that he had “ordered numerous shootings, beatings, and a
contract murder, and had issued threats against the families of witnesses who testified adversely
to him at trial,” Millan, 4 F.3d at 1047, supported the court’s finding that Millan’s pretrial release
“would pose a very serious danger to the community.” Id. at 1048.
Ali’s release pending trial, in contrast, would pose no such threat. Ali is neither a
terrorist nor a drug kingpin. As the government admitted to Ali during plea negotiations in July,
the government does not even think that Ali is a pirate. (See Mot. Ex. 2 at 1 (“During the
meeting, [counsel for the government] said to Mr. Ali, ‘No one thinks you’re a pirate[.]’”).)5
Moreover, no court has found that he should be held based on dangerousness, and at a status
hearing on July 24, 2012, the Court found that Ali posed no danger to the community. (7/24/12
Status Hr’g Tr. at 28.) Indeed, the government did not argue that Ali’s release would endanger
the community during the last bond hearing before this Court (see generally id.) or before the
Court of Appeals. (See generally Appellant’s Memo. of Law and Fact Seeking Reversal of the
District Ct.’s Order of Release, United States v. Ali, No. 12-3057, Doc. No. 1386747 (D.C. Cir.
July 31, 2012).).
5
Contrary to the government’s objections (see Opp’n at 8 n.2), Fed. R. Evid. 410 does not render
inadmissible the statements government counsel made to Ali during plea negotiations, since that rule does
not apply to bond proceedings, see 18 U.S.C. § 3142(f)(2)(B), and it only prohibits the use of statements
made during plea negotiations “against the defendant.” Fed. R. Evid. 410(a) (emphasis added). Nowhere
does the rule suggest that exculpatory statements made by the government cannot be used by the
defendant, and the advisory committee notes to the rule clarify that “[l]imiting the exclusionary rule to
use against the accused is consistent with the purpose of the rule . . . .” See id. advisory committee’s note
(emphasis added).
15
Nonetheless, the government in a mere footnote now argues feebly that Ali’s pretrial
release would endanger the community because “he is charged with serious crimes” and “he
facilitated the armed boarding of a merchant vessel and the ransoming of the vessel and its
crew.” (Opp’n at 9 n.3.) The government’s argument of dangerousness hinges almost entirely
on the “nature” of the charges. Although the charged offenses are undoubtedly serious given
their potential life sentences, and thereby they create a rebuttable presumption of dangerousness,
see Ali I, 793 F. Supp. 2d at 387-88, the government cannot support that presumption by merely
pointing to the offenses that created it. See United States v. Eischeid, 315 F. Supp. 2d 1033,
1036-37 (D. Ariz. 2003) (finding that the record lacked clear and convincing evidence that
defendant, charged with murder, presented a danger to the community when the only evidence in
support of that danger was the charge and the government’s proffer). This is so because the
factual “circumstances” of the charged offenses, as well as the weight of the evidence underlying
those charges, tell a different story. See United States v. Singleton, 182 F.3d 7, 12 (D.C. Cir.
1999) (“The distinction between ‘nature’ and ‘circumstances’ clarifies that the former refers to
the generic offense while the latter encompasses the manner in which the defendant committed
it.”). Importantly, the government does not allege that Ali committed any act of violence when
acting as a negotiator; nor does the record contain any evidence that he did so. (7/24/12 Status
Hr’g Tr. at 25.) 6 Further, Ali has no prior criminal history and is “well regarded both [in this
country] and in Somaliland.” Ali I, 793 F. Supp. 2d at 390. And while it will be the role of the
6
Ali’s case is starkly different from United States v. Shibin, 722 F.3d 233 (4th Cir. 2013), the only other
case prosecuted to date involving a negotiator for Somali pirates. There, the evidence established that the
defendant, Mohammad Saili Shibin, was a key participant in several attacks on foreign vessels. Id. at
236. As part of his negotiation tactics, Shibin tortured hostages aboard the Marida Marguerite, and after
being removed from the role of negotiator for that vessel, he stood guard over the hostages with an AK-
47. Id. Shibin also “held a high position among the pirates” that killed four Americans aboard the U.S.
sailing vessel, the Quest. Id.
16
jury to determine whether Ali had the necessary mens rea to support a charge of aiding and
abetting piracy, there is certainly no dispute that Ali is not, under any common definition of the
term, a “pirate.”7
Therefore, the seriousness of the offenses charged simply do not comport with the facts.
Even considering the presumption created by the charges against him, the record lacks clear and
convincing evidence that Ali presents a danger to any person or to the community. See Eischeid,
315 F. Supp. 2d at 1036-37. For this reason, the cases cited by the government where courts
have upheld comparable or longer periods of pretrial detention for extremely dangerous
individuals do not support Ali’s continued pretrial detention.8
In concluding that Ali’s pretrial detention of twenty-eight months raises due process
concerns, the Court also notes that pretrial detention is the exception to the “‘general rule’ of
substantive due process that the government may not detain a person prior to a judgment of guilt
in a criminal trial.” Salerno, 481 U.S. at 749. Pretrial detention “has a detrimental impact on the
individual.” Barker v. Wingo, 407 U.S. 514, 532 (1972); see also United States v. Perry, 788
F.2d 100, 114 (3d Cir. 1986) (describing pretrial detention as a “grave invasion of the most
fundamental of all personal liberties”). “It often means loss of a job; it disrupts family life; and it
7
Counsel for the government recently admitted as much to Ali when stating that: “I think you wanted [the
hostages] free and off the boat. I don’t think you would put a gun to someone’s head and hold them.
That’s not Ali Ali.” (Mot. Ex. 2 at 1.)
8
The Court also notes that in each of the cases the government relies upon, the court recognized that the
length of pretrial detention as a factor weighed in the defendant’s favor notwithstanding the grave
offenses charged. See El-Hage, 213 F.3d at 80 (“[T]he length of El-Hage’s detention weighs heavily in
his favor in his argument that his due process rights have been violated.”); El-Gabrowny, 35 F.3d at 65
(finding that twenty-seven months is “unquestionably a long duration”); Milan, 4 F.3d at 1044 (finding
the length of pretrial detention “weigh[ed] in favor of release.”).
17
enforces idleness. Most jails offer little or no recreational or rehabilitative programs. The time
spent in jail is simply dead time.” Barker, 407 U.S. at 532-33 (footnote omitted).
The effects of pretrial detention are even more serious in Ali’s case. A pretrial detainee
generally is “hindered in his ability to gather evidence, contact witnesses, or otherwise prepare
his defense.” Id. at 533. This hindrance is heightened where the defendant is also the key
defense witness. Pretrial detention limits defense counsels’ access to their client and thus limits
counsels’ ability to prepare effectively for trial and to prepare the defendant to testify.
Moreover, the physical and psychological toll of pretrial detention, particularly a detention
lasting for several years, where the defendant is effectively cut off from everyone but his
attorneys, can significantly affect a defendant’s ability to participate in his own defense. Cf. id.
at 520 (“Lengthy exposure to these [pretrial detention] conditions ‘has a destructive effect on
human character. . . .’”).
Ali’s recent unwarranted solitary confinement highlights the extremely stressful
conditions that can accompany pretrial detention. From August 12 to August 22, 2013, Ali was
wrongfully held in solitary confinement for allegedly possessing “major contraband” in the form
of USB thumb drives containing GED teaching materials. (See Def.’s Suppl. Mem. in Support
of Renewed Mot. for Pretrial Release (“Suppl. Mem.”), Aug. 21, 2013 [Dkt. No. 295] at 1.) Ali
was placed in solitary confinement even though his cellmate (who was also placed in solitary
confinement) claimed ownership of the USB drives. (Id. at 1-2.) Ali did not receive a hearing
on these charges until August 21, 2013, six days later than required by regulation, see 28 DCMR
§§ 508.3, 521.7, and two days after Ali’s counsel made inquiry of the Department of Corrections
officials regarding his solitary confinement and the lack of a hearing. (See Suppl. Mem. at 2.)
At his hearing, Ali was found not guilty of possessing contraband. (Id. at 2-3.) Although he was
18
cleared of the charges on the morning of August 21, 2013, corrections officials inadvertently
failed to remove Ali from solitary confinement until the next day. (See id. at 3-4.) Ali’s ten days
in solitary confinement, only to be found not guilty of the alleged violation – though not the fault
of the prosecution – exemplifies the exceedingly harsh conditions that pretrial detainees face
while awaiting trial.
With these considerations in mind, the government’s suggestion that Ali has been in
detention for only “a few months” (Opp’n at 4) demonstrates a disregard for Ali’s constitutional
rights, as well as the depressing reality of conditions at the D.C. Jail. In short, the twenty-eight
months of pretrial detention that Ali has endured to date “points strongly to a denial of due
process.” Gonzales Claudio, 806 F.2d at 341. The Court accordingly weighs the length of Ali’s
pretrial detention heavily in his favor in evaluating his due process claim.
III. THE GOVERNMENT’S RESPONSIBILITY FOR DELAY
The Court now turns to the extent to which the government is responsible for the delay in
proceeding to trial. The government need not be fully at fault for the delay. Rather, “[i]t suffices
. . . to conclude that the government, even if not deserving of blame, bears a responsibility for a
portion of the delay significant enough to add considerable weight to the defendants’ claim that
the duration of detention has exceeded constitutional limits.” Gonzales Claudio, 806 F.2d at
342-43. For the following reasons, the Court finds that the government bears a responsibility for
a substantial portion of the twenty-eight month delay.
The government argues that it “was ready and willing to try this case on August 19, 2013,
shortly after the mandate would have been issued by the D.C. Circuit, and therefore, it is not
responsible for any current delay in the trial.” (Opp’n at 1.) The government blames Ali for the
current delay because “any delay in having a trial now is the direct result of defendant’s choice,
19
as it is his right, to seek a petition for rehearing en banc before the D.C. Circuit.” (Id.) The
Court agrees that Ali’s filing and the Court of Appeals’ subsequent consideration, of his petition
for rehearing and rehearing en banc, did cause the trial to be delayed for two-and-a-half months.
Accordingly, even though Ali had no choice but to file petitions for rehearing and rehearing en
banc if he wanted further appellate review of his arguments, Ali is responsible for the current
delay in trial from August 19 to November 4, 2013. (See id. at 1-2, 4-5.) But this pales in
comparison to the delay that is attributable to the government.
By the government’s own logic, it must bear responsibility for the nearly thirteen months
of delay caused by its interlocutory appeal. Even though the Court initially dismissed one of the
piracy counts and narrowed the other, the government still had two hostage-taking counts upon
which it could have proceeded to trial on July 31, 2012. See Ali II, 885 F. Supp. 2d at 38, 45.
Instead, the government chose to exercise its right to seek an interlocutory appeal “because there
[was] a concern government-wide about the interpretation” of Count Two. (7/20/12 Status Hr’g
Tr. at 83.) Although it may not have “take[n] an interlocutory appeal for the purposes of delay”
(Opp’n at 5), the government (just like the defendant) remains responsible for the consequences
of its decisions. “[G]overnment-wide” concern about the policy implications of the Court’s
interpretation of aiding and abetting piracy simply does not justify the individual implications of
continued pretrial detention under a due process analysis. 9 Accordingly, the Court finds that the
9
The government attempts to abdicate altogether its responsibility for filing an interlocutory appeal by
asserting that “it was ready and able to try the case” on July 31, 2012, but only “exercised its right to take
an interlocutory appeal,” because “the Court dismissed before trial the majority of the counts in the
indictment.” (Opp’n at 5.) The Court rejects the government’s attempt to rewrite history. The
government advised the Court that it “certainly ha[d] thought about an interlocutory appeal” at a status
conference on July 20, 2012. (See 7/20/12 Status Hr’g Tr. at 79.) On July 24, 2012, the government
notified the Court of its intent to file an interlocutory appeal regarding the Court’s construction of the
piracy charges in Counts One and Two. The government therefore requested that the court cancel the
20
government bears a significant responsibility for the nearly thirteen months of delay between the
pre-appeal trial date of July 31, 2012, and the tentative trial date of August 19, 2013. See United
States v. Chen, 820 F. Supp. 1205, 1209 (N.D. Cal. 1992) (counting anticipated delay caused by
government’s interlocutory appeal of suppression order that “add[ed] little to the government’s
case” in defendant’s favor); cf. United States v. Cos, 2006 WL 4061168, at *18-19 (D.N.M. Nov.
15, 2006) (counting some portion of time on interlocutory appeal against the government, even
though “[a]n appeal is not a delay, but the exercise of a right Congress has granted litigants”);
United States v. Ailemen, 165 F.R.D. 571, 594-95 (N.D. Cal. 1996) (counting “at least” three or
four of nine months of delay from interlocutory appeal against the government even though the
appeal was “clearly necessary” and “far from frivolous”).10
Moreover, the government is also responsible for a significant amount of the delay prior
to its interlocutory appeal. (See Mot. at 12-14.) The government twice sought, over Ali’s
objections, substantial delays in the trial date to obtain evidence from abroad and to prepare its
case. As a result, the speedy trial clock was tolled, again over Ali’s objection, from August 19,
2011 to February 1, 2012. (Findings of Fact and Order, Sept. 6, 2011 [Dkt. No. 42].) The Court
jury. (7/24/12 Status Hr’g Tr. at 3-4.) It was only in response to these actions by the government that the
Court then dismissed Counts Three and Four to allow definitive review of those counts as well. See Ali
III, 885 F. Supp. 2d at 58. (See also 8/16/13 Mot. Hr’g Tr. at 7 (“I didn’t dismiss the hostage-taking
counts until [the government] said [it was] going up on appeal.”); 7/24/12 Status Hr’g Tr. at 4-5.)
10
It does not matter that some delay is attributable to the appellate process, rather than to the prosecutors.
The Supreme Court has held in the speedy trial context that delay caused by “overcrowded courts should
be weighted less heavily but nevertheless should be considered since the ultimate responsibility for such
circumstances must rest with the government rather than with the defendant.” Barker, 407 U.S. at 531.
The Supreme Court’s treatment of court-caused delay in the speedy trial context should apply with equal
force here. See Ailemen, 165 F.R.D. at 594-95 (“Seeing no obvious reason why the Supreme Court’s
treatment of court-caused delay in the speedy trial arena should not be at least instructive to courts
considering due process challenges to pretrial detention, I will proceed on the assumption that
unnecessary delays caused by the courts can weigh in the defendant’s favor in this analysis.”).
21
concludes that these delays were largely unnecessary and should be attributed primarily to the
government. The government – by planning a ruse to bring Ali into the United States – decided
the time of his arrest. (See Mot. at 11 & n.3.) The government did not have to wait until after
Ali’s arrest to seek to obtain evidence from abroad.
Moreover, the government is responsible for delay caused by its failing to timely produce
classified materials and its late filing of a superseding indictment. The government delayed
producing classified materials for almost two months after defense counsel had received the
appropriate clearance. Likewise, the government’s superseding indictment, filed on May 8,
2012, over a year after the initial indictment and slightly more than two months before trial,
caused delay by adding an additional count and mooting Ali’s prior omnibus motion to dismiss,
which had been fully briefed in March.
Finally, the Court notes that the government disclosed on the eve of trial its lack of
evidence that Ali’s charged conduct occurred on the high seas. The government asserts that,
from day one, it did not hide and “has always embraced” the fact that the Ali was not on board
the CEC Future when it was abducted, and “[t]o say there was a late disclosure of an evidentiary
fact from day one is just not true.” (Opp’n at 6-7.) Again, the government fails to understand
the legal significance of not having evidence to support the allegations in its indictment. As late
as its June 11, 2012 motion opposing Ali’s motion to dismiss the indictment, the government
clearly stated that “the indictment alleges” and “the evidence will show that [Ali] was acting as a
negotiator for the pirates while the CEC Future was on the high seas.” (Gov’t Opp’n to Def.’s
Mot. to Dismiss Counts of the Indictment at 8-9 (emphasis added).) Much to the Court’s
surprise, the government did not confess its mistake and admit that it did not have high seas
evidence until the July 20, 2012 status conference. (7/20/12 Status Hr’g Tr. at 67, 69). The
22
government’s lack of candor caused delay, additional briefing by the parties, and opinion
writing. (See id. at 65.) Had the Court been aware of the lack of the government’s evidence
supporting the indictment’s factual charges, it could have acted sooner and would have had more
than a matter of days to address a complex legal issue that, until July 19, 2012, the government
had apparently never seriously considered or briefed. The delay caused by the government’s
misleading statements – whether intentional or negligent – must count against the government.
See Millan, 4 F.3d at 1045 (holding against the government its “failure to advise the court prior
to the initial trial concerning the misconduct of certain agents who participated in the Millan
investigation” because “[t]he failure of communication in the[ government’s] office has . . .
caused significant delay in bringing this case to trial.”).
In an attempt to excuse the delay, the government points to the complexity of the
case. (Opp’n at 5-6.) It is axiomatic that a factually complex case may “reasonably require a
lengthy period for pretrial preparation.” El-Gabrowny, 35 F.3d at 65; see also Gonzales Claudio,
806 F.2d at 342-43. However, this is not the typical “complex” case where such a significant
delay may be excused. The indictment charges only four counts, all of which relate to the same
event, and the government estimates that its case will take only ten days. (See 8/13/13 Mot. Hr’g
Tr. at 11.) Ali is not charged as a co-defendant in a large criminal conspiracy; nor is there a
substantial debate between the parties about the underlying facts. Rather, the complexities
inherent in this case come from its legal novelty, including the government’s expansive use of
universal jurisdiction to prosecute a defendant who is a foreign national, for crimes committed
on foreign soil against victims who are foreign nationals. Moreover, unlike the usual case of
piracy (see supra note 6), there is extensive favorable information, including classified
information and other evidence of Ali’s activities on behalf of victims of piracy and on behalf of
23
the U.S. government, that supports the defendant’s claim that he did not act with the necessary
mens rea. Needless to say, this case is a far cry from El-Gabrowny, cited by the government
(Opp’n at 5) and the Court of Appeals (see Ali, 459 F. App’x at 3), where the Second Circuit
concluded that the complexity of a multi-defendant terrorism conspiracy case, involving
substantial amounts of evidence in Arabic, reasonably required a lengthy period for preparation
for the projected eight-month long trial. El-Gabrowny, 35 F.3d at 64-65; see also El-Hage, 213
F.3d at 78, 80 (case of “exceptional complexity” involving six conspiracies to kill United States
citizens and destroy United States property abroad, twenty counts of perjury, and three counts of
false statements, with a trial expected to last six to nine months).
Moreover, to the extent that the government suggests that the legal complexity of this
case may excuse the length of the interlocutory appellate process (see Opp’n at 3), this
complexity is largely of the government’s own creation. The Court of Appeals’ approval of the
government’s construction of aiding and abetting piracy notwithstanding, the government had to
have known that it was proceeding on a novel legal theory whenever it finally learned from GPS
data that Ali may have done little, if anything, to aid and abet piracy while on the high seas. The
government must therefore bear the responsibility for whatever delays – both before and after
appeal – are attributable to the legal complexity of this case.
Simply put, this is not a case where “the government has done all it could to bring [Ali]
to trial expeditiously.” Zannino, 798 F.2d at 548. The two-and-a-half months of delay
attributable to Ali’s petition for rehearing and rehearing en banc are dwarfed by the substantial
periods of delay attributable to the government both before and on appeal. Accordingly, the
Court concludes that the government is “responsib[le] for a portion of the delay significant
24
enough to add considerable weight” to Ali’s due process claim. See Gonzales Claudio, 806 F.2d
at 342-43.
IV. THE STRENGTH OF THE EVIDENCE JUSTIFYING DETENTION
Because Ali’s pretrial release would not endanger the community (see supra at 15-16),
the justification for Ali’s detention can only be based on his risk of flight. Judge Friedman
previously found by a preponderance of the evidence that Ali posed a flight risk. Ali I, 793 F.
Supp. 2d at 392. But since Judge Friedman’s ruling it has become clear that Ali’s ties abroad (in
particular to Somalia) are no longer as strong as the government once represented (see, e.g.,
7/24/12 Status Hr’g Tr. at 17) and that Ali’s ties to the United States have always been stronger
than the government has acknowledged. (See id. at 27.) Accordingly, the government now
limits its argument that Ali “has every reason to flee before trial” to the fact that he is “charged
with serious crimes, [the] conviction of which would result in a mandatory life sentence.”
(Opp’n at 9.) The Court concludes that the gravity of the offenses charged and the potential life
sentence that he faces are insufficient to justify his prolonged detention.
To be sure, the serious nature of the offenses charged, along with the potential life
sentences those charges carry, create a presumption in favor of pretrial detention11 and function
as evidence that Ali poses a flight risk. See United States v. Bess, 678 F. Supp. 929, 934 (D.D.C.
1988). However, this is not enough. See United States v. Friedman, 837 F.2d 48, 50 (2d Cir.
1988) (requiring “more than evidence of the commission of a serious crime and the fact of a
potentially long sentence to support a finding of risk of flight”); see also Eischeid, 315 F. Supp.
2d at 1036-37.
11
Because of the charges alone, Ali is disqualified from placement in a halfway house, so conditions of
release cannot include this traditional alternative to incarceration.
25
In this case “what is significant is the absence of any prior acts specifically evidencing
likelihood of flight.” See Gonzales Claudio, 806 F.2d at 343. There is no evidence that Ali “has
ever fled from lawful authority, or failed to honor court orders.” See id. (citation omitted). On
the contrary, when the Court previously ordered Ali’s release on July 24, 2012, he was released
to reside in Virginia with a third-party custodian. Rather than flee, Ali contacted his attorney and
went to the place of his home confinement. He wore a GPS monitoring device and complied
with all conditions of his release for the ten days he was in the community. (Mot. at 18.) This
ten-day period provides further support for the conclusion that he does not pose a risk of flight.
See United States v. Motamedi, 767 F.2d 1403, 1408 (9th Cir. 1985) (citing, upon
reconsideration of its initial grant of bail, the fact that the defendant “has not violated any
conditions of his release” as evidence that he did not pose a risk of flight).
Furthermore, changed circumstances since Judge Friedman’s denials of bail not only
demonstrate that Ali’s motivations to flee are weaker than they then-appeared, but also serve to
rebut the presumption that he is a flight risk. When Judge Friedman considered Ali’s first
motion for pretrial release, the government took the position that Ali was a foreign national that
lacked any ties to the United States; the government has since changed its tune. On appeal, the
government recognized that Ali lived in the United States for twenty-six years, married an
American citizen, and has friends and family members in the Washington metropolitan area.
(See Appellant Br., United States v. Ali, No. 12-3056, Doc. No. 1391964, at 45-55 (D.C. Cir.
Aug. 29, 2012).) These new concessions echo Ali’s long-asserted version of the facts, see Ali I,
793 F. Supp. 2d at 389, and undercut Judge Friedman’s prior finding that Ali poses a risk of
26
flight because of his lack of nexus to the United States. See United States v. Xulam, 84 F.3d 441,
444 (D.C. Cir. 1996). 12
Considering the government’s inability to sustain its burden of showing by a
preponderance of the evidence that Ali poses a risk of flight, this factor favors Ali’s due process
claim. The Court also finds that there are “conditions of release that will reasonably assure the
appearance of” Ali at trial. 18 U.S.C. § 3142(g). The government contends that the proposed
conditions of release are insufficient because “electronic monitoring” can be defeated, and law-
enforcement personnel would only receive “after-the-fact alerts” of violations. (Opp’n at 9.)13
However, the conditions of release prescribed need not guarantee Ali’s appearance at trial; they
need only reasonably assure his appearance. See 18 U.S.C. § 3142(c), (e), (g); United States v.
Hir, 517 F.3d 1081, 1092 n.9 (9th Cir. 2008); see also United States v. Tortora, 922 F.2d 880,
884 (1st Cir. 1990) (“Requiring that release conditions guarantee the community’s safety would
fly in the teeth of Congress’s clear intent that only a limited number of defendants be subject to
pretrial detention.”). Given Ali’s minimal flight risk, the Court concludes that the fact that Ali
has surrendered his passport and has agreed not to contest extradition, coupled with the Pretrial
Service Agency’s high-intensity supervision program, including twenty-four hour electronic
monitoring, home confinement, and exclusionary zones within a mile of local airports and 500
12
Ali’s past misrepresentations to the U.S. Immigration and Naturalization Service in 1988 and 1995 do
not provide support to the statutory presumption that he is a flight risk. (See 7/24/12 Status Hr’g Tr. at
28-29.) A defendant’s willingness to obtain and utilize fabricated documents to get into or stay in the
United States is minimally probative of his willingness to obtain and utilize fabricated documents to get
out of the United States. Cf. Xulam, 84 F.3d at 443-44 (reversing district court’s finding of risk of flight
when charged offense was falsification of information to remain in the United States).
13
As explained by a representative of the Pretrial Services Agency at the hearing on September 4, 2013,
the electronic GPS monitoring system provides real-time updates to law enforcement agents of any
violations, including encroachment into the exclusionary zones which have been established by the Court.
27
feet of bus and train stations, provides more than a reasonable assurance of his appearance at trial
in November.
V. BALANCING THE DUE PROCESS FACTORS
Balancing the three due process factors, see Briggs, 697 F.3d at 101, the Court concludes
that the slight risk of flight that Ali poses simply does not justify twenty-eight (much less more
than thirty-one) months of pretrial detention, particularly considering the government’s
responsibility for the delay. See Gonzales Claudio, 806 F.2d at 343 (risk of flight alone did not
justify twenty-seven months of pretrial detention); Ojeda Rios, 846 F.2d at 169 (same for thirty-
two months of pretrial detention); see also El-Hage, 213 F.3d at 80 (“In an ordinary case, the risk
of the defendant’s flight alone might not justify a detention of this length [i.e., thirty-two to
thirty-three months]. A longer pretrial detention is more justifiable for a defendant found to be
dangerous than for a defendant who presents only a risk of flight.”); United States v. Orena, 986
F.2d 628, 631 (2d Cir. 1993) (“[T]he constitutional limits on a detention period based on
dangerousness to the community may be looser than the limits on a detention period based solely
on risk of flight. In the former case, release risks injury to others, while in the latter case, release
risks only the loss of a conviction.”).
The Court, of course, is not indifferent to the prospect of flight. However, as the Second
Circuit has observed
the enforcement of all constitutional restraints upon government in its efforts to
administer the criminal law entails risks. Occasionally such enforcement creates
the risk that a person convicted of crime may escape punishment. In this case the
enforcement of due process limits upon the duration of preventive detention
creates the risk that a person accused of crime may avoid a trial that might result
in conviction and punishment. That risk is serious, but of at least equal gravity is
the preventive detention for fourteen months of defendants who are presumed
innocent and whose trial to determine guilt or innocence will not even begin until
detention has lasted eighteen months. In mandating fundamental fairness, the
28
Due Process Clause endeavors to set outer limits at which risks to society must be
accepted to avoid unconscionable deprivations of the liberty of individuals.
Gonzales Claudio, 806 F.2d at 343. The Second Circuit’s rationale applies with even more force
in this case, where Ali has been in preventative detention for twenty-eight months, and his trial
will not conclude before December.
Simply put, “for every set of circumstances, due process does impose some limit” on the
length of preventative detention without a trial. Briggs, 697 F.3d at 103. The Court finds that in
this case the limit has been passed. The government has no valid regulatory purpose for
continuing to detain Ali, and thus, his continued detention violates his rights under the Due
Process Clause. Cf. Salerno, 481 U.S. at 746-47.14
CONCLUSION
The Court will therefore grant Ali’s Renewed Motion for Pretrial Release [Dkt. No. 284].
A separate order accompanies this Memorandum Opinion setting forth in detail conditions of
pretrial release.
/s/
ELLEN SEGAL HUVELLE
United States District Judge
Date: September 5, 2013
14
Since the Court concludes under a conventional analysis that Ali’s continued pretrial detention violates
his due process rights, it need not address Ali’s theory that the government’s regulatory interest in
detaining a defendant for a universal jurisdiction crime is uniquely weak. (See Mot. at 5-8.)
29
|
01-03-2023
|
04-03-2014
|
https://www.courtlistener.com/api/rest/v3/opinions/2659991/
|
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
)
YASSER ABBAS, )
)
Plaintiff, )
)
v. ) Civ. Action No. 12-1565 (EGS)
)
FOREIGN POLICY GROUP, LLC, )
JONATHAN SCHANZER, )
)
Defendant. )
)
MEMORANDUM OPINION
Plaintiff Yasser Abbas brings this defamation action
against Foreign Policy Group and Jonathan Schanzer, the author
of an article that appeared in Foreign Policy Magazine in June
2012. Pending before the Court are defendants’ motion to
dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) and
special motion to dismiss pursuant to the District of Columbia
Anti-Strategic Lawsuits Against Public Participation Act of 2010
(the “Anti-SLAPP Act”), D.C. Code § 16-5502(a) (2012). Upon
consideration of the motions, the responses and replies thereto,
the amicus brief filed by the District of Columbia, the
applicable law, and the entire record, the Court GRANTS
1
defendants’ special motion to dismiss and DENIES defendants’
motion to dismiss pursuant to rule 12(b)(6) as moot. 1
I. BACKGROUND
A. Yasser Abbas
Yasser Abbas (“Plaintiff” or “Mr. Abbas”) is the son of
Mahmoud Abbas (“M. Abbas”), the President of the Palestinian
Authority (the “PA”). Compl. ¶ 9. He owns and operates many
businesses throughout the Middle East: he is the chairman of
Falcon Holding Group, which owns Falcon Global
Telecommunications Services Company, Falcon General Investment
Company, and Falcon Electrical Mechanical Company, an
engineering company with offices in Gaza, Jordan, Qatar, the
United Arab Emirates, and the West Bank that has done work for
USAID in the past, Compl. ¶¶ 21, 28; he is the owner of Falcon
Tobacco, Compl. ¶ 16; he is the chairman of the publicly traded
Al-Mashreq Insurance Company, Compl. ¶ 31; and he is the
managing director of the First Option Project Construction
Management Company, which has offices in Amman, Tunis, Cairo,
Montenegro, and Ramallah and has been awarded USAID funds.
Compl. ¶ 32.
Mr. Abbas also serves as a political emissary for his
father’s regime, and often travels to other countries and
1
Because granting the Anti-SLAPP motion disposes of the entire
action, the Court need not consider the motion to dismiss
pursuant to Rule 12(b)(6) here.
2
international meetings in this capacity. Anti-SLAPP Mot. at 9-
10 (citing Anti-SLAPP Mot., Jones Decl. Ex. 15, 16, 17, 18). He
has previously acknowledged that his political involvement in
the Palestinian Authority and his business success have
engendered controversy. See, e.g. Anti-SLAPP Mot., Jones Decl.
Ex. 6, Excerpts from an interview with Yasser Abbas in Ramallah
(“Yasser Abbas Interview”), Part 3. Over the last few years,
many questions have been raised about whether his business
success and political ties are linked, though he has
systematically denied any such allegations. Anti-SLAPP Mot. at
11-12; see, e.g., Jones Decl., Ex. 24 (Ike Seamans, What do
Palestinians Do With Humanitarian Aid Money?, THE MIAMI HERALD,
Jan. 25, 2003, at 7B (“Israeli military intelligence charges
that Yasser Arafat and his cronies have $20 billion stashed in
Swiss bank accounts and invested in foreign real estate. With
PA financial help, Yasser Abbas, the prime minister’s son,
joined the gravy train. He has gained control of the
electronics industry, even though he’s a Canadian citizen who
lives in Ramallah only a few months a year.”)); see also Jones
Decl., Ex. 21, 22, 25, 26.
As public scrutiny over his business and political activity
has increased, Mr. Abbas has used the threat of defamation
litigation to counter bad press. Anti-SLAPP Mot. at 14-15.
Between 2008 and 2010, Mr. Abbas and his family have filed
3
defamation lawsuits or threatened to sue for libel on three
separate occasions against an Israeli television channel,
Reuters, and Al-Jazeera. Id. Mr. Abbas has also threatened to
sue Richard Falk, the United Nations Special Rapporteur for the
Palestinian Territories. Id.
B. Foreign Policy Magazine and Jonathan Schanzer
Foreign Policy is an online and print publication is a
“forum for ‘international news and opinions’ covering topics on
global politics and economics.” Anti-SLAPP Mot. at 15; Compl. ¶
5. The magazine contains an “Arguments” section, which is
described as: “Polemical, controversial, and powerful, FP
arguments provide timely insight on stories making headlines
around the world.” Anti-SLAPP Mot. at 16. Foreign Policy also
publishes FP Arabic on a bimonthly basis in partnership with the
Gulf Strategic Studies Center in Qatar, which contains
translated pieces from Foreign Policy and is distributed in the
Middle East. Compl. ¶ 7.
Jonathan Schanzer is the Vice President for Research at the
Foundation for Defense of Democracies (“FDD”), a non-partisan
group that focuses on national security and foreign policy.
Anti-SLAPP Mot., Declaration of Jonathan Schanzer (“Schanzer
Decl.”) at ¶ 1. Prior to joining FDD, Mr. Schanzer worked as a
terrorism finance analyst at the U.S. Department of the Treasury
and at several other U.S. think tanks. He has also published
4
two books about Hamas and the Middle East and regularly
publishes articles in American and international publications,
including Foreign Policy. Schanzer Decl. ¶¶ 2-5. Mr. Schanzer
has also testified before Congress twice regarding the issue of
corruption in the PA. 2 See Compl. ¶¶ 56-77.
C. The June 5, 2012 Commentary in Foreign Policy Magazine
On June 5, 2012, an article (the “Commentary”) written by
Mr. Schanzer was published in Foreign Policy magazine. Compl. ¶
10. The article is entitled “The Brothers Abbas: Are the sons
of the Palestinian President growing rich off their father’s
system?” and appeared in the “Arguments” section of the
magazine. It can be accessed by clicking on the “Arguments”
link on the FP website. Id.; Defs.’ MTD, Ex. A. In the
introduction of the article, Mr. Schanzer writes:
In the wake of the Arab Spring, U.S. leaders have promised
to reverse the United States’ long reliance on autocratic,
unrepresentative leaders who enrich themselves at the
expense of their citizens. There’s only one problem: Just
as top American officials have been making these lofty
promises, new details are emerging of how close family
members of Palestinian leader Mahmoud Abbas, a major U.S.
partner in the Middle East, have grown wealthy. Have they
enriched themselves at the expense of regular Palestinians
– and even U.S. taxpayers?
2
Mr. Abbas describes Mr. Schanzer’s Congressional testimony in
the Complaint as evidence of malice on the part of Mr. Schanzer.
Because the Court finds that contested portions of the
Commentary are not defamatory, see infra Section II.C.2, the
Court does not reach the question of malice on the part of
Defendants.
5
Defs.’ MTD, Ex. A at 2. Mr. Schanzer then discusses Mr. Abbas,
his family, and their business and political interests. 3
Mr. Schanzer does not paint Mr. Abbas or his family in a
particularly flattering light. He writes of allegations of
corruption in the PA and the “conspicuous wealth” of Mr. Abbas
and his brother, which Mr. Schanzer claims has “become a source
of quiet controversy in Palestinian society since at least
2009.” Defs.’ MTD, Ex. A. He also details allegations made by
some in the region against Mr. Abbas and his family, including
an allegation by Mohammad Rachid, a former economic advisor to
the late PA leader Yasir Arafat who is under investigation for
corruption, that President Abbas has “socked away $100 million
in ill-gotten gains.” Defs.’ MTD, Ex. A at 2; Compl. ¶ 14. He
also discusses conversations he had with Palestinians during a
3
In his Complaint, Mr. Abbas alleged that a number of statements
in the Commentary regarding his business interests and political
activity were libelous. See Compl. ¶¶ 14, 16, 21, 22, 28, 30,
32, 35, 37, 39, 41. However, in his Opposition, Mr. Abbas
considerably narrowed his libel claim and conceded that “the
article’s reference to these businesses is not the basis for
[his] libel claim.” Opp’n to MTD at 10. In their motion to
dismiss, Defendants addressed these statements and argued that
they were not defamatory. See Defs.’ MTD at 15-21. Therefore,
the Court will treat any allegations of libel relating to these
portions of the Commentary in Plaintiff’s complaint as conceded.
See Hopkins v. Women’s Div., Gen. Bd. of Global Ministries, 284
F. Supp. 2d 15, 25 (D.D.C. 2003) (“It is well disputed in this
Circuit that when a plaintiff files an opposition to a
dispositive motion and addresses only certain arguments raised
by the defendant, a court may treat those arguments that the
plaintiff failed to address as conceded.”) (citing FDIC v.
Bender, 127 F.3d 58, 67-68 (D.C. Cir. 1997)).
6
research trip to Ramallah in 2011, who told him that “the Abbas
family dynasty is common knowledge” in the region, but that it
was rarely discussed “thanks to growing fear of retribution by
PA security officers, who have apprehended journalists and
citizens for openly challenging President Abbas’s authority.
Defs.’ MTD, Ex. A at 3; Compl. ¶ 37. The online version of the
article contains approximately 31 highlighted words or phrases
that are hyperlinks to the underlying source material for
statements made in the article, which include articles from
other publications and company websites. 4 Anti-SLAPP Mot. at
17.
Within a week of the publication of Mr. Schanzer’s
Commentary in Foreign Policy, Mr. Abbas threatened to sue the
magazine in an interview with a Palestinian news agency. Anti-
SLAPP Mot. at 17. On July 23, 2012, Mr. Abbas’s London-based
counsel sent Foreign Policy a letter asking it to remove the
Commentary from its website and retract those portions of the
Commentary that he alleged were defamatory or false. Id.
Foreign Policy responded in a letter dated August 6, 2012,
explaining that it did not read Mr. Abbas’s complaints as
alleging anything defamatory or materially false in the
Commentary, and offering to clarify facts in the article if Mr.
4
The bolded words in excerpts of the Commentary in this opinion
represent hyperlinks in the on-line version.
7
Abbas provided the basis to do so. Foreign Policy also offered
Mr. Abbas the opportunity to respond in print. Id. Through his
counsel, Mr. Abbas declined and filed this action on September
20, 2012. Id. at 18. On November 5, 2012 defendants filed a
motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) and a
special motion to dismiss pursuant to the District’s Anti-SLAPP
Act. The District of Columbia moved for leave to file an amicus
curiae brief, which the Court granted. The District filed an
amicus brief on December 22, 2012 arguing that the Anti-SLAPP
Act is applicable in a federal court sitting in diversity.
These motions are now ripe for determination by the Court.
II. Discussion
A. The Anti-SLAPP Act
A SLAPP, or strategic lawsuit against public participation,
is a civil action that arises out of a defendant’s
communications to government bodies or the public on an issue of
public concern. See Brief of Amicus Curiae District of Columbia
(“D.C. Amicus Brief”) at 1. The District’s Committee on Public
Safety and the Judiciary has noted that SLAPPs “are often
without merit, but achieve their filer’s intention of punishing
or preventing opposing points of view, resulting in a chilling
effect on the exercise of constitutionally protected rights.”
Rep. of the D.C. Comm. on Public Safety and the Judiciary on
Bill 18-893 (Nov. 19, 2010) (“Comm. Report”)) at 4. By imposing
8
upon defendants the burden of defending against a lawsuit, the
Committee concluded that “litigation itself is the plaintiff’s
weapon of choice,” Comm. Report at 4, one that was “wielded to
chill the speech of those who would otherwise speak out on a
matter of public interest,” D.C. Amicus Brief at 1. The
Committee also found that the impact of these lawsuits was not
limited to defendants against whom a suit had been filed, but
also prevented others from voicing concerns regarding issues of
public concern. Comm. Report at 4.
To combat this problem, the Council passed the Anti-SLAPP
Act in 2010. The protections offered in the Act “follow[] ‘the
lead of other jurisdictions, which have similarly extended
absolute or qualified immunity to individuals engaged in
protected actions’” by enacting similar Anti-SLAPP legislation.
Farah, 863 F. Supp. 2d at 36 (quoting Comm. Report at 4). The
Act aims to address such concerns “by incorporating substantive
rights that allow a defendant to more expeditiously, and more
equitably, dispense of a SLAPP.” Id.
To that end, the Anti-SLAPP Act provides in pertinent part:
(a) A party may file a special motion to dismiss any claim
arising from an act in furtherance of the right of advocacy
on issues of public interest within 45 days after service
of the claim.
(b) If a party filing a special motion to dismiss under
this section makes a prima facie showing that the claim at
issue arises from an act in furtherance of the right of
advocacy on issues of public interest, then the motion
9
shall be granted unless the responding party demonstrates
that the claim is likely to succeed on the merits, in which
case the motion shall be denied.
D.C. Code § 16-5502(a)-(b). The Act also provides that “[i]f
the special motion to dismiss is granted, dismissal shall be
with prejudice.” Id. That is, if the defendant meets the
burden of showing that the claims at issue arise from the type
of activity protected by the Act, the claims must be dismissed
with prejudice unless plaintiff can show a likelihood of success
on the merits.
The Act applies to claims based on any oral or written
statement made:
(i) In connection with an issue under consideration or
review by a legislative, executive, or judicial body, or
any other official proceeding authorized by law; or
(ii) In a place open to the public or a public forum in
connection with an issue of public interest.
D.C. Code § 16-5501(1)(A). It applies to “[a]ny other
expression or expressive conduct that involves petitioning the
government or communicating views to members of the public in
connection with an issue of public interest.” Id. An “issue of
public interest” is defined as one that is “related to health or
safety; environmental, economic, or community well-being; the
District government; a public figure; or a good, product, or
service in the marketplace.” Pursuant to the Act, an “issue of
public interest” “shall not be construed to include private
10
interests, such as statements directed primarily toward
protecting the speaker’s commercial interests rather than toward
commenting on or sharing information about a matter of public
significance.” Id. § 16-5501(3).
In construing the Act, the Court cannot rely on guidance
from the D.C. Court of Appeals, which has not yet issued a
published opinion interpreting the statute. Where, as here,
“the substantive law of the forum state is uncertain or
ambiguous, the job of federal courts is carefully to predict how
the highest court of the forum state would resolve the
uncertainty or ambiguity.” Travelers Ins. Co. v. 633 Third
Assocs., 14 F.3d 114, 119 (2d. Cir. 1994). With this in mind,
the Court notes that the Committee Report prepared on the Anti-
SLAPP Act emphasized that the statute “followed the model set
forth in a number of other jurisdictions.” Comm. Report at 1.
The D.C. Court of Appeals has accorded great weight to such
reports in interpreting other D.C. statutes. See, e.g. Dist. of
Columbia v. Place, 892 A.2d 1008, 1113 (D.C. 2006); Carter v.
State Farm Mut. Auto. Ins. Co., 808 A.2d 466, 471 (D.C. 2002).
Therefore, where necessary and appropriate, the Court will look
to decisions from other jurisdictions (particularly California,
which has a well-developed body of case law interpreting a
similar California statute) for guidance in predicting how the
11
D.C. Court of appeals would interpret the District’s Anti-SLAPP
statute. See Boley, 2013 U.S. Dist. LEXIS 88494 at *8-9.
B. Applicability of the Anti-SLAPP Act in Federal
Diversity Actions
The parties dispute whether the District’s Anti-SLAPP Act
applies in a federal court sitting in diversity. Defendants
contend that because the Act confers substantive protections
under the District’s tort law, it is applicable in federal
court. Anti-SLAPP Mot. at 21; D.C. Amicus Brief at 5-6.
Plaintiff, however, argues that the Anti-SLAPP Act is procedural
and thus inapplicable because a federal court must apply federal
procedural laws. See Erie R.R. Co. v. Tompkins, 304 U.S. 64
(1938); Anti-SLAPP Opp’n at 3-9.
While the applicability of the Anti-SLAPP Act in a federal
court sitting in diversity has not been addressed by the D.C.
Circuit, other circuits have found that similar state statutes
apply in federal court. See Godin v. Schencks, 629 F.3d 79 (1st
Cir. 2010); U.S. ex rel. Newsham v. Lockheed Missiles & Space
Co., 190 F.3d 963 (9th Cir. 1999); Henry v. Lake Charles Am.
Press, LLC, 566 F.3d 164 (5th Cir. 2009) (adopting the reasoning
of the 9th Circuit in Newsham and ruling that a similar
Louisiana statute was substantive and therefore applied in a
federal court).
12
Most recently, the First Circuit confronted the issue of
whether a Maine Anti-SLAPP statute applied in federal court in
Godin v. Schencks on an interlocutory appeal from a denial of a
special motion to dismiss pursuant to the Anti-SLAPP statute.
629 F.3d 79. Plaintiff in Godin, a former public school
principal, brought a defamation action against three school
system officials because they had expressed their view that she
had acted abusively toward students at her school. 629 F.3d at
80-81. The individual defendants filed a special motion to
dismiss under Maine’s Anti-SLAPP statute in the district court,
which ruled that the statute conflicted with Rules 12 and 56,
and therefore did not apply in federal court. Id. at 81-82.
The First Circuit reversed the decision of the district court,
considering whether the “federal rule is ‘sufficiently broad to
control the issue before the court,’” and finding that it was
not. Id. at 86-87 (citing Shady Grove Orthopedic Assocs., P.A.
v. Allstate Ins. Co., 130 S. Ct. 1431, 1451 (2010) (Stevens, J.,
concurring)). The court held that “neither Fed. R. Civ. P.
12(b)(6) nor Fed. R. Civ. P. 56, on a straightforward reading of
its language, was meant to control the particular issues under
[the Anti-SLAPP statute] before the district court” and
therefore did not reach the question of whether the Rules
12(b)(6) and 56 comply with the Rules Enabling Act. Id. at 86.
The Court also concluded that the twin aims of Erie –
13
“discouragement of forum-shopping and avoidance of inequitable
administration of the laws,” Hanna v. Plumer, 380 U.S. 460, 468
(1965), would be “best served by enforcement of [the Anti-SLAPP
Act] in federal court,” Godin, 629 F.3d at 87. After
distinguishing both Rules 12(b)(6) and 56 from the Maine
statute, the Court found that “[b]ecause [the Anti-SLAPP
statute] is ‘so intertwined with a state right or remedy that it
functions to define the scope of the state-created right,’ it
cannot be displaced by Rule 12(b)(6) or Rule 56.” Id. at 89
(quoting Shady Grove, 130 S. Ct. at 1452 (Stevens, J.,
concurring)).
Two recent decisions by this Court have also followed the
reasoning of the First Circuit in Godin as well as the other
Circuits that have considered the applicability of state Anti-
SLAPP legislation in federal courts. See Boley v. Atlantic
Monthly Group, No. 13-89, 2013 U.S. Dist. LEXIS 88494 (June 25,
2013); Farah v. Esquire Magazine, Inc., 863 F. Supp. 2d 29
(D.D.C. 2012); see also Sherrod v. Breitbart, 843 F. Supp. 2d
83, 85 (D.D.C. 2012) (noting that the District’s Anti-SLAPP
statute “is substantive – or at the very least, has substantive
consequences” that would make it applicable in federal court);
but see 3M Co. v. Boulter, 842 F. Supp. 2d. 85 (D.D.C. 2012)
(finding that the D.C. Anti-SLAPP Act cannot apply in federal
court because it is procedural, and therefore, conflicts with
14
Federal Rules of Civil Procedure 12 and 56). And, the D.C.
Circuit recently upheld a district court decision denying a
special motion to dismiss pursuant to the District’s Anti-SLAPP
Act because the motion was not filed within the 45-day limit
proscribed by the Act. Sherrod v. Breitbart, No. 11-7088, 2013
U.S. App. LEXIS 12959 (June 25, 2013). Though the Circuit did
not address the applicability of the District statute to a
federal court sitting in diversity, implicit in its holding that
defendant had failed to file its motion within the statutory
time frame is the conclusion that the statute applies in federal
court. Id. at *12-13. This Court is persuaded by those
Circuits that have held that similar statutes do apply in
federal court.
C. Merits of Defendants’ Motion
1. Prima Facie Showing of Protected Activity
In order to prevail on their Anti-SLAPP Act motion,
defendants must make a “prima facie showing that the claim at
issue arises from an act in furtherance of the right of advocacy
on issues of public interest.” D.C. Code § 16-5502(b). The
Court finds that defendants have made that showing here.
Defendants have shown that the Commentary and Mr.
Schanzer’s statements are protected under several provisions of
the Anti-SLAPP Act. As an initial matter, the Commentary
qualifies as a written statement made “[i]n a place open to the
15
public or a public forum in connection with an issue of public
interest.” Id. § 16-5501(1)(A)(ii). FP’s website is a “place
open to the public,” because anyone with a working internet
connection or access to one can view it. See Boley, 2013 U.S.
Dist. LEXIS 88494, at *10 (finding that the website of The
Atlantic was a “place open to the public”); Farah, 863 F. Supp.
2d at 38 (holding that statements in an internet blog posting
were “made in a ‘place open to the public or a public forum’”)
(quoting § 16-5501(1)(A)).
Mr. Schanzer’s statements regarding Mr. Abbas concerned an
issue of public interest because, contrary to Plaintiff’s
assertions, he is a “public figure.” See § 16-5501(3).
Although the Anti-SLAPP Act does not define the term “public
figure,” it is a term of art in the context of Plaintiff’s
defamation action. There are two types of public figures:
“general purpose and limited purpose public figures.”
Tavoulareas v. Piro, 817 F.2d 762, 772 (D.C. Cir. 1987) (en
banc). “A person becomes a general purpose public figure only
if he or she is a well-known celebrity, his name a household
word.” Id. (internal quotation marks omitted). However, “[f]ew
people attain the general notoriety that would make them public
figures for all purposes.” Waldbaum v. Fairchild Publn’s, Inc.,
627 F.2d 1287, 1296 (D.C. Cir. 1980). Instead, “public figures
for the more limited purpose of certain issues or situations”
16
are much more common. Tavoulareas, 817 F.2d at 772. If “an
individual voluntarily injects himself or is drawn into a
particular public controversy[, he] thereby becomes a public
figure for a limited range of issues.” Gertz v. Robert Welch,
Inc., 418 U.S. 323, 351 (1974).
Though Mr. Abbas has not achieved the kind of ubiquity or
notoriety to be considered a general purpose public figure, he
is a limited purpose public figure. The Court is not persuaded
by Mr. Abbas’s argument that he cannot be considered a limited
purpose public figure “by virtue of defending himself from the
slanderous claims by the controversy maker.” Opp’n to MTD at
13. As defendants explain, Mr. Abbas has “voluntarily thrust
himself into a role of prominence in both Palestinian politics
and the controversy surrounding his wealth.” Defs.’ MTD at 24.
He explains in his Complaint that he accompanies his father on
official trips, and that he travels as a special envoy “for the
benefit of the Palestinians and the Palestinian cause.” Compl.
¶ 40. In the Complaint, Mr. Abbas also describes his role in
the repatriation of the Palestinian National Fund, in “ensuring
the resumption of US and Canadian aid to the UN Relief and Works
Agency for Palestinian Refugees,” and in providing financial
assistance to Palestinian students and those Palestinians freed
from Israeli jails. Id. ¶ 43. In the past, Mr. Abbas has
openly discussed his wealth; indeed, he has claimed that 25
17
percent of his income went to the PA budget. Defs.’ MTD, Ex. I
at 2. He has also claimed that the PA owes him a great deal of
money, but that he could not use his influence and status to
collect the debt in order to avoid being accused of exploiting
his father’s position. Id. Under these circumstances, Mr.
Abbas cannot reasonably claim that he has no role in the
controversy apart from “simply defending himself against the
slander.” Opp’n to MTD at 13. See Waldbaum, 627 F.2d at 1298
(“Those who attempt to affect the result of a particular
controversy have assumed the risk that the press, in covering
the controversy, will examine the major participants with a
critical eye.”).
Further, the question of U.S. aid to the Palestinian
Authority, and the level of corruption in the PA under both
Yasir Arafat and Mahmoud Abbas, is fundamentally a matter of the
public, not private, interest. 5 See Anti-SLAPP Mot. at 5-6. The
5
Mr. Abbas has acknowledged as much in the past. During an
interview in 2008, Mr. Abbas discussed corruption in the context
of the effect of the global financial crisis on the Palestinian
economy:
We don’t accept any kind of corruption claims to us these
days, because the whole economy of the globe, the global
economy, has been knocked down by corruption, either in the
U.S., or in the Gulf, or in Europe, or in maybe Canada, or
just name it . . . . [T]his is the only country that’s
going up, everybody is going down – simply because we have
a limited kind of corruption. We don’t have it anymore.
It’s been limited. Everything is mainly under control. I
cannot say we have 100 percent control on corruption that
18
relationship between the United States and the Palestinian
Authority, and the way that U.S.-appropriated funds are used by
the Palestinian Authority has been debated at length for years.
The question of whether the sons of the President of the
Palestinian Authority are enriching themselves by virtue of
their political ties, and whether some of their wealth can be
traced to U.S. tax dollars is part of that issue. As defendants
point out, numerous publications in the United States and
throughout the world have written extensively about corruption
in the Palestinian Authority generally, and the Abbas family’s
wealth specifically. See Defs.’ MTD at 23-24. Indeed, Mr.
Abbas does not dispute that “there is a public controversy
concerning allegations of corruption within the Palestinian
Authority.” Opp’n to MTD at 13.
Finally, even setting aside whether Mr. Abbas is a “public
figure” or whether the corruption in the Palestinian Authority
is a “public issue,” Mr. Schanzer’s statements while testifying
we had before – no – but I can claim it’s in the 90’s, it’s
in the high 90’s, because it’s not easy for anyone to go
and really start, you know, having any sort of corruption
in any project that comes up. It’s not that easy, it’s not
that easy anymore. Everybody knows that the President is
holding the stick on everybody’s head, ok? And he always
threatens with that stick, so they know. It’s not a joke.
As a result, we don’t accept the corruption slogan anymore.
After the past three months, I can’t accept it. I
personally will attack anyone who talks about the
Palestinian corruption[.]
Anti-SLAPP Mot., Jones Decl., Exhibit 6, at Part 3.
19
before Congress and in the Commentary are “written or oral
statement[s]” made “[i]n connection with an issue under
consideration or review by a legislative, executive, or judicial
body, or any other official proceeding authorized by law.” D.C.
Code § 16-5501(1)(A)(i). Plaintiff concedes that the Commentary
at issue was written after Mr. Schanzer testified before
Congress regarding “the topic of U.S. Aid to Palestinians”
during which he purportedly suggested that it would be a
“worthwhile inquiry [to] explore the way in which Abbas’ sons,
Yasser and Tarek, have accumulated wealth since their father
took office in 2005.” Compl. ¶¶ 57-61.
2. Likelihood of Success on the Merits
Because defendants have made a prima facie showing that Mr.
Abbas’s defamation claim “arises from an act in furtherance of
the right of advocacy on issues of the public interest,” Mr.
Abbas must now show that he is likely to succeed on the merits
of his defamation claim in order to survive defendants’ Anti-
SLAPP motion. D.C. Code § 16-5502(b). The Act does not define
what it means to succeed on the merits, so the Court looks to
relevant case law from California as instructive. There, in
order to show a “probability of prevailing on a claim” in
opposition to an Anti-SLAPP motion to dismiss, a plaintiff “must
satisfy a standard comparable to that used on a motion for
judgment as a matter of law.” Price v. Stossel, 620 F.3d 992,
20
1000 (9th Cir. 2010); see also Arenas v. Shed Media US Inc., 881
F. Supp. 2d 1181, 1188 (C.D. Ca. 2011). Thus, a plaintiff “must
demonstrate that the complaint is legally sufficient and
supported by a prima facie showing of facts to sustain a
favorable judgment if the evidence submitted by the plaintiff is
credited.” Price, 620 F.3d at 1000 (quoting Metabolife Int’l,
Inc. v. Wornick, 264 F.3d 832, 840 (9th Cir. 2001)). If a
“plaintiff fails to present a sufficient legal basis for the
claims or if the evidence offered is insufficiently substantial
to support a judgment in favor of the plaintiff, then the
defendant’s anti-SLAPP motion should be granted.” Arenas, 881
F. Supp. 2d at 1188 (citing Price, 620 F.3d at 1000).
To prevail on his defamation claim under District of
Columbia law, Mr. Abbas must show:
(1) that the defendant made a false and defamatory
statement concerning the plaintiff; (2) that the defendant
published the statement without privilege to a third party;
(3) that the defendant’s fault in publishing the statement
amounted to at least negligence; and (4) either that the
statement was actionable as a matter of law irrespective of
special harm or that its publication caused the plaintiff
special harm.
Oparaugo v. Watts, 884 A.2d 63, 76 (D.C. 2005) (internal
quotation marks omitted)). “Falsity and defamatory meaning ‘are
distinct elements of . . . defamation and are considered
separately.’” Carpenter v. King, 792 F. Supp. 2d 29, 34 (D.D.C.
2011) (quoting White v. Fraternal Order of Police, 909 F.2d 512,
21
520 (D.C. Cir. 1990). If the plaintiff is a public figure, he
faces a higher burden, and must show, by clear and convincing
evidence, that a defendant published the allegedly defamatory
statements with “‘actual malice’—that is, without knowledge that
it was false or with reckless disregard of whether it was false
of not.” New York Times Co. v. Sullivan, 376 U.S. 254, 280
(1964); see also Masson v. New Yorker Magazine, Inc., 501 U.S.
496, 510 (1991).
To show falsity, a plaintiff “must demonstrate either that
the statement is factual and untrue, or an opinion based
implicitly on facts that are untrue.” Carpenter, 792 F. Supp.
2d at 34 (quoting Lane v. Random House, 985 F. Supp. 141, 150
(D.D.C. 1995)). A statement is defamatory “if it tends to
injure plaintiff in his trade, profession or community standing,
or lower him in the estimation of the community.” Liberty
Lobby, Inc. v. Dow Jones & Co., 838 F.2d 1287, 1293-94 (D.C.
Cir. 1998) (quoting Howard Univ. v. Best, 484 A.2d 958, 988
(D.C. 1984)). The statement “must be more than unpleasant or
offensive; the language must make the plaintiff appear ‘odious,
infamous, or ridiculous.’” Best, 484 A.2d at 989 (quoting
Johnson v. Johnson Publ’g Co., 271 A.2d 696, 697 (D.C. 1970).
“The plaintiff has the burden of proving the defamatory nature
of [the challenged] publication, . . . and the publication must
be considered as a whole, in the sense in which it would be
22
understood by the readers to whom it was addressed.” Id. Words
should be given their plain and natural meaning, and “the
statements at issue should not be interpreted by extremes, but
should be construed as the average or common mind would
naturally understand them.” Klayman v. Segal, 783 A.2d 607, 616
(D.C. 2001). Whether an allegedly defamatory statement is
capable of defamatory meaning is a question of law. Weyrich v.
New Republic, Inc., 235 F.3d 617, 627 (D.C. Cir. 2001).
As noted in footnote 3 supra, Mr. Abbas has considerably
narrowed his defamation claim in his Opposition to Defendants’
Motion to Dismiss. He now contends that he does not contest
portions of the Commentary that relate to his business
interests. Mr. Abbas explains that
the principal allegations supporting [his] libel claim are
the paragraphs concerning the article’s [] libelous
questions, the allegations that the article purports to
provide ‘new details’ regarding those libelous questions,
and the allegations concerning the information provided by
Mr. Schanzer’s unidentified sources, which are the only
‘new details’ used by Mr. Schanzer to support the libelous
implication of his libelous questions—namely, that [he] has
wrongfully enriched himself at the expense of regular
Palestinians and even U.S. taxpayers.
Opp’n to MTD at 12.
Defendants argue that these challenged portions of the
Commentary are not actionable because: (1) the purportedly
“libelous questions” are unanswered questions, not statements of
fact, and to the extent that the questions imply anything, they
23
imply a non-actionable opinion; and (2) the purported “new
details” that Plaintiff objects to are not capable of defamatory
meaning because they are not of and concerning him. Defs.’
Reply to MTD at 3. In response, Mr. Abbas argues that the
Commentary is a “reporting piece, not a mere opinion piece.”
Plaintiff’s Opp’n to MTD at 9 (emphasis in original).
a. “Libelous Questions”
i. The Two Questions are Rhetorical, and
Are Not Assertions of Fact
Mr. Abbas contends that the Commentary poses two “libelous
questions:” (1) “Are the sons of the Palestinian president
growing rich off their father’s system?; and (2) “Have they
enriched themselves at the expense of regular Palestinians—and
even U.S. taxpayers?” Plaintiff’s Opp’n to MTD at 6; Compl. ¶¶
10, 13; Defs.’ MTD, Ex. A, at 3. Mr. Abbas alleges that these
questions “may be read as assertions of false fact that [he] is
wrongfully and possibly criminally getting rich off his
‘father’s system.’” Plaintiff’s Opp’n at 6-7. Purportedly,
these questions ask “those he works with and all the world to
wonder if plaintiff has ‘enriched’ himself ‘at the expense of
regular Palestinians – and even U.S. taxpayers.’” Compl. ¶ 49.
Defendants argue that “the Commentary merely posed questions,
without stating or implying as factual matter that Plaintiff was
guilty of criminal or corrupt conduct, and Plaintiff has wholly
24
mischaracterized the Commentary in an effort to suggest
otherwise.” Defs.’ Reply to MTD at 1.
A statement challenged as defamatory, regardless of whether
it is posed as a question, cannot be libelous unless it can
reasonably be read as a false assertion of fact. See Chapin v.
Knight-Ridder, Inc., 993 F.2d 1087, 1094 (4th Cir. 1993).
“[I]nquiry itself, however embarrassing or unpleasant to the
subject, is not accusation.” Id. In Chapin, the court
considered an article published in the Philadelphia Inquirer
that questioned the finances of a charity program run by
plaintiff through which people could send gift packages to
soldiers stationed in Saudi Arabia. Id. at 1091. In one
purportedly defamatory section of the article, the author posed
a question regarding plaintiff’s involvement in the charity:
“Who will benefit more from the project – GIs or veteran charity
entrepreneur Roger Chapin of San Diego and Falls Church, Va.,
the organizer of the campaign?” Id. at 1093-94. While
acknowledging that the question was “pointed, and could
certainly arouse a reader’s suspicion,” the court ruled that it
could not “reasonably be read to imply the assertion of the
false and defamatory fact – pocket-lining – of which plaintiffs
complain.” Id. at 1094. Instead, the court held that the
“question simply provokes public scrutiny of the plaintiffs’
activities.” Id. Plaintiff also challenged another portion of
25
the article in which the author wrote, “it is not clear where
the rest of the money goes.” Id. at 1095. The court held that
the author was not making a false assertion, but rather was
“invit[ing] the public to ask.” Id. at 1096. That one of the
possible answers to that question was that “Chapin is a
dishonest man who pockets the difference” did not make the
statement defamatory, and according to the court, was “precisely
why we need and must permit a free press to ask the question.”
Id.
Other courts that have considered whether a question can
support a defamation claim have reached a similar conclusion.
In Partington v. Bugliosi, the court considered whether a
rhetorical question regarding an attorney’s trial strategy was
capable of defamatory meaning. 56 F.3d 1147, 1155 (9th Cir.
1995). In the passage at issue, the author, an attorney for a
co-defendant in the same trial, asked: “Had Walker’s lawyer not
read the theft-trial transcripts? Our copy had ended up in a
warehouse; perhaps theirs had too.” Id. (emphasis in original).
The court held that the statement did not imply that plaintiff
had not read the transcripts and therefore did not adequately
represent his client. Id. at 1156. In rejecting plaintiff’s
assertion that the statement was defamatory, the court explained
that “the rhetorical device used by [the defendant] negates the
impression that his statement implied a false assertion of
26
fact.” Id. at 1157. Instead, the author’s use of a question
made clear his lack of definitive knowledge and invited the
reader to consider various possibilities. Id. See also Phantom
Touring, Inc. v. Affiliated Publ’ns, 953 F.2d 724, 730 (1st Cir.
1992) (holding that statements in a series of articles published
in the Boston Globe, including a rhetorical question regarding
whether plaintiff was “trying to score off the success of Andrew
Lloyd Webber’s ‘Phantom,’” were not defamatory because they
“reasonably could be understood only as [the author’s] personal
conclusion about the information presented, not as a statement
of fact”) 6.
Similarly, the two questions posed in the Commentary cannot
reasonably be read to imply the meaning that Mr. Abbas alleges –
that he “is wrongfully and possibly criminally getting rich off
of his ‘father’s system’” or that he is enriching himself “at
the expense of regular Palestinians and even U.S. taxpayers” –
nor can they be read to imply the assertion of objective facts.
Opp’n to MTD at 6-7, 12. Though the conclusions Mr. Abbas draws
6
The Court is not persuaded by Mr. Abbas’ attempts to
distinguish Phantom Touring on the ground that the entirety of
the Commentary “conveys the impression that the author is
reporting a fact-based news item.” Opp’n to MTD at 7-8. The
Phantom court concluded that the challenged statements,
including that the production was “fake” and “phony,” were not
defamatory because “[t]he sum effect of the format, tone and
entire content of the articles is to make it unmistakably clear
that [the author] was expressing a point of view only.” 953
F.2d at 729. For the reasons explained in Section II.C.2.b
infra, the same is true here.
27
are possible answers to the questions posed by Mr. Schanzer, the
questions invite the reader to form her own judgments regarding
the relationship between Mr. Abbas’s family ties and his
admittedly great wealth. The reader could arrive at a number of
different conclusions, a fact that Mr. Abbas acknowledges in his
own complaint. See Compl. ¶ 49 (alleging that the Commentary
asks “those he works with and all the world to wonder if
plaintiff has ‘enriched’ himself at the expense of ‘regular
Palestinians – and even U.S. taxpayers’”). That Mr. Abbas would
prefer that readers do not answer the questions in the
affirmative is not sufficient to support his defamation claim.
Indeed, the invitation in the Commentary for the reader to form
her own opinion is not libel, rather it “is the paradigm of a
properly functioning press.” Chapin, 993 F.2d at 1096.
ii. The Questions Imply an Opinion, Not a
Fact
Even if the two questions posed by Mr. Schanzer were
capable of defamatory meaning, they are statements of opinion
protected by the First Amendment because they do not contain a
provably false connotation. See Milkovich v. Lorain Journal
Co., 497 U.S. 1, 21 (1990). Where the factual basis for a
conclusion is outlined in the article, or, as is the case here,
for the questions, those statements are protected by the First
Amendment. See Moldea v. New York Times Co., 22 F.3d 310, 318
28
(D.C. Cir. 1994) (holding that where “the readers understand
that [] supported opinions represent the writer’s interpretation
of the facts presented, and because the reader is free to draw
his or her own conclusions based upon the facts, this type of
statement is not actionable in defamation”). In distinguishing
opinions from assertions of fact, the court can consider the
language used, the context of the language, and the extent to
which the language can be verified. Ollman v. Evans, 750 F.2d
970, 979 (D.C. Cir. 1984) (en banc).
First, the rhetorical questions in the Commentary are
supported by facts provided in article as well as hyperlinked
source material in the form of articles in other publications,
company websites, and interviews given by the plaintiff. All of
this serves to put the reader on notice that the piece is one of
opinion. Ollman, 750 F.2d at 987-88. Second, like the op-ed
piece at issue in Ollman, the Commentary appeared in the
“Arguments” section of the FP website. That page is described
as “[p]olemical, controversial, and powerful,” and aims to
provide “timely insight on stories making headlines around the
world.” MTD at 10. It is reasonable to assume that the
“Arguments” section of FP is one in which readers expect to find
analytical and opinionated pieces that reflect a particular
viewpoint. See, e.g. Moldea, 22 F.3d at 313 (noting that a book
review is a “forum in which readers expect to find such
29
evaluations” of a literary work). Moreover, writing like that
in the Commentary is “[a]t the heart of the First Amendment,”
which recognizes the “fundamental importance of the free flow of
ideas and opinions on matters of public interest and concern.”
Hustler Magazine, Inc. v. Falwell, 485 U.S. 46, 50 (1988). This
recognition has been vigorously upheld in the District of
Columbia:
If the First Amendment’s guarantees of freedom of speech
and of the press are to ensure that these rights are
meaningful not simply on paper, but also in the practical
context of their exercise, then a[n] Op-Ed column
discussing a subject of public interest must surely be
accorded a high level of protection, lest the expression of
critical opinions be chilled. This is so because “[t]he
reasonable reader who peruses [a] column on the editorial
or Op-Ed page is fully aware that the statements found
there are not ‘hard’ news like those printed on the front
page or elsewhere [in the magazine]. Readers expect that
columnists will make strong statements, sometimes phrased
in a polemical manner that would hardly be considered
balanced or fair elsewhere in the [magazine].”
Guilford Transp. Industries, Inc. v. Wilner, 760 A.2d 580, 582-
83 (D.C. 2000) (quoting Ollman, 750 F.2d at 986).
In in an attempt to demonstrate that the two questions
posed by Mr. Schanzer are defamatory and not merely statements
of opinion, Mr. Abbas argues that “[t]hey do, in fact, contain
provably false factual connotations” because “whether he is
growing rich from alleged corruption in the Palestinian
Authority is certainly a provable fact by investigating
Plaintiff’s relevant financial records.” Opp’n to MTD at 9.
30
However, Mr. Abbas seeks to reframe his defamation claim, and
indeed the subject matter of the article, in trying to defend
his point. The questions the Commentary purportedly answers is
whether Mr. Abbas and his brother are growing rich off their
father’s political power and connections, not whether they are
growing rich as a result of generalized corruption in the
Palestinian Authority. See generally, Defs.’ MTD, Ex. A; see
also Opp’n to MTD at 10. Nevertheless, even the relationship
between Mr. Abbas’s business success and corruption in the PA
were at issue in the Commentary, as defendants argue, “[g]iven
the myriad of factors that may have contributed to Plaintiff’s
wealth—his education, his experience, his skill, and indeed, his
connections and opportunities—it would be impossible to prove
that Plaintiff grew wealthy solely because of his father” or
solely by virtue of corruption in the Palestinian Authority.
Defs.’ MTD at 10; see also Volm v. Legacy Health Sys., Inc., 237
F. Supp. 2d 1166, 1178 (D. Or. 2002) (finding that the question
“[w]ould you want to go to a hospital where they did not
thoroughly check out the people who would be administering
medical care to you?,” which was posed to a patient of the
practice, was not an assertion of objective fact because it was
a rhetorical question not “capable of being proven true or
false”).
31
While there is no “wholesale exemption from liability in
defamation for statements of ‘opinion,’” the purportedly
libelous questions at issue do not “imply a provably false fact,
or rely upon stated facts that are provably false.” Therefore,
for this additional reason, Mr. Abbas’s defamation claim based
on these questions in the Commentary must fail. 7 Moldea, 22 F.3d
at 313.
7
As Defendants briefly discuss in their motion to dismiss, Mr.
Abbas’ libel claim arising from the rhetorical questions posed
in the Commentary also fails on the basis of the District’s Fair
Comment Privilege. See Defs.’ MTD at 11. “The District of
Columbia has long recognized and accorded the media the
privilege of fair comment on matters of public interest” as long
as the opinions are based on true facts. Phillips v. Evening
Star Newspaper Co., 424 A.2d 78, 88 (D.C. 1980); see Jankovic v.
Int’l Crisis Group, 593 F.3d 22, 29 (D.C. Cir. 2010). The
privilege affords “legal immunity for the honest expression of
opinion on matters of legitimate public interest when based upon
a true or privileged statement of fact.” Milkovich, 497 U.S. at
13 (internal citations omitted). In the District of Columbia,
the fair comment privilege is applicable “even if the facts upon
which [the opinion] is based are not included along with the
opinion.” Fisher v. Washington Post Co., 212 A.2d 335, 338
(D.C. 1965) (internal citations omitted).
Here, it is undisputed that the issue of corruption in the
Palestinian Authority is one of public interest. See Opp’n to
MTD at 13 (“Plaintiff acknowledges that there is a public
controversy concerning allegations of corruption within the
Palestinian Authority.”). The allegedly “libelous questions”
are posed by Mr. Schanzer in the context of an article that
generally discusses that issue in the context of an article
about whether the sons of President Abbas are benefiting from
their family connections. Hyperlinks to the underlying
information upon which Mr. Schanzer is reporting are provided in
the online version of the article. Mr. Schanzer’s questions,
which he does not conclusively answer, are his interpretation of
those underlying facts, an action which is protected by the Fair
Comment Privilege.
32
b. “New Details”
In the Commentary, Mr. Schanzer writes that “new details
are emerging of how close family members of Palestinian leader
Mahmoud Abbas, a major U.S. partner in the Middle East, have
grown wealthy.” Compl. ¶ 13; Defs.’ MTD, Ex. A, at 2. Mr.
Abbas alleges that these “new details” support the conclusion
that he is “enriching himself at the expense of regular
Palestinians—and even U.S. taxpayers.” Opp’n to MTD at 10-11.
He asserts that these new details consist of two things: (1)
allegations by Mohammad Rachid that Mahmoud Abbas has “socked
away $100 million in ill-gotten gains; and (2) a statement that
during a research trip to Ramallah in 2011 “several
Palestinians” told the author that the issue of the Abbas family
dynasty was common knowledge in the PA, but that it was rarely
discussed because of a “growing fear of retribution by PA
security officers, who have apprehended journalists and citizens
for openly challenging President Abbas’s authority.” 8 Opp’n to
MTD at 6. The Court addresses these in turn.
8
It is not clear to the Court that these two things are the “new
details” Mr. Schanzer is referencing in the Commentary, which
relate to “how close family members of Palestinian leader
Mahmoud Abbas . . . have grown wealthy.” Defs.’ MTD, Ex. A at
2. This sentence is followed by a lengthy discussion of Mr.
Abbas’s business interests in the Middle East. Id. at 2-3. For
the reasons set forth in footnote 3 supra, Mr. Abbas has
conceded that the portions of the Commentary detailing his
business interests are not defamatory. Accordingly, the Court
33
Regarding Mohammad Rachid, Mr. Schanzer writes:
[President] Abbas’s wealth recently became a source of
controversy during the investigation of Mohammad Rachid, an
economic advisor to the late Palestinian leader Yasir
Arafat, in a high-profile corruption probe. Last month,
Palestinian officials charged Rachid with siphoning off
millions of dollars in public funds . . . .
According to a former Palestinian advisor, [President]
Abbas holds a grudge against Rachid dating back to the
peace talks during the waning days of the Clinton era. . .
. “There was a huge amount of jealousy,” the former
advisor said.
With his back up against a wall, Rachid has now fired back
at the Palestinian president with claims that Abbas himself
has socked away $100 million in ill-gotten gains.
Defs.’ MTD, Ex. A at 1. Mr. Abbas alleges that Mr. Rachid’s
allegations are untrue, and that Mr. Schanzer uses the
allegations to “link Plaintiff to this lie by his implication
that: ‘The conspicuous wealth of Abbas’s own sons, Yasser and
Tarek, has become a source of quiet controversy in Palestinian
society since at least 2009.’” Compl. ¶ 15.
Plaintiff’s argument fails. As the context of the
statement makes clear, the discussion of Mr. Rachid in the
Commentary, and his allegations of “ill-gotten gains,” relate to
President Mahmoud Abbas, not Plaintiff. As such, these
statements cannot be the basis of any libel claim brought by Mr.
Abbas, because they are not of and concerning him. See N.Y.
does not address them here and for the purposes of resolving the
pending motions, the Court accepts Plaintiff’s characterization
of the “new details” in the Commentary.
34
Times Co., 376 U.S. at 288); Croixland Props. Ltd. P’ship v.
Corcoran, 174 F.3d 213, 216 (D.C. Cir. 1999) (“To satisfy the
‘of and concerning’ element, it suffices that the statements at
issue lead the listener to conclude that the speaker is
referring to plaintiff by description, even if the plaintiff is
never named or misnamed.”). Even if the statement was about
Plaintiff, or if his father brought a libel claim, the statement
is not defamatory because Mr. Rachid’s allegation is not
reported as fact, and is instead put in context, “making it
clear to the reader that Rachid’s statement is merely the latest
in an ongoing exchange of charge and countercharge.” Defs.’ MTD
at 14 n. 7.
Similarly, the second alleged “new detail” is not
defamatory. Mr. Schanzer writes:
On a research trip to Ramallah last year, several
Palestinians told me that the Abbas family dynasty is
common knowledge. However, discussion of the issue rarely
rises above a whisper – thanks to fear of retribution by PA
security officers, who have apprehended journalists and
citizens for openly challenging President Abbas’s
authority.
Defs.’ MTD, Ex. A at 3. Mr. Abbas alleges that “[r]eferences to
what ‘several Palestinians told me’ by defendant Schanzer in the
FP article is no evidence to support the allegation that
Palestinian Authority security officers are being used to
protect plaintiff’s reputation.” Compl. ¶ 38.
35
First, the account of what “several Palestinians” told the
author is support for the statement the Abbas family dynasty is
common knowledge in the PA. It is not defamatory because it is
not an assertion of false fact, or indeed, of any fact. Mr.
Schanzer is reporting on what people in the region have said to
him, and does not otherwise take any position on what he has
heard.
Second, the Commentary does not state, nor does it imply,
that PA security officers are protecting Plaintiff’s reputation;
rather, it suggests that PA security officers are protecting his
father’s authority. There is nothing in the Commentary to
suggest that Plaintiff has any involvement with PA security
officers, or that PA security officers are acting at his
direction. Therefore, the statement is not defamatory because
it is not of and concerning Plaintiff.
III. Conclusion
For the foregoing reasons, the Court concludes that the
defendants have made a prima facie showing that Mr. Abbas’s
defamation claim arises from an act in furtherance of the right
of advocacy on issues of the public interest, and that Mr. Abbas
has failed to demonstrate a likelihood of success on the merits
of his defamation claim because the contested statements are
either not capable of defamatory meaning or are protected
statements of opinion. Accordingly, the Defendants’ special
36
motion to dismiss pursuant to the District’s Anti-SLAPP Act is
GRANTED, Defendants’ motion to dismiss pursuant to rule 12(b)(6)
is DENIED as moot, and Plaintiff’s complaint is DISMISSED WITH
PREJUDICE pursuant to the Anti-SLAPP Act. An appropriate Order
accompanies this Memorandum Opinion.
SIGNED: Emmet G. Sullivan
United States District Judge
September 27, 2013
37
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01-03-2023
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04-03-2014
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https://www.courtlistener.com/api/rest/v3/opinions/2660782/
|
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
)
DEBORAH D. PETERSON, et al., )
)
Plaintiffs, )
)
v. ) Civil No. 01-2094 (RCL)
)
ISLAMIC REPUBLIC OF IRAN, et al. )
)
Defendants. )
)
MEMORANDUM OPINION
Plaintiffs moved for sanctions against garnishee HSBC Bank USA, N.A. (“HBUS”) in
the amount of roughly $2.7 billion (plus interest) based on their failure to disclose three blocked
electronic fund transfers (“EFTs”) of less than $25,000 in total. Pls.’ Sanctions Mot., ECF No.
485. Plaintiffs also moved to schedule discovery and oral argument. Pls.’ Scheduling Mot., ECF
No. 494. Because HBUS committed no sanctionable conduct, the Court will DENY both
motions.
I. BACKGROUND
This case is the lead action arising from the 1983 bombing of the United States Marine
Barracks in Beirut, Lebanon, and it contains nearly 1,000 plaintiffs. See In Re Islamic Republic
of Iran Terrorism Litigation, 659 F. Supp. 2d 31, 101 (D.D.C. 2009). This Court entered final
judgment in 2007, awarding plaintiffs roughly $2.7 billion. Peterson v. Islamic Republic of Iran,
515 F. Supp. 2d 25 (D.D.C. 2007).
In their efforts to collect on this award, plaintiffs served a Writ of Attachment on HBUS
on April 30, 2008, which included the following two interrogatories:
1. Were you at the time of the service of the writ of attachment, or have you
been between the time of such service and the filing of your answers to this
interrogatory indebted to the defendant(s), and if so, how, and in what
amount?
2. Had you at the time of the service of the writ of attachment, or have you had
between the time of such service and the filing of your answer to this
interrogatory, any goods, chattels, or credits of the defendant(s) in you [sic]
possession or charge, and, if so, what?
Interrogatories in Attachment, ECF No. 493-1. HBUS answered “No” to both questions and
returned the document to plaintiffs on May 6, 2008. Id.
In 2012, plaintiffs issued a new subpoena to HBUS, seeking, inter alia:
All documents and/or electronically stored information for the calendar years
of 2008 through 2009 and pertaining to any and all financial transactions,
communications concerning, payments to or from, accounts either controlled
(directly or indirectly), or payable to the Islamic Republic of Iran or its known
financial instrumentalities (i.e. Bank Melli, Bank Kshavari, Bank Markazi,
Bank Sepah, Bank Tejarat, the Export Development Bank of Iran) or any
other Iranian Financial Institution subject to U.S. Sanctions against the Islamic
Republic of Iran.
Subpoena 4, ECF No. 485-39. In response, HBUS acknowledged several EFTs blocked
pursuant to Office of Foreign Assets Control (“OFAC”) regulations, including three before May
6, 2008 (the date HBUS responded to plaintiffs’ initial interrogatories):
Current
Recipient Value 1 Date Blocked
Bank Melli PLC, London $21,060.22 Feb. 21, 2008
Bank Melli Iran/ Iranian Airport Co. $2,713.05 Mar. 12, 2008
Bank Mellat, Tehran, Iran $508.38 Mar. 24, 2008
HBUS’s Resp. & Objections to Subpoena 3, ECF No. 485-40. An EFT “is nothing other than an
instruction to transfer funds from one account to another.” Estate of Heiser v. Islamic Republic
1
As of December 19, 2012. ECF No. 485-40.
2
of Iran, 885 F. Supp. 2d 429, 438 (D.D.C. 2012) (quoting Shipping Corp. of India Ltd. V. Jaldhi
Overseas Pte Ltd., 585 F.3d 58, 60 n.1 (2d Cir. 2009)). HBUS explains:
Many international EFTs are denominated in U.S. dollars and are therefore routed
through one or more ‘intermediary banks’ in the United States. The participants
in such EFTs are (1) the originator, the person seeking to transfer funds to another
person; (2) the originator’s bank; (3) one or more intermediary banks; (4) the
beneficiary’s bank, where the beneficiary’s account can be credited; and (5) the
beneficiary, the party meant to receive the funds.
HBUS’s Sanctions Opp’n 9. HBUS was an intermediary bank in the three transactions at issue.
But these EFTs were blocked pursuant to OFAC regulations. Id. at 10; see also 31 C.F.R. pts.
544, 594. The originator bank’s account at HBUS was debited, but, instead of passing along to
the Iranian-affiliated beneficiary banks, the proceeds were placed in a blocked account at HBUS
under OFAC’s supervision.
II. LEGAL STANDARD
D.C. Code § 16-526(b) provides that “[w]hen the garnishee has failed to answer the
interrogatories served on him, . . . judgment shall be entered against him for the whole amount of
the plaintiff’s claim, and costs, and execution may be had thereon.”
III. ANALYSIS
Before reaching the main question, the Court notes the ambiguity in the D.C. Code
section which gives plaintiffs the right to a judgment against a garnishee who “fail[s] to answer
the interrogatories served on him.” D.C. Code § 16-526(b). This provision’s applicability to a
garnishee who knowingly answers an interrogatory with false information is, on first glance,
ambiguous. A literal reading of the provision might suggest that such a person has not “failed to
answer,” although they did so dishonestly. See HBUS’s Sanctions Opp’n 10. Under this
reading, however, the provision incentivizes garnishees to lie. This appears to be a rather
3
unlikely result. However, the Court need not firmly resolve the question here. 2 As explained
below, even if a “fail[ure] to answer” encompasses a garnishee’s dishonest, incomplete, or
misleading answer to an interrogatory, plaintiffs’ motion would still fail.
HBUS’s May 2008 statement that it was neither “indebted to” the defendants nor in
possession of any “any goods, chattels, or credits of the defendants” will not support a motion for
sanctions pursuant to D.C. Code § 16-526(b) because these were legally accurate statements.
Interpreting the legal significance of the terms of the interrogatory requires looking to
plaintiffs’ statutory authority for pursuing these assets in the first place. Section 201(a) of the
Terrorism Risk Insurance Act (“TRIA”), Pub. L. No. 107-297, 116 Stat. 2322 (2002), allows a
person holding a judgment against a state sponsor of terrorism to attach and execute on “the
blocked assets of that terrorist party.” This provision allows plaintiffs to “execute on only the
assets ‘of’—or, in other words, ‘belonging to’—the terrorist state committing the act.” Heiser,
885 F. Supp. 2d at 438. This provision “preempt[s] District of Columbia law.” Id. at 444.
However, the statute does not provide standards to determine which assets “belong to”
defendants. To answer that question, the Court “looks to Restatements, legal treatises, and state
decisional law to find and apply what are generally considered to be the well-established
standards of state common law, a method of evaluation which mirrors—but is distinct from—the
federal common law approach.” Id. (quoting Estate of Doe v. Islamic Republic of Iran, 808 F.
Supp. 2d 1, 23 n.7 (D.D.C. 2011)) (internal quotations omitted). Relying on Article 4A of the
UCC, this Court has concluded that a blocked EFT does not “belong to” the terrorist party who
2
The Court notes, however, that the interpretive question may not be resolved by reading D.C. Code § 16-526(b) “in
tandem” with Federal Rule of Civil Procedure 37(a)(4), which provides that “an evasive or incomplete disclosure,
answer, or response must be treated as a failure to disclose, answer, or respond,” see Pls.’ Sanctions Reply 19,
because the latter provision applies “only to parties to the case” and HBUS is not a party. Alexander v. FBI, 186
F.R.D. 170, 180 (D.D.C. 1999).
4
was the intended beneficiary of the transaction, and thus may not be executed on by judgment
creditors under TRIA § 201. Heiser, 885 F. Supp. 2d at 448; 3 see also Calderon-Cardona v.
JPMorgan Chase Bank, N.A., 867 F. Supp. 2d 389, 400-05 (S.D.N.Y. 2011) (Cote, J.). 4
Under Heiser, defendants had no property interest in these blocked EFTs. Accordingly,
HBUS’s 2008 statements that it was not “indebted to” defendants and did not possess any of
their “goods, chattels, or credits” were legally accurate, notwithstanding their failure to mention
these blocked EFTs. These accurate statements cannot support plaintiffs’ motion for sanctions.
Because this motion for sanctions fails, the Court also rejects plaintiffs’ motion to schedule
discovery and oral argument.
IV. CONCLUSION
For the foregoing reasons, both of plaintiffs’ motions are DENIED. An order shall issue
with this opinion.
Signed by Royce C. Lamberth, Chief Judge, on April 11, 2013.
3
Plaintiffs in that case have taken an appeal on this issue. See Estate of Heiser v. Islamic Republic of Iran, 12-cv-
7101 (D.C. Cir. Appeal Docketed Oct. 5, 2012). The appeal appears to have been fully briefed as of March 18,
2013, but oral argument has not yet been scheduled.
4
Judge Cote has adopted the same approach as this Court, but several judges in the Southern District of New York
have not. See Estate of Heiser v. Bank of Tokyo, 11-cv-1601, 2013 WL 342684 (S.D.N.Y. Jan. 29, 2013) (Castel,
J.); Hausler v. JP Morgan Chase Bank, N.A., 845 F. Supp. 2d 553, 563 (S.D.N.Y. 2012) (Marrero, J.); Levin v. Bank
of New York, 09-cv-5900, 2011 WL 812032 (S.D.N.Y. Mar. 4, 2011) (Patterson, J.); Hausler v. JP Morgan Chase
Bank, N.A., 740 F. Supp. 2d 525, 534 (S.D.N.Y. 2010) (Marrero, J.).
5
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04-03-2014
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This is a suit to recover the sum of $3972.88 paid by plaintiff to foreign railroads on account of the destruction by fire of three freight cars at the industrial plant of defendant in Kansas City, Kans. *Page 463
The facts disclosed by the record are that on March 5, 1909, the Missouri Pacific and the Kansas City Southern Railway Companies entered into an industry track agreement with Leon J. Cohen, doing business as L.J. Cohen Co. of Kansas City, Kansas, for the construction of a track at the plant afterwards owned and occupied by the defendant, Sonken-Galamba Corporation. This agreement provided, among other things:
"Sec. 11. The said second party hereby releases and agrees to indemnify and hold the railway company harmless from and against all liability or claim for loss and damage by fire, which may happen upon or be done to or upon the buildings, premises and property of the party of the second part, or to the property of any other persons or corporations, now or hereafter, on the premises of the party of the second part, and whether inside or outside of said buildings, caused by fire sparks or burning coals from any locomotive when operated upon said track, or by fire otherwise happening howsoever, except when due to carelessness or negligence on part of employees of the railway company."
And section 15 provided: "All of the covenants and provisions of this agreement shall be binding upon the legal representatives, successors and assigns of the second party to the same extent and effect as they are binding upon the second party, and each and every covenant herein shall inure in favor of and run to the successors and assigns of the railway company. The words `second party' wherever used herein shall be held to include each person or corporation mentioned in the title as party of the second part."
On February 29, 1921, there was an assumption agreement entered into between the Sonken-Galamba Iron Metal Co., L.J. Cohen
Co., the Missouri Pacific Railway Co., and the Kansas City Southern Railway Co., wherein it was recited that for value received Cohen Co. sold, assigned and transferred to the Sonken-Galamba Company all its right, title and interest in and to the industry track agreement of date March 5, 1909, providing for the construction and operation of a spur track, four hundred and thirty-five feet in length to serve the scrap iron yards of said Cohen Co., located on the west side of 2nd street, immediately north of the Armour tract of land in Kansas City, Kansas. The railway companies for a consideration therein stated agreed to such sale and assignment. The Sonken-Galamba Iron
Metal Co. on its part agreed faithfully to keep and perform all promises, covenants and agreements of Cohen Co., in said agreement of March 5, 1909, and to be bound by all the terms and conditions thereof in the same manner and to the same effect as if Sonken-Galamba Iron Metal Co. had been the original party contracting therein. It is admitted that the Sonken-Galamba Iron Metal Company *Page 464
changed its name to Sonken Galamba Corporation. The spur track was built in accordance with said agreement.
It is of record that on or about the 19th day of March, 1921, a fire originating from an unknown cause on property adjacent to the scrap iron plant of defendant was communicated to said plant which was destroyed and with it, three freight cars belonging to foreign railroads which had been placed upon the spur track for defendant's use in unloading and loading freight. The said cars had been placed upon said track by plaintiff in the regular course of business. The cars belonged respectively to the N.Y. Central, the Galveston, Harrisburg and San Antonio, and the Ft. Dodge, Des Moines and Southern R.R. Companies, and for them plaintiff was paying a rental of $1 per day. There was a total valuation of $4647.90 placed upon the three cars so destroyed which plaintiff is alleged to have paid to the respective owners. The cars were salvaged after the fire and the sum of $675.02 was realized by plaintiff thereon, and this action is to recover the sum of $3972.88 which plaintiff alleges to be due under the terms of article 11 of the industry track agreement.
The petition sets forth the matters stated above and in addition alleges plaintiff's liability to the owners of the cars so destroyed by fire under the provisions of Rule 113 of the American Railway Association rules, as follows:
"Rule 113. For the mutual advantage of railway companies interested, the settlement for a car owned or controlled by a railway company, when damaged or destroyed upon a private track, shall be assumed by the railway company delivering the car upon such tracks.
There was also introduced in evidence Rule 1 of said Association which reads as follows: "The rate for the use of freight cars shall be one dollar per day which shall be paid for every calendar day and shall be known as the per diem rate."
Defendant's answer is a general denial. By agreement the cause was tried to the court without the aid of a jury. Plaintiff's evidence was chiefly documentary, consisting of the various contracts, agreements, etc., as follows: (1) Industrial track agreement of December 1909; (2) contract of assumption of Sonken-Galamba, February 29, 1912; (3) letter of demand of plaintiff's agent to defendant June 2, 1921, with bill enclosed; (4) letter of defendant of September 7, 1921, to plaintiff's agent, refusing payment; (5) testimony of C.H. Lembke identifying the various documents; (7) vouchers showing payment of the three claims for the cars destroyed.
In the progress of the trial it was admitted that the fire which destroyed the cars did not originate from any locomotive of plaintiff Railway Company and did not originate from any design or intentional negligence of defendant. It was also agreed that the Missouri Pacific Railway Company brought the cars into defendant's *Page 465
plant loaded, and that they were left there to be loaded and were being reloaded at the time of the fire, for the Missouri Pacific Railway Co. to pull out. At the close of the plaintiff's evidence, plaintiff requested the court to give the following declaration of law:
"The court declares the law to be that the foreign line cars described by the evidence as having been delivered to the defendant prior to the fire and for which the plaintiff was, under Rule 113 of the American Railway Association, liable to the several owners for their loss or destruction, were within the indemnity provisions of the industry contract."
This declaration was refused and plaintiff saved its exceptions. No other declarations of law were asked and none were given. The court found for defendant and after motion for new trial was overruled plaintiff appealed.
There is no dispute as to the facts of the case and the appeal hinges upon the proper construction of section 11 of the industrial track agreement in connection with Rule 113 of the American Railway Association, both of which are quoted above.
It is charged the court erred in refusing the declaration of law to the effect that the foreign line cars in question were covered by the indemnity provisions of section 11 of the industry track agreement. It is also charged that under the facts plaintiff was entitled to recover and that the trial court erred in refusing to render judgment for plaintiff and in rendering judgment for defendant. These assignments represent plaintiff's contentions in the case and they may be considered together in our discussion.
It is defendant's position that the indemnity provisions of section 11, of the industry track agreement do not render defendant liable for the loss of the cars in question. The determination of the appeal therefore lies in the proper interpretation to be placed upon said section of the industry track agreement, and it may aid in analyzing the same to quote again the pertinent clause which reads:
"The second party hereby releases and agrees to indemnify and hold the railway company harmless from and against all liability for loss and damage by fire, which may happen upon or be done to or upon the buildings, premises and property of the party of the second part, or to the property of any other persons or corporations, now or hereafter on the premises of the party of the second part, and whether inside or outside of said buildings, caused by fire sparks or burning coals from any locomotive when operated upon said track, or by fire otherwise happening howsoever, except when due to carelessness or negligence of the railway company."
It is the rule that in the construction of a contract its component parts must be taken together and construed in the relation these parts bear to each other, thus arriving at its true intent and meaning. [13 *Page 466
C.J., sec. 486, p. 527; Webb v. Ins. Co., 134 Mo. App. 576; Milliken v. Thyson Com. Co., 202 Mo. 637.] The word `indemnify' used in the quotation above must be considered only in its generally accepted sense. Bouvier's Law Dictionary defines the word: "To secure or save harmless against loss or damage, of a specified character, which may happen in the future." "To compensate or reimburse one for a loss previously incurred. [L.R. 14 Eq. 479. See Weller v. Eames, 15 Minn. 467 (Gil. 376), 2 Am. Rep. 150.]" It has been held that "to indemnify" is synonomous with "to save harmless." [Brentnal v. Holmes, 1 Root (Conn.) 292, 1 Am. Dec. 44.]
We cannot construe said section 11 to mean other than that defendants agreed to indemnify plaintiff only for money paid the owners of the cars, in case plaintiff is legally liable therefor. In other words the indemnity attaches only where plaintiff would be liable to the owner of the property for its destruction by fire while on the premises of defendant; and that defendant would hold plaintiff harmless for any such loss for which plaintiff would be liable as a matter of law. This we hold to be the meaning of the indemnity contract herein. This court held and the rule is well settled that an indemnitee cannot recover beyond the terms of the indemnity contract, and that a voluntary payment made by the indemnitee, without regard to its legal liability is not recoverable thereunder. [National Surety Co. v. Roth,208 Mo. App. 277, 232 S.W. 737, and cases therein cited.]
The general rule is stated in 31 C.J. 430: "An indemnity against losses does not cover losses for which the indemnitee is not liable to a third person, and for which he improperly pays." We hold therefore that plaintiff, under the terms of the indemnity contract in evidence, can only recover for loss for which he is shown to be legally liable.
Plaintiff undertakes to meet this situation by claiming that it was liable for the destruction of the cars under the provisions of Rule 113 of the American Railway Association above quoted. It is urged that this rule, in effect, is a contract between the members of the Association, and each is thereby obligated to reimburse the other for cars destroyed or damaged while under control of another member of the Association. Whether this rule arises to the dignity of a contract is not material, in our view. If it were a binding contract, there would yet remain the question of a legal liability attaching. It cannot be rightfully claimed, we think, that the owner of the destroyed cars should be reimbursed willy nilly for the loss of the cars, unless legal liability be shown. The rule does not impose a blanket liability on the railway company placing the cars on the track, or increase the liability which the rules of law impose. *Page 467
We agree with defendant that Rule 113 is not a contract but merely a regulation for the convenience of the companies in making settlement for the loss. The rule does not establish the liability. All that defendant was undertaking to do was to save harmless the plaintiff against loss growing out of its legal liability as established by law, and not for any liability voluntarily assumed by plaintiff. [National Surety Co. v. Roth, supra, and cases therein cited; Collins v. Ry. Co., 122 Ga. 655, 50 S.E. 477; Simmons v. Gregory, 120 Ky. 116, 85 S.W. 751; Franch v. Nix, 143 N.Y. 90, 37 N.E. 612; Terry v. Richmond, 94 Va. 537, 27 S.E. 429.]
The testimony shows and in fact it is admitted that the cars were destroyed while in the hands of plaintiff as a bailee for hire. It is the rule that a bailee is not liable for the destruction of the property while in his possession, in the absence of negligence of the bailee. There is no claim that the loss of the cars in question was due to any negligence on the part of plaintiff. The rule announced in Link v. Hathaway,143 Mo. App. 502, 514, 127 S.W. 913, applies to this situation:
"The general rule is, if property, while in the possession of the bailee or tenant, is destroyed by flood, wind or fire, without negligence on the part of the tenant or bailee, the latter is not liable to the owner for the loss. It is equally as well settled in this State that although the lease or contract contains a covenant or agreement to return in good condition at the end of the term, that a destruction of the premises or property by fire without fault on the part of the tenant will release the tenant from his obligation to return." [See, also, McEvars v. Steamboat Co., 22 Mo. 187; Electrical Co. v. Com. Co.,166 Mo. App. 332; Levi Co. v. Railroad Co., 157 Mo. App. 536, 138 S.W. 699.] Plaintiff insists that a bailee's ordinary liability may be extended by contract. That may be readily conceded, but still there remains the fact, as we have held above, that Rule 113 may not be construed as a contract extending the ordinary liability of the bailee. Plaintiff's citations do not change the well established rule on this point.
Failing to find reversible error of record, the judgment is affirmed. Bland, J., concurs; Trimble, P.J., absent. *Page 468
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J-A31029-16
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
PENNY MAC CORP. IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellee
v.
HAQNAWAZ CHUGHTAI AND SALEEMA
CHUGHTAI
Appellants No. 857 EDA 2016
Appeal from the Order Entered March 9, 2016
In the Court of Common Pleas of Bucks County
Civil Division at No(s): 2013-06809
BEFORE: BENDER, P.J.E., MOULTON, J., and FITZGERALD, J.*
MEMORANDUM BY MOULTON, J.: FILED MAY 03, 2017
Haqnawaz Chughtai and Saleema Chughtai (“the Chughtais”) appeal
from the March 9, 2016 order of the Bucks County Court of Common Pleas
granting Penny Mac Corporation’s (“Penny Mac”) motion for summary
judgment.1 We affirm.
The well-reasoned opinion of the Honorable Brian T. McGuffin set forth
the detailed factual and procedural history underlying this appeal, which we
adopt and incorporate herein. See Opinion, 5/5/16, at 1-3 (“1925(a) Op.”).
____________________________________________
*
Former Justice specially assigned to the Superior Court.
1
The Chughtais initially appealed a February 18, 2016 order, which
the trial court amended on March 9, 2016 at the request of Penny Mac to
reflect an error in calculation.
J-A31029-16
On appeal, the Chughtais raise the following issue: “Did the trial court
commit an error of law in granting foreclosing lender’s Motion for Summary
Judgment when [Penny Mac]’s motion was founded upon an inadmissible
testimonial affidavit?” Chughtais’ Br. at 8.
It is well-established that “summary judgment is appropriate only in
those cases where the record clearly demonstrates that there is no genuine
issue of material fact and that the moving party is entitled to judgment as a
matter of law.” Truax v. Roulhac, 126 A.3d 991, 996 (Pa.Super.) (quoting
Atcovitz v. Gulph Mills Tennis Club, Inc., 812 A.2d 1218, 1221 (Pa.
2002)), app. denied, 129 A.3d 1244 (Pa. 2015). The moving party bears
the burden of proving that no genuine issue of material fact exists .
Stimmler v. Chestnut Hill Hosp., 981 A.2d 145, 159 (Pa. 2009). “[T]he
trial court must take all facts of record and reasonable inferences therefrom
in a light most favorable to the non-moving party. In so doing, the trial
court must resolve all doubts as to the existence of a genuine issue of
material fact against the moving party . . . .” Truax, 126 A.3d at 996
(internal citation omitted).
We have explained our standard of review as follows:
[A]n appellate court may reverse a grant of summary
judgment if there has been an error of law or an abuse of
discretion. But the issue as to whether there are no
genuine issues as to any material fact presents a question
of law, and therefore, on that question our standard of
review is de novo. This means we need not defer to the
determinations made by the lower tribunals.
-2-
J-A31029-16
Id. (quoting Weaver v. Lancaster Newspapers, Inc., 926 A.2d 899, 902–
03 (Pa. 2007)).
The Chughtais claim that the trial court should have denied Penny
Mac’s motion for summary judgment because the motion was solely
supported by an inadmissible affidavit, and because their general denials to
the complaint should not have been treated as a deemed admission that a
properly negotiated note existed through the chain of loan title. 2
In its opinion, the trial court set forth the relevant law, addressed the
Chughtais’ claim, and properly determined that summary judgment was
appropriate. See 1925(a) Op. at 4-8. In their answer to the complaint, the
Chughtais made general denials, which constitute admissions. See Bank of
Am., N.A. v. Gibson, 102 A.3d 462, 466 (Pa.Super. 2014). This fact,
coupled with the affidavit provided by Penny Mac, the Act 6 notice, 3 and
proof of the mortgage assignments, shows that there was no genuine issue
____________________________________________
2
The Chughtais waived their further contention that Penny Mac failed
to establish a properly endorsed note through the chain of loan title by not
raising it in their response to Penny Mac’s motion for summary judgment.
See Devine v. Hutt, 863 A.2d 1160, 1169 (Pa.Super. 2004) (“[A]rguments
not raised initially before the trial court in opposition to summary judgment
cannot be raised for the first time on appeal[.]”).
3
See 41 P.S. § 403 (providing that a residential mortgage lender must
give the residential mortgage debtor notice of its intention to “accelerate the
maturity of any residential mortgage obligation, commence any legal action
including mortgage foreclosure to recover under such obligation, or take
possession of any security of the residential mortgage debtor for such
residential mortgage obligation” at least 30 days in advance).
-3-
J-A31029-16
of material fact and that Penny Mac was entitled to judgment as a matter of
law. After reviewing the briefs, the record, and the relevant law, we affirm
based on the trial court’s cogent reasoning. See 1925(a) Op. at 4-8.
Because the Chughtais failed to set forth a genuine issue of material
fact, we conclude that the trial court did not abuse its discretion or commit
an error of law in granting Penny Mac’s motion for summary judgment.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 5/3/2017
-4-
Circulated 04/21/2017 08:43 AM
t, ·'
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IN THE COURT OF COM:MON PLEAS OF BUCKS COUNTY, PENNSYLVANIA
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CIVIL ACTION-~ILAW C,,.· ~-0
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PENNYMAC CORP.,
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HAQNAW AZ CHUOHTAl and
SALEEMA CHUGHTAI,
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Appellants.
.
OPINION
Appellants, Haqnawaz Chughtai and Saleema Chughtai, appeal from the Court's Order
dated February l8, 2016, granting Motion for Summary Judgmentin favor of Appellee, PennyMac
Corporation, in this mortgage foreclosure action. The Court files this opinion pursuan, to
Pennsylvania Rules of Appellate Procedure 19Z5(a).
STATEMENT OFFACTS
This mortgage foreclosure action was brought initially by JPMorgan Chase Bank, Natiqnal
Association,' on September 4~ 2013, against Haqnawas Chughtai and Saleema Chughtai
('Appellants"), for the.foreclosure of 1765 Antumn.Leaf'Lane, Huntingdon Valley, Pennsylvania
19006 (°Ptoperty''). In the Complaint, JPMorgan alleged that Appellants executed and delivered
-~
a Mortgage on the Property to Mortgage Electronic Registration Systems, Inc. ("MERS,,), as
nominee for Home Loan Center, Inc. dlb/ti Lending Tree Loans(''Jfome Loan Center"), on April
1, 2006. (Compl. ?if 4-5.) Appellee attached the Mortgage as Exhibit E in its Motion for Summary
-,
Judgment The Mortgage was also recorded on June 12, 2006. (Appellee'$ Mot. for Summ, J.; Ex.
E.) Appellants further signed and deljvered an accompanying Adjustable Rate Rider, attached to
the Motion as Exhibit G.
L. ~ .J.. llL .... _ JS;.....
··--- ·~ ...!-~
On April 25, 2012, the mortgage was assigned.to JPMorgan. (Compl. ,r 6.) The assignment
was recorded on May ts. 2012. (Appellee~s Mot. for Summ, J., Ex. F.)Then on January 9, 2014,
the Mortgage was sold by JFMorgan; and all rights to the Property were transferred and assigned
. I
to PennyMac Corporation ("Appellee''). ~ -at p. 5.
. .
On June 9, 2015, Appellee filed.for substitution and replaced JPMorgan as the creditor in
this action. Appellee subsequently filed the instant Motion for summary Judgment on October 19,
2015, and the Court received Appellants' Responseon November 18~ 2015,
Appellants in their Answer to the Complaint admitted to being the mortgagors of the
Property; (Compl. ~ 2-3.) Appellee in its Motion for Summary Judgment also attached the signed
and notarized Mortgage. (Appellee's Mot. for Summ. J., Ex. E p. 2.) Whil~ AppeJhmts' d~ny
signing a mortgage in favor of MERS, the fully executed Mortgage expressly states under
Definitions (C) that "MERS is the mortgagee under the Security Instrument," and that MER.$ is
actii:lg solely as a nominee for theLender, Id. The Mortgage further states that the Lenderis Home
Loan Center. Id. All of this was alleged .in JPMorgan and Appellee's Complaint (See Compl.1
4.)
As to the rest of :the allegations found in the Compiaint, Appe).lants either admit or provide
general denials. {See Answer, Yi 4-10.) For example, ,JPMorgan and Appellee alleged that
Appellants defaulted on the Mortgage as of January 1, 2012~ but Appellants only responded with
a denial. and that they lacked knowledge or information sufficient to answer. Id. at fl .8-9.
Moreover, Appellee attached the Act 6 Notice that was sent-to Appellants as Exhibit B to its
Motion for SummaryJudgment and Appellants did notptovide any explanationor evidence to the
contrary.
2
~-. ~ •... -··· i,-_, ~ ' ...... •• .o..(.
~
...r.. ........
In addition, Appellee attached an· "Affidavit in Support of Plaintiff' s Motion for Summary
Judgment,' with its Motion. Inthe Affidavit, an employee with authority to make representations
on behalf of Pe~yMac Corporation attested thats based on business records, PennyMac
Corporation purchased Appellants' Mortgage from JPMorgan and that the Mortgage had been in
default since January 1,2012.
In Appellants' Response to Appellee~s Motion, they included only a one page
memorandum of law. (Docket No. 29.) Appellants merely asserted that Appellee had failed to meet
its burden of proof. Id. Appellants also incorrectly asserted that the only evidence that was
provided was in the form on an inadmissible testimonial hearsay, the Affidavit, and that the
Affidavit could not be considered under ij"anty--Olo· v. American Suxety Co., 163 A. 523 (Pa
1932). Id.
After a teview of the case, including all filings and exhibits, the Court granted summary
judgment in favor of Appellee .on February 18, 2016> entering an in rem judgment against
Appellants in the amount of $465,921.83, together with interest and other costs and charges
collectible under the mortgage. The Court amended the Order dated February. It 2016, on March
9, 2016, at Appellee's request to lower the judgment amount to $46l,903.83 to reflect the true
debt, as the original proposed order provided· by Appellee included an error in calculation.
Appellants now appeal from this Court's Order dated February 18, 2016,. alleging that the
Court improperly granted summary judgment.
STATEMENT OF MATTERS COMPLAINED OF ON APPEAL
On April 1, 2016, Appellants submitted a Concise Statement of Matters Complained of on
Appeal, raising the following for review:
1. Whether the Court of Common Pleas erred in entering summary judgment?
3
2. Wheth~r the Court of Common Pleas erred in entering summary judgment when there
existed genuine issues of material fact and Plaintiff-Appellee was not entitled to judgment
as a matter of law?
3. Whether the trial court erred in failing to apply the appropriate swnmary judgment standard
in its ~rant ofsunnnary judgment?
4. Whether the trial court erred by consideration and admission of inadmissible evidence
including but not limited to Plaintiff-Appellee's motion's attached testimonial hearsay
affidavit?
DISCUSSION
The Court was well within its authority in granting summary judgmen;in favor of Appellee
in this mortgage foreclosure lawsuit. "A party bearing the burden .of proof at trial is entitled to
summary judgment 'whenever there is no genuine Issue· of any material fact as to a necessary
element of the cause of action Ol" defense which could be established by additional discovery or
expert report?" Bankof Alp,., N.A. v. Gibson.102 A.3d 462,464 (Pa. Super. Ct. 2014) (quoting
Pa.RC.P. No. 1035.2(1))~ appeal denied. l 12 A.3d 648 (Pa. 2015).
In considering the merits of a motion fur summary judgment, a court views the record in
the ·tight most favorable to the non-moving party, and all doubts as to the existence of a genuine
issue. of material fact must be resolved. against the moving party. Jones v. SEPIA, 772 A.2d 435,
438 (P~ 2001). However, ''[i]n response to a summary judgment motion, the nonmoving party
cannot I'C$t upon the pleadings, but.rather must :set forth specific facts demons1rating a genuine
issue of material fact. Oibsoq, 102 A.3d at 464 (citing Pa.R,C.P, No. 1035.3).
"It is well-settled that the mere assertion that a matmal issue of fact exists without
producing any evidence is insufficient to defeat a motfon for summary judgment," Ling v .. Com.,
4
'I.. ........ .. ill,•;.. ~·- ,l::t..... •
Dep't of Transp .• 79 A3d 1, 3 (Pa. Commw. co, ru_,peal denied,,, 81 A.3d 79 (Pa. 2013). Also,
general denials or demands for proof have the effect of admissions. Se~ Cercone v. Cercone, 386
A.2d 1, 7-9 (Pa. Super. Ct 1978). Furthermore, "in mortgage foreclosure actions, general denials
by mortgagors that they are without information . sufficient to form a belief as to the truth of
averments as to the principal and interest owing [on the mortgage] must be considered an
admission of those facts," Gibson. 102 A.3d at 466 (citations omitted).
"The holder of a mortgage has the right, UJ)Oll default, to bring a foreclosure action,"
Gibson.. 102 A3d at 464-65 (citation omitted). ''The holder of'a mortgage is entitled to summary
judgment if the mortgagor admits that the mortgage is in default the mortgagor has failed to pay
on the obligation, and the recorded mortgage is in the specified amount," Iii.
Appellants argue now on appeal that the Court impermissibly considered the supporting
Affidavit as provided in Appellee's Motion. The Superior Court has already squarely addressed
this issue against Appellants. 'See Gibson, 102 A.3d at 466~67 (holding that summary judgment
was proper where the trial court relied on the bank's affidavit in addition to the mortgagor's
deemed admissions). In that case, the mortgagor argued on appeal that the· trial court erred .in
granting summary judgment by relying on an affidavit that was inadmissible hearsay. Id.
"The Nanty-Glo decision directs that summary judgment may not be entered where the
moving party relies exclusively upon oral testimony, either through testimonial affidavits or
deposition testimony, to establish the absence of a genuine issue of material fact," Porterfield v.
Trustees ofHoso. of Univ. o!Pennsylvania. 657 A2d 1293, 1294-95 (Pa. Super. Ct. 1995) (citation
omitted). However, "[ a]n exception to this rule exists where the moving party supports the motion
by using admissions of the opposing party ':}t the opposing party's own witnesses." Id, Accord
Lineberger v. Wv~ 894 A.2d 141, 149 (Pa. Super. Ct. 2006).
5
.ii~ .. 1h:..
In Gibson. 102 A..3d at 466;.67, the mortgagor had responded to the bank's complaint with
only general denials, which were treated as deemed admissions. Under the Nanty-Glo exception,
the Superior Court there affirmed the trial court's reliance on the bank's supporting affidavit
because of the mortgagor's deemed admissions in granting summary judgment.~ id.
The Superior Court in Gibson fiJrtMr stated that the referenced loan history documents as·
attached to the affidavit, were records of regularly conducted activity, or business records, and
would be admissible attrial with proper foundation in any event. Id. (Pa.R.E. 8Q3(6); 42 Pa.C.S.
§ 6108). This Court, under the analysis pf Gibson, could properly consider not just the Affidavit
itself, because. Appellants responded with only general denials to the Complaint as will be
discussed in. the following paragraphs,. but also the referenced business records attached as exhibits
to the Motion.
Moreover, "[s]ummary judgment is proper when the pleadings, depositions, answers to
interrogatories, and admissions ~n file, togeth4'rwith any affidavits, show that~ isno genuine
issue as to any material fact and that the moving party is entitled tojudgment as a matter of law."
Kenney v. Jeanes Ho~ .• 769 A.2d 492, 495 (Pa. Super. Ct. 2001) (emphasfa added) ..
In the instant CMC, the exception to Nanty-Glo applies because Appellants hi their Answer·
responded with only general denials. Appellants admitted in their answer that they are the
mortgagor owners of the Property. (Compl. ,i, 1-3.) Intheir Response to.Appellee's .Motion; they
denied ever executing or delivering any Mortgage to MERS as nominee for Home. Loan Center.
(Answer ,r 4.) However, the attached Mortgage in Appellee's Motion clearly indicates that it is
signed by Appellants, and that MERS acted as nominee for Home Loan Center. (App~llee's,Mot.
for Summ. J., Ex. E p. 2.)
6
.r .• , llL'.
ln addition, Appellee in its Complaint alleged that Appellants have been in default since
January 1, 2012. and includes a detailed list of'the itemized charges it believed Appellants owed.
(Compl. ff 8-9.) Appellee again provided only general denials, by impermissibly stating that after
reasonable investigation that they were without knowledge or information to answer, (Answer '11'1
8-9). As stated previously, in mortgage foreclosure actions, general denials by. mortgagors that
they are without information sufficient to form a belief as to the truth of averments as to the
principal and interest owing on the mortgage must be considered an admission. of those facts.
Gibson, 102 A.3d at466~
Furthermere, there is no genuine issue of material fact that Appellee's are the mortgage
holder and that the Act 6 Notice has been provided. Appellee has provided. with its Motion as part
of Exhibits a, E, and F, the Notice that was sentand proof of the mortgage assignments. Appellants
have provided no explanation or evidence to the contrary and that their denials should be rejected.
Moreover, the Affidavit provided by Appellee in this case is not, as Appellants argue,
impermissibletestimonial hearsay under Nanty-Glo. Just like in Gibson. Appellants responded to
the Complaint with only general denials end their responses ate deemed admission. Also, Appellee
attached the signed Mortgage and Adjustable Rate Rider an.d evidence of the various assignments
that took place. Therefore; the Court could, and did, consider the Affidavit as further evidence that
Appellants had defaulted. and that Appellee was entitled to judgment.
In thiscase, Appellants have wholly failed to set forth specific facts demonstrating· a
genuine issue of material fact Appellants had an obligation to make monthly payments pursuant
to the Mortgage and the Adjustable Rate Rider. Appellee has alleged that Appellants defaulted on
January 1, 2012, andthat no payments have been made since then, Appellants failed to properly
object or provide any evidence that payments have been tendered. The Mortgage and the
7
-----------······--····
.. ·: .. L. Ji.. -·- '.t,.~ :.t:.. ... ~ .......
accompanying rider include an acceleration clause, provisions fur reasonable attorney's - fees and
j
I
costs associated with enforcement, including property inspections, ~ (Appellee Mot Summ, J ., i
fat. E ,,i 14, 22, Md Ex. G ,r 7.) Therefore, based on all the available evidence, and the Jack of any
_ genuine dispute of material fact, we did not err by granting summatyjudgmentinAppeUee;s-favor.
CONCLUSION
This Court's Order granting summaryjudgment in PennyMac Corporation'sfavor should
be affirmed.
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Dismissed and Memorandum Opinion filed August 22, 2013.
In The
Fourteenth Court of Appeals
NOS. 14-13-00712-CR, 14-13-00713-CR,
14-13-00714-CR and 14-13-00715-CR
FREDRICHEE DOUGLAS SMITH, Appellant
V.
THE STATE OF TEXAS, Appellee
On Appeal from the 339th District Court
Harris County, Texas
Trial Court Cause Nos. 1197969, 1197970, 1208812 & 1255072
MEMORANDUM OPINION
Gerald E. Bourque attempts to appeal from the denial of full compensation
for his representation as appointed appellate counsel for Fredrichee Douglas
Smith.1 In an order signed June 26, 2013, the trial court approved payment to
Bourque in the amount of $6,825 for his representation in the four underlying
1
Appellant’s combined brief in the appeals in the underlying criminal cases was filed June 20,
2013, and the appeals remain pending before this court. See Smith v. State, Nos. 14-11-00838-
CR, 14-11-00839-CR, 14-11-00840-CR, and 14-11-00840-CR (Tex. App.—Houston [14th
Dist.]).
appeals. Bourque complains in his notice of appeal that he was compensated only
$4,500.2
The records in these appeals do not contain an appealable order that is the
subject of Bourque’s complaint. The only signed order in our records is the trial
court’s order approving fees in these four cases. The notice of appeal was filed
August 2, 2013, more than 30 days after the order was signed, and is untimely to
perfect an appeal from that order. See Tex. R. App. P. 26.2 (requiring notice of
appeal to be filed within 30 days of the entry of an appealable order). Moreover,
the order is favorable to Bourque, and he is not challenging this order. . Instead,
Bourque’s complaint is that he was paid only $4,500, pursuant to the presumptive
maximum fee established by Harris County. Bourque’s payment is evidenced only
by a copy of a check dated July 23, 2013, from Harris County; there is no order
associated with the payment. Though mandamus relief potentially may be available
in an original proceeding filed against the Harris County Auditor or the Harris
County Commissioners Court, this case is not a mandamus proceeding, and those
entities are not parties to this attempted appeal. See Smith v. Flack, 728 S.W.2d
784, 789-94 (Tex. Crim. App. 1987).
This court lacks jurisdiction over these attempted appeals. Accordingly, we
order the appeals dismissed.
PER CURIAM
Panel consists of Chief Justice Hedges and Justices Frost and Donovan.
Do Not Publish — Tex. R. App. P. 47.2(b).
2
Although the notice of appeal is addressed to the Presiding Judge of the Second Judicial
Administrative Region, the appeals were assigned to this court. We presume, without deciding,
that this notice of appeal constitutes a bona fide attempt to invoke this court’s appellate
jurisdiction.
2
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u¢“"
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
FILED
JUN 1 4 2013
Alan William Golder, § C|;rakékl:_hsp~tgl/Ség§f_t;nd
Plaintiff, )
)
v. ) Civil Action No.
)
Eric Holder, United States Attomey General et al., )
> {@ -/ 1200
Defendants. )
MEMORANDUM OPINION
This matter is before the Court on plaintiffs pro se complaint and application to proceed
iri forma pauperis. The Court will grant plaintiffs in forma pauperis application and will
dismiss the case for lack of subject matter jurisdiction. See Fed. R. Civ. P. l2(h)(3) (requiring
dismissal "at any time" jurisdiction is found wanting).
Plaintiff is a prisoner at the MacDougall Correctional institution in Suffield, Connecticut,
seeking an order to compel the Department of Justice "to honor their promise and admit me back
95
into the Federal Bureau of Prisons, Federal Witness Security Unit . . . . Compl. at 5. Plaintiff
alleges that in 1980 in return for his cooperation in the investigation and prosecution of members
of a reputed organized crime family, he was promised placement in the Federal Witness Security
Program authorized by 18 U.S.C. § 3521. He pled guilty "in New York" to second degree
murder and other charges and was released to parole in May 1995, "conditionally into the
Federal Witness Program only." Compl. at 6. Allegedly, plaintiff "was denied acceptance
into the program, . . . paroled in the very epicenter of my danger zone . . ., recognized and . . .
severely beaten." Id. at 6-7. He eventually fled the United States in fear for his safety. Id. at
03
7. Plaintiff "settled" in Belgium where he lived for nine years until his arrest and extradition to
the United States on outstanding warrants. Id.
Despite the requested relief to be admitted "back" into the witness protection program,
plaintiff does not establish that he actually participated in the program. Regardless, “[t]he
decision of the Attorney General to terminate [witness] protection shall not be subject to judicial
review," 18 U.S.C. § 352l(f), and "[t]he United States and its officers and employees shall not be
subject to any civil liability on account of any decision to provide or not to provide protection. . . ."
18 U.S.C. § 352l(a)(3); see Harisen v. Lappin, 800 F. Supp. 2d 76, 83 (D.D.C. 201 l) (dismissing
for lack of jurisdiction "[b]oth plaintiff s claim for review of his termination and his claim for
reinstatement into the Program") (citing cases). Hence, this case will be dismissed for want of
jurisdiction. A separate Order accompanies this Memorandum Opinion.
/MW&
Uhited;€tates District Judge
@4#\
DATE: June , 2013
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In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 12-3844
TOMMY D. FORD,
Petitioner-Appellant,
v.
BILL WILSON, Superintendent
Respondent-Appellee.
____________________
Appeal from the United States District Court for the
Northern District of Indiana, South Bend Division.
No. 3:11-cv-490-JTM — James T. Moody, Judge.
____________________
ARGUED APRIL 17, 2014 — DECIDED MAY 2, 2014
____________________
Before MANION, SYKES, and TINDER, Circuit Judges.
TINDER, Circuit Judge. This is a habeas action brought un-
der 28 U.S.C. § 2254, in which Petitioner Tommy Ford chal-
lenges his conviction for murder in an Indiana state court.
On appeal, Ford maintains only one ground for relief: that
his trial counsel was ineffective in failing to object when the
state prosecutor commented on his failure to testify. Ford
contends that an objection would have been sustained be-
cause the prosecutor’s comments violated his Fifth Amend-
2 No. 12-3844
ment privilege against compulsory self-incrimination. How-
ever, even assuming that to be true, Ford has failed to show
prejudice resulting from his attorney’s failure to object.
Therefore, we affirm.
I. BACKGROUND
In § 2254 proceedings, factual determinations made by
the state court are presumed to be correct. 28 U.S.C.
§ 2254(e)(1). Ford has made no attempt to rebut this pre-
sumption as it pertains to the facts relied upon by the Indi-
ana Court of Appeals, which summarized the evidence at
trial as follows:
On November 1, 2005, Ford visited Glen Park in Gary
and encountered an acquaintance, James Grace. Ford
talked with Grace and drank vodka with one of
Grace’s friends. Grace told Ford that he needed a
place to store his vehicle. Ford offered to show Grace
his garage as a possible storage location. Ford left his
car at the park and rode with Grace to Ford’s home.
As the two men approached Ford’s house, they
passed fifteen-year-old Christian Hodge, who was
seated on a front-yard retaining wall on the property
next door. Ford and Hodge greeted each other. When
Ford and Grace entered Ford’s house, Ford said to
Grace, “I can’t stand that mother fucker. I’ll be back.”
Ford left the house, and Grace heard a popping sound
shortly thereafter. He looked outside and saw Hodge
lying in the street. Ford came back inside the house
and said to Grace, “I got to get the fuck out of here,
and meet me down—meet me at the end of the alley
and pick me up.” Grace got into his truck and drove
away. He soon located a police officer and led him
No. 12-3844 3
back to the crime scene. Hodge had suffered one gun-
shot wound to the back of his head, and he died the
next day.
At the crime scene, Gary Police Officer Daniel
Quasney spoke with witness Ronell Simmons, who
appeared to be “upset, in disbelief, and in a state of
shock.” Simmons stated that he had seen the victim
talking to a black male in a black hooded sweatshirt.
He stated that the man pulled out a gun and shot
Hodge in the head and then walked away.
Ford’s first trial, in which Simmons testified, ended in
a mistrial on May 18, 2006. During the second trial,
the State alleged that Simmons was unavailable to tes-
tify and moved for admission of Simmons’s prior tes-
timony. The trial court denied the State’s request. The
State later moved to admit Officer Quasney’s testi-
mony recounting Simmons’s statements at the crime
scene. The trial court admitted this evidence pursuant
to Indiana Evidence Rule 803(2), the excited utterance
exception to the hearsay exclusion rule.
Ford v. State (Ford I), No. 45A03–0701–CR–20, 2007 WL
3071987, at *1 (Ind. Ct. App. Oct. 23, 2007) (citations omit-
ted).
During closing arguments in Ford’s second trial, his at-
torney argued that the state had failed to provide any rea-
sonable explanation as to why Ford would shoot Hodge. In
response, the state prosecutor argued as follows:
Sometimes we’ll never know why crimes were com-
mitted. Someone who could—now, let me phrase this
correctly, he never has to say a single word, a single
4 No. 12-3844
word. It’s the State’s burden to prove that he commit-
ted this crime beyond a reasonable doubt, but what
happens when you have crimes, when you have one
or two people there who can possibly talk and tell
you what happened and one of them’s dead? One of
them’s dead. Who else are we going to get that infor-
mation from? The next possible source is the person
who committed the offense. If that person who com-
mitted the offense don’t talk, how would we ever
know? We would speculate. Does it mean the person
wasn’t shot and killed, it didn’t happen?
It happened, and that’s what we have to prove to you,
not why it happened.
Ford v. State (Ford II), No. 45A05–1009–PC–610, 2011 WL
3476616, at *9 (Ind. Ct. App. Aug. 9, 2011). Ford was convict-
ed and sentenced to fifty years’ imprisonment.
Following his conviction, Ford filed an unsuccessful di-
rect appeal. Later, he filed a petition for postconviction relief
in Lake County Superior Court, presenting several grounds
for relief, including the one we address today. However, the
Superior Court denied Ford’s petition, the Indiana Court of
Appeals affirmed, and the Indiana Supreme Court denied
his petition to transfer.
Having exhausted his state remedies, Ford filed this
§ 2254 petition in the U.S. District Court for the Northern
District of Indiana. However, the district court dismissed his
petition and denied him a certificate of appealability. Ford
then filed a notice of appeal in this court, and we granted
him a certificate of appealability.
No. 12-3844 5
II. TIMELINESS
Ford’s notice of appeal was filed on December 4, 2012,
thirty-two days after the district court’s judgment. Thus, in
its response brief, the state argued that the appeal should be
dismissed as untimely. See Fed. R. App. P. 4(a)(1). However,
Ford is an inmate confined in an institution; therefore, he
may benefit from the so-called “prisoner mailbox rule,” un-
der which a notice is timely “if it is deposited in the institu-
tion’s internal mail system on or before the last day for fil-
ing.” Fed. R. App. P. 4(c)(1). “If an institution has a system
designed for legal mail, the inmate must use that system to
receive the benefit of this rule.” Id. “If the prison lacks such a
system: ‘Timely filing may be shown by a declaration in
compliance with 28 U.S.C. § 1746 … which must set forth the
date of deposit and state that first-class postage has been
prepaid.’” United States v. Craig, 368 F.3d 738, 740 (7th Cir.
2004) (quoting Fed. R. App. P. 4(c)(1)).
After the state’s response brief was filed in our court,
Ford filed such a declaration, stating that he placed his no-
tice of appeal in the prison’s internal mailing system on No-
vember 28, 2012, twenty-six days after the district court’s
judgment, “with first class postage affixed.” Ford was not
required to file this declaration simultaneously with his no-
tice of appeal. See Ingram v. Jones, 507 F.3d 640, 642–44 (7th
Cir. 2007) (relying on declarations filed after the notice of
appeal to establish compliance with Rule 4(c)(1)); Grady v.
United States, 269 F.3d 913, 917–18 (8th Cir. 2001) (holding
that the declaration required by Rule 4(c)(1) need not ac-
company the notice of appeal). Moreover, he was required to
“attest to ‘only two things’: the date the notice was deposited
into the prison mail system and that first class postage was
6 No. 12-3844
prepaid.” 1 Hurlow v. United States, 726 F.3d 958, 964 (7th Cir.
2013) (quoting Craig, 368 F.3d at 740). Ford’s declaration sat-
isfies these requirements, and it is corroborated by the certif-
icate of service he included with his notice of appeal, which
states that he served a copy on the Indiana Attorney General
on November 28, 2012, “by depositing the same in the Unit-
ed States Mail, postage paid.” As a result, we find his notice
timely, and we turn to the merits of his appeal.
III. DISCUSSION
Under the Antiterrorism and Effective Death Penalty Act
of 1996 (“AEDPA”), a state prisoner may obtain federal ha-
beas relief based on a claim of legal error only if the state
court’s decision “was contrary to, or involved an unreasona-
ble application of, clearly established Federal law, as deter-
mined by the Supreme Court of the United States.” 28 U.S.C.
§ 2254(d)(1). In this case, the district court determined that
Ford was not entitled to relief under that standard.
“Our review of the district court’s decision to deny the
habeas petition is de novo, and is governed by the terms of the
AEDPA.” Bolton v. Akpore, 730 F.3d 685, 693 (7th Cir. 2013).
“Thus, although we technically hear this appeal from the
district court, our inquiry focuses entirely on what occurred
in the state court. In so doing, we look at ‘the decision of the
last state court to rule on the merits of the petitioner’s
claim.’” McNary v. Lemke, 708 F.3d 905, 913 (7th Cir. 2013)
(quoting McCarthy v. Pollard, 656 F.3d 478, 483 (7th Cir.
2011)). In this case, that was the Indiana Court of Appeals,
1 The state does not contend that the institution where Ford is con-
fined has a separate mailing system designed for legal mail that Ford
should have used.
No. 12-3844 7
when it affirmed the denial of Ford’s petition for postconvic-
tion relief. Ford II, 2011 WL 3476616.
A. CONSTITUTIONAL FRAMEWORK
In order to determine whether the Indiana Court of Ap-
peals issued a decision that “was contrary to, or involved an
unreasonable application of, clearly established Federal law,
as determined by the Supreme Court of the United States,” it
is first necessary to understand what that law is. Thus, be-
fore turning to the state court’s decision, we consider what
the Supreme Court has said about the constitutionality of
prosecutorial comments on a defendant’s silence.
1. Griffin v. California and the Fifth Amendment Privilege
In Griffin v. California, 380 U.S. 609 (1965), a state prosecu-
tor commented on a murder defendant’s failure to testify, 2
and the trial court instructed the jury that it was permitted to
draw an adverse inference based on the defendant’s failure
to explain or deny facts within his knowledge. 3 At the time,
a California constitutional provision allowed both the prose-
cutor and the court to comment on the defendant’s silence.
2 After asserting that the defendant was in a position to know what
happened, the prosecutor said, “Essie Mae is dead, she can’t tell you her
side of the story. The defendant won’t.” 380 U.S. at 611 (internal quota-
tion marks omitted).
3 The trial court instructed, “As to any evidence or facts against him
which the defendant can reasonably be expected to deny or explain be-
cause of facts within his knowledge, if he does not testify or if, though he
does testify, he fails to deny or explain such evidence, the jury may take
that failure into consideration as tending to indicate the truth of such
evidence and as indicating that among the inferences that may be rea-
sonably drawn therefrom those unfavorable to the defendant are the
more probable.” 380 U.S. at 610 (internal quotation marks omitted).
8 No. 12-3844
However, the Supreme Court held that the Fifth
Amendment privilege against compulsory self-
incrimination, which applies to the states through the Four-
teenth Amendment, “forbids either comment by the prose-
cution on the accused’s silence or instructions by the court
that such silence is evidence of guilt.” Id. at 615. In doing so,
the Court reasoned that “comment on the refusal to testify is
a remnant of the inquisitorial system of criminal justice,
which the Fifth Amendment outlaws.” Id. at 614 (citation
and internal quotation marks omitted). The Court de-
nounced the practice of commenting on a defendant’s silence
as “a penalty imposed by courts for exercising a constitu-
tional privilege,” noting that it “cuts down on the privilege
by making its assertion costly.” Id.
Over twenty years later, the Court revisited the Fifth
Amendment privilege in United States v. Robinson, 485 U.S.
25 (1988). In that case, the defendant did not testify, but in
closing arguments his attorney suggested that the govern-
ment had unfairly deprived him of the opportunity to tell his
side of the story. In response, the prosecutor argued that the
defendant had several opportunities to explain his actions,
including the opportunity to testify at trial. On appeal, the
defendant argued that the prosecutor’s comments violated
his Fifth Amendment privilege against compulsory self-
incrimination as interpreted in Griffin. However, the Su-
preme Court disagreed.
The Court rejected the view that “any ‘direct’ reference
by the prosecutor to the failure of the defendant to testify
violates the Fifth Amendment as construed in Griffin.” Id. at
31. Instead, “Griffin prohibits the judge and prosecutor from
suggesting to the jury that it may treat the defendant’s si-
No. 12-3844 9
lence as substantive evidence of guilt.” Id. at 32 (quoting Bax-
ter v. Palmigiano, 425 U.S. 308, 319 (1976)). Thus, the Court
reasoned:
Where the prosecutor on his own initiative asks the
jury to draw an adverse inference from a defendant’s
silence, Griffin holds that the privilege against com-
pulsory self-incrimination is violated. But where as in
this case the prosecutor’s reference to the defendant’s
opportunity to testify is a fair response to a claim
made by defendant or his counsel, we think there is
no violation of the privilege.
Id. The Court recognized that the defendant’s assertion of
the privilege may be costly in either situation, but it empha-
sized that in order to serve the truth-finding purpose of a
criminal trial, “it is important that both the defendant and
the prosecutor have the opportunity to meet fairly the evi-
dence and arguments of one another.” Id. at 33.
2. Doyle v. Ohio and the Right to Due Process
Eleven years after Griffin, the Supreme Court decided
Doyle v. Ohio, 426 U.S. 610 (1976). In that case, two defend-
ants were charged with selling marijuana to an informant. In
their separate trials, each defendant took the stand and for
the first time asserted that he was trying to buy, rather than
sell, marijuana. To impeach them, the prosecutor brought
out on their respective cross-examinations that neither de-
fendant told that story to the police after he was arrested.
The prosecutor also relied on the defendants’ post-arrest si-
lence in his closing arguments.
In considering the constitutionality of this practice, the
Supreme Court first noted that the defendants had been giv-
10 No. 12-3844
en Miranda warnings when they were arrested and that
those warnings implicitly assured them that their silence
would carry no penalty. Id. at 618. The Court then concluded
that “[i]n such circumstances, it would be fundamentally un-
fair and a deprivation of due process to allow the arrested
person’s silence to be used to impeach an explanation subse-
quently offered at trial.” Id.
Later, in Wainwright v. Greenfield, 474 U.S. 284 (1986), the
Court found that the due process concerns recognized in
Doyle were equally relevant when a defendant’s post-arrest
silence was used to respond to a defense theory, rather than
to impeach the defendant. In Wainwright, the defendant pre-
sented an insanity defense, and the prosecution attempted to
rebut that defense by showing that the defendant was of
sound enough mind to exercise his right to remain silent af-
ter receiving Miranda warnings. The Court held that this vio-
lated the defendant’s right to due process as interpreted in
Doyle. Id. at 295.
These cases reflect an important difference between the
violation of due process recognized in Doyle and the viola-
tion of the Fifth Amendment privilege recognized in Griffin.
Specifically, as the Court held in Robinson, prosecutors may
use a defendant’s silence to impeach him or to fairly respond
to a defense theory without violating the Fifth Amendment
privilege. However, due process generally prohibits prose-
cutors from using the fact that a defendant remained silent
after receiving Miranda warnings, even if that fact is used for
purposes of impeachment (as in Doyle) or in response to a
defense theory (as in Wainwright).
Indeed, the Court has declined to find a violation of due
process based on the mention of a defendant’s silence after
No. 12-3844 11
receiving Miranda warnings only where that silence “was not
used against him within the meaning of Doyle.” Greer v. Mil-
ler, 483 U.S. 756, 764 n.5 (1987). Just as in Doyle, the defend-
ant in Greer took the stand and presented an exculpatory sto-
ry, and the prosecutor asked him why he had not told that
story when he was arrested. However, in Greer, defense
counsel immediately objected, and the court sustained the
objection and later advised the jury that it should disregard
any questions to which an objection was sustained. Moreo-
ver, the prosecutor asked no further questions on the subject,
nor did he refer to the defendant’s silence in his closing ar-
gument. The Court held that no due process violation oc-
curred because the defendant’s post-arrest silence “was not
submitted to the jury as evidence from which it was allowed
to draw any permissible inference.” Id. at 764–65.
B. THE STATE COURT’S POSTCONVICTION DECISION
In this case, Ford claims that his trial counsel was ineffec-
tive in failing to object to the prosecutor’s comments on his
failure to testify. In his brief to the Indiana Court of Appeals,
he argued that such an objection inevitably would have been
sustained because the prosecutor’s comments violated his
Fifth Amendment privilege against compulsory self-
incrimination. He cited Griffin in support of this argument,
and he did not rely on Doyle or other cases dealing with
Doyle-type due process violations.
Even so, the Indiana Court of Appeals analyzed Ford’s
claim under Doyle. The court recognized that in Doyle, “the
United States Supreme Court held that, under the Four-
teenth Amendment, a prosecutor may not use the silence of
a defendant who has been arrested and Mirandized to im-
peach the defendant.” Ford II, 2011 WL 3476616, at *7. How-
12 No. 12-3844
ever, the court also noted that in both Doyle and Wainwright,
“the prosecution used the act of the defendant’s silence or
the fact of the request for counsel itself as indicative of guilt
or damaging to credibility.” 2011 WL 3476616, at *8 (quoting
Willsey v. State, 698 N.E.2d 784, 793 (Ind. 1998)) (internal
quotation marks omitted). Based on this principle, the court
held that “the State did not run afoul of Doyle when it re-
ferred to Ford’s silence in direct response to a defense theory
and when that use was not used to indicate the defendant’s
guilt or damage his credibility.” Id.
This was wrong in two respects. First, Ford’s claim was
based on his Fifth Amendment privilege, not his right to due
process. Thus, the Indiana Court of Appeals applied the
wrong legal standard. The state argues that Ford’s claim
could be governed by either Doyle or Griffin, given that the
prosecutor’s comments were vague and could have referred
to Ford’s silence immediately after his arrest or at trial. But
the fact remains that Ford has not relied on the due process
rights articulated in Doyle. And even if he had advanced
such a claim, the Indiana Court of Appeals should have con-
sidered his Griffin argument as well. Due process and the
Fifth Amendment privilege are independent rights, and one
may be violated even though the other is not.
Second, even if Ford’s claim was based on due process,
the court’s application of Doyle was incorrect. As Wainwright
makes clear, due process may be violated even if the defend-
ant’s post-arrest silence is used “in direct response to a de-
fense theory.”4 Moreover, it is inaccurate to say that Ford’s
4The Indiana Court of Appeals cited Willsey v. State, 698 N.E.2d 784
(Ind. 1998), in support of its holding. Willsey, quoting one of our cases,
recognized that “Doyle does not impose a prima facie bar against any
No. 12-3844 13
silence “was not used to indicate [his] guilt or damage his
credibility.” It was used to explain the state’s inability to
prove motive, and while motive was not an element of the
offense, it was certainly relevant. See Turner v. State, 953
N.E.2d 1039, 1057 (Ind. 2011) (“Evidence of a defendant’s
motive is always relevant in the proof of a crime.”); see also
House v. Bell, 547 U.S. 518, 540 (2006) (“When identity is in
question, motive is key.”). Because evidence of motive
would have been probative of Ford’s guilt, the prosecutor’s
explanation for the absence of such evidence was necessarily
used to indicate Ford’s guilt, or at least to rebut a suggestion
of innocence, which is simply the reverse side of the same
coin.
Of course, the fact that the Indiana Court of Appeals
misapplied Doyle does not in itself permit relief under the
AEDPA, because “the court’s application must have been
more than incorrect; it must have been objectively unreason-
able.” Ruhl v. Hardy, 743 F.3d 1083, 1091 (7th Cir. 2014).
However, the court never should have applied Doyle in the
mention whatsoever of a defendant’s right to request counsel, but in-
stead guards against the exploitation of that constitutional right by the
prosecutor.” 698 N.E.2d at 793 (quoting Lindgren v. Lane, 925 F.2d 198,
202 (7th Cir. 1991)) (internal quotation mark omitted). However, this
does not mean that a defendant’s post-arrest silence or request for coun-
sel may be used in response to a defense theory. It is simply another way
of stating the unremarkable proposition that there is no due process vio-
lation if the defendant’s post-arrest silence or request for counsel “was
not used against him within the meaning of Doyle.” Greer, 483 U.S. at 764
n.5; see Willsey, 698 N.E.2d at 793 (“[T]he State took advantage of Will-
sey’s implication of sinister knowledge, not the request for counsel.”);
Lindgren, 925 F.2d at 202 (“Since this request for counsel was not used
against petitioner, [Wainwright] was not contravened.”).
14 No. 12-3844
first place, and a “state court’s decision is ‘contrary to’ feder-
al law if it employs the wrong legal standard established by
the Supreme Court.” McNary, 708 F.3d at 913 (citing Bell v.
Cone, 535 U.S. 685, 694 (2002)). Therefore, apart from the
state court’s misapplication of Doyle, Ford has cleared the
AEDPA hurdle.
But this is not the end of our inquiry. “Where the state
court’s decision is ‘contrary to’ federal law, that decision is
not entitled to the usual AEDPA deference and is therefore
reviewed de novo with the reviewing court applying the cor-
rect legal standard.” Mosley v. Atchison, 689 F.3d 838, 844 (7th
Cir. 2012). Thus, we must apply the correct legal standard to
Ford’s claim, without deference to the state court’s decision,
to determine whether his attorney’s failure to object war-
rants reversal of his conviction.
C. DE NOVO REVIEW
Under Griffin, we must ask whether the prosecutor’s
comments were a fair response to defense counsel’s argu-
ment that the state failed to prove motive. We have our
doubts. As Ford points out, the prosecutor could have
stopped at saying that the state was not required to prove
motive. He also could have pointed out that there was evi-
dence of motive in the record, given that Ford told Grace just
before the shooting, “I can’t stand that mother fucker.”
However, we must back up a moment. Ford’s claim is
not based on the Fifth Amendment directly but rather on the
ineffectiveness of his counsel in failing to recognize and ob-
ject to a Fifth Amendment violation. Indeed, a Fifth
Amendment violation would not in itself be a proper basis
for habeas relief, because Ford did not present such a claim
No. 12-3844 15
to the Indiana courts. See O’Sullivan v. Boerckel, 526 U.S. 838,
845 (1999) (To sufficiently exhaust state remedies, a federal
habeas petitioner must “give the state courts one full oppor-
tunity to resolve any constitutional issues by invoking one
complete round of the State’s established appellate review
process.”).
The general rule in Indiana is that “[i]f an issue was
known and available on direct appeal, but not raised, it is
procedurally defaulted as a basis for relief in subsequent
proceedings.” Williams v. State, 808 N.E.2d 652, 659 (Ind.
2004). The only exception is a claim of ineffective assistance
of trial counsel, which is properly presented in a post-
conviction proceeding if not raised on direct appeal. Id. Ford
failed to raise a Fifth Amendment challenge on direct ap-
peal, so he was procedurally barred from doing so in his
state postconviction proceedings, except in the context of a
claim of ineffective assistance of counsel. We will not cir-
cumvent the state’s procedural rules by considering Ford’s
Fifth Amendment challenge directly.
“Under Strickland v. Washington’s familiar, two-pronged
test for ineffective assistance of counsel, [Ford] must demon-
strate that (1) his counsel’s performance was deficient; and,
(2) that deficiency resulted in prejudice.” United States v.
Berg, 714 F.3d 490, 496–97 (7th Cir. 2013). Thus, even assum-
ing the prosecutor’s comments violated Ford’s Fifth
Amendment privilege (which we do not decide), and further
assuming that defense counsel’s failure to object fell below
an objective standard of reasonableness (which we also do
not decide), Ford must establish “a reasonable probability
that, but for counsel’s unprofessional errors, the result of the
16 No. 12-3844
proceeding would have been different.” Strickland v. Wash-
ington, 466 U.S. 668, at 694 (1984). This he cannot do.
Ford argues that he was prejudiced because his first trial
resulted in a hung jury, and the prosecutor’s comments on
his silence were the only significant difference between the
two trials. However, there was at least one other significant
difference: one of the state’s witnesses, Sade Robinson, testi-
fied at the first trial but was unavailable for the second, and
in the latter trial, the court allowed her prior testimony to be
read to the jury. Ford’s counsel did not object because he be-
lieved that his cross-examination in the first trial had been
effective and that Robinson would be more prepared if she
were called to testify again. Indeed, during Ford’s postcon-
viction hearing, his trial counsel testified that when the state
agreed to have Robinson’s prior testimony read to the jury,
“I did back flips because I felt her testimony in the first trial
had been extremely helpful to Mr. Ford and played a role in
the verdict.” Apparently, his cross-examination did not have
the same impact when it was read to the jury in the second
trial. This simply underscores the need to be cautious “in as-
signing critical significance to the failure of a different jury,
which heard different evidence and argument, to reach
agreement.” United States v. Williams, 212 F.3d 1305, 1311
n.10 (D.C. Cir. 2000).
Moreover, “[a] jury may hang for any number of reasons,
including the idiosyncratic views of a single juror.” United
States v. Newton, 369 F.3d 659, 680 (2d Cir. 2004). As a result,
only in close cases should the fact of a prior hung jury lead
to a finding of prejudice. Id. This is not such a case because
the evidence against Ford was far too strong for us to find
prejudice under Strickland.
No. 12-3844 17
James Grace testified that after he and Ford walked past
Hodge and into Ford’s house, Ford said, “I can’t stand that
mother fucker. I’ll be back.” Ford left the house, and shortly
thereafter Grace heard a popping sound. He looked out the
front window of Ford’s house and saw Hodge lying in the
street. As Grace continued to look out the window, Ford re-
appeared behind him and frantically said, “I got to get the
fuck out of here, and meet me down—meet me at the end of
the alley and pick me up.”
Gary Police Officer Daniel Quasney testified that after he
arrived at the scene, he questioned a witness named Ronell
Simmons. Simmons stated that he had seen Hodge talking to
a black male in a black hooded sweatshirt and that the man
had pulled out a gun, shot Hodge in the head, and walked
away.
Veveca Story, Sade Robinson’s sister, testified that on the
day of the shooting, one of her coworkers drove her and
Robinson to their mother’s house, which was next door to
Ford’s. As soon as they pulled up to the house, there was a
popping sound. When Story turned to look behind her, she
saw Ford walking toward his house with a gun in his hand.
Ford was wearing dark clothing, and as he walked, he made
a slashing motion across his throat. Ford and Story’s mother
had been neighbors for about two years at the time, and Sto-
ry had seen Ford many times before. As a result, she was
able to recognize him at the time, and she later identified
him at trial.
In addition to the testimony of these witnesses, Ford’s
cellmate testified that Ford confessed to shooting Hodge.
Taken together, the strength of this evidence negates any
reasonable probability that the outcome of Ford’s trial would
18 No. 12-3844
have been different absent the prosecutor’s comments. See,
e.g., Morales v. Johnson, 659 F.3d 588, 602 (7th Cir. 2011) (“The
two eyewitness identifications were substantial evidence
against [the defendant] and negated any possibility of Strick-
land prejudice from [his attorney’s] errors … .”). Conse-
quently, Ford is not entitled to habeas relief based on the
claimed ineffective assistance of his trial counsel. 5
IV. CONCLUSION
Although the Indiana Court of Appeals applied the
wrong legal standard to Ford’s claim, when we apply the
correct standard, we get the same result. Even assuming the
performance of Ford’s trial counsel was deficient, there is no
reasonable probability that adequate performance would
have changed the outcome of Ford’s trial. Therefore, the dis-
trict court’s dismissal of Ford’s petition for a writ of habeas
corpus under 28 U.S.C. § 2254 is AFFIRMED.
5 The outcome would be the same if we were to consider Ford’s
claim directly under the Fifth Amendment and conduct a harmless-error
analysis. Ford asks us to apply the Chapman harmless-error standard,
under which “the court must be able to declare a belief that it was harm-
less beyond a reasonable doubt.” Chapman v. California, 386 U.S. 18, 24
(1967). But that only applies on direct appeal; the “the Kotteakos harm-
less-error standard applies in determining whether habeas relief must be
granted because of constitutional error of the trial type.” Brecht v. Abra-
hamson, 507 U.S. 619, 638 (1993). “The test under Kotteakos is whether the
error ‘had substantial and injurious effect or influence in determining the
jury’s verdict.’” Id. at 637 (quoting Kotteakos v. United States, 328 U.S. 750,
776 (1946)). In other words, there must be “actual prejudice.” Id. (quoting
United States v. Lane, 474 U.S. 438, 449 (1986)). This is difficult to distin-
guish from the Strickland standard, but it may be somewhat more de-
fendant-friendly. See United States v. Dominguez Benitez, 542 U.S. 74, 86–
87 (2004) (Scalia, J., concurring in the judgment). Even so, we would
reach the same result under either standard in this case.
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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 28, 2014
Decided February 18, 2014
Before
DIANE P. WOOD, Chief Judge
FRANK H. EASTERBROOK, Circuit Judge
MICHAEL S. KANNE, Circuit Judge
No. 13‐2074
DAPHNE J. RONNING, Appeal from the United States District
Plaintiff‐Appellant, Court for the Western District of
Wisconsin.
v.
No. 3:10‐cv‐00275
CAROLYN W. COLVIN,
Acting Commissioner of Social William M. Conley,
Security, Chief Judge.
Defendant‐Appellee.
O R D E R
Daphne Ronning, a 46‐year‐old former restaurant cook who suffers from a
chronic pain condition, appeals the district court’s judgment upholding the denial of
her application for disability insurance benefits and supplemental security income. She
argues that the administrative law judge did not properly follow the directives set forth
in Social Security Ruling 03–2p, which explains how claims involving her reflex
sympathetic dystrophy syndrome (RSDS) should be evaluated. She also argues that the
No. 13‐2074 Page 2
ALJ wrongly discredited her testimony. We affirm.
Ronning hurt her left hand in August 2003, when she slipped and fell in the
Hardee’s restaurant she was managing. She sought treatment at an emergency room,
where she was diagnosed with a sprain in her left index, middle, ring, and small
fingers. Less than a month later, an orthopedic surgeon examined Ronning, found
“marked limitation” in the range of motion in her left hand’s fingers, and opined that
she likely had RSDS (also known as complex regional pain disorder) in that hand as a
result of her injury. RSDS is a condition that involves “diffuse persistent pain” and
“frequently follows some local injury”; it “is often associated with vasomotor
disturbances, trophic changes, and limitation or immobility of joints.” STEDMAN’S
MEDICAL DICTIONARY 1895 (28th ed. 2006). Over the next four months, two other
treating orthopedists concurred that Ronning had RSDS.
The month after she was injured, Ronning returned to her job with the restriction
that she not use her left hand. Some unspecified time later, she was fired (for being
tardy and forgetful, she says—side effects that she attributes to medications she was
taking to treat her injury). In spring 2004 she found work as a prep cook at another
restaurant, the Longbranch, but was let go because she could not do her work without
the use of her left hand. She applied for Social Security benefits, alleging an onset
disability date of December 26, 2004—the day she lost her job at the Longbranch—and
that she was disabled because of depression and her inability to use her left hand.
Ronning underwent more intensive treatment for her RSDS in early 2005. Her
treating orthopedist examined her in March, opined that she could work as long as she
did not use her left hand, and referred her to a pain clinic and an occupational therapist.
She received a left stellate ganglion block (an injection of local anesthetic) at a pain clinic
in May, after which she reported a 25% reduction in pain intensity in her left arm. Soon
after, she returned to her orthopedist who noted that the stellate block, combined with
occupational therapy, had improved her RSDS. She attended several occupational‐
therapy sessions, which helped increase the range of motion in her left hand, but
insurance problems (as reported by her orthopedist) prevented her from receiving
additional treatment, including a second stellate block.
In connection with her application for benefits, Ronning underwent various
physical evaluations in late 2006. One state‐examining internist found that her left hand
had severely decreased grip, mild swelling, and loss of motion and that RSDS was an
appropriate diagnosis. He noted, however, that her left wrist, elbow, and shoulder were
No. 13‐2074 Page 3
unaffected by her hand condition. A consulting physician assessed Ronning’s Physical
Residual Functional Capacity and opined that she could lift and carry 20 pounds
occasionally and 10 pounds frequently, stand and sit for 6 hours in an 8‐hour workday,
and push and pull without limitation; she could not, however, use her left hand for
“handling” or “fingering” (since her RSDS left her without functional use of the hand),
and she had no postural, visual, communicative, or environmental limitations. In a form
labeled “Psychiatric Review Technique,” a consulting psychologist concluded based on
the Affective‐Disorders category that Ronning did not have any medically determinable
impairment.
The Social Security Administration denied Ronning’s application for benefits in
November 2006 and in May 2007 upheld the decision on reconsideration.
Since Ronning was also trying to obtain worker’s compensation benefits, two
orthopedic surgeons consulting for the state worker’s compensation board examined
her in February and May 2008 and opined that she could work with limitations. One of
the surgeons believed that she no longer needed further treatment and could
work—with permanent restrictions (lifting no more than five pounds with her left hand
and refraining from repetitive motions with that hand). The other believed that her
RSDS had been “incompletely treated” but that the optimum period for a good result
“had long passed”; he believed that she could return to work with the permanent
limitation that she perform only light duty without using her left hand.
At her hearing in July 2008 before an ALJ, Ronning testified about her physical
limitations. According to Ronning, her medications affected her memory and made her
dizzy, requiring her to sit down. She said that muscle spasms made her left hand
“constantly sore,” and that having to hold the hand in a protective mode left her left
shoulder “really sore.”
A vocational expert testified that a hypothetical claimant of Ronning’s age with a
limited education and left‐hand RSDS who was limited to light work with no use of her
left hand or upper extremity would not be able to perform her past work as a cook, but
that she could work as a hostess, furniture‐rental consultant, or surveillance‐system
monitor. The VE opined further that such a claimant who needed to miss more than
three days of work per month and who could not concentrate or work persistently
throughout a two‐hour period—thus requiring extra work breaks—would not be
competitively employable in those jobs.
No. 13‐2074 Page 4
The ALJ applied the five–step evaluation process and denied Ronning’s
application for benefits. See 20 C.F.R. §§ 404.1520, 416.920. The ALJ concluded that
Ronning had not worked since her alleged onset date (step 1); her RSDS was a severe
impairment (but she did not have a mental impairment) (step 2); her impairment did
not meet or equal a listed impairment (step 3); she was unable to perform her past
relevant work as a cook, but had the residual functional capacity to perform light work
without the use of her left hand or left upper extremity (step 4); and suitable jobs were
available, including work as a hostess and furniture‐rental consultant (step 5). In
addressing step 4, the ALJ discredited Ronning’s statements about her physical
symptoms, pointing out that her treating physicians had released her to work and that
no physician had opined that she could not work. The ALJ further questioned her
credibility by noting that no medical evidence corroborated her complaints that her
shoulder was sore or that she suffered side effects from her medications.
After the Appeals Council denied her request for review, Ronning sued in
federal court. She argued that the ALJ should have considered at step 3 whether her
condition met or equaled other listings, noting that Social Security Ruling 03–2p
requires the ALJ to consider “psychological manifestations” of RSDS under the mental‐
disorders listings. In particular she argued that the ALJ should have considered
whether her condition met or equaled Listing 12.07 for somatoform disorders,
“[p]hysical symptoms for which there are no demonstrable organic findings or known
physiological mechanisms.” 20 C.F.R. Pt. 404, Subpt. P, App. 1 § 12.07. She also argued
that the ALJ erred by discrediting her testimony regarding her limitations (difficulty
concentrating because of pain and side effects from medications).
The district court upheld the ALJ’s decision. The court determined that the ALJ
need not have considered whether Ronning’s condition met or equaled a listing for
mental disorders because the record contained no evidence that she was diagnosed with
or treated for depression or that she had any other psychological impairment such as a
somatoform disorder. The court also found that the ALJ gave specific reasons supported
by the record to discredit her testimony, including the absence of any complaints from
her to physicians about shoulder pain or medicines’ side effects and the absence of any
physicians’ reports opining that she could not work.
Ronning now contends that the ALJ erred at step 3 in finding that her RSDS did
not meet or equal a listed impairment. Acknowledging that RSDS is not a listed
impairment, she relies on SSR 03–2p to argue that the ALJ should have compared her
symptoms to a somatoform disorder. Under SSR 03–2p if an ALJ determines that a
No. 13‐2074 Page 5
claimant’s RSDS is a severe impairment, the ALJ must then compare the “specific
findings . . . to any pertinent listing to determine whether medical equivalence may
exist.” 2003 WL 22399117, at *6. The ruling further directs an ALJ to evaluate
“[p]sychological manifestations related to RSDS under the mental disorders listings,
and [determine] whether the individual’s impairment(s) meets or equals the severity of
a mental listing.” Id. Ronning equates her RSDS symptoms with a somatoform disorder
because her RSDS entails “symptoms that seem out of place with the objective signs of
injury.”
But the ALJ did not have to compare Ronning’s RSDS to a somatoform disorder
because nothing in the record suggests that she had a somatoform disorder. RSDS,
according to SSR 03–2p, is “a constellation of symptoms and signs that may occur
following an injury to bone or soft tissue” and are not “imaginary or etiologically linked
to psychiatric disease.” 2003 WL 22399117, at *1, 3. Whatever physical symptoms she
had, all her treating and examining physicians agreed, resulted from RSDS caused by
her hand injury. Indeed, according to her orthopedist, non‐psychiatric
treatment—including a stellate ganglion block and occupational therapy—helped
alleviate her pain and improve the range of motion in her injured hand. Because she did
not present any evidence that her symptoms resulted from a somatoform disorder, the
ALJ did not err by not considering her impairment under the somatoform‐disorders
listing. See Scheck v. Barnhart, 357 F.3d 697, 700–01 (7th Cir. 2004) (ALJ need not explain
why impairment did not meet or equal listings where there was “no evidence” that
impairment met or equaled a listing).
Ronning next argues that the ALJ’s credibility determination was flawed because
the ALJ used “boilerplate” that we have repeatedly criticized: “[T]he claimant’s
statements concerning the intensity, persistence and limiting effects of these symptoms
are not credible to the extent they are inconsistent with the above residual functional
capacity assessment.” See Arnett v. Astrue, 676 F.3d 586, 592 (7th Cir. 2012); Bjornson v.
Astrue, 671 F.3d 640, 644–46 (7th Cir. 2012); Martinez v. Astrue, 630 F.3d 693, 694 (7th Cir.
2011); Parker v. Astrue, 597 F.3d 920, 921–22 (7th Cir. 2010). But we will uphold the ALJ’s
credibility determination if the ALJ provided specific reasons for discrediting the
claimant’s testimony. See Filus v. Astrue, 694 F.3d 863, 868 (7th Cir. 2012); Myles v.
Astrue, 582 F.3d 672, 676 (7th Cir. 2009). The ALJ here discredited Ronning’s testimony
for a number of reasons, including the absence of any medical findings or treatment
reflecting that she suffered shoulder pain and side effects from her medications.
See Bradley v. Astrue, 528 F.3d 1113, 1115 (8th Cir. 2008). The ALJ also properly credited
the uncontradicted opinions of Ronning’s treating orthopedists that she could work
No. 13‐2074 Page 6
with certain restrictions. See SSR 03–2p, 2003 WL 22399117, at *5; 20 C.F.R.
§ 404.1527(d)(2)–(3); Roddy v. Astrue, 705 F.3d 631, 638 (7th Cir. 2013); Bjornson, 671 F.3d
at 647–48.
Accordingly, we AFFIRM the district court’s judgment.
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In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 13‐1511
MITCH ROONI,
Plaintiff‐Appellant,
v.
BRADLEY BISER,
Defendant‐Appellee.
____________________
Appeal from the United States District Court for the
Western District of Wisconsin.
No. 11‐cv‐827‐bbc — Barbara B. Crabb, Judge.
____________________
ARGUED SEPTEMBER 20, 2013 — DECIDED FEBRUARY 4, 2014
____________________
Before WOOD, Chief Judge, and BAUER and FLAUM, Circuit
Judges.
WOOD, Chief Judge. Deer hunting is serious business in
the state of Wisconsin. Although the hunters and the state
game wardens may coexist peacefully most of the time, in
this case they did not. A dispute erupted between Mitch
Rooni, a hunter, and Bradley Biser, a warden employed by
the Wisconsin Department of Natural Resources (DNR), and
it has now wended its way into federal court. According to
2 No. 13‐1511
Rooni, on November 19, 2005, Biser arrested him without
probable cause and used excessive force against him both
before and after the arrest. Asserting that his civil rights had
been violated by these actions, Rooni brought suit under 42
U.S.C. § 1983 against Biser; Biser responded with a motion
for summary judgment in his favor on all counts. The district
court granted the motion with one exception, for the charge
that Rooni used excessive force before the arrest. The parties
then jointly filed a motion to dismiss the pre‐arrest exces‐
sive‐force claim with prejudice. The district court agreed to
do so and entered a final judgment in Biser’s favor.
Rooni contends on appeal that the district court erred by
granting summary judgment on the unlawful‐arrest claim
and the claim of excessive force after the arrest in connection
with his handcuffing. He also argues that the court was
mistaken to conclude that Biser was entitled in any event to
qualified immunity. We conclude that the district court
correctly granted summary judgment in Biser’s favor on the
handcuffing claim; at a minimum, Biser is entitled to
qualified immunity on this part of the case. Rooni’s arrest
claim, however, is another matter. Taking his reasonable
allegations as true, as we must, we conclude that neither
probable cause nor “arguable” probable cause supported
Rooni’s arrest. This means that a trier of fact could conclude
(if it accepted Rooni’s evidence) that Biser violated Rooni’s
clearly established constitutional rights in so arresting him.
We thus affirm in part and remand in part to the district
court for further proceedings on the wrongful‐arrest claim.
No. 13‐1511 3
I
The account of the facts that follows accepts Rooni’s ver‐
sion for present purposes, without of course vouching for
anything. On November 19, 2005, Rooni, accompanied by his
son, Peter Rooni, and a friend, Brad Weerts, went deer hunt‐
ing in northern Wisconsin. Their trip was successful: they
left with two bucks and a doe loaded onto a trailer attached
to Weerts’s truck.
The trouble began when the group stopped to register
the deer at a DNR post located at a gas station in Brule,
Wisconsin. Christopher Sand and Kevin Feind, two DNR
employees, met and congratulated Rooni on his hunt; Sand
tagged and aged the deer. Rooni then went into the gas
station to buy another tag, which he needed so that the party
could continue hunting. While Rooni was there, Biser
arrived at the station, walked inside, and asked Rooni how
many deer he had downed. Rooni, evidently not a fan of
Biser or perhaps game wardens generally, did not respond.
Biser then proclaimed, loudly enough for everybody in the
station to hear, that Rooni did not like the DNR. Rooni
responded in kind, saying something like “no, just people
like you.” Biser made further comments but Rooni tried to
ignore them.
Biser eventually left the gas station, hotdog in hand, and
approached Sand, who was registering the deer in Weerts’s
trailer. Biser leaned up against the trailer while speaking to
Sand. Rooni then came out of the gas station and ap‐
proached Biser, who was still leaning against the trailer.
Rooni stood five or six feet away from Sand and waited, be‐
lieving that Biser was going to question him, but Biser did
not turn to look at Rooni or say anything. At that point,
4 No. 13‐1511
Rooni attempted to walk around Biser. He had to pass very
closely, because there was slush on the ground with a few
trails beaten down by pedestrians. Biser was leaning right
next to one of those trails. As Rooni walked by, Biser extend‐
ed his leg to block Rooni’s way. Rooni stopped, took a few
steps closer, and looked at Biser, who remained silent. Rooni
then said, “Brad, get off the trailer and let me get through,”
and “brushed” between Biser and the trailer. As Rooni
brushed past Biser on the trail, Biser moved back and spit a
piece of hotdog at Rooni. (Biser strongly disputes this ac‐
count, but this is not the time and we are not the ones who
can say what “really” happened.) Biser accuses Rooni of
pushing him, but Rooni denies doing so.
As the back‐and‐forth escalated, Biser grabbed Rooni. Af‐
ter telling Biser to get his hands off of him, Rooni pushed
down, with his palms facing himself, in an attempt to detach
Biser’s hands from his person. In response, Biser put his
hands back on Rooni and grabbed Rooni’s stomach through
his shirt. Rooni again attempted to push Biser’s hands away.
Biser pushed Rooni against the trailer and started hitting his
hands and arms. As he was hitting Rooni, Biser repeatedly
told Rooni not to grab him, though it was Biser who had
been hitting Rooni. At this point, Rooni’s son came over, and
Rooni told him to call the police. In response, Biser told
Rooni he was under arrest. While in the process of handcuff‐
ing Rooni, Biser grabbed Rooni by the back of the neck and
jerked him back, almost pulling Rooni over. Biser then hand‐
cuffed Rooni with double‐locked handcuffs (a type that can‐
not be tightened or loosened). Biser moved Rooni to his
truck, at which point Rooni complained that the handcuffs
were too tight. Biser responded by telling him to “shut up.”
Soon Deputy Sheriff Alan Peterson arrived, and Rooni again
No. 13‐1511 5
said that the handcuffs were on too tight and hurt; he added
that Biser had purposefully twisted the handcuffs so that
they would hurt him. Although Peterson did not believe that
the handcuffs were too tight, he offered to place Rooni in
shackles so that he could be handcuffed in the front instead
of from behind. Rooni agreed, and when Peterson changed
the handcuffs, Rooni pointed out the red marks on his
wrists. Peterson transported Rooni to the Douglas County
jail, telling him that he had been arrested for disorderly con‐
duct and obstructing an officer. While in the jail, Rooni did
not seek medical attention. He did, however, observe blood
and blister‐type discoloration under his skin, his hands were
numb and painful, and his fingers were swollen for a few
days.
Rooni was charged with disorderly conduct, but the
charges were dismissed. In April 2006, Rooni was diagnosed
with carpal tunnel syndrome.
II
Because this case reaches us from a grant of summary
judgment, we review the district court’s decision de novo, tak‐
ing all facts and reasonable inferences in favor of the non‐
moving party. Marion v. City of Corydon, Ind., 559 F.3d 700,
704 (7th Cir. 2009). As the party with the burden of proof,
Rooni had to present evidence that, if believed by the trier of
fact, would support a finding that his constitutional rights
were violated. See Sow v. Fortville Police Depʹt, 636 F.3d 293,
300 (7th Cir. 2011) (citing McAllister v. Price, 615 F.3d 877, 881
(7th Cir. 2010)). One acceptable type of evidence is the plain‐
tiff’s own affidavit, as long as it otherwise contains infor‐
mation that would be admissible if he were testifying direct‐
ly. There is nothing suspect about the fact that such affidavits
6 No. 13‐1511
are normally “self‐serving.” See Hill v. Tangherlini, 724 F.3d
965, 967 & n.1 (7th Cir. 2013); Payne v. Pauley, 337 F.3d 767,
773 (7th Cir. 2003).
A. Unlawful Arrest Claim
Probable cause is an absolute defense to a claim of
wrongful arrest under section 1983. Chelios v. Heavener, 520
F.3d 678, 685 (7th Cir. 2008). A police officer has probable
cause to arrest if, at the time of the arrest, the facts and cir‐
cumstances within the officer’s knowledge are sufficient to
permit a prudent person to believe that the suspect had
committed, is committing, or is about to commit an offense.
See id. at 686; Wagner v. Washington County, 493 F.3d 833, 836
(7th Cir. 2007) (per curiam) (citing Michigan v. DeFillippo, 443
U.S. 31, 37 (1979)). “The probable cause determination must
be made by a jury ‘if there is room for a difference of opinion
concerning the facts or the reasonable inferences to be drawn
from them.’” Chelios, 520 F.3d at 686 (citing Maxwell v. City of
Indianapolis, 998 F.2d 431, 434 (7th Cir. 1993).
Because the district court jumped directly to the qualified
immunity inquiry, it assumed (as it was permitted to do un‐
der Pearson v. Callahan, 555 U.S. 223, 236 (2009)) that Rooni’s
actions did not give Biser probable cause to arrest him for
disorderly conduct. We find it useful, however, to take a
closer look at that question as we move through the immuni‐
ty inquiry.
The district court found that even though it was
“undisputed that plaintiff gave defendant a sudden verbal
command ‘in a loud voice,’” probable cause for the arrest
would clearly have been lacking if Rooni had done no more
than shout at Biser. But, the district court thought, there was
No. 13‐1511 7
more: after the shout Rooni “brushed” against Biser. Yet the
court acknowledged that it “might be obvious that
disorderly conduct requires more than accidental physical
contact with an officer.” Here, as the district court saw it, the
combination of the accidental physical contact and the
confrontational and loud statements made it “more
reasonable” to interpret plaintiff’s actions as threatening and
disruptive. Coupled with Rooni’s act of pushing Biser’s
hands away from him, the court thought that this amounted
to at least arguable probable cause for the arrest. In order to
evaluate this conclusion, we take a closer look at each of
these ingredients and then at the way they blended together.
1. Rooni’s Verbal Comment
There is a fundamental problem with the district court’s
reliance on Rooni’s alleged sudden and loud statement:
Rooni denies that he yelled or spoke in a confrontational
way, and a trier of fact would be entitled to believe Rooni’s
account. “We have warned before of falling for the trap of
weighing conflicting evidence during a summary judgment
proceeding.” Payne, 337 F.3d at 771. Rooni’s proposed find‐
ing of fact described the encounter this way: “When defend‐
ant Biser said nothing to Mitch Rooni, Mitch Rooni said to
defendant Biser: ‘Brad, get off the trailer and let me get
through.’” Plaintiff’s Proposed Finding of Fact at ¶ 22, Rooni
v. Biser, No. 11‐cv‐827‐bbc (W.D. Wis. October 15, 2012). The
word “said” gives no information about tone of voice or dec‐
ibel level. If, as Rooni contends, his comment was not deliv‐
ered in a confrontational way, then nothing about the com‐
ment would support a finding of probable cause to arrest.
8 No. 13‐1511
2. Brushing
While both sides report that there was physical contact
between Rooni and Biser as Rooni attempted to pass Biser
using the trail through the slush, Biser says that it was signif‐
icant and Rooni depicts it as glancing. An unintentional
touching alone does not give rise to probable cause for a dis‐
orderly conduct arrest. Wisconsin’s disorderly conduct stat‐
ute provides that “whoever, in a public or private place, en‐
gages in violent, abusive, indecent, profane, boisterous, un‐
reasonably loud or otherwise disorderly conduct under cir‐
cumstances in which the conduct tends to cause or provoke
a disturbance is guilty of a Class B misdemeanor.” Wis. Stat.
§ 947.01. The Supreme Court of Wisconsin has noted that the
statute contains two elements: “(1) conduct of the type enu‐
merated in the statute or similar thereto, and (2) the conduct
must be engaged in under circumstances which tended to
cause or provoke a disturbance.” In re A.S., 626 N.W.2d 712,
716 (Wis. 2001). Simply brushing by another person – an act
which we understand as involving only de minimis contact –
cannot be characterized as the type of conduct described in
Wisconsin’s statute. A similar analysis applies to the charge
of obstructing an officer in violation of Wis. Stat. § 946.41,
which broadly prohibits “knowingly resist[ing] or ob‐
struct[ing] an officer while such officer is doing any act in an
official capacity and with lawful authority.” Id. § 946.41(1).
The obstruction must, at a minimum, be “knowing,” and
there is nothing in the accidental brush that Rooni describes
that could meet this criterion. Cf. State v. Ferguson, 767
N.W.2d 187, 199 (Wis. 2009) (describing conduct covered by
the statute); see also Gonzalez v. City of Elgin, 578 F.3d 526,
538 (7th Cir. 2009) (Illinois law). That is enough to defeat
No. 13‐1511 9
summary judgment on Rooni’s arrest claim, since we must
take the facts in the light most favorable to him.
3. Attempting to Remove Biser’s Hands
The district court also thought it significant that Rooni
tried to free himself from Biser by pushing Biser away. But
here again, the overall picture shifts, depending on whose
version of the facts is credited. Rooni alleged that Biser first
spit a piece of hotdog directly at him and then proceeded to
grab and hit him. Rooni tried to push Biser away after Biser
grabbed him. At that point, Rooni told his son to call the po‐
lice, and Biser announced that Rooni was under arrest. If a
jury believes Rooni’s account, then it would find that all
Rooni tried to do was to disengage from Biser’s assault. As
we have noted in the past, “police officers do not have the
right to shove, push, or otherwise assault innocent citizens
without any provocation whatsoever.” Payne, 337 F.3d at 780
(quoting Clash v. Beatty, 77 F.3d 1045, 1048 (7th Cir. 1996)).
Since we have concluded that neither the alleged verbal
comment, nor the brush‐by, nor the effort to disengage from
Biser’s grasp was sufficient to support probable cause for
Rooni’s arrest – as always, taking the facts in the light most
favorable to Rooni – we also find that taken together these
three elements are not enough to support summary judg‐
ment in Biser’s favor on the claim of unlawful arrest.
4. Qualified Immunity
This leaves the question whether Biser is entitled to qual‐
ified immunity on this part of the case. “To determine
whether a defendant is entitled to qualified immunity, courts
must address two issues: (1) whether the defendant violated
the plaintiffʹs constitutional rights and (2) whether the right
10 No. 13‐1511
at issue was clearly established at the time of the viola‐
tion.”Stainback v. Dixon, 569 F.3d 767, 770 (7th Cir. 2009) (cit‐
ing Phelan v. Vill. of Lyons, 521 F.3d 484, 487 (7th Cir. 2008)).
When the facts of this case are taken in the light most favor‐
able to him, Rooni has shown that Biser violated his consti‐
tutional rights by arresting him without probable cause.
Moreover, under his version of the facts, Rooni never raised
his voice and was merely attempting to pass Biser on the
trail surrounded by slush when Biser spit hotdog on him
and then grabbed and began hitting his upper body. Before
Biser ever told Rooni he was under arrest, Rooni attempted
to defend himself against this battery by trying to push his
hands down his own body, in the hopes of removing Biser’s
hands. As Rooni describes it, he never conducted himself in
a disorderly manner. Under these circumstances, Biser
should have been on notice that Rooni had a right to be free
from arrest. See, e.g., Pourghoraishi v. Flying J, Inc., 449 F.3d
751, 762 (7th Cir. 2006) (an officer did not have probable
cause to arrest where the individual “did not raise his voice,
use profanity, make unreasonable noise, or otherwise engage
in any behaviors prohibited by the disorderly conduct stat‐
ute”). We conclude that Biser is not entitled to qualified im‐
munity on this claim.
B. Handcuffing
1. Excessive Force
Rooni also alleges that his constitutional rights were vio‐
lated because Biser used excessive force when he handcuffed
Rooni. A person has the right to be free from an officer’s
knowing use of handcuffs in a way that would inflict unnec‐
essary pain or injury, if that person presents little or no risk
of flight or threat of injury. See Payne, 337 F.3d at 778, Stain‐
No. 13‐1511 11
back, 569 F.3d at 772. The question, however, is whether the
officer knows that he is inflicting such pain. An officer can‐
not be expected to respond to an injury about which he is
unaware. Nonetheless, knowledge may be inferred “from
the nature of the act itself.” Stainback, 569 F.3d at 772.
We have seen a number of cases in which arrestees have
made similar complaints about handcuffing. See, e.g., Sow v.
Fortville Police Dept., 636 F.3d 293 (7th Cir. 2011) (dismissed
where plaintiff complained once but presented no evidence
that he elaborated on the pain to the defendant); Tibbs v. City
of Chicago, 469 F.3d 661 (7th Cir. 2006) (dismissed excessive
force claim where plaintiff complained the handcuffs were
on too tight but did not indicate the degree of pain). Giving
Rooni the benefit of the doubt, it is possible (though we do
not hold this definitively) that the Fourth Amendment re‐
quired Biser to take Rooni’s complaints more seriously.
2. Qualified Immunity
Once again, this brings us to the question of qualified
immunity, and in particular, to the issue whether Rooni’s
right to be free of the degree of force Biser used after the
handcuffs were applied was clearly established. Qualified
immunity gives government officials “the benefit of legal
doubts.” Elliott v. Thomas, 937 F.2d 338, 341 (7th Cir. 1991).
Our decisions in Tibbs and Sow, supra, both found in the of‐
ficer’s favor on similar allegations. It is difficult in borderline
cases to say that a right to be free from a particular degree of
force was “clearly established.” Here, we conclude that there
was nothing that would have alerted Biser to the fact that a
constitutional violation was looming. We therefore conclude
that Biser was entitled to qualified immunity on Rooni’s
complaint of excessive force in connection with the hand‐
12 No. 13‐1511
cuffing, and thus that summary judgment in Biser’s favor
was proper on this part of the case.
III
In closing, we cannot resist commenting that it strikes us
as unfortunate that the kind of dust‐up that gave rise to this
case can wind up in federal court. Nevertheless, as the Su‐
preme Court reminds us, we have an “unflagging duty” to
hear cases that fall within our jurisdiction, and the broad
principles that underlie the right of citizens to be free from
unlawful arrests and the use of excessive force by public of‐
ficers are far from trivial. We thus AFFIRM the judgment of
the district court on the handcuffing and REVERSE and
REMAND the unlawful‐arrest decision for further proceed‐
ings consistent with this opinion.
|
01-03-2023
|
08-05-2014
|
https://www.courtlistener.com/api/rest/v3/opinions/2708756/
|
In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 13‐1321
UNITED STATES OF AMERICA,
Plaintiff‐Appellee,
v.
RANDALL B. CAUSEY,
Defendant‐Appellant.
____________________
Appeal from the United States District Court for the
Northern District of Indiana, Hammond Division.
No. 10‐CR‐88 — Rudy Lozano, Judge.
____________________
ARGUED NOVEMBER 8, 2013 — DECIDED MARCH 28, 2014
____________________
Before POSNER, ROVNER, and WILLIAMS, Circuit Judges.
WILLIAMS, Circuit Judge. Randall Causey was part of a
conspiracy that preyed on novice real estate investors during
the housing bubble in 2005–06, defrauding both borrowers
and lenders alike. A five‐day trial revealed that Causey and
his co‐conspirators would do just about anything to com‐
plete a sale and make a profit, whether it was making prom‐
ises they had no intention of keeping or falsifying receipts,
incomes or other information on loan forms. Causey, who
2 No. 13‐1321
was the only co‐conspirator that did not plead guilty, was
convicted and sentenced for his role in the fraud.
Causey raises five issues—four evidentiary and one sen‐
tencing—on appeal. First, he argues the court improperly
admitted irrelevant and prejudicial photographs taken of the
houses around the time of trial rather than at the time of the
sale. We reject this argument because the photographs gave
the jurors a sense of the size, location and style of the house,
and the jurors were repeatedly reminded when the pictures
were taken. Second, evidence of a fraudulent sale that took
place outside of the conspiracy was properly admitted be‐
cause Causey placed his intent to defraud and knowledge of
the fraudulent scheme at issue by claiming he was an inno‐
cent pawn, and this sale demonstrated his fraudulent
knowledge and intent. Third, a defense witness’s testimony
was properly excluded as undisclosed expert testimony be‐
cause the witness had no personal knowledge of the transac‐
tions at issue and was asked instead about industry norms,
which is only permissible if a witness is qualified as an ex‐
pert. Fourth, Causey argues the district court erred in allow‐
ing an unqualified co‐conspirator to give broad expert testi‐
mony and allowing her to testify as both a fact and expert
witness without a limiting instruction. Since the witness was
never referred to as an expert in front of the jury, there was
extensive cross examination about her credentials and the
basis for her opinion, and her opinion was not significant to
the government’s case, we reject Causey’s arguments. Finally,
a two‐level sentencing enhancement for being an “organizer,
leader, manager, or supervisor of the conspiracy” was
properly assessed because Causey was responsible for re‐
cruiting the buyers into the conspiracy and exercised control
over them during their involvement, which included submit‐
No. 13‐1321 3
ting fraudulent paperwork during closings, and some buyers
were also uncharged criminally responsible parties.
We affirm the district court on each of these issues.
I. BACKGROUND
Sheila Chandler learned how to falsify documents and
close fraudulent loans as a mortgage broker in Gary, Indiana.
She became familiar with the Gary real estate market, in‐
cluding a house’s actual value, and, more importantly for her
purposes, what the house would appraise for after a little
cosmetic work. Sensing an opportunity, she devised a
scheme to defraud both lenders and buyers. As part of that
scheme, she approached Gordon Rainey in 2005 and sug‐
gested he start a construction company to make minimal
changes to the houses and then charge inflated amounts that
would be pocketed at closing. Defendant Randall Causey
was living at Rainey’s house at the time and asked if he
could be involved, and Causey and Rainey subsequently co‐
founded and jointly owned a construction company called
Netlink. With that, the conspiracy was off and running. By
the time the three were arrested, they had executed the
mortgage scheme twenty‐five times between July 2005 and
August 2006 in and around the Gary area.
The scheme worked as follows: First, the group needed
buyers who were real estate novices. Causey used charm
and false promises to recruit five of the seven buyers who
purchased eighteen of the twenty‐five Gary properties listed
in the indictment. With a buyer in place, Chandler would fill
out a mortgage application, falsifying income, down pay‐
ments and any other information to make the buyer a viable
loan candidate. She would then order appraisals, title work,
4 No. 13‐1321
and pre‐approval from the lender. The conspirators would
use “trainee” appraiser Henry Sterk to appraise most of the
houses at a greatly inflated price. The next step was to close
on the house. Chandler gave false information to the lenders
on the HUD‐1 statements, which itemize all charges im‐
posed upon a borrower and seller for the transaction. Once
the amounts on the HUD‐1 were paid, the title company told
Chandler how much remained of the loan. Chandler then
made up false construction invoices for that remainder. After
the closing, the conspirators divvied up the money paid for
the false invoices. Chandler received $2,000 cash per house,
while Causey received somewhere between $3,000 and
$5,000.
Causey was directly or indirectly responsible for recruit‐
ing five of the buyers, but we highlight the experiences of
two purchasers relevant to the appeal, Beatrice Mengich and
Toi Lisa Mark. Beatrice Mengich was brought into the
scheme by her aunt, Lillian Kimutai, who met Causey on a
singles telephone line. After Kimutai bought into Causey’s
sales pitch, but before she realized she had been defrauded,
Kimutai recommended to Mengich that Mengich also invest
in Gary real estate. It was not until Mengich, at twenty‐three
years old, was flown up from North Carolina to Northwest
Indiana for the closing that she learned for the first time that
arrangements had been made for her to buy four houses ra‐
ther than one, as she had previously been told.
Toi Lisa Mark was originally from Gary and had a mutu‐
al friend with Causey named George Hawkins. Hawkins
suggested Mark invest with Causey. Like with other buyers,
Causey told Mark that if she bought houses, he would fix
them up, Netlink would handle all the property manage‐
No. 13‐1321 5
ment issues, and she could rent out the houses. Causey said
he was looking out for her because of their mutual friend,
and promised her at least $7,000 cash back. Mark eventually
bought two houses in May 2006, sight unseen. At the closing,
Mark pointed with concern to the paperwork showing that
she made a “major down payment,” which she knew she
had not, and Causey responded that he had taken care of it.
Once Mark purchased the home, Causey became non‐
responsive.
As the scheme with Chandler and Rainey was winding
down, Causey began recruiting buyers for a different
scheme he was running with one of Chandler’s former
coworkers. One of those buyers was Kristen Dudley who
bought a house in November 2006 when she was eighteen
years old, sight unseen. When Dudley reached out to Causey
later, he stopped taking her calls.
Ultimately, the authorities figured out the scheme and a
grand jury returned a nine‐count indictment against Causey,
Chandler and Rainey, among others. They were charged
with conspiring to commit wire fraud in violation of 18
U.S.C. § 1349, and eight counts of aiding and abetting the
commission of, and committing the offenses of, wire fraud in
violation of 18 U.S.C. § 1343. All except Causey pled guilty.
At trial, the government introduced twenty‐five group
exhibits of pictures of the properties taken between 2009 and
2012. The jury was repeatedly reminded that the photo‐
graphs represented the houses near the time of trial and not
how they appeared at the time of the conspiracy.
The government called Chandler to testify about her role
in the fraud. She had also been disclosed before trial as a po‐
6 No. 13‐1321
tential expert on real estate closings. Chandler testified about
the market conditions in Gary, at one point saying the Gary
housing market was inflated by 400%. Defense counsel did
not object to this estimate, but cross examined Chandler ex‐
tensively about her qualifications to give such an opinion
and regarding the facts on which that opinion was based.
The government also called Mark, Mengich and Dudley
to testify about their purchases. Defense counsel objected to
Dudley’s testimony as improper under Federal Rule of Evi‐
dence 404(b), arguing it was propensity evidence. The dis‐
trict court allowed the testimony, reasoning that it went to
intent, knowledge, and absence of mistake and that the pro‐
bative value was not substantially outweighed by the preju‐
dicial value.
Once the government rested, defense counsel called
Douglas Kvachkoff, the owner of the Indiana Title Network
Company. He began to testify as to the contents of a closing
folder he had with him, but when Kvachkoff admitted that
he “did not personally obtain the funding number” on the
folder and defense counsel began asking about how some‐
one in the industry would get a funding number, the court
barred the responses as improper expert testimony. Defense
counsel proffered that Kvachkoff would have testified that a
funding number is issued by lender once it has reviewed the
settlement statement (e.g., the HUD‐1) and is a necessary
precondition for the disbursement of the loan.
The jury returned a verdict finding Causey guilty on all
counts. At sentencing, the judge adopted the Presentence In‐
vestigative Report prepared by the Probation office, and ap‐
plied a two‐level enhancement under United States Sentenc‐
ing Guidelines (“U.S.S.G.”) § 3B1.1(c) for Causey’s role as an
No. 13‐1321 7
“organizer, leader, manager, or supervisor of the conspira‐
cy.” Causey objected, arguing that he was only a minor par‐
ticipant and instead deserved a two‐level reduction. The dis‐
trict court found that the two‐level enhancement was proper
because Causey was a major player in the crime and sen‐
tenced Causey to 108 months’ of imprisonment to be fol‐
lowed by three years supervised release.
This appeal follows.
II. ANALYSIS
A. Evidentiary Rulings
Causey challenges four evidentiary rulings by the district
court. We review the decision to allow or exclude evidence
for an abuse of discretion. United States v. Garcia‐Avila, 737
F.3d 484, 490 (7th Cir. 2013). “The district court’s evidentiary
rulings are afforded special deference and will be reversed
‘only where no reasonable person could take the view
adopted by the trial court.’” Id. (quoting United States v.
Reese, 666 F.3d 1007, 1015 (7th Cir. 2012)). “Even when an
abuse of discretion occurs, however, reversal only follows if
admission of the evidence affected the defendant’s substan‐
tial rights.” Id. (quoting United States v. Richard, 719 F.3d 746,
758 (7th Cir. 2013)). We ask “whether an average juror would
find the prosecution’s case significantly less persuasive
without the improper evidence.” Id. (quoting United States v.
Miller, 673 F.3d 688, 700 (7th Cir. 2012)).
1. No Abuse of Discretion in Admitting the
Photographs
Causey argues that the district court improperly admit‐
ted irrelevant and overly prejudicial photographs of the
homes because they were taken between three and six years
8 No. 13‐1321
after the conspiracy ended. “To be relevant, evidence need
not conclusively decide the ultimate issue in the case, nor
make the proposition appear more probable, but it must in
some degree advance the inquiry.” Thompson v. City of Chi.,
472 F.3d 444, 453 (7th Cir. 2006) (internal citations omitted);
see Fed. R. Evid. 401. While there is a question as to whether
defense counsel preserved proper objections to all the exhib‐
its—and therefore whether the plain error or abuse of discre‐
tion test applies—it does not affect our analysis because
these photographs were relevant under either test. See United
States v. Cheek, 740 F.3d 440, 447 (7th Cir. 2014) (applying
plain error test when no timely objection). Although the pho‐
tographs were taken after the conspiracy was over, they
were relevant because they presented the jury with the lay‐
out, size, location and composition of the houses, and also
aided various witnesses in explaining their experiences. That
is enough to advance the inquiry.
Causey’s Rule 403 argument is stronger, but fails because
any potential prejudice was mitigated by the parties’ actions.
Causey argues that the photographs were prejudicial be‐
cause they showed the houses in various states of disrepair
and therefore would have given the jury a distorted percep‐
tion of the houses’ worth, which he claims is an important
factor when the government argues the estimates were in‐
flated. Federal Rule of Evidence 403 permits the court to ex‐
clude otherwise relevant evidence “if its probative value is
substantially outweighed by a danger of … unfair prejudice,
confusing the issues, [or] misleading the jury … .” Fed. R.
Evid. 403. Here, there was little, if any, prejudice, and cer‐
tainly not enough to substantially outweigh the pictures’
probative value. The government said in its opening state‐
ment, and the photographer reiterated during direct and
No. 13‐1321 9
cross examination, that the photographs were taken around
the time of the trial; the government introduced a chart,
without objection, detailing which photos were taken and
when; and various witnesses testified to the differences be‐
tween the houses as depicted in the photographs and the
houses when purchased. Any prejudice or danger of mis‐
leading the jury was mitigated by these and numerous other
reminders that the photographs depicted the houses around
the time of trial and not near the time of the sale.
We understand from statements the government made at
oral argument that at least one mitigation effort, the chart,
was necessary because jurors were not allowed to take notes
during trial. While the decision whether to allow jurors to
take notes remains in the discretion of the trial court, see SEC
v. Koenig, 557 F.3d 736, 742 (7th Cir. 2009), we have consist‐
ently encouraged the practice of allowing jurors to take
notes and have acknowledged as much by incorporating the
practice into the Seventh Circuit Pattern Criminal Jury In‐
structions. See 7th Cir. Pattern Criminal Jury Instruction No.
3.18 (2012 ed); see also, e.g., United States v. McGee, 612 F.3d
627, 633–34 (7th Cir. 2010) (stating that taking notes is one
way to avoid jurors’ attention and memories from waning);
Moore v. Knight, 368 F.3d 936, 941 (7th Cir. 2004) (reversing
denial of writ of habeas corpus and noting that jurors’ faulty
memories could have been influenced, in part, by their ina‐
bility to take notes at trial). A judge would not try a bench
trial without the ability to take notes, even though the trial
transcript can be generated post‐trial. It is difficult to under‐
stand why jurors should not have the same opportunity to
take notes.
10 No. 13‐1321
2. No Abuse of Discretion in Admitting Dudley
Transaction
Next, Causey argues that the district court erred by ad‐
mitting evidence of the Dudley transaction, a house sale
which occurred after the conspiracy with Chandler and
Rainey had ended. Causey argues that this transaction was
used to show he had a propensity to commit fraud and
therefore should have been excluded under Federal Rule of
Evidence 404(b).
While evidence of another “bad act” is “not admissible to
prove a person’s character in order to show that on a particu‐
lar occasion the person acted in accordance with the charac‐
ter,” it is admissible to prove motive, opportunity, prepara‐
tion, plan, knowledge, identity, absence of mistake, lack of
accident, or intent. Fed. R. Evid. 404. We have previously
used, and the district court applied, a four‐part test which
states that Rule 404(b) evidence is admissible if: (1) the evi‐
dence is directed towards establishing a matter other than
the defendant’s propensity to commit crimes charged; (2) the
other act is similar and close enough in time to be relevant;
(3) the evidence is sufficient to support a jury finding that
the defendant committed the other act; and (4) the probative
value of the evidence is not substantially outweighed by the
danger of unfair prejudice. See, e.g., United States v. Torres‐
Chavez, ____ F.3d ___, 2014 U.S. App. LEXIS 4229, at *6 (7th
Cir. 2013).
Causey’s defense at trial was that Chandler and Rainey
were the masterminds of the conspiracy and that he was a
pawn who did not know that he was part of a fraudulent
scheme. The government sought to introduce evidence of the
Dudley transaction to show that Causey spearheaded anoth‐
No. 13‐1321 11
er fraudulent scheme without Chandler and Rainey and that
he knew what he was doing when he entered into the mort‐
gage operation with Chandler and Rainey. While the line be‐
tween propensity and intent/knowledge can sometimes be
blurry, the Dudley transaction was directly relevant to
whether Causey intended to defraud the buyers in the
Chandler and Rainey scheme and whether Causey knew of
the scheme’s fraudulent nature. See, e.g., Jannotta v. Subway
Sandwich Shops, Inc., 125 F.3d 503, 517 (7th Cir. 1997) (affirm‐
ing decision to admit evidence of other fraudulent state‐
ments made outside of the alleged fraud).
Moreover, the Dudley transaction was sufficiently similar
to those in the Chandler and Rainey conspiracy to demon‐
strate Causey’s knowledge and fraudulent intent. While
Causey highlights ways in which the Dudley transaction was
different—no falsified financial forms or promises to find
tenants or give cash back—“[w]hen evidence is presented to
show intent, ‘[s]imilarity is relevant only insofar as the acts
are sufficiently alike to support an inference of criminal in‐
tent.’” United States v. Howard, 692 F.3d 697, 705 (7th Cir.
2012) (quoting United States v. Reese, 666 F.3d 1007, 1015 (7th
Cir. 2012)). Both schemes involved Causey’s recruitment of
novice female buyers, false promises, purchases without see‐
ing the houses, and Causey cutting off communication with
the buyers shortly after the closings. Additionally, the Dud‐
ley recruitment began six months after Causey recruited
Mark, which we have previously found is close enough in
time to permit the introduction of 404(b) evidence. See, e.g.,
United States v. Chapman, 692 F.3d 822, 827 (7th Cir. 2012)
(finding two years close enough in time to admit Rule 404(b)
evidence); United States v. Kreiser, 15 F.3d 635, 640 (7th Cir.
1994) (seven years); Howard, 692 F.3d at 705–06 (over one
12 No. 13‐1321
year). Because the characteristics of the schemes were suffi‐
ciently alike, they support an inference of criminal intent.
Next, Dudley and the seller both testified as to Causey’s
role in the fraudulent transaction, which is sufficient evi‐
dence to show he committed the act. Howard, 692 F.3d at 706
(finding witness testimony sufficient).
Finally, an act demonstrating Causey’s intent and
knowledge was especially probative given that the govern‐
ment needed to prove both to prevail on its causes of action.
United States v. Anderson, 580 F.3d 639, 646 (7th Cir. 2009)
(noting 18 U.S.C. § 1343 wire fraud requires proof that de‐
fendant “knowingly participated in a fraudulent scheme
with the specific intent to deceive or cheat the scheme’s vic‐
tims” and conspiracy requires proof that defendant “knew
of the essential nature and scope of the charged conspiracy
and that he intended to participate in it”). Causey himself
made the Dudley transaction even more probative when he
put his intent at issue by claiming he was an innocent pawn
in Chandler and Rainey’s game. United States v. Miller, 673
F.3d 688, 697 (7th Cir. 2012) (“[E]vidence tending to prove
intent becomes more probative [] when the defense actually
works to deny intent”); see also United States v. Stokes, 726
F.3d 880, 896 (7th Cir. 2013). While the probative value was
high, there was minimal prejudice because the testimony
was a brief part of the trial, it did not describe any details
about Causey that had not already been discussed, and the
district court “alleviated any unfair prejudice by giving a
limiting instruction.” United States v. Moore, 531 F.3d 496, 500
(7th Cir. 2008). The admission of the Dudley transaction was
not an abuse of discretion.
No. 13‐1321 13
3. Kvachkoff’s Expert Testimony Was Properly
Barred
Causey argues that the district court erred by barring
Kvachkoff’s testimony as expert opinion testimony that was
not disclosed in Causey’s pretrial Federal Rule of Criminal
Procedure 16 notice. Testimony that is based on “scientific,
technical, or other specialized knowledge” is expert testimo‐
ny, Fed. R. Evid. 702, a written summary of which must be
disclosed pretrial in a criminal case when certain conditions
are met. Fed. R. Crim. P. 16(b) (defendant must provide ex‐
pert summaries when government first discloses its sum‐
maries and requests defendant’s). Causey admits he did not
disclose Kvachkoff’s testimony before trial, but argues he did
not need to because it was not expert testimony.
Causey is correct that Kvachkoff began as an occurrence
witness when he testified as to the contents of a folder sitting
on his lap. But once Kvachoff said he had “no recollection of
this closing” referred to on the folder and defense counsel
began asking about industry practice for procuring closing
numbers, the testimony crossed into expert testimony. See
Fed. R. Evid. 702; United States v. Pansier, 576 F.3d 726, 737–
38 (7th Cir. 2009) (finding testimony about the characteristics
of forged banking forms to be expert testimony). These ques‐
tions required testimony based on “specialized knowledge”
of the industry and therefore necessitated expert opinion.
Because Causey admittedly did not file the required Rule 16
disclosure, the district court was within its discretion to ex‐
clude the expert testimony. See Fed. R. Crim. P. 16(d)(2)(C)
(noting that if a party fails to comply with Rule 16’s disclo‐
sure requirements, the court may “prohibit that party from
introducing the undisclosed evidence”); United States v. Hof‐
14 No. 13‐1321
feckner, 530 F.3d 137, 185 (3d Cir. 2008) (“Courts of appeals
have upheld the exclusion of experts [under Fed. R. Crim. P.
16] when defendants fail to serve timely notice of their intent
to call them as witnesses.”).
4. Admission of Chandler’s Expert Testimony
Was Harmless Error
Next Causey argues the district court erred in allowing
Chandler to testify as an expert. He specifically challenges
her statement that the Gary housing market was inflated by
400%, and he contends that the court erred in letting her tes‐
tify in a dual expert/lay testimony capacity without a limit‐
ing instruction.
The parties dispute the proper standard of review. Cau‐
sey claims we should review for abuse of discretion because
counsel objected to the foundation of Chandler’s opinions,
whereas the government claims we should review for plain
error because no objection was raised about Chandler’s qual‐
ifications as an expert or, specifically, the 400% question and
answer. We need not make this determination because the
argument ultimately fails under either standard since any
error that might have been made in admitting this testimony
was harmless. See Cheek, 740 F.3d at 450 (analyzing for harm‐
less error under plain error review); United States v. York, 572
F.3d 415, 429 (7th Cir. 2009) (analyzing for harmless error
under abuse of discretion review). The test for harmless er‐
ror is “whether, in the mind of the average juror, the prose‐
cution’s case would have been ‘significantly less persuasive’
had the improper evidence been excluded.” York, 572 F.3d at
429 (internal quotations omitted).
No. 13‐1321 15
Causey argues that Chandler was not qualified to give
expert testimony and the 400% comment was beyond the
scope of the government’s pretrial Rule 16 disclosure, which
said Chandler would testify about the process for real estate
closings. Even if it was an error to admit Chandler’s testimo‐
ny and even if such testimony exceeded the scope of the
government’s disclosure, the error was harmless. Chandler’s
expert testimony was of little value to the government’s case.
The government had to prove that the co‐conspirators de‐
frauded purchasers with false promises and defrauded lend‐
ers with false information. Chandler’s occurrence testimony
went to these facts. However, the extent to which the hous‐
ing market in Gary was inflated was beside the point; the
400% estimate was only relevant to explain how profitable
the scheme was because the higher the appraisal, the higher
the loan, and the more wiggle room there was to submit
false invoices. The government did not even mention the
400% figure in its closing.
Moreover, the government’s case was so strong without
Chandler’s expert testimony that we cannot find that the
prosecution’s case would have been “significantly less per‐
suasive” had it been excluded. Id. The government put on
testimony from Causey’s co‐conspirators who described
Causey’s involvement in the scheme, along with witnesses
and purchasers who had been defrauded, and it presented
physical evidence that showed the extent and nature of the
conspiracy.
Additionally, any potential harm by the error was miti‐
gated by defense counsel’s thorough cross examination of
Chandler regarding her qualifications. Defense counsel
pointed out that Chandler was not an appraiser, had done no
16 No. 13‐1321
time span analysis, and had never compared the Gary mar‐
ket to other areas. This reduced the chance that the jury
would attach undue weight to Chandler’s testimony. Admit‐
ting Chandler’s expert testimony, and specifically the 400%
comment, was therefore harmless error.
Finally, Causey’s argument that the district court erred in
allowing Chandler to testify in a dual capacity fails. The dis‐
trict court did not err in its handling of such testimony be‐
cause even if Chandler was an expert, it is unlikely that any
juror would have been confused by such testimony since the
court took “precautions to ensure the jury [understood] its
function in evaluating this evidence.” Id. at 425. The gov‐
ernment “did not explicitly present [Chandler] to the jury as
an expert. Consequently, there was little risk that the jury
might have been confused by [Chandler’s] ‘dual roles’ as
both an expert and lay witness, that [her] status as an expert
might overawe the jury, or that the jury might have mistak‐
enly believed that [her] expert opinions were based on facts
about the defendant not presented at trial.” Cheek, 740 F.3d at
450 (emphasis in original). Other precautionary measures
included the government’s foundational question—“[w]hat
information did you need to make that assessment”—and
defense counsel’s thorough cross examination. York, 572 F.3d
at 425 (finding “government’s establishing the proper foun‐
dation for the witness’s expert opinions and the district
court’s allowing the defense to rigorously cross‐examine the
expert” constituted precautions). While a limiting instruction
is one way to ensure the jury understands how to properly
evaluate the evidence presented, it is not the only way. Here,
such instruction was not necessary because there were ade‐
quate precautionary measures already in place.
No. 13‐1321 17
Even if we assume admitting Chandler’s expert testimo‐
ny was admitted in error, we need not address Causey’s ar‐
gument that he was prejudiced by cumulative trial error be‐
cause “we find that [defendant] did not identify more than
one error, [and so] the cumulative error doctrine does not
apply.” United States v. Moore, 641 F.3d 812, 830 (7th Cir.
2011). We affirm the district court’s evidentiary rulings.
B. No Error in Applying Two‐Level Sentencing En‐
hancement
Lastly, Causey argues that he did not qualify for the two‐
level sentencing enhancement under U.S.S.G. § 3B1.1(c) be‐
cause he was not an “organizer, leader, manager, or supervi‐
sor” of the conspiracy. We disagree.
We review the district court’s application of the Sentenc‐
ing Guidelines de novo and its findings of facts for clear er‐
ror. United States v. Harmon, 721 F.3d 877, 887 (7th Cir. 2013).
“Factual findings are overturned ‘only if our review of all
the evidence leaves us with the definite and firm conviction
that a mistake has been made.’” Id. (quoting United States v.
Bennett, 708 F.3d 879, 888 (7th Cir. 2013)). We may affirm the
application of U.S.S.G. § 3B1.1 on any grounds that are sup‐
ported by the record. United States v. Fox, 548 F.3d 523, 529
(7th Cir. 2008).
Section 3B1.1(c) of the Sentencing Guidelines allows for a
two‐level enhancement “[i]f the defendant was an organizer,
leader, manager, or supervisor in any criminal activity.”
U.S.S.G. § 3B1.1(c). The “defendant must have been the or‐
ganizer, leader, manager, or supervisor of one or more other
participants.” U.S.S.G. § 3B1.1 cmt. n.2. A “participant” is a
“person who is criminally responsible for the commission of
18 No. 13‐1321
the offense, but need not have been convicted.” Id. at cmt.
n.1.
Causey argues the enhancement was improper for three
reasons: (1) he only recruited three of the seven buyers; (2)
the district court improperly considered whether he was
“essential” to the offense; and (3) the enhancement requires
that a defendant exercise control over at least one other par‐
ticipant in the scheme, and Causey did not. First, the district
court did not err in finding that one of the factors that made
Causey an “organizer, leader, manager, or supervisor” was
that he recruited Mark and Mengich, in addition to the three
other buyers he admitting to recruiting. U.S.S.G. § 3B1.1 cmt.
n. 4 (noting “recruitment of accomplices” and “degree of
participation in planning or organizing the offense” are fac‐
tors to consider when determining if someone is a leader or
organizer); United States v. Robertson, 662 F.3d 871, 878 (7th
Cir. 2011) (finding recruitment of charged and uncharged
buyers in fraudulent real estate scheme supported applica‐
tion of the enhancement). While Hawkins re‐introduced
Mark to Causey, Mark made it clear that Causey brought her
into the scheme, told her what the business proposal was,
what role she would play, how she would receive a kickback,
and how Netlink would rehabilitate the house. It was not
clear error to find that Causey recruited Mark into the
scheme. Furthermore, while Lillian introduced Mengich to
the scheme, there are two facts that weigh heavily against
Causey’s argument that he did not recruit Mengich. He in‐
troduced Lillian to the scheme and therefore indirectly
caused Mengich to become part of the conspiracy. More tell‐
ingly, Causey believed he was owed money as a result of the
Mengich purchase, thereby taking credit for the sale. This
demonstrates that Causey himself believed that he brought
No. 13‐1321 19
Mengich to the scheme. It was not plain error to find that
Causey recruited both Mark and Mengich, and therefore to
find him responsible for five of the seven buyers.
Causey next argues that the district court’s finding that
Causey was “essential” to the scheme contravenes our
statement in United States v. Leiskunas that “playing a neces‐
sary role does not definitively prevent that same role from
being minor.” 656 F.3d 732, 739 (7th Cir. 2011). However, the
district court in Leiskunas did not consider the defendant’s
role in the scheme as a whole. Id. Here, the court did consid‐
er the context and gave numerous reasons outside of Cau‐
sey’s “essential” nature that he qualified for the two‐level
enhancement, including Causey’s position as co‐owner of
Netlink, his recruitment of buyers, and the broken promises
he made to the buyers he recruited. Because it was just one
consideration among many, the district court did not err in
noting that Causey was an “essential” player.
Causey’s final argument is that he could not be an “or‐
ganizer, leader, manager, or supervisor” because “Chandler
and Rainey were the true organizers and leaders” and Cau‐
sey did not exercise control over any other criminally re‐
sponsible party. This argument fails because we have repeat‐
edly held that a defendant can exercise control over a “crim‐
inally responsible” party for enhancement purposes even if
that individual was never charged, convicted or indicted for
the “criminally responsible” act. See, e.g., Robertson, 662 F.3d
at 878 (defendants exerted control over “participants who
were not charged” in fraudulent real estate scheme); United
States v. Knox, 624 F.3d 865, 874 (7th Cir. 2010) (finding de‐
fendant exercised control over an individual who was “nev‐
er criminally charged, [but] admitted that she knowingly
20 No. 13‐1321
participated in the scheme”). Mark was such a “criminally
responsible” party. She admitted to fraudulent activities
when she signed a HUD‐1 statement showing she had made
a “major down payment” on the house, which she knew was
not true. That she was also a victim does not prevent her
from being a “criminally responsible” party for sentencing
purposes. United States v. Vivit, 214 F.3d 908, 923 (7th Cir.
2000) (finding enhancement proper because some victims of
a fraudulent scheme were also uncharged criminally respon‐
sible parties who submitted fraudulent paperwork). It is also
clear that Causey exercised control over her. He not only
brought Mark into the scheme and convinced her to buy
houses, but she listened when Causey told her not to worry
about the fraudulent information on the forms she was sign‐
ing because he had taken care of it. Because Causey therefore
had control over Mark and she was a criminally responsible
party, the enhancement was proper.
III. CONCLUSION
For the foregoing reasons, we AFFIRM the judgment of
the district court.
|
01-03-2023
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08-05-2014
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https://www.courtlistener.com/api/rest/v3/opinions/2708972/
|
In the
United States Court of Appeals
For the Seventh Circuit
No. 13-1613
IN RE:
TRANS UNION CORP. PRIVACY LITIGATION.
APPEAL OF:
DAWN A. WHEELAHAN.
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 00 CV 4729 — Robert W. Gettleman, Judge.
ARGUED SEPTEMBER 23, 2013 — DECIDED JANUARY 23, 2014
Before BAUER, KANNE, and HAMILTON, Circuit Judges.
HAMILTON, Circuit Judge. This appeal arises from an
unusual class settlement for an estimated 190 million class
members. Class settlements usually aim to impose a final and
definitive resolution of a dispute, but this one did not. It
offered class members certain benefits, including cash, in
return for giving up only their right to sue the defendant
through class actions or other collective actions. But the
settlement left the door open for the vast majority of class
2 No. 13-1613
members to file individual suits against the defendant, the
credit reporting company Trans Union.
One key detail has led to this appeal. The settlement created
a fund of $75 million for class members’ claims. It also allowed
Trans Union itself to draw money from the fund as reimburse-
ment for the cost of settling individual follow-on suits, termed
“post-settlement claims” or “PSCs.” There have been many
more of these PSCs than anyone expected. Trans Union has
settled them, and the district court has authorized Trans Union
to reimburse itself from the fund. One of the class counsel,
Dawn Wheelahan, has appealed. We affirm the district court’s
actions in all respects.
I. Factual and Procedural Background
A. The Trans Union Litigation and Settlement
Beginning in 1998, a number of consumer class actions were
filed against Trans Union alleging that it had violated the Fair
Credit Reporting Act, 15 U.S.C. § 1681 et seq., by selling lists of
consumer credit reports to target marketers (the “target
marketing” claims) and sharing prohibited consumer informa-
tion with companies that wanted to use the lists to extend
offers of credit or insurance (the “firm offer” claims). In 2000,
the Judicial Panel on Multidistrict Litigation transferred the
cases to Judge Gettleman in the Northern District of Illinois for
consolidated pretrial proceedings. A detailed account of the
litigation’s course over the following decade is not necessary
here. We focus on the settlement and later disputes over the
post-settlement claims or PSCs.
No. 13-1613 3
After preliminary rulings allowed the claims to go forward,
Judge Gettleman asked Magistrate Judge Mason to mediate the
entire dispute. To make a long story short, with his help the
parties eventually reached an agreement that the district court
approved as fair and reasonable. Trans Union agreed to give
all class members “basic” in-kind relief in the form of credit
monitoring services. In addition, class members could either
claim cash from a $75 million settlement fund established by
Trans Union or claim “enhanced” in-kind relief consisting of
additional financial services. Trans Union agreed to provide
roughly $35 million worth of enhanced relief. Five attorneys,
including Wheelahan, were named as settlement class counsel.
While the deal gave significant relief to class members,
court approval under Federal Rule of Civil Procedure 23(e)
remained uncertain because the claims being settled had
potential value far beyond what Trans Union proposed to pay.
See Synfuel Technologies, Inc. v. DHL Express (USA), Inc., 463
F.3d 646, 654 (7th Cir. 2006) (courts evaluating fairness of
settlements generally must compare the value of the relief
offered to the expected value of class claims before approving
the deal); Reynolds v. Beneficial Nat. Bank, 288 F.3d 277, 284–86
(7th Cir. 2002) (same); American Law Institute, Principles of
the Law of Aggregate Litigation § 3.05(a) & cmt. b (advising
the same).
Class counsel sought to represent every consumer whose
credit Trans Union had tracked since 1987. The class was
estimated to include 190 million people, although that figure
surely must have grown in the years since it was cited with
alarm in a related case. Trans Union LLC v. FTC, 536 U.S. 915,
917 (2002) (Kennedy, J., dissenting from denial of certiorari in
4 No. 13-1613
FTC enforcement action against Trans Union). The Fair Credit
Reporting Act authorizes statutory damages of between $100
and $1000 per consumer for willful violations, 15 U.S.C.
§ 1681n, meaning that Trans Union faced at least the theoretical
possibility of $190 billion in liability. Trans Union, 536 U.S. at
917. There are many reasons, starting with Trans Union’s net
worth, why that astronomical number may not have been
meaningful, but the stakes were far greater than the $75 million
in cash that Trans Union was putting on the table.
As part of their effort to persuade the district court to
approve the settlement and to narrow the gap between what
Trans Union was offering and what it might owe, the parties
agreed to an unusual feature that preserved class members’
substantive claims even after settlement. Instead of releasing
outright their claims against Trans Union, class members who
did not ask for cash or enhanced in-kind relief would give up
only their ability to sue as part of either a “Class Action” or an
“Aggregated Action.” Both terms were defined in the
settlement, as explained below. These class members retained
the right to bring their modest individual claims separately.
In exchange for class members agreeing not to proceed
further on a class basis, Trans Union offered online credit
monitoring to everyone in the class. Even those who accepted
this “basic” in-kind relief were free to head straight back to
court to file their claims, so long as they filed individually. We
set aside for a moment whether it would make economic sense
No. 13-1613 5
for them to do so.1 The statute of limitations, at least, would be
no bar. Trans Union agreed to waive that defense for pending
PSCs and those commenced within two years. Class members
who pursued the additional option of claiming either monetary
damages or enhanced in-kind relief, however, had to release
their substantive claims against Trans Union.
Class members were not the only ones authorized to draw
from the $75 million cash fund. The critical feature for
purposes of this appeal is that the settlement authorized
reimbursements from the fund—to Trans Union itself—“equal
to any amounts paid to satisfy settlements or judgments arising
from Post-Settlement Claims, not including any defense costs.”
Thus, Trans Union would bear any costs of defending PSCs but
not the cost of settling them since it could reimburse itself for
settlements from the $75 million it had already paid into the
fund. The settlement put no restrictions on Trans Union’s
1
We recognize that giving up the right to pursue some form of collective
action or other cost-sharing device will often mean that no relief is available.
See American Exp. Co. v. Italian Colors Restaurant, 133 S. Ct. 2304, 2309 (2013)
(“the antitrust laws do not guarantee an affordable procedural path to the
vindication of every claim”); id. at 2316 (Kagan, J., dissenting) (individual
plaintiff’s ability to pursue complex antitrust claim was foreclosed by
contractual prohibitions on class arbitration, joinder/consolidation, cost-
shifting, and other means of spreading expenses); AT&T Mobility LLC v.
Concepcion, 131 S. Ct. 1740, 1760–61 (2011) (Breyer, J., dissenting) (contract
prohibiting class arbitration would likely “lead small-dollar claimants to
abandon their claims” altogether). Class settlements that limit “only” class
members’ procedural options could extinguish their substantive rights as
a practical matter. As we explain below, however, the settlement in this case
did not foreclose outside lawyers from asserting and settling thousands of
modest follow-on claims.
6 No. 13-1613
ability to settle these claims, expressly granting it the “option
to settle any suit or pre-suit demand, or litigate any suit,
involving Post-Settlement Claims.” A committee of
representatives selected in equal parts by Trans Union and
class counsel would monitor PSC reimbursements, although
any disputes would ultimately be settled by the court. Any
money left in the fund after two years would be distributed
among class members who had submitted timely claims for
cash relief. (Approximately 450,000 class members did so.) The
district court granted final approval of the settlement in
September 2008.
B. Post-Settlement Claims
Enterprising lawyers not previously involved in the case
then found an economically viable way to bring individual
post-settlement claims against the $75 million fund. They
solicited class members who had not sought money damages
or enhanced in-kind relief and thus retained their target
marketing and firm offer claims against Trans Union. These
lawyers eventually gathered more than 100,000 PSCs. The
more than 70,000 that were not merely informal demands to
Trans Union were filed as substantially identical but formally
separate individual lawsuits. Most were filed in Nueces
County, Texas—presumably the jurisdiction with the lowest
filing fee the lawyers could find. The remaining PSCs were
filed in other low-fee jurisdictions.
The terms of the class settlement gave Trans Union little
reason to fight these claims. It could settle them without
paying one additional net dollar. The company struck deals
with the post-settlement claimants and then sought to
No. 13-1613 7
reimburse itself from the fund. Class counsel objected. They
argued that the PSCs filed in volume in low-fee jurisdictions
like Nueces County were in fact “Aggregated Actions”
prohibited under the settlement. The theory might have had
some appeal under the term’s ordinary meaning, but the
settlement expressly defined “Aggregated Action.” Its agreed
meaning was “any action in which two or more individual
plaintiffs assert claims relating to the same or similar alleged
conduct.” While the district court conceded that it “never
contemplated such mass actions when it approved the
settlement,” it ruled that the high-volume PSCs were not
covered by the settlement’s definition because each claim was
filed as a separate action on behalf of just one plaintiff. The
claims were therefore not barred by the terms of the settlement.
In re Trans Union Corp. Privacy Litig., 2011 WL 918396 (N.D. Ill.
Mar. 14, 2011).
For their efforts, the PSC attorneys received contingency
fees of between 45 and 50 percent. In mid-2011, class counsel
other than Wheelahan asked the district court for a share of the
PSC attorney fees under the common-fund doctrine. See
generally Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980).
Wheelahan did not join that request because she had already
successfully pursued her own appeal for more fees based on
her role in negotiating the original settlement. See In re Trans
Union Corp. Privacy Litig., 629 F.3d 741 (7th Cir. 2011). Trans
Union responded in the district court by moving for final
approval of its PSC settlements, which would resolve the bulk
of the outstanding claims for around $35 million from the fund.
In separate orders issued in August and September 2011, the
district court denied class counsels’ motion for common-
8 No. 13-1613
benefit fees and then approved the PSC settlements and Trans
Union’s reimbursement for them.
C. The Prior Appeal
Class counsel minus Wheelahan appealed both of those
2011 orders. The appeals were consolidated and Wheelahan
joined in, representing her own view of the class’s interests. We
affirmed both orders in a terse non-precedential order. App.
11-3030 ECF 101.2 With the reimbursement issue seemingly
resolved, Trans Union paid on its provisional PSC settlements
and moved the district court for a final order that would
distribute the remainder of the fund and bring the litigation to
an end. Judge Gettleman issued the order in February 2013.
Wheelahan now appeals from that final order, as well as
several interim orders approving reimbursements for PSCs.
II. Analysis
Wheelahan raises three issues on appeal in an effort to
block reimbursement of Trans Union for settling the PSCs.
First, she challenges the district court’s final distribution order
on the ground that it impermissibly modified the terms of the
original settlement. Second, she asks us to reverse the district
court’s determination that the PSCs were not brought as
prohibited class or aggregate actions. And third, she wants
2
The order said in its entirety: “This appeal, successive to In re Trans Union
Corp. Privacy Litigtion, 629 F.3d 741 (7th Cir. 2011), involves a conflict
between class action lawyers over fees. We AFFIRM. The conflict was
resolved by the district judge in an order based on an extended colloquy
with the lawyers. We find no error in the order, or reason to enlarge on the
judge’s analysis.”
No. 13-1613 9
Trans Union to reimburse the fund for money spent settling
PSCs the company could have defeated at little cost because
the claims were either barred by the statute of limitations or
otherwise meritless.
We review de novo a district court’s interpretation of a
consent decree. Bailey v. Roob, 567 F.3d 930, 940 (7th Cir. 2009);
United States v. Krilich, 303 F.3d 784, 789 (7th Cir. 2002). Our
opinions have sometimes said that we will give an unspecified
amount of deference to a district court’s interpretation when
that court has overseen the litigation for a long time and is
familiar with the details of what may be a complex
arrangement. See, e.g., Foufas v. Dru, 319 F.3d 284, 286 (7th Cir.
2003) (dicta); United States v. Alshabkhoun, 277 F.3d 930, 934 (7th
Cir. 2002). This line of cases seems to have sprung from a
footnote in a Sixth Circuit opinion simply recognizing the
district court’s view of a consent decree as one of a number of
“relevant aids to contract interpretation.” Brown v. Neeb,
644 F.2d 551, 558 n. 12 (6th Cir. 1981), cited in United States v.
Bd. of Educ. of City of Chicago, 717 F.2d 378, 382 (7th Cir. 1983).
When the issue is one of case management, such deference
is appropriate. When the issue involves reliance interests,
however, with parties and especially with non-parties who
may not have time or opportunity to ask a court to clarify an
ambiguous order, it is less clear that we should defer to the
authoring judge’s interpretation. Litigants as well as third
parties must be able to rely on the clear meaning of court
orders setting out their substantive rights and obligations, and
appellate courts should interpret those orders in the same
manner. See Mendez v. Republic Bank, 725 F.3d 651, 663 (7th Cir.
2013) (“It is not reasonable to expect a third-party citation
10 No. 13-1613
respondent to investigate the intended meaning of a court
order beyond the text of the order itself.”). Because we would
affirm the district court under ordinary de novo review,
however, we need not decide the degree of deference here.
A. Challenge to the Final Order
We begin with Wheelahan’s argument that the final
distribution order impermissibly modified the original
settlement by restricting her ability to raise objections on behalf
of the class. As mentioned above, the settlement called for a
committee composed of equal numbers of class counsel and
Trans Union agents to receive quarterly reports concerning
PSCs. Wheelahan is not a member of the committee, but she
retained her status as one of the class counsel. She now objects
to a provision in the final order in which the court recognized
“the possibility that it may be required to resolve future
disputes raised by any member of the Committee chosen by
Settlement Class Counsel.” Wheelahan contrasts this language
with the original settlement, which said the court would
address “Any dispute about the propriety of a
reimbursement,” including presumably one raised by a class
attorney not on the committee. She argues that the new
language will bar her from protecting the class’s interests and
that the district court lacked the authority to make such a
change.
We do not see the conflict. Wheelahan retained her status
as class counsel. Nothing in the final order limited her ability
to fulfill her fiduciary responsibilities to the class, see Fed. R.
Civ. P. 23(g)(4), even though she is not on the committee
overseeing the post-settlement claims. The committee did not
No. 13-1613 11
displace class counsel and was never designated the sole
advocate for the class, which makes sense since half its
members were representatives of Trans Union. As we read the
original settlement and the final order, any class counsel could
bring an issue to the district court on behalf of the class.
B. Challenges to Interim Orders
More substantively, Wheelahan offers two reasons why
Trans Union should not be reimbursed for all or some PSC
settlements. First, she argues that the district court erred in
approving settlements for PSCs that were in substance
prohibited class actions. Her second argument is that Trans
Union is not entitled to reimbursement for settling claims it
could easily have defeated, either because they were clearly
barred by the statute of limitations or meritless on their face.
We discuss these arguments together here because they raise
the same threshold issues of appellate procedure, though
ultimately we find our way to the merits and agree with the
district court. The terms of the settlement allowed Trans Union
to find peace by settling arguably worthless claims from the
$75 million settlement fund.
1. Appellate Jurisdiction
We have jurisdiction to hear Wheelahan’s appeal from the
final distribution order itself under 28 U.S.C. § 1291. Although
the order acknowledged that the court might have to resolve
residual disputes, it effectively concluded the litigation by
distributing the remaining money and is final for purposes of
§ 1291. See Ray Haluch Gravel Co. v. Central Pension Fund, 134 S.
Ct. —, No. 12-992, 2014 WL 127952, at *5 (Jan. 15, 2014); Solis v.
Current Dev. Corp., 557 F.3d 772, 775–76 (7th Cir. 2009). An
12 No. 13-1613
appeal from a final judgment encompasses review of earlier
interlocutory rulings—even those that could have been the
subject of an interlocutory appeal—so long as the issues
decided in those rulings have not become moot. Calma v.
Holder, 663 F.3d 868, 873 (7th Cir. 2011); Habitat Educ. Center v.
U.S. Forest Service, 607 F.3d 453, 456 (7th Cir. 2010); 15A
Wright & Miller, Federal Practice & Procedure § 3911 (2d ed.)
(“The only consequences of forgoing a collateral order appeal
opportunity should be the risk that further proceedings may
moot the issue, and that in some circumstances the standard of
review may be different” on appeal from a final judgment.). So
no jurisdictional obstacles block our examination of the district
court’s orders concerning reimbursements.
2. Effects of the Prior Appeal
The procedural problem for Wheelahan is that the
reimbursements she challenges were already the subject of the
prior appeal before this court decided May 22, 2012. That was
the consolidation of two appeals filed by Wheelahan’s fellow
class counsel. The first challenged the district court’s denial of
class counsels’ motion for more fees in an order dated
August 8, 2011. The second challenged a broader order dated
September 8, 2011 in which the district court rejected all of
class counsels’ objections to the reimbursements and approved
the PSC settlements in all respects.
Class counsel argued on appeal that the district court had
erred in blessing Trans Union’s reimbursements. Their main
contention was that the court and Trans Union both were
obliged to examine the fairness of the PSC settlements, and
particularly the accompanying fee arrangements, before
No. 13-1613 13
paying from the settlement fund. Wheelahan joined the fray as
an appellee, arguing that Trans Union was being reimbursed
improperly for settling meritless PSCs. According to her, an
FTC lawsuit had led Trans Union to stop selling lists of
consumers to target marketers in 2001, yet PSC counsel were
asserting target marketing claims on behalf of some consumers
who had not entered Trans Union’s database until after 2001
and thus could never have been victims of target marketing
practices. She argued that this disqualified Trans Union from
settling any such claims because they were certainly meritless.
Our decision affirming the district court, although brief,
stated conclusively that we found “no error in the [district
court’s] order, or reason to enlarge on the judge’s analysis.”
This language effectively adopted the reasoning of the district
court’s September 8, 2011 order and rejected all the appellants’
arguments. See Burlington Northern R.R. Co. v. City of Superior,
962 F.2d 619, 620 (7th Cir. 1992) (per curiam).
Under these circumstances, Trans Union urges us not to
consider the merits of Wheelahan’s arguments in this appeal.
Trans Union argues that we should apply the law of the case
doctrine or find forfeiture. We see considerable merit in these
procedural arguments, but neither the law of the case nor
forfeiture is a rigid doctrine. Both allow this court some
discretion in application. See Creek v. Village of Westhaven,
144 F.3d 441, 446 (7th Cir. 1998) (law of the case); Humphries v.
CBOCS West, Inc., 474 F.3d 387, 391 (7th Cir. 2007) (forfeiture),
aff’d, 553 U.S. 442 (2008); see also 18B Wright & Miller § 4478.2.
Applying either doctrine here raises some delicate problems
because of potential uncertainty about the scope of our prior
decision and the complications that can arise when some
14 No. 13-1613
parties—in this case, Wheelahan’s co-counsel—pursued an
interlocutory appeal and others claimed to have reserved their
right to appeal after a final judgment. See generally 18B
Wright & Miller § 4478.6 (advising greater clarity in courts’
application of overlapping but distinct doctrines of law of the
case and forfeiture).
In applying either law of the case or forfeiture, the sound
exercise of our discretion would lead us to look beyond the
procedural obstacles to the merits of Wheelahan’s arguments.
We have done so here, and the arguments’ lack of merit is so
clear that we elect to bypass the law of the case and forfeiture
doctrines. We simply affirm the district court on the merits.
3. The Merits of the Remaining Objections
We first address Wheelahan’s argument that most of the
PSCs that Trans Union settled were in truth prohibited class
actions. This argument is based on Bullard v. Burlington
Northern Santa Fe Railway Co., 535 F.3d 759 (7th Cir. 2008), a
case applying the Class Action Fairness Act provision that
gives federal courts jurisdiction over certain types of mass
actions. See 28 U.S.C. § 1332(d)(11). Bullard read the term
“mass action” in a way that might encompass the PSCs here.
But the fact that CAFA treats mass actions as class actions for
purposes of federal jurisdiction does not mean that we should
read the settlement’s unambiguous definition of “Class
Action” to incorporate a separate statutory definition of “mass
action.” For purposes of applying the settlement, the meaning
agreed upon by the parties and approved by the district court
is the one that counts. That definition reaches any action
“brought by one or more individual plaintiffs on behalf of a
No. 13-1613 15
class of similarly situated persons.” As explained above, each
PSC was filed on behalf of one individual plaintiff rather than
on behalf of a class of similarly situated claimants. None fall
within the settlement’s clear definition of “Class Action.”
Wheelahan also asserts that Trans Union should not be
reimbursed for settling PSCs it could have defeated at little
cost, either because they were barred by the statute of
limitations or were meritless. Wheelahan’s claim concerning
time-barred PSCs is based on the provision in the settlement
that says Trans Union will waive the statute of limitations for
PSCs commenced within two years. Wheelahan objects to
reimbursing Trans Union for settling claims asserted outside
the two-year window.
The argument overlooks language in the settlement that
empowered Trans Union “to settle any suit or pre-suit
demand” involving PSCs and to be reimbursed for “any
amounts paid to satisfy” such settlements. Although the
settlement required Trans Union to waive the statute of
limitations in some instances, it did not require Trans Union to
assert the defense in any. Nothing in the settlement would
require Trans Union to assert all available defenses or to
defend each arguably time-barred PSC to the death. The
settlement gave Trans Union complete discretion to fold even
a winning hand. The same reasoning applies to Wheelahan’s
argument that some PSCs included meritless targeting
marketing claims. Trans Union was under no obligation to
spend its own money to defend such claims rather than settle
them. This argument also overlooks the fact that these
claimants may have held valid firm offer claims even if their
target marketing claims were extremely weak. We see no error
16 No. 13-1613
in the district court’s order authorizing reimbursement for
these settlements.
We AFFIRM both the final distribution order and the
challenged interlocutory orders approving the PSC settlements
and Trans Union’s reimbursements for them.
|
01-03-2023
|
08-05-2014
|
https://www.courtlistener.com/api/rest/v3/opinions/2709025/
|
In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 12‐2000
MAURICE COLEMAN,
Petitioner‐Appellant,
v.
MICHAEL LEMKE, Warden,*
Respondent‐Appellee.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 99 C 2635 — Amy J. St. Eve, Judge.
____________________
ARGUED SEPTEMBER 16, 2013 — DECIDED JANUARY 8, 2014
____________________
Before KANNE, ROVNER, and WILLIAMS, Circuit Judges.
WILLIAMS, Circuit Judge. Maurice Coleman’s collateral
challenge of his 1983 murder and armed robbery convictions
is before us a second time. In the first appeal, we reversed
* We substitute Michael Lemke, the current warden of Stateville Correc‐
tional Center, as the Respondent in this action. See Fed. R. App. P.
43(c)(2).
2 No. 12‐2000
the district court’s denial of Coleman’s habeas petition. Cole‐
man v. Hardy (“Coleman I”), 628 F.3d 314, 323 (7th Cir. 2010).
We concluded that the facts underlying Coleman’s petition
could potentially demonstrate his actual innocence of the
state charges and ordered the district court to conduct an ev‐
identiary hearing on the issue. Id. at 322‐23 (citing 28 U.S.C.
§ 2254(e)(2)(B)). On remand, the parties completed discovery
and the district court held a two‐day evidentiary hearing.
After the hearing, the district court examined the entirety of
the evidentiary record and concluded that Coleman had not
satisfied the actual innocence standard. Because Coleman
needed to make this showing in order for the court to excuse
his failure to exhaust state remedies and consider his sub‐
stantive ineffective habeas claim, the court denied his peti‐
tion.
After reviewing the extensive record from Coleman’s pre‐
trial investigation, trial, state collateral review, and federal
habeas proceedings, we agree with the district court that
Coleman has not demonstrated his actual innocence. Much
of the evidence Coleman presented to establish his inno‐
cence was unreliable. Even though Coleman did introduce
evidence that two eyewitnesses were unable to place him at
the scene of the crime, this was not enough to overcome the
testimony of two eyewitnesses to the crime who identified
Coleman as the perpetrator and another witness who impli‐
cated Coleman in the murder. Absent a showing of his actual
innocence, we must refrain from reviewing the substance of
Coleman’s procedurally defaulted habeas claims. We affirm
the denial of his habeas petition.
No. 12‐2000 3
I. BACKGROUND1
A. Offense, Investigation, and Trial
On the evening of August 2, 1981, a drug dealer named
Terrell Jackson (“TJ”) was shot to death in his home on Chi‐
cago’s South Side. TJ’s brother, Arlander Adamson, and his
stepdaughter, Gwen Thomas, were both in the house at the
time of the murder. According to Adamson, two men en‐
tered the house, pointed their guns at Adamson, tied his
hands behind his back, and gagged him. The gunmen forced
Adamson up the stairs to TJ’s bedroom. Adamson was
thrown to the floor, face down. The gunmen repeatedly
asked TJ where he kept his money. When TJ refused to coop‐
erate, the assailants fired multiple bullets into him.
One of the gunmen proceeded into the next room where
Thomas was watching television with her week‐old baby.
Thomas was forced into the other bedroom where she was
tied up and placed on the floor next to Adamson and a dy‐
ing TJ. The gunmen eventually left the house and TJ soon
succumbed to his wounds.
Adamson and Thomas did not know the gunmen and
were only able to provide general descriptions in their initial
statements to police. On the day of the crime, they viewed
mug shot photos of possible suspects but did not identify
TJ’s murderer. When police searched the scene, they found
1 We limit our synopsis to those facts bearing on Coleman’s actual inno‐
cence claim. For a more extensive factual summary that includes infor‐
mation related to Coleman’s ineffective assistance of counsel challenge,
we refer the reader to our previous opinion in this case. Coleman I, 628
F.3d at 315‐318.
4 No. 12‐2000
an unloaded .22 caliber revolver under TJ’s mattress. Ballis‐
tics tests later revealed that none of the bullets recovered at
the scene came from the gun. According to the initial police
report of the incident, the gunmen stole a necklace and ring
with the initials “TJ” written in diamonds.
Two weeks after the murder, police interviewed TJ’s
neighbors, two brothers named David and Tracey Wilkins.
David told officers that he saw two men on TJ’s back porch
on the night of the murder. He stated that the two men re‐
peatedly entered and exited TJ’s house during the hour‐and‐
a‐half period before the shooting. David saw one of the men
run across the street to the laundromat and then return to
the house a few minutes later. David’s brother Tracey was at
that laundromat at the time and told police that he saw a
man (matching Adamson’s and Thomas’s description of one
of the killers) walk in and use the phone forty‐five minutes
before the murder. Tracey saw the same man and another
man running down the street after the shooting occurred.
Both brothers provided descriptions of the two males that
were similar to those given by Adamson and Thomas.
Chicago Police officers also spoke to Roy Wright on two
occasions over the course of their investigation. The first in‐
terview with Wright occurred the day after TJ’s murder on
August 3, 1981. At that meeting, Wright told officers that on
the day of the murder he was trying to coordinate a drug
deal with TJ but the deal never went through. He also stated
that he picked up two men (one of whom was Coleman and
the other whom he did not know) on the night of the murder
and dropped them off in front of TJ’s house. Police inter‐
viewed Wright a second time on August 18, 1981, at which
No. 12‐2000 5
time Wright stated that Coleman had tried to sell him TJ’s
medallion with his initials written in diamonds.
On August 19, 1981 (more than two weeks after the mur‐
der), Adamson, Thomas, and David Wilkins each separately
viewed a police lineup that included Coleman and six other
suspects. Adamson and Thomas both identified Coleman as
one of the men who murdered TJ. David Wilkins did not se‐
lect Coleman or any other suspect as one of the men he saw
hanging around TJ’s house just before the murder. Police in‐
terviewed Coleman that same day. He denied any involve‐
ment in TJ’s murder and stated that he could not remember
exactly where he was or what he was doing at the time of the
crime. He believed that he was either at the home of his
then‐girlfriend or at his own home, alone. Adamson and
Thomas later viewed another lineup of suspects and identi‐
fied Joseph Barnes as the other perpetrator.
Coleman and Barnes were tried together in the Circuit
Court of Cook County. Each man had his own separate
counsel. Adamson and Thomas were the key witnesses tying
Coleman to TJ’s murder. Both identified Coleman as one of
the perpetrators in open court. Adamson testified that he
had a good look at Coleman on the day of the murder—they
stood six inches away from each other at one point. But on
cross‐examination Adamson stated that he looked down and
closed his eyes when Barnes put a gun to his head. Thomas
also identified Coleman as the person who came into her
room and brought her into TJ’s bedroom. Coleman called
two police officers to impeach Thomas’s trial testimony. Al‐
though Thomas testified at trial that one of the assailants
pulled her necklace off, the officers testified that she did not
report this theft on the day of the murder. Coleman also elic‐
6 No. 12‐2000
ited testimony from one of the officers that David Wilkins
had seen two men near TJ’s house around the time of the
murder but had not identified Coleman as one of them.
Both Barnes and Coleman were convicted of murder and
armed robbery. After considering whether to impose the
death penalty, the trial judge elected to sentence Coleman
and Barnes to natural life in prison on their respective mur‐
der convictions.
B. State Postconviction Proceedings
After an unsuccessful direct appeal, Coleman pursued
postconviction relief with the help of his co‐defendant
Barnes. In 1994, Barnes submitted an affidavit stating that
Coleman had nothing to do with TJ’s murder. Barnes stated
that his co‐defendant should have been Wright. According to
Barnes, he, Wright, and another man, Barnett Hall,2 pur‐
chased drugs from TJ that turned out to be of low quality.
Barnes averred that, on the evening of the murder, he and
Wright went to TJ’s house to get their money back. A con‐
frontation ensued during which TJ pulled out a gun. Barnes
and Wright responded by pulling out their guns and shoot‐
ing TJ multiple times in self‐defense.
Coleman also submitted a signed affidavit from Barnes’s
trial attorney, James L. Rhodes.3 According to Rhodes’s
statement, Barnes informed him during the trial that Cole‐
man had nothing to do with the murder. Moreover, Rhodes
2 Hall died shortly after the murder in 1981.
3 Both Rhodes and Coleman’s trial attorney, Geary Kull, currently serve
as judges for the Circuit Court of Cook County.
No. 12‐2000 7
stated that Barnes expressed dismay about Coleman’s con‐
viction. Coleman also relied upon an affidavit from a de‐
fense investigator who interviewed Adamson in 1994. Ac‐
cording to the investigator, Adamson told him that Wright
had been to TJ’s house a couple of times on the day of the
murder. Adamson also reportedly told the investigator that
Thomas and Wright had dated at some point.
In 2000, while Coleman’s postconviction petition was still
pending, Loretta Cade, Coleman’s girlfriend at the time of
the murder and the mother of his child, submitted a signed
statement. Loretta stated that Coleman was with her at the
time of the shooting. In 1999, Loretta’s mother, Evelynn
Cade, signed a statement that she called Loretta and Cole‐
man on the day of the shooting in 1981 at approximately 5:00
or 5:15 p.m. and spoke to Coleman for fifteen minutes.
The Illinois postconviction trial court held a hearing on
Coleman’s petition in which Barnes testified. Ultimately, the
court rejected the petition for postconviction relief and
Coleman was unable to overturn the decision on appeal.
C. Federal Habeas Hearing
Coleman filed a federal habeas petition in 1999. In his pe‐
tition, Coleman asserts three ineffective assistance of trial
counsel claims. Coleman concedes that he procedurally de‐
faulted these claims by neglecting to present them for one
complete round of state‐court review. See Bolton v. Akpore,
730 F.3d 685, 696 (7th Cir. 2013) (“Procedural default general‐
ly precludes a federal court from reaching the merits of a
habeas claim when the claim was not presented to the state
courts and it is clear that the state courts would now find the
claim procedurally barred.”). Coleman argued that the dis‐
8 No. 12‐2000
trict court could still consider his procedurally defaulted
claims because he is actually innocent of the crimes of which
he was convicted. See generally Schlup v. Delo, 513 U.S. 298,
314‐15 (1995). After our decision in Coleman I, we remanded
the case to the district court in order for the court to conduct
an evidentiary hearing on the question of Coleman’s inno‐
cence. So the district court held a two‐day hearing in which
it received testimony and other evidence.
Barnes testified at the hearing. For the most part, his tes‐
timony was consistent with the story he told in his 1994 affi‐
davit. He testified that Wright, not Coleman, had been in‐
volved in TJ’s murder. But Barnes’s story changed in an im‐
portant way. He stated that three people—Barnes, Wright,
and Barnett Hall—entered TJ’s house on the night of the
murder. This was inconsistent with his 1994 affidavit in
which he swore that two people, he and Wright, entered the
house and shot TJ. In the story presented at the hearing,
Barnes, Wright, and Hall entered the house, went upstairs to
TJ’s room, and argued with TJ. Barnes further testified that
he and his co‐assailants exchanged gunfire with TJ and
killed him. Barnes also corroborated the affidavit given by
his trial attorney, Rhodes, regarding Barnes’s statements to
Rhodes during trial. According to Barnes, he told Rhodes at
the time of trial that Coleman had nothing to do with the
murder and also expressed his disappointment that Cole‐
man had been wrongfully convicted. Barnes also testified
that he knew Coleman from the neighborhood but that they
were not friends.
Rhodes also testified at the hearing and repeated his ac‐
count of what Barnes had told him at trial. Rhodes also testi‐
fied about the pre‐trial investigation he conducted with
No. 12‐2000 9
Coleman’s attorney, Geary Kull. Rhodes stated that he and
Kull interviewed David and Tracey Wilkins, the two broth‐
ers who were TJ’s neighbors. According to Rhodes, both men
were able to identify Barnes as one of the two men they saw
on the day of the murder but neither was able to identify
Coleman as one of those men. Kull also testified at the hear‐
ing about the interview with the Wilkins brothers. Like
Rhodes, Kull stated that neither David nor Tracey Wilkins
identified Coleman as one of the individuals they saw on the
day of TJ’s murder.
Coleman also presented testimony from Loretta Cade.
She testified that Coleman was staying with her at her par‐
ents’ home after her parents left for vacation in July 1981.
According to Loretta, she and Coleman never left the house,
not even for one moment, for the two weeks that her parents
were on vacation. In addition, Loretta’s mother, Evelynn,
submitted an affidavit to the district court in which she stat‐
ed that Coleman was with her daughter when she called
home at 5:15 p.m. on August 2, 1981.
The district court also heard testimony from Wright.
Wright testified that he had known Coleman since elemen‐
tary school. A year before the murder, Wright introduced
Coleman to TJ at TJ’s house and soon began brokering drug
deals between the two men. Coleman eventually began buy‐
ing drugs directly from TJ. On the day of the murder, Wright
stated that he stopped by TJ’s house around noon to try to
set up a drug deal but left the house shortly after. Around 3
o’clock that same day, Coleman approached Wright at a gas
station and asked Wright to drive him and Barnes to a loca‐
tion near TJ’s house. During the drive, Wright testified,
Coleman and Barnes exchanged handguns and talked about
10 No. 12‐2000
“tak[ing] care of some business” later that day. After drop‐
ping Barnes and Coleman off, Wright went to TJ’s house to
ask about the potential drug deal. When TJ demurred,
Wright left the house and did not come back the rest of the
day.
Wright learned of TJ’s murder the next day. He testified
that he told police about his visits to TJ’s house but did not
mention his interaction with Barnes and Coleman because he
did not believe it was relevant to the investigation. Two days
after he spoke with investigators, Wright encountered Cole‐
man at a local playground. Coleman approached Wright and
asked him whether he wanted to buy a medallion with the
initials “TJ” inscribed in diamonds. Wright stated that he
recognized the medallion as TJ’s and realized that Coleman
was involved in TJ’s murder. When the police interviewed
Wright a second time, he told them about Coleman’s attempt
to sell him the medallion and about his interaction with
Coleman and Barnes on the day of the murder.4
Wright also testified that he knew Adamson and Thomas
and admitted that he was present at TJ’s house on the day of
the murder. But he denied shooting TJ and having a roman‐
tic relationship with Thomas. For her part, Thomas testified
at the hearing and also denied having a romantic relation‐
ship with Wright.
4 For the most part, Wright’s testimony at the evidentiary hearing was
consistent with the story he told at a preliminary hearing in Coleman’s
case on September 3, 1981. The one exception relates to the discussion
between Coleman and Barnes about “tak[ing] care of some business”
which Wright did not mention during the 1981 hearing.
No. 12‐2000 11
Coleman took the stand on his own behalf at the hearing.
He denied ever visiting TJ’s home and denied participating
in the murder. Although Coleman said he knew Barnes from
the neighborhood, he denied being friends with him or be‐
ing involved in the drug trade with him. Coleman testified
that at the time of the murder he was at Evelynn Cade’s
house with Loretta Cade house‐sitting. On cross‐
examination, Coleman was asked why he was listed on
Barnes’s list of visitors during the latter’s incarceration in
1980. Coleman explained his appearance on the list was a
coincidence—he had driven Barnes’s wife (who was a friend
of Coleman’s sister) to the prison to visit Barnes that day.
After the evidentiary hearing, the district court issued a
written opinion denying Coleman’s habeas petition on the
ground that he had not demonstrated his actual innocence.
The district court conducted an exhaustive review of the ev‐
idence from the pre‐trial investigation, the trial, the state
postconviction proceedings, and the habeas evidentiary
hearing. Based on the entire record, the court found that
Coleman had not established his actual innocence and so
was not entitled to consideration of his procedurally default‐
ed habeas claims. Coleman now appeals.
II. ANALYSIS
Coleman contends that the district court erred in denying
his habeas petition based on its conclusion that he had not
demonstrated his actual innocence. “When reviewing the
district court’s decision on a habeas petition, we review its
factual findings for clear error and its legal conclusions de
novo.” Newman v. Harrington, 726 F.3d 921, 927 (7th Cir.
2013).
12 No. 12‐2000
As a general matter, federal habeas courts are precluded
from considering habeas claims that were procedurally de‐
faulted because they were not presented for one complete
round of state court review. See O’Sullivan v. Boerckel, 526
U.S. 838, 845 (1999). But a petitioner can still obtain review of
his defaulted claims by establishing that a fundamental mis‐
carriage of justice would result from denial of his petition
because he or she is actually innocent. See House v. Bell, 547
U.S. 518, 536‐37 (2006). “[T]enable actual‐innocence gateway
pleas are rare: ‘[A] petitioner does not meet the threshold
requirement unless he persuades the district court that, in
light of the new evidence, no juror, acting reasonably, would
have voted to find him guilty beyond a reasonable doubt.’”
McQuiggin v. Perkins, 133 S. Ct. 1924, 1928 (2013) (quoting
Schlup, 513 U.S. at 329). The new evidence may include “ex‐
culpatory scientific evidence, trustworthy eyewitness ac‐
counts, or critical physical evidence—that was not presented
at trial.’” House, 547 U.S. at 537 (quoting Schlup, 513 U.S. at
324). The actual innocence standard is a demanding one that
“permits review only in the ‘extraordinary’ case.” House, 547
U.S. at 538. When deciding the ultimate question of inno‐
cence, “the habeas court must consider all the evidence, old
and new, incriminating and exculpatory” and then “make a
probabilistic determination about what reasonable, properly
instructed jurors would do.” Id. We review de novo the dis‐
trict court’s conclusion as to whether a reasonable juror
would convict in light of the all the evidence. Gomez v. Jaimet,
350 F.3d 673, 679 (7th Cir. 2003).
In support of his actual innocence claim, Coleman mostly
relies on four categories of new evidence: (1) Barnes’s testi‐
mony that Coleman was not involved in the murder;
(2) testimony from Barnes’s attorney, Rhodes, that Barnes
No. 12‐2000 13
professed Coleman’s innocence at the time of trial; (3) state‐
ments from Coleman’s then‐girlfriend, Loretta Cade, and her
mother Evelynn that Coleman was with Loretta at the time
of the murder; and (4) evidence that TJ’s neighbors, the Wil‐
kins brothers, could not identify Coleman as one of the men
they saw outside TJ’s house on the day of the murder. When
viewed in conjunction with the entirety of the record in this
case, Coleman argues, no reasonable juror would vote to
find him guilty beyond a reasonable doubt.
To determine how a reasonable juror would assess Cole‐
man’s first category of exculpatory evidence, testimony from
his co‐defendant, Barnes, we must account for the district
court’s serious concerns with Barnes’s credibility. Following
an opportunity to observe Barnes directly at the evidentiary
hearing, the district court found that Barnes “was not a cred‐
ible witness and his testimony and affidavits are not relia‐
ble.” We almost never disturb this type of finding by the dis‐
trict court. See generally United States v. Stewart, 536 F.3d 714,
720 (7th Cir. 2008) (“[D]eterminations of witness credibility
can virtually never be clear error.”). Nor do we see reason to
do so here. For one thing, Barnes has a history of fabrication.
For example, the court noted that he previously presented
three conflicting accounts of his involvement in TJ’s murder:
one at his extradition hearing (Barnes was arrested in Balti‐
more, Maryland), another at trial, and a third during the
1995 evidentiary hearing on Coleman’s state postconviction
petition. At his extradition hearing in 1982, Barnes testified
that he was in Baltimore on the day of the murder. At his
1983 trial, Barnes instructed his wife to lie to the court and
testify that Barnes was at home with her in Chicago at the
time of the murder. Then, in 1995, Barnes testified that he
did kill TJ but that Wright, not Coleman, did the deed with
14 No. 12‐2000
him and only in self‐defense after TJ began shooting.
Barnes’s inability to present a consistent account of his
whereabouts on the day of the murder provided a sound ba‐
sis for the district court to discount the newest version of
events that Barnes presented at the evidentiary hearing.
The district court’s disbelief of Barnes’s evidentiary hear‐
ing testimony was also supported by the inconsistencies be‐
tween Barnes’s account and the other evidence in the case. At
the evidentiary hearing, Barnes testified that he, Wright, and
Hall went into TJ’s house and then the group shot TJ after he
pulled a gun on them. But all other accounts of the incident
(from Adamson, Thomas, and the Wilkins brothers) suggest
that two men, not three, went into TJ’s house that evening.
Moreover, Barnes’s testimony that TJ pulled a gun has no ba‐
sis in the physical evidence from the scene. Police found TJ’s
gun under his mattress, unloaded, and none of the bullets
found at the scene matched TJ’s gun.
Barnes’s obvious motive for blaming Wright gave the dis‐
trict court another appropriate ground upon which to base
its credibility determination. At Coleman’s postconviction
hearing in 1995, Barnes testified that he felt embittered to‐
ward Wright for supplying law enforcement with infor‐
mation that culminated in his arrest for TJ’s murder. He
again expressed his animosity toward Wright at the eviden‐
tiary hearing before the district court, stating that he was
“angry” with Wright for giving him up. The evidence of
Barnes’s antagonism toward Wright provides another justifi‐
cation for discounting the reliability of the former’s hearing
testimony. See generally United States v. Abel, 469 U.S. 45, 51
(1984) (“A successful showing of bias on the part of a witness
No. 12‐2000 15
would have a tendency to make the facts to which he testi‐
fied less probable in the eyes of the jury.”).
In addition to his enmity toward Wright, Barnes’s friend‐
ship with Coleman supports the district court’s second
thoughts about Barnes’s testimony. At the hearing before the
district court, Barnes testified that around the time of the
murder he and Coleman were “okay. We was all right, you
know. It’s like you know a next‐door neigh‐—a person that
live on the block.” But on cross‐examination, Barnes admit‐
ted that in 1980, while he was incarcerated on an unrelated
charge, he identified Coleman as one of his friends on his
visitor list. When asked about this during Coleman’s state
postconviction evidentiary hearing, Barnes stated that he
placed Coleman on the visitor list as a matter of conven‐
ience. According to Barnes, Coleman had driven Barnes’s
wife (a friend of Coleman’s sister) to the prison and so
Barnes put Coleman’s name on the visitor list so that he
would not have to wait outside the prison. After having the
opportunity to hear this testimony from Barnes, the post‐
conviction trial court found that Barnes and Coleman were
indeed friends and concluded that their friendship provided
a strong incentive for Barnes to testify in Coleman’s favor.
We see no reason to disagree with the Illinois postconviction
trial court’s finding on this point. See Woolley v. Rednour, 702
F.3d 411, 426‐27 (7th Cir. 2012) (“State court findings … are
presumed correct on federal habeas review, unless the peti‐
tioner rebuts those findings with ‘clear and convincing evi‐
dence.’” (quoting 28 U.S.C. § 2254(e)(1))).
Given the fluctuations in Barnes’s account over the years,
the discrepancies between the most recent edition and the
other evidence in the case, as well as his biases against
16 No. 12‐2000
Wright and in Coleman’s favor, the district court did not
clearly err in deciding not to believe Barnes’s hearing testi‐
mony. Barnes’s credibility deficiency renders his testimony
unhelpful to Coleman’s attempt to show his innocence.
Barnes’s credibility issues also affect our assessment of
how a jury would view the testimony offered by his trial at‐
torney, Rhodes. Coleman maintains that a reasonable juror
would find him innocent based on Rhodes’s testimony (in
hearings before the state postconviction court and the dis‐
trict court) that Barnes told him privately that “Coleman re‐
ally didn’t have anything to do with it” and that Barnes was
dismayed by Coleman’s conviction. We see no reason to
doubt that Rhodes is truthfully reporting Barnes’s statements
to him. But the ambiguity of these remarks gives them little
exculpatory value in isolation. Barnes’s statement could
mean, as Coleman argues, that Coleman did not participate
in the murder. Or perhaps Barnes was merely stating that
Coleman did not have any involvement with the underlying
dispute between Barnes and TJ which culminated in the lat‐
ter’s murder. Or maybe Barnes was remarking on Coleman’s
lack of involvement in the planning of the murder. We can‐
not be sure because Barnes did not provide Rhodes with an
explanation of the meaning of his remarks at the time he
made them. So to assess the effect of Rhodes’s testimony re‐
quires consideration of the credibility of his source. Put an‐
other way, the value of Barnes’s statement depends on the
trustworthiness of the clarification Barnes supplied during
collateral proceedings in state and federal court.
Unfortunately for Coleman, Barnes’s attempts to clarify
the meaning of his statement to Rhodes suffered from signif‐
icant credibility problems. The various accounts of TJ’s mur‐
No. 12‐2000 17
der that Barnes presented were internally inconsistent and
conflicted with the physical evidence and other testimony.
Barnes’s biases in favor of Coleman and against the man
who got him arrested, Wright, provided him with powerful
incentives to fabricate his account. Moreover, the two courts
to observe Barnes testify, the state postconviction trial court
and the district court, both found his statements that Cole‐
man was not involved decidedly lacking in credibility. In
light of the unreliability surrounding Barnes’s subsequent
attempts to explain what he meant when he told Rhodes that
Coleman had “nothing to do with it,” Rhodes’s testimony
about Barnes’s ambiguous pronouncements cannot support
Coleman’s actual innocence claim.
The statements and testimony given by Coleman’s alibi
witnesses, Loretta and Evelynn Cade, also suffer from simi‐
lar credibility issues. Recall that Coleman told police that, at
the time of the murder, he was either at home alone or with
Loretta Cade, his then‐girlfriend. Coleman introduced testi‐
mony from Loretta at the evidentiary hearing in order to
support his alibi. But after observing Loretta’s testimony
during the evidentiary hearing, the district court found she
lacked credibility based on her demeanor on the stand. See
United States v. Noble, 246 F.3d 946, 953 (7th Cir. 2001) (“[W]e
defer to the district court’s determination of witness credibil‐
ity, which can virtually never be clear error.”) (internal quo‐
tation marks omitted). We see no clear error in this finding.
Apart from her demeanor, the substance of Loretta’s testi‐
mony supports the district court’s assessment. For example,
Loretta maintained that she and Coleman never left her par‐
ents’ home for two weeks in early August 1981. Besides its
inherent implausibility, Loretta’s testimony contradicts
Coleman’s own testimony that he left the Cades’ house the
18 No. 12‐2000
day after the murder to spend all day at the park. In addi‐
tion, as the mother of Coleman’s child, Loretta had a proba‐
ble bias in Coleman’s favor. See generally Hayes v. Battaglia,
403 F.3d 935, 938 (7th Cir. 2005) (“To demonstrate innocence
so convincingly that no reasonable jury could convict, a
prisoner must have … powerful evidence: perhaps some
non‐relative who placed him out of the city, with credit card
slips, photographs, and phone logs to back up the claim.”). A
reasonable juror likely would not be persuaded by state‐
ments provided by Loretta’s mother, Evelynn Cade, for the
same reason: Evelynn’s relationship to Coleman suggests she
had a motive to give evidence in Coleman’s favor. Id. In ad‐
dition, we find it hard to believe that Evelynn would be able
to recall, in a sworn statement made almost twenty years af‐
ter the murder, the precise time that she spoke to Coleman.
Neither woman provides much help to Coleman in his actu‐
al innocence challenge.
Coleman’s best hope is the evidence provided by TJ’s
neighbors, David and Tracey Wilkins, who observed indi‐
viduals outside TJ’s house on the day of the murder. Both
Wilkins brothers viewed a lineup of individuals including
Coleman just a few weeks after the murder (Tracey looked at
a photo array while David viewed a photo array and an in‐
person lineup). Neither brother identified Coleman as one of
the individuals seen on the same day as the murder. Nor
does the record reveal any reason for the Wilkins brothers to
lie for Coleman—by all accounts, they did not know each
other. Based on the Wilkins brothers’ disinterested state‐
No. 12‐2000 19
ments to police and Coleman’s attorney, Coleman argues, we
must sustain his actual innocence claim.5
But we cannot assess the Wilkins brothers’ statements in
a vacuum. Rather, to evaluate their impact on a hypothetical
jury, we must consider them in tandem with the testimony of
other witnesses to TJ’s murder and any other evidence link‐
ing Coleman to the crime. See House, 547 U.S. at 538 (“[T]he
habeas court must consider all the evidence, old and new,
incriminating and exculpatory” and “make a probabilistic
determination about what reasonable, properly instructed
jurors would do.”). Using this approach, we must remember
that the Wilkins brothers were not the only witnesses to the
murder: Adamson and Thomas both identified Coleman as
one of TJ’s assailants. Adamson identified Coleman in a live
police line‐up shortly after the murder, at the preliminary
hearing, and at trial. Although Adamson averted his glance
from Coleman when a gun was put to his head, he also testi‐
fied that he stood face‐to‐face with Coleman, about six inch‐
es away from him, when Coleman first entered TJ’s home. In
total, Adamson spent a few minutes with Coleman over the
course of the encounter. Thomas also had an opportunity to
view Coleman from up close during the incident (she testi‐
5 Coleman has never introduced an affidavit or other sworn statement
from either Wilkins brother in support of his claim and did not call them
as witnesses at the evidentiary hearing before the district court. Alt‐
hough their statements to police and to Coleman’s attorney are relevant
to the issue of Coleman’s guilt, their sworn statements or testimony
would be more powerful evidence in Coleman’s favor. See generally Mu‐
rillo v. Frank, 402 F.3d 786, 790 (7th Cir. 2005) (“Live testimony is prefera‐
ble to affidavits and transcribed confessions, because cross‐examination
can probe its weaknesses.”).
20 No. 12‐2000
fied he was less than two feet away at one point). Thomas
also contemporaneously identified Coleman as one of TJ’s
murderers in a photo array containing over two hundred
mug shots as well as in a live police lineup. These statements
possess many of the indicia of reliable eyewitness identifica‐
tions and constituted the chief evidence of Coleman’s guilt at
trial.6 See generally Manson v. Brathwaite, 432 U.S. 98, 114
(1977) (listing “opportunity of the witness to view the crimi‐
nal at the time of the crime, the witness’ degree of attention,
the accuracy of his prior description of the criminal … and
the time between the crime and the confrontation” as factors
to be weighed in determining reliability).
Coleman maintains that evidence adduced at the state
and federal collateral proceedings undermines the credibility
of Adamson’s and Thomas’s identifications. Mostly, Coleman
relies on a statement from an investigator who assisted
Coleman during state postconviction proceedings. Accord‐
ing to the investigator, Adamson told him that Thomas and
Wright had a “‘thing’ for a while.” This relationship, Cole‐
man argues, supplied both Thomas and Adamson with a
motive to implicate Coleman in order to protect Wright. But
6 Coleman argues that a reasonable juror would not find Adamson’s and
Thomas’s identifications particularly strong based on certain aspects of
their trial testimony. In support, he cites: (1) Adamson’s admission that
he looked down from his assailants at one point during the encounter,
and (2) the discrepancy between Thomas’s testimony that one of her at‐
tackers took a necklace from her neck and her failure to report this inci‐
dent to the police at the time of the crime. But both these matters were
elicited on cross‐examination during Coleman’s trial. The fact that the
jury still convicted Coleman despite these complications suggests that
they are less significant than Coleman suggests.
No. 12‐2000 21
Thomas and Wright testified at the evidentiary hearing be‐
fore the district court that they never had a relationship. In
addition, Coleman never established the timing of their pur‐
ported relationship. Even if Coleman had shown that Thom‐
as and Wright were in a relationship at the time of TJ’s mur‐
der, it seems far‐fetched to argue that Adamson had a mo‐
tive to protect the man who murdered his brother just be‐
cause he happened to be dating his brother’s step‐daughter.
Given their reliability and consistency, Adamson’s and
Thomas’s testimony remain convincing evidence of Cole‐
man’s guilt.
We must also consider Wright’s testimony and other evi‐
dence in order to evaluate whether Coleman is actually in‐
nocent of TJ’s murder. At the evidentiary hearing, Wright tes‐
tified that, on the day of the murder, he drove Coleman and
Barnes to a location near TJ’s house and observed that both
men had guns on them. He also testified that Coleman tried
to sell TJ’s medallion to him a couple of days after the mur‐
der. Wright’s hearing testimony is consistent with a state‐
ment in the initial police report noting that the gunmen had
stolen a “TJ” medallion from the scene of the crime. Moreo‐
ver, Wright’s testimony is largely consistent with his state‐
ment to police (given two weeks after the murder) and with
his testimony at Coleman’s preliminary hearing a month lat‐
er. To be sure, Wright’s prior convictions and past drug deal‐
ing weigh against his credibility. See generally Fed. R. Evid.
609. Still, Wright’s hearing testimony is entitled to some
weight because of its consistency with his statements made
contemporaneously with the murder as well as with infor‐
mation gleaned from the scene of the crime.
22 No. 12‐2000
After reviewing the evidence, both old and new, of
Coleman’s guilt, we cannot conclude that “no juror, acting
reasonably, would have voted to find him guilty beyond a
reasonable doubt.” Schlup, 513 U.S. at 329. Testimony and
statements from Barnes, Rhodes, and the Cades all suffer
from profound credibility and reliability problems that most
likely would not persuade a reasonable juror of Coleman’s
innocence. Evidence of the Wilkins brothers’ inability to
place Coleman at TJ’s home on the day of the murder, while
helpful to Coleman’s cause, is not sufficient to overcome the
testimony from Adamson, Thomas, and Wright implicating
him in the crime. See, e.g., Smith v. McKee, 598 F.3d 374, 387‐
88 (7th Cir. 2010) (holding that petitioner who “put forth the
statements of two witnesses not called at trial” did not “suf‐
ficiently counter the state’s two eyewitness identifications”
and concluding that the actual innocence standard was not
satisfied). In short, Coleman’s is not “the extraordinary case”
of actual innocence that warrants excusal of the procedural
default rule. House, 547 U.S. at 536. Because Coleman’s
claims are procedurally defaulted and he has not provided
us with a reason to excuse him from application of the rule,
we affirm the district court’s denial of his habeas petition.
III. CONCLUSION
The judgment of the district court is AFFIRMED.
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Order filed, March 27, 2013.
In The
Fourteenth Court of Appeals
____________
NO. 14-12-00833-CR
NO. 14-12-00834-CR
____________
HIRAM BROWN, Appellant
V.
THE STATE OF TEXAS, Appellee
On Appeal from the Co Crim Ct at Law No 13
Harris County, Texas
Trial Court Cause No. 1806917, 1806918
ORDER
The reporter’s record in this case was due March 12, 2013. See Tex. R.
App. P. 35.1. The court has not received a request to extend time for filing the
record. The record has not been filed with the court. Because the reporter’s record
has not been filed timely, we issue the following order.
We order Deanne Bridwell, the official court reporter, to file the record in
this appeal within 30 days of the date of this order.
PER CURIAM
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809 F.Supp.2d 1291 (2011)
Gabriel RODRIGUEZ, Plaintiff,
v.
JP MORGAN CHASE & CO. formally doing business as Washington Mutual BK FA; MTC Financial Inc.; and Does 1-50, Defendants.
Case No. 11-CV-01188-H (POR).
United States District Court, S.D. California.
August 25, 2011.
*1293 Gabriel Rodriguez, Chula Vista, CA, pro se.
Alyson M. Dudkowski, Alvarado Smith, Santa Ana, CA, Richard J. Reynolds, Turner Reynolds Greco & OHara, Irvine, CA, for Defendant.
ORDER
(1) GRANTING MOTIONS TO DISMISS WITH LEAVE TO AMEND [Doc. Nos. 6, 7]
(2) DENYING WITHOUT PREJUDICE AS MOOT MTC'S MOTION TO STRIKE [Doc. No. 6]
MARILYN L. HUFF, District Judge.
On June 17, 2011, Defendant MTC Financial Inc. ("MTC") filed a motion to dismiss Plaintiff's complaint and a motion to strike portions of Plaintiff's complaint. (Doc. No. 6.) On July 8, 2011, Defendant JP Morgan Chase & Co. ("JP Morgan") also filed a motion to dismiss Plaintiff's complaint. (Doc. No. 7.) On August 10, 2011, the Court submitted the motion on the papers. (Doc. No. 9.) In addition, on August 10, 2011, the Court noted that Plaintiff had not filed an opposition and ordered the opposition to be filed on or before August 22, 2011. (Id.) To date, *1294 Plaintiff has yet to file an opposition. For the reasons below, the Court GRANTS MTC's motion to dismiss the complaint without prejudice, DENIES without prejudice as moot MTC's motion to strike, and GRANTS JP Morgan's motion to dismiss the complaint without prejudice.
Background
On May 10, 2011, Plaintiff filed a complaint in the San Diego Superior Court against Defendants JP Morgan and MTC, alleging causes of action for (1) violations of California Civil Code § 2923.5; (2) fraud; (3) intentional misrepresentation; (4) violations of California Civil Code § 2923.6; (5) violations of California Civil Code § 1572; (6) violations of California's Unfair Competition Law ("UCL"), California Business & Professions Code §§ 17200, et seq.; (7) violations of Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601, et seq. (Doc. No. 1, Compl.) On May 31, 2011, Defendants removed the action to this Court on the basis of federal question and diversity jurisdiction. (Id., Notice of Removal.)
The Court takes judicial notice under Federal Rule of Evidence 201, of the following public documents: (1) Grant Deed recorded on November 26, 2003 with the San Diego County Recorder's Office as instrument number XXXX-XXXXXXX (Doc. No. 7-1, Request for Judicial Notice ("RJN") Ex. 1); (2) Deed of Trust recorded on September 18, 2006 with the San Diego County Recorder's Office as instrument number XXXX-XXXXXXX (Id. Ex. 2); (3) Deed of Trust recorded on October 10, 2006 with the San Diego County Recorder's Office as instrument number XXXX-XXXXXXX (Id. Ex. 3); (4) the Purchase and Assumption Agreement between the FDIC and JP Morgan Chase Bank, N.A. dated September 25, 2008 (Id. Ex. 4); (5) Notice of Default recorded on or about January 14, 2009, with the San Diego County Official Records as instrument number XXXX-XXXXXXX (Id. Ex. 5); (6) Substitution of Trustee recorded on February 27, 2009 with the San Diego County Recorder's Office as instrument number XXXX-XXXXXXX (Id. Ex. 6); (7) Notice of Trustee's Sale recorded on or about April 20, 2009 with the San Diego County Recorder's Office as instrument number XXXX-XXXXXXX (Id. Ex. 7); (8) Loan Modification Agreement, which was recorded on January 26, 2010 with the San Diego County Recorder's Office as instrument number XXXX-XXXXXXX (Id. Ex. 8); (9) Rescission of Notice of Default recorded on January 19, 2010 with the San Diego County Recorder's Office as instrument number XXXX-XXXXXXXX (Id. Ex. 9); (10) Notice of Default recorded on January 3, 2011 with the San Diego County Recorder's Office as instrument number XXXX-XXXXXXX (Id. Ex. 10); and (11) List of licensees that are exempt from the requirements of the California Foreclosure Prevention Act issued by the California Department of Corporations. (Id. Ex. 11.)
On September 11, 2006, Plaintiff borrowed $417,000.00 from Washington Mutual Bank, FA ("Washington Mutual") and executed a Deed of Trust to real property commonly known as 991 Calma Drive, Chula Vista, California as security for the loan. (Compl. ¶¶ 1, 6; Doc. No. 7-1, RJN Ex. 2.) On September 25, 2008, JP Morgan Chase Bank, N.A. acquired certain assets and liabilities of Washington Mutual from the FDIC acting as receiver, including the loan at issue in this action. (Doc. No. 7-1, RJN Ex. 4.) On January 3, 2011, there was a Notice of Default on Plaintiff's property. (Id. Ex. 10.) As of the date of the motions to dismiss, Plaintiff's property has not been sold at a trustee's sale. (Doc. No. 6-1 at 2.)
Discussion
I. Motion to Dismiss Pursuant to Fed. R.Civ.P. 12(b)(6)
A motion to dismiss a complaint under Federal Rule of Civil Procedure 12(b)(6) *1295 tests the legal sufficiency of the claims asserted in the complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir.2001). Rule 8(a)(2) requires that a pleading stating a claim for relief contain "a short and plain statement of the claim showing that the pleader is entitled to relief." The function of this pleading requirement is to "give the defendant fair notice of what the. . . claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the `grounds' of his `entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. A complaint does not "suffice if it tenders `naked assertion[s]' devoid of `further factual enhancement.'" Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955). "Factual allegations must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (citing 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216, pp. 235-36 (3d ed.2004)). "All allegations of material fact are taken as true and construed in the light most favorable to plaintiff. However, conclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss for failure to state a claim." Epstein v. Wash. Energy Co., 83 F.3d 1136, 1140 (9th Cir.1996); see also Twombly, 550 U.S. at 555, 127 S.Ct. 1955.
II. Plaintiff's Complaint
A. Violations of California Civil Code § 2923.5
Plaintiff alleges that Defendants violated California Civil Code section 2923.5 by failing to file a proper declaration, provide Plaintiff with a toll-free number, or comply with the provisions for contacting Plaintiff prior to foreclosure as required by the statute. (Id. ¶¶ 11-24.) MTC argues that Plaintiff's claim is preempted. (Doc. No. 6-1, at 10-11.) The Court agrees with Defendant.
Plaintiff's section 2923.5 claim fails because the asserted portions of section 2923.5 have been preempted by the Home Owners' Loan Act ("HOLA") of 1933, 12 U.S.C. § 1461 et seq. since the loan provider, Washington Mutual Bank, FA, was a federally chartered savings bank at the time the loan was originated. (Doc. No. 7-1, RJN Ex. 2.)[1]See Quintero Family Trust v. OneWest Bank, F.S.B., 2010 WL 2618729, *4-7, 2010 U.S. Dist. LEXIS 63659, at *13-19 (S.D.Cal.2010); see also Odinma v. Aurora Loan Servs., 2010 WL 1199886, at *6-8, 2010 U.S. Dist. LEXIS 28347, at *19-24 (N.D.Cal.2010); Taguinod v. World Sav. Bank, FSB, 755 F.Supp.2d 1064, 1073-74 (C.D.Cal.2010). Accordingly, the Court GRANTS Defendants' motions to dismiss this claim.
*1296 B. Violations of Cal. Civil Code § 2923.6
Plaintiff alleges Defendants violated California Civil Code § 2923.6 by failing to offer her a loan modification. (Doc. No. 1, Compl. ¶¶ 45-54.) Defendants argue that there is no private right of action under § 2923.6. (Doc. No. 6-1, at 14; Doc. No. 7, at 13-14.) Defendants are correct. Section 2923.6 does not require loan servicers to modify loans, and it does not create a private right of action for borrowers. See Monet v. Countrywide Home Loans, 2011 WL 1196461, at *1, 2011 U.S. Dist. LEXIS 37695, at *3 (N.D.Cal.2011) (citing cases); Arreola v. Wells Fargo Home Mortg., 2011 WL 1205249, at *1, 2011 U.S. Dist. LEXIS 33493, at *4 (E.D.Cal.2011) (citing cases); see also Mabry v. Sup. Ct., 185 Cal.App.4th 208, 222, 110 Cal.Rptr.3d 201 (2010) ("[S]ection 2923.6 . . . does not operate substantively. Section 2923.6 merely expresses the hope that lenders will offer loan modifications on certain terms."). Accordingly, the Court GRANTS Defendants' motions to dismiss this claim.
C. Fraud, Intentional Misrepresentation, and Violations of California Civil Code § 1572
Plaintiff alleges that Defendants engaged in fraud, intentional misrepresentation, and violations of California Civil Code section 1572. (Doc. No. 1, Compl. ¶¶ 25-44, 55-61.) Defendants argue that Plaintiff's fraud based claims lack the specificity required by Federal Rule of Civil Procedure 9(b). (Doc. No. 6-1, at 11-14; Doc. No. 7, at 12-13.)
Under California law, "[t]he elements of intentional misrepresentation, or actual fraud, are: `(1) misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity (scienter); (3) intent to defraud (i.e., to induce reliance); (4) justifiable reliance; and (5) resulting damage.'" Anderson v. Deloitte & Touche, 56 Cal.App.4th 1468, 1474, 66 Cal.Rptr.2d 512 (1997). The elements of fraud in inducement of a contract are the same elements as actual fraud. See Cal. Civ.Code § 1572; Zinn v. Ex-Cell-O Corp., 148 Cal.App.2d 56, 68, 306 P.2d 1017 (1957).
Under Federal Rule of Civil Procedure 9, a plaintiff must plead fraud with particularity. "Rule 9(b)'s particularity requirement applies to state-law causes of action." Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103 (9th Cir.2003). "Averments of fraud must be accompanied by `the who, what, when, where, and how' of the misconduct charged." Id. at 1106 (quoting Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir.1997)). "`[A] plaintiff must set forth more than the neutral facts necessary to identify the transaction. The plaintiff must set forth what is false or misleading about a statement, and why it is false.'" Id. at 1106 (quoting Decker v. GlenFed, Inc. (In re GlenFed, Inc. Sec. Litig.), 42 F.3d 1541, 1548 (9th Cir.1994)). "While statements of the time, place and nature of the alleged fraudulent activities are sufficient, mere conclusory allegations of fraud" are not. Moore v. Kayport Package Express, Inc., 885 F.2d 531, 540 (9th Cir.1989).
Plaintiff has presented only conclusory allegations of fraud in his complaint. Plaintiff has failed to allege with specificity any fraudulent statements that were made by Defendants at any time. These allegations fall well short of the pleading requirements of Rule 9(b). Instead, Plaintiff appears to be arguing again that Defendants violated California Civil Code section 2923.5. (Doc. No. 1, Compl. ¶¶ 36-42, 44.) However, as previously explained, Plaintiff's claim for violations of section 2923.5 are preempted. See supra section II.A.
*1297 In addition, Plaintiff appears to be arguing that Defendants did not have standing to enforce the note because they were not the recorded holder in due course, relying on California Commercial Code sections 3-301 and 3-302. (Doc. No. 1, Compl. ¶¶ 27-35, 44.) California Civil Code sections 2924 through 2924k govern non-judicial foreclosures initiated under a deed of trust. "California courts have consistently held that the Civil Code provisions `cover every aspect' of the foreclosure process and are `intended to be exhaustive.'" Gardner v. Am. Home Mortg. Servicing, Inc., 691 F.Supp.2d 1192, 1202 (E.D.Cal. 2010) (quoting I.E. Assocs. v. Safeco Title Ins. Co., 39 Cal.3d 281, 285, 216 Cal.Rptr. 438, 702 P.2d 596 (1985); Moeller v. Lien, 25 Cal.App.4th 822, 834, 30 Cal.Rptr.2d 777 (1994)). "Under Civil Code section 2924, no party needs to physically possess the promissory note." Sicairos v. NDEX West, LLC, 2009 WL 385855, at *3, 2009 U.S. Dist. LEXIS 11223, at *3 (S.D.Cal. 2009) (citing Cal. Civ.Code § 2924(a)(1)); see also Wood v. Aegis Wholesale Corp., 2009 WL 1948844, at *5, 2009 U.S. Dist. LEXIS 57151, at *14 (E.D.Cal.2009) (citing In re Golden Plan of Cal., Inc., 829 F.2d 705, 708-11 (9th Cir.1986) ("When a mortgage is sold, physical transfer of the note is not required.")). In addition, Plaintiff's reliance on the California Commercial Code is unavailing, as it has no application in the instant context of real property financing. See Sicairos, 2009 WL 385855, at *2-3, 2009 U.S. Dist. LEXIS 11223, at *6-7; Spence v. Wells Fargo Bank, N.A., 2011 WL 1668320, at *2, 2011 U.S. Dist. LEXIS 50272, at *5 (E.D.Cal.2011). Accordingly, the Court GRANTS Defendants' motions to dismiss Plaintiff's fraud claims.
D. Violations of the UCL
Plaintiff alleges a cause of action for violation of California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof.Code § 17200, et seq. (Doc. No. 1, Compl. ¶¶ 62-65.) Plaintiff appears to be arguing that Defendants violated the UCL by generating a false and misleading declaration on the Notice of Default. (Id.)
The UCL prohibits "any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising." Cal. Bus. & Prof. Code § 17200. Under the UCL, conduct is deceptive or misleading if it is likely to deceive an ordinary consumer. Williams v. Gerber Products Co., 552 F.3d 934, 938 (9th Cir.2008). In order to assert a claim under the UCL, a person must have "suffered injury in fact and has lost money or property as a result of such unfair competition." Cal. Bus. & Prof.Code §§ 17204 & 17535. Therefore, reliance is required to have standing to sue under the UCL. Federal Rule of Civil Procedure 9(b)'s heightened pleading standards apply to claims for violation of the UCL that are grounded in fraud. Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir.2009).
In support of his UCL claim, Plaintiff alleges that Defendants engaged in a fraudulent course of conduct by generating a false and misleading declaration on the Notice of Default. (Compl. ¶¶ 63.) Accordingly, Plaintiff's UCL claim is grounded in fraud and subject to Rule 9(b)'s heightened pleading standard. See Kearns, 567 F.3d at 1125-26. However, Plaintiff has presented only conclusory allegations of fraud in his complaint. Plaintiff fails to allege with specificity who engaged in the fraud and when and how. In addition, to the extent Plaintiff's claim relies on his claim that Defendants violated California Civil Code section 2923.5, Plaintiff's claim is preempted. See supra section II.A. Also, Plaintiff has not alleged that Defendants' conduct caused him an "injury in fact." See Hall v. Time, Inc., 158 Cal.App.4th 847, 854-55, 70 Cal. Rptr.3d 466 (2008) ("[A] plaintiff suffers an *1298 injury in fact for purposes of standing under the UCL when he or she has: (1) expended money due to the defendant's acts of unfair competition; (2) lost money or property; or (3) been denied money to which he or she has a cognizable claim." (citations omitted)). Accordingly, the Court GRANTS Defendants' motions to dismiss Plaintiff's UCL claim.
E. Violations of TILA
Plaintiff alleges that Defendants violated the federal Truth in Lending Act, 15 U.S.C. §§ 1601, et seq. ("TILA"). (Doc. No. 1, Compl. ¶¶ 66, 69-71.) Plaintiff alleges that the original lender failed to provide her with various disclosures mandated by the Act. (Id.)
TILA seeks to protect credit consumers by mandating "meaningful disclosure of credit terms." 15 U.S.C. § 1601(a). A request for any damages under TILA is subject to a one year statute of limitations, typically running from the date of the occurrence of the violation. 15 U.S.C. § 1640(e). The doctrine of equitable tolling extends the statutory period only where, "despite all due diligence, a plaintiff is unable to obtain vital information bearing on the existence of his claim." Santa Maria v. Pac. Bell, 202 F.3d 1170, 1178 (9th Cir.2000). Equitable tolling "focuses on whether there was excusable delay by the plaintiff," and "does not depend on any wrongful conduct by the defendant to prevent the plaintiff from suing." Id. The Ninth Circuit has held equitable tolling of civil damages claims brought under TILA may be appropriate "in certain circumstances," such as when a borrower might not have had a reasonable opportunity to discover the nondisclosures at the time of loan consummation. King v. State of California, 784 F.2d 910, 915 (9th Cir. 1986). Courts then have discretion to "adjust the limitations period accordingly." Id.
Plaintiff obtained the loan in question on September 18, 2006, but did not file this action until May 17, 2011. (Doc. No. 1, Compl.; Doc. No. 7-1, RJN Ex. 2.) Because Plaintiff brought his TILA damages claim more than one year after the date of the occurrence of the alleged violations, the claim is time-barred. The Court concludes that Plaintiff has not alleged sufficient facts to suggest that his claim is timely or that equitable tolling is appropriate. Plaintiff's complaint fails to show that he was denied any "vital information bearing on the existence" of his TILA claim. See Santa Maria, 202 F.3d at 1178. Additionally, Plaintiff does not offer any allegations indicating that he acted with "due diligence" or with "excusable delay" in bringing this action five years after the loan transaction. Id.; see also O'Connor v. Boeing N. Am., Inc., 311 F.3d 1139, 1157-58 (9th Cir.2002) (a plaintiff relying on delayed discovery or fraudulent concealment to toll limitations period must plead when and how she discovered her claim so the court can judge whether information triggering her filing had been available earlier). A review of the documents Plaintiff received at the time of closing would have revealed any irregularities in the loan. See Hubbard v. Fidelity Federal Bank, 91 F.3d 75, 79 (9th Cir.1996) (stating that the one-year statute of limitations was not tolled as to all initial TILA disclosures because "nothing prevented [plaintiff] from comparing the loan contract, [defendant's] initial disclosures, and TILA's statutory and regulatory requirements"). Therefore, the Court GRANTS Defendants' motions to dismiss Plaintiff's TILA claim.
To the extent Plaintiff seeks rescission under TILA, his claim is also time-barred. The remedy of rescission is available for three years under TILA, 15 U.S.C. § 1635(f), but only where a borrower is willing and able to tender the balance *1299 owed. See Yamamoto v. Bank of N.Y., 329 F.3d 1167, 1173 (9th Cir.2003); LaGrone v. Johnson, 534 F.2d 1360, 1362 (9th Cir.1976). Once the three-year time limit elapses, the borrower's rescission right is "completely extinguishe[d]." Beach v. Ocwen Fed. Bank, 523 U.S. 410, 412, 118 S.Ct. 1408, 140 L.Ed.2d 566 (1998). Additionally, the Ninth Circuit has held that a court should order the borrower to demonstrate an ability to tender as a prerequisite to considering the merits of the borrower's TILA claim. Yamamoto, 329 F.3d at 1171. Plaintiff has not alleged that he tendered, or is willing to tender, the owed amount under the loan. Accordingly, the Court dismisses Plaintiff's TILA rescission claim.
F. MTC's Immunity under Cal. Civil Code §§ 47 & 2924(d)
MTC argues that as a foreclosure trustee, it is entitled to absolute immunity from suit pursuant to California Code of Civil Procedures sections 47 and 2924(d). (Doc. No. 6-1, at 5-8.)
Cal. Civ.Code § 2924(a) states in pertinent part:
Where . . . in any transfer in trust made after July 27, 1917, of a like estate to secure the performance of an obligation, a power of sale is conferred upon the mortgagee, trustee, or any other person, to be exercised after a breach of the obligation for which that mortgage or transfer is a security, the power shall not be exercised . . . until all of the following apply:
(1) The trustee, mortgagee, or beneficiary, or any of their authorized agents shall first file for the record . . . a notice of default. . . .
. . .
(3) . . . [A]fter the lapse of the three months described in paragraph (2), the mortgagee, trustee, or other person authorized to take the sale shall give notice of sale, stating the time and place thereof. . . .
(emphasis added.) Subsection (d) further provides that "[t]he mailing, publication, and delivery of notices as required by this section" and the "[p]erformance of the procedures set forth in this article" are considered "privileged communications pursuant to [Cal. Civ.Code § 47]." The broad privilege conferred by § 47 bars liability for "all torts except malicious prosecution," and is "absolute in nature." Silberg v. Anderson, 50 Cal.3d 205, 212, 215, 266 Cal.Rptr. 638, 786 P.2d 365 (1990).
Pursuant to section 47 and 2924(d), MTC has absolute immunity as a foreclosure trustee for certain actions it took related to the foreclosure process, including its issuance of the Notice of Default. Thus, to the extent Plaintiff is seeking to hold MTC liable for issuing the Notice of Default, MTC is immune from suit.
G. JP Morgan as a Party in this Action
JP Morgan Chase & Co. argues that it should not be a party in this action because it is not the lender of Plaintiff's loan. (Doc. No. 7, at 3-4.) JP Morgan argues that Washington Mutual was the original lender, which was later acquired by JP Morgan Chase Bank, N.A. ("JPMCB"), and that Chase Home Financial LLC ("CHF") was the servicer of Plaintiff's loans. (Id.)
It is the general rule that a parent corporation and its subsidiary will be treated as separate legal entities. Current Inc. v. State Bd. of Equalization, 24 Cal.App.4th 382, 391, 29 Cal.Rptr.2d 407 (1994); Laird v. Capital Cities/ABC, Inc., 68 Cal.App.4th 727, 741, 80 Cal.Rptr.2d 454 (1998). "The alter ego doctrine is one exception to the rule where a parent corporation will be found liable for the actions of its subsidiary when there is (1) such *1300 unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist, and (2) that if the acts are treated as those of the corporation alone, an inequitable result will follow." Pantoja v. Countrywide Home Loans, Inc., 640 F.Supp.2d 1177, 1192 (N.D.Cal.2009) (citing Automotriz Del Golfo De California v. Resnick, 47 Cal.2d 792, 796, 306 P.2d 1 (1957); United States v. Healthwin-Midtown Convalescent, 511 F.Supp. 416, 418 (C.D.Cal.1981)). Another exception to the general rule is when the subsidiary is the agent of the parent, which requires a showing that the parent so controls the subsidiary as to cause the subsidiary to be become merely the instrumentality of the parent. Laird, 68 Cal. App.4th at 741, 80 Cal.Rptr.2d 454.
JP Morgan Chase & Co is the parent company of JPMCB and CHF. (Doc. No. 7, at 3.) JPMCB, not JP Morgan Chase & Co., acquired Plaintiff's loan from Washington Mutual. (Doc. No. 7-1, RJN Ex. 4.) CHF, not JP Morgan Chase & Co., was the servicer on Plaintiff's loan. (Id. Ex. 8.) Plaintiff's complaint contains no allegations explaining why JP Morgan Chase & Co. should not be treated a separate legal entity from its two subsidiaries, JPMCB and CHF. Plaintiff's complaint only contains the incorrect allegation that JP Morgan Chase & Co. was formerly doing business as Washington Mutual. (Compl. ¶ 2.) Accordingly, JP Morgan is not a proper party to this action, and the Court GRANTS its motion to dismiss.
III. Motion to Strike
Along with its motion to dismiss, MTC moves to strike portions of Plaintiff's complaint related to punitive damages. (Doc. No. 6-1 at 17-19.) Because the Court dismisses Plaintiff's complaint in its entirety, the Court DENIES without prejudice as moot MTC's motion to strike.
Conclusion
For the reasons above, the Court GRANTS MTC's motion to dismiss the complaint without prejudice, DENIES without prejudice as moot MTC's motion to strike, and GRANTS JP Morgan's motion to dismiss the complaint without prejudice. The Court grants Plaintiff 30 days from the date of this order to amend or cure the deficiencies-if he can-in an amended complaint.
IT IS SO ORDERED.
NOTES
[1] Although Defendants themselves are not federally chartered savings banks, HOLA still applies because Washington Mutual was a federally chartered savings bank at the time the loan was originated. See DeLeon v. Wells Fargo Bank, N.A., 729 F.Supp.2d 1119, 1126 (N.D.Cal.2010) ("Wells Fargo notes that at the time the loan was made to [Plaintiffs], `World Savings Bank, FSB was a federally chartered savings bank organized and operating under HOLA' and observes correctly that the same preemption analysis would apply to any alleged conduct after November 1, 2009, when the lender merged into a national banking association."); see also Jones-Boyle v. Wash. Mut. Bank, F.A., 2010 WL 2724287, at *6-7, 2010 U.S. Dist. LEXIS 78208, at *18-20 (N.D.Cal.2010) (finding that Washington Mutual was a federally chartered savings bank and that HOLA preemption applied to the plaintiff's claims).
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699 F. Supp. 893 (1988)
Gerald M. POPKIN, Plaintiff,
v.
UNITED STATES of America, Defendant.
Civ. A. No. 1:86-CV-2241-JOF.
United States District Court, N.D. Georgia.
April 21, 1988.
William E. Frantz, Frantz & Sanders, Atlanta, Ga., for plaintiff.
Sharon D. Stokes, Office of U.S. Atty., Atlanta, Ga., Noreen C. Stehlik, U.S. Dept. of Justice, Tax Div., Sp. Litigation Office, Washington, D.C., for defendant.
ORDER
FORRESTER, District Judge.
This suit for refund of income tax penalties is before the court on the plaintiff's motion for partial judgment on the pleadings and on the defendant's motion for partial summary judgment. The following facts are not in dispute. The Internal Revenue Service determined in 1986 that the *894 plaintiff had participated in fifty-five sales of the O.E.C. Energy Corporation tax shelter in 1982 and 1983, in violation of 26 U.S.C. § 6700. The IRS calculated the plaintiff's penalty by assessing $1,000 for every violation, a total of $55,000. The penalty was then administratively abated to $48,249, which the Internal Revenue Service determined was the total amount received in commissions by the plaintiff for the fifty-five sales. The plaintiff paid fifteen percent of the assessment, filed a claim for refund of that amount, and filed this suit for refund after six months had expired without action by the Internal Revenue Service. The plaintiff denies any violation of 26 U.S.C. § 6700. The issue presented by these motions is whether the IRS correctly calculated the plaintiff's penalty by assessing $1,000 for each of the fifty-five sales. As the following discussion will show, the statutory language and legislative history are not particularly clear and the few cases on the issue reach differing results. Having carefully weighed the parties' arguments, the court will defer to the interpretation of the IRS and, like the majority of the courts which have addressed this issue, will uphold the "per sale" method of calculation.
The relevant code section, 26 U.S.C. § 6700(a), provides as follows:
Imposition of penalty. Any person who (1)(A) organizes (or assists in the organization of)
(i) a partnership or other entity,
(ii) any investment plan or arrangement, or
(iii) any other plan or arrangement, or
(B) participates in the sale of any interest in an entity or plan or arrangement referred to in subparagraph (A), and
(2) makes or furnishes (in connection with such organization or sale)
(A) a statement with respect to the allowability of any deduction or credit, the excludability of any income, or the securing of any other tax benefit by reason of holding an interest in the entity or participating in the plan or arrangement which the person knows or has reason to know is false or fraudulent as to any material matter, or
(B) a gross valuation overstatement as to any material matter, shall pay penalty equal to the greater of $1,000 or 10 percent of the gross income derived or to be derived by such person from such activity.[1]
The plaintiff interprets the final portion of the statute to make the $1,000 penalty a minimum penalty to be assessed only when ten percent of the gross income derived by a taxpayer from abusive tax shelter sales is less than $1,000 in a taxable year. The defendant, on the other hand, contends that the $1,000 penalty applies to each violation if the gross income derived from the violation is less than $10,000.
The court is aware of six cases addressing the issue of the proper interpretation of § 6700. Four of the six support the government's position and two support the plaintiff's. In McGrew v. United States, No. 85-0513-CIV-ORL (M.D.Fla. July 31, 1985), the court concluded that the term "activity" refers to each individual sale, where a false or fraudulent statement was made in connection with that sale. In Bean v. United States, 618 F. Supp. 652, 659 (N.D.Ga.1985), Judge Evans of this district noted that the amount assessed by the government should be presumed appropriate and followed McGrew in holding that the "activity" refers to each individual sale. In Waltman v. United States, 618 F. Supp. 718 (M.D.Fla.1985), the court concluded that the plain language of the statute equates "activity" with the sale of an "interest" in a tax shelter rather than the cumulative tax shelter activities. Most recently, in Johnson v. United States, 677 F. Supp. 529, 88-1 USTC ¶ 9149 (E.D.Mich. 1988), the court concluded that the government's interpretation of the statute was reasonable and therefore entitled to deference. On the other side of the debate, in Ostrow v. United States, No. 85-470-CIV-T-17 (M.D.Fla.1985) [available on WEST-LAW, *895 1985 WL5961], the court found no legal authority supporting the government's broad reading of § 6700. Finally, in Spriggs v. United States, 660 F. Supp. 789 (E.D.Va.1987), the court declined to defer to the government's interpretation because it found that interpretation contrary to the statutory language and to congressional intent.
The starting point for this court's analysis of the interpretational issue is the deference due to be given to the IRS's interpretation. As the Supreme Court recently noted, federal courts "accord substantial deference" to an agency's interpretation of a statute "whenever its interpretation provides a reasonable construction of the statutory language and is consistent with legislative intent." Securities Industry Association v. Board of Governors, 468 U.S. 207, 217, 104 S. Ct. 3003, 3009, 82 L. Ed. 2d 158 (1984). The principle of deference applies in full force to IRS interpretations of the tax laws because "Congress has delegated to the Secretary of the Treasury, not to this Court, the task `of administering the tax laws of the Nation.'" Commissioner v. Portland Cement Company of Utah, 450 U.S. 156, 169, 101 S. Ct. 1037, 1045, 67 L. Ed. 2d 140 (1981). The Court in Portland Cement Company continued:
We therefore must defer to Treasury Regulations that "implement the congressional mandate in some reasonable manner." To put the same principle conversely, Treasury Regulations "must be sustained unless unreasonable and plainly inconsistent with the revenue statutes."
Id. (citations omitted). To sustain the IRS interpretation, the court need not find that its construction is the only reasonable one, or even that it is the result the court would have reached had the question arisen in the first instance in judicial proceedings. Udall v. Tallman, 380 U.S. 1, 16, 85 S. Ct. 792, 801, 13 L. Ed. 2d 616 (1965). The administrative interpretation "becomes of controlling weight unless it is plainly erroneous or inconsistent with the [statute]." Id. at 16-17, 85 S.Ct. at 801 (citation omitted). The court should reject administrative constructions of a statute only if they are "inconsistent with the statutory mandate or ... frustrate the policy that Congress sought to implement." Securities Industry Association v. Board of Governors, 468 U.S. 137, 143, 104 S. Ct. 2979, 2982-83, 82 L. Ed. 2d 107 (1984), quoting FEC v. Democratic Senatorial Campaign Committee, 454 U.S. 27, 32, 102 S. Ct. 38, 42, 70 L. Ed. 2d 23 (1981). Finally, the court should "not defer to administrative constructions of statutes which create nonsensical results, particularly where ... the administrative construction `frustrate[s] the policy that Congress sought to implement.'" Curry v. Block, 738 F.2d 1556, 1560 n. 6 (11th Cir.1984).
Spriggs v. United States, 660 F. Supp. 789, which is both the only published case rejecting the IRS interpretation of § 6700 and the most thorough analysis of the issue, concluded that no deference was due the IRS interpretation because that interpretation was contrary to the statutory language and contrary to congressional intent. This court must disagree. The court in Spriggs concluded that the IRS interpretation contravened the statutory language, first, because "[h]ad Congress intended the penalty to apply to each sale, it would have so provided simply by using the words `such organization or sale' instead of `such activity' at the end of subsection (a)." Id. at 791. But, as the defendant points out in this case, the "activity" prohibited by § 6700 is not just an "organization or sale" of an abusive tax shelter but is the combination of "such organization or sale" and making or furnishing a fraudulent statement or gross valuation overstatement as to any material matter. Section 6700(a)(2). In order for the plain language of the statute to be as clear as the court in Spriggs would require, the final portion of § 6700(a) would have to impose a penalty based on "the gross income derived or to be derived by such person from such organization or sale and fraudulent statement or gross valuation overstatement." In other words, the phrase "such activity" could reasonably be interpreted to be shorthand for the combination of acts and statements prohibited by § 6700.
*896 The court in Spriggs found the IRS interpretation contrary to the statutory language, second, because the language of other statutes demonstrates that Congress knows how to speak specifically when it intends to levy a penalty on each act. Id. at 791. However, if "such activity" is used as shorthand as described above, Congress has been specific in § 6700 in levying a penalty on each act. Moreover, the other statutory provisions cited by the court in Spriggs do not proscribe a combination of actions and statements, but only single actions.[2] To turn the argument around, if Congress had intended the penalties of § 6700 to apply to "the salesperson's overall activity of promoting abusive tax shelters," 660 F.Supp. at 791, it could easily have said "overall activity" or "such activities" or even merely omitted the phrase "from such activity." In short, the "per sale" interpretation of the IRS is a reasonable interpretation of, and is not contrary to, the statutory language.
The court in Spriggs also found the IRS interpretation contrary to congressional intent, relying on an excerpt from the House Committee Report in the legislative history of the Tax Reform Act of 1984. That report notes that the penalty for promoting abusive tax shelters was increased from ten percent to twenty percent of the gross income derived from the activity because the Committee believed the ten percent penalty was inadequate "since promoters of tax shelters operate on a large margin." H.R.Rep. No. 432, 98th Cong., 2d Sess. 1, 1357-58, reprinted in 1984 U.S.Code Cong. & Ad.News 697, 1009. The report also states:
The committee did not increase the $1,000 penalty because, as originally enacted, the $1,000 was intended to be a minimum penalty on small promoters who derive little income from the deals they promote.
Id. The court in Spriggs interpreted the committee's language to confine the $1,000 penalty only to "small promoters." 660 F.Supp. at 792. The court found it strange that the $1,000 penalty would apply to a plaintiff who earned a fee of $800 on each sale even if he had earned $800,000 by making $1,000 separate sales. To the court, that hypothetical plaintiff could not be considered a "small promoter" and therefore could not be assessed a $1,000 penalty per sale. Id. n. 4.
This court is not persuaded that the objections raised by the court in Spriggs establish that the per sale interpretation is contrary to congressional intent. First, deriving legislative intent from the words of a subsequent Congress is problematic. "[T]he views of a subsequent Congress form a hazardous basis for inferring the intent of an earlier one." United States v. Price, 361 U.S. 304, 313, 80 S. Ct. 326, 332, 4 L. Ed. 2d 334 (1960). Second, even if the 1984 Act's legislative history is accurate, there is no way to determine from the committee report how Congress defined a "small promoter." It may be that the committee had in mind promoters "who derive little income from" their overall activity, but it is just as reasonable to assume that the committee had in mind promoters "who derive little income from" each sale. It may also be significant that the committee report refers only to promoters of abusive tax shelters and not sellers; because the gross income derived from the activity is normally greater for the promoter than for the salesman, it may be that the $1,000 penalty is often only a minimum penalty for promoters.
One last objection raised by the court in Spriggs to the IRS interpretation is that the penalties should apply evenly to all *897 promoters with the same income; i.e., one who sells ten partnership units for $3,000 each should pay the same penalty as one who sells one partnership unit for $30,000. Under the IRS interpretation, the penalties would be $10,000 and $3,000, respectively. Since the language of the statute will support either approach, the only question is whether the IRS interpretation is unreasonable. This court cannot fathom how it can be considered unreasonable to penalize each violation of § 6700, rather than the overall activity, when the "per sale" interpretation leads to heavier penalties against plaintiffs such as the one in this case and therefore operates as a greater deterrent to the activity proscribed in § 6700.
In summary, for every objection to the IRS interpretation raised by the plaintiff here and discussed by the court in Spriggs there is an intelligent and reasonable rebuttal. The plaintiff therefore fails to show that the IRS interpretation is contrary to the statutory language or to congressional intent, and the court must defer to that interpretation. The plaintiff's motion for partial judgment on the pleadings is DENIED. The defendant's motion for partial summary judgment is GRANTED and the IRS method of calculation of penalties under § 6700 is upheld.
SO ORDERED.
NOTES
[1] Effective July 18, 1984, the Tax Reform Act of 1984, Pub.L. 98-369, § 143(a), 98 Stat. 494, 682, raised the percentage penalty from ten percent to twenty percent of the gross income derived.
[2] "For example, the penalty for failing to file an information return or registration statement applies `in the case of each failure.' 26 USC § 6652(a). The penalty for failing to furnish a statement to an employee, 26 USC § 6674, or to supply a taxpayer identifying number, 26 USC § 6676, or to supply information on a place of residence, 26 USC § 6687, applies to `each such failure.' A person who assists someone in understating his tax liability on any document pays a penalty `with respect to each such document.' 26 USC § 6701(a). In the area of tax shelters, a person who fails to maintain a list of persons who have invested in potentially abusive tax shelters pays a penalty `for each person with respect to whom there is such a failure.' 26 USC § 6708." Spriggs, 660 F.Supp. at 791.
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987 F. Supp. 84 (1997)
Daniel W. SHELLEY, et al., Plaintiffs,
v.
TRAFALGAR HOUSE PUBLIC LIMITED CO., et al., Defendants.
No. 91-1213 (DRD).
United States District Court, D. Puerto Rico.
November 17, 1997.
*85 John F. Malley-Vega, San Juan, PR, for Plaintiffs.
Theodore J. Theophilos, John G. Hutchinson, Elizabeth M. Sacksteder, Sidley & Austin, New York City, Salvador Antonetti-Zegueira, Fiddler, Gonzalez & Rodriguez, San Juan, PR, for Defendants.
OPINION AND ORDER
DOMINGUEZ, District Judge.
Pending before the court is Defendants' Motion to Strike Jury Demand. (Docket No. 190.) The Seventh Amendment guarantees the right to a jury trial on all legal suits, rather than suits in equity or admiralty. Thus, the issue before the court is whether Plaintiffs' culpa in contrahendo suit is legal or equitable in nature.
Defendants argue that the culpa in contrahendo suit is analogous to the promissory estoppel suit an action in equity and, therefore, Plaintiffs do not have a constitutional right to a jury trial. Plaintiffs counter, however, that the suit is one in torts an action in law and, therefore, a jury trial is constitutionally mandated. For the reasons stated below, the court finds that Plaintiffs are entitled to a jury trial.
I. Standard
The Seventh Amendment provides, in relevant part, that "[i]n suits at common law, where the value at controversy shall exceed twenty dollars, the right of trial by jury shall be preserved." U.S. Const. amend. VII. The phrase "common law" found in this clause is used in contradistinction to equity and admiralty. In Re N-500L Cases, 691 F.2d 15, 19 (1st Cir.1982). Hence, the court must determine if a suit is one in law or in equity so as to determine whether a plaintiff has a right to a jury trial.
In making this determination, the court must keep in mind that "[m]aintenance of the jury as a fact-finding body is of such importance and occupies so firm a place in our history and jurisprudence that any seeming curtailment of the right to a jury trial should be scrutinized with the utmost care." Chauffeurs, Teamsters & Helpers Local No. 391 v. Terry, 494 U.S. 558, 565, 110 S. Ct. 1339, 1344, 108 L. Ed. 2d 519 (1990). The United States Supreme Court has further stated: "The federal policy favoring jury trials is of historic and continuing strength." Simler v. Conner, 372 U.S. 221, 222, 83 S. Ct. 609, 610, 9 L. Ed. 2d 691 (1963), quoted in Gallagher v. Wilton Enterprises, Inc., 962 F.2d 120, 122 (1st Cir. 1992).
In diversity cases, such as the one at hand, the substantive claim asserted is always based on state law, "but the characterization of that state-created claim as legal or equitable for purposes of whether a right to jury trial is indicated must be made by recourse to federal law." Gallagher, 962 F.2d at 122. Therefore, the court "must look first to the state law to determine the elements of the cause of action and the propriety of the remedies sought. This done, the court should turn to federal law to `characterize' the action and remedies as either legal or equitable." Id. See Abbott v. Bragdon, 882 F. Supp. 181, 182 (D.Me.1995). See also Tull v. United States, 481 U.S. 412, 417, 107 S. Ct. 1831, 1835, 95 L. Ed. 2d 365 (1987) (holding that the inquiry under the Seventh Amendment focuses on the nature of the action and of the remedy sought).
*86 II. Action: Legal or Equitable
The court must determine first the nature of the culpa in contrahendo action brought pursuant to Puerto Rico law. In the seminal case of Producciones Tommy Muniz v. COPAN, 113 P.R. Dec. 517, 528, 1982 WL 210537 (1982) [hereinafter "COPAN"], the Puerto Rico Supreme Court plainly stated that culpa in contrahendo is a tort claim based on Article 1802 of the Puerto Rico Civil Code, P.R. Laws Ann., tit. 31 § 5141 (1991).[1] In the federal arena sitting in Puerto Rico, the courts have also held that the culpa in contrahendo action "is necessarily based on Art. 1802 of the Civil Code for damages resulting from negligent acts or omissions" and, therefore, falls within the torts ambit. Ocaso v. Puerto Rico Maritime Shipping Authority, 915 F. Supp. 1244, 1258 (D.P.R.1996). See also Prime Retail, L.P. v. Caribbean Airport Facilities, Inc., 975 F. Supp. 148 (D.P.R.1997) (stating that, pursuant to Article 1802 and COPAN, "Puerto Rico law provides for a tort claim of culpa in contrahendo, which binds parties to act in good faith during preliminary negotiations"). Further, an action pursuant to Article 1802 is legal in nature, entitling a plaintiff to a jury trial. See Padilla de Higginbotham v. Worth Publishers, Inc., 820 F. Supp. 48, 50 (D.P.R. 1993).
In characterizing the culpa in contrahendo action under federal law, the court arrives at the same conclusion by comparing the elements of both the culpa in contrahendo and the common law tort actions. The essential elements of a common law tort action are "duty, breach, causation (actual and proximate), and damages." Swift v. United States, 866 F.2d 507 (1st Cir.1989). In parallel, the elements of the culpa in contrahendo are a culpable act or omission, resulting damages and a causal relation between the conduct and the result. COPAN, 113 P.R. Dec. at 529. In addition, a culpable act arises from a breach of the duty to act in good faith during preliminary contract negotiations. Id. at 528. Since the culpa in contrahendo action has the same elements as the common law tort action to wit, duty, breach, causation and damages the court must necessarily characterize the culpa in contrahendo action as a legal action in torts. See In Re N-500L Cases, 691 F.2d 15, 21 (1st Cir.1982) (stating that actions in tort are legal actions, rather than equitable).[2]
III. Remedies: Legal or Equitable
Having determined that the action is legal in nature, the court must now determine the nature of the culpa in contrahendo remedies. The matter is close under this scrutiny.
Remedies sought in Article 1802 tort actions are legal in nature. See Padilla de Higginbotham v. Worth Publishers, Inc., 820 F. Supp. 48, 50 (D.P.R.1993). Yet, Defendants cite Satellite Broadcasting Cable, Inc. v. Telefonica de Espana, S.A., 807 F. Supp. 218 (D.P.R.1992) to argue the contrary. In Satellite, the court stated that, in culpa in contrahendo suits, "liability will extend only to the damages caused, so that the injured party may be restored to the same position it was prior to the commencement of the negotiations." Id. at 221 (citing Pedro F. Estenza-Escobar, La Responsabilidad Precontractual en Derecho Puertorriqueño, 7 Rev. Der. Puertorriqueño 105, 106 (1963)). Defendants argue that, as in Satellite, damages will only place Plaintiffs in the same position in which they were before negotiations, being merely restitutionary remedies and, therefore, equitable in nature. However, Defendants' argument does not necessarily follow from the holding in Satellite. The court explains.
In the case of In re Acushnet River & New Bedford Harbor, 712 F. Supp. 994, 1002 (D.Mass.1989), the court disagreed with the defendant's argument that, because the award of costs incurred by the plaintiff would return the plaintiff to its "status quo ante," such an award should be properly *87 characterized as restitution and, therefore, as equitable in nature. In Acushnet, the court believed that the defendant's position was incorrect, stating the following: "Were the Court to accept the argument that monetary reward is restitutionary simply because it returns a party to pre-injury status, little would be left in the realm of compensatory damages." Id. Although in the case at hand the court did not allow traditional "compensatory damages" as such, the court did authorize damages for lost opportunities not speculative in nature. Shelley v. Trafalgar House Public Ltd. Co., 977 F. Supp. 95 (D.P.R.1997). Moreover, the court in Acushnet added that, even if recovery were restitutionary, the analysis would not end there because "the label `restitution' is not a talisman before which all distinctions between legal and equitable issues must disintegrate." Id. Hence, even if culpa in contrahendo damages are restitutionary, they may not be necessarily or exclusively equitable in nature. In the instant case, the court has authorized the remedy of "damages for lost opportunities ... not speculative in nature," Shelley v. Trafalgar House Public Ltd. Co., 977 F. Supp. 95 (D.P.R.1997), clearly beyond the traditional label of restitution and closer to a tort, warranting a jury determination.
At the very least, the question as to whether these damages are equitable or legal in nature would remain a borderline question, as it did in Acushnet, given that culpa in contrahendo encompasses, not only out-of-pocket expenses, but also damages for lost opportunities that are not speculative in nature. Shelley v. Trafalgar House Public Ltd. Co., 977 F. Supp. 95 (D.P.R.1997). Given this premise, the court would still have to find the remedies legal in nature. In Acushnet, the court was not clear as to the nature of the remedy sought. Thus, the court followed the precedents favoring jury trials in close or doubtful cases and held that the remedies were legal in nature. Acushnet, 712 F.Supp. at 1004 (citing Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 79 S. Ct. 948, 3 L. Ed. 2d 988 (1959) and Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 2302 (1971)).[3] The federal policy is that, "when there is doubt, the balance is tilted in favor of jury trial." 8 James W. Moore, Federal Practice § 38.10[1][d] (3d ed.1997) (citing Prudential Oil Corp. v. Phillips Petroleum Co., 392 F. Supp. 1018, 1022 (S.D.N.Y.1975)). Therefore, considering the existing federal policy that strongly favors jury trials, the court would still hold that the culpa in contrahendo remedies in this case are legal in nature.
IV. Conclusion
For the reasons stated above, the court holds that the culpa in contrahendo suit in this case is legal in nature because both the action and its remedies warrant said conclusion. Therefore, Plaintiffs are entitled to a jury trial; Defendants' Motion To Strike Jury is DENIED.
IT IS SO ORDERED.
NOTES
[1] Having clearly held that the action was one in torts, the court noted the existence of comparable actions in non-civil law jurisdictions, such as promissory estoppel and negligent misrepresentations. COPAN, 113 P.R. Dec. at 530.
[2] See also a previous decision in this same case, where the court determined that Puerto Rico law the law of the forum was applicable in this case because it is, precisely, an action in torts. Shelley v. Trafalgar House Public Limited Co., 918 F. Supp. 515, 522-23 (D.P.R. 1996).
[3] The court stressed the importance of the right to jury trial in our democracy:
It is against this background that a demand for jury trial must be evaluated. It is true that the language of lawyers only invokes images of the dusty distinctions between the law courts and the chancellor sitting in equity, and that the terms "legal" and "equitable" do not even hint at the important purposes the jury system serves. But no matter how tied Seventh Amendment analysis remains to historical practice, one cannot ignore the importance of the civil jury to modern political life.
Acushnet, 712 F.Supp. at 1006.
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372 F. Supp. 1137 (1974)
ROYAL INDEMNITY COMPANY et al.
v.
The CITY OF ERIE.
Civ. A. No. 18-71 Erie.
United States District Court, W. D. Pennsylvania.
March 21, 1974.
*1138 Andrew J. Conner, Erie, Pa., for plaintiffs.
Irving O. Murphy, Erie, Pa., for defendant.
OPINION
KNOX, District Judge.
In the early morning hours of July 23, 1970, a large fire occurred in the City of Erie, a third-class city under the laws of Pennsylvania, in which a large warehouse and commercial building known as the Schultz Building at 212 East Eighteenth Street, Erie, Pennsylvania, was totally destroyed, resulting in claimed losses to building, contents, and for business interruption of approximately $1,400,000. The building was owned by a realty corporation known as 212 Realty Company. The business operated on the premises was owned by the A. F. Schultz Company, a related corporation, which suffered loss of the contents and interruption of its business. The plaintiffs are insurance companies which insured these corporate entities against loss by fire.
The fire had originally started in a building across the street on the south side of East Eighteenth Street known as the Hoffman Building. The blaze there was being actively fought by several municipal fire companies when the fire suddenly "erupted" and with great speed engulfed the whole building and immediately thereafter spread across the street to the Schultz Building on the north side of the street. The evidence indicates that strenuous efforts by the fire department were fruitless in attempting to stop this sudden burst of flame which jumped across the street. As a matter of fact, the fire hoses were burned and several pieces of fire equipment were destroyed or seriously damaged in this blaze and firemen barely escaped with their lives. The Schultz Building was protected by a fully operating sprinkler system and certain windows had been blocked up but nevertheless these precautions were inadequate to prevent the fire from jumping the street and destroying it. The suddenness and overwhelming character of the "eruption" were such as to give rise to a well founded suspicion of arson, but no arsonist has ever been brought to book.
*1139 The Hoffman Building where the fire originally started was a three-story wooden frame building approximately 40 feet in height. It was approximately 75 years old and, prior to 1967, it had been used as a storage facility for surplus food. In July, 1967, a fire occurred and subsequent to this there was an attempted arson. As a result of this, the insurance on the building was cancelled and the building remained uninsured and unoccupied except for certain motor vehicles therein from July, 1967, to July, 1970, when the fire occurred.
The plaintiffs did not contend that the City was negligent in fighting the fire. It was originally claimed that the City was negligent in not furnishing an adequate supply of water and not supplying sufficient water pressure to contain the fire but these grounds for recovery were not pressed at the trial. Instead, plaintiff relied on a claim that the Hoffman Building was unreasonably dangerous to the Schultz Building across the street, that it was a fire hazard and that the City Building Inspector should have required it to be rendered more secure or demolished it in enforcement of the Building Code of the City of Erie. It was further claimed the City should have required the removal of automobiles stored there.
After nine days of trial (including part of a day for jury selection), the jury found for the defendant. The jury further answered certain Special Interrogatories as follows:
1) "Do you find that the Hoffman Building as it existed during the period September 7, 1969 to July 23, 1970 was in an unreasonably dangerous condition as a fire hazard which made it unreasonably dangerous to the Schultz Building? Answer: No."
4) "Do you find that the presence of any automobiles, that is, so called live autos as distinguished from burned hulks, in the Hoffman Building was a proximate cause of the spread of the fire in the Hoffman Building to the Schultz Building? Answer: No."
The negative answers to these questions made it unnecessary for the jury to consider Interrogatory No. 2 as to the City's negligence in not removing the alleged hazard and No. 3 as to contributory negligence or assumption of the risk.
The plaintiffs have now moved for a new trial alleging errors in selection of the jury, errors in limiting their expert testimony, erors in excluding certain building codes and certain errors with respect to the charge of the court. We will deal with the reasons presented in order.
I. Errors with Respect to Selection of the Jury
The case in question was a diversity action, the plaintiffs being foreign corporations without principal places of business within Pennsylvania. Hence, since the events complained of all occurred in Pennsylvania, Pennsylvania law applied to this law suit. Plaintiffs contend that City of Erie taxpayers should have been excluded from the jury.
The Pennsylvania Statute with respect to this matter is found in 17 Purdon's Pa.Stats. 1173 (Act Apr. 16, 1840, P.L. 410) and reads as follows:
"No person shall be excluded from being a witness or juror in any suit, prosecution or proceeding in which any county, city, incorporated district, borough or township, is a party, or is interested, by reason of such person being, or having been an officer, rated citizen or inhabitant in such county, city, district, borough or township, or owning assessed or taxable property, or being liable to the assessment or payment of any tax therein."
In Patterson Water Co. v. Mifflin Borough, 69 Pa.Super. 441 (1918), the citizens of the defendant borough were held to be qualified as jurors in a suit against the borough. To the same effect is Romig v. Allentown, 2 Leh. 277 (1905). See also Comm. v. Delamater, *1140 145 Pa. 210, 22 A. 1098 (1891) where the court said:
"There are cases constantly being tried, of a quasi public nature, in which jurors, as citizens and taxpayers, are interested to some extent. If such interest would disqualify a juror, cases might arise where an offender could not be tried in any county of the commonwealth, as, for instance, an indictment for the embezzlement of state funds."
The cases on this subject are collected in 18 A.L.R. 2d 708 which annotation indicates a split of authority among the various states. Pennsylvania is listed as following the rule of no disqualification. There has been little litigation in Pennsylvania of this question, probably because of the statute above cited. We have found no controlling federal authority. We therefore hold that status as a citizen or taxpayer of a defendant municipality in Pennsylvania does not of itself disqualify a juror in a diversity action in federal court. In addition to this, actual bias or prejudice resulting from such status must be shown to sustain a challenge for cause.
In the instant case, during the selection of the jury, the plaintiffs were permitted extensive voir dire examination to inquire of all prospective jurors who were city residents whether this would prevent them from returning a fair and just verdict based on the evidence and law in this case. These questions were addressed to all citizens of the City of Erie who appeared upon the jury panel. All answered in the negative. Plaintiffs exercised only one peremptory challenge to strike a City of Erie resident.
Under 28 U.S.C. § 1861, it is provided:
"It is the policy of the United States that all litigants in Federal courts entitled to trial by jury shall have the right to grand and petit juries selected at random from a fair cross section of the community in the district or division wherein the court convenes. It is further the policy of the United States that all citizens shall have the opportunity to be considered for service on grand and petit juries in the district courts of the United States, and shall have an obligation to serve as jurors when summoned for that purpose."
In the Western District of Pennsylvania, the court sits at Erie and at Pittsburgh (28 U.S.C. § 118(c)). Cases arising in the counties of Crawford, Elk, Erie, Forest, McKean, Venango or Warren are docketed at Erie and juries for this "division" of the court are chosen from these counties. Thus, in a suit against the City of Erie, jurors come from throughout the area served by the court at Erie and there is something to be said for defendant's argument that it is entitled to a random selection of jurors chosen from throughout these seven counties. It is true that a large portion of the jurors do come from Erie County and from the City of Erie. To follow plaintiff's argument in this case, we would have to rule that in all suits against the City of Erie only those jurors who resided in other counties or in parts of Erie County outside the City of Erie were eligible to serve. The court ruled against plaintiff's position in this respect at the time of selection of the jury and we adhere to that ruling.
Further, plaintiffs claim that the jury was prejudiced and biased against them as the result of comments about the case in the news media. The court had directed the parties and their officers and employees to refrain from commenting on the case before and during the trial. In addition, the jury was instructed not to view, listen to or read anything which might be carried in the news media with respect to the case and was constantly admonished about this during the trial. (pp. 27-30 of proceedings)
The jury was selected on September 5, 1973, a Wednesday, and told to report for trial the following Monday, September 10. This gap between jury selection and commencement of trial was occasioned by absence of leading defense *1141 counsel from the City which absence was excused by the court. Plaintiff claims that sometime during the interval, there was a telecast on one of the local television stations indicating that if the City lost the case, there might be a three mill tax increase.
The exact contents of this telecast have not been spread upon the record in this court and there was no request to question the jury about this during trial. The court was not requested to interrogate the jury as to whether or not the instructions had been violated and whether anything had been heard relative to this matter that would influence any of the jurors in their verdicts. The plaintiffs not having raised this question before or during trial are barred from raising it now as a grounds for new trial.
II. Restriction of Expert Testimony With Respect To Building Codes and Regulations
The plaintiff complains that his expert's testimony with respect to the condition of the Hoffman Building was unduly restricted in forbidding the expert to go into the ramifications of various building codes and standards. To understand this objection, we must recite some historical facts with respect to this case. Suit was started on March 2, 1971, by filing a complaint which was several times amended. The gravamen of the original complaint was that the City was negligent in supplying an insufficient supply of water to fight this fire, insufficient pipes and insufficient water pressure being alleged. The City promptly filed motions to dismiss which were denied by order of this court dated April 23, 1971 (Royal Indemnity Company v. City of Erie, 326 F. Supp. 571 (W. D.Pa.1971). It was there held that the City in the operation of its water bureau was engaged in a commercial or proprietary enterprise and hence was subject to liability under Pennsylvania law notwithstanding the general doctrine of governmental immunity as it then stood.
Following this order, there was considerable further skirmishing with respect to discovery matters and arguments with respect thereto and numerous extensions of time were granted. On May 10, 1973, pretrial was fixed for May 24, 1973. Plaintiff's pretrial narrative had not been filed until April 25, 1973 and defendant's pretrial narrative was filed on May 21, 1973. Following the pretrial conference on May 24, 1973, an order was entered placing the case on the trial list for the June term at Erie commencing May 29, 1973. It was specifically directed that the plaintiffs would be permitted to offer evidence with respect to their later claim that the City was also liable for not taking steps to demolish or secure the Hoffman Warehouse. This matter had not been pleaded in the complaint but was set forth in the pretrial narrative statement and defendant admitted it had known of this contention for some time.
At the pretrial conference held May 24, 1973, the court indicated that it had serious doubts that failure to take steps to remove the Hoffman Warehouse or make it secure was an act of negligence for which the City could be held liable in view of the governmental immunity doctrine in Pennsylvania.
By a strange coincidence on the previous day on May 23, 1973, the Supreme Court of Pennsylvania had handed down its decision in Ayala v. Philadelphia Board of Public Education, 453 Pa. 584, 305 A.2d 877 (1973) abolishing the doctrine of governmental immunity with respect to municipal corporations in Pennsylvania. This, of course, rendered the City liable for any negligence in connection with the Hoffman Warehouse and also, of course, for negligence in fighting the fire provided there was evidence of such negligence and it was the proximate cause of the destruction of the Schultz Building across the street.
Immediately upon the Ayala decision being called to the court's attention, the court directed that in the light of this development, trial of the case be continued *1142 and be placed upon the September trial list at Erie.
Following this, further depositions were taken and on August 22, 1973, the complaint was amended to set forth a cause of action with respect to the Hoffman Building. Leave was given to file the amended complaint provided that the trial should not be delayed. On August 27, 1973, a further pretrial conference was held and on August 28, 1973, plaintiff made another attempt to postpone the trial. On August 30, 1973, plaintiff's motion for continuance was denied. At the pretrial conference, plaintiff had attempted to submit a supplemental pretrial narrative statement with an expert's report attached thereto. This had been served on defendant August 24, 1973. In the order of August 30, 1973, leave was given to file a late expert's report as attached to the motion for continuance with reference to applicable codes and regulations deleted. The court ruled that it was too late to inject such matters into the case but in view of the fact that the City had known about the Hoffman Warehouse claim for many months, it was felt the City would not be prejudiced by injecting this matter into the case and an expert would be allowed to testify thereto, but not to go into details of building codes and regulations.
It was obvious that such matters were very detailed and technical and the court felt it would be unfair at the last moment to inject detailed matters with respect to all these standards as laid down by national organizations and codes, many of which are quite bulky, since the City would not have a chance to study this and have the counter expert's report prepared in time for trial which was then set to commence by drawing a jury on September 5, 1973. As noted in the transcript of the argument on August 30, 1973, plaintiff's counsel stated that what he wanted to refer to was the code known as the NFPA Code with standards for garages, it being claimed that the Hoffman Warehouse qualified as a garage and he claimed that the City of Erie had a copy of it in its fire department office. No reference whatsoever was made to the BOCA Code, the City of Erie Building Code, in the argument.
Under Rule 5 pt. II(C)(2) of this court as applied to all civil actions under Rule 5 pt. II(D), provision is made for the filing of a pretrial narrative statement to have attached thereto copies of all reports including reports of experts upon which the plaintiff will rely at the time of trial. Plaintiff was delinquent in filing this report and only filed the same after delinquency notice was sent out by the Clerk. The purpose of the rule obviously is to give defendant ample opportunity to prepare his own experts and consider the matters which plaintiff's experts will testify to. It is provided in Rule 5 pt. II(G) that failure to disclose in the pretrial narrative statements or at the pretrial conference the substance of the evidence to be offered will result in exclusion of the evidence at trial "the only exceptions will be (1) matters which the Court determines were not discoverable at the time of the pretrial conference, (2) privileged matter, and (3) matter to be used solely for impeaching purposes". The late expert's report which plaintiff attempted to file covered matters which had been known to the plaintiff for many months and in the court's view no reasonable excuse was presented for not producing it prior to August 24, 1973, immediately before the trial date. Rule 5 pt. II(J) of this court provides that after a case has been pretried, no amendment to any pretrial statement or other pleadings shall be presented to the Clerk for filing unless authorized at the pretrial conference. "Otherwise, a party may amend only by leave of the court or by written consent of the adverse party; and leave shall be freely given when justice so requires."
We have been admonished by our Circuit to uphold the integrity of our pretrial procedures. See Shuber v. S. S. Kresge Co., 458 F.2d 1058 (3d Cir. 1972). On the other hand, where manifest justice requires it, in accordance with the Rule 16 of the Federal Rules of *1143 Civil Procedure, we will allow amendments to pretrial narrative statements provided that the other side is not surprised or harmed thereby. It was the feeling of the court that to pick one or two sections out of bulky national building standards or codes and claim that there was some violation thereof to fasten negligence on the City a week before trial was manifestly unfair and, for this reason, we directed that reference to such codes and standards be deleted. If parties can rush in at the last minute, ten days before trial, with new experts' reports setting forth new grounds for fastening negligence upon the defendant, then our pretrial procedures are meaningless and we might just as well forget about them. There is no question these codes and standards are admissible if disclosed to the other side at the proper time.
The plaintiff now claims that it was prevented from relying upon the City's own ordinance known as the BOCA Code. Such is not the case. The provisions of the City of Erie Building Ordinance or BOCA Code were discussed often during the trial. At page 16 of the court's charge, reference was made to this ordinance which derives its initials from Building Officials Conference of America. It is a standard building ordinance which has been recommended for adoption by all municipalities and which the City of Erie had enacted with certain variations which are not material here. On pages 16 through 19 of the court's charge, the court discussed this ordinance in detail insofar as it was applicable to this case to enable the jury to answer Interrogatory No. 1 to determine whether the Hoffman Building was a fire hazard and unreasonably dangerous to the Schultz Building across the street. The jury was told to determine whether the City had used reasonable means in the light of what it knew and the notices given it to have this building either repaired or secured or demolished or whether it was negligent in not following through after a notice to the owner, Mrs. Hoffman, to do something about the hazard. Numerous witnesses were examined and cross examined relative to the provisions of the BOCA Code and it was finally left to the jury whether, under the terms of the ordinance and what was known, this building constituted an unreasonable danger to the Schultz Building across the street. The jury answered "No" thereby finding that the City was not guilty of negligence with respect to this building and there was ample evidence in the record to support this finding by the jury.
The basis for plaintiff's contention that the City did not take proper steps with respect to the Hoffman Building was that it was used as a "public garage" for storage of "live" motor vehicles. The use of the term of "live" motor vehicles in this case derives from the fact that it was admitted that there were certain burned out hulks of motor vehicles located in this building from the time of a previous fire therein. These, of course, would not offer any fire hazard at all. There was also testimony offered by the plaintiff that there were certain so-called "live" vehicles, i. e., vehicles which were not burned out hulks, located in the building. Even assuming that there were "live" vehicles in the building which presumably would have gasoline in their tanks, the jury nevertheless found these had nothing to do with the spread of the fire from the Hoffman Building to the Schultz Building 55 feet across the street. This question as to any causal connection was specifically posed to the jury in Interrogatory No. 4 and the jury answered "No", finding that there was no causal connection between the presence of any "live" vehicles in the building and the spread of the fire to the Schultz Building. There was ample evidence to support the determination of the jury that even if there were "live" vehicles in the Hoffman Building, the fire nevertheless spread because of the placing of some highly incendiary material upon the second floor which caused the fire to erupt with tremendous speed and spread across the street as described by many witnesses. *1144 There was testimony also that the rear door of the Hoffman Building had been broken open. Therefore, even if the court had permitted experts to testify that the building would be considered a public garage if there were "live" vehicles in it, this would add nothing to the picture since the jury determined there was no causal connection.
III. Alleged Errors in the Court's Charge.
The plaintiffs further claim that the court made numerous errors in its charge with respect to the issue of the Hoffman Building being a public garage and with reference to various violations of the BOCA Code.
The BOCA Code as noted was extensively referred to throughout the trial, and certain portions were admitted in evidence. At pages 16 through 19 the court read various specific provisions from this ordinance bearing upon the case in conjunction with Interrogatory No. 1 as to whether the Hoffman Building was unreasonably dangerous to the Schultz Building which Interrogatory the jury answered "No".
The court then instructed the jury, if it determined the Hoffman Building was unreasonably dangerous, the next step was to determine whether the City was negligent in failing to take reasonable means to correct the hazards to secure the building and whether such failure was the proximate cause of the damage to the Schultz Building. In view of the fact that the jury had determined that the Hoffman Building was not unreasonably dangerous to the Schultz Building, and was not in an unreasonably dangerous condition as a fire hazard, the jury never reached the question of the City's negligence in not taking steps to secure or demolish the Hoffman Building. The court had told the jury that many fire code violations could probably be found throughout the City but the City would not necessarily be negligent in not correcting all of them. The only question was whether the violations made the building unreasonably hazardous to surrounding structures and whether such hazards were the proximate cause of damage to the surrounding structures.
The plaintiff also contends that the Hoffman Building was a "public garage" under the BOCA Code as a matter of law and the court should have instructed the jury on this. There was continuing controversy throughout the trial as to what automobiles were in the Hoffman Building immediately prior to the fire. Certain evidence indicated that all there were in the building were burned out hulks from a prior fire which were no longer fire hazards. There was other testimony that there may have been cars there placed by a man named Sharkey who operated a business immediately adjacent to the Hoffman Building and who had a contract for towing cars from the City streets which might or might not have gasoline in their tanks and that he also may have placed several vehicles from his own business in this building, these last two categories being denominated "live" cars. The jury was clearly instructed that if the Building Inspector knew that the Hoffman Building was being used for the storage of live cars and this increased the hazardous condition of the Hoffman Building, then the Building Inspector had a duty to proceed against this improper use.[1] Thus, the *1145 issue as to whether as a fact the Hoffman Building was a public garage was presented to the jury and they answered Interrogatory No. 4 that the presence of any live automobiles as distinguished from burned out hulks was not a proximate cause of the spread of fire to the Schultz Building. There was ample support in the record for the jury's finding.
The plaintiff also complains about the refusal of certain requests for charge.
A. Plaintiff's Requests 11, 12 and 13.
The court had affirmed plaintiff's Request No. 10 with a modification which clearly told the jury that they could find that the Hoffman Warehouse was a storage garage for five or more automobiles making it a public garage under the Erie Building Code, if they found that the automobiles therein were live automobiles as distinguished from burned out hulks. The court then refused Request Nos. 11, 12 and 13 which bore on the same subject. At conference with counsel, prior to the court's charge, the court indicated that it refused No. 11 because it referred to a date of September 26, 1969, ten months before the fire, as to the use of the Hoffman Building for a public garage and the same was true of No. 12. No. 13 involved the use of this structure as a public garage without the installation of fire resistant materials. This last should be considered with plaintiff's Request No. 14 which was affirmed with a modification that if the Building Inspector knew the Hoffman Building was being put to use which increased its hazardous condition, then he had a duty to advise the tenant Sharkey of its improper use and to advise Mrs. Hoffman, the owner, as to the building's unsafe condition. This was affirmed.
In the light of all this, it is believed that the court had amply and fully covered the situation with respect to the Hoffman Warehouse as a public storage garage. In any event, the jury found that the storage of live automobiles in the building was not a proximate cause of the spread of the fire to the Schultz Building.
B. Request No. 17.
Plaintiff also complains of the refusal of Request No. 17. This was refused as having been covered by the general charge in part and partly being in conflict with it. In view of the fact that we left the question of proximate cause to the jury as to whether the Hoffman Building was the cause of the loss to the Schultz Building, this request was properly refused as being argumentative and, in any event, even if the Hoffman Building had been cleared of cars, dead or alive, it appears that the Schultz loss would nevertheless have still occurred.
C. Request Nos. 5, 6, 7 and 8.
Plaintiff also complains about the refusal of requests 5 through 8. No. 5 with respect to the mandatory duty of the Building Inspector to serve a notice that the Hoffman Building was unsafe was refused as repetitious, this matter already having been covered by Request No. 4 which had been affirmed with the modification that the evidence indicated the Building Inspector had complied with these requirements. No. 6 with respect to the duty of the City Solicitor to institute appropriate legal action, was affirmed with the modification that this was a correct statement of the law provided the City Solicitor, in the exercise of his discretion, considered this a proper case under the circumstances. Certainly, the City Solicitor has the discretion as to what suits he is going to institute *1146 in court which he has a reasonable chance of winning, just the same as the United States Attorney cannot be faulted for not bringing criminal prosecutions in every case. Request No. 7 was refused as not being a correct statement of the law. In any event, the jury having found the Hoffman Building was not unreasonably hazardous to the Schultz Building, this point made no difference. No. 8 was also refused since the same was argumentative and with respect to the failure of the Building Inspector's conduct constituting negligence amounted to a directed verdict for the plaintiffs to which they were obviously not entitled.
In sum total, it appears that plaintiffs' real complaint is that the jury found against them on a sharply disputed set of facts and where the facts were admitted, varying inferences could have been drawn. This the court cannot help since both parties were entitled to a jury trial, there was substantial evidence to support the jury's verdict, at least so substantial that the court is unwilling to find that the verdict is against the weight of the evidence. For these reasons, plaintiff's motion for new trial will be denied.
NOTES
[1] "Now, the fourth question, the so-called `Sharkey Theory', brings up another matter which you must consider in connection with this case. There has been much testimony about autos in the Hoffman Building at or immediately before the time of the fire in July, 1970, and also at other times. We have had varying statements from witnesses as to the numbers of cars in there and what their conditions were, whether they were mere burned out hulks from the previous fire or whether they were cars placed there by Sharkey, either in connection with his own business or which he had towed in under his contract with the City. You must first determine whether there were any cars in there beyond the burned out hulks left after the fire of September, 1969. And if you find there were any additional cars in there, I am referring to them for convenience purposes only as "live cars", although it is not clear that they had been towed in, being abandoned on the streets, whether they would have run anyway. If you find that there were live cars in there, other than the burned out hulks, then you would have to consider as to whether they were dangerous, whether the City should have known of their presence and taken steps to order Sharkey and Mrs. Hoffman to remove them, and if they were dangerous because of gasoline in their tanks, or otherwise, and whether, in fact, they did contribute to the spread of the fire from the Hoffman Building to the Schultz Building. If the Building Inspector knew that this warehouse was being used for the storage of so-called live cars, and that this increased the hazardous condition, then he had a duty under the Building Code to advise Sharkey and Hoffman of this improper use and of the building's unsafe condition as a result. You may find, also, the City was negligent in this respect."
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193 P.3d 807 (2008)
STATE of Arizona, Appellee,
v.
Eliezer RODRIGUEZ-ROSARIO, Appellant.
No. 1 CA-CR 07-0438.
Court of Appeals of Arizona, Division 1, Department E.
August 19, 2008.
Terry Goddard, Attorney General by Kent E. Cattani, Chief Counsel, Criminal Appeals Section and Sarah E. Heckathorne, Assistant Attorney General, Phoenix, Attorneys for Appellee.
Kessler Law Offices by Eric W. Kessler, Mesa, Attorneys for Appellant.
OPINION
PORTLEY, Judge.
¶1 Eliezer Rodriguez-Rosario ("Defendant") challenges his convictions because a *808 juror, when polled, told the trial court he did not agree with the verdict. He argues that the court should have granted his motion for a mistrial. For the following reasons, we vacate the convictions and sentences and remand for a new trial.
FACTS AND PROCEDURAL BACKGROUND[1]
¶2 An undercover Phoenix police officer purchased twenty dollars of methamphetamine from Defendant in September 2006. Defendant was indicted and tried for possession of narcotic drugs for sale, a class two felony; possession of dangerous drugs for sale, a class two felony; and sale of dangerous drugs, a class two felony.[2] The jury found him guilty on all three counts.
¶3 After the verdict was read, the court polled the jury. When the deputy court clerk came to juror number 6, the following exchange took place:
COURT CLERK: Juror number 6, are these your true verdicts?
JUROR NO. 6: No.
THE COURT: Could you repeat that again?
JUROR NO. 6: No, I just went along with it.
THE COURT: You didn't agree with the jury verdict that was rendered by the fellow jury members, juror number 6?
JUROR NO. 6: I didn't believe the testimony of the police officers.
¶4 After the exchange and without completing the polling, the court sent the jury back to the jury room and met with counsel in chambers. After some discussion, both parties agreed that a mistrial was appropriate. The court and defense counsel expressed concerns that juror number six might be coerced into voting for conviction if the court ordered further deliberation. The court decided that the next step was to determine juror number six's verdict on the separate counts.
¶5 When the jury was brought back into the courtroom and re-polled as to the individual counts, juror number six agreed with the verdicts. The court then stated:
Juror number 6, I want to follow-up a little bit further with you. When you were first polled and I just asked generally whether these verdicts were in fact your true and correct verdicts, you seemed to indicate that they weren't, that you weren't sure that you believed the testimony. The jury was excused ... and then I brought you back. And your responses to those questions on an individual basis seemed to be yes they were your true and correct verdicts.
And I'm trying toto have a clear understanding of what your true feelings are and what your verdicts are because I seem to be hearing two different things, and this is important. That's why I want to find out exactly whatwhat your thinking is and what basis of youryour statement now this is your true and correct verdict.
Before juror number six could respond, defense counsel requested a bench conference, after which the court dismissed all of the questioned juror number six about his vote:
THE COURT: On your vote. Your vote seems to have gone two different directions and [sic] trying to get clarification as to what iswhat is your verdict, what is the basis of your decision, and what is the decision you want to declare to the Court and to the lawyers and to the defendant as to the verdict.
....
JUROR NO. 6: I just feel that there were inconsistencies in the police officers' statements. They were small, but I felt they were inconsistent to me. So itbut as far as the rules that were read to me, and trust me, we went over hundreds of times in the jury room.
*809 ....
THE COURT: But again, I'm trying to find out what your true verdict is.
JUROR NO. 6: Then I would say since I was the person that probably argued the most against some of the inconsistencies that I'm probably wrong, that I would probably go ahead and say thatthat the verdict is guilty on all three counts.
THE COURT: Is that your true and correct verdict, decision on the evidence that was submitted to you for your deliberation?
JUROR NO. 6: From the evidence submitted, yes.
....
[DEFENSE COUNSEL]: Yes. You have to make your own decision for yourself. Are you just going along with what the other people say or do you believe the State proved their case on each of the three counts?
JUROR NO. 6: I believe the State did prove their case.
[DEFENSE COUNSEL]: So this is your independent decision irrespective of how the other people voted?
JUROR NO. 6: Yes.
[DEFENSE COUNSEL]: Then why when you were first polled you said this is not my true verdict, I just went along with it?
JUROR NO. 6: I'm not sure.
[DEFENSE COUNSEL]: Was that an honest statement?
JUROR NO. 6: Yes.
¶6 Based on the discussion with the juror, the court found that the jury "ha[d] in fact returned a true and correct verdict ... of guilty on all three counts." After Defendant unsuccessfully moved for a mistrial, the court sentenced Defendant to the mitigated term of five years in prison on the sale of dangerous drugs count, five years in prison on the possession of dangerous drugs for sale count, and four years in prison on the possession of narcotic drugs for sale count. The sentences were ordered to run concurrently. Defendant appeals, and we have jurisdiction pursuant to Arizona Revised Statutes ("A.R.S.") sections 12-120.21(A)(1) (2003), 13-4031 (2001) and 13-4033(A)(1) (2001).
DISCUSSION
¶7 Defendant contends that the trial court erred when it denied his motion for mistrial because the juror was coerced into agreeing with the guilty verdict. We review the denial of a motion for mistrial for a clear abuse of discretion. State v. McCrimmon, 187 Ariz. 169, 172, 927 P.2d 1298, 1301 (1996).
¶8 When a polled juror does not agree with the verdict, Arizona Rule of Criminal Procedure 23.4 provides, in pertinent part, that "the court may direct [the jury] to retire for further deliberations or they may be discharged." The two part process was reiterated in State v. Hernandez, 147 Ariz. 312, 709 P.2d 1371 (App.1985). There, a polled juror told the trial court that "his verdict was guilty but with reservations." Id. at 312, 709 P.2d at 1371. The judge then asked the juror if he needed more time to deliberate and when he indicated no more time was needed, the court asked him if his verdict was guilty and "he replied that it was." Id.
¶9 On appeal from the denial of the motion for new trial, we noted that "it is the court's duty to return the jury for further deliberations or dismiss the jury and declare a mistrial." Id. at 313, 709 P.2d at 1372 (citation omitted). We, however, found that because the juror did not wish to discuss his reservation and that upon further inquiry "the court determined from the juror that his verdict was guilty with no expression of reservation[,]" the court did not err in finding that the verdict was unanimous. Id.
¶10 This case does not pose a qualified response but a clear statement that the juror did not agree with the verdict. Defendant argues that the juror was coerced into agreeing with the verdict. "Jury coercion exists when the trial court's actions or remarks, viewed in the totality of the circumstances, displaced the independent judgment of the jurors.... What conduct amounts to coercion is particularly dependent upon the facts of each case." State v. Fernandez, 216 Ariz. 545, 548, 169 P.3d 641, 644 (App.2007) *810 (internal quotation marks and citations omitted).
¶11 Our supreme court identified circumstances that may give rise to a finding of coercion in McCrimmon. There, the first juror polled responded, "I guess, yeah." McCrimmon, 187 Ariz. at 170, 927 P.2d at 1299 (internal quotation marks omitted). After polling the other jurors and a bench conference, the court denied a motion for mistrial. Id. The court then asked the juror for a yes or no answer, but the juror could not agree to a one-word answer. Id. The court declared a recess and, at the juror's request and with the knowledge of both counsel, had an ex parte discussion with the juror. Id. During that meeting, the judge told the juror that when the proceedings resumed he would ask her the same question and asked how she would answer. Id. She answered that "it would have to be yes" but could not say that it was beyond a reasonable doubt. Id. The court advised counsel of the conversation and reconvened the jury after lunch. Id. at 170-71, 927 P.2d 1298, 927 P.2d at 1299-1300. The jury was reinstructed on the presumption that the defendant is innocent; that the State has the burden of proof beyond a reasonable doubt; and that each juror had to decide the case for themselves. Id. at 171 n. 2, 927 P.2d at 1300 n. 2. The jury, after deliberating for two hours, again returned a guilty verdict that all agreed upon. Id.
¶12 Our supreme court, in examining the coercion issue, found that the reluctant juror had been singled out twice, that the trial court's words and actions sent her a clear message that being undecided was unacceptable and failed to tell her that her inability to find guilt beyond a reasonable doubt could be a disaffirmation of the verdict. Id. at 173, 927 P.2d at 1302. The court then stated "[w]e fear that the trial court ... inadvertently created an atmosphere of coercion when it repeatedly communicated the implicit message to the lone hold-out juror that being undecided about a guilty verdict was unacceptable." Id.
¶13 McCrimmon and other cases define when coercion may occur. First, if the jury is deadlocked, the court's inquiry into the numerical division of the split may result in coercion. Id. at 172, 927 P.2d at 1301 (stating that in general, inquiry into the numerical division of a jury tends to be coercive). When the court makes such an inquiry, and it becomes known that there is a single holdout juror, the juror will likely be subjected to pressure when the jury returns to the jury room. State v. Sabala, 189 Ariz. 416, 419, 943 P.2d 776, 779 (App.1997) (noting that there is inherent pressure associated with being a lone dissenter) (citation omitted). Although the revelation of a numerical division creates the potential for harm, it does not amount to coercion per se. Id. at 418, 943 P.2d at 778.
¶14 A second circumstance that may give rise to a finding of coercion is "any contact between a judge and any member of a deliberating jury." McCrimmon, 187 Ariz. at 173, 927 P.2d at 1302. If the polling of a jury indicates that a juror does not agree with the verdict, Rule 23.4 provides that "the court may direct [the jury] to retire for further deliberations or [the jury] may be discharged." The trial judge also has the discretion to "make discreet inquiries of the jury as a whole to decide whether the jury is deadlocked or whether further deliberations might be useful." McCrimmon, 187 Ariz. at 174, 927 P.2d at 1303 (citation omitted and emphasis added). The court should, however, refrain from communicating with an individual member of the jury because such contact "is pregnant with possibilities for error." See id. at 173, 927 P.2d at 1302 (quoting United States v. United States Gypsum Co., 438 U.S. 422, 460, 98 S.Ct. 2864, 57 L.Ed.2d 854 (1978)).
¶15 Here, the court polled the jury and juror number six stated he did not agree with the verdict. He stated that he "just went along with" the verdict even though he disagreed with it. During the in-chambers discussion between the court and counsel, the jury was sent back to the jury room. When they were brought back into open court, the court stated:
What I've decided to do, ladies and gentlemen of the jury, is to have each of you polled on an individual basis as to each of *811 the three forms of verdict that were returned toto me with a finding of guilty by the jurors. So we'll do it as to each count and starting with the first form, and the clerk will read it off and go down.
The court did not inquire whether the jury had discussed juror number six's disagreement or other matters.
¶16 Each juror, during the re-polling, indicated agreement with each count of the verdict. The court then started to question juror number six to determine what his true verdict was but did so after the other jurors were returned to the jury room. The juror told the court and defense counsel that his true verdict was his re-polled verdict of guilty.
¶17 Although the trial court was trying to discern the juror's true vote, the court appreciated there was the potential for coercion when it stated:
As I said, my concern with what I expressed on-the-record, if the juror were toto upon further reflection change his mind he might feeland this is my concernthat he might feel that he was pressured into this by circumstances and will be perhaps against his better judgment and not truly of his feeling, and he may be doing this for reasons that he might not perceive beingagain, his testimonyI mean hishis statement was that he didn't believe the testimony of the police officers. I'm not sure that's going to change upon further discussion. That's his belief.
¶18 And, once the court decided to re-poll the jurors on the individual counts, all eyes were on juror number six. See State v. Lautzenheiser, 180 Ariz. 7, 10, 881 P.2d 339, 342 (1994) (citation omitted). Even without knowing what occurred during the brief time that the jurors had together after the juror's statement and before re-polling, "it is impossible to conclude that the juror was not subjected to pressure after the jury had returned to the jury room." Id.
¶19 In fact, after juror number six changed his vote, he reaffirmed that he believed that there were inconsistencies in the police officers' statements. He also stated, "[t]hen I would say since I was the person that probably argued the most against some of the inconsistencies that I'm probably wrong, that I would probably go ahead and say thatthat the verdict is guilty on all three counts." His statement reflects the sentiment of his original statement that he "just went along with" the verdict even though he disagreed with it. Accordingly, given the totality of the circumstances, once the court learned that the juror changed his vote even though he held essentially the same doubts about the officers' testimony that led him to disagree with the verdict during the first polling, the court should have granted the mistrial motion and the failure to do so was an abuse of discretion.
CONCLUSION
¶20 For the following reasons, we vacate Defendant's convictions and sentences and remand for a new trial.
CONCURRING: PATRICK IRVINE, Presiding Judge and PATRICIA K. NORRIS, Judge.
NOTES
[1] We view the evidence in the light most favorable to sustaining the verdict. State v. Nihiser, 191 Ariz. 199, 201, 953 P.2d 1252, 1254 (App. 1997).
[2] Defendant was also indicted for misconduct involving weapons, but that count was dismissed during trial.
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193 P.3d 84 (2008)
222 Or. App. 95
IN RE A.J.N.
STATE EX REL. DEPT. OF HUMAN SERVICES
v.
IN RE T.K.N.
A.A.N. STATE EX REL. DEPT. OF HUMAN SERVICES
v.
T.K.N.
No. A138179.
Court of Appeals of Oregon.
August 20, 2008.
Affirmed without opinion.
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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
)
WASHINGTON METROPOLITAN AREA )
TRANSIT COMMISSION, )
)
Plaintiff, )
)
v. ) Civil Action No. 12cv576 (ESH)
)
RELIABLE LIMOUSINE SERVICE, LLC et al., )
)
Defendants. )
)
MEMORANDUM OPINION
Upon consideration of plaintiff’s Motion for Sanctions, defendants’ Motion to Defer
Ruling on the Motion for Sanctions, and plaintiff’s Opposition to Defendants’ Motion, the Court
will deny defendants’ motion and, pursuant to Fed. R. Civ. P. 37(b)(2), will grant plaintiff’s
motion and impose sanctions. 1
Defendants refused to obey the Court’s December 19, 2012 Order requiring that they
respond to outstanding discovery requests on or before January 2, 2013. Indeed, defendants
continue to withhold all requested discovery even though the final pretrial conference is
scheduled for March 7, 2013, and the trial is scheduled for March 20, 2013. In addition, as
documented by plaintiff’s motion, defendants have a history of defying court orders regarding
discovery (see Ex. 2-4 to Pl. Mot. [ECF No. 19]), and they have failed to provide any valid
reason or excuse for their defiance of this Court’s Order.
Nor have defendants offered any valid basis for deferring the Court’s ruling on the
sanctions motion. Defendants argue that the Court should defer ruling for thirty days because
1
Defendants have failed to file an opposition to plaintiff’s motion, and their time to do so
expired on February 4, 2013.
applications by two affiliates of defendants are currently pending in an administrative proceeding
before the plaintiff Commission and may be decided in the near future. However, even if the
Commission were to approve the applications, it would not excuse defendants’ failure to comply
with their discovery obligations and with this Court’s Order.
In addition, both plaintiff and the Court would be prejudiced by continuing the status quo,
insofar as the remedy plaintiff seeks is injunctive relief to prevent defendants from conducting an
unlicensed passenger transportation business, and trial is set to begin next month. More
importantly, further delay would serve to reward defendants’ contumacious conduct. Under
these circumstances, the imposition of any less severe sanction would not be appropriate.
Accordingly, the Court will deny defendants’ motion, grant plaintiff’s motion, and enter default
judgment for plaintiff. The Court will also award the requested fees set forth in the declaration
of counsel.
/s/
ELLEN SEGAL HUVELLE
United States District Judge
DATE: February 6, 2013
2
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987 F. Supp. 460 (1997)
Richard R. ALLEN, Sr., Plaintiff,
v.
UNITED STATES of America, Defendant.
No. 5:96-CV-909-F.
United States District Court, E.D. North Carolina, Western Division.
December 2, 1997.
*461 David D. Dahl, Manning, Fulton & Skinner, Raleigh, NC, for Plaintiff.
R.A. Renfer, Jr., Asst. U.S. Atty., Office of U.S. Atty., Raleigh, NC, Thomas Holderness, Trial Atty., Tax Div., U.S. Dept. of Justice, Washington, DC, for Defendant.
ORDER
JAMES C. FOX, Chief Judge.
In this action, the plaintiff Richard R. Allen ("Allen"), a cash basis taxpayer, seeks a refund of federal income tax paid for the year 1992. The sole issue in this case is whether Allen may deduct deficiency interest paid in 1992 when the deficiency interest arose from adjustments made by the Internal Revenue Service ("IRS") to items of income generated by Allen's real estate business activities.
I. Findings of Fact
The facts of this case are not disputed by the parties. In the years preceding 1984, Richard Allen was engaged in the business of purchasing, holding, developing, leasing and selling real property. He was also a director and the majority shareholder of D.R. Allen & Son, Inc. ("Company"), a North Carolina corporation engaged in the general contracting business. The Company was founded by Allen's father in 1942, and benefitted Allen's real estate business by providing it with a general contracting firm for development work. By 1984, the Company was in critical need of working capital. In order to induce First Union Bank to make a loan to the company, Allen was required to contribute real estate used in his real estate business to inject equity into the Company and to serve as security on the loan.
On January 1, 1984, Allen transferred his partnership interest in the Claredon House partnership, which owned real property containing apartments, to the Company. On September 25, 1984, Allen transferred a 52 acre tract of real estate containing the Belk Service Center building and the D.R. Allen & Son, Inc. office building ("Belk Service Center Tract") to the Company. By the end of 1984, the Company sold the Belk Service Center Tract and the Clarendon House Tract. The Company reported the gain on the sales of the two tracts on its corporate income tax return for 1984.
The IRS then initiated an audit of Allen's personal federal income return for 1984. On September 1, 1992, the IRS issued a Notice of Deficiency to Allen proposing adjustments to his 1984 income in excess of $1,500,000.00. Primarily, the adjustments were based on the position of the IRS that the gains realized on the sales of the Belk Service Center tract and the Clarendon House tract should be treated as if Allen individually sold the properties instead of the Company. Allen objected to the IRS's position and filed a petition with the United States Tax Court on October 12, 1992. However, after substantial negotiation, Allen and the IRS reached a settlement in which Allen agreed to a personal tax deficiency in the amount of $541,882 for the taxable year 1984. On October 14, 1993, the Tax Court entered a decision confirming this basis of settlement.
Before reaching the settlement with the IRS and in order to stop the continuing accrual of interest pending resolution of the Tax Court proceeding, Allen paid $1,000,000.00 towards his potential additional 1984 income tax and interest liabilities on October 22, 1992, which included $500,000 for deficiency interest relating to the ultimately determined amount of the deficiency. Allen then filed an amended 1992 income tax return and claimed the deficiency interest as a business expense deduction. On January 31, 1995, the IRS disallowed Allen's claimed deduction stating that "[i]nterest paid on the *462 deficiency is personal interest and may not be deducted." This action followed.
II. Discussion
Section 62(a)(1) of the Internal Revenue Code defines "adjusted gross income" as a taxpayer's gross income minus various deductions including deductions attributable to a trade or business carried on by the taxpayer.[1] Section 162(a) of the Code allows as a deduction "all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business." 26 U.S.C. § 162(a) (1996). While the phrase "ordinary and necessary" is not defined statutorily, an extensive body of case law has established its general definition. See Melinda L. Reynolds, Redlark v. Commissioner: A "Bird in the Hand" for Non-Corporate Taxpayers?, 47 CASE W. RES. L. REV. 751, 755-760 (1997).
For example, in Commissioner v. Standing, 259 F.2d 450 (4th Cir.1958), the Court of Appeals for the Fourth Circuit addressed whether deficiency interest on an underlying adjustment to a sole proprietor's tax liability and the legal expense incurred in resolving the matter of the deficiency could be deducted as an "ordinary and necessary" expense of a trade or business. The Fourth Circuit noted that in Kornhauser v. United States, 276 U.S. 145, 48 S. Ct. 219, 72 L. Ed. 505 (1928), the Supreme Court held that when "a suit or action against a taxpayer is directly connected with, or ... proximately resulted from, his business, the expense incurred is a business expense within the meaning of [the tax code]." See id. at 153, 48 S.Ct. at 220. The Kornhauser Court explained that it was unable "to perceive any real distinction between an expenditure for attorney's fees made to secure payment of the earnings of the business and a like expenditure to retain such earnings after their receipt." Id. Thus, the Standing court concluded that legal expenses and interest claimed as deductions are ordinary and necessary expenses of business. See Standing, 259 F.2d at 456. This general holding, that deficiency interest on an underlying tax adjustment could be a business expense, was reaffirmed in Commissioner v. Polk, 276 F.2d 601 (10th Cir. 1960), aff'g, 31 T.C. 412, 1958 WL 1213 (1958), and Commissioner v. Reise, 299 F.2d 380 (7th Cir.1962), aff'g, 35 T.C. 571, 1961 WL 1350 (1961).[2]
Interest generally is deductible under Section 163(a) of the Code. Before the Tax Reform Act of 1986, individual taxpayers could deduct interest regardless of the nature of the underlying indebtedness. However, Section 163(h) of the Code, added by the Tax Reform Act of 1986, disallows the deduction of "personal interest" for a non-corporate taxpayer. See 26 U.S.C. § 163(h). The term "personal interest" is defined in that section by way of exclusion that is, it is any interest other than specified types of interest. Section 163(h)(2)(A) excepts "interest paid or accrued on indebtedness properly allocable to a trade or business" from the definition of personal interest. See 26 U.S.C. § 163(h)(2)(A).[3]
*463 In 1987, following the enactment of the Tax Reform Act of 1986, the IRS issued temporary regulations implementing § 163(h) which set forth criteria for determining when interest is personal interest. Section 1.163-9T of the temporary regulations states in relevant part:
(b) Personal interest
(2) Interest relating to taxes (i) In general. Except as provided in paragraph (b)(2)(iii) of this section, personal interest includes interest
(A) Paid on underpayments of individual Federal, State or local income taxes and on indebtedness used to pay such taxes ... regardless of the source of the income generating the tax liability.
Temp. Treas. Reg. § 1.163-9T(b) (1987) (emphasis added). Thus, if valid, the temporary regulation would disallow a deduction for deficiency interest paid on personal income taxes even when the source of the income is a business or trade.
In this case, Allen contends that the temporary regulation promulgated by the IRS is invalid and that under I.R.C. § 163(h)(2)(A) he may deduct deficiency interest on his tax liability because it was properly allocable to his real estate business. The Government argues that the IRS's temporary regulation is a reasonable interpretation of the statute, and that deficiency interest for the underpayment of taxes is per se non-deductible. In the alternative, the Government argues that the deficiency interest in this case did not arise from an "ordinary and necessary" expense in carrying on Allen's real estate business as that phrase is defined by pre-1986 case law. A resolution of the parties' contentions requires this court to determine whether the temporary regulation at issue is a valid interpretation of the Internal Revenue Code. Secondly, if the regulation is invalid, this court must determine whether the deficiency interest at issue in this case is properly deductible.
A. Temporary Treasury Regulation § 1.163-9T
This court is not the first to analyze the validity of Temporary Treasury Regulation § 1.163-9T(b)(2)(i)(A). In Redlark v. Commissioner, 106 T.C. 31, 1996 WL 10243 (1996), a majority of the Tax Court held that the temporary regulation was an invalid interpretation of I.R.C. § 163(h)(2)(A). See id. at 47.[4] Also, the United States District Court for the District of North Dakota held that the regulation was invalid. See Miller v. United States, 841 F. Supp. 305, 309-310 (D.N.D.1993) [hereinafter Miller I].[5] However, the district court's holding in Miller I was reversed by the Court of Appeals for the Eight Circuit which decided that the regulation "represent[ed] a permissible construction of the statute." See Miller v. United States, 65 F.3d 687, 691 (8th Cir.1995) [hereinafter Miller III]. After a careful review of relevant case law and the Tax Reform Act of 1986, this court agrees with the reasoning of the majority and concurring opinions of the Tax Court in Redlark that Temp. Treas. Reg. § 1.163-9T(b)(2)(i)(A) is invalid.
B. Judicial Review of Administrative Regulations
Judicial review of tax regulations is unique as compared with other areas of administrative law because of the complexity of *464 the tax code, the frequency with which it is amended, and the lengthy legislative history that generally accompanies tax statutes. See Ellen P. Aprill, Muffled Chevron: Judicial Review of Tax Regulations, 3 FLA. TAX. REV. 51, 53 (1996). In reviewing tax regulations, a court generally owes the same deference to temporary regulations as to final regulations. However, interpretive regulations, which merely interpret a tax statute, are afforded less weight than legislative regulations, which are promulgated by the IRS pursuant to a congressional grant of authority to define a statutory term. See Redlark, 106 T.C. at 38; United States v. Vogel Fertilizer, 455 U.S. 16, 24, 102 S. Ct. 821, 827, 70 L. Ed. 2d 792 (1982). An interpretive regulation will be upheld if it "`implement[s] the congressional mandate in some reasonable manner.'" Vogel, 455 U .S. at 24, 102 S.Ct. at 827 (quoting United States v. Correll, 389 U.S. 299, 307, 88 S. Ct. 445, 450, 19 L. Ed. 2d 537 (1967)).
In National Muffler Dealers Ass'n v. United States, 440 U.S. 472, 99 S. Ct. 1304, 59 L. Ed. 2d 519 (1979), the Supreme Court explained that whether an IRS regulation "harmonizes" with the plain language, origins, and purpose of a statute depends on numerous factors including "the length of time the regulation has been in effect, the reliance placed on it, the consistency of the Commissioner's interpretation, and the degree of scrutiny Congress had devoted to the regulation during subsequent re-enactments of the statute." See id. at 477, 99 S.Ct. at 1307. However, in Chevron U.S.A. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984), the Supreme Court prescribed a two-part test, which largely replaced the National Muffler standard, for lower courts to use in determining whether an administrative agency's interpretation of a statute is reasonable. Cf. Central Pa. Sav. Ass'n v. Comm'r, 104 T.C. 384, 392, 1995 WL 138584 (1995) (noting that the Tax Court was "inclined to the view that the impact of the traditional, i.e., National Muffler standard, has not been changed by Chevron, but has merely been restated in a practical two-part test with possibly subtle distinctions as to the role of legislative history and the degree of deference to be accorded to a regulation").
Chevron requires a court reviewing an agency interpretation of a statute to determine first whether Congress has directly spoken to the question at issue. If the intent of Congress is clear, "that is the end of the matter." Chevron, 467 U.S. at 842, 104 S.Ct. at 2781; see also MCI Telecommunications Corp. v. AT & T, 512 U.S. 218, 229-234, 114 S. Ct. 2223, 2230-33, 129 L. Ed. 2d 182 (1994) (finding an FCC regulation invalid because Congress had "spoken" by using the term "modify" which had a "clear meaning"). However, if a court determines that Congress has not directly addressed the question at issue, "the court does not simply impose its own construction on the statute.... Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute." Chevron, 467 U.S. at 843, 104 S.Ct. at 2781. Thus, if an agency's interpretation of a statute "fills a gap or defines a term in a way that is reasonable in light of the legislature's revealed design," then the interpretation is given "controlling weight." Nations-Bank v. Variable Annuity Life Ins. Co., 513 U.S. 251, 257, 115 S. Ct. 810, 813, 130 L. Ed. 2d 740 (1995) (citation omitted).
C. Congressional Intent
In Miller III, the Court of Appeals for the Eighth Circuit found that because Congress did not define "what constitutes business interest" under § 163(h)(2)(A), the statute's meaning was unclear. The dissenting opinion in Redlark also found that § 163(h)(2)(A) was ambiguous under the first prong of the Chevron test. However, both concurring opinions in Redlark concluded that § 163(h)(2)(A) was clear and unambiguous. Judge Swift, in concurrence, asserted that "[u]nder the express language of section 163(h)(2)(A), if an interest expense is properly allocable to a trade or business, then under that statute the interest expense is deductible." Redlark, 106 T.C. at 48 (Swift, J., concurring). Judge Laro explained that "[i]nterest paid on a debt that is properly allocable to a trade or business is not personal *465 interest under section 163(h). Given the clarity of this text, the beginning and end of our inquiry should be the statutory text, and we should apply the plain and common meaning of the statute." Id. at 55 (Laro, J., concurring).
The majority in Redlark noted that the language of § 163(h)(2)(A) "[a]rguably ... in and of itself is sufficient to enable [the taxpayer] to prevail, since such interest on Federal income tax deficiencies was considered, at least in situations such as that involved herein, as an ordinary and necessary business expense under predecessors of section 162 and therefore of section 62(a)(1) by the pre-section 163(h) cases." Redlark, 106 T.C. at 39. However, the majority explained that in Tanner v. Commissioner, 45 T.C. 145, 1965 WL 1300 (1965), aff'd per curiam, 363 F.2d 36 (4th Cir.1966), which the majority described as "a comparable situation dealing with the deduction of State income taxes in computing adjusted gross income," the Tax Court found congressional intent sufficiently ambiguous to warrant a review of legislative history and the validity of an IRS regulation. Redlark, 106 T.C. at 39 (citing Tanner, 45 T.C. at 148-49).[6] Because of the Tanner decision and despite its conclusion that § 163(h)(2)(A) contained no real ambiguity, the Redlark majority then reviewed the legislative history and regulatory framework relating to the deductibility of interest on income tax deficiencies. See Redlark, 106 T.C. at 39.
This court agrees with the majority in Redlark and the two concurring opinions that the language of § 163(h)(2)(A) is sufficient, in and of itself, to find Temp. Treas. Reg. § 1.163-9T(b)(2)(i)(A) invalid. However, this court does not agree that the Tanner decision requires the court to proceed to the second step of a Chevron analysis of the IRS's regulation. The language of § 163(h)(2)(A) is clear and unambiguous. The statute requires that personal interest is nondeductible unless the indebtedness underlying the interest expense is properly "allocable to a trade or business." 26 U.S.C. § 163(h)(2)(A). Prior to the enactment of the Tax Reform Act of 1986, case law had clearly established that interest on a tax deficiency could be a deductible business expense. Certainly, Congress does not legislate in a vacuum; it should be presumed that Congress was familiar with judicial interpretations of what constitutes an ordinary and necessary expense of business when it drafted § 163(h)(2)(A). See Richard M. Lipton, Divided Tax Court Allows Deduction of Interest on Tax Arising from a Trade or Business, 84 J. TAX'N 218, 222 (1996) (arguing that § 163(h)(2)(A) is not ambiguous and that the Redlark dissent and the Miller III opinion were decisions "in search of an ambiguity"). As the majority in Redlark pointed out, a court should be very "reluctant to conclude that Congress overruled existing case law when the statutory language does not compel such a conclusion and Congress has not otherwise expressly indicated that such a result should ensue." Redlark, 106 T.C. at 43 (citations omitted).
Even without assuming that Congress understood the judicial interpretation of the deductibility of deficiency interest, the statute speaks for itself. As Judge Swift explained, "[t]he statute mandates an allocation and allows a deduction for interest expense related to a taxpayer's business." Redlark, 106 T.C. at 48 (Swift, J., concurring). If Temp. Treas. Reg. § 1.163-9T(b) is given effect, in the case of a sole proprietor of a business, nothing is left to be "allocated." Thus, the regulation is in contradiction with the language of the statute.
This court further agrees with Judge Swift that Temp. Treas. Reg. § 1.163-9T(b)(2)(i)(A) is not only inconsistent with the statutory language of § 163(h)(2)(A), but also is inconsistent with the IRS's own allocation rule as provided for in 1.63-8T(c)(3)(ii). That regulation controls the allocation of a *466 debt when no loan proceeds are involved in the underlying transaction, and provides:
If a taxpayer incurs or assumes a debt in consideration for the sale or use of property, for services, or for any other purposes, or takes property subject to a debt, and no debt proceeds are disbursed to the taxpayers, the debt is treated for purposes of this section as if the taxpayer used an amount of the debt proceeds equal to the balance of the debt outstanding at such time to make an expenditure for such property, services or other purpose.
Temp. Treas. Reg. § 1.163-8T(c)(3)(ii). Thus, under that regulation, "interest expenses are to be allocated between the taxpayer's business and personal activity based on the nature of the particular underlying activity giving rise to the extension of credit." Redlark, 106 T.C. at 49 (Swift J., concurring). In the case of deficiency interest, the Government essentially extends credit to a taxpayer and assesses interest for the extension of that credit. Thus, when the underlying activity which creates the deficiency relates to a taxpayer's business, the interest is "allocable" to the business and deductible under § 163(h)(2)(A).
This court is not persuaded by the "wooden" assertion of the IRS that the payment of federal income taxes always constitutes consumption, and cannot be allocated to a trade or business. Under this consumption argument, "[t]he payment of Federal income taxes is a civic duty, not a matter of business contract or investment advantage." Redlark, 106 T.C. at 71 (Halpern, J., dissenting). As the Redlark majority explained, this argument is "an unrealistic application of our tax law." Id. at 47. The purpose of § 163(h) was to end deductions for interest incurred to fund consumption expenditures. See S.R. REP. No. 99-313, at 804 (1985); H.R. CONF. REP. No. 99-841, at II-154 (1986), U.S.Code Cong. & Admin.News 1986, p. 4075. That purpose is served by § 163(h)(2)(A) which requires the IRS to "look through" an interest expenditure to allocate its components if the expenditure is attributable to a trade or business it is deductible. If the expenditure is attributable to consumption, it is not deductible.
Moreover, under the IRS's "consumption theory," tax return preparation fees and the like should be nondeductible because they are associated with an underlying consumption expense. However, under Revenue Ruling 92-29, 1992-1 C.B. 20, litigation expenses and tax preparation fees incurred in determining income tax liability related to a business conducted as a sole proprietorship are deductible. See Redlark, 106 T.C. at 58 n. 7 (Laro, J., concurring) ("Given the Commissioner's position with respect to these litigation expenses and tax preparation fees, I am unable to fathom why she continues to believe that the interest on a tax deficiency that is allocable to a trade or business is not also deductible.").
Thus, in order to accept the IRS's argument that the statute is ambiguous and the regulation at issue is a valid interpretation of the statute, this court would have to assume that not only was Congress unfamiliar with judicial interpretations of the Code, but also with other provisions of the Code itself. Because this court agrees with neither proposition, any further analysis of the statute, including its legislative history, is unnecessary. As explained in Chevron, if a court determines that Congress has spoken to the question at issue, "that is the end of the matter." Chevron, 467 U.S. at 843, 104 S.Ct. at 2781-82. Furthermore, because the "agency's interpretation of a statute is not entitled to deference when it goes beyond the meaning that the statute can bear," this court finds that the IRS's interpretation of § 163(h)(2)(A) through Temp. Treas. Reg. § 1.163-9T(b)(2)(i)(A) is invalid. MCI Telecommunications, 512 U.S. at 229, 114 S.Ct. at 2230.
III. Ordinary and Necessary Expense?
Having determined that Temp. Treas. Reg. § 1.163-9T(b)(2)(i)(A) is invalid, this court must now analyze whether the tax deficiency at issue in this case can be considered an ordinary and necessary expense of carrying on the taxpayer's business. As stated earlier, to be deductible under 26 U.S.C. § 162(a), an expense must be an "ordinary and necessary" expense of carrying on a trade or business. 26 U.S.C. §§ 62(a), 162(a). If interest constitutes a business expense under §§ 162(a) and 62(a), then it *467 should be characterized as interest "on indebtedness properly allocable to a trade or business" within the meaning of § 163(h)(2)(A).[7] In Commissioner v. Standing, 259 F.2d 450 (4th Cir.1958), the Fourth Circuit considered whether interest on a deficiency in federal income tax resulting from the improper reporting of income caused by a sole proprietor's transfer from a cash basis to an accrual basis was deductible as a business expense. The court held that the interest, along with related attorney's fees and accountant's fees, was an ordinary and necessary expense of carrying on a business. See id. at 453-56.
Subsequently, in Commissioner v. Polk, 276 F.2d 601 (10th Cir.1960), the Tenth Circuit faced the issue of whether interest on a deficiency, arising out of livestock valuation corrections, was a deductible business expense for purposes of calculating the net operating loss of a sole proprietor. The Tenth Circuit agreed with the Fourth Circuit's analysis in Standing. However, the Polk holding was more narrow than the Standing holding in that the Polk court asserted that "[t]he field, within which it can be said that penalty interest on a deficiency assessment of taxes against a taxpayer, charged with the duty of filing a correct return, constitutes an ordinary and necessary expense arising out of the operation of the business, is much narrower than in the case of attorneys' fees." Id. at 601. Because the Polk court concluded that the failure to properly value livestock inventories arose from the nature of the livestock business, interest on the deficiency assessment was deductible as an "ordinary" expense of the business. See id.
Then, in Commissioner v. Reise, 299 F.2d 380 (7th Cir.1962), aff'g 35 T.C. 571, 1961 WL 1350 (1961), the Seventh Circuit expanded the reasoning of Polk and Standing by allowing deficiency interest on state income taxes as a business expense deduction in calculating a taxpayer's net operating loss. See id. at 381. The Tax Court in Reise specifically overruled one of its prior decisions, Aaron v. Commissioner, 22 T.C. 1370, 1954 WL 43 (1954), in which it held that deficiency interest on state taxes was not deductible because the connection contemplated by the Code between an expense and the carrying on of a business was a "direct" one rather than a remote one. See Aaron, 22 T.C. at 1376. The Tax Court in Reise noted that neither the Standing nor Polk court cited Aaron, and that the reasoning of the former two opinions was "sound and correct" while the reasoning of the latter was no longer a "proper and correct construction." Reise, 35 T.C. at 579.
The parties in this action have argued extensively on the issue of whether the deficiency interest in this case is an ordinary and necessary expense of business. The Government has pointed to Deputy v. du Pont, 308 U.S. 488, 60 S. Ct. 363, 84 L. Ed. 416 (1940), in support of its assertion that the interest is not an ordinary and necessary business expense. In du Pont, the Supreme Court addressed whether carrying costs incurred in the purchase of stock was an ordinary and necessary expense of business. The taxpayer acquired certain publicly traded stock, incurred carrying costs in connection with the acquisition, and then sold that publicly traded stock to his corporation so that the corporation could distribute the stock to the company's executive committee. The du Pont Court held that the carrying costs were not deductible "since they proximately result[ed] not from the taxpayer's business but from the business of the du Pont Company." Id. at 494, 60 S.Ct. at 366 (citing Kornhauser v. United States, 276 U.S. 145, 48 S. Ct. 219, 72 L. Ed. 505 (1928)).
Although the facts of du Pont are not "parallel" to the case at hand as suggested by the IRS, the case is significant for its explanation of "ordinary." The du Pont Court explained that:
"[o]rdinary has the connotation of normal, usual or customary. To be sure, an expense may be ordinary though it happen but once in the taxpayer's lifetime. Yet the transaction which gives rise to it must *468 be of common or frequent occurrence in the type of business involved."
du Pont, 308 U.S. at 495, 60 S.Ct. at 367 (citations omitted). Also, in du Pont, the Court found it relevant that "[t]here [was] no intimation in the record that the transactions whereby the stock was borrowed were not in good faith or were entered into for any reason except a bona fide business purpose. Nor [was] there any suggestion that the transactions were cast in that form for purposes of tax avoidance." Id. at 493, 60 S.Ct. at 366.
Admittedly, allowing a taxpayer to deduct deficiency interest from an underlying tax adjustment related to his or her business is not as efficient an exercise as mandating that all deficiency interest is per se nondeductible. However, interest on adjustments which are clearly and directly related to a taxpayer's business, and approaching the level of the "expected" or "unavoidable" as those described in Polk, should be deductible. Conversely, when virtually no nexus is shown between the deficiency and the ordinary course of the taxpayer's business or when there is evidence of bad faith, a deduction should not be allowed. The more difficult questions lie in between these two ends of the spectrum.
In this case, the court has no difficulty determining that the deficiency at issue was an ordinary and necessary expense of Allen's real estate business. Both parties have agreed that there is no evidence of bad faith on the part of Mr. Allen or of an attempt by him to avoid the payment of taxes. The transactions which gave rise to the deficiency in this case were the sales of two tracts of real estate-a common and "ordinary" occurrence in the real estate industry.
The IRS argues that two distinct events took place in 1984:(1) the two sales of the properties; and (2) the transfers of the properties from Allen's business to his corporation. According to the IRS, "[t]he sales, a business event, created plaintiff's tax liability. The transfers, a non-business event, created the interest expense." Defendant's Post Trial Memorandum, at 2. However, in assessing the deficiency at issue in this case, the IRS restructured the transactions such that the "transfers" of the property never occurred. The IRS cannot create the deficiency in this case by assigning the sale of the property to Allen and then assert that the interest is non-deductible because the sales were not made by Allen.
Furthermore, the IRS has asserted that an interest expense on a tax deficiency was not an ordinary expense of Allen's business because "he had never incurred this type of interest expense in connection with his business before 1984." Defendant's Post Trial Memorandum, at 4. As the plaintiff points out in his post trial memorandum, in order for the IRS to prevail on this analysis, this court must find that a specific taxpayer operating a business must repeatedly incur federal income tax deficiency interest expense for the expense to be deemed ordinary. See Plaintiff's Post Trial Memorandum, at 4. Conversely, following the IRS's logic, the "ordinary course of events" would be that every taxpayer always accurately reports all items of income and expense. In light of the complexity of the tax code, this is an implausible characterization of the "ordinary."
The IRS fails to acknowledge that for the purposes of determining whether deficiency interest is "ordinary" under § 162(a), a court must determine that the transaction underlying the deficiency expense is an ordinary one. See du Pont, 308 U.S. at 495, 60 S.Ct. at 367. In this case, as stated above, the sale of real estate, the restructuring of the terms of the real estate transaction by the IRS, and the assessment of a deficiency based on the restructuring with interest are ordinary events and expenses in carrying on a real estate business. Because such interest is an ordinary and necessary expense of Allen's real estate business, it is deductible under § 163(h)(2)(A).
IV. Conclusion
For the reasons stated above, this court concludes that Temp. Treas. Reg. 1.163-9T(b)(2)(i)(A), which contradicts the clear and unambiguous meaning of I.R.C. § 163(h)(2)(A), is invalid. See 26 U.S.C. § 163(h)(2)(A). Under I.R.C. § 163(h)(2)(A), a taxpayer may deduct interest on a tax deficiency when the expense is an ordinary *469 and necessary expense of carrying on a business or trade. Whether an expense is an "ordinary and necessary" expense of business must be determined by reference to the extensive body of case law establishing the definition of that phrase.
In this case, the interest paid by Allen in 1992 on his federal income tax deficiency for the year 1984 was attributable to and properly allocable to Allen's real estate business. Thus, the Plaintiff is entitled to a refund of federal income tax paid for the year 1992 with interest as provided by law.
The parties are DIRECTED to confer in an attempt to stipulate to the amount of the refund and interest owed to Allen by virtue of this Order. They are further DIRECTED to file with the court on or before January 15, 1998, a stipulation of the principal amount of refund owed, and the amount of interest due. Should the parties fail to reach such a stipulation, they are hereby DIRECTED to file briefs outlining their respective positions on the amount of the Government's liability on or before January 15, 1998.
SO ORDERED.
NOTES
[1] Specifically, the statute reads:
(a) General rule. For purposes of this subtitle, the term "adjusted gross income" means, in the case of an individual, gross income minus the following deductions:
(1) Trade and business deductions. The deductions allowed by this chapter (other than by part VII of this subchapter) which are attributable to a trade or business carried on by the taxpayer, if such trade or business does not consist of the performance of services by the taxpayer as an employee.
26 U.S.C. § 62(a)(1) (1996).
[2] These cases will be discussed in greater detail in Part III of this order. See infra.
[3] As originally enacted in 1986, § 163(h)(2)(A) excepted from the definition of personal interest "interest paid or accrued on indebtedness incurred or continued in connection with the conduct of a trade or business." See Tax Reform Act of 1986, Pub.L. No. 99-514, 199 Stat. 2085, 2246. However, a 1988 amendment to the statute changed the language to "interest paid or accrued on indebtedness properly allocable to a trade or business." See Technical and Miscellaneous Revenue Act of 1988, § 1005(c)(4), Pub.L. No. 100-647, 102 Stat. 3342, 3390. The amendment was intended to conform the definition of personal interest to the language of related passive loss and investment interest definitions, also found in § 163(h), to allow for consistent application of the standard of allocation of interest. See H.R. REP. No. 100-795, at 36 (1988); S.R. REP. No. 100-445, at 36 (1988), U.S.Code Cong. & Admin. News 1988, p. 4515.
[4] The Tax Court was sharply divided in Redlark. The majority and dissenting opinions each gained the support of eight judges. However, the majority was joined by three judges who concurred in the result. The court was unable to agree on many issues, including whether I.R.C. § 163(h) was ambiguous standing alone, whether the related legislative history was ambiguous, and whether the legislative history should be given weight in interpreting the statute.
[5] In response to cross motions for summary judgment, the district court in Miller I held that the temporary regulation was invalid to the extent that it mandated that all deficiency interest was per se nondeductible. See Miller I, 841 F.Supp. at 310. However, following additional discovery, the district court ruled that the deficiency adjustment had resulted from the disallowance of a "clearly improper income deferral scheme" such that the deficiency interest could not be considered an ordinary and necessary business expense under pre-1986 case law. Thus, because the interest was not deductible by the taxpayer, the court granted the government's renewed motion for summary judgment. See Miller v. United States, 95-1 U.S. Tax Cas. (CCH), 50,068, at 87,232, 1994 WL 714069 (D.N.D.1994) [hereinafter Miller II].
[6] In Tanner, the Tax Court held that state income taxes are not comparable to deficiency interest and are consistently nondeductible for purposes of calculating adjusted gross income. See Tanner, 45 T.C. at 149-50. The court explained that, while the court in Standing had found no mention of deficiency interest in committee reports on relevant provisions of the Code, those reports specifically provided that state income taxes were not deductible in computing gross income even if the taxes arose from business income. Id.
[7] This court agrees with the reasoning of the Redlark majority and the Miller I court that the definition of business interest under §§ 162(a) and 62(a) is appropriate to define business interest under § 163(h)(2)(A). See Redlark, 106 T.C. at 33-34; Miller I, 841 F.Supp. at 309.
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337 F. Supp. 2d 146 (2004)
JUDICIAL WATCH, INC., Plaintiff,
v.
UNITED STATES DEPARTMENT OF COMMERCE, Defendant.
No. CIV.A. 95-133(RCL), No. CIV.A. 97-289(RCL), No. CIV.A. 97-2416(RCL), No. CIV.A. 96-2747(RCL).
United States District Court, District of Columbia.
September 30, 2004.
*147 *148 *149 *150 *151 *152 *153 *154 *155 *156 Larry Elliot Klayman, Paul J. Orfanedes, Klayman & Associates, PC, James F. Peterson, Washington, DC, for Plaintiff.
Bruce R. Hegyi, Marina Utgoff Braswell, William Mark Nebeker, Washington, DC, for Defendant.
MEMORANDUM OPINION
LAMBERTH, District Judge.
Before the Court are the defendant's Motions for Summary Judgment in Civil Action Nos. 95-133 [doc. 617], 97-289 [doc. 32], 97-2416 [docs. 42 and 47], and 96-2747 [doc. 36]. Upon consideration of the motion papers, the applicable law and the records in these cases, the Court will grant each of the defendant's motions for summary judgment.
BACKGROUND
The plaintiff, Judicial Watch, Inc. ("Judicial Watch"), filed these actions pursuant to the Freedom of Information Act ("FOIA"), 5 U.S.C. § 552, against the defendant, the Department of Commerce ("DOC"). The DOC conducted a search pursuant to Judicial Watch's FOIA requests, a search which the Court found to be "inadequate, unreasonable and unlawful." Judicial Watch, Inc. v. Dep't of Commerce, 34 F. Supp. 2d 28, 45 (D.D.C.1998). Having found this first search grossly inadequate, the Court ordered the DOC to conduct a "rigorous" second search in satisfaction of its FOIA duties and in compliance with a separate order issued that date. Judicial Watch, 34 F.Supp.2d at 46.
Subsequent to the Court's 1998 Order, Judicial Watch made five separate FOIA requests, each lodged in a separate civil action as discussed herein. In Civil Action No. 95-133, Judicial Watch sought access to:
all correspondence, memoranda, lists of names, applications, diskettes, letters, expense logs and receipts, diary logs, facsimile logs, telephone records, notes and other documents and things that refer or relate in any way to" certain trade missions involving former Secretary Brown from January 1993 through October 1995.
In Civil Action No. 97-289, Judicial Watch sought access to:
all correspondence, memoranda, lists of names, applications, diskettes, letters, expense logs and receipts, diary logs, facsimile logs, telephone records, notes and other documents and things that refer or relate in any way to" certain trade missions involving former Secretary Brown from January 1993 through October 1996; information on certain identified individuals and organizations, as well as certain documents of former Secretary Ron Brown.
In Civil Action No. 96-2747, Judicial Watch sought access to:
all correspondence, memoranda, lists of names, applications, diskettes, letters, expense logs and receipts, diary logs, facsimile logs, telephone records, notes and other documents and things that refer or relate in any way to" certain trade missions taken by the Department in 1995, work performed or responsibilities *157 held by former Deputy Assistance Secretary John Huang, records concerning certain specified individuals, and other categories of records that would update certain of the Judicial Watch's prior FOIA requests to the Department.
In the request underlying the first motion for summary judgement in Civil Action No. 97-2416, Judicial Watch sought access to:
all documents produced by the DOC within the last twelve (12) months in response to any request, demand, or subpoena by any investigatory agency or body, including the United States Department of Justice (including any of its divisions, the Federal Bureau of Investigation, and its United States Attorneys for the District of Columbia or any other district), the United States Congress (and any of its committees), or any grand jury impaneled pursuant to federal law in any judicial district of the United States.
In the request underlying the second motion for summary judgement in Civil Action No. 97-2416, Judicial Watch sought access to:
all documents produced by the DOC within the last twelve (12) months in response to any request, demand, or subpoena by any investigatory agency or body, including the United States Department of Justice (including any of its divisions, the Federal Bureau of Investigation, and its United States Attorneys for the District of Columbia or any other district), the United States Congress (and any of its committees), or any grand jury impaneled pursuant to federal law in any judicial district of the United States.
After its second document search, responsive to each of Judicial Watch's FOIA requests, the DOC produced some responsive documents and withheld others pursuant to various FOIA exemptions. The DOC moved for summary judgment in each case relative to Judicial Watch's specific FOIA requests and its specific FOIA withholdings. In each case, the DOC seeks an order approving the second search and its invocations of the FOIA exemptions.
Judicial Watch urges the Court to find the second search inadequate, including the DOC's use of FOIA exemptions to withhold certain classes of information and documents. It seeks a new round of discovery to further examine the DOC's search procedures and to locate other responsive documents that Judicial Watch claims the DOC did not produce.
Judicial Watch filed an opposition in each case, disputing the adequacy of the second search and the DOC's use of the various FOIA exemptions. In support of its oppositions, Judicial Watch submitted and principally relied upon the declaration of Sonya Stewart ("Stewart Declaration"), the DOC's FOIA Director at the time of both searches. Relying on the Stewart Declaration, Judicial Watch argues that the second search was inadequate because: (1) the same persons involved in the first search were active participants in the second; (2) rules and procedures used during the first search were re-utilized in the second search; and (3) the DOC is misusing various FOIA exemptions to unlawfully withhold responsive documents. For reasons stated in a separately issued memorandum opinion and order, the critical majority of the Stewart Declaration was stricken pursuant to Rules 12(f) and 56(e) of the Federal Rules of Civil Procedure. As such, the only portions of Judicial Watch's oppositions remaining before the Court are the legal arguments and factual assertions contained in the memoranda of law attached to its oppositions.
*158 LEGAL STANDARD
Summary judgment is appropriate when the motion papers, affidavits, and other submitted evidence demonstrate that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). Whether a fact is "material" is determined in light of the applicable substantive law invoked by the action. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). In light of the applicable substantive law, a "genuine issue of material fact" is a fact that is determinative of a claim or defense, and therefore, affects the outcome of the case. See Celotex, 477 U.S. at 322, 106 S. Ct. 2548; Anderson, 477 U.S. at 248, 106 S. Ct. 2505. The moving party bears the initial burden of demonstrating that no genuine issues of material fact are in dispute. Upon such a showing, the burden then shifts to the non-moving party to demonstrate that genuine issues of material fact are in dispute. The Court is precluded from weighing evidence or finding disputed facts and must draw all inferences and resolve all doubts in favor of the non-moving party. See Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986).
DISCUSSION
For the DOC to prevail on its summary judgment motions, it must demonstrate that it, first, conducted an adequate search, one "reasonably calculated to uncover all relevant documents" and that, second, any withheld materials fall within a statutory exemption. Weisberg v. Dep't of Justice, 705 F.2d 1344, 1351 (D.C.Cir.1983); Judicial Watch v. Dep't of Justice, 306 F. Supp. 2d 58, 64 (D.D.C.2004). Judicial Watch contests both the search's adequacy and the propriety of withholdings under FOIA's seven exemptions.
I. Adequacy of the Second Search
When responding to a FOIA document request, an agency is obliged to conduct a good faith search that is reasonably calculated to uncover all documents responsive to that request. See Valencia-Lucena v. Coast Guard, 180 F.3d 321, 325-26 (D.C.Cir.1999); Campbell v. Dep't of Justice, 164 F.3d 20, 27 (D.C.Cir.1998); Oglesby v. Dep't of the Army, 920 F.2d 57, 68 (D.C.Cir.1990). The adequacy of a FOIA search, and the corresponding search burden, are case-dependent. See Truitt v. Dep't of State, 897 F.2d 540, 542 (D.C.Cir.1990). Normally, an agency need only conduct a "reasonable" search, but in this case the DOC's burden was heightened as a result of its prior misconduct. See Judicial Watch, 34 F.Supp.2d at 46. In its 1998 Memorandum Opinion, this Court found that
[T]he DOC's search was inadequate, unreasonable and unlawful under the FOIA. The DOC failed to search entire offices that were likely, if not certain, to hold responsive documents. Documents were destroyed, discarded and given away, sometimes without being searched to determine if they were responsive, other times with full knowledge that they were responsive.
Judicial Watch, 34 F.Supp.2d at 46. The Court ordered the DOC to conduct a second search "more restrictive and rigorous... than those ordinarily ordered as relief in a FOIA case" because the "egregious facts of this case make such requirements entirely necessary to ensure agency compliance with the law and this Court's orders." Id. The Court also found that Judicial Watch could conduct discovery "related to the destruction or removal of documents after its first FOIA *159 request was filed, [which] may include, out of necessity, some inquiry into the creation and handling of documents." Id.
In a separate order issued that date, the Court also prescribed the following search rules:
(1) that the search be monitored by the Chief of Staff for the Secretary of the Department and the Department's OIG;
(2) that the new search include all bureaus and offices of the Department in which responsive documents were located in prior searches for records responsive to the requests in this case;
(3) that in bureaus or offices where no records were previously located a search would either be performed or the head of the office or bureau would sign a declaration as to why responsive records could not reasonably be expected to be located in a search;
(4) that detailed search instructions be given to each bureau and office as set forth in DOC's March 20, 1998 filing; and
(5) that each office searched submit one or more declarations from an individual with personal knowledge describing how the search was designed and performed and attesting to the fact that all responsive documents located were forwarded to a central location to then be processed for release.
As to the searches performed in Civil Action Nos. 95-133, 97-289 and 96-2747, the motion papers and supporting declarations demonstrate that the DOC engaged in an exhaustive second search that conformed with both its normal obligations under the FOIA and its obligations as heightened by this Court's 1998 orders. In fact, above and beyond what the Court ordered, the DOC issued the following search instructions:
(1) Bureaus and Offices required to engage in a new search had to have their search plans approved by the OIG as well as by Ms. Swiatek, the Search Coordinator for the Chief of Staff;
(2) a search checklist was provided to each office and bureau setting forth in detail the areas to be searched and the types of records to be examined and a signature on the completed checklist was required by each office and bureau;
(3) all Bureau heads were required to sign a search certification which included a commitment to retain all original responsive documents and not to destroy any documents pending termination of the lawsuit;
(4) all potentially responsive documents located were Bates-stamped and logged;
(5) copies of Judicial Watch's FOIA requests were again disseminated with the search instructions.
See Swiatek Search Decl., Exh. A. Senior officials from each Bureau were designated to supervise each Bureau's search, and Ms. Swiatek micro-managed the entire search operation. See id. at ¶ 5. Moreover, OIG conducted a quality control review as ordered by the Court, which included a review of the search procedures and random sample spot checks. See OIG Memorandum, Exh. 7. Where OIG found search discrepancies, those were investigated and, where necessary, new searches were conducted. See id. at ¶ 5-6; OIG Memorandum, Exh. 7 at ¶¶ 4-6. The second search resulted in the production of several thousand documents, which were processed and located in a central depository. Of the thousands of documents searched, processed and produced, the DOC was unable to locate one document thought to be responsive and cataloged its efforts and lack of success. See Swiatek Supp Decl. Outside contractors logged each processed document into a database for tracking purposes. *160 See id. at ¶¶ 10-11. Offices where no responsive documents would reasonably be expected to be located did not conduct searches, and provided certifications and/or declarations verifying such. See id. at ¶¶ 7-9; White Decl. ¶¶ 3-9; Bunton Decl. ¶¶ 3-7; Tillman Decl. ¶ 6. The DOC submitted twelve Vaughn declarations in explanation of the documents/information withheld from production pursuant to various FOIA exemptions. See Swiatek Search Decl., at ¶¶ 10-11. With an overabundance of caution and a palpable awareness of its prior failings, the DOC's search in these cases satisfy both the FOIA and this Court.
As to the searches conducted in Civil Action No. 97-2416, the Court finds no factual basis to support Judicial Watch's assertion that the DOC's search, or descriptions thereof, is conclusory, inadequate or otherwise raises doubts as to completeness or good faith. Rather, the DOC's recount, declarations and exhibits in support thereof, demonstrate a thoughtful, comprehensive search that satisfies both the legal requirements of the FOIA and the additional strictures imposed by this Court.
In support of the search in Civil Action No. 97-2416, the DOC submitted the declaration of Daniel Rooney, the Management Analyst of the Special Matters Unit at the DOC and Project Coordinator of these searches. The Rooney declaration details the manner in which the second search was conducted, the location of responsive documents, and, as discussed later, the statutory bases for withholding several classes of documents pursuant to various FOIA exemptions. As explained in the Rooney declaration the DOC kept documents responsive to Judicial Watch's requests in two locked rooms. See Rooney Decl. ¶ 2. In addition, Rooney issued a memorandum "requiring the production of all information related to the handling and processing of documents in response to these information requests from investigatory bodies." Rooney Decl. ¶ 2. His office then processed the responsive documents located in the two locked rooms as well as any documents produced in response to his department-wide memorandum. See id. This search is more than adequate. The DOC respond to the Court's 1998 orders with an exhaustive search of the two locked rooms where the responsive documents were maintained. Moreover, the DOC, knowing that the Court had authorized Judicial Watch to request discovery related to document handling, conducted at its own behest a further department-wide search for any other responsive documents related to the handling and processing of these documents.
In an attempt to controvert the DOC's contentions and submissions, Judicial Watch offers the declaration of Sonya Stewart to "establish" its claims. However, the Stewart Declaration, Judicial Watch's sole factual basis in support of the assertions in its briefs, does nothing to advance Judicial Watch's argument regarding the inadequacy of the search for absent the critical portions, which, by separate order issued this date, have been stricken as not conforming with the materiality, pertinence, and propriety requirements of Federal Rule of Civil Procedure 12(f), as well as the personal knowledge, admissibility and competency requirements of Federal Rule of Civil Procedure 56(e). Judicial Watch's opposition briefs alone are factually insufficient to overcome the DOC's demonstrations.
Even if the Court were to consider the stricken portions of the Stewart Declaration, they provide no factual basis capable of controverting the factual support mounted by the DOC. For example, the declaration of Pamela Swiatek, a search *161 project coordinator capable of giving first-hand accounts of the search and production process via her personal knowledge of the circumstances, asserts that material that Stewart claims the DOC did not produce was eventually produced to the extent that it could be located, and, as to material that could not be located, the DOC properly detailed this material in the Vaughn Index. As another example, Stewart bases, her assertions of procedural inadequacy and mal-intent on the notes of another employee and alleged conversations between other employees to which she was not privy. Overlooking the hearsay problem, for which the Court struck these statement, the statements, taken in a light most favorable to Judicial Watch, are simply insufficient to overcome the personal knowledge-based and properly presented declarations submitted by the DOC. The other stricken portions of Stewart's declaration regarding purported substantive and procedural inadequacies are based on statements similarly lacking the personal knowledge and the requisite indicia of reliability necessary to combat the DOC's submissions.
Given the DOC's actions in these cases and Judicial Watch's failure to present submissions capable of controverting the volumes of factual support submitted by the DOC, Judicial Watch's request for further discovery into the adequacy of the DOC's search is denied. Judicial Watch has not shown the existence of a "substantial question" concerning the "substantive content of the affidavits relied upon by the agency." Military Audit Project v. Casey, 656 F.2d 724, 751 (D.C.Cir.1981).
The Court finds that the DOC's actions adequately address the concerns of the court and the rights of Judicial Watch. The Court also finds that the DOC's submissions fully advise the Court of the scope and manner in which the second search was conducted, and evince completeness and good faith. The Court further finds that the commonalities in personnel and procedure in the first and second searches do not violate the Court's 1998 orders as neither the Court's orders nor its memorandum opinion impose rules regarding personnel or general procedural structure for the second search. Finally, having no reasonable basis in the instant cases upon which to import the failings of the first search into the second, the Court finds, on the instant record, the second search sufficient under the law.
II. FOIA Exemptions
When withholding documents pursuant to a FOIA exemption, an agency must show that the withheld documents fall within one of the statutory exemptions to FOIA. Weisberg, 705 F.2d at 1351. To satisfy its burden, an agency may submit affidavits and declarations describing the documents withheld and the statutory basis for the withholdings. See Judicial Watch, Inc. v. United States Postal Service, 297 F. Supp. 2d 252, 256 (D.D.C.2004); Vaughn v. Rosen, 484 F.2d 820 (D.C.Cir.1973). For the sake of efficiency, the burden may be satisfied by submission of a "Vaughn Index" and supporting declarations, which are intended to provide a court with an adequate description of documents that are being withheld from production pursuant to a specified FOIA exemption and justification for the applicability of the exemption invoked. See Founding Church of Scientology v. Bell, 603 F.2d 945, 949 (D.C.Cir.1979); Vaughn, 484 F.2d passim. Efficiency to the side, exemptions are not proper if based merely on "conclusory and generalized allegations." Vaughn, 484 F.2d at 826. Any reasonably segregable portions of requested records must be disclosed once the exempt portions *162 have been redacted, Oglesby v. United States Dep't of the Army, 79 F.3d 1172, 1176 (D.C.Cir.1996). In addition, district courts are required to consider segregability issues even when the parties have not specifically raised such claims. Trans-Pacific Policing Agreement v. United States Customs Serv., 177 F.3d 1022, 1027 (D.C.Cir.1999).
A. Exemption 1
Pursuant to Exemption 1, an executive agency may prevent disclosure of documents that are "specifically authorized under criteria established by an Executive order to be kept secret in the interest of national defense or foreign policy" and "properly classified pursuant to such Executive order." 5 U.S.C. § 552(b)(1); see Halperin v. CIA, 629 F.2d 144, 148 (D.C.Cir.1980). Intelligence sources, both the individual human sources and their intelligence gathering methods, must be insulated from unnecessary revelation as such may lead to, at the least, embarrassment, and at the most, retribution. Blanketing this type of information, source and method, in a cloak of near absolute secrecy is critical to the United States' ability to deal with confidential agents in furtherance of national security. See Afshar v. Dep't of State, 702 F.2d 1125, 1130 (D.C.Cir.1983).
In light of courts' presumed lack of expertise in the area of national security and related disclosure interests, a reviewing court is prohibited from conducting a detailed analysis of the agency's invocation of Exemption 1. Halperin v. CIA, 629 F.2d 144, 148 (D.C.Cir.1980). Review is de novo, but significant deference to an agency's decision is due. Washington Post. v. Dep't of Defense, 766 F. Supp. 1, 6-7 (D.D.C.1991). Summary judgment may be granted on this issue "on the basis of agency affidavits [alone] if they contain reasonable specificity of detail rather than merely conclusory statements, and ... they are not called into question by contradictory evidence in the record or by evidence of agency bad faith." Halperin, 629 F.2d at 148.
Here, in these cases, the DOC successfully maintains that documents withheld pursuant to Exemption 1 are proper and in accord with Executive Order 12958, 3 C.F.R. § 333 (1995). The DOC specifically maintains the following: The DOC, the Department of State, the CIA, the USTR, the DSCA and the DIA have determined that the information withheld is properly classified pursuant to Executive Order 12958, § 1.5(a), (b), (c), (d) and (e) because its disclosure would reveal military plans, weapons systems or operations, information regarding foreign governments, intelligence activities, sources or methods and foreign relations or activities of the United States, including confidential source information, and scientific, technological or economic matters related to national security. For Civil Action 97-2416, see Rooney Decl. ¶¶ 8-18 & Exhibit B(DOC); Grafeld Decl. ¶¶ 61-14(DOS); McNair Decl. ¶¶ 8(a), 10-12, 16-28 & Tab A(CIA); Harrison Decl. ¶¶ 6-10 (USTR); for Civil Action 97-289, see Swiatek Supp. Decl. ¶¶ 5-7 & Exh. A(DOC); Grafeld 2 Decl. ¶¶ 16-22(DOS); Grafeld 3d Decl. ¶¶ 8-10 (DOS); Briick Decl. ¶¶ 8-9(CIA); Richardson Decl. ¶¶ 6-10(DIA); for the second motion in Civil Action 97-2416, see Grafeld 4th Decl. ¶¶ 31-35; for Civil Action 96-2747, see Swiatek 2d Supp. Decl. ¶¶ 5-17 & Exhibit A(DOS); Grafeld 2d Decl. ¶¶ 16-22(DOS); Grafeld 3d Decl. ¶¶ 8-10(DOS); Briick 1st Decl. ¶¶ 8-9(CIA); Briick 2d Decl. ¶¶ 9-11, 15-34(CIA); Richardson Decl. ¶¶ 6-10(DIA); Keltz 1st Decl. ¶¶ 8-17 & Exh. A (DSCA); Keltz 2 Decl. ¶¶ 11-21 (DSCA). Consistent with their classification authority, these departments have determined *163 that public disclosure of this information, by itself or in the context of other information, would threaten national security, and that there is no reasonably segregable information to be released. See Executive Order 12958, § 1.2(a); § 1.3; see also Rooney Decl. ¶¶ 8-18 & Exh. B. (DOC); Grafeld Decl. ¶¶ 6-14(DOS); McNair Decl. ¶¶ 8(a), 10-12, 16-28 & Tab A (CIA); Harrison Decl. ¶¶ 6-10 (USTR); Swiatek Supp. Decl. ¶¶ 5-7 & Exh. A(DOC); Grafeld 2 Decl. ¶¶ 11-12, 18, 20, 22, 25(DOS); Grafeld 3d Decl. ¶¶ 8-10 (DOS); Briick Decl. ¶¶ 4, 6-9(CIA); Richardson Decl. ¶¶ 3-5, 10(DIA); Grafeld 4th Decl. ¶¶ 26, 36-38; Swiatek 2d Supp. Decl. ¶¶ 5-17, 36 & Exh. A.; Grafeld 2 Decl. ¶¶ 11-12, 18, 20, 22, 25; Grafeld 3 Decl. ¶¶ 8-10; Briick 1 Decl. ¶¶ 4, 6-9; Briick 2 Decl. ¶¶ 9-11, 15-34; Richardson Decl. ¶¶ 3-5, 10; Keltz 1 Decl. ¶¶ 8-17 & Exh. A.; Keltz 2 Decl. ¶¶ 11-21.
The DOC, DOS, the DSCA and the CIA have withheld classified information regarding foreign governments pursuant to Executive Order 12958, § 1.5(b) because disclosure would reveal information obtained in confidence from foreign governments necessary for the formulation of U.S. foreign policy and action, the disclosure of which would chill the willingness of foreign governments to disclose this type of information. See Rooney Decl. ¶ 11 & Ehx A; Grafeld Decl. ¶¶ 10-12, 14; McNair Decl., Tab A; Grafeld 2 Decl. ¶¶ 16-18 & Exh. A.; Briick Decl. ¶¶ 9, 25-27; Grafeld 4 Decl. ¶¶ 31-33; Swiatek 2d Supp. Decl. ¶¶ 8-11; Grafeld 2 Decl. ¶¶ 16-18 & Exh. A.; Briick 1 Decl. ¶¶ 9, 25-27; Keltx 2 Decl. ¶ 11 & Exh. A.
Pursuant to Executive Order 12958, § 1.5(d), the DOC, DOS, USTR, DCSA and CIA have withheld information regarding various aspects of foreign relations and activities of the United States, including confidential source information, the disclosure of which would jeopardize the delicate nature of intelligence collection and information exchange between the United States and foreign governments and adversely impact national security. See Rooney Decl. ¶ 15 & Exh. B; Grafeld Decl. ¶¶ 13-14; McNair Decl., Tab A; Harrison Decl. ¶¶ 6-8 & Exh. A; Swiatek Supp. Decl. ¶ 7 & Exh. A(DOC); Grafeld 2 Decl. ¶¶ 19-22(DOS); Grafeld 3 Decl. ¶¶ 6-10 (DOS); Briick Decl. ¶¶ 28-34(CIA); Grafeld 4 Decl. ¶¶ 34-35; Swiatek 2d Supp. Decl. ¶¶ 14-15 & Exh. A.; Grafeld 2 Decl., ¶¶ 19-22; Grafeld 3 Decl. ¶¶ 6-10; Briick 1 Decl. ¶¶ 28-34; Briick 2 Decl. ¶¶ 33-34; Keltz 1 Decl. ¶¶ 16-17 & Exh.A.; Keltz 2 Decl. ¶¶ 11-21 & Exh. A.
Pursuant to Executive Order 12958, § 1.5(c), the DOC, DOS, CIA, DSCA and DIA also withheld classified information pertaining to intelligence sources and methods because the disclosure of this information would chill the United States ability to communicate with foreign intelligence sources in a candid and productive manner, and as such jeopardize national security information. See Rooney Decl. ¶ 13-14 & Exh. B; McNair Decl. ¶¶ 16-28 & Tab A; Swiatek Supp. Decl. ¶¶ 7 & Exh. A(DOC); Grafeld 2 Decl. ¶¶ 19-22(DOS); Grafeld 3 Decl. ¶¶ 6-10 (DOS); Briick Decl. ¶¶ 12-24(CIA); Richardson Decl. ¶¶ 8-10(DIA); Swiatek 2d Supp. Decl. ¶¶ 12-13 & Exh. A.; Grafeld 2 Decl. ¶¶ 19-22; Grafeld 3 Decl. ¶¶ 6-10; Briick 1 Decl. ¶¶ 12-14; Briick 2 Decl. ¶¶ 15-31; Richardson Decl. ¶¶ 8-10. The CIA has also withheld information regarding intelligence methods used by the CIA to accomplish its missions, the disclosure of which would render intelligence information useless. See McNair Decl. ¶ 23 & Tab A; Briick Decl. ¶ 20; Briick 1 Decl. ¶ 20; Briick 2 Decl. ¶¶ 20-27.
Pursuant to Executive Order 12958, § 1.5(d), The DOC and DSCA have also *164 withheld classified information regarding military plans and technological and economic matters related to national security, the disclosure of which could reasonably be expected to cause serious damage to national security. See Rooney Decl. ¶¶ 9-10, 17-18 & Exh. B; Swiatek 2d Supp. Decl. ¶¶ 16-17 & Exh. A.; Keltx 1 Decl. ¶¶ 15-17 & Exh. A; Keltz 2 Decl. ¶¶ 19-21 & Exh. A.
The Court finds that the invocation and application of Exemption 1 to the aforementioned documents is consistent with the FOIA. The various departments reviewed the information for classification, and, in each case, determined that the information falls within the aforementioned categories and that release would jeopardize to cause the types of harm detailed. The submitted declarations and the Vaughn Index descriptions more than sufficiently establish that the withholdings are properly classified consistent with Executive Order 12958. See Carlisle Tire & Rubber Co. v. Customs Serv., 663 F.2d 210, 216 (D.C.Cir.1980).
Furthermore, the DOC's Vaughn Indices and declarations are sufficiently detailed and non-conclusory. They provide at least as much detail as the descriptions the D.C. Circuit has previously accepted as adequate. In Pub. Citizen v. Dep't of State, 276 F.3d 634 (D.C.Cir.2002), the D.C. Circuit permitted withholding when the agency affidavit stated "disclosure ... could enable foreign persons or entities opposed to United States foreign policy objectives to identify U.S. intelligence activities, sources or methods." Id. at 644. In Halperin, the D.C. Circuit similarly permitted withholding when the CIA's affidavit stated that if the names of its attorneys were revealed "representatives of hostile, foreign intelligence services working in this country [could], by a variety of techniques, ... undertake courses of action to ascertain ... other contacts [or] other locations, and then arrive at determinations whether [the attorney] is doing any other function for the [CIA]." Halperin, 629 F.2d at 149.
The sworn statements in this case are equally specific and detailed. For example, Rooney's sworn declaration offered in Civil Action 97-2416 first describes Exemption 1 withholdings at a category-by-category level, affirming:
Information identified as falling within category (a) has been determined on review to contain information concerning the military plans, weapons systems, or operations of the United States, disclosure of which reasonably could be expected to cause serious damage to U.S. national security.
Rooney Decl. ¶ 10. Then, Rooney describes withholdings document-by-document. A typical description, and one that Judicial Watch takes issue with, reads:
Undated 5 pages. SECRET memorandum from Ronald H. Brown for the President regarding an October 17-18 visit to China. This document was classified and reviewed for declassification by the Assistant Secretary for Market Access and Compliance pursuant to Section 1.5(b) and (d) of E.O. 12958. The release of this information, which pertains to foreign government information and to foreign relations, reasonably could be expected to cause serious damage to U.S. foreign relations, and thereby to national security....
Such descriptions are sufficiently detailed and meet the DOC's burden on Summary Judgment.
Judicial Watch, in its attempt to defeat Summary Judgment, offers neither evidence of bad faith in this second search nor any contradictory evidence. Instead, Judicial Watch makes three other points. First, it argues that the DOC *165 has, generally, not provided enough specific information about document classification procedures to permit withholding. This argument has already been found wanting. Second, Judicial Watch argues that the DOC has not established that it followed proper classification procedures for documents classified after Judicial Watch's FOIA request. For each document classified after a FOIA request, an agency "must show that the document has not previously been released to the public under proper authority and that the document has been classified by or at the direction of a specially designated official." Executive Order 12,958. § 1.8(d); see Public Citizen, Inc. v. Dep't of State, 100 F. Supp. 2d 10, 24 (D.D.C.2000), aff'd in part, rev'd in part on other grounds, 276 F.3d 634 (D.C.Cir.2002).
Judicial Watch's second argument also fails. The DOC has singled out the handful of documents that were classified after Judicial Watch's FOIA requests and has, in its sworn declarations, described the process it followed to classify these documents. For example, in the second summary judgment motion in Civil Action 97-2416, documents C80, C101, C171, C191 were classified after the proper Department of State senior agency official signed a public order directing the Deputy Assistant Secretary for Records and Publishing Services to make classification determinations pursuant to § 1.8(d) for a group of documents. Grafeld 4th ¶¶ 37-38; Grafeld 5th ¶ 4. This and the other sworn declarations, without any contradictory evidence from Judicial Watch, must be taken at their word.
Third, and finally, Judicial Watch points out that for some withheld documents, withholding cannot be proper under Executive Order 12958 because that order is dated April 17, 1995 while the documents have earlier dates. For example, document 40AK2342, withheld in Civil Action 96-2747, has the date July 28, 1994. Swiatek 2d Supp. Decl. Supp. Vaughn Index at 1. The DOC replies that these documents pre-dating the Executive Order were originally classified prior to the FOIA request pursuant to the April 17 order. While the DOC could have written more lucid declarations on this particular point, the DOC has nonetheless affirmed, through its sworn declarations, that it did classify all documents pursuant to the April 17 order and that its classifications pursuant to that order were proper.
Therefore, for all these reasons, the DOC's Exemption 1 withholdings were proper, and the agency is entitled to Summary Judgment.
B. Exemption 2
Pursuant to Exemption 2, an agency is permitted to withhold documents "related solely to the internal personnel rules and practices of the agency." 5 U.S.C. 552(b)(2). Exemption 2 applies both to trivial internal matters, referred to as "low 2" information, and substantial internal matters, the disclosure of which would facilitate circumvention of the law, referred to as "high 2" information. See Crooker v. ATF, 670 F.2d 1051, 1074 (D.C.Cir.1981).
The DOC has invoked Exemption 2 only to withhold "high 2" information. To establish its right to withhold "high 2" information, the DOC must show that (1) the withheld information is "predominantly internal" and (2) its disclosure "significantly risks circumvention of agency regulations or statutes." Crooker, 670 F.2d at 1073-74; Founding Church of Scientology v. Smith, 721 F.2d 828, 831 (D.C.Cir.1983). In light of Exemption 2's anti-circumvention purpose, public interest in the disclosure is legally irrelevant. See Voinche v. FBI, 940 F. Supp. 323, 328 (D.D.C.1996); *166 instead, the focus is on whether disclosure will "benefit those attempting to violate the law and avoid detection," see Crooker, 670 F.2d at 1054.
In Civil Actions 95-133, 96-2747, and 97-289, the DOC withheld Office of Security guidelines for protecting the Secretary of Commerce on trade missions and guidelines for internal audits of Commerce expenses and travel vouchers. Swiatek 1st Supp. Decl. ¶ 5 & Exh. A. at 1-2; Swiatek 2d Supp. Decl. ¶ 26 & Exh. A; Swiatek 3d Supp. Decl. ¶ 5. Disclosure of this information would compromise the Secretary's safety, making the Secretary subject to unlawful attacks, and could enable Commerce employees to evade the law when preparing expenses for audit. Id. Such internal guidelines and audit procedures are exempt from disclosure. Ginsburg, Feldman & Bress v. Federal Energy Administration, 591 F.2d 717, 723 (D.C.Cir.1978) (en banc); accord Kaganove v. EPA, 856 F.2d 884 (7th Cir.1988) (permitting withholding of guidelines and specifications for employee promotions); Dirksen v. Dep't of Health and Human Serv., 803 F.2d 1456 (9th Cir.1986) (permitting withholding of internal processing guidelines for medicare claims).
In Civil Actions 95-133 and 97-2416, the DOC withheld government credit card numbers to prevent public access and misuse. See, e.g., Rooney Decl. ¶ 19 & Exh. The Customs Service withheld cases, file numbers and other administrative markings that indicated certain aspects of enforcement cases because knowledge of this information may render the Customs Service's electronic records system vulnerable to hacking, and facilitate circumvention of the laws and regulations enforced by the Customs Service. See Marshall Decl. ¶¶ 9-11. The DOD also withheld documents containing information describing the DOD's communication methods, as well as those of other government agencies, that are not generally known to the public, the disclosure of which may facilitate circumvention of the law. See Aly Decl. ¶¶ 5-7; McIntyre Decl. ¶ 8. Judicial Watch makes no argument in favor of compelling disclosure. Thus, taking the agency at its word, these withholdings are proper.
C. Exemption 3
An agency may invoke FOIA Exemption 3 to prevent disclosure of documents that are:
[s]pecifically exempted from disclosure by statute ..., provided that such statute (A) requires that the matters be withheld from the public in such a manner as to leave no discretion on the issue, or (B) establishes particular criteria for withholding or refers to particular types of material to be withheld.
5 U.S.C. 552(b)(3) (emphasis added). To determine whether withholdings are proper, "[t]he sole issue ... is the existence of a relevant statute and the inclusion of withheld material within that statute's coverage." Goland v. CIA, 607 F.2d 339, 350 (D.C.Cir.1978). Courts limit nondisclosure statutes to those that are "the product of congressional appreciation of the dangers inherent in airing particular data" and that "incorporate[] a formula whereby the administrator may determine precisely whether the disclosure in any instance would pose the hazard that Congress foresaw." Am. Jewish Cong. v. Kreps, 574 F.2d 624, 628-29 (D.C.Cir.1978). Therefore, "only explicit nondisclosure statutes that evidence a congressional determination that certain materials ought to be kept in confidence will be sufficient to qualify under the exemption." Irons and Sears v. Dann, 606 F.2d 1215, 1220 (D.C.Cir.1979). See generally Nat'l Ass'n of Home Builders v. Norton, 309 F.3d 26, 37 (D.C.Cir.2002).
*167 In these cases, the DOC relies on several statutes that qualify as Exemption 3 nondisclosure statutes and thus permit its withholding of documents. First, the DOC and the CIA invoke the National Security Act of 1947, requiring the CIA director to protect intelligence sources and methods from unauthorized disclosure, 50 U.S.C. § 403-3(c)(6), and requiring protection of the functions, names and official titles of CIA personnel, id. § 424. Second, the DOC and CIA invoke § 6 of the Central Intelligence Agency Act of 1949, 50 U.S.C. 403g, exempting the CIA from any law that requires publication or disclosure of the organization or function of the CIA, or any information with respect to the agency's employees or activities. Both statutes qualify as Exemption 3 statutes. CIA v. Sims, 471 U.S. 159, 167, 105 S. Ct. 1881, 85 L. Ed. 2d 173 (1985); Krikorian v. Dep't of State, 984 F.2d at 465; Fitzgibbon v. CIA, 911 F.2d 755, 761 (D.C.Cir.1990); Founding Church of Scientology v. Nat'l Security Agency, 610 F.2d 824, 827-29 (D.C.Cir.1979); Pfeiffer v. CIA, 721 F. Supp. 337, 341-42 (D.D.C.1989). Third, the DOC also properly invokes § 12(c) of the Export Administration Act ("EAA"), 50 U.S.C. app. § 2411(c)(1), prohibiting public disclosure of information obtained with respect to license applications unless the Secretary determines that the disclosure is in the national interest. See Wisc. Project on Nuclear Arms Control v. Dep't of Commerce, 317 F.3d 275, 281 (D.C.Cir.2003) (holding that the statute qualifies as an Exemption 3 statute). Fourth, the DOC properly invokes the Ethics in Government Act, 5 U.S.C. app. § 107(a)(2), which prohibits public disclosure of government employees' reports to supervising ethics offices. See Meyerhoff v. EPA, 958 F.2d 1498, 1502 (9th Cir.1992); Judicial Watch v. Rossotti, 285 F. Supp. 2d 17, 30 (D.D.C.2003) (holding that various versions of the statute qualify as an Exemption 3 statute). Fifth, the DOC properly invokes the Patent Act, 35 U.S.C. § 122, prohibiting disclosure of patent applications and information pertaining to such applications. See Irons & Sears v. Dann, 606 F.2d 1215 (D.C.Cir.1979) (holding that the statute qualifies as an Exemption 3 statute). Sixth, the DOC properly invokes Federal Rule of Criminal Procedure 6(e), which prohibits the release of grand jury transcripts, as well as the names or identities of actual or potential grand jury witnesses, or other information that would reveal the scope, focus, and direction of the grand jury. See Fund for Constitutional Government v. Nat'l Archives and Records Service, 656 F.2d 856, 867, 869 (D.C.Cir.1981) (holding that the statute qualifies as an Exemption 3 statute). Finally, the DOC properly invokes the Smith-Mundt Act, which prohibits dissemination within the United States of certain materials about the United States authorized by the Secretary of State and prepared for dissemination abroad, 22 U.S.C. § 1461, and which prohibits program materials prepared by the United States Information Agency from dissemination within the United States, id. § 1461-1a. See Essential Info. v. United States Info. Agency, 134 F.3d 1165, 1166-68 (D.C.Cir.1998) (holding that the statute qualifies as an Exemption 3 statute).
Having properly identified Exemption 3 statutes that permit withholding, the DOC now need only demonstrate that the withheld documents fall within the statutes' ambit. The DOC's Vaughn Index and the accompanying declarations accomplish this task.
With reference to its statutory invocations, the DOC and the CIA have withheld information regarding intelligence sources and methods; names and other identifying information pertaining to the structure of CIA records. See Swiatek Supp. Decl. ¶ 9; *168 Briick Decl. ¶¶ 16, 24, 35-37. The DOC has also withheld export license application information pursuant to the EAA and Executive Branch Public Financial Disclosure Reports pursuant to the Ethics in Government Act. See Swiatek 2d Supp. Decl., Exh. A. Consistent with Federal Rule of Criminal Procedure 6(e), the DOC and OIG withheld agent notes containing information that would identify targets and/or subjects of grand jury investigations; information regarding grand jury subpoenas, containing specific matters considered by the grand jury. See Swiatek 2d Supp. Decl. ¶ 5; Garmon Decl. ¶ 3. Consistent with the Smith-Mundt Act, the DOC withheld five editions of the United States Information Agency's "Wireless File," a daily electronic news service disseminated abroad, and each edition's table of contents. See Grafeld 4th Decl. ¶¶ 39-41, pp. 106-108.
Judicial Watch claims that the DOC has not properly specified that certain documents are exempt pursuant to the EAA and that the DOC's description of these documents is inadequately general. Judicial Watch's claim, made without citation to legal authority, is unfounded. The DOC, in its Vaughn Index, explains that documents withheld under Exemption 3 are "being withheld pursuant to § 12(c) of the [EAA]." Rooney Vaughn Index at 44. The DOC then lists withheld documents, each "concerning an export license application" and each containing a description, such as "[i]nformation about a company that is applying for an export license." Rooney Vaughn Index at 46-135. Taken together, the information in the DOC's Vaughn Index is sufficient to permit Exemption 3 withholding for these documents.
Judicial Watch similarly claims that the DOC has not properly specified that certain documents are exempt pursuant to the Smith-Mundt Act and that the DOC's description of these documents makes it impossible for Judicial Watch to determine whether the documents are truly covered by the Act. Again, Judicial Watch's claim lacks merit. Grafeld's declarations list all five documents that the DOC has withheld pursuant to Smith-Mundt, names and explains the act, and describes the contents of each document. Grafeld 4th ¶¶ 39-41, Grafeld 5th ¶ 16. The Wireless Files withheld and described by the DOC are exempt from disclosure. Essential Info., 134 F.3d at 1168. The DOC has produced sufficient information to invoke Exemption 3 for these documents.
D. Exemption 4
Exemption 4 permits an agency to withhold "trade secrets and commercial or financial information obtained from a person and privileged or confidential." 5 U.S.C. 552(b)(4); see Public Citizen Health Research Group v. FDA, 704 F.2d 1280, 1290 (D.C.Cir.1983); Gulf & Western Indus., Inc. v. United States, 615 F.2d 527, 529 (D.C.Cir.1980). Exemption 4 seeks to ensure that the government is supplied with information in an efficient and effective manner and protects a persons who submits commercial and financial information from competitive disadvantages that might otherwise accompany this type of information gathering. See Critical Mass Energy Project v. NRC, 830 F.2d 278 (D.C.Cir.1987) [hereinafter Critical Mass I]. The term "commercial" for Exemption 4 purposes is construed broadly to include information in which the submitting party has a "commercial interest." Public Citizen Health Research Group, 704 F.2d at 1290. Information qualifies as "confidential" in one of two ways. Courts apply one test for confidentiality when the government required the information's submission and apply a different test when submission was voluntary.
*169 1. Compelled Information
When the government obliges or compels a document's submission, information contained in that document is confidential
if disclosure of the information is likely to have either of the following effects: (1) to impair the Government's ability to obtain necessary information in the future; or (2) to cause substantial harm to the competitive position of the person from whom the information was obtained.
Nat'l Parks & Conservation Ass'n v. Morton, 498 F.2d 765, 770 (D.C.Cir.1974), limited by Critical Mass Energy Project v. Nuclear Regulatory Comm'n, 975 F.2d 871, 872 (D.C.Cir.1992) [hereinafter Critical Mass II] (limiting the application of National Parks to FOIA requests for financial or commercial information that a person is obliged to provide to the government).
In each of the related civil actions now before the Court, the DOC has withheld information that it required of parties hoping to participate in or seeking advocacy during the Department's trade missions. The information included marketing data, financial arrangements, business contacts, contract details, negotiation status, estimates that companies have placed on the value of foreign projects and requests for meetings with foreign contacts that companies have made to DOC. Swiatek 2d. Supp Decl. at 106-12 (listing and briefly describing individual documents, such as "40AK1714, January 11, 1995 2 pages. Matrix: Summary of Possible India Advocacy Projects. Redacted: meetings requested, values."). The parties do not contest that the withheld information is commercial; nor do they dispute that the information was compelled, see Lepelletier v. FDIC, 977 F. Supp. 456, 460 n. 3 (D.D.C.1997) (holding that information required for participation in a voluntary program is information that a party was "obliged to furnish."). Based on the withheld information being commercial and compelled, the DOC then argues under the rubric set forth in National Parks that the information is confidential, and thus within Exemption 4, because it is likely to cause the entities submitting the information substantial competitive harm, as well as chill the necessary supply of this type of information, the receipt of which is necessary to fulfillment of the DOC's mission. See Swiatek 1st Supp. Decl. at 5; Swiatek 2d Supp. Decl. at 7-8.
In Civil Actions 95-133, 96-2747, and 97-289, Judicial Watch challenges the DOC's assertion of confidentiality on the basis that the DOC, through its Vaughn indices and affidavits, has not shown the requisite likelihood of harm to the entities contributing information. Judicial Watch criticizes the DOC for not submitting "concrete evidence of specific harm" that would occur upon release of the withheld documents. Judicial Watch's criticism has no basis in law. Both Judicial Watch and the DOC cite National Parks, which, as already noted above, requires only that the substantial harm be "likely." Nat'l Parks, 498 F.2d at 770; see also McDonnell Douglas Corp. v. Dep't of the Air Force, 375 F.3d 1182, 1187 (D.C.Cir.2004).
The DOC has shown a likelihood of substantial harm. The withheld information, the DOC argues, "would be likely to cause ... [the information contributors] substantial harm ... because disclosure to competitors of commercial plans and desired contacts could be useful to competitors interested in developing their own ventures." Swiatek 1st Supp. Decl. Exh. A. at 5; see also Swiatek 2d Supp. Decl. at 8. If the DOC were to disclose the estimated value of potential ventures and the identities of potential corporate partners, the *170 entities contributing this information could face competition that, but for the disclosure, would have never existed. Where the DOC has stated a case for likelihood of substantial harm and Judicial Watch has responded without viable legal or factual challenge, this Court concludes that the DOC's Exemption 4 withholdings in these cases are valid.
Even if no likelihood of substantial harm to the information contributors existed, the information is confidential, and therefore within Exemption 4, based on the likelihood that disclosure would impair the government's ability to collect and utilize similar information in the future. The DOC asserts that collection of this information is "necessary to assist Commerce in fulfilling its mission," including advocacy for important projects and the identification of entities that will be successful. Motion for Summary Judgment 95-133, at 28. Judicial Watch does not put forth argument or evidence disputing the DOC's argument that disclosure would chill the DOC's similar, future data collection endeavors.
Judicial Watch raises further, specific challenges to the DOC's withholdings in Civil Action 97-2416. First, Judicial Watch claims that a finance agreement between OPIC and the Dabhol Power Company cannot be withheld in full. The finance agreement, which has document numbers 40AA3900 and 40AM2828, consists of a three-page cover letter that the DOC has released and the agreement itself, which sets forth terms such as the "interest rate, repayment schedules, interest rate changes, commitment and other fees, expenses and premiums." the specific negotiated terms." Naide Vaughn Index at 6. Contracts in and of themselves may not be commercial information subject to Exemption 4; however, terms within contracts certainly can be exempt. Comstock Int'l v. Export-Import Bank, 464 F. Supp. 804, 808 (D.D.C.1979); Piper & Marbury, L.L.P. v. United States Postal Serv., No. 99-2383, 2001 WL 214217, 2001 U.S. Dist. LEXIS 2492 (D.D.C. Mar. 6, 2001).
In Comstock, FOIA requesters sought disclosure of a loan agreement. The court permitted the Export-Import Bank to withhold the agreement under Exemption 4 on the basis that it contained confidential commercial and financial information. The agreement, if disclosed, would have significantly impaired the bank's ability to promote United States exports, because borrowers would flock to lenders who would be less likely to disclose loan agreement terms, and would have impaired the bank's effectiveness in obtaining concessions from debtors in future negotiations. Id.
In this case, the DOC alleges similar harms would result from disclosure of OPIC's finance agreement. OPIC would face difficulty negotiating future agreements with borrowers fearful of disclosure. In addition, the business submitter has informed OPIC that it would suffer "substantial competitive harm by negatively impacting their ongoing negotiations with third parties involved in the project." Naide Vaughn Index at 7. The DOC has established the commercial and confidential nature of the finance agreement's terms to the same extent that the bank established these things with respect to its agreement in Comstock, and therefore, the DOC is entitled to withhold the finance agreement in its entirety pursuant to Exemption 4.
As to other documents in these matters that Judicial Watch claims the DOC withheld without sufficient explanation, this Court finds after review that the DOC's explanations, set forth in its Vaughn indices and affidavits, are adequate for withholding the documents and portions of documents described
*171 2. Voluntarily Submitted Information
When a person voluntarily provides documents to the government, information contained in those documents is confidential if it is of the kind that the person would not customarily disclose to the public. Critical Mass II, 975 F.2d at 879. The agency bears the burden of proving the document provider's custom. Id. at 879. It is the document provider's custom, not the industry custom, that matters. Ctr. for Auto Safety v. Nat'l Highway Traffic Safety Admin., 244 F.3d 144, 148 (D.C.Cir.2001). While affidavits from the information providers themselves or evidence of confidentiality agreements would carry more weight on the custom issue, see, e.g., Parker v. Bureau of Land Mgmt., 141 F. Supp. 2d 71, 78-79 (D.D.C.2001), it is sufficient for an agency to proceed solely on its sworn affidavits, Judicial Watch v. Dep't of Justice, 306 F. Supp. 2d 58, 68 (D.D.C.2004).
Voluntary submission are only at issue in Civil Action 97-2416. In that case, the DOC relies solely on the declarations of government officials who describe the withheld information, assert that the information was voluntarily submitted, and assert the information providers customarily refrain from disclosing this kind of information to the public. The DOC withheld information from 16 documents related to "actual or planned business or financial activities, such as bids on construction projects, plans for investment, sales offers, etc." Grafeld 4th Decl. ¶ 44. The DOC collected this kind information, in large part, from willing U.S. and foreign business contacts in an effort "to formulate effective policies" and "to assist Americans in specific cases." Id. at ¶ 45. These business contacts generally submit the information "with the knowledge that a good working relationship with American officials abroad can be good for business;" though "no quid pro quo" exists "and the information cannot be said to be required." Id. ¶ 46. The DOC and the business contacts have an "understanding more usually tacit than explicit that the information will be held in confidence by the U.S. and not publicly divulged," and respect for this understanding is "essential" for the U.S.'s continued acquisition of this information. Id. ¶ 45.
In addition to these general remarks regarding Exemption 4 withholdings, the DOC describes the withheld information document-by-document. Consider two descriptions as examples. Document C7 is a telegram from the U.S. Embassy in Beijing to the DOC. The document contains information from a Chinese company "regarding its range of business operations and dealings with other firms, including state-owned entities." The information "is of the type not customarily give to the public." Grafeld 4th Decl. at 40-41. Document C108 is a telegram from the U.S. Embassy in Jakarta to the Department of State and concerns the Indonesian effort to develop a national car. The document contains "assessments on the implementation of the national car policy conveyed in confidence to the embassy by ... industry sources" and "information concerning investment plans by an American firm that was voluntarily shared with the Embassy .... which is of a kind not customarily shared with the public." Grafeld 4th Decl. at 67-68.
Judicial Watch first argues that some of the withheld information in five of these 16 documents was not voluntarily submitted. Specifically, Judicial Watch claims that the bidding information submitted was required information. To be sure, bidding information submitted at an agency's behest for consideration by that agency is required, Lepelletier, 977 F.Supp. at 460 n. 3; however, the bidding information in this *172 case, though collected by the DOC, was submitted to foreign governments for the governments' consideration. Grafeld 5th Decl. ¶ 8. Such information is not required by any United States legal authority and therefore is voluntarily submitted. See Ctr. for Auto Safety, 244 F.3d at 149.
Next, Judicial Watch argues that the document descriptions just quoted do not adequately establish each documents's confidentiality under Exemption 4: it claims that the DOC has not sufficiently demonstrated the information provider's custom of non-disclosure. Judicial Watch's bare assertions, made without evidentiary support, are unpersuasive. See Allnet Communication Servs. v. FCC, 800 F. Supp. 984 (D.D.C.1992) (finding that a requester's unsubstantiated challenge to Exemption 4 withholding was "vague hearsay" that "cannot raise a genuine issue as to a material fact"). These DOC descriptions, which are some of the least detailed of the sixteen, are adequate. They establish that the withheld information is both commercial and confidential and that the DOC withholdings under Exemption 4 were proper.
E. Exemption 5
Exemption 5 permits an agency to withhold documents constituting "inter-agency or intra-agency memorandums or letters which would not be available by law to a party other than an agency in litigation with the agency." 5 U.S.C. § 552(b)(5). Withholdings under this exemption may include documents "normally privileged in the civil discovery context." NLRB v. Sears, Roebuck & Co., 421 U.S. 132, 148, 95 S. Ct. 1504, 44 L. Ed. 2d 29 (1975); see also Martin v. Office of Special Counsel, 819 F.2d 1181, 1185 (D.C.Cir.1987). Here, the DOC contends that the withheld documents fall within the deliberative process, attorney-client, and work product privileges.
1. Deliberative Process Privilege
Exemption 5 and the deliberative process privilege operate to "protect the decisionmaking processes of government agencies and encourage the frank discussion of legal and policy issues by ensuring that agencies are not forced to operate in a fishbowl. Nevertheless, this privilege, like all FOIA exemptions, must be construed as narrowly as consistent with efficient Government operation." Mapother v. Dep't of Justice, 3 F.3d 1533, 1537 (D.C.Cir.1993) (internal citations and quotes omitted). Proper application of the deliberative process privilege requires that the withheld documents be both pre-decisional and deliberative. Id. A document is pre-decisional if it was prepared in assistance of agency decision-making, as opposed to supporting, post hoc, a decision that predates creation of the document. See Petroleum Info. Corp. v. Dep't of Interior, 976 F.2d 1429, 1434 (D.C.Cir.1992). An agency need not:
identify a specific decision in connection with which a memorandum is prepared. Agencies are, and properly should be, engaged in a continuing process of examining their policies; this process will generate memoranda containing recommendations which do not ripen into agency decisions; and the lower courts should be wary of interfering with this process.
Sears, 421 U.S. at 151 n. 18, 95 S. Ct. 1504. A document is deliberative if it reflects the discourse that occurred during the decision-making process, and that discourse is of the type that would be discouraged absent the ability to withhold. See Petroleum Info. Corp., 976 F.2d at 1434. Exemption 5 extends to recommendations, draft documents, proposals, suggestions, *173 and like documents containing the opinion of the writer, as opposed to the policy of the agency. See Coastal States Gas Corp. v. Dep't of Energy, 617 F.2d 854, 866 (D.C.Cir.1980).
In these cases, the DOC has withheld or redacted documents regarding the selection of companies to assist the Secretary on trade missions, policy and advocacy decisions, post-trade policies, and the establishment of the Ronald H. Brown Memorial Library, which include subjective analysis, candid comments, and recommendations. See, e.g., Rooney Decl. ¶¶ 24, 27, 29, 32, 35-36, 38, 40, 43 & Exh. B; Swiatek 2d Supp. Decl. ¶ 20 & Exh. A; McD Miller Decl. ¶¶ 3-7; Grafeld 2 Decl. ¶ 24 & pp. 25-26, 29, 40, 43-44; Grafeld 4th Decl. at 30-31, 34, 68, 72; Swiatek 2 Decl., Exh. A; Nadie Decl., Vaughn Index; Sorbera Decl., App. A-1; Parsons Decl. ¶ 5 & Exh A. The DOC maintains that the disclosure of this information would impede its decision-making process by discouraging frank discussions amongst its employees. Judicial Watch disputes withholdings in each case.
In Civil Action 95-133 the DOC withheld issue papers written to assist DOC decision-makers, recommendations on how to conduct negotiations, a draft of an agreement with China, a draft of a letter from the Commerce Secretary to the Vice Premier of the State Council. All these documents are part of the DOC's deliberative process, were prepared prior to any agency actions, and thus were properly withheld under Exemption 5. Judicial Watch v. United States Dep't of Energy, 310 F. Supp. 2d 271, 317 (D.D.C.2004) (briefing papers prepared for cabinet secretary); Sears, 421 U.S. at 150, 95 S. Ct. 1504 (recommendations and deliberations); Coastal States, 617 F.2d at 866 (drafts). Judicial Watch offers no valid challenge to the DOC's withholding of these documents.
In Civil Action 97-289, the DOC has withheld or redacted numerous documents that Judicial Watch has organized into groups and has challenged withholding on a group-by-group basis. Documents in the first group "discuss proposals for ... the elements of the Department's final brokered resolution" certain contracts related to uranium transactions. Opp. Brief in 97-289 at 30 (quoting the Swiatek Vaugn index). Documents in the second group contain "deliberations concerning issues such as gift acceptance, legislative proposals, financial disclosure laws...." Id. (quoting the Swiatek Vaugn index). Documents in the third group are "advocacy matrices." These matrices, which DOC employees complete, contain advocacy recommendations, the writer's assessment of any problems with specific projects, and the writer's assessment of any looming obstacles. Documents in the remaining groups are letters and other documents written by DOC and other U.S. government employees for DOC decision-makers to consider as they deliberate about advocacy on behalf of particular companies, foreign policy, trade policy, export policy, and how to present DOC policy to the public. In each case, these documents fall under Exemption 5. The documents are pre-decisional, because they do not represent final agency action, but instead are the recommendations and personal viewpoints of agency employees. The documents are deliberative, because they reflect the discourse within the DOC.
In Civil Action 96-2747, the kinds of documents at issue are substantially the same as those in Civil Action 97-289. For the reasons just discussed, the DOC's withholdings in these cases is proper.
In the first summary judgment motion for Civil Action 97-2416, the DOC has withheld handwritten notes that
*174 reflect the Commerce employees' deliberations concerning: congressional inquiries, press inquiries, Freedom for Information Act requests, .... They represent opinions and recommendations for the decisionmakers to evaluate.
Rooney Vaughn Index at 217. The DOC also withheld talking points and recommendations for how to answer questions about the duties of two DOC employees. In each case, these documents were prepared by DOC employees for the consideration of DOC decision-makers. All were properly withheld. Judicial Watch's selective quoting of the Vaughn indices does not convince the court otherwise.
In the second summary judgment motion for Civil Action 97-2416, eight documents are at issue. Document C140 is a draft plan for a business promotion package for Bosnia and Document C138 is a memo sent by a State Department employee that contains State Department and USAID comments on a DOC Preliminary Draft Commercial Strategy for Bosnia and Croatia. Drafts and comments on drafts are squarely within the scope of Exemption 5. Coastal States, 617 F.2d at 866. The remaining six documents are properly withheld under Exemption 1, see supra, and, as regards these documents, the Court makes no enquiry under Exemption 5 at this time.
2. Attorney-Client Privilege
The attorney-client privilege in the Exemption 5 context protects "confidential communications between an attorney and a client relating to a legal matter for which the client has sought professional advice." Mead Data Central v. Dep't of the Air Force, 566 F.2d 242, 252 (D.C.Cir.1977). The privilege promotes "[u]ninhibited confidence in the inviolability of the relationship [which] is viewed as essential to the protection of a client's legal rights, and to the proper functioning of the adversary system." Coastal States, 617 F.2d at 862. The privilege protects all documents reflecting a client's attempt to obtain legal counsel and advice, see id., as well as facts divulged by the client and opinions givens by the attorney, Schlefer v. United States, 702 F.2d 233, 244 n. 26 (D.C.Cir.1983). "In the governmental context, the `client' may be the agency and the attorney may be an agency lawyer." Tax Analysts v. IRS, 117 F.3d 607, 618 (D.C.Cir.1997).
In Civil Action 95-133, the DOC has withheld reports prepared by attorneys in the Office of the General Counsel describing to superiors the advice they were providing to clients within the department in response to those clients' request for advice. The reports contained confidential information. Such reports are within Exemption 5's ambit. Ludsin v. Small Business Admin., No. 96-2865, slip op. at 3 (D.D.C. Apr. 24, 1997) (holding that an intra-agency report containing an agency attorney's legal conclusions and reasoning falls within the exemption).
In Civil Action 97-2416, the DOC withheld documents that were requests for legal advice made by DOC clients to the Office of the General Counsel or responses made by attorneys to their DOC clients. Rooney Vaughn Index at 246. The documents contain confidential information not disclosed to third parties. Id. The DOC describes each document, identifies the sender and the receiver, and the nature of the legal request. For example, document 03CC0387 consists of "draft documents from OGC attorney Gordon Fields to client, Commerce employee Ray Kammer, regarding his request for OGC's proposed input on responses to Congressional inquiries." Id. at 248. For a second example, document 50JJ2558 is a letter responding to legal questions posed by Alma Brown, *175 Secretary Brown's wife, concerning her and her husband's attendance at fundraising events. Id. at 247. As the DOC correctly argues based on its description, these documents are directly related to requests for legal advice. Further, the DOC attests that the information in the documents remains confidential. Id. at 246. Therefore, the DOC's withholdings here were proper.
With respect to document 50JJ2558, Judicial Watch's raises the argument that Alma Brown is no client of the DOC. Judicial Watch, however, offers no legal support for the proposition. It seems reasonable to the Court that the wife of a cabinet secretary, like the first lady, may at times be entitled to be entitled to legal advice from the government agency as regards acts relating to her official capacity as wife of the Secretary. See Assoc. of Am. Phys. & Surgeons v. Clinton, 997 F.2d 898, 911 (D.C.Cir.1993) (finding that First Lady Hillary Clinton was a government employee for purposes of the Federal Advisory Committee Act).
In Civil Actions 97-289 and 97-2747, the DOC withheld documents with descriptions substantially similar to those discussed in the other actions, and therefore, the withholdings in Civil Actions 97-289 and 97-2747 were proper.
3. Work-Product Privilege
The work-product privilege is intended to facilitate the adversary process by shielding an attorney's preparatory work from an opposing party's scrutiny. See Jordan v. Dep't of Justice, 591 F.2d 753, 775 (D.C.Cir.1978). In the Exemption 5 context, the work-product privilege permits an agency to withhold documents prepared by an attorney in anticipation of litigation. See Hickman v. Taylor, 329 U.S. 495, 509-10, 67 S. Ct. 385, 91 L. Ed. 451 (1947). So long as a document is prepared in anticipation of foreseeable litigation, the privilege applies, Schiller v. NLRB, 964 F.2d 1205, 1208 (D.C.Cir.1992), and sweeps broadly so as to include factual material contained in such a document, Martin v. Office of Special Counsel, 819 F.2d 1181, 1187 (D.C.Cir.1987).
In Civil Action 96-2747, the DOC withheld handwritten notes made during meetings and hearings concerning plaintiff Judicial Watch's FOIA requests and this litigation. The DOC affirms that two OFG attorneys, Elise Packard and Judith Means, made these notes in contemplation of the litigation with Judicial Watch. Swiatek 2d Supp. Decl. Exh. A at 52-53. In addition to these notes, the DOC also withheld an OGC attorney's one page memo and the attached 82 pages of organized, abridged deposition testimony it introduces. The memo explains what portions of the deposition the author included, explained the subject-matter headings used to classify parts of the deposition, and was to be used by the "Acting General Counsel in developing legal theories and strategies for ongoing litigation with Judicial Watch." Id. at 54. In Civil Action 97-289, the DOC withheld two documents: one, prepared by OGC lawyers, talks about legal theories OGC contemplated in response to an administrative complaint filed against the DOC before the Federal Elections Commission; the other, an OGC lawyer's handwritten notes from a court proceeding that recounted the issues important to that lawyer to aid that lawyer in devising a legal strategy. All of these documents were prepared by lawyers. In every case, litigation, either this litigation or some other litigation was either occurring or foreseeable. These documents were properly withheld under Exemption 5 and the attorney work product privilege.
*176 F. Exemption 6
Exemption 6 permits an agency to withhold documents containing "personnel and medical files and similar files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy." 5 U.S.C. 552(b)(6). "Similar files" sweeps broadly and includes "detailed government records on an individual which can be identified as applying to that individual." Dep't of State v. Washington Post Co., 456 U.S. 595, 602, 102 S. Ct. 1957, 72 L. Ed. 2d 358 (1982). Disclosure of such information will constitute a "clearly unwarranted invasion of personal privacy" when the privacy interest of the individual outweigh the public interest in disclosure. See Dep't of the Air Force v. Rose, 425 U.S. 352, 372, 96 S. Ct. 1592, 48 L. Ed. 2d 11 (1976).
In these cases, the DOC withheld social security numbers, home telephone numbers and addresses, a discussion of a visa applicant, visa and passport information, dates of birth, medical information, credit card information, and personal information on a foreign government official, "and the like." See, e.g., Grafeld 4th Decl. ¶¶ 49-51, pp. 28-30, 32; Rooney Decl. ¶ 23 & Exh. B.; Harrison Decl. ¶ 11 & Exh. A; Naide Decl. Vaughn Index at 5. The DOC maintains that the disclosure of this information would identify individuals and result in a clearly unwarranted invasion of their personal privacy. As balanced against the public interest in disclosure, the disclosure of this information has little to do with the public's understanding of the manner in which the DOC conducts business.
Most of the controversy in this case surrounds the information lumped into the DOC's "and the like" category. As to the enumerated categories, Judicial Watch, in Civil Actions 97-2724 and 97-289, simply requests the court to conduct in camera review. This court considered the issue of Exemption 6 withholdings related to other, but similar documents in a 1996 summary judgment motion in Civil Action 95-133. In that case, the DOC had redacted categories of information similar to those now enumerated, namely:
home addresses and telephone numbers, dates of birth, hair and eye color, heights and weights, allergies, family information, Social Security numbers, [and] Visa and passport data....
Judicial Watch v. Dep't of Commerce, 83 F. Supp. 2d 105, 112 (D.D.C.1999). In addition, the 1996 case also considered the DOC's withholding of "a performance appraisal that pre-dates plaintiff's FOIA request." Id. Again, similar withholdings, part of the "and the like" category, are now before the court. In the current summary judgment motion in Civil Action 95-133, the DOC withheld performance appraisals and descriptions of employee performance that might merit DOC awards all pre-dating September 8, 1994 and thus the FOIA requests and searches at issue. Swiatek Decl Sep. 28, 2003 Exh. A (describing documents 40AB6255, 40AB6092, 40AB6094, and 40AB6253). Here, just as in that case:
Plaintiff does not dispute the withholding of this information under Exemption 6 but urges the Court to review it in camera just to verify that the withholdings are proper. The Court declines plaintiff's suggestion, as plaintiff has pointed to absolutely nothing in the affidavits submitted to suggest that they contain information different than that described above, all of which falls squarely within the ambit of this exemption. Plaintiff also disputes the withholding of a performance appraisal on the grounds that it may contain evidence of government corruption related to his FOIA request. Because the appraisal *177 pre-dates the plaintiff's FOIA request, however, the Court finds that it is highly unlikely that this particular performance appraisal contains evidence of the government's attempts "to thwart plaintiff's FOIA request." Accordingly, as the claimed Exemption 6 withholdings do not present genuine issues of material fact, summary judgment for the defendant is appropriate.
Id. (citations omitted).
The Court addresses the remaining "and the like" withholding issues in turn.
In Civil Action 95-133, Judicial Watch challenges the redaction of personal appointments and associated names and home contract information located in some of Secretary Ron Brown's calendars and schedules dating from 1993 and 1994. Swiatek Decl Sep. 28, 2003 Exh. A. The D.C. Circuit has held that appointment calendars that are not circulated to other agency employees and serve no agency purpose are not even agency records under FOIA. Bureau of Nat'l Affairs v. Dep't of Justice, 742 F.2d 1484, 1495 (D.C.Cir.1984). As for daily agendas or other schedules that do circulate, these items are agency records, but redaction of personal information is appropriate. Id. at 1496. Therefore, Judicial Watch is not entitled to release of personal information contained within the Secretary's calendars and schedules. Still, Judicial Watch argues that it is entitled to know whether any of these documents refer to meetings between the Secretary and Nolanda Hill, who testified before this court at length about the DOC's suppression of documents in the first search not at issue in this case. The DOC replies in its final brief that the records, after additional review, contain no mention of Ms. Hill. Reply Brief in 95-133, at 37 n. 17.
In the first summary judgment proceeding in Civil Action 97-2416, Judicial Watch makes several arguments for the disclosure of portions of particular documents. First, it argues that two kinds of information fall outside the class "similar files" protected by Exemption 6: for one, "comments" in response to being asked to name "known persons in South Africa" in document 03BA2052; for another, a cab driver's name and identification number in document 03AQ0516. When information withheld under Exemption 6 consists of "the names and identifying data of individuals mentioned during the course of routine day-to-day matters with" agencies, "[t]here is no reason to believe that the public will obtain a better understanding of the workings of various agencies" by becoming aware of this information. Voinche v. FBI, 940 F. Supp. 323, 329 (D.D.C.1996). Here, as in Voinche, the withheld information consists merely of names and identifying data for acquaintances of trade mission participants and a cab driver. "Accordingly, in light of the countervailing privacy interests of third parties about whom personal information is contained in the requested records, the Court finds that the defendant properly asserted Exemption (b)(6)." Id. at 330.
Second, Judicial Watch argues for disclosure of a resume sent to the DOC by the Department of Agriculture on behalf of an individual interested in "the South Africa Project." There is no evidence that the individual was hired or that the project ever got out of its embryonic stages and moved forward. Hinden Decl. Exh. A. While resumes of people dealing with the government may be subject to disclosure, Judicial Watch, Inc. v. Export-Import Bank, 108 F. Supp. 2d 19, 37 (D.D.C.2000), those resumes rejected may not, id. at 38. Again, withholding here in proper.
*178 Third, Judicial Watch takes issue with redactions from documents related to a DOC employee and a private individual who were implicated during an investigation of alleged improprieties at the American Institute of Taiwan in 1994. Rooney Vaughn Decl. at 537. It does not contest the redaction of names, but rather contests the redaction of additional "personal information" of the private individual. Id. Information beyond a person's name can identify that person, and courts should proceed to balance the privacy and disclosure interests when there exists "a causal relationship between the disclosure and the threatened invasion of privacy." Nat'l Ass'n of Retired Federal Employees v. Horner, 879 F.2d 873 (D.C.Cir.1989). Here, the DOC affirms that the private individual has a strong interest in not being associated with the 1994 investigation, because harassment might result. Rooney Vaughn Decl. at 537. Therefore, there is a causal relationship and a privacy interest. Judicial Watch offers evidence in support of a countervailing disclosure interest. Redaction of the "personal information" in these documents was proper.
In the second summary judgment proceeding in Civil Action 97-2416, Judicial Watch contests the non-disclosure of portions of two documents. Document C65 is a series of letters related to the denial of a visa application. Some letters recount episodes in a visa applicant's history that made the applicant, in the writer's view, unworthy of a visa. One letter sets forth reasons for visa denial, and another letter, now released to Judicial Watch, discussed one entity's visa sponsorship activities. Grafeld 5th Decl. ¶ 5. The DOC affirms that these letters contain specific information about the visa applicant and submits that disclosure would invade personal privacy without shedding light on the government's workings. With respect to the letters concerning the applicant's history, the DOC has justified exemption; however, with respect to the letter setting forth the reasons for denial, which the DOC admits, "explain[s] a routine application of immigration law," id., the DOC did not meet its burden, but the Court has examined this letter in camera and has determined that withholding is proper. Judicial Watch's argument that the document was redacted too broadly is unfounded in light of the DOC's detailed description and assertion that "no additional substantive information in this document may be segregated and released." Id.
Document C160 is a telegram from the State Department to several U.S. embassies The document is properly withheld pursuant to Exemption 4, see supra; however, the DOC withholds three paragraphs of the document pursuant to Exemption 6. Grafeld 4th Decl. at 87-88; Grafeld 5th Decl. ¶ 6. The three redacted paragraphs refer to financier Roger Tamraz's "personal financial status and ... alleged legal difficulties, which he has encountered in a foreign country." Grafeld 5th Decl. ¶ 6. The DOC further asserts that disclosure of the three paragraphs would shed little light on government activities. Id. Judicial Watch offers no good reason why disclosure would not be an unwarranted invasion of Mr. Tamraz's privacy. Withholding of this information on Exemption 6 grounds is proper.
Finally, Judicial Watch claims that other Vaughn index entries are too vague or otherwise inadequate. As before in this case, these claims are without merit because they rely on selective quotation, by omission, of the Vaughn indices and and mischaracterization of the DOC withholdings.
*179 G. Exemption 7
Exemption 7 permits an agency to withhold certain classes of documents compiled for law enforcement purposes. 5 U.S.C. § 552(b)(7); Ctr. for Nat'l Sec. Studs. v. Dep't of Justice, 331 F.3d 918, 926 (D.C.Cir.2003). A "law enforcement purpose" exists where there is a "rational nexus" between the compiled document and a law enforcement duty of the agency and where there is "a connection between an individual or incident and a possible security risk or violation of federal law." See Ctr. for Nat'l Sec. Studs., 331 F.3d at 926 (citation omitted). Several classes of documents may be withheld under Exemption 7. One class of document includes those documents whose disclosure could reasonably be expected to interfere with a pending or anticipated law enforcement proceeding. See 5 U.S.C. 552(b)(7)(A); Ctr. for Nat'l Sec. Studs., 331 F.3d at 926. A second class of documents includes those whose disclosure "could reasonably be expected to constitute an unwarranted invasion of personal privacy." 5 U.S.C. § 552(b)(7)(C). Finally, a third class of documents includes those whose disclosure would reveal "techniques and procedures for law enforcement investigations or prosecutions," 5 U.S.C. § 552(b)(7)(E), not well known to the public, see, e.g., Malloy v. Dep't of Justice, 457 F. Supp. 543, 545 (D.D.C.1978).
1. Exemption 7(A)
Exemption 7(A) is "designed to block the disclosure of information that will genuinely harm the government's case in an enforcement proceeding or impede an investigation." North v. Walsh, 881 F.2d 1088, 1097 (D.C.Cir.1989). To invoke Exemption 7(A), an agency must establish that the information was compiled for a law enforcement purpose and that disclosure would interfere with enforcement proceedings. Id. at 1097. The law enforcement proceeding must have been "a concrete, prospective law enforcement proceeding" at the time of the agency decision to withhold. Scheer v. Dep't of Justice, 35 F. Supp. 2d 9, 11-13 (D.D.C.1999).
In Civil Action 96-2747 and 97-289, the DOC withheld, claiming Exemption 7(A), documents containing agent notes about targets and/or subjects of an ongoing grand jury proceeding concerning a Department of Justice task force investigation into violations of campaign finance laws. The DOC also withheld the identity of a company subject to export enforcement investigation and specifics of the investigated transaction that would tip of the company if released. DOC maintains that release of this information would "interfere with enforcement proceedings by diminishing the government's ability to shape and control the law enforcement proceedings" and "compromise future prosecutions or plea agreements arising out of the investigation." See Garmon Decl. ¶¶ 3-4; Swiatek 2d Decl. at 95, 97. Despite Judicial Watch's assertions to the contrary, these statements by Garmon do indicate why the agent notes would reasonably be expected to interfere with a law enforcement proceeding the continued prosecution of violators of campaign finance laws and why, therefore, they should be exempted from disclosure pursuant to Exemption 7(A).
In Civil Action 95-133, the DOC invoked Exemption 7(A) to withhold information related to an ongoing export enforcement action, Swiatek Decl. Sept. 28, 1999 ¶ 26, ongoing BXA criminal enforcement actions, id. ¶ 29; Swiatek 3d Decl. Exh. A, and ongoing grand jury proceedings, Garmon Decl. ¶¶ 3-4. Judicial Watch challenges withholdings in documents 40KA0077 and 40KA0481, both withheld on other grounds, as too conclusory to establish the law enforcement purpose and the *180 nature of the enforcement proceedings. The DOC relies on its Vaugn Description: The document
contains information, part of a BXA investigative report, pertaining to an ongoing BXA law enforcement action.... Disclosure of the information ... would alert the subject of an ongoing investigation to agency opinions about the case, which could reasonably be expected to affect the way in which the subject of the investigations responds....
Swiatek Decl. Sept. 28, 1999 Exh. A. The DOC has made clear both the law enforcement purpose, the BXA investigation, and the ongoing nature of the proceedings. Its Exemption 7(A) withholdings in this case and all these cases are proper.
2. Exemption 7(C)
Like Exemption 6, Exemption 7(C) protects against unwarranted invasions of privacy. Exemption 7(C) protects the identities of suspects and others of investigatory interest who are identified in agency records in connection with law enforcement investigations. Reporters Comm. for Freedom of the Press, 489 U.S. 749, 780, 109 S. Ct. 1468, 103 L. Ed. 2d 774 (1989). Given a privacy interest, that interest must be balanced against the public interest, if any, that would be served by disclosure. Albuquerque Publ'g Co. v. Dep't of Justice, 726 F. Supp. 851, 855 (D.D.C.1989); however, as with other exemptions that require balancing, the public interest in only that interest central to FOIA: shedding light on an agency's performance of its statutory duties. Reporters Comm., 489 U.S. at 773, 109 S. Ct. 1468.
In Civil Action 97-2416, the DOC invokes Exemption 7(C) to withhold the names of export enforcement agents found in BXA investigatory files, Rooney Decl. ¶ 31 & Ex. B., the names of non-supervisory FBI and DOC employees in documents compiled for the OIC's criminal investigation into possible obstruction of justice by Webster Hubble (at the behest of the OIC), Gellert Decl. ¶¶ 4, 6., information compiled for the background investigation file of John Huang (at the behest of the Office of Personnel Management), Baker Decl. Exh. A., the names of private citizens employed to investigate government employee conduct (at the behest of the State Department), Dougherty Decl. ¶ 4, and the identities of Customs Officers conducting or supervising investigations reported in the documents at issue (at the behest of the Customs Service), Marshall Decl. ¶ 16. In Civil Action 96-2747, the DOC has withheld names or identifying code numbers of export enforcement personnel in addition to a report of the OIG on interviews with the subject of an investigation and the subjects acquaintances. Swiatek 2d Decl. at 94, 114. In Civil Action 95-133, the DOC withholds similar information, but Judicial Watch offers no challenge.
All these documents, according to the DOC's sworn declarations, were compiled for law enforcement purposes. Additionally, the DOC has, given the law, sufficiently established that a privacy interest is at stake. Individuals subject to law enforcement actions have an obvious privacy interest under Exemption 7(C), Dunkelberger v. Dep't of Justice, 906 F.2d 779, 781 (D.C.Cir.1990), and agencies may withhold the names of these individuals as a "categorical matter, Reporters Comm., 489 U.S. at 780, 109 S. Ct. 1468." Law enforcement officers who work on criminal investigations, and individuals who provide information to the law enforcement authorities, also have a privacy interest and their names have traditionally been protected from disclosure by Exemption 7(C). Davis v. Dep't of Justice, 968 F.2d 1276, 1281 (D.C.Cir.1992); Computer Prof'ls for Social Responsibility v. Secret Service, 72 *181 F.3d 897, 904 (D.C.Cir.1996). Further, private citizens who may be mentioned in investigatory files, witnesses, and informants enjoy a privacy interest. Davis, 968 F.2d at 1281; King v. Dep't of Justice, 830 F.2d 210, 233 (D.C.Cir.1987). Judicial Watch does not assert a public interest to balance against the strong privacy interest that forms the basis for the decisions allowing redaction just cited. Therefore, the DOC has established that its withholdings under Exemption 7(C) are proper.
Still, Judicial Watch argues that the DOC has, in many cases, withheld entire documents under Exemption 7(C) when only names should have been withheld. This argument is meritless. As the DOC explains in its reply, it justifies its document withholdings under two Exemptions, Exemption 3 or Exemption 5 and Exemption 7(C). The first exemption permits withholding the entire documents; the second exemption, Exemption 7(C) offers an alternative basis for withholding, by redaction, names and identifications. When an entire document is validly withheld pursuant to one exemption, the withholder cannot be expected to describe the rationale for a second, partial withholding by reference to withheld material. That is essentially what Judicial Watch is asking for here: to have Exemption 7 more completely justified in terms of information contained in documents withhold pursuant to other exemptions.
Judicial Watch also argues, as it has continually argued throughout its opposition, that the DOC's document descriptions lack sufficient detail to enable Judicial Watch to challenge the DOC's exemption claim. For example, Judicial Watch quotes a portion of the DOC's document description for document 54CD0464 and asserts it is inadequate: "54CD0464 ... is simply described as a `three-page telegram ... regarding the status and elements of the ongoing investigation.'" Opp. Brief in Civil Action 97-2416, at 37 (quoting Marshall Decl. ¶ 8(E)). Apparently, Judicial Watch has not considered this sentence in context of the remainder of the declaration, which explains the progress and status of the investigation underlying the documents, Marshall Decl. ¶ 7, and describes in detail that names of Customs investigators and clerical personnel were withheld to protect them from harassment, id. at ¶¶ 17-18. Far from conclusory, the statement are detailed and sufficient to permit withholding.
3. Exemption 7(E)
This Court has noted:
Exemption 7(E) affords "categorical" protection for "techniques and procedures" used in law enforcement investigations or prosecutions. Smith v. Bureau of Alcohol, Tobacco, and Firearms, 977 F. Supp. 496, 501 (D.D.C.1997) .... While Exemption 7(E)'s protection is generally limited to techniques or procedures that are not well-known to the public, even commonly known procedures may be protected from disclosure if the disclosure could reduce or nullify their effectiveness. See, e.g., Coleman v. FBI, 13 F. Supp. 2d 75, 83 (D.D.C.1998). In justifying the application of Exemption 7(E), the agency may describe the general nature of the technique while withholding the full details. Coleman, 13 F.Supp.2d at 83.
Judicial Watch v. FBI, No. 00-745, 2001 U.S. Dist. LEXIS 25732, at *26-27 (D.D.C. Apr. 20, 2001).
In Civil Actions 95-133, 96-2747, 97-2416, the DOC has withheld techniques the BXA used to identify parties and transactions that should be monitored for violations of Export Administration regulations, Swiatek 2d Supp. Decl at 94-98, 100-01; Rooney Vaughn Index at 133-37; and *182 "security procedures, firearm specifications, and radio frequencies, all used by special agents to protect the Secretary," id. at 91; Swiatek 1st Supp. Decl. at 2.
Judicial Watch's only response is to allege conclusorily that the withholdings are poorly described. This is not the case. For example, one description explains:
Information about investigative techniques, including how BXA tracks export enforcement actions and what investigative concerns specific kinds of cases present, is protected.... Disclosure would allow circumvention of the system by giving potential violators a key to what kinds of action BXA categorizes as significant and what kinds of action may be considered less significant. Accordingly, potential violators might decide to risk violations that they may be of lower enforcement priority.
Rooney Vaughn Index at 133-34. The explanation, similar to that given for other Exemption 7(C) withholdings, is detailed and sufficient to permit withholding.
H. Segregability
Even after determination that documents are exempt from disclosure, FOIA analysis is not properly concluded unless a court determines whether "any reasonably segregable portion of a record" can "be provided to any person requesting such record after deletion of the portions which are exempt." 5 U.S.C. § 552(b). Therefore, "it is error for a district court to simply approve the withholding of an entire document without entering a finding on segregability, or the lack thereof." Schiller v. NLRB, 964 F.2d 1205, 1210 (D.C.Cir.1992). In this case, the DOC has described thousands of withholdings from thousands of documents, yet has consistently made clear when documents were withheld in full or in part, and if in part, which parts (names, social security numbers, 10 lines here, two paragraphs there). Further, the DOC, when it claimed multiple exemptions for one document or one piece of information, was careful to discuss each exemption separately and to map each exemption to the precise information withheld. At times, Judicial Watch has argued that the DOC could have disclosed more than it did. Judicial Watch's segregability arguments have been dealt already, exemption-by-exemption. Therefore, segregability issues do not stand in the way of summary judgment.
CONCLUSION
For the foregoing reasons, the Court finds that the DOC is entitled to summary judgment in Civil Action Nos. 95-133 [doc. 617], 97-289 [doc. 32], 97-2416 [docs. 42 and 47], and 96-2747 [doc. 36].
However, the DOC's success today on its summary judgment motions and the comprehensiveness of the second round of searches in no way excuses the agency's handling of Judicial Watch's initial requests. In 1998, this Court found, as regards these initial requests, that:
The record in this case establishes beyond any reasonable dispute that [this] search was inadequate, unreasonable, and unlawful under the FOIA. The DOC failed to search entire offices that were likely, if not certain, to hold responsive documents. Documents were destroyed, discarded, and given away, sometimes without being searched to determine if they were responsive, other times with full knowledge that they were responsive.
Judicial Watch, 34 F.Supp.2d at 45. At that time, the Court indicated its willingness to consider the issue of sanctions along with the issue of attorney's fees at the litigation's close. Therefore, while the Court grants summary judgment to the DOC, it simultaneously invites Judicial *183 Watch to file an application for attorney's fees and, additionally, invites Judicial Watch to move for the Court to make any findings needed to cause referral of the DOC's activities to the Office of Special Counsel, pursuant to 5 U.S.C. § 552(a)(4)(F). Further, the Court remains open to Judicial Watch's motions for other appropriate sanctions.
The Court will issue an order consistent with this memorandum opinion.
ORDER
After consideration of defendant's motions for summary judgment in Civil Action Nos. 95-133 [doc. 617], 97-289 [doc. 32], 97-2416 [docs. 42 and 47], and 96-2747 [doc. 36], the applicable law, and the records in these cases, and it appearing to the Court that the granting of defendant's motions would be just and proper for the reasons set forth in the accompanying Memorandum Opinion, it is this 30th day of September, 2004,
ORDERED that defendant's motions for summary judgment are GRANTED, and,
ORDERED that plaintiff shall have 30 days in which to file an application for attorney's fees and motions for any disciplinary action or other appropriate sanctions.
ORDERED that these cases are DISMISSED WITH PREJUDICE.
SO ORDERED.
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655 F. Supp. 422 (1987)
Peter ROMAN, et al. Plaintiffs,
v.
NEW YORK STATE UNITED TEACHERS, Defendant.
No. 86 Civ. 3016 (EW).
United States District Court, S.D. New York.
March 13, 1987.
Davis & Eisenberg, New York City, for plaintiffs; Herbert Eisenberg, of counsel.
James R. Sander, New York State United Teachers, New York City, for defendant; Noel D. Cohen, of counsel.
OPINION
EDWARD WEINFELD, District Judge.
This action has its origin in a New York Times advertisement, sponsored by the Friends of Democracy in Central America, which urged support of the "contras" in Nicaragua.[1] The advertisement was signed by sixty-nine well-known individuals engaged in a wide variety of occupations, *423 including Albert Shanker, who was identified as "President, American Federation of Teachers, AFL-CIO." An asterisk indicated that the "organizational affiliations" which appeared below the name of each signatory were for identification only.
The plaintiffs are NYSUT Members Against Intervention in Central America and 36 individual members of that organization. Because plaintiffs disagreed with the view expressed in the New York Times advertisement, they sought to place an opposing advertisement in the New York Teacher, the official newspaper of defendant New York State Union of Teachers (NYSUT). The proposed advertisement, signed by over 400 NYSUT members, made reference to the New York Times advertisement signed by Shanker and called for NYSUT to support nonintervention in Nicaragua.
The editor-in-chief of the New York Teacher refused to publish the proffered advertisement on the ground that the union had a policy of refusing to publish any political advertisements or advertisements from membership organizations. He specifically stated that the advertisement was refused because "1. It is a political advertisement, 2. It is an advertisement submitted by a membership organization." In rejecting the advertisement, he reiterated an offer he previously made to publish the advertisement, free of cost, as a letter to the editor on the condition that only one name appear, coupled with a statement of the number of other signatories.
In January 1986, a local union of NYSUT submitted a resolution to the NYSUT Representative Assembly calling for the establishment of a committee to review the editorial policy of the New York Teacher on paid advertisements. The resolution was rejected by the Assembly. Plaintiffs then brought the instant suit against NYSUT to compel publication of their advertisement. Defendant has moved to dismiss plaintiffs' claim under Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted, and plaintiffs have moved for summary judgment.
Plaintiffs predicate their right to relief upon section 101(a)(2) of Title I of the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA), which provides:
FREEDOM OF SPEECH AND ASSEMBLY. Every member of any labor organization shall have the right to meet and assemble freely with other members; and to express any views, arguments, or opinions; and to express at meetings of the labor organization his views, upon candidates in an election of the labor organization or upon any business properly before the meeting, subject to the organization's established and reasonable rules pertaining to the conduct of meetings: Provided, That nothing herein shall be construed to impair the right of a labor organization to adopt and enforce reasonable rules as to the responsibility of every member toward the organization as an institution and to his refraining from conduct that would interfere with its performance of its legal or contractual obligations.
The statute was construed by the Supreme Court in United Steelworkers of America v. Sadlowski.[2] In its analysis of the statute, the Court reasoned that:
[W]e first consider whether the rule interferes with an interest protected by the first part of § 101(a)(2). If it does, we then determine whether the rule is "reasonable" and thus sheltered by the proviso to § 101(a)(2). In conducting these inquiries, we find guidance in the policies that underlie the LMRDA in general and Title I in particular. First Amendment principles may be helpful, although they are not controlling....
The critical question is whether a rule that partially interferes with a protected interest is nevertheless reasonably related to the protection of the organization as an institution.[3]
The Court held that although a union rule against non-members contributing to campaigns for union offices limited the ability *424 of union insurgents to wage an effective campaign against entrenched office holders, it was valid because it was "rationally related to the union's legitimate interest in reducing outsider interference in union affairs."[4]
In essence, plaintiffs' complaint challenges the editorial policy that required rejection of their advertisement on the ground that it violated their right of freedom of speech under the statute. For several reasons, plaintiffs' complaint fails to state a cause of action upon which relief may be granted.
First, plaintiffs have failed to allege any interference with speech that is protected by the first part of § 101(a)(2). The subject of plaintiffs' advertisement has no relationship to any interest of the union or its members, but rather concerns an issue of international politics. Moreover, plaintiffs have not alleged that NYSUT has adopted or taken any position or issued any statement on the subject of United States intervention in Nicaragua which might make this into a subject of union concern. The fact that Albert Shanker signed an advertisement in the New York Times as a private individual does not trigger any right to reply on the part of the plaintiffs under § 101(a)(2).
Moreover, even if one were to assume arguendo that the New York Times advertisement expressed political views attributable to the union, thus bringing into play the protections of § 101(a)(2), plaintiffs would still have to allege an unreasonable interference with their right to communicate with other union members. As noted in Sadlowski, "the critical question is whether a rule that partially interferes with a protected interest is nevertheless reasonably related to the protection of the organization as an institution." The mere allegation that the union newspaper has a policy of rejecting political advertisements and has rejected plaintiffs' advertisement does not in itself suffice to state such a claim.
Defendant's policy is specifically directed at issues of politics, which ofttimes sharply divide union memberships with a resulting diminution of the union's power. The policy avoids sharp political controversy which may weaken the power of the union to advance its essential purpose of protecting the economic interests of the union's members and to achieve broader objectives, such as improvements in education and raising the standards of qualifications for those who aspire to enter the teaching profession. The editorial policy reduces the prospect of divisive elements within the union based on sharply held views that may impair the effectiveness of its leadership in seeking to promote the basic interests of the union before national and state legislative bodies.
The inadequacy of plaintiffs' allegation is underscored by the ruling in Sheldon v. O'Callaghan,[5] in which our Court of Appeals stated that:
The duly elected officers of a union have a right and a responsibility to lead, and to give the members the benefit of their advice on questions that arise. They have a right to use the union publications to express their views, and are not ordinarily required to give space therein to the expression of contrary views, provided they do not interfere improperly with whatever rights members may have to communicate their views to other members.[6]
Under Sheldon, then, even if it were true that the union in the instant case has taken a position and denied plaintiffs access to the union newspaper, this allegation without more would not suffice to state a cause of action.
Indeed, based upon plaintiffs' complaint, it cannot even be said that defendant denied plaintiffs space in which to express their views. Defendant's policy was not only reasonable, but extremely fair in that the editor of the New York Teacher offered *425 to publish plaintiffs' advertisement free of cost as a letter to the editor, with the name of one of the plaintiffs and noting the number of other signatories. Plaintiffs arbitrarily rejected this offer, which certainly would have sufficed to communicate their message to other union members.
Taking all of the allegations of the complaint as true, plaintiffs have failed to state a claim of interference with speech protected by § 101(a)(2) or that defendant's alleged partial interference with that speech was unreasonable. Defendant's motion to dismiss the complaint under Rule 12(b)(6) for failure to state a claim is granted; plaintiffs' motion for summary judgment is dismissed as moot.
So ordered.
NOTES
[1] The following statement of facts assumes the truth of plaintiffs' complaint, statements in exhibits thereto, and the New York Times advertisement, which is incorporated in the complaint by reference.
[2] 457 U.S. 102, 102 S. Ct. 2339, 72 L. Ed. 2d 707 (1982).
[3] Id. at 111-12, 102 S.Ct. at 2345-46.
[4] Id. at 112, 102 S.Ct. at 2346.
[5] 497 F.2d 1276 (2d Cir.), cert. denied, 419 U.S. 1090, 95 S. Ct. 681, 42 L. Ed. 2d 682 (1974).
[6] Id. at 1282.
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997 F. Supp. 1235 (1998)
UNITED STATES of America, Plaintiff,
v.
Stephen Paul DUNIFER, Defendant.
No. C 94-03542 CW.
United States District Court, N.D. California.
June 16, 1998.
*1236 *1237 Mark St. Angelo, Patricia A. Duggan, U.S. Attorney's Office, San Francisco, CA, David Silberman, F.C.C., Office of the General Counsel, Washington, DC, for U.S.
Louis N. Hiken, San Francisco, CA, M. Allen Hopper, San Francisco, CA, for Stephen Paul Dunifer.
Alan Alan Korn, Berchenko & Korn, San Francisco, CA, amicus curiae.
Peter Franck, Peter Franck Law Offices, San Francisco, CA, pro se.
ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AND GRANTING PERMANENT INJUNCTION
WILKEN, District Judge.
BACKGROUND
This case first came before the Court in 1994 on Plaintiff United States' motion for injunctive and declaratory relief against Defendant Stephen Paul Dunifer for violation of 47 U.S.C. § 301, which prohibits the operation of a radio station without a license. In opposition to the United States' motion, Mr. Dunifer did not dispute that he was operating a micro radio station, "Free Radio Berkeley", without having applied for a license.[1] Instead, Mr. Dunifer raised several affirmative defenses challenging Federal Communication Commission ("FCC") regulations governing the licensing of micro radio broadcasting.
Mr. Dunifer claimed that new technology enables micro radio stations such as his to broadcast locally, on frequencies between those of higher-powered stations, without causing interference with those stations. According to Mr. Dunifer, small, local, poorly-financed stations would offer program content different from that provided by larger, *1238 necessarily well-financed, stations. Mr. Dunifer argued that he should not be enjoined from broadcasting because the FCC's refusal to license micro radio stations amounts to a content-based restriction on speech that violates the First Amendment and is not justified under the FCC statutory mandate to regulate in the public convenience, interest and necessity.[2]
The United States did not respond directly to Mr. Dunifer's constitutional attack on the regulations, but instead argued that the FCC's statutory authority to regulate and license broadcasters is constitutional.
The Court ruled that, on the limited record before it, the United States had shown probable success on the merits on the issue that Mr. Dunifer had broadcast without a license, but that the United States had failed to show a probability of success on the constitutional issues raised by Mr. Dunifer. See Memorandum and Order Denying Plaintiff's Motion For Preliminary Injunction and Staying This Action at 3-4. For that reason, the Court denied the motion for a preliminary injunction. Under the doctrine of primary jurisdiction, the Court stayed the case so that the issue of the constitutionality of the Class D regulations could first be addressed by the FCC either in the context of Mr. Dunifer's pending forfeiture proceeding[3] or in the context of the FCC's rule-making powers. Id. at 10.
On August 2, 1995, the FCC issued its Memorandum Opinion and Order in Mr. Dunifer's forfeiture proceeding ("Forfeiture Order"). In the Forfeiture Order, the FCC concluded that the Class D regulations do not violate the First Amendment or the FCC's mandate to regulate in the public interest.
After the FCC issued the Forfeiture Order, the United States filed a motion for summary judgment in this case. In the summary judgment motion, the United States still did not discuss the merits of Mr. Dunifer's constitutional claims. Instead it argued that, by statute, this Court lacks jurisdiction to hear Mr. Dunifer's challenge to the Class D regulations because exclusive jurisdiction over any challenge to FCC regulations is vested in the courts of appeals.[4] Mr. Dunifer responded that the Court had jurisdiction over his affirmative defenses and renewed his First Amendment arguments.[5]
The Court entered an Order Denying Plaintiff's Motion for Summary Judgment Without Prejudice and Requesting Further Briefing, ruling that 47 U.S.C. § 401(a), which provides the district court with jurisdiction over the United States' charge of broadcasting without a license, also provides the Court with jurisdiction over any valid defense to the charge. However, the Court noted that neither party had addressed the issue of whether Mr. Dunifer's claim that the *1239 Class D regulations are unconstitutional is a valid defense in an action brought by the United States to enjoin him from broadcasting without a license, given that he has never applied for a license. The Court ordered further briefing on this issue, which both parties have filed. Having considered all the papers filed by the parties, the Court GRANTS the United States' motion for summary judgment and ENJOINS Mr. Dunifer from broadcasting without a license. This ruling is not based on the merits of Mr. Dunifer's criticisms of the FCC's refusal to license micro broadcasters. As discussed below, Mr. Dunifer does not have standing as required by Article III of the United States Constitution to challenge the Class D regulations as they have been applied to him; they have not been applied to him because he has never applied for a license. Mr. Dunifer also lacks standing to assert a challenge to the regulatory scheme on the ground that it is unconstitutional in every conceivable application. Mr. Dunifer does have standing to raise his claim that the regulations are over-broad, but this claim fails.
DISCUSSION
I. Article III Standing
Article III of the Constitution of the United States limits the jurisdiction of federal courts to deciding cases and controversies. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 559, 112 S. Ct. 2130, 119 L. Ed. 2d 351 (1992). The doctrine of standing is a core component of the case-or-controversy requirement. See id. 504 U.S. at 560. The litigant invoking federal jurisdiction must establish the three minimum requirements of standing: (1) a litigant must have suffered an actual and concrete injury consisting of "an invasion of a legally protected interest"; (2) there must be a causal connection between the injury and the conduct of which the litigant complains; and, (3) there must be a likelihood that the injury will be redressed by a favorable judicial decision. See id. at 560-61.
Mr. Dunifer argues that he need not establish standing because standing must be shown by plaintiffs who invoke federal court jurisdiction, not by defendants like himself. It is true that the doctrine of standing is usually raised by the defendant, because the plaintiff is the party who is invoking the jurisdiction of the court. The Seventh Circuit has stated that the standing doctrine applies only to plaintiffs. See Wynn v. Carey, 599 F.2d 193, 196 (7th Cir.1979). The Ninth Circuit, however, in at least two cases, has analyzed whether defendants have standing to raise, as an affirmative defense, the unconstitutionality of the statute and regulations that form the basis of the government's case-in-chief. See United States v. Hugs, 109 F.3d 1375, 1378 (9th Cir.1997); United States v. Thirty Eight (38) Golden Eagles or Eagle Parts, 649 F. Supp. 269, 274, 276 (D.Nev. 1986), aff'd, 829 F.2d 41 (9th Cir.1987).
In Hugs, the defendants were convicted of taking and purchasing eagles in violation of the Bald and Golden Eagle Protection Act ("BGEPA"). Id. at 1377. Regulations allowed enrolled Native Americans to obtain eagles or eagle parts for religious use through a permit system. Id. The defendants had not applied for a permit. Id. The defendants admitted they had trapped and killed eagles, but defended their actions by arguing that their right to the free exercise of their religion was infringed upon by the existence of the BGEPA and by the difficulty of obtaining a permit. Id. The Ninth Circuit ruled that the defendants could bring a facial challenge to the BGEPA and its regulations, but because they had failed to apply for a permit, they lacked standing to defend themselves based on an as-applied challenge. Id. at 1378-79. Similarly, in Golden Eagles, a forfeiture action brought by the government, the court ruled that a claimant who had failed to apply for a permit as required by the BGEPA did not have standing to defend against the forfeiture with an as-applied challenge to the BGEPA or its implementing regulations, but did have standing to bring a facial challenge. 649 F.Supp. at 274, 276.
Where the defendant asserts an affirmative defense requiring the litigation of issues not encompassed in the plaintiff's case-in-chief, the defendant is in a similar situation on those issues to a plaintiff who is invoking the jurisdiction of the court. See *1240 e.g. Federal Deposit Ins. Corp. v. Main Hurdman, 655 F. Supp. 259, 268 (E.D.Cal. 1987) (concluding that defendant must have Article III standing to pursue affirmative defense). Therefore, the Court concludes that Mr. Dunifer must establish standing to assert his constitutional defenses.
Mr. Dunifer admits that he has not applied for a license or a waiver pursuant to the Class D regulations. Thus, the Class D regulations have not been applied to him and he has no standing to bring an as-applied challenge to them.
Mr. Dunifer argues that he should be excused from applying for a license because doing so would be futile. Some circuits have excused on grounds of futility the threshold standing requirement that the plaintiff submit to the policy being challenged by applying for the benefit regulated by that policy. See e.g. Jackson-Bey v. Hanslmaier, 115 F.3d 1091, 1096 (2nd Cir.1997). Futility can be established only where an adverse decision by the agency is a certainty. See Randolph-Sheppard Vendors of America v. Weinberger, 795 F.2d 90, 105 (D.C.Cir. 1986). An adverse decision is certain if the agency lacks, or believes itself to lack jurisdiction, or if an agency has "articulated a very clear position on the issue which it has demonstrated it would be unwilling to reconsider." Id.; accord Clouser v. Espy, 42 F.3d 1522, 1532-33 (9th Cir.1994) (regarding administrative exhaustion requirement of Administrative Procedures Act).
Mr. Dunifer argues that his application to the FCC for a license would be futile because the FCC lacks jurisdiction to determine the constitutionality of regulations it has promulgated, because the FCC has clearly stated in other proceedings that it will not decide the constitutional issues he raises, and because the FCC has never granted a waiver to a micro radio station.
Mr. Dunifer's contention that the FCC does not have jurisdiction to determine the constitutionality of its regulations is incorrect. See e.g. Meredith Corp. v. FCC, 809 F.2d 863, 872, 874 (D.C.Cir.1987) (holding that FCC was required to respond to plaintiff's constitutional arguments and remanding case to FCC to consider the constitutionality of FCC's fairness doctrine on its face and as applied to plaintiff); WAIT Radio v. FCC, 418 F.2d 1153, 1156 (D.C.Cir.1969) (remanding FCC's denial of an applicant's waiver request to FCC to reconsider the First Amendment issue raised therein). The cases cited by Mr. Dunifer are inapposite because they refer to agencies other than the FCC, see e.g. Gilbert v. Nat'l Transp. Safety Bd., 80 F.3d 364 (9th Cir.1996), or address an agency's jurisdiction to determine the constitutionality of governing statutes, see e.g. Liu v. Waters, 55 F.3d 421, 425 (9th Cir.1995) (explaining prior cases incorrectly stated that the Board of Immigration Appeals lacked jurisdiction to adjudicate constitutional issues and that Board lacks jurisdiction only to determine constitutionality of governing statutes and regulations).
Mr. Dunifer's next contention is that applying for a license would be futile because he has fairly presented the constitutional issues to the FCC in his Application for Review of the Forfeiture Order and the FCC has clearly indicated in its decision on the Application that it would not address these issues. The United States counters that Mr. Dunifer's presentation of the constitutional issues in his forfeiture proceeding is not the equivalent of applying for a license and requesting a waiver.
A correctly plead application for a license to broadcast on an FM noncommercial educational radio station must show compliance with many rules, and a request for a waiver of any of the rules must be included with the license application. See Declaration of Linda Blair, Acting Chief, Audio Services Division, Mass Media Bureau, FCC at 3:10-14; 47 C.F.R. § 73.3533(a)(5). The premise of a waiver application is that the rule to be waived is valid, but that the rule is not in the "`public interest' if extended to [the] applicant who proposes a new service that will not undermine the policy, served by the rule, that has been adjudged in the public interest." WAIT Radio, 418 F.2d at 1157. FCC regulations do not limit which rules may be waived, upon a proper showing. See Blair Decl. at 3; 47 C.F.R. § 1.3. In response to a properly presented waiver application which *1241 includes factual material to support a non-frivolous First Amendment claim, the agency must address the constitutional issues raised by the applicant. See WAIT Radio, 418 F.2d at 1156. See also Rio Grande Family Radio Fellowship, Inc. v. FCC, 406 F.2d 664, 666 (D.C.Cir.1968) (to be considered, an application for a waiver must "plead with particularity the facts and circumstances which warrant such action"); United States v. Storer Broadcasting Co., 351 U.S. 192, 205, 76 S. Ct. 763, 100 L. Ed. 1081 (1956) (FCC need not grant waiver unless application sets out "adequate reasons why the rules should be waived").
Based upon the documents Mr. Dunifer has filed with the Court, it appears that Mr. Dunifer's arguments to the FCC in his forfeiture proceeding were that the Class D rules generally are not valid because they violate the First Amendment and are not in the public interest. See Dunifer Decl. in Support of Opposition to Plaintiff's Motion for Preliminary Injunction, Exs. A and B. It does not appear that Mr. Dunifer argued or presented evidence to support the position that the Class D regulations, as applied to his new service, are not in the public interest. For this reason, the fact that the FCC declined to address the constitutional issues in the context of the forfeiture proceeding does not mean the FCC will also decline to address the constitutional issues when properly raised in an application for a license and a request for a waiver. See also Writers Guild of America, West, Inc. v. American Broadcasting Co., Inc., 609 F.2d 355, 364 (9th Cir.1979) (dismissing claim of futility because FCC's position in a proper future administrative proceeding could not be inferred from the FCC's position in an adversarial context).
In response to Mr. Dunifer's claim that the FCC has never granted a waiver to a Class D broadcaster, the United States cites Turro v. FCC, 859 F.2d 1498, 1500 n. 1 (D.C.Cir. 1988), in which the court noted that the FCC had granted two such waivers.
Finally, Mr. Dunifer makes an effort, in a footnote at the end of his supplemental brief, to overcome the consequences of his failure to apply for a license by stating that he is "in effect, challenging the statutes [47 U.S.C. § 301, prohibiting broadcasting without a license, and 47 U.S.C. § 401, authorizing the government to enjoin anyone who broadcasts without a license], as applied to him via the regulations." This argument fails because only the statutes, not the regulations, have been applied to Mr. Dunifer. Throughout his opposition to the United States' original summary judgment motion, Mr. Dunifer stated that it is not the statutes, but the FCC Class D regulations that he is challenging. If Mr. Dunifer were challenging the constitutionality of the statutes he would fail because the statutes have been found to be constitutional by the Supreme Court. See Nat'l Broadcasting Co. v. United States, 319 U.S. 190, 227, 63 S. Ct. 997, 87 L. Ed. 1344 (1943) ("The right of free speech does not include, however, the right to use the facilities of radio without a license. The licensing system established by Congress in the Communications Act of 1934 was a proper exercise of its power over commerce."); Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 389, 89 S. Ct. 1794, 23 L. Ed. 2d 371 (1969); see also, Action for Children's Television v. FCC, 59 F.3d 1249, 1260, 1262 (D.C.Cir.1995), cert. denied, 516 U.S. 1072, 116 S. Ct. 773, 133 L. Ed. 2d 726 (1996) (statutory scheme authorizing the FCC to enforce forfeitures is constitutional on its face, does not lack appropriate safeguards and was not unconstitutional as applied).
Because Mr. Dunifer has never applied for a broadcasting license or a waiver of the regulations disallowing applications by Class D broadcasters, he does not have standing to challenge those regulations.
II. Standing Under First Amendment Jurisprudence
Mr. Dunifer argues that he has standing to raise a facial challenge to the Class D regulations because, in First Amendment cases, the Supreme Court has relaxed the general rules of standing.
In a recent case, the Ninth Circuit explained that there are two ways in which legislation can be challenged on the ground that it is unconstitutional on its face. See Foti v. City of Menlo Park, 146 F.3d 629, 635 *1242 (9th Cir.1998) (citing Members of City Council of City of Los Angeles v. Taxpayers for Vincent, 466 U.S. 789, 796-98, 104 S. Ct. 2118, 80 L. Ed. 2d 772 (1984)). The first type of challenge seeks to establish that the legislation is unconstitutional in every conceivable application. See Vincent, 466 U.S. at 796. This type of facial challenge does "not involve any departure from the general rule that a litigant only has standing to vindicate his own constitutional rights." Id.
As discussed above, Mr. Dunifer lacks standing to bring an as-applied challenge to the Class D regulations. Therefore, he lacks standing to claim that the Class D regulations are unconstitutional in every conceivable application. In fact, Mr. Dunifer acknowledges that requiring micro radio broadcasters to be licensed is necessary and constitutional. Even with advanced technology, not all micro radio stations could broadcast without causing interference with other radio stations. Therefore, application of the Class D regulations, in conjunction with considering waiver requests, is not unconstitutional in every conceivable instance.
The Supreme Court has recognized a doctrine in First Amendment cases that does relax the usual standing requirement. The overbreadth doctrine allows a litigant to claim that the legislation in question prohibits such a broad range of protected speech that it may chill the speech of third parties, even if the litigant's own speech is not protected. See id. at 798; Foti, 146 F.3d at 635. In Mr. Dunifer's Supplemental Brief filed in response to the Court's request for further briefing, he argues that the Class D regulations are overbroad and act as an impermissible prior restraint on speech.
Claims of facial overbreadth have been allowed against statutes that regulate the time, place and manner of communicative conduct, including licensing statutes that delegate standardless discretionary power to administrators resulting in unreviewable prior restraints on First Amendment rights. See Broadrick v. Oklahoma, 413 U.S. 601, 612-13, 93 S. Ct. 2908, 37 L. Ed. 2d 830 (1973); FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 223, 110 S. Ct. 596, 107 L. Ed. 2d 603 (1990). The overbreadth doctrine was enunciated by the Supreme Court in Thornhill v. Alabama, 310 U.S. 88, 60 S. Ct. 736, 84 L. Ed. 1093 (1940). In that case, Thornhill was convicted of violating a statute prohibiting a person without just cause or legal excuse to go near or to picket business premises. Thornhill defended himself on the ground that the statute was unconstitutional on its face. Id. 310 U.S. at 91. The Court explained that Thornhill need not have applied for a license to challenge the statute because "the character of the evil inherent in a licensing system ... is not merely the sporadic abuse of power by the censor but the pervasive threat inherent in its very existence that constitutes the danger to freedom of discussion.' One who might have had a license for the asking may therefore call into question the whole scheme of licensing when he is prosecuted for failure to procure it." Id.
In Shuttlesworth v. City of Birmingham, 394 U.S. 147, 150, 152, 89 S. Ct. 935, 22 L. Ed. 2d 162 (1969), the Court invalidated a city ordinance that granted to the City Commission unbridled power to prohibit any parade, procession or demonstration in the city's streets, stating that "a person faced with ... an unconstitutional licensing law may ignore it and engage with impunity in the exercise of the right of free expression for which the law purports to require a license". In City of Lakewood v. Plain Dealer Publishing Co., 486 U.S. 750, 755-56, 108 S. Ct. 2138, 100 L. Ed. 2d 771 (1988), the Court permitted a facial attack on a city ordinance that gave the mayor "unfettered discretion to deny annual newsrack applications and unbounded authority to condition the permit on any additional terms he deems `necessary and reasonable.'"
The United States argues that the First Amendment cases addressing overbroad licensing schemes do not apply here because the First Amendment right of freedom of speech does not include the right to broadcast over radio frequencies without a license. Although the right to broadcast is not as broad as the right to speak, write or publish, it does implicate the First Amendment. *1243 See Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 386, 89 S. Ct. 1794, 23 L. Ed. 2d 371 (1969) ("Although broadcasting is clearly a medium affected by a First Amendment interest, differences in the characteristics of new media justify differences in the First Amendment standards applied to them").
Therefore, if the regulatory scheme that Mr. Dunifer challenges were unconstitutionally overbroad on its face, the fact that Mr. Dunifer has not applied for a license would not deprive him of standing to challenge it.
Mr. Dunifer proffers two theories in support of his argument that the regulations constitute an overbroad licensing scheme creating a prior restraint on speech. First, citing Shuttlesworth, 394 U.S. at 150 and City of Lakewood, 486 U.S. at 772, Mr. Dunifer argues that because no written rules or regulations exist regarding waiver of the Class D regulations, the FCC has unbridled discretion to decide who will be granted a waiver and permitted to operate a Class D radio station. Mr. Dunifer reasons that the FCC does not have standards for granting waivers because in his Application for Review of the FCC's Forfeiture Order he requested that the FCC provide him with such standards, and the FCC did not respond. The United States asserts that Mr. Dunifer's request for standards, appearing in a footnote in his Application for Review, is not equivalent to filing a license application with a waiver request. Although the United States does not provide to the Court any evidence of what guidelines the FCC uses to determine who will be granted a waiver, it cites WAIT Radio, 418 F.2d at 1159.
As noted above, in WAIT Radio, the D.C. Circuit remanded the FCC's denial of an applicant's waiver request to the FCC for a clearer statement of reasons for its denial. Id. at 1156. The court explained that the FCC must give serious consideration to meritorious applications for waiver, including non-frivolous First Amendment claims when supported by adequate factual material. Id. at 1156-57. Pursuant to WAIT Radio, the FCC is bound to consider seriously any correctly plead application for a waiver that Mr. Dunifer files. If the FCC denies Mr. Dunifer's application for a waiver, it must "articulate with clarity and precision its findings and the reasons for its decisions." Id. at 1156. The Court finds that these judicial guidelines, within the context of the FCC's mandate to administer for the public interest, convenience and necessity, provide sufficient standards for the FCC's decision whether to grant or deny a waiver application filed by Mr. Dunifer or any other aspiring Class D broadcaster.
Second, Mr. Dunifer argues, citing Bernstein v. United States Dep't of State, 974 F. Supp. 1288 (N.D.Cal.1997) and Freedman v. Maryland, 380 U.S. 51, 85 S. Ct. 734, 13 L. Ed. 2d 649 (1965), that the FCC licensing scheme is overbroad and acts as a prior restraint on speech because it lacks procedural safeguards. In Bernstein, the court stated, "The danger inherent in prior restraints is largely procedural, in that they bypass the judicial process and locate in a government official the delicate responsibility of passing on the permissibility of speech." Bernstein, 974 F.Supp. at 1304 (citing Freedman v. Maryland, 380 U.S. at 58). In Freedman, the Court established that three procedural safeguards were essential for a licensing scheme to pass constitutional scrutiny: (1) the licensor must decide whether to issue the license within a specified and reasonable time; (2) prompt judicial review must be available in the event the license is erroneously denied; and, (3) the censor must bear the burden of going to court and must bear the burden of proof in court. Freedman, 380 U.S. at 58-60; see also FW/PBS, 493 U.S. at 227(discussing Freedman requirements). The third safeguard, however, is only necessary in licensing schemes that act as a censorship system. See id., at 228-229. Because the Class D regulations do not act as a censorship system, only the first two Freedman safeguards are required.
The FCC regulatory scheme sets forth adequate procedures for processing applications for a license and requests for a waiver, thus fulfilling the first Freedman requirement. See 47 C.F.R. § 73.3573 (providing procedures for processing FM broadcast station applications); 47 C.F.R. § 1.3 (waiver provision). By statute, a denial of an application *1244 for a license or request for a waiver is appealable to the Court of Appeals for the District of Columbia, fulfilling the second Freedman requirement. See 47 U.S.C. § 402(b)(1). Moreover, any party may submit a petition for the issuance, amendment or repeal of any FCC rule or regulation. See 47 C.F.R. § 1.401(a). A petition for rule-making is subject to the procedures set forth in 47 C.F.R. Part 1 Subpart C. Any denial of a petition for the issuance, amendment or repeal of a rule or regulation is a final order of the FCC subject to appeal in any court of appeals. See 47 U.S.C. § 402(a); 28 U.S.C. § 2342. The Court finds that the regulatory scheme here withstands constitutional scrutiny because it specifies procedures which the FCC must follow and it provides for judicial review of any improper FCC ruling.
Thus, Mr. Dunifer's claims that the regulations are unconstitutional in every conceivable application and that they are overbroad must fail.
CONCLUSION
For the foregoing reasons, the United States' motion for summary judgment must be GRANTED. Accordingly, Mr. Dunifer, and all persons in active concert or participation with him, are hereby ENJOINED:
(a) From making radio transmissions within the United States unless and until they first obtain a license from the FCC;
(b) From doing any act, whether direct or indirect, to cause unlicensed radio transmissions or to enable such radio transmissions to occur.
Judgment shall enter for Plaintiff. Each party shall bear its own costs.
IT IS SO ORDERED.
NOTES
[1] Mr. Dunifer refers to his low-powered radio station as a micro radio station. FCC regulations apply the term Class D station to any station, such as "Free Radio Berkeley", that operates with minimum effective radiated power of less than 100 watts.
[2] The FCC regulatory scheme currently precludes the licensing of Class D stations. See e.g., 47 C.F.R. § 73.512(c) (except in the state of Alaska, the FCC will not accept new applications for licenses from Class D stations); 47 C.F.R. § 73.211(a) (FM stations must operate with a minimum effective radiated power of 100 watts); 47 C.F.R. § 73.511(a) (no new noncommercial Educational station will be authorized with less than the minimum power requirement for Class A stations [100 watts]). (Hereinafter, "Class D regulations"). However, any of the FCC's rules may be waived on petition if good cause is shown. See 47 C.F.R. § 1.3.
[3] In 1993, before the United States filed its complaint in this Court, the FCC had imposed a monetary forfeiture against Mr. Dunifer. Mr. Dunifer had filed an application for review of the forfeiture order with the FCC, raising the same constitutional arguments that he raised in response to the motion for preliminary injunction. At the time the motion for preliminary injunction was argued before the Court, the FCC had not yet responded to Mr. Dunifer's application for review.
[4] Pursuant to 47 U.S.C. § 402(b)(1), appeals of the FCC's denial of an application for a license or waiver of its rules must be taken to the United States Court of Appeals for the District of Columbia. Pursuant to 47 U.S.C. § 402(a) and 28 U.S.C. § 2342, appeals of any final order of the FCC may be taken to the court of appeals for any circuit.
[5] Mr. Dunifer did not reassert other claims that he had raised in his opposition to the United States' motion for injunctive and declaratory relief, namely that the FCC promulgated the Class D regulations in violation of its authority under the commerce clause and that the Class D regulations violate the United Nations Declaration on Human Rights, the International Covenant on Civil and Political Rights, and the American Convention on Human Rights.
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682 F. Supp. 451 (1988)
JANE DOE "A", et al., Plaintiffs,
v.
The SPECIAL SCHOOL DISTRICT OF ST. LOUIS COUNTY, et al., Defendants.
Nos. 85-2801C(1), 87-1681C(1) to 87-1684C(1) and 87-1686C(1) to 87-1691C(1).
United States District Court, E.D. Missouri, E.D.
March 25, 1988.
On Motion for Reconsideration May 18, 1988.
*452 William Edward Taylor, Ross Harry Briggs, St. Louis, Mo., for plaintiffs.
Timothy K. Kellett, George M. Von Stamwitz, John H. Quinn, III, St. Louis, Mo., for Special School Dist.
Russell F. Watters, Brown, James & Rabbitt, Thomas J. Casey, St. Louis, Mo., for defendant Cerny.
MEMORANDUM
NANGLE, Chief Judge.
Plaintiffs, eleven handicapped children enrolled in the Special School District of St. Louis County (S.S.D.), allege that defendants David Cerny, the S.S.D. and certain S.S.D. officials[1] deprived them of their right to substantive due process in violation of 42 U.S.C. § 1983.[2] Specifically, plaintiffs allege that Cerny, a bus driver for the S.S.D., deprived them of their liberty interest in personal privacy and bodily security by subjecting them to acts of physical and sexual abuse; that the S.S.D. officials were deliberately indifferent to Cerny's acts; and that the S.S.D. had a custom or policy of ignoring and failing to act upon complaints regarding Cerny's misconduct. The matter is now before the Court on: the S.S.D. defendants' motion for summary judgment with respect to all of the plaintiffs, defendant Cerny's motion for summary judgment, and the S.S.D. defendants' joint motion for partial summary judgment with respect to several of the plaintiffs.
I. Summary Judgment Standard.
Under Rule 56 of the Federal Rules of Civil Procedure, a movant is entitled to summary judgment if he can "show that there is no genuine issue as to any material fact and that [he] is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). See also Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 82 S. Ct. 486, 7 L. Ed. 2d 458 (1962). In determining whether summary judgment should issue, the facts and inferences from these facts are viewed in the light most favorable to the non-moving party and the burden is placed on the moving party to establish both the absence of a genuine issue of material fact and that he is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S. Ct. 1348, 1356-1357, 89 L. Ed. 2d 538 (1986). Once the moving party has met this burden, the non-moving party may not rest on the allegations in the pleadings but by affidavit or other evidence must set forth specific facts *453 showing that a genuine issue of material fact exists. Fed.R.Civ.P. 56(e). See also 10A C. Wright, A. Miller & M. Kane, Federal Practice and Procedure § 2739 (1983).
In determining whether a genuine issue of material fact exists, the Court views the evidence presented through the "prism" of the burden of proof imposed upon the parties by the underlying substantive law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S. Ct. 2505, 2513, 91 L. Ed. 2d 202 (1986). Recently, the Supreme Court noted that: "Summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed to `secure the just, speedy and inexpensive determination of every action'." Celotex Corp. v. Catrett, 477 U.S. 317, 106 S. Ct. 2548, 2555, 91 L. Ed. 2d 265 (quoting Fed.R.Civ.P. 1). Thus, the non-moving party "must do more than show that there is some metaphysical doubt as to the material facts," Matsushita, 106 S.Ct. at 1356, and "[w]here the record 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'." Id.
II. Liability of the Individual S.S.D. Officials.
Plaintiffs have sued the individual S.S.D. defendants in their individual as well as their official capacities. A § 1983 action against officials in their official capacities is "tantamount to an action directly against the public entity." Clay v. Conlee, 815 F.2d 1164, 1170 (8th Cir.1987). Because the liability of the individual S.S.D. defendants in their official capacities is coextensive with the liability of the S.S.D., the Court will consider the official capacity liability issue below when it addresses the liability of the S.S.D.
An action against officials in their individual capacities seeks to impose personal liability upon the officials for their own culpable action or inaction. Clay, 815 F.2d at 1170. To impose personal liability upon an official, the plaintiff must show that the official was personally involved, in some way, in the violation of the plaintiff's constitutional rights. An official may be personally involved by directly participating in the constitutional violations, by creating a policy or custom of condoning the violations, by failing to remedy known violations, or by training or supervising subordinates in a grossly negligent or reckless manner. See Id.; Patzner v. Burkett, 779 F.2d 1363, 1367 (8th Cir.1985); Williams v. Smith, 781 F.2d 319, 323 (2d Cir.1986). See also City of Springfield, Mass. v. Kibbe, ___ U.S. ___, 107 S. Ct. 1114, 1121, 94 L. Ed. 2d 293 (1987) (O'Connor, J., dissenting).
When an official's personal liability is premised upon failure to remedy known constitutional violations or failure to adequately supervise or train subordinates, the plaintiff must show that:
1. The official received "notice of a pattern of unconstitutional acts" committed by subordinates;
2. The official "demonstrated deliberate indifference [to] or tacit authorization of the offensive acts";
3. The official failed to take sufficient "remedial" action; and
4. The official's failure proximately caused injury to plaintiff.
See Wilson v. City of North Little Rock, 801 F.2d 316, 322 (8th Cir.1986); see also Clay, 815 F.2d at 1170; Patzner, 779 F.2d at 1367. Mere negligence in supervision of subordinates is not sufficient to establish § 1983 liability. See Daniels v. Williams, 474 U.S. 327, 330-33, 106 S. Ct. 662, 664-66, 88 L. Ed. 2d 662 (1986); Rubek v. Barnhart, 814 F.2d 1283, 1284 (8th Cir.1987).
Plaintiffs' first amended complaint alleges that the individual SSD officials "failed to adequately investigate the complaints" regarding defendant Cerny's misconduct and "failed to reasonably respond to the pervasive risk of harm" to the plaintiffs. Plaintiffs do not allege that any of the S.S.D. officials directly participated in or observed the alleged violation of the plaintiffs' constitutional rights, instead, plaintiffs base the individual S.S.D. defendants' liability upon their inaction. Therefore, *454 plaintiffs must establish that the individual SSD defendants had "notice of a pattern of unconstitutional acts", were deliberately indifferent to or tacitly authorized the acts, failed to take sufficient remedial action, and that this failure caused injury to plaintiffs.
According to plaintiffs' evidence, defendant Scarnato received a single complaint from a parent that on one occasion defendant Cerny cursed at her and called her names in front of the children on the bus and that her son told her that Cerny was stopping the bus on the side of the road where there was no bus stop. (Plaintiffs' Compliance Report filed August 28, 1987, p. 8). Defendant Scarnato also may have received information from another S.S.D. official that defendant Cerny kissed a child on the bus.[3] Defendant Campbell received only two complaints regarding Cerny's conduct: defendant Marchlewski told defendant Campbell that Cerny kissed a boy and defendant Marchlewski or defendant Hill told defendant Campbell that Cerny used foul language on the bus. (Plaintiffs' Compliance Report filed August 28, 1987, pp. 5, 6, 9). The Court concludes that on the basis of the isolated incidents reported to defendants Scarnato and Campbell, a rational trier of fact could not find that these defendants had "notice of a pattern of unconstitutional acts" and were deliberately indifferent to or tacitly authorized the alleged physical and sexual abuse of plaintiffs. Wilson, 801 F.2d at 322.
Defendants Marchlewski and Hill allegedly received complaints that defendant Cerny used profanity on the bus, kissed a boy on the bus, pushed plaintiff John Doe "M" down the bus steps, and pulled his hair.[4] (Plaintiffs' Compliance Report filed August 28, 1987, pp. 5, 7, 10, 11). Defendant Marchlewski also received complaints regarding Cerny's failure to follow a child's behavior modification program and Cerny's failure to hand out a bus pass, and a complaint that Cerny kissed, kicked and gave John Doe "G" a "snuggle."[5] (Plaintiffs' Compliance Report filed August 28, 1987, pp. 7, 9). Defendant Hill received a complaint that a child had not been picked up at his bus stop and that Cerny physically restrained John Doe "D" to break up a fight. (Plaintiffs' Compliance Report filed August 28, 1987, pp. 7, 12).
Many of the complaints received by defendants Marchlewski and Hill, e.g. failure to give out a bus pass, not picking up a child at a bus stop, restraining a child to break up a fight, are similar to the kinds of complaints routinely received regarding a bus driver's interaction with children. While some of the reported incidents involved offensive actions which well may rise to common-law torts, these actions do not rise to constitutional violations under the circumstances of this case. Thus, the complaints received by defendants Marchlewski and Hill do not constitute "notice of a pattern of unconstitutional actions." Moreover, any failure on the part of defendants Marchlewski and Hill to act upon these complaints does not amount to deliberate indifference to or tacit authorization of the alleged physical and sexual abuse of the plaintiffs.
Of the individual S.S.D. defendants, defendant Stotler received the most notice of defendant Cerny's alleged misconduct. According to plaintiffs' evidence, defendant *455 Stotler received many of the same complaints received by the other individual S.S.D. defendants as well as two additional more serious complaints. In October 1984, defendant Stotler allegedly received a complaint from a parent that defendant Cerny put his hand down a boy's pants and pulled down a boy's pants and spanked him. (Plaintiffs' Compliance Report filed August 28, 1987, pp. 4, 5). In late January or early February 1985, just prior to defendant Cerny's February 8, 1985 arrest, John Doe "K" allegedly told defendant Stotler that Cerny had been touching boys' crotches. (Plaintiffs' Compliance Report filed August 28, 1987, p. 12, John Doe K Deposition, pp. 150-152). While these two additional complaints are serious complaints and involve actions which may rise to constitutional violations, the totality of complaints received by defendant Stotler are insufficient to establish the necessary notice of a pattern of unconstitutional conduct. Further, the John Doe K complaint, which Stotler received just prior to Cerny's arrest, came too late; the alleged violations of plaintiffs' constitutional rights had already taken place and, therefore, could not have been caused by any deliberate indifference on the part of defendant Stotler. Defendant Stotler may have been negligent in her lack of response to the October 1984 complaint, but the mere negligent act of a government official which causes "unintended injury to life, liberty, or property" does not implicate Fourteenth Amendment constitutional protections. See Davidson v. Cannon, 474 U.S. 344, 347, 106 S. Ct. 668, 670, 88 L. Ed. 2d 677 (1986). A rational trier of fact could not conclude that defendant Stotler received notice of a pattern of unconstitutional conduct, acted with deliberate indifference or callous disregard to plaintiffs' needs, and thereby caused plaintiffs' injuries.
The present case is unlike police brutality or sexual harassment cases in which supervisory officials, who have received numerous complaints regarding the precise unconstitutional conduct, tolerate or condone the practice and persistently fail to remedy a known and continuing pattern of unconstitutional conduct. See e.g., Harris v. City of Pagedale, 821 F.2d 499 (8th Cir.), cert. denied, ___ U.S. ___, 108 S. Ct. 504, 98 L. Ed. 2d 502 (1987) (pattern of prior sexual misconduct by police officers and numerous citizen complaints regarding police sexual misconduct); Herrera v. Valentine, 653 F.2d 1220, 1225 (8th Cir.1981) (pattern of racially-motivated police brutality against American Indians and numerous complaints regarding racist conduct); Bohen v. City of East Chicago, Ind., 799 F.2d 1180 (7th Cir.1986) (repeated and pervasive sexual harassment of female employees by male supervisors and male employees, frequent complaints through official channels, and open acknowledgement of the sexually oppressive working conditions by high-ranking officials). Nothing in the record indicates that the individual S.S.D. defendants tolerated or condoned Cerny's alleged violation of plaintiffs' constitutional rights. To the contrary, they responded to the complaints received by questioning Cerny, by counseling Cerny about physical interventions with children, and by riding on Cerny's bus to observe his behavior. (S.S.D. Defendants' Response to Plaintiffs' Compliance Report filed September 9, 1987, p. 5; Plaintiffs' Compliance Report filed August 28, 1987, pp. 5, 11).
In summary, the Court concludes that a rational trier of fact could not find that the individual S.S.D. defendants had notice of a pattern of unconstitutional acts and displayed deliberate indifference to or tacitly authorized the alleged unconstitutional conduct. Accordingly, the individual S.S.D. defendants are entitled to summary judgment on plaintiffs' § 1983 action.
III. Liability of the S.S.D.
A governmental entity cannot be held vicariously liable for unconstitutional acts of its employees on a theory of respondent superior, but it can be held liable under § 1983 for constitutional violations which occur as a result of an official policy or custom. Monell v. Department of Social Services of the City of New York, 436 U.S. 658, 694, 98 S. Ct. 2018, 2037, 56 L. Ed. 2d 611 (1978). The plaintiff must show that an official policy or custom which is "fairly attributable" to the governmental entity caused the "particular constitutional violation." Spell v. McDaniel, 824 F.2d 1380, 1385 (4th Cir.1987). The entity must be a "moving force" behind the constitutional deprivation; Monell, 436 U.S. at 694, 98 S.Ct. at 2038; Clay, 815 F.2d at 1170; and an "affirmative link" must exist between the policy or custom and the "particular constitutional violation alleged." Oklahoma City v. Tuttle, 471 U.S. 808, 823, 105 S. Ct. 2427, 2436, 85 L. Ed. 2d 791 reh'g denied, 473 U.S. 925, 106 S. Ct. 16, 87 L. Ed. 2d 695 (1985).
*456 Official policy involves "a deliberate choice to follow a [particular] course of action ... made from among various alternatives" by an official who has the final authority to establish governmental policy. Pembaur v. City of Cincinnati, 475 U.S. 469, 483, 106 S. Ct. 1292, 1300, 89 L. Ed. 2d 452 (1986). Custom involves a pattern of "persistent and widespread" practices of governmental officials, which are not necessarily approved through formal decision making channels, but which become so "permanent and well settled" as to have the force and effect of law. Monell, 436 U.S. at 691, 98 S.Ct. at 2036 (quoting Adickes v. S.H. Kress & Co., 398 U.S. 144, 167-68, 90 S. Ct. 1598, 1613, 26 L. Ed. 2d 142 (1970)); Garza v. City of Omaha, 814 F.2d 553, 556 (8th Cir.1987).
Only decisions made by officials with "final policymaking authority" are attributable to a governmental entity. Pembaur, 475 U.S. at 483, 106 S.Ct. at 1300; City of St. Louis v. Praprotnik, ___ U.S. ___, ___, 108 S. Ct. 915, 924, 99 L. Ed. 2d 107 56 U.S.L.W. 4201, 4204, (1988). Whether a particular official has "final policymaking authority" is determined by the Court by reference to state law. Praprotnik, ___ U.S. at ___ - ___, 108 S.Ct. at 924-26. For the governmental entity to be held liable under § 1983, the alleged unconstitutional action "must have been taken pursuant to a policy adopted by the official or officials responsible under state law for making policy in that area...." Id. at ___, 108 S.Ct. at 924.
Under Missouri law, the Special School District Board of Education is responsible for establishing and operating educational programs for handicapped children and for providing transportation and establishing all necessary rules for the transportation of handicapped children. Mo.Rev.Stat. §§ 162.855, 162.890. The School Board of each district is empowered to make rules and regulations necessary for the operation of the school district. Mo.Rev.Stat. § 171.011. Under the rules and regulations of the S.S.D. Board of Education, the Board, as the "corporate policy-making body," is responsible for formulating and adopting official policy for the district. (S.S.D. Defendants' Supplementary Memorandum, Exhibit BA). The Board is the "final authority" with respect to establishing S.S.D. policy, (S.S.D. Defendants' Supplementary Memorandum, Exhibit BBA); Board members have no authority individually to take official action. (S.S.D. Defendants' Exhibit BA). The superintendent functions as the chief executive officer of the district and is responsible for carrying out Board policies. (S.S.D. Defendants' Exhibit BBA).
It is clear that under state law and the regulations promulgated by the S.S.D. Board pursuant to state law that no individual Board member has the final authority to establish S.S.D. policy, and S.S.D. policy can only be formulated by the Board functioning as a legislative body. Although no individual S.S.D. Board member has final authority to establish S.S.D. policy, defendant Scarnato, as superintendent and as the official responsible for implementing Board policy, may be "high enough" in the S.S.D. structure that his "actions can be said to represent a decision" of the S.S.D. itself. See Praprotnik, at ___, 108 S.Ct. at 925.
There is, of course, no official policy formulated by the S.S.D. Board of Education which authorizes or condones physical or sexual abuse of handicapped children. There also is no evidence that defendant Scarnato deliberately chose to follow a course of action of ignoring complaints regarding physical or sexual abuse of handicapped children. See Pembaur, 475 U.S. at 483, 106 S.Ct. at 1300; Tuttle, 471 U.S. at 823, 105 S.Ct. at 2436.
The record also does not support the existence of a customary practice of deliberate indifference to the violation of handicapped children's constitutional rights. For the S.S.D. to be held liable on the basis of custom, there must exist a pattern of "persistent and widespread" unconstitutional practices which have become so "permanent and well settled" as to have the force and effect of law. See Monell, 436 U.S. at 691, 98 S.Ct. at 2036. Because the Court has concluded that the individual S.S.D. defendants did not have "notice of a pattern of unconstitutional acts" and did not display deliberate indifference to or tacitly authorize the violation of plaintiffs' constitutional rights, a custom of deliberate indifference to or tacit authorization of the alleged unconstitutional conduct cannot be attributed to the S.S.D.
Independent evidence of a policy or custom must exist, apart from any misconduct of an employee, to hold a governmental entity liable under § 1983. See Tuttle, 471 U.S. at 824, 831, 105 S.Ct. at 2436, 2440. The constitutional deprivation must be attributable to the policies or customs of the governmental entity, and not to other factors such as the employee's "own unbalanced *457 mental state." Tuttle, 471 U.S. at 831, 105 S.Ct. at 2440 (Brennan, J., concurring). To hold a governmental entity liable on the basis of a policy inferred from the "isolated misconduct of a single, low-level" employee would amount to imposing liability on the theory of "strict respondeat superior" which was "rejected in Monell." Id. The policy or custom requirement was intended to prevent imposition of liability upon a governmental entity merely because the entity hired "one `bad apple'." Tuttle, 471 U.S. at 821, 105 S.Ct. at 2435. Thus, the existence of a S.S.D. policy or custom cannot be inferred merely on the basis of defendant Cerny's alleged unconstitutional acts.
For the foregoing reasons, the Court concludes that the S.S.D. did not have a policy or custom of ignoring complaints of physical or sexual abuse of handicapped children, and therefore, the S.S.D. is entitled to summary judgment on plaintiffs' § 1983 claim.
IV. Liability of Defendant Cerny.
A. Defendant Cerny's Alleged Acts of Physical and Sexual Abuse.
Defendant Cerny contends that he is entitled to summary judgment because none of the acts alleged in plaintiffs' complaint against him rise to the level of a constitutional violation and the alleged acts constitute, at most, common law torts. The Court previously addressed and rejected this argument in denying Cerny's motion to dismiss. See Jane Doe "A" v. Special School District of St. Louis County, 637 F. Supp. 1138, 1143-45 (E.D.Mo.1986). Thus, the Court will only briefly address the argument here.
To recover under § 1983, plaintiffs must prove that Cerny's conduct deprived them of rights, privileges or immunities secured by the Constitution and laws of the United States. See 42 U.S.C. § 1983. Plaintiffs argue that Cerny's acts of physical and sexual abuse deprived them of their substantive due process rights. The due process clause protects against state deprivation of an individual's life, liberty or property interest without due process of law. The liberty interest protected by substantive due process encompasses the right to be free from state intrusion upon one's bodily security and personal privacy. See Ingraham v. Wright, 430 U.S. 651, 673, 97 S. Ct. 1401, 1413, 51 L. Ed. 2d 711 (1977); Hall v. Tawney, 621 F.2d 607, 613 (4th Cir.1980). State action which "shocks the conscience" or runs counter to "certain decencies of civilized conduct" violates the due process clause. See Rochin v. California, 342 U.S. 165, 172-73, 72 S. Ct. 205, 209-10, 96 L. Ed. 183 (1952); Griffin v. Hilke, 804 F.2d 1052, 1056 (8th Cir.1986), cert. denied, ___ U.S. ___, 107 S. Ct. 3184, 96 L. Ed. 2d 673 (1987).
Some of the acts allegedly committed by Cerny include: touching, grabbing, or pinching the plaintiffs' genitals and buttocks, pulling their pants down and spanking them, striking or sitting on them, threatening them and exposing himself and masturbating in front of them. The Court cannot find, as a matter of law, that these acts do not rise to violations of plaintiffs' substantive due process rights. As alleged, these acts constitute an intrusion upon the plaintiffs' bodily security and personal privacy sufficient to "shock the conscience" of the jury. Davis v. Forrest, 768 F.2d 257, 258 (8th Cir.1985).
B. Plaintiffs Who "Witnessed" Defendant Cerny's Acts.
Defendant Cerny contends that certain plaintiffs who merely "witnessed" his alleged improper acts or who were touched in non-sexual ways do not have a § 1983 cause of action. Defendant argues that these plaintiffs essentially allege a state cause of action for intentional infliction of emotional distress. The United States Supreme Court has clearly held that damages for mental and emotional distress caused by a violation of constitutional rights are recoverable under § 1983. Carey v. Piphus, 435 U.S. 247, 264, 98 S. Ct. 1042, 1052, 55 L. Ed. 2d 252 (1978). The issue before the Court then is whether defendant Cerny violated the constitutional rights of the plaintiffs who suffered mental distress but who were not directly subject to the alleged acts of sexual misconduct.
Defendant is correct in stating that individuals may not recover under § 1983 merely because they suffered emotional distress as a result of witnessing acts which deprived others of their constitutional rights. Buikema v. Hayes, 562 F. Supp. 910 (N.D.Ill.1983). Individuals may recover under § 1983, however, for violation of their own constitutional rights. The substantive due process protection against state intrusions upon an individual's personal security extends to protection of emotional as well as physical well-being when *458 the emotional distress is accompanied by some actual risk of physical harm. White v. Rochford, 592 F.2d 381, 386 (7th Cir. 1979); Conner v. Sticher, 801 F.2d 1266, 1268 (11th Cir.1986).
Defendant Cerny contends that John Does K and F who merely "witnessed" the alleged violation of other children's constitutional rights and John Does H, J and M who witnessed the acts and were touched in non-sexual ways, fail to state a § 1983 action. According to John Doe K's deposition, he observed Cerny masturbate himself and commit various acts of physical and sexual abuse against other children such as touching their genitals, threatening, hitting, and kissing them. He also told his psychologist that he wore a "jock strap with a cup because he was afraid that Cerny would do something to him." John Doe F also testified that he observed defendant Cerny stimulating himself and abusing other children. John Doe F's mother testified that he began to wear two pairs of underwear in October 1984 and became excessively modest. Cerny allegedly pinched John Doe H in the buttocks several times, struck John Doe J in the leg, and grabbed John Doe M to break up a fight. John Does H, J and M also observed Cerny's alleged acts of misconduct toward other children.
It is clear to the Court that, although John Does K, F, H, J, and M may have not been directly subject to defendant Cerny's alleged acts of sexual abuse, their emotional distress may have arisen from an actual risk of physical harm. If the allegations against Cerny are true, these plaintiffs were more than mere witnesses to the violation of other childrens' civil rights. They observed acts and heard threats against other children which put them in fear of intrusions upon their own bodily security and personal privacy. They were in a position in which they could have been the next targets of the alleged physical and sexual abuse. Thus, John Does K, F, H, J, and M's own liberty interest in personal security and emotional well-being were implicated by Cerny's alleged misconduct.
C. Plaintiffs on Defendant Cerny's Bus.
Finally, defendant Cerny contends that he is entitled to summary judgment with respect to certain plaintiffs who never rode on or rode for only a brief period of time on Cerny's bus. According to affidavits submitted by the S.S.D. defendants and completed by S.S.D. bus drivers, transportation aides, and the transportation supervisor, John Doe C did not ride on Cerny's bus during the 1984-85 school year and John Does E, I, and K rode on Cerny's bus for only the first four days of the 1984-85 school year while a transportation aide was on the bus.
John Doe C claims that he was on Cerny's bus during the 1984-85 school year and he describes, in his deposition, various acts of physical and sexual abuse that he witnessed Cerny commit on the bus. (John Doe C Deposition, pp. 14-18). John Doe K testified at his deposition that he rode on Cerny's bus during 1984-85. (John Doe K Deposition, p. 15). The S.S.D. defendants admit that John Does E, I, and K were transported on Cerny's bus during the 1983-84 school year. (Defendant S.S.D. Answers to Plaintiffs' Supplemental Interrogatory No. 1(b) filed September 23, 1987). Because a factual dispute exists as to whether John Does C and K rode on Cerny's bus during 1984-1985 and because defendants admit that John Does E, I, and K rode on Cerny's bus during 1983-84, summary judgment on this issue is inappropriate. See Hillebrand v. M-Tron Industries, Inc., 827 F.2d 363 (8th Cir.1987).
For the foregoing reasons, defendant Cerny's motion for summary judgment is denied.
ORDER
Pursuant to the memorandum filed herein this day,
IT IS HEREBY ORDERED that the "Motion for Summary Judgment" of defendant Special School District and of the individual Special School District defendants be and is granted.
IT IS FURTHER ORDERED that the S.S.D. defendants' "Joint Motion for Partial Summary Judgment" be and is denied as moot.
IT IS FURTHER ORDERED that defendant David Cerny's motion for summary judgment be and is denied.
IT IS FURTHER ORDERED that the S.S.D. defendants' motion to reject the ex parte statement of Madeline Wendland be and is denied.
IT IS FURTHER ORDERED that summary judgment be and is entered in favor of the defendant Special School District and in favor of the individual Special School *459 District defendants Scarnato, Campbell, Marchlewski, Hill and Stotler on plaintiffs' complaint.
ON MOTION FOR RECONSIDERATION
IT IS HEREBY ORDERED that plaintiffs' motion for reconsideration of this Court's order granting summary judgment in favor of the Special School District defendants be and is denied.
In support of their motion for reconsideration, plaintiffs argue that the Court overlooked "significant examples" of prior notice of misconduct received by the Special School District (S.S.D.) defendants. The examples of prior notice cited by plaintiffs involve alleged sexual encounters between defendant Cerny and other adults. The Court did not overlook these incidents, but rather found that these alleged incidents were irrelevant and immaterial to the issue of whether the S.S.D. defendants had notice of defendant Cerny's alleged physical and sexual abuse of the handicapped children.
Plaintiffs also seek to supplement the record with the affidavit of Elizabeth Decker, a former member of the S.S.D. Board of Education. Recently, the Eighth Circuit described the proper use of the motion for reconsideration as follows:
Motions for reconsideration serve a limited function: to correct manifest errors of law or fact or to present newly discovered evidence. Such motions cannot in any case be employed as a vehicle to introduce new evidence that could have been adduced during pendency of the summary judgment motion.
Hagerman v. Yukon Energy Corp., 839 F.2d 407, 414 (8th Cir.1988) (quoting Rothwell v. Rosenthal & Co., 827 F.2d 246, 251 (7th Cir.), as amended, 835 F.2d 710 (7th Cir.1987).
Plaintiffs do not contend that they were unable to present the information in the affidavit prior to the entry of the summary judgment. In fact, when plaintiffs' counsel filed the motion for reconsideration on April 4, 1988, he indicated that the "information was available" to him "last fall." The parties were permitted to file numerous memoranda and supplementary materials during the six months that the S.S.D. defendants' motion for summary judgment was pending before this Court. The Court also granted plaintiffs leave to file the ex parte statement of Madeline Wendland, another former member of the S.S.D. Board of Education. Plaintiffs had ample opportunity to file the affidavit of Elizabeth Decker before the summary judgment decision was issued. Therefore, the plaintiffs' motion to reconsider the Court's judgment is denied.
NOTES
[1] The only remaining individual S.S.D. defendants are Scarnato, Marchlewski, Hill, Campbell and Stotler. The other individual S.S.D. defendants were dismissed pursuant to a prior Court order.
[2] Plaintiffs' original complaint contained other constitutional and state law claims which were dismissed by this Court in a previous opinion. See Jane Doe "A" v. Special School District of St. Louis County, 637 F. Supp. 1138 (E.D.Mo.1986).
[3] The S.S.D. defendants have filed a motion to reject plaintiffs' filing of an ex parte statement of Madeline Wendland, a former member of the Special School District Board, who was recently dismissed from this action. The Court has denied the S.S.D. defendants' motion to reject this statement in order to consider all of the evidence relevant to the motions for summary judgment before the Court. Although the S.S.D. defendants dispute many of the incidents of notice to the S.S.D. officials cited by plaintiffs, for purposes of the S.S.D. defendants' motions for summary judgment, the Court will assume that such notice was received.
[4] The evidence in the record does not support this allegation against defendant Cerny. John Doe "M" testified in his deposition, that Cerny never pushed him and that he was only touched by Cerny once when Cerny grabbed him by the arm to break up a fight. (John Doe "M" Deposition, pp. 28-30, 52).
[5] John Doe "G" has voluntarily dismissed his complaint against defendants and is no longer a party to this action.
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535 F. Supp. 2d 157 (2008)
CITIZENS FOR RESPONSIBILITY AND ETHICS IN WASHINGTON, Plaintiff,
v.
DEPARTMENT OF JUSTICE Defendant.
Civil Action No. 07-1620 (RMC).
United States District Court, District of Columbia.
March 10, 2008.
*158 *159 Kimberly D. Perkins, Citizens for Responsibility and Ethics in Washington, Washington, D.C., for Plaintiff.
Michael P. Abate, U.S. Department of Justice, Washington, D.C., for Defendant.
MEMORANDUM OPINION
ROSEMARY M. COLLYER, District Judge.
Citizens for Responsibility and Ethics in Washington ("CREW') brought this suit against, the Department of Justice ("DOJ") under the Freedom of Information Act ("FOIA"), 5 U.S.C. § 552. CREW complains that DOJ failed to conduct an adequate search for documents regarding the termination of nine U.S. Attorneys and how the explanation for such terminations might have been influenced by Mark McKinnon and his public relations firm. Despite the fact that its search turned up no documents, DOJ asserts that it conducted the reasonable and adequate search that FOIA requires. Thus, DOJ has moved to dismiss or for summary judgment. As explained below, the motion will be granted.
I. FACTS
In response to a media report that the White House worked with political consultant Mark McKinnon to devise a media strategy concerning the U.S. Attorney firings, CREW submitted a FOIA request to DOJ. Specifically, on May 23, 2007, CREW requested email messages sent between Mark McKinnon or his public relations firms, Maverick Media, Inc. and Public Strategies, Inc., and "any current or former [DOJ] employee in the Offices of the Attorney General, Deputy Attorney General, and/or Associate Attorney General concerning any aspect of the Congressional inquiry into the firings of U.S. Attorneys." Def.'s Mot. to Dismiss or for Summ. J. and Mem. in Supp. ("Def.'s Mem."), Ex. 1, A.
In response to the request, on June 27, 2007, DOJ's Office of Information and Privacy ("OIP") initiated a records search. Before the Court, DOJ has submitted the Declaration of Melanie Ann Pustay, Director *160 of OIP, describing the search conducted. See Def.'s Mem., Ex. 1 (Pustay Decl.). On June 29, 2007 records searches were initiated in the Offices of the Attorney General, Deputy Attorney General, and Associate Attorney General. Id. ¶ 9. Ms. Pustay states:
The practice for these three Offices is to notify each individual staff member in that Office of the receipt of OIP's memorandum requesting that a search be conducted, and each staff member's files, including electronic files, are then searched as necessary for records responsive to the request. In this instance, OIP notified these Offices that emails were specifically requested by plaintiff.
Id. Because this search would only encompass the records of current employees, OIP itself conducted a search of the records of former employees of these Offices. Id. ¶ 13. Ms. Pustay explains:
OIP determined which former employees were the most likely to have responsive records, and then conducted e-mail searches of the Enterprise Vault ("EV Vault") for those custodians. The EV Vault maintains e-mails of former employees in the senior leadership offices of the [DOJ]. . . .
Custodians were identified from a list of former employees in the EV Vault, using general information on the topic as well as the extensive personal experience of the FOIA Specialist assigned to plaintiff's request in conducting previous e-mail searches regarding the Congressional inquiries into the replacement of U.S. Attorneys.
Once we identified the likely records custodians, the FOIA Specialist conducted a search of each individual's e-mails in the EV Vault using the terms "Mark McKinnon," "Maverick Media," and "Public Strategies" from March 8, 2007, the date of the first congressional inquiry into the U.S. Attorney firings, to July 18, 2007, the date the search was conducted.
Id. ¶¶ 13-15.
On August 6, 2007, OIP informed CREW that searches in the Offices of the Attorney General and the Associate Attorney General produced no responsive records and that the search in the Office of the Deputy Attorney General was not yet completed. On September 13, 2007, CREW brought suit under FOIA, alleging that DOJ failed to produce the records requested.[1] Subsequently, DOJ completed processing the FOIA request, and on October 22, 2007, DOJ informed CREW that the search of the Office of the Deputy Attorney General also had failed to produce responsive records. Asserting that it conducted an adequate under FOIA., DOJ seeks dismissal or summary judgment of this suit.
II. STANDARD OF REVIEW
If, in considering a Rule 12(b)(6) motion, "matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56[.]" Holy Land Found. for Relief & Dev. v. Ashcroft, 333 F.3d 156, 165 (D.C.Cir.2003). Because matters outside the pleadings are presented in this *161 case, the court will treat the motion as one for summary judgment under Rule 56. Fed.R.Civ.P. 12(b)(6).
Under Rule 56 of the Federal. Rules of Civil Procedure, summary judgment must be granted when "the pleadings, depositions, answers to interrogatories, and, admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986); see also Diamond v. Atwood, 43 F.3d 1538, 1540 (D.C.Cir.1995). Moreover, summary judgment is properly granted against a party who "after adequate time for discovery and upon motion . . . fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Cetotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986).
In ruling on a motion for summary judgment, the court must draw all justifiable inferences in the nonmoving party's favor and accept the nonmoving party's evidence as true. Anderson, 477 U.S. at 255, 106 S. Ct. 2505. A nonmoving party, however, must establish more than "the mere existence of a scintilla of evidence" in support of its position. Id. at 252, 106 S. Ct. 2505, In addition, the nonmoving party may not rely solely on allegations or conclusory statements. Greene v. Dalton, 164 F.3d 671, 675 (D.C.Cir.1999). Rather, the non-moving party must present specific facts that would enable a reasonable jury to find in its favor. Id. at 675, If the evidence "is merely colorable, or is not significantly probative, summary judgment may be granted." Anderson, 477 U.S. at 249-50, 106 S. Ct. 2505 (citations omitted).
FOIA cases are typically and appropriately decided on motions for summary judgment. MisCavige v. IRS, 2 F.3d 366, 368 (11th Cir.1993); Rushford v. Civiletti, 485 F. Supp. 477, 481 n. 13 (D.D.C. 1980). In a FOIA case, the Court may award summary judgment solely on the basis of information provided by the department or agency in affidavits or declarations when the affidavits or declarations describe "the documents and the justifications for nondisclosure with reasonably specific detail, demonstrate that the information Withheld logically falls within the Claimed exemption, and are not controverted by either contrary evidence in the record nor, by evidence of agency bad faith." Military Audit Project v. Casey, 656 F.2d 724, 738 (D.C.Cir.1981); see also Vaughn v. Rosen, 484 F.2d 820, 826-28 (D.C.Cir. 1973). An agency's declarations should be reasonably detailed and nonconclusory, Weisberg v. Dep't of Justice, 705 F.2d 1344, 1351 (D.D.C.1983), and must be accorded "a presumption of good faith, which Cannot be rebutted by purely speculative claims about the existence and discoverability of other documents." SafeCard Services v. SEC, 926 F.2d 1197, 1200 (D.C.Cir. 1991) (internal citation and quotation omitted).
III. ANALYSIS
To prevail in a FOIA case, the plaintiff must show that an agency has (1) improperly (2) withheld (3) agency records. United States Dep't of Justice v. Tax Analysts, 492 U.S. 136, 142, 109 S. Ct. 2841, 106 L.Ed.2d, 112 (1989); United We Stand America, Inc. v. IRS, 359 F.3d 595, 598 (D.C.Cir.2004). A suit is only authorized under the FOIA against federal agencies and injunctive relief is only available to remedy an agency's improper withholding of information. Kissinger v. Reporters Comm. for Freedom of the Press, 445 U.S. 136, 150, 100 S. Ct. 960, 63 L. Ed. 2d 267 (1980); see also 5 U.S.C. § 652(a)(4)(B) & (f)(1)"
*162 Before it can obtain summary judgment in a FOIA case, "an agency must show, viewing the facts in the light most favorable to the requester, that . . . [it] has conducted a search reasonably calculated to uncover all relevant documents." Steinberg v. United States Dep't of Justice, 23 F.3d 548, 551 (D.C.Cir.1994). The question is not whether other responsive documents may exist, but whether the search itself was adequate. Id. The adequacy of a search is measured by a standard of reasonableness and depends on the individual circumstances of each case. Truitt v. Dep't of State, 897 F.2d 540, 542 (D.C.Cir. 1990). There is no requirement that an agency search every record system, but the agency must conduct a good faith, reasonable search of those systems of records likely to possess the requested information. Blanton v. U.S. Dep't of Justice, 182 F. Supp. 2d 81, 84 (D.D.C.2002).
An agency can show a good faith reasonable search by submitting a declaration that describes the scope and method of the search in reasonable detail. Perry v. Block, 684 F.2d 121, 127 (D.C.Cir. 1982). "An agency's affidavits need not be precise but they must provide basic information on what records were searched, by whom, and in what manner." Schrecker v. Dep't of Justice, 217 F. Supp. 2d 29, 33-34 (D.D.C.2002). The declaration(s) must assert that all files likely to contain responsive materials were searched. Wilbur v. CIA, 273 F. Supp. 2d 119, 124 (D.D.C.2003). For example, in CREW v. Nat'l Indian Gaming Comm'n, 467 F. Supp. 2d 40 (D.D.C.2006), CREW alleged that it was insufficient for the agency to state merely that it had performed an electronic search for the names of the individuals and entities identified in the FOIA request and that the agency must provide details regarding the actual databases and indices searched as well as the "Boolean operators" used to search. The Court rejected this argument noting that basic information regarding what records were searched, by whom, and in what manner was sufficient. Id. at 50.
In this case, CREW contends that Ms. Pustay's declaration is inadequate because CREW cannot tell what specific files were searched, how many files were searched, or which specific former employee's files were searched. DOJ in fact identified the files searched the email files of all current employees in the Offices of the Attorney General, Deputy Attorney General, and Associate Attorney General and the email files of former employees most likely to have records responsive to the request. Decl. of Pustay ¶¶ 9, 13-15. CREW asked for email; obviously, the files searched were email files. There is no need for further specificity. In compliance with FOIA requirements, Ms. Pustay's declaration asserts that all files likely to contain responsive materials were searched, by whom they were searched, and in what manner. Wilbur, 273 F.Supp.2d at 124; Schrecker, 217 F.Supp.2d at 33-34.
CREW further contends that the declaration is insufficient because while it specifies search terms used to search the EV Vault of former employee emails the terms "Mark McKinnon," "Maverick Media," and "Public Strategies" it does not specify what terms current employees used in searching for responsive documents. CREW made a similar claim in Nat'l Indian Gaming Comm'n, where it asserted that the agency failed to sufficiently disclose the method of searching files because CREW had "no idea what formed the basis" for the agency employees' determination as to what they considered to be relevant materials. 467 F.Supp.2d at 50. The Court rejected this argument stating, "[t]o the contrary, CREW's own FOIA request, in CREW'S own words, identified the records that it wanted." Id. The same is true here. *163 CREW's FOIA request sought email messages between Mark McKinnon, Maverick Media, Inc., and Public Strategies, Inc. and any current or former DOJ employee concerning any aspect of the Congressional inquiry into the firings of U.S. Attorneys. Ms. Pustay's declaration indicates that DOJ searched for the records requested by CREW. Ms. Pustay's declaration must be accorded "a presumption of good faith, which cannot he rebutted by purely speculative claims about the existence and discoverability of other documents." SafeCard, 926 F.2d at 1200. CREW has not presented any claim that would rebut this presumption of good faith. Because DOJ conducted a diligent and reasonable search, summary judgment, will be granted in its favor.
IV. CONCLUSION
Defendant's motion to dismiss or for summary judgment [Dkt. # 5] will be granted. Accordingly, the Complaint will be dismissed. A memorializing order accompanies this Memorandum Opinion.
NOTES
[1] Originally, CREW also asserted a claim for failure to grant expedited processing. Compl. Count 1 ¶¶ 37-40. Because DOJ has now completed processing CREW's request, CREW recognizes that this claim is moot. Pl.'s Opp. at 7 n. 1, (citing 5 U.S.C. § 552(a)(6)(E)(iv) (a district court shall not have jurisdiction to consider a claim for denial of expedited processing after the agency has provided a complete response to the request)).
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01-03-2023
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10-30-2013
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IN RE DESA HEATING, L.L.C.
COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-06-088-CV
IN RE DESA HEATING, L.L.C. RELATOR
------------
ORIGINAL PROCEEDING
------------
MEMORANDUM OPINION
(footnote: 1)
------------
Relator DESA Heating, L.L.C. seeks mandamus relief from the trial court’s order compelling it to produce information that it claims is protected by trade secret privilege. Because we hold that the trial court abused its discretion by ordering production of DESA’s financial information and market strategies, we conditionally grant DESA’s petition for writ of mandamus as to this information only; in all other respects, we deny the petition.
FACTUAL BACKGROUND
DESA, a manufacturer and distributor of fireplace mantels, signed a contract in early 2003
with Lowe’s hardware stores agreeing to provide Lowe’s with a variety of fireplace mantels. DESA then placed an order with real party in interest Heartland USA, L.L.C. for
six million dollars’ worth of fireplace mantels. After their business relationship soured,
DESA and Heartland were named as co-defendants in a lawsuit filed by KBK Financial, Inc., a company that provided financing to Heartland. DESA and Heartland then filed cross-claims against each other in this suit; DESA alleges that Heartland failed to produce the quality and quantity of mantels as promised, and Heartland alleges that DESA wrongfully diverted its mantel business away from Heartland and interfered with its business relationship with KBK Financial.
In the course of this lawsuit,
Heartland served discovery requests, including a request for production of documents and a corporate representative deposition notice, on DESA.
DESA claimed that five of Heartland’s requests for production and eight of Heartland’s deposition topics sought information protected by trade secret privilege, and it tendered
an affidavit of Scott M. Nehm, its Vice President of Distribution and Logistics, in support. Heartland then filed a motion to compel DESA to respond to its discovery requests. In response, DESA argued that the requested information was privileged but asked the trial court to enter a protective order should it rule that Heartland was entitled to discover the information. The visiting trial court judge granted Heartland’s motion to compel and ordered DESA to respond to the discovery requests, but it did not enter the protective order requested by DESA. DESA now seeks a writ of mandamus from this court ordering the trial court to set aside its order granting Heartland’s motion to compel.
DISCUSSION
When trade secret privilege is asserted as the basis for resisting production, the party resisting discovery must first establish that the information is a trade secret.
In re Cont’l Gen. Tire, Inc.
, 979 S.W.2d 609, 613 (Tex. 1998) (orig. proceeding).
The burden then shifts to the requesting party to establish that the information is necessary for a fair adjudication of its claims.
Id.
If the requesting party meets this burden, the trial court should ordinarily compel disclosure of the information, subject to an appropriate protective order.
Id.
Mandamus will issue to correct a discovery order only if the order constitutes a clear abuse of discretion and there is no adequate remedy by appeal.
In re Colonial Pipeline Co
., 968 S.W.2d 938, 941 (Tex. 1998) (orig. proceeding)
;
Walker v. Packer
, 827 S.W.2d 833, 839 (Tex. 1992) (orig. proceeding)
.
The trial court abuses its discretion if it orders production once trade secret status is proven but the party seeking production has not shown a necessity for the requested materials.
In re Bass
, 113 S.W.3d 735, 738 (Tex. 2003) (orig. proceeding).
A.
Is the requested information a trade secret?
A trade secret is “any formula, pattern, device or compilation of information which is used in one’s business and presents an opportunity to obtain an advantage over competitors who do not know or use it.”
Computer Assocs. Intern., Inc. v. Altai
,
Inc
., 918 S.W.2d 453, 455 (Tex. 1994).
(footnote: 2) DESA provided Nehm’s affidavit to establish the applicability of this privilege to the information sought by Heartland. The discovery requests seek information from four general categories: financial information, market strategies, customers and vendors, and contract terms.
(footnote: 3) The majority of Nehm’s affidavit discusses how DESA keeps this information secret and how it is often required to do so by terms of various contracts that it has with customers and vendors, but secrecy is not the only requirement of trade secret status. To prevail in its claim of privilege, DESA also should show the value of the information to DESA and its competitors,
see Bass
, 113 S.W.2d at 739, or how the information “
presents an opportunity to obtain an advantage
over competitors,”
Computer Assocs.
, 918 S.W.2d at 455 (emphasis added).
After examining each discovery request and Nehm’s affidavit supporting DESA’s assertion of the trade secret privilege, we conclude that
DESA has established the applicability of trade secret privilege to information regarding financial information and market strategies, but not to information regarding customers and vendors or contract terms.
Financial information
: Nehm’s affidavit asserts that, should DESA’s financial information be released to the public, its customers and vendors could use the information to renegotiate their prices with DESA, and its competitors could use the information to “undercut DESA in its pricing in an effort to obtain DESA’s customers.” We hold that these statements, while somewhat conclusory and lacking in detail, are nevertheless sufficient to establish the competitive value of the information to DESA’s pricing strategy.
See In re Cayman Island Firm of Deloitte & Touche
, No. 04-01-00491-CV, 2001 WL 1042233, at *4 (Tex. App.—San Antonio September 12, 2001, orig. proceeding) (not designated for publication) (holding affiant’s statement that information was “highly confidential and proprietary and would greatly benefit [relator’s] competitors,” while “sketchy” on details, was sufficient to establish trade secret privilege). Accordingly, DESA has carried its initial burden of establishing that this information is a trade secret.
See Cont’l Gen. Tire
,
979 S.W.2d at 613.
Market strategies
: Nehm’s affidavit asserts the same reasons for the value of market analyses, assessments, and so forth prepared by DESA, claiming that public release of the information would be “detrimental” and could assist its vendors and competitors in undercutting DESA’s pricing. Again, these statements establish that the market analyses provide DESA with pricing strategies that, if they were revealed to competitors, would cause DESA to lose its marketplace advantage. Therefore, we conclude that DESA has carried its initial burden as to market strategies as well.
See id.
Customers and vendors
: In contrast to the statements in Nehm’s affidavit regarding financial information and market strategies, the affidavit does not address any competitive advantage provided by DESA’s customer and vendor lists. Instead, the affidavit states merely that revealing the identity and contact information of its customers and vendors “would put DESA’s competitors in direct contact with DESA’s customers (buyers) and vendors (manufacturers)” and that “DESA spends many man hours in maintaining a good relationship with their customers (buyers) and vendors (manufacturers).” It does not state why the identity and contact information is important to DESA or why the information gives it a competitive advantage, and it does not state that revealing this information would hurt its business or its relationships.
(footnote: 4)
For these reasons, we conclude that DESA did not establish the applicability of trade secret privilege to the discovery requests seeking customer and vendor information; therefore, the trial court did not abuse its discretion by ordering the production of the requested discovery relating to DESA’s customers and vendors.
Contract terms
: For the same reason, we hold that DESA did not meet its burden of showing that the terms of its contract with Lowe’s are entitled to trade secret protection. Nehm’s affidavit states only that the information is confidential and proprietary, not that it has competitive value for the company. While Nehm’s affidavit states that the contract contains a confidentiality provision, this establishes only the confidentiality of the information—not that it is a trade secret. Accordingly, we do not find a clear abuse of discretion as to the trial court’s compelling discovery of the terms of DESA’s contract with Lowe’s.
B.
Did Heartland establish that the information was necessary for a fair adjudication of its claims?
Because DESA established the applicability of trade secret privilege to the financial information and market strategies sought by Heartland, the burden shifted to Heartland to show that disclosure of the information was necessary for a fair adjudication of its claims.
See Cont’l Gen. Tire
, 979 S.W.2d at 613. However, the trial court had no evidence before it of Heartland’s need for the information. The trial court merely had Heartland’s explanation, “To show that its claim for lost profits is not speculative, Heartland intends to show the Court that DESA projected Heartland’s profits and that DESA continues to sell the products to Lowe’s which DESA promised to purchase from Heartland,” and Heartland’s unsupported contention that “the information is material and necessary to prove Heartland’s lost profits and is unavailable from another source.” Heartland’s motion to compel provided no explanation as to why revealing DESA’s trade secrets was necessary to proving its claims.
(footnote: 5)
See Cont’l Gen. Tire
, 979 S.W.2d at 615 (holding that, without evidence of necessity, requesting party did not carry its burden for compelling disclosure of trade secret). Accordingly, we hold that the trial court abused its discretion when it compelled production of DESA’s trade secrets without a showing of necessity by Heartland.
(footnote: 6) And because DESA has no adequate remedy by appeal, mandamus relief is appropriate.
See id.
(holding that appeal was an inadequate remedy when requesting party failed to establish necessity, yet the trial court nevertheless compelled production of trade secrets) (citing
Walker
, 827 S.W.2d at 843).
CONCLUSION
Having concluded that the trial court abused its discretion by compelling production of DESA’s trade secret financial information and market strategies, we conditionally grant DESA’s petition for writ of mandamus only to the extent that we order the trial court, in accordance with this opinion,
to vacate its February 21, 2006 order with respect to
numbers 9-13 of Heartland’s First Request for Production and numbers 12-13, 17, and 21-22 of Heartland’s Notice of Intent To Take the Oral/Videotaped Deposition Duces Tecum of a DESA Corporate Representative
.
A writ will issue only if the trial court fails to do so. In all other respects, DESA’s petition for writ of mandamus is denied.
BOB MCCOY
JUSTICE
PANEL A: CAYCE, C.J.; LIVINGSTON and MCCOY, JJ.
DELIVERED: June 22, 2006
APPENDIX A
HEARTLAND’S FIRST REQUEST FOR PRODUCTION:
REQUEST FOR PRODUCTION NO. 9:
Other than Heartland, produce all financial information including copies of purchase orders, profit projections, payments made to any mantel manufacturer selling products to DESA from April 2003 until the present.
REQUEST FOR PRODUCTION NO. 10:
Produce all financial information showing DESA’s gross profit from the mantel business from its calendar business years for 2001 through the present.
REQUEST FOR PRODUCTION NO. 11:
Produce all financial information showing DESA’s net profit form the mantel business from its calendar business years for 2001 through the present.
REQUEST FOR PRODUCTION NO. 12:
Produce any studies, analyses, assessments, and/or forecasts by DESA for the mantel business for its calendar business years from 2001 through the present.
REQUEST FOR PRODUCTION NO. 13:
Produce the revenues, earnings, profits, losses, or billings relating to and/or derived form DESA’s mantel business from its calendar business years for 2001 through the present.
HEARTLAND’S NOTICE OF INTENT TO TAKE THE ORAL/VIDEOTAPED DEPOSITION DUCES TECUM OF A DESA CORPORATE REPRESENTATIVE:
8. The terms of DESA’s contract(s) with Lowe’s to purchase mantels manufactured by Heartland, including the number of mantels to be supplied by DESA to Lowe’s.
12. Sales of mantels by DESA to buyers, such as Lowe’s, since DESA discontinued its relationship with Heartland, includes the gross amount of such sales by year.
13. The percentage of gross profit DESA has derived from the mantel business in relation to its total gross profit for the company for each year from 2001 to present.
14. The purchase by DESA of mantels from all suppliers after DESA discontinued purchasing from Heartland until present, including the names, addresses, phone numbers and contact persons for the suppliers and whether or not such supplier is an affiliate of DESA.
16. Identify the buyers of mantels from DESA from the beginning of Heartland’s relationship with DESA until the present time, including DESA’s primary contact person with each buyer.
17. DESA’s gross sales in dollars of products, other than mantels, to buyers which sales were obtained by DESA as a result of DESA’s sales of mantels designed by Heartland (or modifications thereof) from 2001 to present.
21. DESA’s gross and net profit from selling mantels for each year form 2001 to present.
22. Projections prepared by DESA for the mantel business for each year from 2001 to present.
FOOTNOTES
1:See
Tex. R. App. P.
47.4.
2:Also see
In re Bass
, which approves the following Restatement factors for evaluating a claim of trade secret privilege:
(1) the extent to which the information is known outside of his business; (2) the extent to which it is known by employees and others involved in his business; (3) the extent of the measures taken by him to guard the secrecy of the information; (4) the value of the information to him and to his competitors; (5) the amount of effort or money expended by him in developing the information; (6) the ease or difficulty with which the information could be properly acquired or duplicated by others.
113 S.W.3d at 739 (citing
Restatement of Torts
§ 757 cmt. B (1939)).
3:The specific requests corresponding to the categories are as follows: Financial information (requests for production numbers 9-11, 13; deposition notice numbers 12-13, 17, 21-22); market strategies (requests for production numbers 9, 12; deposition notice number 22); customers and vendors (deposition notice numbers 14, 16); and contract terms (deposition notice number 8). These discovery requests are reproduced at Appendix A to this opinion.
4:Cf. T-N-T Motorsports, Inc. v. Hennessey Motorsports, Inc.
, 965 S.W.2d 18, 23 (Tex. App.—Houston [1st Dist.] 1998, pet. dism’d) (holding that vendor list was a trade secret when resisting party testified that “it [had] taken him four years to compile a list of vendors he considers capable of providing the materials and service he needs, who have the best prices, and who are the most reliable”);
Miller Paper Co. v. Roberts Paper Co.
, 901 S.W.2d 593, 601-02 (Tex. App.—Amarillo 1995, no writ) (concluding that customer list was trade secret when evidence showed that it had been compiled over a 52-year period and that it contained contact information as well as customers’ buying preferences, special billing information, delivery sites, information regarding the need for purchase orders, and cash on delivery data; witnesses also testified that the information “would provide competitors tremendous advantage” and that “with the data, one could easily start a new company”).
5:In this original proceeding, Heartland contends that its expert’s testimony (which was not before the trial court) establishes necessity because “the information solicited will be used to supplement his opinions concerning the amount of Heartland’s damages.” To the contrary, the expert did not state that he needed the information to formulate his damages calculations; he merely said that, when asked if he planned to supplement his report, “[i]t depends upon what other information comes to me as a result of interrogatories and future depositions.”
6:Specifically, the trial court abused its discretion by ordering DESA to respond to numbers 9-13 of Heartland’s First Request for Production and numbers 12-13, 17, and 21-22 of Heartland’s Notice of Intent To Take the Oral/Videotaped Deposition Duces Tecum of a DESA Corporate Representative.
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09-03-2015
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This opinion was unsealed by order of Judge Howell on 12/8/11.
UN
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01-03-2023
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03-31-2014
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861 F.Supp. 616 (1994)
Hilda M. PAPPAS, Plaintiff,
v.
BETHESDA HOSPITAL ASSOCIATION and Benefit Services Agency, Inc., Defendants.
No. C2-93-1116.
United States District Court, S.D. Ohio, Eastern Division.
June 29, 1994.
*617 Denis James Murphy, Carlile, Patchen, Murphy & Allison, Columbus, OH, for plaintiff Hilda M. Pappas.
Peter Nelson Cultice, Kincaid Cultice & Geyer, Zanesville, OH, for defendants Bethesda Hosp. Ass'n, Benefit Services Agency Inc., Bethesda Hosp. Employee Benefit Plan.
OPINION AND ORDER
GEORGE C. SMITH, District Judge.
Plaintiff alleges that defendants Benefit Services Agency, Inc. (BSAI) and Bethesda Hospital Association (Bethesda) engaged in discriminatory behavior in violation of Title I and Title III of the Americans with Disabilities Act of 1990 (ADA), 42 U.S.C. §§ 12111-12117, 12181-12189. In addition, plaintiff alleges that the defendants deprived her of equal protection of the laws and of equal privileges or immunities in violation of the Civil Rights Act of 1871, 42 U.S.C. § 1985(3).
This matter is before the Court on defendants' joint motion to dismiss. (Doc. 3) Defendant BSAI moves to dismiss all counts against it for failure to state a claim upon which relief can be granted, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.[1] Defendant Bethesda moves to dismiss Counts II and III of plaintiff's complaint for failure to state a claim upon which relief can be granted.
I.
For purposes of ruling on defendants' motion, the Court assumes that the following facts are true. Plaintiff worked at Bethesda Hospital as a registered nurse. In August 1991, she applied, pursuant to a plan offered by Bethesda, for family health insurance coverage for herself, her husband and two children. Benefit Services administered the health insurance plan that Bethesda offered to its employees. Although defendants approved plaintiff for individual coverage, they denied her application for family coverage.
Plaintiff alleges defendants informed her that family coverage was denied because her husband was receiving medication for hypertension and hyperlipidemia, and that her son was a paraplegic confined to a wheelchair. Plaintiff asserts that, after defendants told her that family coverage was denied, she made continuing efforts to get defendants to reconsider their decision. Bethesda admits that plaintiff requested reconsideration of the denial of family coverage. Bethesda, however, maintains that Pappas never reapplied for coverage.
Plaintiff brought a charge of discrimination before the Equal Employment Opportunity Commission (EEOC). On September 21, 1993, the EEOC sent plaintiff a Notice of Right to Sue.
Plaintiff alleges in Count I that both defendants are "covered entities" as defined by 42 U.S.C. § 12111(2). She asserts that the conditions of her husband and son constitute disabilities as defined in § 3 of the ADA, 42 U.S.C. § 12102(2). Plaintiff contends that, by denying her family coverage and refusing to reconsider this decision, defendants acted with malice and reckless indifference with respect to plaintiff's federally protected rights in violation of Title I of the ADA. 42 U.S.C. §§ 12111-12117.
*618 Count II of the complaint alleges that both defendants are public accommodations as defined by the ADA, 42 U.S.C. § 12181(7)(F). Therefore, defendants' actions violated Title III of the ADA. 42 U.S.C. §§ 12181-12189. Plaintiff asserts in Count III that the defendants' actions constituted a conspiracy to deprive the plaintiff of equal protection of the laws or of equal privileges or immunities in violation of the Civil Rights Act of 1871, 42 U.S.C. § 1985(3).
II.
A district court may not dismiss a claim under Rule 12(b)(6) for the failure to state a claim unless it is apparent beyond a doubt to the court that the plaintiff can prove no set of facts to support a claim which would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957). In determining whether the facts presented in a complaint support a claim upon which relief may be granted, the district court is to liberally construe the facts in the light most favorable to the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974); Jenkins v. McKeithen, 395 U.S. 411, 421, 89 S.Ct. 1843, 1848-49, 23 L.Ed.2d 404 (1969); 5A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1357, at 344 (1990). The essence of a court's inquiry is to determine whether the allegations contained in the complaint satisfy the mandate of the Federal Rules that the complaint contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a).
III.
While the court is to liberally construe facts in pleadings in a light most favorable to the plaintiff, the same is not true as to conclusions of law that are included in the pleadings. Blackburn v. Fisk Univ., 443 F.2d 121 (6th Cir.1971). Plaintiff's complaint contains the allegation that both defendants are covered entities as defined by the ADA. This statement is a conclusion of law. It is therefore necessary to determine whether the facts in the complaint, liberally construed, state or imply that defendants were both covered entities.
A.
Defendant BSAI moves to dismiss Count I of the plaintiff's claim on the ground that it was not a covered entity to which the antidiscrimination prohibitions of Title I of the ADA apply. Section 101(2) of the ADA states that "covered entity means an employer, employment agency, labor organization, or joint labor-management committee." 42 U.S.C. § 12111(2). BSAI finds support in Carparts Distribution Center, Inc. v. Automotive Wholesaler's Ass'n of New England, 826 F.Supp. 583 (D.N.H.1993). In Carparts, the court granted the defendant health insurance plan administrator's motion to dismiss for failure to state a claim. The court found that because the plan administrator did not employ the plaintiff, it was not a covered entity under the ADA. 826 F.Supp. at 585. BSAI argues that it, likewise, does not employ Pappas and therefore is not a covered entity to which Title I is applicable.
The plaintiff responds that "employer," as used in the ADA's definition of "covered entity," should be interpreted in the same way that the term is used in cases brought under Title VII of the Civil Rights Act of 1964. Noting that the definition of "employer" in both the ADA and Title VII includes agents of traditional employers,[2] plaintiff argues that BSAI is Bethesda's agent for its employees' health insurance and therefore is a covered entity under the ADA.
Plaintiff relies upon Spirt v. Teachers Ins. & Annuity Ass'n, 691 F.2d 1054 (2d Cir. 1982), vacated and remanded sub nom, Long Island Univ. v. Spirt, 463 U.S. 1223, 103 S.Ct. 3566, 77 L.Ed.2d 1406 (1983), reinstated on remand subject to modification on other grounds, 735 F.2d 23 (2d Cir.1983), cert. denied, 469 U.S. 881, 105 S.Ct. 247, 83 *619 L.Ed.2d 185 (1984). In Spirt, the court held that an independent insurance and pension fund that administered benefits for the plaintiff's employer was the plaintiff's employer for purposes of Title VII.
Defendants properly point out, however, that the Sixth Circuit took a narrower view of what constitutes an agent of an employer. Peters v. Wayne State Univ., 691 F.2d 235 (6th Cir.1982), cert. granted, judgment vacated and case remanded on different grounds, 463 U.S. 1223, 103 S.Ct. 3566, 77 L.Ed.2d 1406 (1983). In Peters, the court concluded that an independent administrator of pension and retirement benefits for university employees was not a Title VII employer of the plaintiffs, who were employed by universities which subscribed to the plans. The court stated "[w]e decline to hold that an insurance company may become liable under Title VII simply by furnishing its services to a Title VII employer." 691 F.2d at 238.
In Peters, the court first pointed out that the defendants did not employ the plaintiffs in the conventional sense of the term. Id. Second, the court noted that the employer did not delegate any of its duties regarding employee compensation to the defendant. Id. Third, the court emphasized that the insurer was not the employer's agent since the employer did not exercise the type of control that is required in a principal-agent relationship. Id.
In the case before the Court, plaintiff does not allege that BSAI was her employer in the conventional sense of the term. Additionally, plaintiff does not allege, nor can it be inferred from the complaint, that Bethesda delegated any of its duties regarding employee benefits to BSAI. In fact, the complaint refers to the health insurance plan as the "Defendant's [Bethesda]," while BSAI is referred to as the "administrator." Finally, there is nothing in the complaint to indicate that Bethesda exercised any degree of control over BSAI that would be necessary to make BSAI an agent of Bethesda.
The Court finds persuasive the parties' arguments that the Title VII interpretation of "employer" should be applied to the Americans with Disabilities Act. In this Circuit, as Peters demonstrates, the administrator of a Title VII employer's benefits is not deemed to be an agent of the Title VII employer solely because it administers employee benefits for that employer. Therefore, such an administrator is not subject to the antidiscrimination provisions of Title VII. Applying Peters to the instant case, the Court concludes that the administrator of employee benefits for a statutory employer under the ADA is not an agent of that employer and therefore may not be held liable for benefits that discriminate based on disability.
In conclusion, plaintiff has failed to plead facts under which it can be inferred that defendant BSAI is a covered entity under the ADA. For this reason, BSAI's motion to dismiss Count I of the complaint will be granted.
B.
Title III of the ADA provides in part that "[n]o individual shall be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation by any person who owns, leases (or leases to), or operates a place of public accommodation." ADA § 302(a), 42 U.S.C. § 12182(a). Plaintiff alleges in her complaint that both Bethesda and BSAI are public accommodations as defined by Title III of the ADA. Plaintiff claims that both defendants' denial of family health insurance benefits constituted unlawful discrimination in violation of Title III.
The Court must decide whether either or both of the defendants is a public accommodation within the meaning of the Act. In their motion to dismiss, the defendants argue that neither is a public accommodation in regard to their provision of health insurance benefits and services. Defendants again rely on Carparts, supra, in which the court held that Title III applied to "actual physical structures with definite physical boundaries which a person physically enters for the purpose of utilizing the facilities or obtaining services there." 826 F.Supp. at 586.
BSAI argues that, because plaintiff did not enter its physical structure, it is not a public *620 accommodation within the purview of Title III. Bethesda admits that it falls within the general definition of public accommodations. However, Bethesda contends that it falls outside the definition in regard to its provision of health insurance benefits because plaintiff did not claim that Bethesda denied her access to its facility or services provided therein.
Plaintiff argues that Congress intended that Title III of the ADA apply to the sale of insurance contracts. First, plaintiff notes that both hospitals and insurance offices are places of public accommodation within the statute. 42 U.S.C. § 12181(7)(F). Second, plaintiff relies on U.S. Department of Justice pronouncements that discriminatory practices in the sale of insurance contracts fall within the prohibition of Title III. 28 C.F.R. Pt. 36, App. B. at 600 (1993).
Since neither the U.S. Supreme Court nor the Sixth Circuit has interpreted the scope of Title III, this Court must decide the issue based on the "ordinary, common meaning" of the words in the statute. United States v. Ransbottom, 914 F.2d 743, 745 (6th Cir.1990), cert. denied, 498 U.S. 971, 111 S.Ct. 439, 112 L.Ed.2d 422 (1990). Title III's general antidiscrimination provision refers to discrimination on the basis of disability by "any place of public accommodation." 42 U.S.C. § 12182(a) (emphasis added). The statute provides examples of public accommodations, all of which are "places" within the plain meaning of that word (hotel, restaurant, theater, grocery store, or senior citizen center, 42 U.S.C. § 12181(7) (1993)). Furthermore, the references throughout Title III make it clear that its scope is limited to discrimination in the provisions of goods, services, facilities, privileges, advantages or accommodations based on a disabled person's physical ability to make use of those goods, services, etc.[3]
Again, plaintiff properly points out that both hospitals and insurance offices are places of public accommodation and thus Title III can apply to them. An example of this is a Title III claim alleging that an insurance office did not make reasonable accommodations for a person whose access to it required the use of a wheelchair. Here, however, plaintiff's claim has nothing to do with an inability to make physical use of the services of a place of public accommodation. In other words, there is no nexus whatsoever between the alleged discrimination and any public accommodation.
Finally, plaintiff points out that the U.S. Department of Justice has construed Title III as applicable to the sale of insurance contracts. This Court, however, need not defer to the Department's construction. The Supreme Court recently stated that "[i]n ... contexts in which we defer to an administrative interpretation of a statute, we do so only if Congress has not expressed its intent with respect to the question and then only if the administrative interpretation is reasonable." Presley v. Etowah County Commission, 502 U.S. 491, 112 S.Ct. 820, 117 L.Ed.2d 51 (1992). Here, Congress has unambiguously expressed its intent with respect to the applicability of Title III as it relates to the physical use of a place of public accommodation. The Court, therefore, declines to defer to the Department's construction.
For the above reasons, the Court finds that in Count II plaintiff has not stated a claim against either defendant upon which relief can be granted. Defendants' motion to dismiss Count II will therefore be granted.
C.
Defendants also move to dismiss Count III for the failure to state a claim upon which relief can be granted. In this count, plaintiff alleges that Bethesda and BSAI conspired to deprive her of the equal protection of the laws and equal privileges *621 and immunities of the United States in violation of 42 U.S.C. § 1985(3).
Section 1985(3) reads, in pertinent part:
If two or more persons in any State or Territory conspire ... for the purpose of depriving, either directly or indirectly, any person or class of persons of the equal protection of the laws, or of equal privileges and immunities under the laws ... [and] if one or more persons engaged therein do, or cause to be done, any act in furtherance of the object of such conspiracy, whereby another is injured in his person or property, or deprived of having and exercising any right of or privilege of a citizen of the United States, the party so injured or deprived may have an action for the recovery of damages occasioned by such injury or deprivation against any one or more of the conspirators.
42 U.S.C. § 1985(3).
Defendants cite Carparts for the proposition that a cause of action under 42 U.S.C. § 1985(3) requires "some racial, or perhaps otherwise class-based, invidiously discriminatory animus behind the conspirators' action." 826 F.Supp. at 587 (quoting Griffin v. Breckenridge, 403 U.S. 88, 102, 91 S.Ct. 1790, 1798, 29 L.Ed.2d 338 (1971)). Defendants argue that plaintiff has failed to demonstrate that she belongs to a "discrete and insular minority" to which 42 U.S.C. § 1985(3) applies. Browder v. Tipton, 630 F.2d 1149, 1150 (6th Cir.1980).
The disposition of this case, however, does not require a determination of whether plaintiff is a member of a discrete and insular minority protected by § 1985(3). Rather, it merely requires that the Court answer the threshold question whether a person who alleges that she was injured by a conspiracy to violate Title I of the ADA may bring an action under § 1985(3).[4] The Court finds that she may not.
Fifteen years ago, the Supreme Court of the United States addressed a similar question in the context of the relationship between § 1985(3) and Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e to 2000e-17. In Great Am. Fed. Sav. & Loan Ass'n v. Novotny, 442 U.S. 366, 99 S.Ct. 2345, 60 L.Ed.2d 957 (1979), the Court decided "whether a person injured by a conspiracy to violate § 704(a) of the Civil Rights Act of 1964 is deprived of `the equal protection of the laws, or the equal privileges and immunities under the laws' within the meaning of § 1985(3)." Id. at 372, 99 S.Ct. at 2349.
In Novotny, the respondent was a loan officer and member of the board of directors of the petitioner savings and loan who was terminated from his employment. Respondent was terminated after he voiced support for female employees at a board of directors meeting. He believed female employees were being denied equal employment opportunities within the company. Respondent filed a Title VII charge with the EEOC. After respondent received a "right to sue letter" from the EEOC, he filed suit against the petitioner in federal court, alleging violations of 42 U.S.C. § 1985(3) and Title VII.[5]
In its analysis, the Court noted the "detailed administrative and judicial process designed to provide an opportunity for nonjudicial and nonadversary resolution of claims" under Title VII. Id. at 372-73, 99 S.Ct. at 2349. These processes include the requirement that a Title VII plaintiff bring his dispute to a state or local fair employment commission, if one exists, before filing a charge with the EEOC. Title VII's remedy provisions also include specific time limits which have to be adhered to before bringing *622 a private cause of action. Id. at 373, 99 S.Ct. at 2349.
Because of Title VII's detailed remedial scheme, the Court held that "[Section] 1985(3) could not be invoked to address violations of Title VII." Id. at 378, 99 S.Ct. at 2352. The Court reasoned that, if such a § 1985(3) claim were allowed, "a complainant could avoid most, if not all, of these detailed and specific provisions of the laws." Id. at 375-76, 99 S.Ct. at 2350-51.
The remedies that Congress provided for violations of Title I of the ADA incorporate by reference the remedies that Congress created for Title VII violations. 42 U.S.C. § 12117 (incorporating 42 U.S.C. §§ 2000e-4, 2000e-5, 2000e-6, 2000e-8 and 2000e-9 as the exclusive remedies for violations of Title I). These remedies include the "detailed administrative and judicial process[es]" that the Court referred to in Novotny. 442 U.S. at 372, 99 S.Ct. at 2349. See Kent v. Director, Missouri Dept. of Elementary and Secondary Education and Div. of Vocational Rehabilitation, 792 F.Supp. 59 (E.D.Mo.1992) (a right to sue letter from the EEOC is a statutory prerequisite to a claim under Title I of the ADA).
To allow a plaintiff to bring a § 1985(3) claim alleging a conspiracy based on the same facts as the plaintiff's Title I claim would undermine the remedies Congress provided within the ADA. The Sixth Circuit followed this view in Griggs v. Nat'l Railway Passenger Corp., 900 F.2d 74 (6th Cir.1990), in which the court held that a railway worker could not bring an action under the Federal Employers' Liability Act based on allegations that were cognizable under Title VII. In Griggs, the court stated that "we should be reluctant ... to read an earlier statute broadly where the result is to circumvent the detailed remedial scheme constructed in a later statute." Id. at 76.
In the instant case, the Court declines to broadly interpret the Civil Rights Act of 1871 because doing so would permit plaintiff to bypass the detailed remedial procedures that Congress provided in the ADA. For the foregoing reasons, Count III of plaintiff's complaint will be dismissed for failure to state a claim upon which relief can be granted.
IV.
Based upon the foregoing, the Court holds that defendants' motion to dismiss Counts I, II, and III are GRANTED. Count I is DISMISSED with respect to BSAI. Counts II and III are DISMISSED with respect to both defendants.
IT IS SO ORDERED.
NOTES
[1] Defendants submitted an affidavit with their joint motion to dismiss. The Court, however, declines to treat defendants' motion as one for summary judgment. See Fed.R.Civ.P. 12(b).
[2] The operative language in the definitions of "employer" under the ADA and Title VII is identical: "The term `employer' means a person engaged in an industry affecting commerce who has 15 or more employees for each working day in each of 20 or more calendar weeks in the current or preceding calendar year, and any agent of such person...." Cf. 42 U.S.C. § 12111(5)(A) and 42 U.S.C. § 2000e(b) (emphasis added).
[3] "Goods, services, facilities ... shall be afforded to an individual with a disability in the most integrated setting appropriate to the needs of the individual," 42 U.S.C. § 12182(B); "discrimination includes ... (iii) a failure to take such steps as may be necessary to ensure that no individual with a disability is excluded [or] denied services ... because of the absence of auxiliary aids and services ... [or] (iv) a failure to remove architectural barriers, and communication barriers that are structural in nature...." 42 U.S.C. § 12182 (emphasis added).
[4] The discussion is narrowed to allegations of a violation of Title I of the ADA for several reasons. The plaintiff's allegation of a conspiracy in Count III is based solely on the same facts that relate to the allegations of ADA violations in Count I and Count II. Earlier in this opinion, the Court held that Title III of the ADA is not applicable to either defendant; thus Count II of the complaint is dismissed and Title III shall not be considered. Plaintiff does not allege that either defendant violated Title II of the ADA, which relates to public services, so Title II shall not be considered. The only ADA count for which the defendants did not move for dismissal is the Title I count against Bethesda. This is the only ADA count that the Court has not dismissed.
[5] Both in Novotny and in the instant case, a standing issue is raised under § 1985(3). The resolution of the standing question, however, is not necessary for the disposition of the motion to dismiss.
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01-03-2023
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10-30-2013
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https://www.courtlistener.com/api/rest/v3/opinions/2661385/
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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
RONNIE THOMAS,
Plaintiff,
Civil Action No. 10-913 (BAH)
v.
Judge Beryl A. Howell
DISTRICT OF COLUMBIA,
Defendant.
MEMORANDUM OPINION
This action was brought by the original plaintiff, Angela Brooks, against the defendant
District of Columbia (“the District”) pursuant to the Individuals with Disabilities Education
Improvement Act (“IDEIA”), 20 U.S.C §§ 1400, et seq., on behalf of her then-minor child,
Ronnie Thomas, seeking to compel the District of Columbia to issue a revised Individualized
Education Plan (“IEP”) for her daughter consistent with an August 2009 vocational evaluation. 1
Although the merits of the plaintiff’s claims have already been resolved, the plaintiff now seeks
attorney’s fees from the defendant under the IDEIA’s fee-shifting provision, 20 U.S.C
§ 1415(i)(3)(B). The primary questions before the Court are the appropriate hourly rate to apply
and the appropriate number of hours to permit for certain tasks.
I. BACKGROUND
The original plaintiff, Ms. Brooks, commenced this lawsuit on June 3, 2010, seeking
declaratory and injunctive relief for the District’s failure to review a vocational evaluation of her
daughter (Ms. Thomas) in a timely manner, the District’s subsequent failure to review and revise
Ms. Thomas’s IEP, and the District’s failure to provide a free appropriate public education
1
On January 28, 2012, Ronnie Thomas was substituted as the real party in interest in this action. See Order dated
Jan. 28, 2012, ECF No. 33.
1
(“FAPE”). See Compl. ¶¶ 1, 11–22, ECF No. 1. The case was referred to a Magistrate Judge for
a Report and Recommendation, which issued on August 10, 2011, recommending that the
plaintiff be granted summary judgment on her three claims. See Report & Recommendation
dated Aug. 10, 2011, at 16, ECF No. 21. On August 31, 2011, the Court adopted the Report and
Recommendation in full, granting summary judgment to the plaintiff in part, and denying
summary judgment to the District. See Order dated Aug. 31, 2011, ECF No. 22. In connection
with the defendant’s motion for reconsideration of that decision, the Court recited the factual
background underlying the plaintiff’s substantive claims in a previous memorandum opinion,
which the Court incorporates here by reference. See Brooks v. District of Columbia, 841 F.
Supp. 2d 253 (D.D.C. 2012).
Relevant to the matter currently before the Court, the plaintiff filed a motion for
attorney’s fees and costs, which the Court also referred to a Magistrate Judge for report and
recommendation. See Pl.’s Mot. for Fees & Costs (“Pl.’s Mot.”), ECF No. 35; see also Order
dated Mar. 16, 2012, ECF No. 36. In her motion, the plaintiff sought $43,589 in attorney’s fees
and costs associated with the litigation of her IDEIA claims. See Pl.’s Mot. at 1. The plaintiff
based her request on a line-item accounting of tasks performed by her counsel, Douglas Tyrka,
throughout the litigation, and the rates were based upon an adjusted version of the so-called
Laffey matrix—a matrix of hourly rates for attorneys of varying experience levels approved by
this Circuit. 2 See Mem. in Supp. of Pl.’s Mot. for Fees & Costs (“Pl.’s Mem.”) at 4–7, ECF No.
2
There are two versions of the Laffey matrix:
One version, which is maintained by the Civil Division of the Office of the United States
Attorney . . . , calculates the matrix rate for each year by adding the change in the overall cost of
living, as reflected in the United States Consumer Price Index (‘CPI’) for the Washington, D.C.
area for the prior year, and then rounding that rate to the nearest multiple of $5. A second, slightly
different version of the Laffey Matrix . . . , also in use in the Washington, D.C. area, calculates the
matrix rates for each year by using the legal services component of the CPI rather than the general
CPI on which the U.S. Attorney’s Office Matrix is based.
2
35; Pl.’s Mot. Ex. 1, ECF No. 35-1. See generally Laffey v. Nw. Airlines, Inc., 572 F. Supp. 354
(D.D.C. 1983), aff’d in part, rev’d in part on other grounds, 746 F.2d 4 (D.C. Cir. 1984). The
District opposed the magnitude of the relief sought by the plaintiff, arguing that the adjusted
Laffey rates were too high for a “routine administrative litigation” and that many of the specific
charges claimed were unreasonable, excessive, or overly vague. See Mem. of P. & A. in Opp’n
to Pl.’s Mot. for Fees & Costs (“Def.’s Opp’n”) at 3–16, ECF No. 38. As a result, the District
argued that the plaintiff’s fee award should be reduced to $8,437. See id. at 17.
The Report and Recommendation (“R&R”), issued on August 31, 2012, recommended
that the plaintiff be granted attorney’s fees at 75% of the standard Laffey rates, rather than the
100% of the adjusted Laffey rates requested, and that charges for certain tasks be reduced,
resulting in a total fee award of $19,546.88. See Report & Recommendation dated Aug. 31,
2012 (“R&R”) at 8, 12–13, 17, ECF No. 41. The R&R recognized that the plaintiff had
submitted evidence that her counsel’s hourly rates were significantly higher ($609 per hour), id.
at 3, 8, but nevertheless concluded that the 75% figure ($307.50–$326.25) was “fair and just,” id.
at 8.
At the outset, the R&R cited guidance promulgated by the defendant—in particular the
District of Columbia Public Schools (“DCPS”)—as support for the recommendation. See id. at
7–8. The DCPS guidance uses 75% of the standard Laffey rates as a measure of reasonable
hourly rates in IDEIA matters. See R&R Ex. 1, at 2, ECF No. 41-1. Although acknowledging
Smith v. District of Columbia, 466 F. Supp. 2d 151, 156 (D.D.C. 2006) (citation and internal quotation marks
omitted). The adjusted Laffey matrix, or “Salazar matrix”—named after Salazar v. District of Columbia, 123 F.
Supp. 2d 8 (D.D.C. 2000), which approved of the adjusted matrix—results in higher rates because it uses the legal
services component of the national CPI rather than the general CPI for the metropolitan Washington, D.C. area. See
Blackman v. District of Columbia, 677 F. Supp. 2d 169, 176 (D.D.C. 2010). The plaintiff in the instant action
submitted her fee petition based on an adjusted Laffey rate ($609), and the R&R recommended awarding the
plaintiff fees at three-quarters of the standard Laffey rates ($307.50–$326.25). The Court will refer to the matrix
based on the general CPI as the “standard” Laffey matrix and the matrix based on the legal services component of
the CPI as the “adjusted” Laffey matrix.
3
that plaintiff’s counsel could “complain that he is being forced to work at a 25% discount from
his hourly rates” and that “the lawyer’s hourly rate is a vital consideration,” the R&R pointed to
several policy-based considerations in support of the conclusion that the 75% figure was the
appropriate one. R&R at 8. First, the R&R noted that the public interest in “encouraging
lawyers to take on IDEA cases for families who cannot afford them . . . must be balanced against
the reality that, ironically, those lawyers and children . . . are competing for the same dollars
from a finite appropriation.” Id. at 9. Hence, the R&R concluded that considerations of “the
public fisc” supported the discounted 75% figure. Id. Next, the R&R identified the advantages
of certainty that would result if courts used a uniform rate for IDEIA cases, stating that “[w]hile
the lawyers may be receiving less . . . they know exactly what they will receive . . . . [and] [t]hey
also know that they will receive it as soon as their vouchers are submitted and approved.” Id.
Third, the R&R opined that “a system based on 75% of the Laffey rate should result in fewer
challenges in this Court to the amounts paid by DCPS” because the “prompt payment” by DCPS
would mean that “the Court will see few if any IDEA fees cases.” Id. at 9–10. Finally, the R&R
determined that the 75% figure would be sufficient “to provide the bar sufficient encouragement
to take IDEA cases” because it would still yield “several thousand dollars per day” for the
plaintiffs’ bar, assuming a forty-hour work week at those rates. Id. at 10.
In addition to this discussion of the appropriate hourly rate, the R&R also concluded that
certain charges submitted by the plaintiff were excessive and needed to be reduced. Specifically,
the R&R found that the plaintiff’s counsel should have been able to research, outline, draft, and
file the plaintiff’s 16-page memorandum of law in support of her motion for summary judgment
in 8 hours rather than the 13.75 hours that was recorded. See id. at 11–12. Further, the R&R
concluded that “it should not have taken an attorney with [plaintiff’s counsel’s] legal experience
4
(over 13 years in 2012) 6.5 hours to complete” a petition for attorney’s fees and costs. Id. at 13.
Rather, the R&R proposed a reduction in the hours for that task to three hours. Id. Finally, the
R&R rejected the District’s arguments that (1) certain entries were vague, (2) certain entries
(e.g., researching and drafting the petition for fees) were clerical in nature, and (3) certain entries
were too remote in time to be compensable. Id. at 11–14. 3 The R&R further recommended that
the rate applied to the work of the plaintiff’s counsel should be the rate that applied at the time
the work was completed, rather than applying the current rate to all of the work claimed. Id. at
6–7.
Currently pending before the Court is the plaintiff’s timely filed objection to the R&R. In
her objection, the plaintiff argues that the R&R’s conclusions regarding the reasonable hourly
rate and the reasonable number of hours were in error. See Pl.’s Objections to Report &
Recommendation Regarding Att’ys’ Fees (“Pl.’s Objection”), ECF No. 44. For the reasons
discussed below, the Court sustains the plaintiff’s objections and enters judgment that differs
accordingly from that recommended in the R&R.
II. LEGAL STANDARD
Normally, when, as here, the Court has referred a non-dispositive pretrial motion to a
Magistrate Judge for decision, a district judge “may modify or set aside any portion of a
magistrate judge’s order . . . found to be clearly erroneous or contrary to law.” LCvR 72.2(c).
This Local Civil Rule is consistent with Federal Rule of Civil Procedure 72(a), which provides
for the referral of a pretrial matter “not dispositive of a party’s claim or defense” to a Magistrate
3
The District elected not to file any timely objection to the R&R, and therefore it waived its right to appeal from an
Order of this Court adopting the findings and recommendations of the R&R. See LCvR 72.3(b); see also Thomas v.
Arn, 474 U.S. 140, 155 (1985); Charter Oil Co. v. Am. Emp’rs’ Ins. Co., 69 F.3d 1160, 1172 (D.C. Cir. 1995)
(acknowledging that “a failure to object to a magistrate judge’s ruling barred review of that ruling on appeal”).
5
Judge to “hear and decide,” any part of which a district judge must “modify or set aside” if it is
“clearly erroneous or is contrary to law.” FED. R. CIV. P. 72(a).
The Federal Rules of Civil Procedure further state that a court “may refer a motion for
attorney’s fees to a magistrate judge under Rule 72(b) as if it were a dispositive pretrial matter.”
FED. R. CIV. P. 54(d)(2)(D); see also David v. District of Columbia, 252 F.R.D. 56, 58 (D.D.C.
2008) (noting “the limited jurisdiction granted by Congress to a magistrate judge in Federal
Rules 54(d)(2)(D) and 72(b) to issue a recommendation on a motion for attorneys’ fees”). Rule
72(b), much like Local Civil Rule 72.3, provides that “[t]he district judge must determine de
novo any part of the magistrate judge’s disposition that has been properly objected to,” and
“[t]he district judge may accept, reject, or modify the recommended disposition.” FED. R. CIV. P.
72(b)(3); see also LCvR 72.3(c) (“A district judge shall make a de novo determination of those
portions of a magistrate judge’s findings and recommendations to which objection is
made . . . .”).
III. DISCUSSION
The IDEIA permits the parents of a disabled child to recover “reasonable attorneys’ fees”
insofar as they are “a prevailing party.” 20 U.S.C. § 1415(i)(3)(B). “A court’s determination of
the appropriate attorney’s fees, in other words, is based on a two-step inquiry.” Jackson v.
District of Columbia, 696 F. Supp. 2d 97, 101 (D.D.C. 2010). “First, the Court must determine
whether the party seeking attorney’s fees is the prevailing party.” Id. “Second, the court must
determine whether the attorney’s fees sought are reasonable.” Id. There is no dispute in this
action that the plaintiff is a “prevailing party,” and therefore the only question is whether the fees
sought by the plaintiff are reasonable.
6
“The usual method of calculating reasonable attorney’s fees is to multiply the hours
reasonably expended in the litigation by a reasonable hourly fee, producing the ‘lodestar’
amount.” Bd. of Trs. of Hotel & Rest. Emps. Local 25 v. JPR, Inc., 136 F.3d 794, 801 (D.C. Cir.
1998). “[T]he fee petitioner bears the burden of establishing all elements of his entitlement.” In
re North (Bush Fee Application), 59 F.3d 184, 189 (D.C. Cir. 1995). “But trial courts need not,
and indeed should not, become green-eyeshade accountants. The essential goal in shifting fees
(to either party) is to do rough justice, not to achieve auditing perfection.” Fox v. Vice, 131 S.
Ct. 2205, 2216 (2011). The Court will first address the plaintiff’s objections to the R&R
regarding the reasonable hourly rate, and then the Court will discuss the plaintiff’s objections to
the number of hours reasonably expended.
A. Reasonableness of the Hourly Fee
“[A] fee applicant’s burden in establishing a reasonable hourly rate entails a showing of
at least three elements: the attorneys’ billing practices; the attorneys’ skill, experience, and
reputation; and the prevailing market rates in the relevant community.” Covington v. District of
Columbia, 57 F.3d 1101, 1107 (D.C. Cir. 1995). “[P]revailing parties must offer evidence to
demonstrate their attorneys’ experience, skill, reputation, and the complexity of the case they
handled.” Id. at 1108. They must also “produce data concerning the prevailing market rates in
the relevant community for attorneys of reasonably comparable skill, experience, and
reputation,” which courts have consistently recognized “is undoubtedly a difficult assessment.”
Id.; see also Blum v. Stenson, 465 U.S. 886, 895 n.11 (recognizing that “determining an
appropriate ‘market rate’ for the services of a lawyer is inherently difficult”). “In order to
demonstrate [the prevailing market rate], plaintiffs may point to such evidence as an updated
version of the Laffey matrix or the U.S. Attorney’s Office matrix, or their own survey of
7
prevailing market rates in the community.” Covington, 57 F.3d at 1109; see also Save Our
Cumberland Mountains, Inc. v. Hodel, 857 F.2d 1516, 1525 (D.C. Cir. 1988) (“commend[ing]”
the use of the Laffey matrix); Rapu v. D.C. Pub. Sch., 793 F. Supp. 2d 419, 424 (D.D.C. 2011)
(“[T]he Laffey Matrix may demonstrate the prevailing market rate . . . .”).
The vast majority of the plaintiff’s objections to the R&R relate to the reasonableness of
the hourly fee. Primarily, the plaintiff objects that “the Magistrate Judge devoted his analysis to
factors never mentioned by the Court of Appeals in Covington, factors which are almost entirely
speculative.” Pl.’s Objection at 2. The plaintiff argues that the predictions articulated by the
R&R regarding the benefits of imposing a uniform rate at 75% of the standard Laffey rate “are
demonstrably wrong” and “for the most part illogical and inappropriate.” Id. Furthermore, the
plaintiff objects that “the Magistrate Judge considered this case not on its own merits, but as
identical to and part of a group of unrelated and significantly different cases.” Id. Finally, the
plaintiff objects that although “the Magistrate Judge addressed the alleged benefits of uniformity
of decisions [about attorney’s fees] as if it is readily achievable,” he “did not fairly represent the
full body of” opinions within this Court about the use of the Laffey rates in IDEIA cases. Id. at
11.
The appropriate framework for evaluating the reasonableness of an hourly rate for a fee
petition comes from the D.C. Circuit’s decision in Covington. That case, as the R&R noted, lays
out three elements that a petitioner must establish through competent evidence. As both the
Supreme Court and the Circuit have held, “‘[w]hen . . . the applicant for a fee has carried his
burden of showing that the claimed rate and number of hours are reasonable, the resulting
product is presumed to be the reasonable fee contemplated by [the fee-shifting statute].’”
Covington, 57 F.3d at 1109 (quoting Blum, 465 U.S. at 897). Once the petitioner has satisfied
8
this initial burden, the plaintiff’s rates and hours are “properly accorded a presumption of
reasonableness” and “the Government must either accede to the applicant’s requested rate or
provide specific contrary evidence tending to show that a lower rate would be appropriate.” Id.
at 1110 (quoting Nat’l Ass’n of Concerned Veterans v. Sec’y of Def., 675 F.2d 1319, 1326 (D.C.
Cir. 1982)). In this case, although the R&R briefly summarized the evidence offered by the
plaintiff to satisfy her burden, see R&R at 3–4, the R&R did not conclude one way or the other
whether the plaintiff had satisfied her burden or whether the defendant had succeeded in
rebutting the plaintiff’s evidence. Therefore, the Court will first discuss the burden-shifting
framework articulated in Covington.
The record before the Court establishes that the plaintiff has produced sufficient evidence
to demonstrate the billings practices, skill, experience, and reputation of her counsel, Mr. Tyrka,
and the plaintiff has also submitted evidence sufficient to demonstrate the prevailing market rates
in the community. In a sworn statement submitted in support of the fee petition, Mr. Tyrka
describes his billing practices, as well as his expertise and experience in special education
litigation. See V.S. of Douglas Tyrka (“First Tyrka Statement”) ¶¶ 4–5, 9–11, ECF No. 35-2.
Mr. Tyrka has worked as a litigator since graduating law school in 1998, and he has specialized
in the field of special education law since 2003. Id. ¶ 10. Through 2008, Mr. Tyrka’s firm has
been prolific in the Washington, D.C. special education law community, representing “more than
200 special education cases each year.” Id. ¶ 11. With respect to his billing practices, Mr. Tyrka
avers that his firm “has always matched its hourly rates to those in what is commonly known as
the ‘adjusted Laffey matrix,’” which he says at least some of his clients pay “regardless of
whether reimbursement is ever obtained.” Id. ¶¶ 4–5. Finally, as to prevailing market rates, the
plaintiff has submitted the adjusted Laffey matrix, which provides that rates for an attorney of
9
Mr. Tyrka’s experience (11–19 years) were $569–$609 from 2009 to 2012, when the relevant
work was performed. See Pl.’s Mot. Ex. 3, ECF No. 35-3; see also Covington, 57 F.3d at 1109
(holding that petitioner may “point to such evidence as an updated version of the Laffey matrix”
to demonstrate the prevailing market rate).
The one potential shortcoming in the plaintiff’s evidence was in establishing “that the
requested rates are in line with those prevailing in the community for similar services by lawyers
of reasonably comparable skill, experience, and reputation.’” Covington, 57 F.3d at 1109
(emphasis added) (quoting Blum, 465 U.S. at 896 n.11). In particular, although Mr. Tyrka’s
sworn statement avers that adjusted Laffey rates “conform to those of attorneys in this
jurisdiction of comparable skill and experience,” First Tyrka Statement ¶ 4, he does not address
whether adjusted Laffey rates conform to the prevailing rates for lawyers who primarily practice
in the field of special education law, or IDEIA law in particular. Ultimately, this is a question of,
inter alia, the complexity of both this case in particular and IDEIA litigation more generally,
which was a major point of contention between the parties during their briefing on the motion for
attorney’s fees and has garnered a wide array of opinions from this Court.
The R&R discussed this issue, noting a simple dichotomy within this Court’s decisions,
stating “[w]here the issues are complex, the full Laffey rate has been awarded,” and “[w]here the
issues are not complex . . . use of the Laffey matrix has not been considered appropriate and
instead, some fraction of the Laffey rate has been awarded.” R&R at 5. The R&R then
discussed at length DCPS’s guidelines for fees in IDEIA cases, noting that the guidelines rely
upon three decisions from this Court 4 to impose the 75% Laffey rate, and concluding that
because DCPS has “expressed its agreement with the decisions of this Court that a rate of 75% of
4
The three decisions are Cousins v. District of Columbia, No. 11-172, 2012 WL 1439033 (D.D.C. Apr. 26, 2012)
(Kay, Mag. J.), Wright v. District of Columbia, No. 11-384, 2012 WL 79015 (D.D.C. Jan. 11, 2012) (Kay, Mag. J.),
and Rooths v. District of Columbia, 802 F. Supp. 2d 56 (D.D.C. 2011) (Friedman, J.).
10
Laffey is a fair and just one . . . . it is equally as fair and just for work . . . to be compensated at
that same rate.” 5 Id. at 6–8. The plaintiff is correct, however, that the R&R’s reasoning on this
point does not acknowledge the diversity of opinions within this Circuit on the topic, which the
Court discusses in more detail below. Also, although the R&R recognized that the complexity of
an IDEIA case is a critical factor in determining the appropriate hourly rate in such cases, see
R&R at 5, the R&R did not discuss the complexity of this case or base its recommendation on
that ground. Rather, it appears that, in concluding that 75% of the standard Laffey rate was
appropriate, the R&R presumed that this case was not complex because, as its discussion of the
case law stated, “some fraction of the Laffey rate has been awarded” when “the issues are not
complex.” Id. Therefore, the plaintiff is right to object that although “the Magistrate Judge
determined that the applicability of a version of the Laffey Matrix to IDEA fee disputes turns on
the complexity of the individual case . . . . the Magistrate Judge never considered the issue in this
case.” Pl.’s Objection at 7.
In addition to the question of whether this case was complex, the plaintiff goes further in
objecting to the notion that complexity is a critical consideration at all, arguing that there is a
robust body of case law from this Court “award[ing] fees based on Laffey rates without
addressing the complexity of the individual case.” Id. at 11 (collecting cases). The plaintiff
notes that “[t]hough this is not a matter of a court-wide vote, the majority of judges who have
addressed the question have applied 100% of the USAO Laffey [rates], regardless of the alleged
complexity of the individual case.” Id. at 13. Additionally, the plaintiff contends that “setting
the rate based on complexity” is error because “fees for simple cases are already discounted.” Id.
By this, the plaintiff appears to mean that lawyers like Mr. Tyrka who specialize in IDEIA cases
5
The R&R was primarily concerned with the question of whether DCPS’s 2012 guidance should apply to invoices
submitted prior to June 1, 2012, see R&R at 7–8—an issue neither party raised and which the Court concludes is not
necessary to decide the plaintiff’s motion.
11
“bill[] less for each task than would have a less experienced IDEA litigator,” and thus “the
District asks to double that deduction, to apply lower rates to fewer hours due to supposed
simplicity.” Id.
1. The Laffey Matrix Is the Appropriate Starting Point for Calculating
Attorney’s Fees in IDEIA Cases
First, the Court emphasizes that the award of reasonable attorney’s fees under the IDEIA
is a matter of judicial discretion. See 20 U.S.C. § 1415(i)(3)(B)(i) (authorizing the court to
award attorney’s fees “in its discretion”); accord Fisher v. Friendship Pub. Charter Sch., No. 10-
886, 2012 WL 3090308, at *1 (D.D.C. July 31, 2012) (“Whether attorney’s fees are ‘reasonable’
is a matter of judicial discretion, the objective measurement of which has divided courts within
the D.C. Circuit.”). The exercise of the Court’s discretion in this case is informed by a number
of considerations, including the fact that “[c]ourts in this district routinely refer to the Laffey
Matrix to determine the reasonableness of requested attorney’s fees in IDEA actions.” B.R. ex
rel. Rempson v. District of Columbia, 802 F. Supp. 2d 153, 164 (D.D.C. 2011) (Urbina, J.);
accord Parks v. District of Columbia, No. 10-1460, 2012 WL 4475681, at *5 (D.D.C. Sept. 28,
2012) (Roberts, J.) (“Many courts find that the Laffey rate is presumptively reasonable.”);
Jackson, 696 F. Supp. 2d at 102 (“[N]umerous judges in this district have applied Laffey rates in
the context of fee awards arising out of IDEA administrative proceedings.”). 6
The defendant argued in its opposition to the motion for attorney’s fees that the plaintiff’s
attempt to justify Laffey rates “compar[es] ‘apples to oranges’” because Laffey rates are reserved
for “complex federal litigation,” but IDEIA cases only involve “routine administrative litigation”
6
See also; Young v. District of Columbia, No. 11-1041, 2012 WL 4466474, at *5 (D.D.C. Sept. 28, 2012) (Berman
Jackson, J.) (applying Laffey rates to IDEIA litigation); Fisher, 2012 WL 3090308, at *5 (Lamberth, C.J.) (same);
Garvin v. District of Columbia, 851 F. Supp. 2d 101, 107 (D.D.C. 2012) (Walton, J.) (same); A.S. v. District of
Columbia, 842 F. Supp. 2d 40, 49 (D.D.C. 2012) (Rothstein, J.) (same); Cox v. District of Columbia, 754 F. Supp.
2d 66, 76 (D.D.C. 2010) (Kessler, J.) (same); District of Columbia v. Jeppsen, 686 F. Supp. 2d 37, 39 (D.D.C. 2010)
(Leon, J.) (same); Abraham v. District of Columbia, 338 F. Supp. 2d 113, 124 (D.D.C. 2004) (Collyer, J.); Kaseman
v. District of Columbia, 329 F. Supp. 2d 20, 26 (D.D.C. 2004) (Huvelle, J.) (same).
12
and thus “[t]he prevailing rates for attorneys practicing special education litigation is not
measured by the Laffey Matrix.” Def.’s Opp’n at 3–4. This argument, however, paints with
brushstrokes that are far too broad. It is important to understand that IDEIA cases take a variety
of different litigation paths. Although the defendant focused on the administrative origin of
IDEIA litigation, many IDEIA administrative determinations are also appealed to federal district
court, which come with all of the trappings of any other federal case—often involving the
submission of voluminous administrative records and motions for summary judgment. Even the
administrative component of IDEIA litigation, however, which “typically require[s] testimony
from education experts regarding whether a student has been denied a [FAPE] and the need for
any compensatory educational services,” cannot be dismissed as categorically routine or simple.
See Jackson, 696 F. Supp. 2d at 102. Therefore, the District is incorrect to argue that full Laffey
rates should never be applied to IDEIA litigation. On the contrary, the Laffey rates serve as a
useful and reasonable approximation of the prevailing market rates in the Washington, D.C. area,
and therefore it is appropriate to use Laffey rates as a starting point for determining a reasonable
hourly fee in IDEIA cases. See, e.g., Covington, 57 F.3d at 1109 (“Although fee matrices are
somewhat crude . . . the matrices do provide a useful starting point”); Heller v. District of
Columbia, 832 F. Supp. 2d 32, 45 (D.D.C. 2011) (using Laffey matrix as a “‘starting point’ for its
analysis”); Elec. Privacy Info. Ctr. v. U.S. Dep’t of Homeland Sec., 811 F. Supp. 2d 216, 238
(D.D.C. 2011) (observing that Laffey matrix is “an appropriate baseline for any fee award”);
Rapu, 793 F. Supp. 2d at 424 (using Laffey matrix as “the benchmark for prevailing market rates
in this [IDEIA] case”).
On the other hand, the plaintiff argues too much in suggesting that the Court should
mechanically apply full Laffey rates as a matter of course merely because those rates represent
13
the prevailing market rates in the community. See Pl.’s Objection at 11–13. “[T]he prevailing
market rate is but one of the elements needed to establish the reasonableness of a billing rate
sought in a fee application,” and therefore “the prevailing rates set forth in the Laffey Matrix
provide merely a starting point for determining the reasonableness of a billing rate.” Jackson,
696 F. Supp. 2d at 104 (emphasis added). The determination of whether a requested rate is
reasonable “must be made in a case by case analysis.” A.S., 842 F. Supp. 2d at 48. Thus,
starting with the presumption that Laffey rates represent the prevailing rates in the community,
the Court must consider the other relevant factors articulated by the Circuit, such as the
attorney’s skill, experience, reputation, billing practices, and expertise, as well as the complexity
of the litigation, to determine what rate is reasonable for this particular case. See Covington, 57
F.3d at 1107–08. Additionally, in line with Supreme Court precedent, the Court will consider
whether the fees sought are “adequate to attract competent counsel.” Blum, 465 U.S. at 893–94
(citing S. Rep. No. 94-1011, at 6 (1976)).
2. Full Laffey Rates Are Justified in This Case
The Court will now discuss the myriad factors relevant to determining what a reasonable
fee is for the services performed by Mr. Tyrka in the instant action. For the reasons discussed
below, the Court concludes that the full amount of the standard Laffey rate is a reasonable hourly
fee for this case.
a) Attorney Expertise
At the outset, the Court discusses a consideration in the attorney’s fees calculus that often
goes unsung in the context of IDEIA litigation, which is the valuable expertise that the special
education bar brings to the resolution of IDEIA cases. IDEIA law can, at times, be remarkably
complicated, and all parties involved—the District of Columbia, the Court, and most importantly
the children and their families directly affected by the statute’s provisions—benefit from the
14
expertise that specialized IDEIA counsel bring to bear upon these cases. Yet, far more than
specialized legal knowledge is required to be an effective IDEIA lawyer. As one court in this
Circuit has observed:
[I]n order to handle special education cases effectively, counsel must know far
more than IDEA law in order to cope with the obstructive and delaying practices
of DCPS. Sad to say, to be effective—i.e., to get services, education, and
treatment for their young clients—it is essential that counsel understand the
bureaucratic workings of that system, know competent and caring individuals in
that system who can break logjams and obtain necessary evaluations, reports, and
materials, and then assure provision of whatever FAPE is deemed appropriate. To
accomplish this goal takes diligence, perseverance, persuasiveness, and
negotiating and inter-personal skills—as well as the traditional legal skills
expected of any competent lawyer.
Cox, 754 F. Supp. 2d at 76. Mr. Tyrka is no exception to this rule. As indicated by his sworn
statement, for nearly ten years he has dedicated 95% of his practice to special education law,
which has included over 1,000 IDEIA administrative cases and 20 IDEIA federal cases. See
First Tyrka Statement ¶ 10.
The Supreme Court has acknowledged that “the special skill and experience of counsel
should be reflected in the reasonableness of the hourly rates” because “the experience and special
skill of the attorney will require the expenditure of fewer hours than counsel normally would be
expected to spend on a particularly novel or complex issue.” Blum, 465 U.S. at 898. The
plaintiff makes this precise point in her objection to the R&R. See Pl.’s Objection at 13. The
above principle fully applies to IDEIA litigation, where the expertise of counsel undoubtedly
results in less time being billed than would be billed by a general practitioner. Since fewer hours
are billed, the hourly rate must be concomitantly increased to ensure that the resulting fee award
is not unreasonably low. See, e.g., Blum at 897 (cautioning that “there may be circumstances in
which the basic standard of reasonable rates multiplied by reasonably expended hours results in a
fee that is either unreasonably low or unreasonably high”).
15
b) The District’s Track Record of Refusing Full and Timely Payment
of Attorney’s Fees
Mr. Tyrka’s continued dedication to IDEIA cases is all the more impressive considering
the evidence the plaintiff has submitted regarding the acute financial challenges currently faced
by special education lawyers in the District of Columbia. Sworn statements by Mr. Tyrka and
one of his former associates, Nicholas Ostrem, which have gone unrebutted by the defendant,
reveal that the District of Columbia habitually avoids paying attorney’s fees to victorious counsel
at all costs. See V.S. of Douglas Tyrka (“Second Tyrka Statement”), ECF No. 44-1; V.S. of
Nicholas Ostrem (“Ostrem Statement”), ECF No. 44-2. In particular, Mr. Tyrka avers that, since
submitting bills to the District of Columbia for 232 IDEIA administrative cases from July 2007
to December 2008, the District failed to pay any amount toward 73 of those bills (31%), and the
District only made partial payment for 125 of those bills (54%), leaving a meager 15% that were
paid in full. See Second Tyrka Statement ¶¶3–13. Additionally, the District has “made no
payments to [Tyrka] since June 2011 except as ordered by a court,” and when the District had
made partial payments without a court order in the past, those payments were only for
approximately one-third of the amounts originally billed, on average. See id. ¶¶ 15, 17. Perhaps
most disturbing, Mr. Tyrka states that, although he has obtained 21 court orders directing the
District to make payments for attorney’s fees since November 2011, 13 of those orders remain
wholly unpaid despite the fact that the deadlines for payment directed by the court have all
lapsed. See id. ¶ 16.
The plaintiff’s evidence also establishes that the District’s pattern of avoiding payment
for attorney’s fees has left IDEIA litigators practicing in this jurisdiction with some difficult
choices. Mr. Tyrka states that in 2009, “having received no payments from DCPS in more than a
year,” he was forced to lay off his firm’s entire staff and close his firm’s offices. See id. ¶ 24.
16
Since that time, Mr. Tyrka has functioned primarily as a solo practitioner. Id. What is more, the
plaintiff’s evidence indicates that this problem extends beyond Mr. Tyrka. One of the associates
laid off by Mr. Tyrka was Mr. Ostrem, who now works for Brown & Associates—“the largest
firm in the District whose practice is solely special education.” Ostrem Statement ¶¶ 3, 5, 8.
Brown & Associates has encountered similar obstinance from the District regarding the payment
of attorney’s fees: DCPS “has routinely failed to timely process and/or pay the invoices
submitted by Brown & Associates, often times failing to process and/or make payment at all,”
and as a result the firm has 14 separate cases in this Court seeking payment for attorney’s fees
from the District, which represent 369 individual invoices. Id. ¶¶ 9–10. Additionally, the
District inexplicably “stopped processing and/or paying all invoices submitted by Brown &
Associates” in February 2012, which has resulted in the firm losing half of its 800 clients and the
firm having to lay off two-thirds of its staff. See id. ¶¶ 13, 15–17. 7
The Court reviews this disgraceful state of affairs for two reasons. First, the plaintiff’s
evidence reveals that the R&R’s well-intentioned and logical assumptions about the benefits of
endorsing a lower, but uniform, hourly rate for IDEIA cases, unfortunately do not reflect reality
in this jurisdiction. For example, it is likely wishful thinking to hope that if victorious parties in
IDEIA cases were uniformly awarded 75% of standard Laffey rates, the District would promptly
settle and pay fee petitions in such cases. See R&R at 9. It is also likely nothing more than an
academic exercise to assume that an IDEIA litigator will be able to secure attorney’s fees from
the District “at the rate of several thousand dollars per day,” R&R at 10, because such a result
would require that the District pay invoices in full and on time.
7
The plaintiff’s evidence also reveals that an investigation conducted by the District’s own Office of the State
Superintendent of Education (“OSSE”) concluded that, during a one-year period in which DCPS entered into 401
settlement agreements regarding attorney’s fees in IDEIA cases, DCPS waited more than 120 days to effect payment
in at least 72 of those cases (18%). See Pl.’s Objection Ex. 3, at 1, ECF No. 44-3.
17
Additionally, the District’s apparent behavior highlights the well-established principle
that “a ‘reasonable’ fee is a fee that is sufficient to induce a capable attorney to undertake the
representation of a meritorious . . . case.” Perdue v. Kenny A. ex rel. Winn, 130 S. Ct. 1662,
1672 (2010). À propos to this principle, the plaintiff observes that, due to the District’s practices
regarding the payment of attorney’s fees in IDEIA cases, IDEIA litigators “are quickly becoming
extinct,” which is supported by the evidence of the financial hardship faced by IDEIA litigators
in this jurisdiction. Pl.’s Objection at 11. Although the defendant quickly rejects the plaintiff’s
evidence as a “doomsday scenario[]” that is “not worthy of a response” and a sideshow designed
to “distract from the actual issue in this case,” Def.’s Reply to Pl.’s Objection to R&R (“Def.’s
Objection Reply”) at 4, ECF No. 45, the Court finds the plaintiff’s evidence not only troubling
but relevant to the fee inquiry in this case because the District’s consistently dismal track record
compels the conclusion that higher fees may need to be awarded in IDEIA cases in order to
ensure that competent counsel continues to be attracted to IDEIA litigation.
c) Complexity of the Litigation
Finally, the Court will discuss the factor to which courts in this district have typically
devoted the lion’s share of their analysis in IDEIA attorney’s fee disputes: the complexity of the
litigation. The Supreme Court and the D.C. Circuit have identified the complexity of the
litigation as a relevant consideration in awarding reasonable attorney’s fees. See, e.g.,
Pennsylvania v. Del. Valley Citizens’ Council for Clean Air, 478 U.S. 546, 565 (1986) (holding
that “[t]he ‘novelty [and] complexity of the issues’” should be “fully reflected” in a reasonable
fee award); Covington, 57 F.3d at 1108. In the context of IDEIA cases specifically, decisions
from this Circuit have identified a number of indicia of complexity, such as (1) the length of the
administrative hearing; (2) the number of documents and witnesses presented at the
administrative hearing; (3) the amount of discovery required; (4) the presence of novel legal
18
issues; (5) the quantity of briefing required; and (6) the use of expert testimony. See, e.g., Parks,
2012 WL 4475681, at *6; Fisher, 2012 WL 3090308, at *5; Garvin, 851 F. Supp. 2d at 106–07;
Agapito v. District of Columbia, 525 F. Supp. 2d 150, 152 (D.D.C. 2007).
The instant action, unlike most IDEIA fee-dispute cases, involved substantive disputes at
both the administrative level and the federal level. The plaintiff was denied relief at the
administrative level and essentially appealed that determination to this Court. See Compl. ¶ 10.
As a result, in assessing the complexity of this case, the Court must consider both aspects of the
litigation. The administrative portion of the litigation was of only modest complexity. At the
administrative stage, Mr. Tyrka’s work involved the filing of a three-page due process
complaint; submitting a three-page pre-hearing memorandum and a three-page opposition
memorandum; and attending a two-hour hearing at which only two witnesses testified and only
eighteen total documents were submitted. See Admin. Record (“AR”) at 4–10, 120–22, 136–39,
146–258, ECF Nos. 7-1, 7-3 to 7-7. Although only two witnesses testified at the administrative
hearing, it bears noting that one of the witnesses was a special education advocate, called by the
plaintiff, who was qualified as “an expert on the development of IEPs and the development of
compensatory education plans.” Pl.’s Mem. in Supp. of Mot. for Summ. J. (“Pl.’s Summ. J.
Mem.”) at 7, ECF No. 8. All of this resulted in a six-page, single-spaced Hearing Officer’s
Determination (“HOD”). See AR at 4–10.
Although the administrative portion of this case lasted only about two and one-half
months, the case lasted much longer in its entirety. Once the action was filed in this Court, the
parties filed cross-motions for summary judgment regarding the merits of the plaintiff’s IDEIA
claims. See ECF Nos. 8, 11. Additionally, after the Court granted summary judgment to the
plaintiff, the defendant filed a motion for reconsideration, and the plaintiff filed a motion to
19
substitute, which required two more rounds of briefing. See ECF Nos. 23–25, 30–31. These
four motions, altogether, resulted in a seventeen-page Report and Recommendation, see ECF No.
21, and a fourteen-page Memorandum Opinion, see ECF No. 32; see also Brooks, 841 F. Supp.
2d 253. The defendant’s motion for reconsideration was particularly noteworthy because it
required the parties to address an issue of first impression within this Circuit regarding whether a
former student retains the right to seek compensatory education under the IDEIA. See Brooks,
841 F. Supp. 2d at 258–60. From start to finish, beginning with the administrative due process
complaint and ending with the Court’s Order on the motion for reconsideration, it took over two
years for the plaintiff to obtain the relief that she sought.
In sum, even though the administrative portion of this case was largely routine, the action
in its totality was not uncomplicated. Courts have often discounted the standard Laffey rates in
IDEIA cases that only “involve[] a routine administrative proceeding,” and if that were all that
was involved in the instant action, a similar discount might be warranted. See, e.g., Flores v.
District of Columbia, 857 F. Supp. 2d 15, 21 (D.D.C. 2012). The large majority of this action,
however, has been litigated in federal court, and the case contains sufficient indicia of
complexity—including (1) the preparation and presentation of an expert witness; (2) the filing of
four motions, including two motions for summary judgment; and (3) a question of first
impression under the IDEIA—to conclude that a discount from the Laffey rate would be
inappropriate. 8 See, e.g., Jeppsen, 686 F. Supp. 2d at 39 (applying full Laffey rates where “the
fees incurred in this case arise exclusively from federal litigation”).
In light of the above discussion, the Court concludes that the plaintiff has carried her
burden of establishing the reasonableness of the full amount of the Laffey rate, and the defendant
8
This conclusion is further supported by the fact that the plaintiff’s evidence of complexity has gone unrebutted by
any evidence from the defendant other than its repeated and categorical assertion that IDEIA litigation is routine,
simple, and undeserving of Laffey rates.
20
has failed to rebut the “presumption of reasonableness” with “specific contrary evidence.” See
Covington, 57 F.3d at 1109–10 (quoting Nat’l Ass’n of Concerned Veterans, 675 F.2d at 1326).
Therefore, the Court concludes that the full amount of the Laffey rate is a reasonable hourly fee
in this action, contrary to the conclusion reached in the R&R.
The two remaining issues that the Court must resolve with regard to the hourly fee are
(1) whether the standard Laffey rate or the adjusted Laffey rate should apply and (2) whether the
plaintiff should receive the Laffey rate that applied at the time the work was completed or the
current Laffey rate.
d) Standard vs. Adjusted Laffey Rates
As discussed above, the difference between the two Laffey matrices is that the standard
Laffey matrix grows at the rate of general cost-of-living inflation for the Washington, D.C.
metropolitan area, as indicated in the Consumer Price Index (“CPI”) for Washington, D.C. See
supra note 2. The adjusted Laffey matrix, on the other hand, grows at the rate of inflation in the
legal services component of the national CPI. See id. Deciding which matrix to apply presents a
“difficult issue” because, while the standard Laffey matrix “has the distinct advantage of
capturing the data which is specific to the Washington, D.C., metropolitan area, as opposed to
the [adjusted] Laffey index, which relies on [CPI] data from all over the country,” the adjusted
Laffey matrix “has the distinct advantage of capturing the more relevant data because it is based
on the legal services component of the [CPI] rather than the general CPI on which the [standard
Laffey] matrix is based.” Salazar, 123 F. Supp. 2d at 14–15.
The parties have neither briefed this issue nor presented evidence regarding which Laffey
matrix would be appropriate, and the R&R did not analyze this issue either. Since the plaintiff
bears the burden of justifying the reasonableness of the fee requested, however, the absence of
evidence on this issue necessarily militates in favor of awarding the plaintiff the lower of the two
21
rates. As a result, the Court will, in line with the R&R, award the plaintiff the standard Laffey
rate, rather than the adjusted Laffey rate.
e) Current Laffey Rate vs. Laffey Rate at the Time Work Was
Completed
The final issue presented regarding the appropriate hourly rate to apply is whether the
plaintiff should receive the Laffey rate that applied at the time the work was completed or the
current Laffey rate. The R&R recommended that the Court use the rate that applied at the time
the work was completed. See R&R at 6–7. The plaintiff objects, however, that this
recommendation was error because “current rates are typically paid for all work to account for
the delay in payment.” Pl.’s Objection at 14 (citing Missouri v. Jenkins, 491 U.S. 274, 284
(1989) and Copeland v. Marshall, 641 F.2d 880, 893 n.23 (D.C. Cir. 1980) (en banc)). The
Supreme Court has held that “compensation received several years after the services were
rendered . . . is not equivalent to the same dollar amount received reasonably promptly as the
legal services are performed,” and therefore “an appropriate adjustment for delay in payment—
whether by the application of current rather than historic hourly rates or otherwise—is within the
contemplation of [fee-shifting] statute[s].” Jenkins, 491 U.S. at 283–84. The D.C. Circuit has
endorsed a similar approach. See Copeland, 641 F.2d at 893 (“A percentage adjustment to
reflect the delay in receipt of payment therefore may be appropriate.”).
The services provided by Mr. Tyrka in this action were rendered between September
2009 and March 2012. See Pl.’s Mot. Ex. 1. Therefore, for some of these services,
compensation will be received, if at all, “several years after the services were rendered.”
Jenkins, 491 U.S. at 283. More fundamentally, however, the economic premise behind the
Supreme Court’s holding in Jenkins and the D.C. Circuit’s holding in Copeland was that it is
only fair to award attorneys the present value of the services that they rendered. As the Circuit
22
noted in Copeland, “payment today for services rendered long in the past deprives the eventual
recipient of the value of the use of the money in the meantime, which use, particularly in an
inflationary era, is valuable.” 641 F.2d at 893. The defendant has presented no authority, legal
or economic, that would contradict the Circuit’s rationale in Copeland, and therefore the Court
will award the plaintiff the current Laffey rate for services rendered. See also Fisher, 2012 WL
3090308, at *5 (awarding current Laffey rates where “defendant feebly trie[d] to distinguish
[Jenkins and Copeland],” but “fail[ed] to meaningfully do so and further fail[ed] to cite any legal
authority to the contrary”).
***
In summary, the Court concludes that the standard Laffey rate, commensurate with Mr.
Tyrka’s legal experience (11–19 years), is a reasonable fee for the plaintiff to recover in this
case. Furthermore, the Court concludes that the plaintiff should be awarded the current Laffey
rate, rather than the Laffey rate that applied at the time the work was performed. Therefore, the
reasonable hourly rate that will apply in the lodestar calculation will be $445 per hour, rather
than the $307.50–$326.25 proposed in the R&R. See Pl.’s Reply to Def.’s Opp’n to Mot. for
Fees & Costs Ex. 2, ECF No. 39-2 (setting forth standard Laffey matrix).
B. Hours Reasonably Expended
Having determined the reasonable hourly fee that will apply, the Court must now address
the plaintiff’s objections to the R&R regarding the number of hours reasonably expended.
“To satisfy the burden of showing that the hours claimed were reasonably expended on a
case, a petitioner must submit ‘sufficiently detailed information about the hours logged and the
work done,’ and ‘it is insufficient to provide the . . . Court with very broad summaries of work
done and hours logged.” Am. Petroleum Inst. v. EPA, 72 F.3d 907, 915 (D.C. Cir. 1996)
23
(quoting Nat’l Ass’n of Concerned Veterans, 675 F.2d at 1327). The fee application, however
“need not present ‘the exact number of minutes spent nor the precise activity to which each hour
was devoted nor the specific attainments of each attorney.’” Nat’l Ass’n of Concerned Veterans,
675 F.2d at 1327 (quoting Copeland, 641 F.2d at 891). “The touchstone inquiry is whether the
time expended on particular tasks was reasonable. Parties cannot be reimbursed for
nonproductive time or duplicative activities. However, contests over fees should not be
permitted to evolve into exhaustive trial-type proceedings.” Martini v. Fed. Nat’l Mortg. Ass’n,
977 F. Supp. 482, 487 (D.D.C. 1997) (citations and internal quotation marks omitted). As one
Judge from this Circuit has stated in the context of fee petitions, “[n]either broadly based, ill-
aimed attacks, nor nit-picking claims by the Government should be countenanced.” Nat’l Ass’n
of Concerned Veterans, 675 F.2d at 1338 (Tamm, J., concurring).
In the instant action, the plaintiff has presented a reasonably detailed itemization of the
tasks that Mr. Tyrka performed and for which the plaintiff seeks attorney’s fees. See Pl.’s Mot.
Ex. 1. The itemization seeks payment for 71 total hours of work performed exclusively by Mr.
Tyrka. See id. The R&R proposed two specific reductions from this total, to which the plaintiff
objects. First, the R&R docked the 13.75 hours spent by Mr. Tyrka in researching, outlining,
drafting, and filing the plaintiff’s motion for summary judgment, noting that, “[a]part from the
facts, the procedural history of plaintiff’s case . . ., and Tyrka’s legal argument . . . , the statutory
framework of the IDEA and the standards governing summary judgment are the same for every
one of Tyrka’s clients.” R&R at 12. Therefore, the R&R concluded that “the research and
drafting of plaintiff’s motion for summary judgment could have been performed in less time by
an attorney with Tyrka’s experience,” and recommended “that plaintiff be compensated for only
8.0 hours for this task, rather than the 13.75 hours sought.” Id. at 11–12. Second, the R&R
24
deconstructed the 6.5 hours charged for drafting and preparing the plaintiff’s petition for
attorney’s fees, concluding that “this petition is the same for every one of Tyrka’s clients” and
thus “it should not have taken an attorney with Tyrka’s legal experience . . . 6.5 hours to
complete.” Id. at 13. As a result, the R&R proposed that the hours charged for that task “be
reduced to 3 hours.” Id.
The plaintiff objects to both of these proposed reductions. With respect to the motion for
summary judgment, the plaintiff complains that the R&R improperly characterized the statement
of material facts contained in the motion for summary judgment as “simple or boilerplate.” Pl.’s
Objection at 14. The plaintiff contends that “[t]he statement of material facts is arguably the
most important part of a summary judgment motion,” and therefore “its production requires a
careful examination of the entire record.” Id. at 14–15. Furthermore, the plaintiff calculates that
the summary judgment brief contained “6 pages of simple work and 15 pages of more
complicated work,” which yield a billing rate of approximately “49 minutes per substantive
page.” Id. at 15. The plaintiff submits that this “is an extremely good pace.” Id. The plaintiff
offers a much briefer defense of Mr. Tyrka’s charges related to the fee petition, arguing only that
the 6.5 hours billed are reasonable because the plaintiff “made no claim for the work performed
on the 9-page Reply regarding fees, the large majority of which was specific to this case.” Id. In
other words, the 6.5 hours billed encompasses both the petition for fees as well as the reply in
further support of that petition.
The Court agrees with the plaintiff that the hours sought for Mr. Tyrka’s work on the
plaintiff’s motion for summary judgment and petition for fees was reasonable. In this regard, the
Court heeds the words of the Supreme Court that “trial courts need not, and indeed should not,
become green-eyeshade accountants” when it comes to determining the reasonableness of fee
25
petitions. Fox, 131 S. Ct. at 2216. The goal in shifting fees, the Supreme Court reminds us, “is
to do rough justice, not to achieve auditing perfection.” Id. The R&R may be correct that it
would have been possible for an attorney of Mr. Tyrka’s experience and skill to complete these
tasks in a shorter amount of time, but such an exacting scrutiny of an attorney’s bill is akin to a
quest for “auditing perfection,” rather than the more appropriate goal of “do[ing] rough justice.”
Id. The hours sought by the plaintiff are not excessive, and therefore the Court sustains the
plaintiff’s objections to the R&R’s proposal to reduce the hours charged for both tasks.
IV. CONCLUSION
To summarize, the Court sustains the plaintiff’s objections to the Report and
Recommendation and concludes that (1) the current (i.e., 2012–13) rates contained in the
standard Laffey matrix are reasonable and (2) the hours itemized by the plaintiff in her petition
for fees are also reasonable. Therefore, the plaintiff shall be awarded attorney’s fees for 71 hours
of work at a rate of $445 per hour, totaling $31,595. The plaintiff shall also be awarded the
undisputed amount of $350 for the cost of the federal filing fee in this action, bringing the total
award of fees and costs to $31,945. Finally, the Court adopts all other recommendations of the
R&R.
An Order consistent with this Memorandum Opinion will be filed contemporaneously.
Date: December 17, 2012
/s/ Beryl A. Howell
BERYL A. HOWELL
United States District Judge
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SUMMARY MEMORANDUM AND OPINION; NOT INTENDED FOR PUBLICATION.
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
SALLIE MCKOY-SHIELDS,
Plaintiff,
v.
FIRST WASHINGTON REALTY, INC.,
and GOOD HOPE MARKET PLACE, L.P.
Defendants/Third-Party Plaintiffs,
v. Civil Action No. 11-cv-01419 (RLW)
UNITED STATES POSTAL SERVICE
Third-Party Defendant.
MEMORANDUM OPINION 1
Before the Court is third-party defendant United States Postal Service's (“USPS”) Motion
to Dismiss (Docket No. 2) for lack of subject matter jurisdiction pursuant to Rule 12(b)(1). See
Fed. R. Civ. P. 12(b)(1). Having considered the full briefing on this motion, and for the reasons
set forth below, USPS’ motion is GRANTED and the claims against USPS are dismissed with
prejudice. Additionally, this case will be REMANDED to the Superior Court for the District of
Columbia.
I. BACKGROUND
On October 3, 2008, plaintiff Sallie McKoy-Shields was injured by a lowered work
platform at the entrance of a United States Post Office building. (Third Party Compl. ¶3). In her
Second Amended Complaint filed in the Superior Court for the District of Columbia, Plaintiff
1
This is a summary opinion intended for the parties and those persons familiar with the
facts and arguments set forth in the pleadings; not intended for publication.
1
SUMMARY MEMORANDUM AND OPINION; NOT INTENDED FOR PUBLICATION.
alleges that defendants First Washington Realty, Inc. and Good Hope Marketplace, L.P.’s,
negligence was a direct and proximate cause of her injuries. (Second Amended Compl. ¶ 7). On
June 20, 2011, defendants filed a third-party complaint denying all liability for the accident and
seeking complete indemnity or contribution from USPS, alleging that USPS was solely
responsible for plaintiff’s injuries . (Third Party Compl. ¶¶ 5, 6, 7, 10, 14). Subsequently, USPS
removed the action to this Court pursuant to 28 U.S.C § 1442(a)(1). (Docket No. 1).
II. STANDARD OF REVIEW
USPS has moved to dismiss the complaint for lack of subject matter jurisdiction pursuant
to Rule 12(b)(1). Fed. R. Civ. P. 12(b)(1). Federal courts are courts of limited jurisdiction, with
the ability to hear only cases entrusted to them by a grant of power contained in either the
Constitution or in an act of Congress. See Beethoven.com LLC v. Librarian of Congress, 394
F.3d 939, 945 (D.C. Cir. 2005). On a motion to dismiss for lack of subject matter jurisdiction,
the plaintiff bears the burden of establishing that the Court has jurisdiction. See Brady
Campaign to Prevent Gun Violence v. Ashcroft, 339 F. Supp. 2d 68, 72 (D.D.C. 2004). A Rule
12(b)(1) motion is the proper mechanism for raising the issue of whether the doctrine of
derivative jurisdiction bars federal jurisdiction. See Lambert Run Coal Co. v. Baltimore & O.R.
Co., 258 U.S. 377, 382 (1922) (holding that the doctrine of derivative jurisdiction is a
jurisdictional bar which deprives federal courts of subject matter jurisdiction).
III. ANALYSIS
USPS argues that defendants’ claims for indemnification and contribution should be
dismissed because this Court lacked subject matter jurisdiction over those claims upon removal
from the Superior Court by virtue of the derivative jurisdiction doctrine. “The derivative-
jurisdiction doctrine arises from the theory that a federal court’s jurisdiction over a removed case
2
SUMMARY MEMORANDUM AND OPINION; NOT INTENDED FOR PUBLICATION.
derives from the jurisdiction of the state court from which the case originated.” Palmer v. City
Nat’l Bank of W. Va., 498 F.3d 236, 244 (4th Cir. 2007) (applying derivative jurisdiction
doctrine to dismiss action removed under 28 U.S.C. § 1442). As the Supreme Court has
explained:
[if] the state court was without jurisdiction over either the subject-
matter or the United States, the District Court could not acquire
jurisdiction over them by the removal. The jurisdiction of the
federal court on removal is, in a limited sense, a derivative
jurisdiction. If the state court lacks jurisdiction of the subject-
matter or of the parties, the federal court acquires none, although it
might in a like suit originally brought there have had jurisdiction.
Lambert Run Coal, 258 U.S. at 382 (citations omitted); see also Arizona v. Manypenny, 451 U.S.
232, 242 n.17 (1981).
Although Congress has chosen to abrogate the derivative jurisdiction doctrine for
removals effectuated under 28 U.S.C § 1441 2, application of the derivative jurisdiction doctrine
remains valid where, like here, cases are removed under 28 U.S.C § 1442. See Palmer, 498 F.3d
at 246 (“plain language of § 1441(f) limits the abrogation of derivative jurisdiction to removals
under § 1441 and . . . the [derivative jurisdiction] doctrine is viable for removals under § 1442);
In re Elko County Grand Jury, 109 F.3d 554, 555 (9th Cir. 1997) ("[B]ecause this case was
removed from state court pursuant to § 1442, our jurisdiction is derivative of the state court's
jurisdiction."); Edwards v. United States Dep't of Justice, 43 F.3d 312, 316 (7th Cir. 1994) (“The
2
The relevant subsection of § 1441 abrogating derivative jurisdiction provides as follows:
Derivative removal jurisdiction. The court to which a civil action is
removed under this section is not precluded from hearing and
determining any claim in such civil action because the State court
from which such civil action is removed did not have jurisdiction
over that claim.
28 U.S.C § 1441(f) (emphasis added).
3
SUMMARY MEMORANDUM AND OPINION; NOT INTENDED FOR PUBLICATION.
jurisdiction of the federal court upon removal, pursuant to 28 U.S.C. § 1442, is essentially
derivative of that of the state court.”).
To determine whether this Court lacks subject matter jurisdiction by virtue of the doctrine
of derivative jurisdiction, the threshold determination is whether, prior to removal, the Superior
Court for the District of Columbia had jurisdiction of the subject matter or of the parties. It is
well settled that “the United States may not be sued without its consent and that the existence of
consent is a prerequisite for jurisdiction.” United States v. Mitchell, 463 U.S. 206, 212 (1983).
Absent a waiver of sovereign immunity, the Federal Government is immune from suit. United
States v. Sherwood, 312 U.S. 584, 586 (1941). The conditional sovereign immunity of the
United States extends to its branches and agencies, including the USPS. See Franchise Tax
Board v. United States Postal Service, 467 U.S. 512, 517-18 (1984) (suit against USPS requires
waiver of sovereign immunity); see also Loeffler v. Frank, 486 U.S. 549, 554 (1988) (same).
“Congress, however, has waived the sovereign immunity of certain federal entities from the
times of their inception by including in the enabling legislation provisions that they may sue and
be sued.” Loeffler, 486 U.S. at 554. Thus, USPS is entitled to sovereign immunity unless
Congress waives that immunity and authorizes consent to suit.
The Postal Reorganization Act of 1970 (“PRA”), 39 U.S.C. § 101 et seq., provides that
the Federal Tort Claims Act (“FTCA”) applies to “tort claims arising out of activities of the
Postal Service.” 39 U.S.C. § 409(c); 29 U.S.C. § 2679(a). The FTCA constitutes a limited
waiver of sovereign immunity with respect to certain common-law-tort claims, and provides that
the district courts shall have exclusive jurisdiction over such claims. 3 Therefore, federal courts
have exclusive jurisdiction over tort actions against the USPS.
3
Section 1346(b) provides:
4
SUMMARY MEMORANDUM AND OPINION; NOT INTENDED FOR PUBLICATION.
Here, defendants assert claims for indemnity or contribution against the USPS by
alleging in their third-party complaint that the USPS’s negligence was the “sole, direct, active
and proximate cause” of McKoy-Shields’ injuries. (Third Party Compl. ¶ 10). Thus, it is plain
that defendants’ claims against the USPS sound in tort. Moreover, the FTCA has long been
interpreted to cover indemnity claims. See Lockheed Aircraft Corp. v. United States, 460 U.S.
190, 198 (U.S. 1983) (FTCA “permits an indemnity action against the United States in the same
manner and to the same extent that the action would lie against a private individual under like
circumstances.”) (internal quotes omitted). Thus, under the FTCA, federal district courts have
exclusive jurisdiction over defendants’ claims against USPS. Therefore, because the Superior
Court for the District of Columbia lacked jurisdiction over defendants’ claims against the USPS,
this Court acquires none upon removal, even though this Court would have had jurisdiction if the
suit had originated here. 4 Lambert Run Coal Co., 258 U.S. at 382.
Even if the Court construes Defendants’ claims for indemnification and contribution as
contractual claims—as Defendants urge the Court to do here—dismissal is still appropriate. The
Subject to the provisions of chapter 171 of this title, the district
courts . . . shall have exclusive jurisdiction of civil actions on
claims against the United States, for money damages . . . for . . .
personal injury . . . caused by the negligent or wrongful act or
omission of any employee of the Government while acting within
the scope of his office or employment, under the circumstances
where the United States, if a private person, would be liable to the
claimant in accordance with the law of the place where the act or
omission occurred.
28 U.S.C. § 1346(b) (emphasis added).
4
Defendants (Third-Party Plaintiffs) do not address the issue of derivative jurisdiction in
their opposition brief and do not dispute that removal under § 1442(a) is improper. Therefore, the
Court may treat those arguments as conceded. See F.D.I.C. v. Bender, 127 F.3d 58, 67-68 (D.C.
Cir. 1997); Hopkins v. Women's Div., Gen. Bd. of Global Ministries, 238 F. Supp. 2d 174, 178
(D.D.C. 2002) ("It is well understood in this Circuit that when a plaintiff files an opposition to a
motion to dismiss addressing only certain arguments raised by the defendant, a court may treat
those arguments that the plaintiff failed to address as conceded.").
5
SUMMARY MEMORANDUM AND OPINION; NOT INTENDED FOR PUBLICATION.
Court of Federal Claims and the district courts have concurrent jurisdiction over monetary claims
against the United States for less than $10,000, while the Court of Federal Claims has exclusive
jurisdiction over contract claims seeking a recovery over $10,000. 28 U.S.C. § 1346(a)(2);
Brown v. United States, 389 F.3d 1296, 1297 (D.C. Cir. 2004). Thus, to the extent Defendants’
claims against USPS are based in contract, jurisdiction over these claims lie in either the district
court or the Court of Federal Claims—not the Superior Court.
Therefore, whether Defendants’ claims against USPS are based in tort or in contract, it is
clear that the Superior Court, and consequently this Court, lacked jurisdiction over these claims
at the time of removal. Accordingly, the Court will grant USPS’ motion to dismiss for lack of
subject matter jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1).
IV. CONCLUSION
For the forgoing reasons, USPS’ motion to dismiss third-party plaintiffs’ complaint is
GRANTED. Third-party plaintiffs’ complaint is hereby dismissed with prejudice, and the
remainder of this action is REMANDED to the Superior Court for the District of Columbia.
SO ORDERED.5 Digitally signed by Judge Robert L. Wilkins
DN: cn=Judge Robert L. Wilkins, o=U.S.
District Court, ou=Chambers of Honorable
Robert L. Wilkins, email=RW@dc.uscourt.gov,
c=US
Date: 2012.03.30 18:05:25 -04'00'
Date: March 30, 2012
ROBERT L. WILKINS
United States District Judge
5
An order will be issued contemporaneously with this memorandum opinion granting
USPS’ motion to dismiss Third-Party Plaintiffs’ Complaint.
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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
____________________________________
)
JOHN MUNRO, )
)
Plaintiff, )
)
v. ) Civil Action No. 11-0098 (ABJ)
)
RAY LAHOOD, Secretary, )
U.S. Department of Transportation, )
)
Defendant. )
____________________________________)
MEMORANDUM OPINION
Plaintiff John Munro brings this action against Ray LaHood, Secretary of the United
States Department of Transportation (“DOT”), under Title VII of the Civil Rights Act of 1964
(“Title VII”), 42 U.S.C. § 2000e et seq., and the Rehabilitation Act of 1973, 29 U.S.C. § 701 et
seq., alleging gender and disability discrimination, retaliation, and hostile work environment by
his employer, DOT. Defendant moves the Court to dismiss the complaint or, in the alternative,
to grant summary judgment for defendant [Dkt. # 9]. Defendant contends that the actions
plaintiff alleges as discriminatory do not constitute adverse employment actions within the
meaning of Title VII, that any alleged discriminatory or retaliatory actions can be explained by
legitimate, nondiscriminatory and nonretaliatory reasons, and that the circumstances presented
by plaintiff do not rise to the level of severity necessary to make out a hostile work environment
claim. For the reasons stated below, the Court will deny defendant’s motion to dismiss as to
plaintiff’s discrimination and retaliation claims and will grant defendant’s motion to dismiss as
to plaintiff’s hostile work environment claim.
I. BACKGROUND
Plaintiff is a male who suffers from post-concussion syndrome, depression, anxiety, and
Attention Deficit Disorder. Compl. ¶ 1. He was employed by defendant from January 2002 to
January 2011 as a GS-14 Program Analyst in the Office of Corporate Research, Technology, and
Innovation Management in the DOT Federal Highway Administration (“FHWA”). Compl. ¶ 10.
Plaintiff’s responsibilities, described by the agency as “critical job elements” (“CJEs”), included
providing leadership on intellectual property issues, managing the FHWA Small Business
Innovation Research Program, and leading the Office of Research, Development, and
Technology’s performance management issues. Compl. ¶ 12; Def.’s Mem. of Law in Supp. of
Mot. to Dismiss or, in the alternative, for Summ. J. (“Def.’s Mem.”) at Ex. 6.
On June 2, 2009,1 plaintiff filed a formal complaint against defendant with the Equal
Employment Opportunity Commission (“EEOC”) for alleged violations of Title VII and the
Rehabilitation Act. Pl.’s Mem. of Law in Opp. to Def.’s Mot. to Dismiss or, in the alternative,
for Summ. J. (“Pl.’s Mem.”) at Ex. Z. In the EEO Complaint, plaintiff alleges that his
supervisor, Jack Jernigan, discriminated against him on the basis of his sex and disability when
Jernigan disciplined him for allegedly threatening a female co-worker but did not discipline the
female co-worker or verify her allegations. Id. 2 Further, he alleges that defendant retaliated
1 Plaintiff’s complaint states that plaintiff filed the EEO Complaint in May 2009, Compl.
¶ 17, and defendant states that plaintiff filed the complaint in April 2009, Def.’s Statement of
Material Facts as to Which There Is No Genuine Dispute ¶ 3. But the EEO Complaint itself and
subsequent pleadings refer to the filing date as June 2, 2009.
2 The Court, on a motion to dismiss, may consider “any documents either attached to or
incorporated [by reference] in the complaint.” Williams v. Chu, 641 F. Supp. 2d 31, 34 (D.D.C.
2009) (alteration in original), quoting EEOC v. St. Francis Xavier Parochial Sch., 117 F.3d 621,
624 (D.C. Cir. 1997). Although plaintiff did not attach his EEO complaint to his pleadings, it is
incorporated by reference in his complaint. Compl. ¶ 17. Thus, the Court may properly consider
the contents of the EEO Complaint on the motion to dismiss.
2
against him when he brought the incident to the attention of the EEOC office prior to filing his
formal EEO Complaint. Compl. ¶ 17. Plaintiff claims that, before filing the EEO Complaint, he
“had never been counseled or disciplined for performance-related matters.” Compl. ¶ 18.
On November 5, 2009, Mr. Jernigan notified plaintiff that he had received a “Fails to
Meet Requirements” performance rating on several of his CJEs and that he would be placed on a
Performance Improvement Plan (“PIP”) as a result. Def.’s Mem. at Ex. 6. The PIP
memorandum stated that plaintiff’s performance had “declined” since October 2008 and that “the
deficiencies were noted at [plaintiff’s] mid-year evaluation and in numerous meetings since.” Id.
According to the terms of the PIP, plaintiff had 90 days 3 from the date of the memorandum to
improve his performance rating to at least “Meets or Exceeds Requirements,” and if he was
unable to do so, plaintiff would “be subject to removal . . . after a further opportunity period in
which to demonstrate acceptable performance.” Id.
Plaintiff’s progress while on the PIP was monitored and documented by Mr. Jernigan,
who provided plaintiff with written feedback on his progress after 30 and 60 days, on December
7, 2009 and January 14, 2010, respectively. See Def.’s Mem. at Ex. 3. In the 30-day evaluation,
Mr. Jernigan told plaintiff: “[y]ou made efforts to advance some initiatives, but your work
continues to lack in terms of volume produced, quality/completeness, level of supervision
required, and demonstrated performance at the GS-14 level.” Id. Mr. Jernigan reiterated these
concerns in the 60-day evaluation, informing plaintiff that “[y]ou are moving in the right
direction, but are not there yet.” Id. Ultimately, plaintiff failed to attain a “Meets or Exceeds
Requirements” rating, and he received a rating of record of “Fails to Meet Requirements.”
Def.’s Mem. at Ex. 1.
3 Plaintiff ultimately received an extension until February 22, 2010. Def.’s Mem. at Ex. 1.
3
On February 26, 2010, plaintiff was notified of the “Fails to Meet Requirements” rating
and informed that he would be given a Final Opportunity Period (“POP”) of 90 days to bring his
performance up to the “Meets or Exceeds Requirements” level. Def.’s Mem. at Ex. 1. Unlike
the terms of the PIP, the terms of the POP stated that if plaintiff failed to obtain a “Meets or
Exceeds Requirements” rating at the close of his POP, he would “be subject to some type of
formal action which could include demotion, reassignment, or removal.” Def.’s Mem. at Ex. 6.
During a meeting on his PIP performance held the same day, plaintiff alleges that Mr. Jernigan
“yelled at him.” Compl. ¶ 23. Moreover, presumably at some point prior to being put on the
POP, plaintiff also alleges that he was told he could no longer submit assignments because “his
supervisor had already decided to placed [sic] him on a Performance Opportunity Period.”
Compl. ¶ 28. 4
Plaintiff filed this complaint on January 14, 2011 [Dkt. #1]. Counts I, III, and IV 5 allege
gender discrimination, retaliation, and hostile work environment in violation of Title VII.
Counts II and III allege disability discrimination and retaliation in violation of the Rehabilitation
Act. Defendant has moved to dismiss, or in the alternative, for summary judgment under Fed. R.
Civ. P. 12(b)(6) and 56(a) [Dkt. #9].
4 Upon completion of the POP, for 90 days plus another extension to June 21, 2010, it was
determined that plaintiff had “failed to achieve the critical results,” Pl.’s Mem. at Ex. QQQ, and
plaintiff was ultimately removed from federal service as a result, id. at Ex. SSS. Plaintiff,
however, does not does not allege that his removal violates Title VII or the Rehabilitation Act.
The Court does not consider any of this information, as it was not attached to or incorporated by
reference in the complaint.
5 Plaintiff’s complaint misnumbers this count as Count I, but the Court will refer to it as
Count IV to avoid having two Count Is.
4
II. STANDARDS OF REVIEW
A. Motion to Dismiss
“To survive a [Rule 12(b)((6)] motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to state a claim to relief that is plausible on its face . . . . A claim
has facial plausibility when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal,
556 U.S. 662, 129 S.Ct. 1937, 1949 (2009) (internal quotation marks and citations omitted); see
Bell Atlantic Corp. v. Twombly, 555 U.S. 544, 555 (2007) (a plaintiff’s “[f]actual allegations
must be enough to raise a right to relief above the speculative level . . . .”) (citations omitted). In
considering a motion to dismiss for failure to state a claim, a court generally “must accept as true
all of the factual allegations contained in the complaint,” Erickson v. Pardus, 551 U.S. 89, 94,
(2007), and “grant plaintiff[] the benefit of all inferences that can be derived from the facts
alleged,” Kowal v. MCI Commc’ns Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994). However, the
court need not accept a plaintiff’s legal conclusions or the inferences he draws if those inferences
are unsupported by the alleged facts. Id. “Nor must the court accept legal conclusions cast as
factual allegations.” Id.; see Warren v. District of Columbia, 353 F.3d 36, 39–40 (D.C. Cir.
2004) (differentiating unacceptable conclusions of law from acceptable conclusions of fact).
In ruling on a Rule 12(b)(6) motion to dismiss, the court “may consider only the facts
alleged in the complaint, [and] any documents either attached to or incorporated in the
complaint,” EEOC v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 624 (D.C. Cir. 1997), or
those “documents upon which the plaintiff’s complaint necessarily relies . . . produced not by the
plaintiff in the complaint but by the defendant in a motion to dismiss,” Hinton v. Corrections
Corp. of Amer., 624 F. Supp. 2d 45, 46 (D.D.C. 2009) (internal quotation marks and citations
5
omitted); accord Kaempe v. Myers, 367 F.3d 958, 965 (D.C. Cir. 2004). In addition, the court
may consider “matters of which . . . judicial notice” may be taken, St. Francis Xavier Parochial
Sch., 117 F.3d at 624, such as “public records,” Kaempe, 367 F.3d at 965 (citations omitted).
B. Summary Judgment
Summary judgment is appropriate “if the movant shows that there is no genuine dispute
as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a). 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, 323 (1986) (internal quotation marks omitted). To defeat
summary judgment, the nonmoving party must “designate specific facts showing there is a
genuine issue for trial.” Id. at 324 (internal quotation marks omitted). The existence of a factual
dispute is insufficient to preclude summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248 (1986). A dispute is “genuine” only if a reasonable fact-finder could find for the
nonmoving party; a fact is only “material” if it is capable of affecting the outcome of the
litigation. Id.; see also Laningham v. U.S. Navy, 813 F.2d 1236, 1241 (D.C. Cir. 1987).
In assessing a party’s motion, “[a]ll underlying facts and inferences are analyzed in the
light most favorable to the nonmoving party.” N.S. ex rel. Stein v. District of Columbia, 709 F.
Supp. 2d 57, 65 (D.D.C. 2010), citing Anderson, 477 U.S. at 247. The non-movant may not,
however, rest upon the mere allegations or denials of its pleadings, but must instead establish
more than “the mere existence of a scintilla of evidence” in support of its position. Anderson,
477 U.S. at 252. The court will “not accept bare conclusory allegations as fact.” Taylor v.
6
FDIC, 132 F.3d 753, 763 (D.C. Cir. 1997); see also District Intown Props, Ltd. P’ship v. District
of Columbia, 198 F.3d 874, 878 (D.C. Cir. 1999) (“[T]he court must assume the truth of all
statements proffered by the non-movant except for conclusory statements lacking any factual
basis in the record.”).
III. ANALYSIS
A. Plaintiff’s Discrimination Claims
Plaintiff claims that he was discriminated against on the basis of his sex and disability6 in
violation of Title VII and the Rehabilitation Act. Defendant seeks dismissal of plaintiff’s
discrimination claims on the grounds that plaintiff has failed to establish that he suffered an
adverse employment action and has not alleged facts sufficient to “raise a plausible claim that the
work related acts were motivated by sex or disability discrimination.” Def.’s Mem. at 9–13.
In order to prove a discrimination claim in the absence of direct evidence of
discrimination, plaintiff must establish that he suffered an adverse employment action and that
the action gives rise to an inference of discrimination; both are elements of a prima facie case of
discrimination under Title VII and the Rehabilitation Act. Baloch v. Kempthorne, 550 F.3d
1191, 1196 (D.C. Cir. 2008). At the motion to dismiss stage, however, a plaintiff need not prove
a prima facie case. Ali v. District of Columbia, 697 F. Supp. 2d 88, 91 (D.C. Cir. 2010), citing
Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C. Cir. 2000) (stating that a Title VII
plaintiff “need not set forth the elements of a prima facie case [of discrimination] at the initial
pleading stage.”) (alteration in original); see also Winston v. Clough, 712 F. Supp. 2d 1, 10
(D.D.C. 2010), citing Brady v. Office of Sergeant at Arms, 520 F.3d 490, 493 (D.C. Cir. 2008)
(“[J]udicial inquiry into the prima facie case is usually misplaced . . . . At the motion to dismiss
6 For purposes of its motion only, defendant does not dispute that plaintiff is disabled or
that defendant knew of plaintiff’s disability. Def.’s Mem. at 1 n.1.
7
stage, the district court cannot throw out a complaint even if the plaintiff did not plead the
elements of a prima facie case.”). Plaintiff need only allege that he “suffered an adverse
employment action . . . because of [his] race, color, religion, sex, national origin, . . . or
disability.” Baloch, 550 F.3d at 1196.
Plaintiff alleges a plausible claim of discrimination because he claims to have suffered
five adverse employment actions on the basis of his sex and disability: (1) his supervisors placed
him on a PIP; (2) his supervisors gave him “distorted performance feedback that was
unfavorable” 7; (3) prior to being placed on a PIP, his supervisors told him he could not submit
any more assignments; (4) his supervisor, Mr. Jernigan, yelled at him during a meeting about his
PIP; and (5) upon failure to complete his PIP to the satisfaction of his supervisors, his
supervisors placed him on an extended POP. Compl. ¶ 28. Defendant argues, however, that
none of these alleged actions rise to the level of an adverse employment action because plaintiff
has failed to sufficiently allege that any of the actions “tangibly affected him” or caused him “an
economic loss or a change in the terms, conditions, or privileges of his employment.” Def.’s
Mem. at 10–13. 8
7 Plaintiff identifies this feedback by referring to the dates on which he received it:
December 2009 and January 2010. See Compl. ¶ 28. Defendant, in its motion, assumes that the
feedback to which plaintiff refers is contained in the two emails documenting plaintiff’s progress
on the PIP, which were received by plaintiff on December 7, 2009 and January 14, 2010. Def.’s
Mem. at 11. Because these two emails are the only documents incorporated into the pleadings
that were received by plaintiff during the referenced time periods, the Court will assume that the
emails constitute the alleged unfavorable feedback.
8 As to the PIP, defendant even goes so far as to say that “[p]laintiff concedes (as he must)
that the PIP is not an adverse employment action.” Def.’s Reply at 6. Plaintiff, however, only
“concedes” that the holding in Ndonji v. Interpark, Inc., No. 09-02547, 2011 U.S. Dist. LEXIS
23668, at 48 (D.D.C. Mar. 9, 2011), establishes that a PIP alone, without evidence of direct
economic harm, does not constitute an adverse employment action. Pl.’s Mem. at 22.
8
An adverse employment action is a “a significant change in employment status, such as
hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a
decision causing a significant change in benefits.” Burlington Indus., Inc. v. Ellerth, 524 U.S.
742, 761 (1998). To ultimately establish an adverse employment action, a plaintiff must show
that he “experience[d] materially adverse consequences affecting the terms, conditions, or
privileges of employment or future employment opportunities such that a reasonable trier of fact
could find objectively tangible harm.” Forkkio v. Powell, F.3d 1127, 1131 (D.C. Cir. 2002).
This harm is usually in the form of “direct economic harm,” Burlington Indus., 524 U.S. at 762,
such as affecting an employee’s grade or salary, Taylor v. Small, 350 F.3d 1286, 1293 (D.C. Cir.
2003).
Plaintiff alleges just enough to make his claim plausible that the alleged actions constitute
adverse employment actions: he claims that “as a direct and proximate result” of each of these
actions he has suffered “injuries and losses includ[ing] . . . loss of substantial past and future
salary, benefits and entitlements, loss of professional status and career-enhancing opportunities[,]
and loss of retirement savings and benefits.” Compl. ¶ 25. Losses of “substantial past . . . salary,
benefits and entitlements” and “retirement savings and benefits” are just the type of direct
economic harms that courts have recognized as objectively tangible, Burlington Indus., 524 U.S.
at 762. Moreover, courts have specifically recognized that when PIP placement and negative
performance feedback cause these types of harms, those actions rise to the level of an adverse
employment action. See Taylor, 350 F.3d at 1293 (finding that a PIP placement did not
constitute an adverse employment action on the grounds that plaintiff did not allege that the PIP
affected her grade or salary or caused a significant change in her employment status); Brown v.
Brody, 199 F.3d 446, 457–58 (D.C. Cir. 1999) (noting that “formal criticism or poor
9
performance evaluations” typically do not constitute adverse employment actions in the absence
of direct economic harm).
To survive further dispositive motions, however, plaintiff will need to overcome several
hurdles to prove that these actions did in fact cause him direct economic harm. For example,
plaintiff’s allegations that the PIP and the POP caused him to lose salary and benefits are
inconsistent with the memoranda plaintiff received describing the terms of the PIP and the POP.
See Def.’s Mem. at Ex. 1, 6. According to those documents, only if plaintiff failed to obtain a
“Meets or Exceeds Requirements” rating at the close of his POP would he “be subject to some
type of formal action which could include demotion, reassignment, or removal.” Def.’s Mem. at
Ex. 6. Thus, the terms of the placements purport to not affect the terms or conditions of
plaintiff’s employment, 9 and without proof of objectively tangible harm to employment, the PIP
and the POP placements likely would not rise to the level of an adverse employment action. See
Taylor, 350 F.3d at 1293. But see Porter v. Shah, 606 F.3d 809, 818 (D.C. Cir. 2010) (holding
that a negative assessment combined with a PIP constituted an adverse employment action).
Similarly, most courts have found that being “yelled at” on a single occasion is not an adverse
employment action per se. See Baloch, 550 F.3d at 1199 (“[S]poradic verbal altercations or
disagreements do not qualify as adverse actions[.]”), citing Burlington Indus., 548 U.S. at 68
(“[W]e believe it is important to separate significant from trivial harms. Title VII, we have said,
does not set forth a general civility code for the American workplace.”) (internal quotation marks
omitted); see also Moore v. Ashcroft, 401 F. Supp. 2d 1, 26 (D.D.C. 2005) (“[M]erely being
9 Plaintiff claims in subsequent filings that placement on the PIP caused him to lose
“career-enhancing assignments,” which in turn affected the terms and conditions of his
employment. Pl.’s Mem. at 22. This allegation does not change the Court’s analysis, however,
because plaintiff alleges loss of assignments, or being told he could no longer turn in
assignments, as a separate adverse employment action in his complaint. Compl. ¶ 28.
10
yelled at by your supervisor does not rise to the level of an adverse employment action.”)
(internal quotation marks omitted).
Moreover, other harms plaintiff claims he suffered are most likely not actionable. For
example, plaintiff’s claims that the alleged adverse actions caused him to lose “future salary,
benefits and entitlements” and “career-enhancing opportunities,” Compl. ¶ 26 (emphasis added),
are most likely too speculative to be actionable, see Edwards v. EPA, 456 F. Supp. 2d 72, 85–86
(D.D.C. 2006) (An adverse action “must have a discernible, as opposed to a speculative, effect
on the terms, conditions, or privileges of one’s employment . . . . [W]here what an employee
alleges is that he was denied the chance to pursue, at the employer’s expense, potentially fruitful
opportunities, he has not pointed to any concrete changes in the terms, conditions, or privileges
of his current or identifiable employment.”); see also Douglas v. Donovan, 559 F.3d 549, 553
(D.C. Cir. 2009) (noting that the effect of a poor performance evaluation is “ordinarily too
speculative to be actionable”). Further, plaintiff’s claims that the alleged actions caused him
“great emotional distress, embarrassment, humiliation, pain and anguish, as well as damage to
his . . . reputation,” Compl. ¶ 26, are also not likely to be not actionable, as this Circuit has held
that “purely subjective injuries,” such as “public humiliation, or loss of reputation” do not
constitute the objectively tangible harm necessary to establish adverse employment action under
Title VII, Holcomb v. Powell, 433 F.3d 889, 902–03 (D.C. Cir. 2006).
Despite these doubts as to whether plaintiff will ultimately be able to prove that he
suffered an adverse employment action, the Court finds that plaintiff’s allegations are sufficient
to survive a motion to dismiss. See Ali v. District of Columbia, 697 F. Supp. 2d 88, 91 (D.D.C.
2010) (denying defendant’s motion to dismiss even though “it was unlikely that [plaintiff’s]
claims of discrimination [would] ultimately prove meritorious” because plaintiff could not show
11
he was the subject of an adverse employment action). Construing the complaint in a light most
favorable to plaintiff, as the Court must do at the motion to dismiss stage, plaintiff’s allegations
are sufficient because he claims he suffered adverse employment actions that tangibly affected
the terms, conditions, and privileges of his employment, specifically his salary, benefits, and
entitlements.
Alternatively, defendant argues that, even if the Court finds that plaintiff has suffered an
adverse employment action, defendant is “entitled to judgment as a matter of law as [d]efendant
has legitimate, nondiscriminatory reasons for its actions,” Def.’s Reply at 8, and because plaintiff
cannot establish that defendant’s legitimate explanations for its actions are pretext, Def.’s Mem.
at 13–14. It is true that if this case were at a more advanced stage of litigation, the McDonnell
Douglas burden-shifting framework would control, and defendant’s proffer of legitimate,
nondiscriminatory reasons for its actions would shift the burden of production to plaintiff to
establish that defendant’s reasons are pretext. McDonnell Douglas Corp. v. Green, 411 U.S.
792, 802–04 (1973). But a plaintiff alleging discrimination at the motion to dismiss stage is not
required to negate defendant’s proffered explanations for the alleged adverse treatment. Rochon
v. Gonzales, 438 F.3d 1211, 1219–20 (D.C. Cir. 2006); see also Winston, 712 F. Supp. 2d at 11.
Finally, defendant requests that the Court consider its motion, in the alternative, as a
motion for summary judgment [Dkt. # 9]. On this record, the Court declines to do so. Although
some or all of these matters may be amenable to summary judgment, at this time, defendant has
not demonstrated that contested issues can be resolved as a matter of law. For one, there is a
genuine factual dispute over whether the alleged adverse actions affected the terms, privileges,
and conditions of plaintiff’s employment. See Def.’s Mem. at 9–13. Moreover, defendant
claims that plaintiff’s allegations with respect to adverse actions “mischaracterize what
12
occurred.” Def.’s Mem. at 6. For example, defendant disputes that plaintiff’s assignments were
taken away as a result of his placement on the PIP. 10 See Compl. ¶ 22; Def.’s Mem. at 17–18.
Thus, because neither party has provided the Court with the type of documentation that would
permit it to resolve such issues as a matter of law, the motion to decide this case in the alternative
on summary judgment will be denied. 11
B. Plaintiff’s Retaliation Claim
In Count III, plaintiff claims that defendant, by taking the same adverse actions alleged in
Counts I and II, retaliated against him for “his opposition to [d]efendant’s unlawful employment
practices and his participation in protected activity and the EEO process,” particularly plaintiff’s
filing of an EEO complaint in which he alleged defendant discriminated and retaliated against
him in violation of Title VII and the Rehabilitation Act. Compl. ¶ 32. Defendant, although it
originally challenged plaintiff’s retaliation claims on multiple grounds, now only contends that it
is “entitled to judgment as a matter of law due to [d]efendant’s legitimate, nondiscriminatory and
non-retaliatory reasons for its actions.” Def.’s Reply at 8 n.6. 12
As in the discrimination context, a plaintiff alleging retaliation faces a low burden at the
motion to dismiss stage and is not required to show that defendant’s proffered reasons for its
10 Plaintiff claims that he was “told he could not submit any more assignments because his
supervisor had already decided to placed [sic] him on a Performance Opportunity Period.”
Compl. ¶ 28. Defendant counters that plaintiff did not have work assignments taken away from
him; he was only prevented from turning them in after a long weekend because he was not
authorized to work overtime. Def.’s Mem. at 11–12, 17–18. Defendant further claims that
plaintiff was subsequently allowed to turn in the work. Def.’s Reply at 8.
11 The Court has not considered materials beyond the complaint and the documents
incorporated therein by reference, so it need not treat the motion to dismiss as a motion for
summary judgment.
12 In its reply to plaintiff’s opposition, defendant states that it no longer bases its motion to
dismiss the retaliation claim on the argument that the alleged retaliatory actions lack temporal
proximity to protected activity. Def.’s Reply at 8 n.6.
13
actions are pretext. Winston, 712 F. Supp. 2d at 11 (stating that plaintiff faces a “low hurdle” at
motion to dismiss stage); Rhodes v. Napolitano, 656 F. Supp. 2d 174, 187 (D.D.C. 2009)
(finding plaintiff’s allegations that materially adverse actions were caused by plaintiff’s
protected activity “sufficient to survive a motion to dismiss”); Vance v. Chao, 496 F. Supp. 2d
182, 185, 187 (D.D.C. 2007) (same). “[I]n order to survive a motion to dismiss, ‘all [the]
complaint has to say,’ is ‘the Government retaliated against me because I engaged in protected
activity.’” Rochon, 438 F.3d at 1219–20 (internal citations omitted), quoting Sparrow, 216 F.3d
at 1114.
Plaintiff has alleged exactly enough to survive a motion to dismiss: he alleges that
defendant “retaliated against him for his opposition to defendant’s unlawful employment
practices and his participation in protected activity and the EEO process.” Compl. ¶ 32.
Plaintiff’s alleged protected activity is undisputed: he filed a formal EEO Complaint against
defendant for alleging sex and disability discrimination and retaliation in violation of Title VII
and the Rehabilitation Act. Compl. ¶ 17; Def.’s Statement of Material Facts as to Which There
Are No Genuine Disputes ¶ 3. Moreover, defendant’s only grounds for challenging plaintiff’s
retaliation claim, that it has proffered legitimate, nondiscriminatory, and nonretaliatory
explanations for its actions, are inapposite at the motion to dismiss stage. See Winston, 712 F.
Supp. 2d at 11. Thus, plaintiff’s retaliation claim survives defendant’s motion to dismiss
because plaintiff alleges that defendant retaliated against him because he engaged in protected
activity.
C. Plaintiff’s Hostile Work Environment Claim
Finally, plaintiff alleges that defendant, by taking the same actions alleged as adverse in
the preceding discrimination and retaliation claims, subjected him to a hostile work environment
14
in violation of both Title VII and the Rehabilitation Act. 13 Defendant contends that plaintiff’s
hostile work environment claims should be dismissed because “[p]laintiff has made no allegation
from which one can infer gender discrimination or disability discrimination” and his claim is
“based solely on work-related actions.” Def.’s Reply at 11–12; see also Def.’s Mem. at 20.
To make out a hostile work environment claim, a plaintiff must demonstrate that the
“workplace is permeated with discriminatory intimidation, ridicule, and insult” and that this
behavior is “sufficiently severe or pervasive [as] to alter the conditions of the victim’s
employment and create an abusive working environment.” Harris v. Forklift Sys., 510 U.S. 17,
21 (1993). “To determine whether a hostile work environment exists, [courts] look to ‘all the
circumstances,’ including ‘the frequency of the discriminatory conduct; its severity; whether it is
physically threatening or humiliating, or a mere offensive utterance; and whether it unreasonably
interferes with an employee’s work performance.’” Nat’l R.R. Passenger Corp. v. Morgan, 536
U.S. 101, 115 (2002), quoting Harris, 510 U.S. at 23; see also Baloch, 550 F.3d at 1201.
Although a plaintiff is not required to plead a prima facie case of hostile work
environment in the complaint, Ali, 697 F. Supp. 2d at 92, the alleged facts must be able to
support such a claim, Rattigan v. Gonzales, 503 F. Supp. 2d 56, 78 (D.D.C. 2007), citing
Sparrow, 216 F.3d at 1114. And “mere reference to alleged disparate acts of discrimination
cannot be transformed, without more, into a hostile work environment.” Childs-Pierce v. Util.
13 It is unclear whether plaintiff actually alleges a hostile work environment claim under the
Rehabilitation Act. In the first paragraph of his complaint, he alleges that defendant “subjected
him to a hostile work environment because of his sex (male), [and] disability,” see Compl. ¶ 1,
but Count IV (the hostile work environment count) only alleges that defendant “subjected him to
a hostile work environment [on the] basis of his sex,” see Compl. ¶ 34. For purposes of this
motion, the Court will assume plaintiff has properly alleged both claims. It is also unclear
whether plaintiff’s hostile work environment claim is discrimination-based or retaliation-based,
see, e.g., Harris v. Wackenhut Servs., Inc., 419 Fed. App’x 1, 1 (D.C. Cir. 2001), but this does
not affect the Court’s analysis because the legal standard is the same for either theory, Baloch,
550 F.3d at 1201, citing Harris, 510 U.S. at 12.
15
Workers Union of Am., 383 F. Supp. 2d 60, 79 (D.D.C. 2005) (emphasis added), aff’d 187 Fed.
App’x. 1 (D.C. Cir. 2006); Wade v. District of Columbia, No. 08-1187, 2011 WL 1491075, at
*19 (D.D.C. Apr. 20, 2011); Nunridden v. Bolden, 674 F. Supp. 2d 64, 94 (D.D.C. 2009);
(dismissing plaintiff’s hostile work environment claim because plaintiff only sought “to
transform challenges to discrete acts of alleged discrimination or retaliation . . . into a hostile
work environment claim by combining those events with a series of ordinary workplace
difficulties”); see also Nat’l R.R., 536 U.S. at 115 (noting that hostile work environment claims
are “different in kind from discrete acts,” in that they must be “based upon the cumulative effect
of individual acts”).
Plaintiff, in alleging that defendant “subjected him to a hostile work environment because
of his sex (male) [and] disability,” merely relists the same five adverse employment actions
alleged in his discrimination and retaliation claims. Compl. ¶¶ 1, 34. He says nothing about the
nature of these disparate acts that would permit this Court to “transform” them into a hostile
work environment claim. For example, plaintiff alleges that being “yelled at” by Mr. Jernigan at
his PIP meeting contributed to his hostile work environment. Compl. ¶ 34. But plaintiff only
cites this one occasion, whereas the “very nature” of hostile work environment claims “involves
repeated conduct.” Nat’l R.R., 536 U.S. at 115. Moreover, plaintiff does not allege that the
yelling was physically threatening or humiliating and, in saying nothing at all about the content
or manner of the yelling, gives the Court no basis for inferring that it was anything more than
offensive to plaintiff. See Harris, 510 U.S. at 21 (“[M]ere utterance of an . . . epithet which
engenders offensive feelings in a[n] employee does not sufficiently affect the conditions of
employment to implicate Title VII[.]”) (internal quotation marks and citations omitted).
16
Similarly, plaintiff fails to elaborate upon the nature of the remaining four acts that he
alleges created a hostile work environment: placement on the PIP, receipt of unfavorable
feedback, being told he could not submit any more assignments, and placement on the POP.
Compl. ¶ 34. And as defendant points out, courts typically do not find these types of “work-
related actions by supervisors” to be sufficient for a hostile work environment claim. See Wade,
2011 WL 1491075, at *19, citing Nunridden, 674 F. Supp. 2d at 94 (“[T]he removal of important
assignments, lowered performance evaluations, and close scrutiny of assignments by
management cannot be characterized as sufficiently intimidating or offensive in an ordinary
workplace context.”).
Thus, because plaintiff has not alleged anything beyond the discrete workplace actions
alleged in his discrimination and retaliation claims and has failed to allege facts sufficient to
establish that these acts were severe or pervasive enough to constitute a hostile work
environment, his hostile work environment claims do not survive defendant’s motion to dismiss.
IV. CONCLUSION
For the foregoing reasons, the Court will deny defendant’s motion to dismiss as to Counts
I, II, and III, and grant its motion to dismiss as to Count IV. A separate order will issue.
AMY BERMAN JACKSON
United States District Judge
DATE: March 21, 2012
17
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https://www.courtlistener.com/api/rest/v3/opinions/2662744/
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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
FISHER-CAL INDUSTRIES, INC.,
Plaintiffs,
v. Civil Action No. 11-791 (BAH)
Judge Beryl A. Howell
UNITED STATES OF AMERICA, et al.,
Defendants.
MEMORANDUM OPINION
On July 30, 2011, the U.S. Air Force determined that it would not renew plaintiff Fisher-
Cal Industries’ contract to perform certain multimedia services at Dover Air Force Base, instead
choosing to “convert to in-house” the services performed by the plaintiff “based upon anticipated
savings.” Defs.’ Mot. Dismiss, ECF No. 6, Ex. 1. Following the expiration of the plaintiff’s
contract, the plaintiff initiated the instant lawsuit against the United States, the U.S. Department
of Defense, and the U.S. Air Force, alleging that the defendants’ insourcing decision was
unlawful because it violated federal statutes and implementing guidelines and procedures. The
defendants’ have moved to dismiss the Complaint on grounds that the Court lacks subject matter
jurisdiction. As explained below, the Court agrees and the Complaint is dismissed.
I. BACKGROUND
On July 6, 2009, the U.S. Air Force issued a Request for Proposal to acquire multimedia
services at Dover Air Force Base in Delaware. Compl. ¶¶ 10-11. Plaintiff Fisher-Cal Industries,
Inc., a New Jersey corporation, bid for and ultimately obtained the contract on September 15,
2009. Id. ¶ 13.
1
The contract between the Air Force and the plaintiff provided for one base year of
services, from October 1, 2009 to September 30, 2010, with four optional one-year extensions.
Id. ¶ 12. On July 30, 2010, approximately nine months into the base year of the contract, the Air
Force notified the plaintiff that it had decided to insource the multimedia services and would not
be exercising its option to renew the contract for Fiscal Year 2011. Id. ¶¶ 14-16; Defs.’ Mot.
Dismiss, ECF No. 6, Ex. 1. The Air Force, however, continued to use the plaintiff’s services
under a bridge contract for an additional six months after the base contract year expired, until
March 31, 2011. Id. ¶ 14. After March 31, 2011, the Air Force began to perform in-house the
multimedia services that the plaintiff had previously provided. Id.
On April 26, 2011, the plaintiff filed a Complaint in this Court against the United States,
the U.S. Department of Defense, and the U.S. Air Force, alleging that the defendants’ “[i]n-
sourcing [d]ecision is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance
with law.” Id. ¶ 30. Specifically, the plaintiff contends that the defendants’ decision to insource
the services covered by the contract was unlawful because it failed to comply with 10 U.S.C.
§129a – which requires the defendants to use “the least costly form of personnel consistent with
military requirements and other needs of the Department” – and violated “various implementing
guidelines and procedures” promulgated in accordance with 10 U.S.C. § 2463.1 Pl.’s Opp’n
Mot. Dismiss, ECF No. 8, at 2; see Compl. ¶¶ 15-53. The plaintiff seeks, inter alia, declaratory
judgment that the defendants’ insourcing decision is unlawful, in violation of the Administrative
1
10 U.S.C. § 2463 directs the Department of Defense to, inter alia, “devise and implement guidelines and
procedures to ensure that consideration is given to using, on a regular basis, Department of Defense civilian
employees to perform new functions and functions that are performed by contractors and could be performed by
Department of Defense civilian employees.” The statute further provides that “[t]he Secretary of a military
department may prescribe supplemental regulations, if the Secretary determines such regulations are necessary for
implementing such guidelines within that military department.”
2
Procedures Act (“APA”), and injunctive relief setting aside the agency action, as well as
attorney’s fees pursuant to the Equal Access to Justice Act, 28 U.S.C. § 2412(d). Id. ¶¶ 54-65.
On August 5, 2011, the defendants moved to dismiss the Complaint under Federal Rules
of Civil Procedure 12(b)(1) and (b)(6), arguing that the Court lacks subject matter jurisdiction
over the plaintiff’s claims because the Court of Federal Claims has exclusive jurisdiction over
matters related to federal procurement, and additionally that the case is moot because the
insourcing has already taken place and there is no possible relief for plaintiff. Defs.’ Mem.
Supp. Mot. Dismiss, ECF No. 6. This motion is pending before the Court.
As explained below, the Tucker Act and the Administrative Disputes Resolution Act of
1996 (“ADRA”) confer exclusive jurisdiction over matters related to procurement of federal
contracts to the Court of Federal Claims, and this Court therefore lacks subject matter
jurisdiction over the Complaint. Accordingly, defendants’ motion to dismiss is GRANTED.
II. STANDARD OF REVIEW
On a motion to dismiss for lack of subject matter jurisdiction, under Rule 12(b)(1) of the
Federal Rules of Civil Procedure, the plaintiff bears the burden of establishing jurisdiction by a
preponderance of the evidence. Mostofi v. Napolitano, No. 11-cv-727, 2012 U.S. Dist. LEXIS
9563, at *4 (D.D.C. Jan. 27, 2012) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 561
(1992)); Ki Sun Kim v. United States, No. 08-cv-1660, 2012 U.S. Dist. LEXIS 2094, at *8
(D.D.C. Jan. 9, 2012). As the Supreme Court has explained “many times,” the “district courts of
the United States . . . are ‘courts of limited jurisdiction. They possess only that power authorized
by Constitution and statute.’” Exxon Mobil Corp. v. Allapattah Servs., 545 U.S. 546, 552 (2005)
(quoting Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377 (1994)) (internal
citations omitted); see also Micei Int’l v. DOC, 613 F.3d 1147, 1151 (D.C. Cir. 2010) (“[T]wo
3
things are necessary to create jurisdiction in an Article III tribunal other than the Supreme Court .
. . The Constitution must have given to the court the capacity to take it, and an act of Congress
must have supplied it.”) (internal citations and quotation marks omitted). For this reason, a
“federal district court’s initial obligation is to ascertain its subject matter jurisdiction.” Malyutin
v. Rice, 677 F. Supp. 2d 43, 45 (D.D.C. 2009), aff’d, No. 10-5015, 2010 U.S. App. LEXIS 13869
(D.C. Cir. July 6, 2010). When a court lacks subject matter jurisdiction, it must dismiss the case.
See Ravulapalli v. Napolitano, 773 F. Supp. 2d 41, 48 (D.D.C. 2011); McManus v. District of
Columbia, 530 F. Supp. 2d 46, 62 (D.D.C. 2007).
The Court must be assured that it is acting within the scope of its jurisdictional authority
and therefore must give the plaintiff’s factual allegations closer scrutiny when resolving a Rule
12(b)(1) motion than would be required for a Rule 12(b)(6) motion for failure to state a claim.
See Macharia v. United States, 334 F.3d 61, 64 (D.C. Cir. 2003); Westberg v. FDIC, 759 F.
Supp. 2d 38, 41 n.1 (D.D.C. 2011); Dubois v. Wash. Mut. Bank, No. 09-cv-2176, 2010 WL
3463368, at *2 (D.D.C. Sept. 3, 2010); Hoffman v. District of Columbia, 643 F. Supp. 2d 132,
135 (D.D.C. 2009). In this respect, it is “the plaintiff’s burden to prove subject matter
jurisdiction by a preponderance of the evidence.” Sai v. Clinton, 778 F. Supp. 2d 1, 5 (D.D.C.
20011) (quoting Am. Farm Bureau v. Envtl. Prot. Agency, 121 F. Supp. 2d 84, 90 (D.D.C.
2000)). In deciding whether to grant a motion to dismiss for lack of jurisdiction, “the district
court may consider materials outside the pleadings” but “must still accept all of the factual
allegations in the complaint as true.” Jerome Stevens Pharms., Inc. v. FDA, 402 F.3d 1249, 1253
(D.C. Cir. 2005) (citing Herbert v. Nat’l Acad. of Sci., 974 F.2d 192, 197 (D.C. Cir. 1992) and
United States v. Gaubert, 499 U.S. 315, 327 (1991)); see also Coal. for Underground Expansion
v. Mineta, 333 F.3d 193, 198 (D.C. Cir. 2003) (noting that courts may consider materials outside
4
the pleadings in ruling on a 12(b)(1) motion to dismiss for lack of subject matter jurisdiction);
Citizens for Responsibility & Ethics in Wash. v. FEC, No. 11-cv-951, 2011 U.S. Dist. LEXIS
149672, at *6 (D.D.C. Dec. 30, 2011). The court, however, “need not accept as true a legal
conclusion couched as a factual allegation, nor inferences that are unsupported by the facts set
out in the complaint.” Mostofi, No. 11-cv-0727, 2012 U.S. Dist. LEXIS 9563, at *5 (citations
and quotation marks omitted).
III. DISCUSSION
The Complaint alleges that the plaintiff “solely challenges Defendants’ compliance with
their own guidelines and procedures regarding the decision to insource.” Compl. ¶ 4 (emphasis
in original). According to the plaintiff, the defendants’ decision to insource the multimedia
services at Dover AFB was not “based upon economic analysis” as to the “most cost effective
provider,” which, if properly conducted, would “reveal[] that a private contractor (such as
Plaintiff) is the most cost effective provider.” Id. ¶ 36.
The defendants assert that the Court lacks subject matter jurisdiction over these
allegations because they relate to procurement of a federal contract, over which the Court of
Federal Claims has exclusive jurisdiction. Specifically, the Tucker Act, 28 U.S.C. § 1491, as
amended by the ADRA, provides that:
Both the United States Court of Federal Claims and the district courts of the
United States shall have jurisdiction to render judgment on an action by an
interested party objecting to a solicitation by a Federal agency for bids or
proposals for a proposed contract or to a proposed award or the award of a
contract or any alleged violation of statute or regulation in connection with a
procurement or a proposed procurement.
28 U.S.C. § 1491(b)(1). The ADRA, however, provided for a sunset provision regarding the
concurrent jurisdiction of the district courts. Pub. L. No. 104-320. Pursuant to Section 12(d) of
the ADRA, the jurisdiction of district courts expired on January 1, 2001. Since that date, only
5
the Court of Federal Claims has jurisdiction over cases “in connection with a procurement or a
proposed procurement.”
The plaintiff argues that its claims fall outside the scope of 28 U.S.C. §1491(b)(1)
because “the Government’s decision to perform the services through internal resources . . . does
not fall within the definition of procurement.” Pl.’s Opp’n Mot. Dismiss, ECF No. 8, at 3. It
asserts that insourcing “concerns a nonprocurement of services” and “thus there is no
procurement or proposed procurement . . . for which an alleged violation of statute or regulation
may be considered ‘in connection with.’” Pl.’s Opp’n Mot. Dismiss, ECF No. 8, at 3. The Court
disagrees with this contention and holds, consistent with other courts both in and outside this
jurisdiction, the Federal Circuit, and the Court of Federal Claims, that an agency’s decision to
insource is “in connection with a procurement” under the Tucker Act, and, consequently, that
this Court is without subject matter jurisdiction to hear this Complaint.
A. The Defendants’ Decision to Insource Services is a Matter “in Connection
with” Procurement
While the Tucker Act does not define “procurement,” the relevant definition of the term
is provided in 41 U.S.C. § 111. Distributed Solutions, Inc. v. United States, 539 F.3d 1340, 1345
(Fed. Cir. 2008) (stating that definition of ‘procurement’ in 41 U.S.C. § 403(2), which has since
been reorganized as 41 U.S.C. § 111, should be used to interpret the Tucker Act). This statute
states that ‘procurement’ includes “all stages of the process of acquiring property or services,
beginning with the process for determining a need for property or services and ending with
contract completion and closeout.”
The plaintiff argues that §111 “indicates that the term procurement centers on ‘the
process of acquiring property or services’” and “[t]he ‘process of acquiring’ does not extend to
‘not acquiring’ the services.” Pl.’s Opp’n Mot. Dismiss, ECF No. 8, at 8. The plaintiff contends
6
that insourcing of services “is an act to not acquire, which runs contrary to the ordinary meaning
of the term ‘acquiring.’” Id.
The plaintiff’s reading of §111 and its understanding of the scope of “procurement”
under 28 U.S.C. §1491(b)(1) is incorrect. The definition of procurement in § 111 includes the
process of “determining a need for property or services.” As numerous other courts, including
the Fifth, Eleventh, and Federal Circuits, have noted, insourcing necessarily involves
“determining a need for property or services” and whether there was a need to perform such
functions through private contractors. See Rothe Dev., Inc. v. U.S. Dep’t of Defense, 666 F.3d
336, 339 (5th Cir. 2011) (holding that the plaintiff’s challenge to the defendants’ insourcing
decision fell within the scope of 28 U.S.C. §1491(b)(1) because the definition of ‘procurement’
“includes the process for determining a need for services, which by necessity includes the choice
to refrain from obtaining outside services.”) (emphasis in original); Vero Technical Support,
Inc. v. U.S. Dep’t of Defense, 437 F. App’x. 766, 769-70 (11th Cir. 2011) (holding that challenge
to insourcing decision fell within the scope of 28 U.S.C. §1491(b)(1) and explaining that
“[b]ecause the decision to insource a government contract involves the process of ‘determining a
need for property or services,’ . . . that decision occurs ‘in connection with a procurement or a
proposed procurement’ under the Tucker Act.”); see also Distributed Solutions, Inc. v. U.S.
Dep’t of Defense, 539 F.3d 1340, 1346 (Fed. Cir. 2008) (“[T]he phrase, ‘in connection with a
procurement or proposed procurement,’ by definition involves a connection with any stage of the
federal contracting acquisition process, including ‘the process for determining a need for
property or services.’”). This conclusion has also been reached by other courts in this
jurisdiction as well as the Court of Federal Claims. See Labat-Anderson Inc. v. United States,
346 F. Supp. 2d 145, 153-54 (D.D.C 2004) (holding that a decision to insource services was a
7
matter in connection with procurement); Santa Barbara Applied Research Inc. v. United States,
98 Fed. Cl. 536, 543 (Fed. Cl. 2011) (holding that “the Air Force’s decision to insource the work
[the plaintiff] had been performing at four Air Force bases and continues to perform at five other
locations is a decision that was made ‘in connection with a procurement’”); Labat-Anderson,
Inc. v. United States, 65 Fed. Cl. 570, 574 (Fed. Cl. 2005) (agreeing with the district court that
the challenge to an insourcing decision, “[a]lthough . . . not a review of a solicitation or award, []
is a challenge to an ‘alleged violation of statute or regulation in connection with a procurement . .
. .’”); see also Harris Enters., Inc. v. U.S. Dep’t of Defense, No. 10-cv-573, (W.D. Tex. Oct. 12,
2010) (unpublished) (“While insourcing in and of itself may not involve the procurement of
goods or services, a decision whether or not to insource involves the process for determining a
need for acquisition of property or services and, consequently, involves a ‘procurement’ or a
‘proposed procurement’ regardless of whether property or services are actually procured.”); cf.
K-Mar Indus. v. U.S. Dep’t of Defense, 752 F. Supp. 2d 1207, 1212 (W.D. Okla. 2010). The
plaintiff’s instant legal challenge contests precisely this aspect of the procurement process:
namely, that the defendants failed to comply with federal statutes and guidelines when
determining the need and cost-savings associated with insourcing multimedia services. These
allegations are therefore within the scope of 28 U.S.C. §1491(b)(1).
Despite the broad language of § 111 and decisions by numerous other courts holding that
challenges to insourcing decisions are governed by 28 U.S.C. §1491(b)(1), the plaintiff relies on
Resource Conservation Group v. United States, 597 F.3d 1238 (Fed. Cir. 2010) (“RCG”), for the
proposition that insourcing is a nonprocurement decision that “cannot be characterized as a
‘process of acquiring property or services.’” Pl.’s Opp’n Mot. Dismiss, ECF No. 8, at 10. In
RCG, the plaintiff challenged the government’s decision to lease property to a third party. The
8
Federal Circuit held that the plaintiff’s claims did not fall within 28 U.S.C. § 1491(b) because the
“definitions of ‘procurement’ and of ‘procure’ signify the act of obtaining or acquiring
something, in the context of acquiring goods or services. It strains the ordinary meaning of
‘procurement’ to extend that definition to encompass a situation in which it is the government
that is seeking to lease its own property.” RCG, 597 F.3d at 1244. While the court associated
procurement with the act of acquiring a property or service, the discussion of procurement was
limited to the factual circumstances of the case. As the defendants note, “[d]eciding to sell or
lease property is the opposite of acquiring property, and so the Federal Circuit properly held that
a challenge to the rejection of a bid to lease the Government’s property was not ‘in connection
with a procurement.’” Defs.’ Reply, ECF No. 11, at 5.
Given the disparate circumstances and issues presented in RCG from the case before the
Court, RCG provides little support for the plaintiff’s argument that insourcing decisions fall
outside 28 U.S.C. § 1491(b). The decision by an agency to provide services either by hiring
civilian employees in-house, or by contracting with an outside provider is different in kind from
the situation in RCG where the government was itself the provider of property, which it sought to
lease. Indeed, other courts have similarly distinguished RCG from cases challenging insourcing
decisions. See, e.g., Vero Technical Support, Inc. v. U.S. Dept. of Defense, 733 F. Supp. 2d
1336, 1342 (S.D. Fla. 2010) aff’d 437 F. App’x. 766 (11th Cir. 2011) (holding that challenges to
insourcing decisions were governed by 28 U.S.C. § 1491(b) and stating that RCG is “a situation
fundamentally different from the one presented here”).
As explained above, and as numerous other courts have noted, the terms of 28 U.S.C. §
1491(b) and the definition of ‘procurement’ in 41 U.S.C. § 111 provide that insourcing decisions
are matters connected to procurement of federal contracts. Consequently, the Court of Federal
9
Claims has exclusive jurisdiction over challenges to the government’s decision to insource
services and thus over this dispute.
B. There Are No Other Jurisdictional Bases for the Plaintiff’s Claims
While the plaintiff maintains that its case is properly before this Court, it has failed to
establish any jurisdictional basis for this suit outside 28 U.S.C. § 1491(b). As an initial matter,
the plaintiff explicitly disclaims that its case relates to a contractual dispute, stating in its
Complaint that it “does not allege a breach of contract, and seeks no contractual relief. No
contract claim is alleged.” Compl. ¶ 5(A). Indeed, had the plaintiff alleged claims founded on
contract, the Court of Federal Claims would have exclusive jurisdiction over the case pursuant to
28 U.S.C. 1491(a), which provides, in relevant part, that the “Court of Federal Claims shall have
jurisdiction to render judgment upon any claim against the United States founded . . . upon any
express or implied contract with the United States, or for liquidated or unliquidated damages in
cases not sounding in tort.”
The plaintiff argues that the Court has jurisdiction over this case pursuant to the APA, but
this is incorrect. Although the APA waives sovereign immunity, it does so only to the extent that
no other statute “expressly or impliedly forbids the relief which is sought.” 5 U.S.C. § 702.
Additionally, 5 U.S.C. § 704 states that judicial review of agency actions is only available when
“there is no other adequate remedy in a court . . . .” Here, as stated above, 28 U.S.C. 1491(b)(1)
permits the plaintiff to challenge the defendants’ insourcing decision, and its alleged failure to
comply with federal statutes and guidelines, but only before the Court of Federal Claims. The
statute does not provide federal district courts with concurrent jurisdiction over such matters, and
the plaintiff may not circumvent the statutory scheme established by the Tucker Act by simply
citing to the APA. See, e.g., Rothe, 666 F.3d at 338-39 (rejecting assertion that the APA
10
conferred jurisdiction to federal district courts to adjudicate challenges to government insourcing
decisions); Vero Technical Support, 437 F. App’x at 768 (stating that because “the Tucker Act
and the [Contracts Disputes Act] vest jurisdiction over certain disputes exclusively with the
[Court of Federal Claims], these statutes forbid relief that would otherwise be available under the
APA . . . .”).
Finally, the plaintiff argues that the APA applies to his claims because he is not an
“interested party” under the terms of 28 U.S.C. § 1491(b)(1) and therefore lacks standing to
pursue any remedy under that statute. The defendants contend that the plaintiff indeed “may not
ultimately satisfy the definition of an ‘interested party.’ However, if [the plaintiff] has standing
in any court, it could only be the Court of Federal Claims.” Defs.’ Reply, ECF No. 11, at 9. The
Court recognizes that the parties have spilled considerable ink over whether the plaintiff is an
“interested party” and has standing under the Tucker Act. Nonetheless, the Court need not
resolve this issue because the matter is one that is more appropriately addressed by the Court of
Federal Claims, which has exclusive jurisdiction to adjudicate the merits of the plaintiff’s claims
and whether the plaintiff has the ability to pursue them at all.2
IV. CONCLUSION
For the reasons explained above, the defendants’ motion to dismiss is GRANTED. An
appropriate Order will accompany this Memorandum Opinion.
DATE: MARCH 19, 2012 /s/ Beryl A. Howell___
BERYL A. HOWELL
United States District Judge
2
The defendants additionally contend that the plaintiff’s claims should be dismissed because they are moot. Defs.’
Mem. Supp. Mot. Dismiss, ECF No. 6, at 18-23. The Court need not address this argument because the Court lacks
subject matter to adjudicate the plaintiff’s claims.
11
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01-03-2023
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04-03-2014
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https://www.courtlistener.com/api/rest/v3/opinions/2661436/
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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
INTERNATIONAL COUNSEL BUREAU
and PILLSBURY, WINTHROP, SHAW,
PITTMAN, LLP,
Plaintiffs,
v. Civil Action No. 08-1063 (JDB)
UNITED STATES DEPARTMENT OF
DEFENSE,
Defendant.
MEMORANDUM OPINION
International Counsel Bureau and Pillsbury, Winthrop, Shaw, Pittman, LLP (collectively
"ICB") bring this action against the United States Department of Defense pursuant to the
Freedom of Information Act, 5 U.S.C. § 552 ("FOIA"), seeking records pertaining to four
individuals detained at Guantanamo Bay Naval Base. Several rounds of summary judgment
motions have occurred in this case. The only issues remaining involve the Department's
withholding of forty-five forced cell extraction ("FCE") videos, one video of a detainee receiving
a haircut while forcibly restrained, and the adequacy of the Department's search for records.
Currently before the Court are renewed motions and cross-motions for summary judgment on
those remaining issues.1 Based upon the Court's in camera inspection of three representative
videos, the hearing held on July 12, 2012, the several memoranda filed by the parties and the
entire record herein, and for the reasons discussed below, the Court concludes that summary
judgment shall be granted in its entirety to the Department on all remaining issues.
1
As stated in the Court's July 12, 2012 order, the Court deemed the parties' previous
submissions and oral representations as constituting renewed motions and cross-motions for
summary judgment. See Order at 1, ECF No. 73.
-1-
BACKGROUND
The Court previously issued three opinions resolving the parties' prior cross-motions for
summary judgment. See Int'l Counsel Bureau v. U.S. Dep't of Def., 657 F. Supp. 2d 33 (D.D.C.
2009); Int'l Counsel Bureau v. U.S. Dep't of Def., 723 F. Supp. 2d 54 (D.D.C. 2010); Int'l
Counsel Bureau v. U.S. Dep't of Def., 864 F. Supp. 2d 101 (D.D.C. 2012). These opinions
discuss the background of this case at great length. Hence, that history need not be repeated here.
In the last round of summary judgment, the Court granted in part and denied in part both parties'
motions on the propriety of withholding the FCE videos from disclosure, directed the
Department to conduct an additional search for responsive documents under the name "Abu
Khallaad" in U.S. Central Command ("USCENTCOM") files, and ordered the Department to
produce three representative FCE videotapes for the Court's in camera review. See Int'l Counsel
Bureau, 864 F. Supp. 2d at 110.
Subsequently, the Department conducted another search for relevant videos at the request
of the Department's Office of General Counsel (OGC) after some discrepancies were found
between the list of FCE videos and the videos actually received by OGC. Decl. of Caryn L.M.
Hargrave ¶ 6 (June 18, 2012), ECF No. 70-3. This search resulted in forty-five FCE videos of
one detainee and one additional video of another detainee receiving a haircut.2 Id. ¶ 6a. The
Department also performed an additional search for responsive records under the name "Abu
Khallaad." 3d Decl. of Jacqueline J. Scott ¶¶ 1-2 (June 8, 2012), ECF No. 70-2 ("3d Scott
Decl."). The Court held a hearing on July 12, 2012, deemed the parties' various submissions and
2
The FCEs at issue all involve one detainee, Fawzi Khaled Abdullah Fahad Al Odah, and
the detainee appearing in the haircut video is Khalid Abdullah Misha'al Al–Mutairi. See 2d
Decl. of Ross Hyams ¶¶ 2, 7f (July 10, 2012), ECF No. 72-1.
-2-
arguments as renewed motions and cross-motions for summary judgment, and granted leave to
the parties to file supplemental materials.
STANDARD OF REVIEW
Summary judgment is appropriate when the pleadings and the evidence demonstrate that
"there is no genuine issue as to any material fact and that the movant is entitled to judgment as a
matter of law." Fed. R. Civ. P. 56(c). The party seeking summary judgment bears the initial
responsibility of demonstrating the absence of a genuine dispute of material fact. See Celotex
Corp. v. Catrett, 477 U.S. 317, 323 (1986). The moving party may successfully support its
motion by identifying those portions of "the pleadings, the discovery and disclosure materials on
file, and any affidavits" that it believes demonstrate the absence of a genuine issue of material
fact. Fed. R. Civ. P. 56(c); see also Celotex, 477 U.S. at 323.
FOIA requires federal agencies to release all records responsive to a proper request except
those protected from disclosure by any of nine enumerated exemptions set forth at 5 U.S.C. §
552(b). A district court is authorized "to enjoin [a federal] agency from withholding agency
records or to order the production of any agency records improperly withheld from the
complainant." 5 U.S.C. § 552(a)(4)(B); see also Kissinger v. Reporters Comm. for Freedom of
the Press, 445 U.S. 136, 139 (1980). The agency has the burden of proving that "each document
that falls within the class requested either has been produced, is unidentifiable, or is wholly
exempt from the Act's inspection requirements." Goland v. CIA, 607 F.2d 339, 352 (D.C. Cir.
1978) (internal citation and quotation marks omitted); accord Maydak v. U.S. Dep't of Justice,
218 F.3d 760, 764 (D.C. Cir. 2000). The district court may award summary judgment to an
agency on the basis of information provided in affidavits or declarations that describe "the
documents and the justifications for nondisclosure with reasonably specific detail, demonstrate
-3-
that the information withheld logically falls within the claimed exemption, and are not
controverted by either contrary evidence in the record nor by evidence of agency bad faith."
Military Audit Project v. Casey, 656 F.2d 724, 738 (D.C. Cir. 1981); accord Vaughn v. Rosen,
484 F.2d 820, 826 (D.C. Cir. 1973).
DISCUSSION
I. U.S. Central Command Records
The Department has represented that it undertook the additional search ordered by the
Court for responsive records under the name "Abu Khallaad." See Def.'s Supp. Mem. at 1. It
searched six organizations within USCENTCOM deemed likely to hold records pertaining to the
alternate name "Abu Khallaad" and searched classified and unclassified files, using both
electronic name and content searches, and conducted physical inspections of files. 3d Scott Decl.
¶ 2. The Department found no responsive records. Id. ¶ 3. Given the Department's
representations, and the lack of any objections raised by ICB with respect to the adequacy of the
search performed for files relating to the name "Abu Khallaad" the Court finds that the
Department's search for responsive files is adequate and summary judgment will be granted to
the Department as to that search.
II. Videos
A. Issues Not in Dispute
The only issue remaining, then, is whether ICB is entitled to any portions of the video
recordings that are responsive to ICB's FOIA request. The videos at issue are forty-five videos
depicting forced cell extractions of a detainee and one video showing a detainee receiving a
haircut while restrained. The Court has reviewed in camera a representative sample consisting of
three forced cell extraction videos.
-4-
The Department divides the FCE videos into five segments, listed as (a) through (e).
Segment (a) covers the pre-extraction meeting of personnel who will be involved in the FCE
procedure ("FCE Team"). Segment (b) shows the FCE team starting the extraction process.
Segment (c) shows the actual extraction. Segment (d) shows the FCE team returning the detainee
to his cell, and ends when the FCE team is out of the cell and has locked the door. Segment (e)
shows the FCE team leaving the cell location and returning back to the rallying point. Def.'s
Supp. Mem. at 3, ECF No. 77; see generally Vaughn Index, ECF No. 79.
The portions of the video devoid of any detainee images – segment (a) and almost all of
segment (e) of the videos -- are not responsive to ICB's FOIA request. Mots. Hr'g Tr. at 4:10-14.
In addition, ICB concedes that it is only pursuing solo images of a detainee, and that it does not
challenge the Department's invocation of FOIA Exemption 1 to withhold the haircut video in its
entirety, since the Department has averred that it contains no solo images of a detainee. See
Decl. of Colonel John V. Bogdan ¶ 4 (Sept. 11, 2012), ECF No. 77-2; ICB's Supp. Mem. at 2 n.1
& 2 ("ICB is not challenging the application of FOIA exemptions to anything but the solo
detainee imagery."). ICB also agrees that it would not be reasonable to segregate solo images of
a detainee that appear for less than ten seconds. See Mots. Hr'g Tr. 12:20-13:9. Of the thirty-nine
solo images of a detainee that appear in the FCE videos, only thirteen of those images last ten
seconds or longer. See 3d Decl. of Ross Hyams ¶ 4 (Sept. 12, 2012), ECF No. 77-3; Def.'s Supp.
Mem. at 3. Accordingly, the dispute winnows down to whether ICB is entitled to these thirteen
solo images of a detainee from the FCE videos. Defendant raises Exemptions 1 and 63 as the
3
FOIA Exemption 3 allows an agency to withhold information that is "specifically
exempted from disclosure by statute" provided that certain other requirements are also met. 5
U.S.C. § 552(b)(3). The Department of Defense previously argued that Exemption 3 applied to
portions of the videos where identifying information of military personnel appeared, because 10
-5-
bases for withholding these solo images from disclosure. Because the Department asserts that
Exemption 1 applies to the entirety of the videos, the Court will address the applicability of this
exemption first.
B. Exemption 1
Exemption 1 permits agencies to withhold records if they are "(A) specifically authorized
under criteria established by an Executive order to be kept secret in the interest of national
defense or foreign policy and (B) are in fact properly classified pursuant to such Executive
order." 5 U.S.C. § 552(b)(1). In other words, to show that it has properly withheld information
under Exemption 1, an agency must show both that the information was classified pursuant to the
proper procedures, and that the withheld information meets the standard for classification. See
Salisbury v. United States, 690 F.2d 966, 971-72 (D.C. Cir. 1982).
Previously, the Department asserted Executive Order 12,958, as amended by Executive
Order 13,292, as the basis for classifying the videos. See Int'l Counsel Bureau, 723 F. Supp. 2d at
62; see also Decl. of Brigadier Gen. Rafael O'Ferrall ¶¶ 12-13 (Jan. 15, 2009), ECF No. 16-2. As
of December 29, 2009, Executive Order 13,526, 75 Fed. Reg. 707 (Dec. 29, 2009) ("EO
13,526"), superseded and replaced these prior executive orders. In its most recent submission, the
Department relies on EO 13,526. See Decl. of William K. Lietzau ¶ 5 (Sept. 12, 2012), ECF No.
77-1 ("Lietzau Decl."). In its substance, EO 13,526 provides for the same standards and
procedures for classification as its predecessors. And, as with the previous orders, it allows for
U.S.C. § 130(b) allows an agency to withhold identifying information of armed forces assigned
to certain units. The Department concedes – as it must – that Exemption 3 does not apply to the
solo images of the detainee in the FCE videos, Mots. Hr'g Tr. at 27:10-25, which is the only
remaining information that ICB seeks. Therefore, the Court need not address the applicability of
Exemption 3.
-6-
information to be classified if its disclosure "could reasonably be expected to cause identifiable
or describable damage to the national security." EO 13,526 § 1.4.
Under EO 13,526, information can be properly classified if the following requirements
are met: (1) an original classification authority classifies the information; (2) the United States
Government owns, produces, or controls the information; (3) the information falls within one or
more of the protected categories listed in section 1.4 of the Executive Order; and (4) the original
classification authority determines that the unauthorized disclosure of the information reasonably
could be expected to result in damage to the national security, and the original classification
authority is able to identify or describe the damage. See EO 13,526 § 1.1(a). ICB does not appear
to contest that the other requirements under EO 13,526 § 1.1(a) have been met; instead, it attacks
only the Department's assertions with respect to the harm to national security. See Pls.' Supp.
Mem. at 6-13.
Previously, the Court found that the Department 's supporting affidavits provided enough
explanation to demonstrate how at least portions of the videos, showing the movement of
detainees in and out of their cells, would allow hostile entities to develop counter-tactics. Int'l
Counsel Bureau, 623 F. Supp. 2d at 63. But the Court concluded that the record, at that time, did
not justify withholding the entirety of the videos under Exemption 1. Id. At the motions hearing,
the Department also conceded that the record did not specifically address whether Exemption 1
could be asserted over solo images of the detainee on the videos; instead, the arguments and
supporting affidavits submitted by the Department were primarily raised in an Exemption 6
context with respect to solo images of the detainee. See Mots. Hr'g Tr. at 36-37. The Court
granted leave to the Department to supplement the record with respect to its Exemption 1
-7-
argument over solo images of the detainee. Id. at 37-38; Order, ECF No. 73 (July 12, 2012).
The Department has now submitted additional declarations addressing that issue. One is
from William Lietzau, the Deputy Assistant Secretary of Defense for Rule of Law and Detainee
Policy. Lietzau is an original classification authority under EO 13,526. Lietzau Decl. ¶¶ 1, 3.
He states that the FCE videos are "properly classified in their entirety" under EO 13,526, id. ¶5,
and elaborates on the reasons why the recordings are classified. He states that "there is a
significant risk that public release, even of portions of forced cell extraction videos, would cause
serious damage to national security." Id.
Lietzau asserts that public release of the videos would allow detainees to communicate
through means other than the accepted channels provided for by JTF-GTMO and the
International Committee of the Red Cross, which, in turn, would endanger national security. He
explains that "detainees would quickly learn that these videos are a useful means of
communicating with others, potentially including al-Qaeda and associated enemy forces not
detained at Guantanamo," and states that detainees could use such means of communication to
convey direct or coded messages. Id. ¶ 5a. He further states that detainees have attempted to
communicate through covert or coded means in the past. Id. Moreover, Lietzau asserts that even
a ten second image of a detainee waiting to be forcibly removed from his cell would show the
public that a detainee was resisting the rules of the detention facility, which would allow al-
Qaeda and its affiliates to create propaganda out of such images. Id. at ¶ 5a.
The Department, through Lietzau, also states that some detainees, as an act of resistance,
choose to be forcibly extracted from their cells rather than comply with the detention facility's
rules. If the videos were made public, it would encourage more detainees to engage in disruptive
behavior that would likely result in forced cell extractions, hereby increasing the likelihood of
-8-
injury to both detainees and military personnel. Id. at ¶ 5b. As a result, JTF-GTMO would have
to reconsider its practice of recording FCEs. Lietzau also claims that public release of the videos
would harm relationships between the United States, its allies, and other members of the
international community, since it would raise "serious questions" as to whether the United States
was acting in accordance with the Geneva Conventions, which, the Department asserts, have
been interpreted as prohibiting the release of images of identifiable detainees without a legitimate
purpose. Id. at 5c.
The Department also provided an affidavit by Major General Karl R. Horst, Chief of Staff
of USCENTCOM. See Decl. of Maj. Gen. Karl R. Horst (Sept. 13, 2012), ECF 80-1 ("Horst
Decl."). Like Lietzau, Horst is an original classification authority. He is also an initial denial
authority for FOIA requests, and is responsible for USCENTCOM's FOIA and Privacy Act
office. Horst Decl. ¶ 2. Horst asserts that the official release of the videos could reasonably be
expected to harm national security. He states that enemy forces in Afghanistan and throughout
USCENTCOM's area of responsibility "have previously used videos and photographs out of
context to incite the civilian population and influence government officials and would likely
utilize [the FCE videorecordings] in the same manner," thereby putting U.S. military forces and
its allies at increased risk. Id. ¶ ¶ 8-9. He states that the FCE videos "are particularly subject to
use as propaganda and to incite a public reaction because of their depiction of forcible guard and
detainee interaction." Id. ¶ 10. He claims that the images could be manipulated "to alter the
images of the detainee's face or person to show physical signs of mistreatment," id. ¶ 11c, and
spliced with other footage to create propaganda, id. ¶ 11d. He further states that the source of the
image is itself "inflammatory given the sensitivities surrounding the U.S. detention of foreign
nationals," id. ¶ 11e. Horst provides examples of previous occasions where release of
-9-
photographs and videos have provoked violence and anger. See id. ¶¶ 7-8. These examples are
not exactly analogous, since the images Horst refers to are related to depictions of alleged abuse
and misconduct, rather than solo images of the nature ICB seeks here. However, the Department
also claims that its prior release of images through "B-roll footage" (where detainees' faces were
obscured, but which attempted to show the conditions of the detention facility), resulted in
angered reactions and accusations against the Department of creating propaganda. See Ex. D to
Lietzau Decl.
In any event, these additional declarations, providing plausible explanations of the harm
to national security from the release of even solo images of a detainee, and explanations for why
the videos were appropriately classified in their entirety, "merit substantial weight." Campbell v.
U.S. Dep't of Justice, 164 F.3d 20, 30 (D.C. Cir. 1998); see also Morley v. CIA, 508 F.3d 1108,
1124 (D.C. Cir. 2007) ("[T]he text of Exemption 1 itself suggests that little proof or explanation
is required beyond a plausible assertion that information is properly classified."); Larson v. Dep't
of State, 565 F.3d 857, 865 (D.C. Cir. 2009) ("We have consistently deferred to executive
affidavits predicting harm to the national security, and have found it unwise to undertake
searching judicial review.") (internal quotation marks omitted); Ctr. for Nat'l Sec. Studies v. U.S.
Dep't of Justice, 331 F.3d 918, 927 (D.C. Cir. 2003) (noting that "substantial weight" is given "to
an agency's affidavit concerning the details of the classified status of the disputed record because
the Executive departments responsible for national defense and foreign policy matters have
unique insights" into adverse consequences that might result in disclosure of a particular
classified record) (internal quotations and citations omitted).
The Department has identified particular harms and dangers to national security from
disclosure of the information ICB seeks. It claims that release of even solo images would allow
-10-
such images to be manipulated and/or used as a propaganda tool and that release of the footage
also raises the risk of its use as a vehicle for covert communication. Perhaps more hypothetical
are the Department's arguments that military members would be placed at greater risk because
release of the videos would encourage detainees to trigger more forced cell extractions in the
chance that such encounters would be videotaped, and that the release of these videos would
threaten foreign relations. Nevertheless, in sum, the Department has provided sufficient
explanations as to how these solo images, if released, "reasonably could be expected to result in
damage to the national security" and are therefore properly withheld under exemption 1. Larson,
565 F.3d at 865.
ICB's arguments against the Department's invocation of Exemption 1 are unavailing. It
essentially claims that the Court should divorce the solo images from the context in which they
are taken. In that light, ICB asserts that the Department's primary reasons for withholding
disclosure under Exemption 1– the use of images in propaganda efforts and covert
communications – are too hypothetical and attenuated. But context matters. The Department
has provided plausible, non-conclusory reasons why even solo images of detainees taken from
the forced cell extraction videos could pose a substantial risk and danger to national security.
The Court finds no reason to second-guess such assertions, particularly when this Circuit has
deemed it "unwise" for courts "to undertake searching judicial review" when it comes to
assessments of harms to national security based on the agency's particular expertise. Larson, 565
F.3d at 865; see also Morley, 508 F.3d at 1124.
In arguing for disclosure, ICB compares the solo images in the FCE videos to other
information that has been publicly released. It argues that the Department's national security
contentions are undermined by its own release of seemingly similar types of information. For
-11-
example, it claims that the Department has already disclosed written summaries of the forced cell
extractions, see ICB's Supp. Mem. at 9, and "disciplinary records that include extensive
documentation of FCEs," id. at 11. It also claims that the solo images in the videos are similar to
"B-roll" footage made publicly available by the Department, and that they are also akin to the
photographs the Court previously ordered disclosed pursuant to Exemption 6.
But the information ICB seeks here – solo images of the detainees from the FCE videos
themselves – differs from the written descriptions of those videos, other disciplinary records, or
even the "B-roll" of footage that the Department has released. See Wolf v. CIA, 473 F.3d 370,
378 (D.C. Cir. 2007) (to prevail on argument that information should be released because it has
already been previously disclosed, "the information requested must be as specific as the
information previously released . . . [and] must match the information previously disclosed");
Judicial Watch v. U.S. Dep't of Def., 857 F. Supp. 2d 44, 48 (D.D.C. 2012) ("A picture may be
worth a thousand words. And perhaps moving pictures bear an even higher value. Yet, in this
case, verbal descriptions of the death and burial of Osama Bin Laden will have to suffice, for this
Court will not order the release of anything more."). ICB's reliance on the photographs the Court
previously ordered disclosed is similarly infirm. As ICB concedes, the Department withdrew its
Exemption 1 claim regarding the photographs when information indicated that the Department
had previously released them. Mots. Hr'g Tr. at 10:16-20; see also Int'l Counsel Bureau, 723 F.
Supp. 2d at 65 n.13 (noting that the Department "expressly disclaimed any reliance on exemption
1" with respect to the photographs). The Court then ordered disclosure of the photographs only
after rejecting the Department's Exemption 6 arguments. Int'l Counsel Bureau, 723 F. Supp. 2d
at 67. Here, there is no indication in the record that any portion of the FCE videos – which have
been classified "SECRET" – were ever publicly released. And, as this Court noted, the
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considerations and analysis for disclosure under Exemption 1 and Exemption 6 differ. See Mots.
Hr'g Tr. at 36-38; see also Morley, 508 F.3d at 1123, 1126 (comparing Exemption 1's
requirements of showing proper classification procedures with Exemption 6's instruction to
weigh public interests against privacy interests and noting Government's heavier burden under
Exemption 6 for withholding information compared to other exemptions); Assoc. Press v. U.S.
Dep't of Def., 462 F. Supp. 2d 573, 576 & 577-78 (S.D.N.Y. 2006) (withholding photographs of
detainees pursuant to Exemption 1, but ordering disclosure of height and weight information for
detainees under Exemption 6).
C. Exemption 6 and Segregability
Having concluded that the solo images ICB seeks are properly classified and withheld
from disclosure under Exemption 1, the Court need not address the parties' arguments under
Exemption 6. See, e.g., Am. Civ. Liberties Union v. Dep't of State, --- F. Supp. 2d ----, 2012
WL 2989833, at *7 n.3 (D.D.C. 2012) ("Although the State Department also relies on
Exemptions 6 and 7 as alternative bases for withholding . . . the Court need not address whether
those exemptions have been properly invoked because Exemption 1 covers all the information
withheld."). And because the Court concludes that the solo images of the detainees – the only
portions of the videos ICB now seeks – were properly classified, there is no issue with respect to
their segregability. Indeed, there is nothing remaining for the Department to segregate. See
Trans-Pacific Policing Agreement v. U.S. Customs Serv., 177 F.3d 1022, 1026-27 (D.C. Cir.
1999) (agency only required to provide reasonably segregable portion of a record after exempt
portions are deleted, unless the portions are inextricably intertwined) (internal citations omitted).4
4
As the Court indicated at the motions hearing, the government's obligation to segregate
exists "even in classified documents, which may be disclosed without danger to national
security," Founding Church of Scientology of Wash., D.C., Inc. v. Bell, 603 F.2d 945, 951 (D.C.
-13-
Having concluded that the solo images are properly classified and have been appropriately
withheld pursuant to Exemption 1, the Court finds that there is no segregable non-exempt
information to which ICB is entitled.
CONCLUSION
For the reasons expressed above, the Court will DENY ICB's motion for summary
judgment and GRANT the Department of Defense's motion for summary judgment on the
remaining issues – the adequacy of its search with respect to responsive information found under
the alternative spelling of the name "Abu Khallaad" and the withholding of the forced cell
extraction and haircut video recordings under Exemption 1. A separate order will accompany
this memorandum opinion.
SO ORDERED.
/s/ John D. Bates
JOHN D. BATES
United States District Judge
Date: December 4, 2012
Cir. 1979). Nevertheless, the classified nature of a document, in some circumstances, is at least a
consideration. See Edmonds v. FBI, 272 F. Supp. 2d 35, 57 (D.D.C. 2003) (citing Anderson v.
CIA, 63 F. Supp. 2d 28, 30 (D.D.C. 1999)) (considering classified nature of documents withheld
pursuant to Exemption 1 in finding segregability unnecessary where government affirmatively
stated that there was no segregable material that can be disclosed). Here, because ICB has
narrowed its request to solo images of detainees, which the Court has found to be properly
classified and withheld under Exemption 1, the Court need not consider ICB's arguments with
respect to segregability as to the remaining portions of the videos.
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01-03-2023
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04-03-2014
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https://www.courtlistener.com/api/rest/v3/opinions/2661494/
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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
MONIQUE LOCKHART,
and
MONIQUE LOCKHART, next best friend of K.C.,
Plaintiffs, Civil Action No. 11-02264 (BAH)
Judge Beryl A. Howell
v.
COASTAL INTERNATIONAL SECURITY, INC.
Defendant.
MEMORANDUM OPINION
Pending before the Court is the motion filed by the defendant Coastal International
Security, Inc. (“Coastal”), to dismiss the Complaint of Plaintiffs Monique Lockhart and Monique
Lockhart, as next best friend of K.C., pursuant to Federal Rule of Civil Procedure 41(b), for
“failure to prosecute and failure to follow the Court’s order.” Def.’s Mot. to Dismiss (“Def.’s
Mot.”), ECF No. 14, at 2. The defendant also moves to dismiss due to the “Plaintiff’s failure
and/or refusal to take appropriate steps to resolve her claims through [the D.C. Department of
Employment Services],” which “has primary jurisdiction over these claims.” Id. For the reasons
set forth below, this motion will be granted in part and denied in part. 1
I. BACKGROUND
A. Factual Allegations
The defendant “performs security and related services under various contracts in the
District of Columbia and nationwide.” Complaint (“Compl.”), ECF No. 1-1, ¶ 3. The plaintiffs
1
The Court has diversity jurisdiction over this matter under 28 U.S.C. § 1332(a), since the plaintiffs are residents of
Maryland, the defendant is incorporated under the laws of South Carolina and maintains its principal place of
business in Virginia, and the Complaint alleges monetary damages in excess of $75,000.
1
allege that Monique Lockhart was formerly employed, beginning in June, 2004, 2 by the
defendant and had “problems with her supervisor, Lieutenant Minor . . . and other Coastal
employees.” Id. ¶¶ 7, 9. These problems allegedly stemmed from Lockhart’s refusal “to make a
false statement in support of Mr. Minor,” in connection with a sexual harassment case, which
refusal prompted “Coastal officers,” to make “repeated threats against the physical safety of Ms.
Lockhart.” Id. ¶¶ 9-11, 37.
Set against the backdrop of this “pattern of abuse and harassment,” id. ¶ 13, the claims
focus primarily on the events that allegedly occurred on September 9, 2008. On that day,
Lockhart “was not feeling well due to her pregnancy.” Id. ¶ 15. Her supervisor denied her “an
extra break,” but told Lockhart “to sit down while she was waiting for other Coastal employees.”
Id. ¶¶ 15-16. Lockhart “passed out while sitting.” Id. ¶ 17. In an effort to bring her “back to
consciousness, Mr. Minor shouted at Ms. Lockhart and repeatedly slapped Ms. Lockhart in the
face.” Id. When she regained consciousness, her supervisor made her “perform an exterior
patrol of the premises and then return to the post,” before granting her request to leave for the
day. Id. ¶¶ 18, 19.
Lockhart was subsequently terminated for “‘neglect of duty including sleeping on duty,’”
a citation she disputes on grounds that she “was not neglecting her duty by falling asleep but
rather fell unconscious after she was repeatedly denied a break.” Id. ¶¶ 21-22. 3 The Complaint
alleges that, “[s]ubsequent to [her] termination,” as a result of the defendant’s conduct, she “was
plagued by various medical complications . . . causing her child, [K.C.], to be born with physical
2
The Complaint does not provide information regarding Lockhart’s position with the defendant, but the defendant
states that Lockhart was employed “as a security guard.” Def.’s Mem. in Supp. of Mot. to Stay, ECF No. 4, at 1.
3
In its Answer to the Complaint, the defendant admits that Lockhart was terminated for events occurring on
September 9, 2008, and that she was cited for various violations, including “sleeping while on duty and neglect of
duty.” Def.’s Answer and Defenses to Pls.’ Compl., ECF No. 3, at ¶¶ 20, 21.
2
abnormalities.” Id. ¶¶ 24, 25.
B. Procedural Background
The plaintiffs filed their Complaint in Superior Court of the District of Columbia on
September 8, 2011, alleging that the defendant breached a duty to “not expos[e] [employees] to
dangerous work conditions, and to observe reasonable standards of care for employees under
medical conditions.” Id. ¶ 28. Plaintiffs allege that Coastal further breached that duty by
“allowing other employees to slap [Lockhart] in the face repeatedly and force her to walk a
patrol, and or to refuse reasonable request for leave,” id. ¶ 52, as well as by “allowing the
supervisor to assault and otherwise abuse Plaintiff Lockhart,” id. ¶ 60. Based upon their factual
and legal allegations, the plaintiffs assert a total of five claims: three claims on behalf of both
Lockhart and her child, K.C., namely, negligence (Count I), intentional infliction of emotional
distress (Count III), and negligent supervision (Count V); and two claims on behalf of Lockhart
alone, for wrongful discharge in violation of public policy because she was allegedly terminated
due to her medical disability (pregnancy) and “for her refusal to cover up an investigation into
allegations of violation of Title VII,” id. ¶ 39 (Count II), and negligent infliction of emotional
distress (Count IV). They seek relief for the “physical, emotional, and financial harm” caused to
“both Ms. Lockhart as a former employee and Master [K.C.],” id. ¶ 31; see also ¶¶ 47-49, 55-57,
62, in the amount of no less than $5,000,000, id. at 12 (Request for Relief).
Following removal of the action to this Court, the defendant filed its Answer to the
Complaint asserting, inter alia, the defenses that the Complaint, in whole or in part, fails to state
a cause of action upon which relief may be granted (“First Defense”) and that plaintiffs’ claims
are barred, in whole or in part, for failure to exhaust administrative remedies and/or jurisdictional
prerequisites to suit (“Second Defense”). Def.’s Answer and Defenses to Pls.’ Compl., ECF No.
3
3, at 15.
The plaintiffs’ representations in proceedings after the pleadings were closed are relevant
to consideration of the defendant’s motion to dismiss for failure to prosecute and/or comply with
Court orders, and will therefore be reviewed in some detail. On the same day as filing its
Answer, the defendant requested that the case be stayed “because all the torts alleged in
Plaintiffs’ Complaint, including Counts I, III, IV, and V, arose from a work-related incident in
the workplace,” and, under D.C. law, a “‘substantial question’ exists as to whether these counts
are covered by the D.C. Worker’s Compensation Act.” Def.’s Mot. to Stay, ECF No. 4, at 1.
The plaintiffs consented to a partial stay of the claims in Counts I, III, and IV, see id. at 2, 4 but
filed no timely opposition to the part of the motion seeking to stay Counts II and V as well. The
Court granted the defendant’s motion, based on the plaintiffs’ partial concession and partial
consent, and stayed the case in its entirety pending the determination by the D.C. Department of
Employment Services (“DOES”) of the applicability of the D.C. Worker’s Compensation Act
(“WCA”) to the plaintiffs’ claims. 5 See Minute Order (Jan. 14, 2012). The Court instructed the
parties to file a joint status report by March 14, 2012, indicating whether DOES had “made a
determination regarding the claims in this action or whether the stay should be continued.”
Minute Order (Jan. 14, 2012).
The first status report, filed by the defendant alone, rather than jointly as required by the
Court’s January 14, 2012 Order, advised that the defendant had received no notice of submission
of the plaintiffs’ claims to DOES, 6 but that plaintiffs’ counsel represented that “he believes he
4
The plaintiffs filed no opposition or other papers in response to the defendant’s request for a stay, leaving the Court
to rely solely on the representations made in the defendant’s papers about the plaintiffs’ position.
5
The Court also stayed Count II, alleging wrongful discharge, since it arose out of the same events as the other
counts and “to avoid piecemeal litigation.” Minute Order (Jan. 14, 2012).
6
The defendant indicates that “[t]ypically, such notification would be received shortly after a claim is filed
4
has submitted their claims to DOES and will supplement this Status Report with the date of the
filing and the docket number.” Status Report, ECF No. 7, dated March 14, 2012, at ¶ 1. The
Court accordingly continued the stay, but also directed that the next joint status report be filed
within one week and specifically provide “(1) the date of plaintiffs’ filing, if any, of claims with
DOES; (2) the status of those claims; (3) whether the filing, if any, with DOES was timely; and
(4) if no filing by the plaintiffs with DOES was made, whether the stay should be lifted.” Minute
Order (Mar. 15, 2012).
The second status report, which was filed jointly, acknowledged that (1) a “‘substantial
question’ exists as to whether the counts in Plaintiffs’ complaint and the injuries upon which
they are based are compensable exclusively through the D.C. Worker’s Compensation Act
(“WCA”) and whether this Court lacks primary jurisdiction;” (2) the “issues in this case should
be decided by DOES, after filing by Plaintiffs, because the answer may well be that Plaintiffs’
claims are covered by the exclusivity provision of the WCA;” and (3) “[w]hether Plaintiffs’
filing, if any, with DOES is/was timely and, therefore, whether Plaintiffs can be compensated for
their claims is another question for DOES to determine.” Joint Status Report, ECF No. 8, dated
March 21, 2011, at ¶¶ 2, 3. The Court granted the joint request to continue the stay, but noted
the failure of the plaintiffs to comply with the Court’s March 15, 2012 Order and provide the
date of the plaintiffs’ submission to DOES. Specifically, the Court directed that the next status
report, due by May 4, 2012, “should include the date of filing of Plaintiffs’ claims with DOES
with more precision than merely indicating that ‘Plaintiffs are in the process of applying for
benefits from [DOES], but believe that this process will take some time.’” Minute Order (Apr. 5,
2012).
The third status report, which was filed jointly, advised that the plaintiffs’ counsel had
with the DOES.” Def.’s Status Report, ECF No. 12, dated June 14, 2012, at ¶ 2.
5
contacted DOES “regarding the claim submitted to it on behalf of Plaintiff by first class mail,”
but the report otherwise was silent regarding when the claim had been sent or whether or when
DOES had received the submission. Joint Status Report, ECF No. 9, dated May 4, 2012, at ¶ 1.
Plaintiffs’ counsel further represented that he had “resubmitted those claim forms by courier, in
order to ensure that the claim is processed. Counsel for Plaintiff will submit the original or
supplemental filing to the Court to establish the date of filing upon return from the courier.” Id.
The plaintiffs consented to an extension of the stay for an additional 60 days, but requested that
“this Court order further proceedings should the DOES not act on the original or supplemental
filing by that date.” Id. at ¶ 2. The Court granted the joint request to continue the stay and
required the submission of another status report by June 6, 2012. See Minute Order (May 7,
2012).
The fourth status report, filed by the defendant alone, 7 stated that the defendant had still
“not received notice from DOES that there has been any filing nor has Defendant received
notification that Plaintiffs have filed the original or supplemental DOES filing with the Court, as
Plaintiffs informed the Court they would do in the May 4, 2012 Joint Status Report.” Status
Report, ECF No. 10, dated June 6, 2012, at ¶ 1. In light of the plaintiffs’ apparent failure to
submit the claims to DOES, contrary to the plaintiffs’ counsel’s prior representations, the
defendant requested that the stay be continued or “if Plaintiffs continue to fail to follow the
Court’s Order or prosecute their case by filing their claims with DOES, Defendant believes that
dismissal of all claims with prejudice is the appropriate remedy.” Id. at ¶ 4. The plaintiffs
remained silent and made no filing by the due date for the status report or in response to the
7
Defense counsel indicates in the status report that plaintiffs’ counsel had been “contacted . . . regarding preparing a
Joint Status Report as requested in the Court’s Minute Order. However, Plaintiffs’ counsel failed to provide
information regarding Plaintiffs’ alleged filing of their claims to the D.C. Department of Employment Services
(“DOES”).” Status Report, ECF No. 10, dated June 6, 2012, at 1.
6
defendant’s status report, which contained the clear warning that dismissal would be sought
should the plaintiffs fail to provide proof of filing their claims with DOES. Upon consideration
of the fourth status report, the Court issued an order noting the “troubling issue” raised in the
defendant’s submission that the plaintiffs had not submitted their claims to DOES “contrary to
the Joint Status Report, filed on May 4, 2012, in which the plaintiff’s counsel represented to the
Court that ‘Counsel for Plaintiff has resubmitted those claim forms by courier, in order to ensure
that the claim is processed.’” Minute Order (June 8, 2012). The Court directed that plaintiffs (1)
“submit to the Court, by June 12, 2012, documentation that establishes the date of filing of the
plaintiff’s claims with DOES;” and (2) “provide the Court an estimation of the duration of the
DOES process from the date of filing of the DOES claims.” Id.
The fifth and sixth status reports were filed by the parties separately. The fifth status
report, filed by the plaintiffs, stated that counsel had “re-submitted a notice of injury” to DOES,
without indicating the specific date when this submission had been made. According to
plaintiffs’ counsel, the courier service was requested to return a “stamped copy of the filing,” and
counsel promised to “supplement this Status Report with a copy of the filing later this week”
since “[n]ot [sic] such return has been made as of the date of this filing.” Plaintiff’s [sic] Status
Report, ECF No. 11, dated June 12, 2012, ¶¶ 1, 2, 5. Plaintiffs’ counsel also indicated that in
discussing the filing with DOES personnel, a DOES supervisor “expressed doubts as to the
validity of the filing, given the old nature of the injury noticed therein.” Id. at ¶ 3. In any event,
plaintiffs argued, the claims subject to WPA “are a relatively small part of this suit – Counts I, III
and IV as to Plaintiff Monique Lockhart only,” and “[b]ecause of the relatively secondary nature
of the Workers Compensation claims, Plaintiff questions the need to delay proceedings related to
DOES at all.” Id. at ¶¶ 6-7. Instead, the plaintiffs suggested that the defendant file dispositive
7
motions related to issues concerning “a failure of administrative exhaustion and or that the
remedies are barred by statute.” Id. at ¶ 7.
Shortly thereafter, in the sixth, and final, status report, filed by the defendant, defense
counsel “confirmed that Defendant has not received notice of the claim from DOES or from its
workers’ compensation insurance carrier.” Status Report, ECF No. 12, dated June 14, 2012, at ¶
2. The defendant urged the Court to dismiss the case in its entirety for failure to prosecute and/or
to follow the Court’s Order if the plaintiffs could not prove their claim was submitted to DOES
no later than May, 2012, or, if such proof was provided, that the stay “be continued pending the
determination by DOES of the applicability of the WCA to Plaintiffs’ claim.” Id. at ¶ 6.
Contrary to the plaintiffs’ promise, in their June 12, 2012 Status Report, to file a
“stamped copy of the filing” made with DOES by the end of that week, plaintiffs have not
submitted to the Court any copy, stamped or otherwise, of any submission to DOES. Pl.’s Status
Report, ECF No. 11, dated June 12, 2012, at ¶ 2. As the defendant correctly observes, “despite
repeated requests from the Court for documentation that establishes the date of filing of
Plaintiff’s claims with DOES and repeated statements from Plaintiffs’ counsel that he was ‘in the
process of applying for benefits,’ ‘will submit the original or supplemental filing to the Court to
establish the date of filing upon return from the courier,’ and had ‘re-submitted a notice of injury
. . . [and] will supplement [his] Status Report with a copy of the filing,’ Plaintiffs’ counsel has
been unable to prove that a claim was submitted to the DOES.” Def.’s Mem. in Supp. of Mot. to
Dismiss (“Def.’s Mem.”), ECF No. 14-1, at 3-4. Due to the persistent failure of the plaintiffs to
file any documentation that any submission had been made to DOES seeking a determination
regarding the applicability of the WCA to the plaintiffs’ claims, on July 13, 2012, the Court
lifted the stay, which had been in place for six months. See Minute Order (July 13, 2012).
8
Shortly thereafter, the defendant filed the pending motion to dismiss.
II. LEGAL STANDARD
Before outlining the legal standard of review that applies to the instant motion, the Court
first clarifies the bases for the motion. While the defendant has cited Federal Rule of Civil
Procedure 41(b) for its motion to dismiss, based upon plaintiffs’ counsel’s failure to prosecute
and/or comply with a court order, the motion is also predicated on the grounds that primary
jurisdiction over the plaintiffs’ claims rests with DOES, but without citation to any Federal Rule
of Civil Procedure. See Def.’s Mem. at 9 (“Plaintiffs’ claims must now be dismissed because
this Court lacks jurisdiction over the claims”). As noted, the defendant’s Answer sets forth the
affirmative defenses that the Complaint fails to state a claim for relief and that the claims are
barred for failure to exhaust administrative remedies or to satisfy jurisdictional prerequisites.
Yet, the defendant did not assert these defenses by motion prior to filing its Answer. See FED. R.
CIV. P. 12(b) (requiring that a motion “asserting any of these defenses must be made before
pleading if a responsive pleading is allowed”).
Nevertheless, when not raised in a motion prior to filing a pleading, the legal defenses of
failure to establish subject matter jurisdiction or to state a claim upon which relief can be granted
may be made “by a motion under Rule 12(c).” FED. R. CIV. P. 12(h)(2)(B); see also Yates v.
District of Columbia, 324 F.3d 724, 725 (D.C. Cir. 2003) (“Rule 12(b) was inapplicable: the
defendants had already answered the complaint. The motion therefore should have been for
judgment on the pleadings under Rule 12(c).”); 5C Charles Alan Wright & Arthur R. Miller,
FEDERAL PRACTICE AND PROCEDURE § 1361 (3d ed. 2012) (noting that “federal courts have
allowed untimely motions if the defense has been previously included in the answer” and,
“[m]oreover, under Rule 12(h) the defenses of lack of subject matter jurisdiction, Rule 12(b)(1)
9
[and] failure to state a claim upon which relief can be granted, Rule 12(b)(6),… are preserved
from the waiver mechanism by the express terms of subdivision (h),…although technically they
no longer are Rule 12(b) motions.”). Thus, although the defendant does not specify the
procedural rule, the Court construes the alternative basis for the defendant’s motion to be a
motion for judgment on the pleadings, pursuant to Federal Rule of Civil Procedure 12(c), which
may be brought “[a]fter the pleadings are closed—but early enough not to delay trial.” FED. R.
CIV. P. 12(c).
The legal standards under which the Court must assess both bases for the pending motion
to dismiss, under Rules 41(b) and 12(c), are set forth below.
A. Dismissal For Failure To Prosecute Or Comply With Court Orders
Under Rule 41(b)
Rule 41(b) provides that “a defendant may move to dismiss the action or any claim
against it,” when “the plaintiff fails to prosecute or to comply with these rules or a court order.”
FED. R. CIV. P. 41(b); see also LCvR 83.23 (authorizing Court to dismiss case for failure to
prosecute “upon motion by an adverse party, or upon the Court’s own motion,” which dismissal
is “without prejudice, unless the Court determines that the delay in prosecution of the claim has
resulted in prejudice to an opposing party”). A dismissal on this basis “operates as an
adjudication on the merits.” FED. R. CIV. P. 41(b). Thus, involuntary dismissal under Rule 41(b)
is “an extremely harsh sanction.” Trakas v. Quality Brands, Inc., 759 F.2d 185, 186 (D.C. Cir.
1985) (citing Camps v. C & P Telephone Co., 692 F.2d 120, 123-24 (D.C. Cir. 1981). Since
disposition on the merits is favored, such dismissal may be considered as “a sanction of last
resort to be applied only after less dire alternatives have been explored without success.” Id. at
187. In Bristol Petroleum Corp. v. Harris, then-D.C. Circuit Judge Ruth Bader Ginsburg
instructed that “[c]onsiderations relevant to ascertaining when dismissal, rather than a milder
10
disciplinary measure, is warranted include the effect of a plaintiff’s dilatory or contumacious
conduct on the court’s docket, whether the plaintiff’s behavior has prejudiced the defendant, and
whether deterrence is necessary to protect the integrity of the judicial system.” 901 F.2d 165,
167 (D.C. Cir. 1990) (citing Shea v. Donohoe Construction Co., Inc., 795 F.2d 1071, 1074-79
(D.C. Cir. 1986); see also B.R. v. District of Columbia, 262 F.R.D. 11, 14-15 (D.D.C. 2009)
(noting that the D.C. Circuit has approved “three justifications for dismissal with prejudice
because of attorney misconduct: (1) severe prejudice to another party; (2) failure of alternative
sanctions to mitigate the severe burden that the misconduct has already placed on the judicial
system; and (3) the need to sanction conduct that demonstrates a blatant disregard for the court’s
orders in order to deter future misconduct”) (citing Gardner v. United States, 211 F.3d 1305,
1309 (D.C. Cir. 2000) and Shea, 795 F.2d at 1074-79).
Exercise of the court’s discretion to dismiss an action for failure to prosecute or comply
with court orders is ordinarily limited to cases involving egregious conduct by plaintiffs, who are
particularly dilatory, act in bad faith, or engage in deliberate misconduct, particularly when such
conduct results in prejudice to the opposing party that is “so severe as to make it unfair to require
the other party to proceed with the case.” Peterson v. Archstone Cmtys. LLC, 637 F.3d 416, 418
(D.C. Cir. 2011) (quoting Gardner, 211 F.3d at 1309) (internal quotation marks omitted); Shea,
795 F.2d at 1075. Misconduct warranting dismissal can arise when a plaintiff repeatedly fails to
heed or conspicuously disregards clear instructions to take certain steps, thereby frustrating the
ability of the district court to discharge the responsibility of controlling its docket efficiently and
to ensure compliance with judicial orders. See, e.g., Automated Datatron, Inc. v. Woodcock, 659
F.2d 1168, 1170 (D.C. Cir. 1981) (dismissal of a count of a counterclaim upheld where the
dismissal resulted from the litigant’s “prolonged failure” over six month period to comply with
11
court’s clear instruction to amend his pleadings, and plaintiff had advanced no excuse for
“conspicuous disregard” of the court’s directive); Wooten v. Premier Yachts, Inc., No. 00-cv-
7127, 2000 U.S. App. LEXIS 29204 (D.C. Cir. Oct. 18, 2000) (per curiam) (dismissal order
upheld where plaintiff failed to appear at status conference, refused to participate in discovery,
and filed baseless motions after warning by district court of the consequences); Stella v. Mineta,
231 F.R.D. 44, 49 (D.D.C. 2005) (dismissing action under Rule 41(b) to protect integrity of court
where plaintiff failed to comply with six of the court’s orders or rules, and plaintiff’s failure to
comply had prejudiced the defendants and unnecessarily consumed the court’s time). Where the
record is unclear whether the client is aware of the attorney’s misconduct in failing to comply
with a court order, the D.C. Circuit has required the district court “to notify the client before
dismissing a case pursuant to the deterrence rationale.” B.R., 262 F.R.D at 15 (citing Shea, 795
F.2d at 1077-78).
B. Motion for Judgment on the Pleadings Under Rule 12(c)
A Rule 12(c) motion “shall be granted if the moving party demonstrates that no material
fact is in dispute and that it is entitled to judgment as a matter of law.” N. Am. Catholic Educ.
Programming Found. v. Womble, Carlyle, Sandridge & Rice, PLLC, No. 09-cv-1167, 2012 U.S.
Dist. LEXIS 119844 (D.D.C. Aug. 24, 2012) (quoting Stewart v. Evans, 275 F.3d 1126, 1132
(D.C. Cir. 2002) (internal quotation marks omitted). In deciding a motion under Rule 12(c),
“courts employ the same standard that governs a Rule 12(b)(6) motion to dismiss.” Lans v.
Adduci Mastriani & Schaumberg L.L.P., 786 F. Supp. 2d 240, 265 (D.D.C. 2011); see also
Brooks v. Clinton, 841 F. Supp. 2d 287, 297 (D.D.C. 2012). “[T]he Court may not rely on facts
outside the pleadings and must construe the complaint in the light most favorable to the non-
moving party.” Id. (citation omitted); see also Moore v. United States, Nos. 99-5197, 99-5198,
12
2000 U.S. App. LEXIS 12038 (D.C. Cir. 2000) (noting that “on Rule 12(c) motions we view the
facts presented in the pleadings and the inferences to be drawn therefrom in the light most
favorable to the nonmoving party”) (citations and internal quotation marks omitted); Schuchart
v. La Taberna del Alabardero, Inc., 365 F.3d 33, 34 (D.C. Cir. 2004) (Under Rule 12(c), facts
“must be read in the light most favorable to the non-moving parties, … granting them all
reasonable inferences”) (citing Henthorn v. Dept. of Navy, 29 F.3d 682, 684 (D.C. Cir. 1994)).
To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a plaintiff
need only plead “enough facts to state a claim to relief that is plausible on its face” and to
“nudge[ ] [his or her] claims across the line from conceivable to plausible.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007); FED. R. CIV. P. 12(b)(6). Although detailed factual
allegations are not required, the complaint must set forth “more than an unadorned, the
defendant-unlawfully-harmed-me accusation,” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), and
may not merely state “a formulaic recitation of the elements of a cause of action,” Twombly, 550
U.S. at 555. Instead, the complaint must plead facts that are more than “merely consistent with”
a defendant’s liability; “the plaintiff [must plead] factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at
678 (citing Twombly, 550 U.S. at 556-57).
If, on a motion under Rule 12(c), “matters outside the pleadings are presented to and not
excluded by the court, the motion must be treated as one for summary judgment under Rule 56.”
FED. R. CIV. P. 12(d); Ord v. District of Columbia, 587 F.3d 1136, 1140 (D.C. Cir. 2009) (noting
that “because Rule 12(d)’s conversion mechanism applies only to motions under Rule 12(b)(6)
or 12(c), the impropriety of transforming Rule 12(b)(1) motions into summary-judgment motions
is well-settled.”) (internal citations and quotation marks omitted); see also Vest v. Dep't of the
13
Air Force, 793 F. Supp. 2d 103, 112 (D.D.C. 2011); Dormu v. District of Columbia, 795 F.
Supp. 2d 7, 17 n.4 (D.D.C. 2011); Strong-Fischer v. Peters, 554 F. Supp. 2d 19, 22 (D.D.C.
2008).
III. DISCUSSION
The defendant contends that the complaint must be dismissed because, first, DOES,
rather than this Court, has “primary jurisdiction” to determine whether the torts alleged in Counts
I (negligence), III (intentional infliction of emotional distress), IV (negligent infliction of
emotional distress), and V (negligent supervision) arose from a work-related incident in the
workplace and are covered by the WCA. 8 As noted, the Court construes this claim as a motion
for a judgment on the pleadings under Rule 12(c) for failure to state a claim. 9 Second, the
8
In seeking a stay and referral of the claims to DOES, the defendant relied upon Joyner v. Sibley Mem. Hosp., 826
A.2d 362, 374 (D.C. 2003), which instructs that where a “substantial question” exists as to whether the WCA
applies, a stay is appropriate to give the plaintiff an opportunity to present the claims to DOES for a determination
whether the claims are subject to or fall outside of the WCA’s exclusivity provisions. See also Taylor v. D.C. Water
& Sewer Auth., 957 A.2d 45, 53-54 (D.C. 2008) (finding that trial court erred by granting defendants’ motion for
summary judgment regarding plaintiff’s battery and intentional infliction of emotional distress claims, rather than
staying the proceeding to allow plaintiff to present the tort claims to DOES). Mindful of this procedural mechanism
preferred by the D.C. Court of Appeals to defer to DOES, the administrative agency having primary jurisdiction
over compensability issues under the WCA, to determine whether the agency has jurisdiction over the tort claims at
issue, this Court granted—and continued for six months—the joint request for a stay. While the defendant
apparently would be content to allow the stay to continue, see Def.’s Status Report, ECF No. 12, dated June 14,
2012 (stating “[d]ispositive motions are not the proper avenue to resolve the issues in front of the Court – staying the
case pending a determination by [DOES] is the proper method”), this Court’s docket will not be held hostage and a
pending case stalled, when, as here, the plaintiffs evidently failed to pursue the opportunity provided by the Court to
clarify that their claims fall outside the scope of WCA’s exclusivity. Instead, the Court will forge ahead to resolve
the issue whether a “substantial question” exists regarding WCA coverage and, if so, evaluate the sufficiency of the
plaintiffs’ claims.
9
The Court notes that under the “broad command of Erie [R.R. Co. v. Tompkins, 304 U.S. 64 (1938)], . . . federal
courts are to apply state substantive law and federal procedural law when sitting pursuant to their diversity
jurisdiction.” Burke v. Air Serv. Int'l, Inc., 685 F.3d 1102, 1107 (D.C. Cir. 2012) (quoting Hanna v. Plumer, 380
U.S. 460, 465 (1965)) (internal quotation marks omitted). The WCA and the D.C. Court of Appeals’ construction of
this law are therefore binding on this Court. See Estate of McDaniels v. Liberty Mut. Group, Inc., No. 12-cv-202,
2012 U.S. Dist. LEXIS 124448, at *8-9 (D.D.C. Aug. 31, 2012) (noting the Erie doctrine and citing Hall v. C & P
Tel. Co., 793 F.2d 1354 (D.C. Cir. 1986), as requiring application of the D.C. Court of Appeals interpretation of the
WCA to uphold the district court’s dismissal for lack of subject matter jurisdiction). While some Judges in this
District have dismissed common law tort claims covered under the WCA for lack of subject matter jurisdiction
under Rule 12(b)(1), see, e.g., Estate of McDaniels, 2012 U.S. Dist. LEXIS 124448, at *8; Hamilton v. Sanofi-
Aventis U.S., Inc., 628 F. Supp. 2d 59 (D.D.C. 2009), the more appropriate basis for dismissal appears to be for
failure to state a claim under Rule 12(b)(6). As Chief Judge Lamberth explained in an extensive discussion of the
“proper procedural significance of jurisdictional state administrative exhaustion requirements in federal courts” in
14
defendant contends that the complaint should be dismissed, under Rule 41(b), due to the
plaintiffs’ failure to prosecute and/or failure to follow the Court’s order regarding filing a claim
with DOES. The Court will address each of these arguments for dismissal below.
A. Plaintiffs’ Work-Related Tort Claims Are Subject to the WCA.
The WCA, D.C. Code § 32-1503(a)(1), covers, in pertinent part, an injury to an employee
“that occurs in the District of Columbia if the employee performed work for the employer, at the
time of the injury.” The types of injuries covered by the WCA are broadly defined to encompass
“accidental injury or death arising out of and in the course of employment . . . and includes an
injury caused by the willful act of third persons directed against an employee because of his
employment.” D.C. CODE § 32-1501(12). Thus, even intentional torts occurring at the
workplace and committed by other employees or third parties constitute injuries falling within
the scope of the WCA. See Clements v Ace Cash Express, Inc., No. 04-cv-02123, 2005 U.S.
Dist. LEXIS 12610, at *5-6 (D.D.C. June 23, 2005) (injuries sustained by employee when her
workplace was robbed “fall squarely within the provisions of the WCA because the robbery
occurred while Clements, in her capacity as manager, was opening Ace’s store for business”);
Vanzant v. Wash. Metro. Area Transit Auth., 557 F. Supp. 2d 113, 118 (D.D.C. 2008) (plaintiff’s
tort claims arising from supervisor’s behavior, including intentionally striking plaintiff on the
head during a meeting, were subject to the WCA exclusively and therefore defendants’ motion
for summary judgment granted “on the basis that the complaint fails to state a claim because the
WCA precludes suit”).
Johnson v. District of Columbia, 368 F. Supp. 2d 30, 34-37 (D.D.C. 2005), “a state administrative exhaustion
requirement, even if treated as jurisdictional by state courts, cannot be jurisdictional in federal courts.” Id. at 36.
Instead, for Federal courts sitting in diversity jurisdiction, “the exhaustion requirement is prudential rather than
jurisdictional,” and “the plaintiff has in fact ‘failed to state a claim on which relief may be granted’ with respect to
the unexhausted claim or claims by failing to demonstrate that a necessary precondition to judicial review of those
claims has been satisfied.” Id.
15
For injuries subject to the WCA, the compensation provided under this law “shall
constitute the employee’s exclusive remedy against the employer . . . for any illness, injury . . .
arising out of and in the course of his employment.” D.C. CODe § 32-1504(b). The exclusivity
of the WCA remedy for work-related injuries is further confirmed by the statutory provision that
the employer’s liability as “prescribed in § 32-1503 shall be exclusive and in place of all liability
of such employer to the employee . . . , dependents, . . . and anyone otherwise entitled to recover
damages from such employer at law on account of such injury . . . .” Id. § 32-1504(a). The
exclusivity of remedy to employees is a fundamental part of the bargain reflected in workers’
compensation laws, which necessarily entail a quid pro quo from both employers and employees.
“[I]n return for the purchase of insurance against job-related injuries, the employer receives tort
immunity; in return for giving up the right to sue the employer, the employee receives swift and
sure benefits.” USA Waste of Md., Inc. v. Love, 954 A.2d 1027, 1032 (D.C. 2008) (quoting
Meiggs v. Associated Builders, Inc., 545 A.2d 631, 637 (D.C. 1988) (internal quotation marks
omitted). Thus, under the District of Columbia’s WCA, employers are immune from tort actions
by their employees for personal injuries arising out of and in the course of their employment,
whether or not the employee exercises the right to obtain workers’ compensation benefits. See
Georgetown Univ. v. D.C. Dep't of Empl. Servs., 830 A.2d 865, 868, n.1 (D.C. 2003) (reversing
DOES finding that employee’s injury was not compensable under WCA where employer sought
ruling that WCA applied in order to bar employee’s pending civil tort claim, noting that “‘[o]nce
a workers’ compensation act has become applicable either through compulsion or election, it
affords the exclusive remedy for the injury by the employee or the employee’s dependents
against the employer and insurance carrier. This is part of the quid pro quo in which the
sacrifices and gains of employees and employers are to some extent put in balance, for while the
16
employer assumes a new liability without fault, it is relieved of the prospect of large damage
verdicts.’”) (quoting ARTHUR LARSON, et al., LARSON’S WORKERS’ COMPENSATION LAW §
100.01 (May 2000) (citations omitted)).
In the instant matter, the parties do not dispute that plaintiff Lockhart was an employee of
the defendant, that the allegedly injurious events of September 9, 2008 occurred while Lockhart
was at work, and that “all or a substantial part of the events, acts or omissions giving rise to
Plaintiffs’ . . . claims . . . occurred in the District of Columbia.” Compl. ¶ 6. As a consequence,
the defendant contends that the plaintiffs’ tort-related claims for negligence (Count I), intentional
infliction of emotional distress (Count III), negligent infliction of emotional distress (Count IV)
and negligent supervision (Count V), are covered by the WCA and exclusively subject to
resolution by DOES. See Def.’s Mot. to Dismiss at 2.
1. Lockhart’s Work-Related Tort Claims in Counts I, III, IV and V
Will Be Dismissed As Conceded.
The plaintiffs do not dispute or even respond to the defendant’s argument regarding the
exclusivity of the WCA remedies as to plaintiff Lockhart’s injuries, as claimed in Counts I, III,
IV and V. See generally Pls.’ Opp’n to Mot. to Dismiss (“Pls.’ Opp’n”), ECF No. 17. Indeed,
the law in this jurisdiction is clear that the WCA is the exclusive remedy for work-related
injuries, with the result that common law tort claims arising from such injuries, such as claims
for negligence, negligent or intentional infliction of emotional distress, and assault, are barred in
civil actions. See, e.g., Vanzant, 557 F. Supp. 2d at 118 (granting summary judgment for
defendants with respect to plaintiff’s tort claims for negligent and intentional infliction of
emotional distress, negligent hiring and supervision, and assault); Doe v. United States, 797 F.
Supp. 2d 78, 82-83 (D.D.C. 2011) (dismissing claims for, inter alia, negligence, negligent and
intentional infliction of emotional distress); Bilal-Edwards v. United Planning Org., No. 11-cv-
17
2220, 2012 U.S. Dist. LEXIS 145619, at *15-18 (D.D.C. Oct. 10, 2012) (dismissing claims for
negligence and intentional infliction of emotional distress). 10
The law is also well-settled in this jurisdiction that “when a plaintiff files a response to a
motion to dismiss but fails to address certain arguments made by the defendant, the court may
treat those arguments as conceded, even when the result is dismissal of the entire case.” Fox v.
Document 5 Am. Airlines, No. 02-cv-2069, 2003 U.S. Dist. LEXIS 13606, at *5 (D.D.C. Aug. 5,
2003) (citing Sparrow v. United Air Lines, Inc., No. 98-cv-2194, 1999 U.S. Dist. LEXIS 22054,
at *17 (D.D.C. July 23, 1999), overruled on other grounds, 216 F.3d 1111 (D.C. Cir. 2000)),
aff'd, Fox v. Am. Airlines, Inc., 389 F.3d 1291 (D.C. Cir. 2004); see also Toms v. Office of the
Architect of the Capitol, 650 F. Supp. 2d 11, 18-19 (D.D.C. 2009) (noting that “when the
plaintiff is represented by counsel, [a court] may consider as conceded any arguments raised by a
defendant’s Rule 12(b)(6) motion that are not addressed in a plaintiff’s opposition”) (citing
Tnaib v. Document Tech., Inc., 450 F. Supp. 2d 87, 91 (D.D.C. 2006) (“When a plaintiff files a
response to a motion to dismiss but fails to address certain arguments made by the defendant, the
court may treat those arguments as conceded.”) and Stephenson v. Cox, 223 F. Supp. 2d 119, 122
(D.D.C. 2002) (dismissing as conceded certain counts, noting that “[t]he court’s role is not to act
as an advocate for the plaintiff and construct legal arguments on his behalf in order to counter
10
The D.C. Court of Appeals has indicated that “DOES does not have primary jurisdiction over emotional distress
claims.” Joyner v. Sibley Mem. Hosp., 826 A.2d 362, 367 n.6 (D.C. 2003) (citing Estate of Underwood v. National
Credit Union Admin., 665 A.2d 621 (D.C. 1995)), but this holding has been limited to claims concerning the
infliction of emotional distress arising from pervasive sexual harassment, which is not a “risk involved in or
incidental to employment,” Hamilton v. Sanofi-Aventis U.S., Inc., 628 F. Supp. 2d 59, 64 n.3 (D.D.C. 2009) (internal
quotation marks omitted). By contrast, where the alleged injuries are “directly traceable” to conditions of
employment, they fall under the WCA, even if the plaintiff claims the conditions were imposed because of
discriminatory animus. Id. (finding plaintiff’s tort claim of false imprisonment subject to WCA when allegation that
he was forced to stand for long period of time, despite his disability, “was a standard part of his employment”); see
also Vanzant, 557 F. Supp. 2d at 117 (“WCA coverage also extends to claims for emotional distress or mental
anguish where the underlying cause or tort is covered by the WCA.”); Doe, 797 F. Supp. 2d at 83 (same). Here, the
plaintiff Lockhart claims emotional distress from having been forced to perform her job, including staying awake
while on duty and performing a patrol of the premises. See Compl. ¶¶ 19, 21. These claims relate specifically and
directly to her employment conditions and are indisputably subject to the WCA.
18
those in the motion to dismiss”)). The Court, therefore, considers the defendant’s motion to
dismiss these four counts as to Lockhart as conceded. 11 Accord LCvR 7(b) (Court may treat
motion as conceded when defendant fails to file timely opposition memorandum); LCvR 7(h)(1)
(Court may treat as admitted any fact identified by moving party in its statement of material
facts, unless such fact is controverted in opposition to motion for summary judgment).
In their opposition, the plaintiffs argue against dismissal only of Count II, which alleges
wrongful discharge in violation of public policy on behalf of Lockhart, and “Counts I, III, IV,
and V as to Plaintiff [K.C.].” 12 Pls.’ Opp’n at ¶ 8. According to the plaintiffs, the wrongful
termination claim in Count II falls “outside the scope of the [WCA], as it does not cover injuries
during employment . . . .” Id. at ¶ 7. Indeed, the defendant apparently does not seek dismissal of
Count II on grounds of the WCA’s exclusivity, but pursuant to Rule 41(b), which will be
addressed below.
2. Plaintiff K.C.’s Tort Claims in Counts I, III and V Will Be Dismissed
As Subject to the WCA’s Exclusivity.
As noted above, the plaintiffs contest the defendant’s motion to dismiss the counts
asserted on behalf of the plaintiff K.C. The defendant argues that plaintiff K.C.’s claims “are
potentially subject to workers’ compensation exclusivity and, therefore, this Court lacks primary
11
The WCA requires that a claim for worker’s compensation be filed “within 1 year after the injury . . . .” D.C.
CODE § 32-1514(a). Plaintiffs have proffered no evidence that any claim has been filed with DOES and, in the fifth
Status Report, allude to discussions with DOES personnel about the potential untimeliness of any such claim.
Plaintiff’s [sic] Status Report, ECF No. 11, dated June 12, 2012, ¶ 3. The defendant argues that even if plaintiffs’
workers’ compensation claims are denied “due to the expiration of the limitations period,” this would not preclude
application of the WCA’s exclusivity provision. Def.’s Status Report, ECF No. 12, dated June 14, 2012, ¶ 3 (citing
Hicks v. Allegheny East Conference Ass’n of Seventh-Day Adventists, Inc., 712 A.2d 1021, 1022 (D.C. 1998) (“In
short, workers’ compensation is a substitute for any liability of the employer to an employee who otherwise would
be entitled to recover damages from such employer at law on account of [an] injury or death suffered by the
employee.”) (emphasis omitted)). The exclusivity of the WCA cannot be avoided simply by a tactical delay in filing
a workers’ compensation claim or allowing the statute of limitations to lapse.
12
The plaintiffs are incorrect that Count IV (alleging negligent infliction of emotional distress) is asserted on behalf
of plaintiff K.C. The Complaint identifies only Lockhart as the plaintiff bringing Count IV. Thus, this claim will be
dismissed as conceded.
19
jurisdiction over these claims.” Def.’s Reply in Supp. of Mot. to Dismiss (“Def.’s Reply”), ECF
No. 20, at 4. The plaintiffs counter that the WCA “only covers injuries to employees,” Pls.’
Opp’n at ¶ 5, and therefore that the claims of K.C. are not subject to dismissal, see id. at ¶ 6.
They further stress that K.C. “has suffered the most in this suit.” Id. at ¶ 6.
The question whether fetal injuries occurring at the mother’s workplace are remedied
solely, if at all, through the workers’ compensation system, has not been addressed in this
jurisdiction or by the D.C. Court of Appeals. Arguably, the plain terms of the WCA provide the
answer. The exclusivity provision in D.C. Code § 32-1504(a) expressly limits “all liability” of
an employer to the employee and to that employee’s “dependents, next of kin, and anyone
otherwise entitled to recover damages from such employer at law on account of such injury. . . .”
(emphasis added). In short, this provision could be read to limit the employer’s liability to the
third parties enumerated in the statute, including dependents, such as K.C., for damages arising
from a work-related injury to the employee.
Other courts that have examined their local workers’ compensation laws to address this
question have found, however, that “prenatal injuries, even when they occur simultaneously with
the mother’s work-related injuries, are separate, rather than derivative, and that the exclusivity
provisions of workers’ compensation acts do not bar such claims.” Meyer v. Burger King Corp.,
2 P.3d 1015, 1019 (Wash. Ct. App. 2000) (collecting cases from Alabama, California, Colorado,
Indiana, Illinois, Louisiana); cf. IBM v. Liberty Mut. Fire Ins. Co., 303 F.3d 419, 427 (2d Cir.
2002) (workers’ compensation insurance company had duty to defend employer on claims by
child that he suffered injury as a result of parents’ workplace exposure to chemicals during
gestation since there was “reasonable possibility” that claim was within the coverage of the
insurance policy).
20
In sum, the claims presented by plaintiff K.C. present a “substantial question” as to
whether this child’s injuries are covered by the WCA and, if so, whether the WCA bars the
plaintiff K.C.’s tort claims. DOES has “‘primary jurisdiction’” to determine whether the WCA
applies exclusively “before the courts can exercise jurisdiction.” Estate of Underwood v. Nat'l
Credit Union Admin., 665 A.2d 621, 631 (D.C. 1995) (quoting Harrington v. Moss, 407 A.2d
658, 661 (D.C. 1979)). The plaintiffs bear the burden of proving that the WCA does not apply to
preempt their tort claims and they have been provided ample opportunity, through a six-month
stay of this action, to seek clarification from DOES to support their burden. See Carson v. Sim,
778 F. Supp. 2d 85, 95-97 (D.D.C. 2011) (dismissing claim of intentional infliction of emotional
distress because plaintiff failed to “meet[] his burden to show that the WCA does not preempt
this claim”); Ramey v. Potomac Elec. Power Co., 468 F. Supp. 2d 51, 55-56 (D.D.C. 2006)
(dismissing claims of intentional and negligent infliction of emotional distress because plaintiff
did not demonstrate that these claims fell outside of the WCA); Hamilton v. Sanofi-Aventis U.S.,
Inc., 628 F. Supp. 2d 59, 63 (D.D.C. 2009) (noting that “because the WCA contains a number of
presumptions that favor coverage, the employee bears the burden of proving that the WCA does
not apply”). Failing to establish that the plaintiff K.C.’s injuries are not compensable under the
WCA, when these same injuries are alleged to have occurred as a result of injuries sustained by
his mother while at work, is fatal to the child’s tort claims. Accordingly, the tort claims of the
plaintiff K.C. will be dismissed for failure to state a claim for which relief may be granted.
B. Plaintiffs’ Failure to Prosecute and/or Comply with the Court’s Order
In light of the dismissal of the plaintiffs’ tort claims, the only claim remaining is Count II
asserted on behalf of plaintiff Lockhart for wrongful discharge against public policy. The only
basis asserted by the defendant for dismissal of this Count is under Rule 41(b) because of the
21
plaintiffs’ failure to prosecute and/or comply with the Court’s order regarding submission of the
tort claims to DOES. The plaintiffs have consistently argued, however, that Count II should not
be subject to the stay since it is not in the nature of a tort claim and is therefore not subject to the
WCA. See Pls’ Opp’n at ¶ 7; see also Def.’s Mot. For Stay, ECF No. 4, at 2 (indicating
plaintiffs’ counsel did not consent to stay of Counts II and V). Thus, any delay in consideration
of Count II cannot be attributed to the plaintiffs, who wished to proceed on this count all along.
In any event, the defendant has not demonstrated, nor can demonstrate, any prejudice to it from
the delay in consideration of Count II when it requested the stay of this claim over the plaintiffs’
objection.
While the Court remains troubled by the plaintiffs’ counsel’s representations about
submitting the tort claims to DOES but failing to follow-through with promised proof of those
same submissions, failure by the plaintiffs to submit their tort claims to DOES during the stay
has no bearing on the viability of Count II. Thus, penalizing plaintiff Lockhart by dismissal of
Count II, which is separate from her tort claims, would be overly harsh. Accordingly, the
defendant’s motion to dismiss Count II is denied.
IV. CONCLUSION
For the foregoing reasons, the defendant’s motion to dismiss is granted in part and denied
in part. Specifically, the plaintiffs’ common law tort claims in Counts I, III, IV and V of the
Complaint are dismissed, but plaintiff Lockhart’s claim in Count II that she was discharged in
violation of public policy remains.
The parties are directed to submit by December 5, 2012 a proposed scheduling order with
any proposed modifications to the proposal previously provided in the parties’ Joint Meet and
Confer Report, ECF No. 15, at 3.
22
A separate order consistent with this Memorandum Opinion is contemporaneously filed.
DATED: November 21, 2012
Digitally signed by Beryl A. Howell
DN: cn=Beryl A. Howell, o=District
Court for the District of Columbia,
ou=United States District Court
Judge,
email=Howell_Chambers@dcd.us
courts.gov, c=US
Date: 2012.11.21 15:22:45 -05'00'
_______________________
BERYL A. HOWELL
United States District Judge
23
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01-03-2023
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04-03-2014
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https://www.courtlistener.com/api/rest/v3/opinions/2661596/
|
UNCLASSIFIED//FOR PUBLIC RELEASE
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
) Filed with Classified
) Information Security Oni~~Jr
)
)
CISO ~07?'_E:
ABD AL-RAHIM HUSSAIN MOHAMED
AL-NASHIRI, ) 10-"-/....;R;LI..;...'-c. _ _ _,....
Date _ _ _ •..;..._
)
Petitioner., )
)
vs. ) Civ. No. 08-1207 (RWR) (EGS)
)
BARACK OBAMA, et al., )
)
_________________________________ )
Respondents. )
MEMORANDUM ORDER
Pending before the Court is Petitioner Abd Al-Rahim Hussain
Mohamed Al-Nashiri's ("Mr. Al-Nashiri") motion to reconsider the
classified Memorandum Opinion and Order filed May 7, 2012
(hereinafter "Opinion") (see May 9, 2012 Minut.e Order) or,
alternatively, to stay the Order and amend it to permit an
interlocutory appeal. Upon consideration of the motion, the
opposition, and the reply thereto, the relevant caselaw, and the
record in these proceedings as a whole, and for the reasons set
forth herein, petitioner's motion is DENIED.
I . BACKGROUND
The factual and procedural history regarding this matter are
set forth in the May 7, 2012 Opinion, familiarity with which is
assumed. Briefly, in 2011, the government filed an identical
request in ten habeas corpus cases brought by detainees at
UNCLASSIFIED//FOR PUBLIC RELEASE
UNCLASSIFIED//FOR PUBLIC RELEASE
Guantanamo Bay. The government notified the Court
the government's request, and by consent of the Merits Judges
presiding over the ten underlying habeas cases, the motions were
transferred to the undersigned for coordinated consolidation and
resolution. Most of the detainees opposed the government's
request; some filed joint oppositions, and some filed individual
oppositions.
On May 7, 2012, this Court issued its Opinion and Order
granting the government's request but imposing additional
conditions upon the
government Al-Nashiri is the
sole petitioner who has moved to reconsider, stay, or for
certification of interlocutory appeal. His motion is ripe for
determination by the Court.
2
UNCLASSIFIED//FOR PUBLIC RELEASE
UNCLASSIFIED//FOR PUBLIC RELEASE
II. STANDARD OF REVIEW
Motions for reconsideration of interlocutory orders "may be
revised at any time before the entry of a judgment adjudicating
all the claims and all the parties' rights and liabilities."
Fed. R. Civ. P. 54(b}. Although courts have discretion to
reconsider their interlocutory orders, they should be "loathe to
do so in the absence of extraordinary circumstances such as where
the initial decision was clearly erroneous and would work a
manifest injustice." Christianson v. Colt Indus. Operating
Corp., 486 U.S. 800, 817 (1988} (internal citations and quotation
marks omitted}. "In particular, a court should grant
reconsideration only when the movant demonstrates (1} an
intervening change in the law; (2) discovery of new evidence not
previously available; or (3} a clear error of law in the first
order." In re Guantanamo Bay Detainee Litig., 706 F. Supp. 2d
120, 122-23 (D.D.C. 2010) (internal citations and quotations
omitted}.
In determining whether to stay an order pending appeal, the
Court considers the same four factors it would in resolving a
motion for a preliminary injunction: "(1} whether the stay
applicant has made a strong showing that he is likely to succeed
on the merits; (2) whether the applicant will be irreparably
injured absent a stay; (3) whether the issuance of a stay will
substantially injure the other parties interested in the
3
UNCLASSIFIED//FOR PUBLIC RELEASE
UNCLASSIFIED//FOR PUBLIC RELEASE
proceedings; and ( 4) where the public interest lies." Nken v.
Holder, 556 U.S. 418, 434 (2009) (citations omitted). "It is the
movant's obligation to justify the Court's exercise of such an
extraordinary remedy." Cuomo v. United States Nuclear Regulatory
Comm'n, 772 F. 2d 972, 978 (D.C. Cir. 1985).
Finally, in granting a request for an interlocutory appeal,
a district court must certify that the order involves "a
controlling question of law as to which there is substantial
ground for difference of opinion and that an immediate appeal
from the order may materially advance the ultimate termination of
the litigation." 28 U.S.C. 1292(b). "Although courts have
discretion to certify an issue for interlocutory appeal,
interlocutory appeals are rarely allowed . . . the movant bears
the burden of showing that exceptional circumstances justify a
departure from the basic policy of postponing appellate review
until after the entry of final judgment." Judicial Watch, Inc.
v. Nat'l Energy Policy Dev. Group, 233 F. Supp. 2d 16, 20 (D.D.C.
2002) (citations omitted) .
III. ANALYSIS
Mr. Al-Nashiri has identified no error in this Court's May
2012 Opinion, nor does he argue there has been a change in the
law since that time. He does not discuss his likelihood of
success on the merits. He does not identify a controlling
question of law on which there is a substantial difference of
4
UNCLASSIFIED//FOR PUBLIC RELEASE
UNCLASSIFIED//FOR PUBLIC RELEASE
opinion, nor does he argue that resolution by the Court of
Appeals would materially advance the disposition of his habeas
corpus litigation. Rather, he argues that his circumstances have
changed since this matter was previously considered by the Court
.- namely, he "now faces an active capital murder prosecution in
military commissions proceedings in Guantanamo Bay." Motion at
3. Mr. Al~Nashiri argues that
would interfere with his due process rights in his
commissions prosecution.
Accordingly, he requests that the Court reconsider, stay,
and or certify its Opinion for appeal, and he additionally
The government responds that Mr. Al-Nashiri's circums~ances
have not changed in any material manner: when he filed his
opposition to the government's original motion in 2011, he was
alre~dy aware he could face capital'charges in the military
5
. UNCLASSIFIED//FOR PUBLIC RELEASE
UNCLASSIFIED/tFOR PUBLIC RELEASE
commission proceedings and brought that fact to the Court's
attention at least three times. Gov't Opp'n to Mot. for
Reconsid. at 6 (citing Mr. Al-Nashiri's Opp'n filed May 27, 2011
at 2, 3, 8). More fundamentally, the government argues that this
Court's May 2012 decision governs the government's rights and
The government is correct. Indeed, in their initial filings in
this matter in 2011, many of the petitioners asked the Court to
reject the government's request
because
tribunals' - such as the Military Commissions - consideration
in other proceedings. The Court rejected
this claim, noting that "these arguments fall outside the scope
of petitioners' habeas review." Opinion 16. The government
argues - and Mr. Al-Nashiri does not dispute - that:
the Court to supervise
for military commission
, nor s re any reason for the Court to do so.
The Court's May 9, 2012 Order has no effect on
~ns the Government may have
lllllllllin military commission procee , or any
corresponding rights Petitioner might potentially assert in
such proceeding.
Gov't Opp'n at 7. The Court agrees with the government that it
does not have jurisdiction to order
in military commission proceedings. The only
issues this Court resolved - and, so far as the Court is aware,
the only issues it had the power to resolve - concerned the
6
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UNCLASSIFIED//FOR PUBLIC RELEASE
parties' rights and obligations with respect to
in proceedings in this court, namely, the petitions
for habeas corpus. As a necessary corollary, therefore, this
Court could only determine the government's rights
as relates to the habeas proceedings. The May
2012 Opinion does not impact the parties' rights or obligations
under any other law, or in any other proceedings. Accordingly,
Mr. Al-Nashiri's prosecution before the military commission does
not constitute grounds for reconsideration, stay, or
certification for interlocutory appeal.
Finally, the Court turns to Mr. Al-Nashiri's additional
request for relief,
Essentially, counsel request that they be
from their obligations under the Top Secret/Sensitive
Compartmented Information Orders entered by Judge Hogan in In re:
Guantanamo Bay Detainee Litig., Case 08-mc-442, which prohibit
petitioners' counsel from disclosing such information. See Doc.
1496. Petitioner's request is denied. Judge Hogan's protective
orders are not before this Court: the sole issue transferred to
the undersigned is the government's obligations under certain
orders in the habeas proceedings.
7
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UNCLASSIFIED//FOR PUBLIC RELEASE
Moreover, even if the protective orders were before this Court,
Mr. Al-Nashiri's counsel have provided no basis for overturning
the orders; as discussed above, this Court's May 2012 Opinion
does not govern the parties' rights or obligations in the
IV. CONCLUSION
For the foregoing reasons, Mr. Al-Nashiri has not met his
heavy burden to prevail on his motion for reconisderation, for
stay pending appeal, or for certification of interlocutory
appeal. Accordingly, it is hereby ORDERED that petitioner's
motion is DENIED.
Signed: Emmet G. Sullivan
United States District Judge
October 11, 2012
8
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|
01-03-2023
|
04-03-2014
|
https://www.courtlistener.com/api/rest/v3/opinions/4555629/
|
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
SAYLOR v. STATE
Cite as 306 Neb. 147
James Saylor, appellant,
v. State of Nebraska
et al., appellees.
___ N.W.2d ___
Filed June 19, 2020. No. S-18-794.
1. Summary Judgment: Appeal and Error. An appellate court will affirm
a lower court’s grant of summary judgment if the pleadings and admit-
ted evidence show that there is no genuine issue as to any material facts
or as to the ultimate inferences that may be drawn from those facts and
that the moving party is entitled to judgment as a matter of law.
2. ____: ____. In reviewing a summary judgment, an appellate court views
the evidence in the light most favorable to the party against whom the
judgment was granted and gives that party the benefit of all reasonable
inferences deducible from the evidence.
3. Tort Claims Act: Political Subdivisions Tort Claims Act: Appeal
and Error. Where the relevant facts are undisputed, whether the notice
requirements of the State Tort Claims Act or the Political Subdivisions
Tort Claims Act have been satisfied is a question of law, on which
an appellate court reaches a conclusion independent of the lower
court’s ruling.
4. Statutes: Appeal and Error. Statutory interpretation presents a ques-
tion of law, for which an appellate court has an obligation to reach
an independent conclusion irrespective of the decision made by the
court below.
5. Administrative Law. Agency regulations that are properly adopted and
filed with the Secretary of State have the effect of statutory law.
6. Political Subdivisions Tort Claims Act: Notice. In cases under the
Political Subdivisions Tort Claims Act, the substantial compliance doc-
trine applies when deciding whether the content of a claim satisfies the
presuit claim presentment requirements in Neb. Rev. Stat. § 13-905
(Reissue 2012).
7. ____: ____. Substantial compliance with the statutory provisions per-
taining to a claim’s content supplies the requisite and sufficient notice
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SAYLOR v. STATE
Cite as 306 Neb. 147
to a political subdivision in accordance with the Political Subdivisions
Tort Claims Act when the lack of compliance has caused no prejudice to
the political subdivision.
8. Tort Claims Act: Political Subdivisions Tort Claims Act. Generally,
provisions of the State Tort Claims Act should be construed in har-
mony with similar provisions under the Political Subdivisions Tort
Claims Act.
9. ____: ____. Under the State Tort Claims Act, when a question is raised
about whether the content of a presuit tort claim complied with the man-
ner in which the State Claims Board prescribed such claims to be filed,
the substantial compliance doctrine may be applied, just as it is applied
under the Political Subdivisions Tort Claims Act.
10. ____: ____. Under both the State Tort Claims Act and the Political
Subdivisions Tort Claims Act, application of the substantial compliance
doctrine is limited to the content of a presuit claim. The doctrine of sub-
stantial compliance does not apply when considering whether a presuit
tort claim has complied with statutory timing requirements or whether it
has been served on the recipient described in the statute.
11. Tort Claims Act: Political Subdivisions Tort Claims Act: Notice.
Under both the State Tort Claims Act and the Political Subdivisions
Tort Claims Act, application of the doctrine of substantial compliance is
confined to situations where the content of the tort claim nevertheless
satisfies the primary purpose of the presuit notice requirements by noti-
fying the state or political subdivision about possible tort liability for a
recent act or omission so it may investigate and make a decision whether
to pay or defend the claim.
Appeal from the District Court for Lancaster County:
Robert R. Otte, Judge. Reversed and remanded for further
proceedings.
Michael J. Wilson, of Berry Law Firm, for appellant.
Douglas J. Peterson, Attorney General, Scott R. Straus, and,
on brief, David A. Lopez, Deputy Solicitor General, for appel-
lee State of Nebraska.
Miller-Lerman, Cassel, Stacy, and Funke, JJ.
Stacy, J.
James Saylor, an inmate at the Nebraska Department of
Correctional Services (DCS), appeals from an order dismissing
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SAYLOR v. STATE
Cite as 306 Neb. 147
his lawsuit under the Nebraska State Tort Claims Act (STCA), 1
based on a finding that Saylor failed to comply with the pre-
suit filing requirements of the STCA. 2 Because we find Saylor
substantially complied with those requirements, we reverse,
and remand for further proceedings.
BACKGROUND
Tort claims against the State are governed by the STCA. 3
This case requires us to focus on the presuit administrative
requirements of the STCA. Before suit can be commenced
under the STCA, a claimant must present the claim in writing
to the Risk Manager for the State Claims Board within 2 years
after the claim accrued. 4 Pursuant to § 81-8,212, such claim
“shall be filed with the Risk Manager in the manner prescribed
by the State Claims Board.” Generally speaking, a claimant
cannot file suit under the STCA until the Risk Manager or
State Claims Board makes a final disposition of the claim. 5
However, if no final disposition of a claim has been made after
6 months, § 81-8,213 authorizes the claimant to withdraw the
claim and commence an action under the STCA. 6
We have described the presuit claim presentment require-
ment in § 81-8,212 and the final disposition requirement in
§ 81-8,213 as procedural conditions precedent to commenc-
ing a tort action against the State in district court, and not
as jurisdictional prerequisites for the adjudication of a tort
claim against the State. 7 Noncompliance with these procedural
1
Neb. Rev. Stat. §§ 81-8,209 to 81-8,235 (Reissue 2014 & Cum. Supp.
2018).
2
See § 81-8,212.
3
Komar v. State, 299 Neb. 301, 908 N.W.2d 610 (2018).
4
See, § 81-8,227(1); Komar, supra note 3.
5
§ 81-8,213; Komar, supra note 3.
6
Komar, supra note 3.
7
See Cole v. Isherwood, 264 Neb. 985, 653 N.W.2d 821 (2002) (superseded
by rule on other grounds as stated in Weeder v. Central Comm. College,
269 Neb. 114, 691 N.W.2d 508 (2005)).
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Cite as 306 Neb. 147
conditions precedent is considered an affirmative defense to
be raised by the State. 8 We apply the same rules to the presuit
claim presentment and final disposition procedures under the
Political Subdivisions Tort Claims Act (PSTCA). 9 Under both
the STCA and the PSTCA, the primary purpose of the presuit
claim presentment procedures is the same: to notify the state
or political subdivision about possible tort liability for a recent
act or omission, to provide an opportunity to investigate the
allegedly tortious conduct, and to enable the state or politi-
cal subdivision to make a decision whether to pay or defend
the claim. 10
Saylor Files Tort Claims
With Risk Manager
Between June 12, 2016, and February 23, 2017, Saylor filed
16 separate tort claims with the Risk Manager. 11 Pursuant to
§ 81-8,212 of the STCA, these claims had to “be filed with the
Risk Manager in the manner prescribed by the State Claims
Board.” Saylor filed all 16 of his claims using the standard
form provided by the Risk Manager. Each claim form con-
tained 18 fields requesting information regarding the claim.
Some fields were marked with an asterisk indicating it was
a “required” field. Further, each form contained a blank area
with the following instructions:
Provide detailed itemization of all known facts/
circumstances/damages leading to your claim. Identify
all property, places, and people involved. Include names,
8
Id.
9
Neb. Rev. Stat. §§ 13-901 to 13-928 (Reissue 2012 & Cum. Supp. 2018).
See, e.g., Geddes v. York County, 273 Neb. 271, 729 N.W.2d 661 (2007);
Big Crow v. City of Rushville, 266 Neb. 750, 669 N.W.2d 63 (2003);
Jessen v. Malhotra, 266 Neb. 393, 665 N.W.2d 586 (2003); Millman v.
County of Butler, 235 Neb. 915, 458 N.W.2d 207 (1990) (superseded by
rule on other grounds as stated in Weeder, supra note 7).
10
See, Cole, supra note 7; Chicago Lumber Co. v. School Dist. No. 71, 227
Neb. 355, 417 N.W.2d 757 (1988).
11
See § 81-8,212.
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addresses and phone numbers of witnesses, if any. The
information provided herein, along with the findings
of the investigating agency, will form the basis of
any decision.
In this section, most of Saylor’s claim forms described
instances in which he claimed the actions of DCS or its
employees either denied him timely medical care, aggravated
his existing post-traumatic stress disorder, or deprived him
of the use of devices that eased his pain. In a few claim
forms, Saylor alleged DCS staff deprived him of the use of
certain legal materials in his possession or interfered with
his ability to meet with his attorney. Saylor generally stated
that all these things caused him physical and emotional pain
and suffering.
On each form, Saylor provided information in all required
fields. One of the required fields, field No. 9, was titled “Total
Amount of Claim.” When completing field No. 9 on each
claim form, Saylor wrote “[t]o be proven” without specifying
a dollar amount.
The Risk Manager, in a series of letters, acknowledged
receiving all of Saylor’s claims. Those letters notified Saylor
of the claim numbers assigned to his claims and advised it
may take up to 6 months to receive final disposition. None
of the letters indicated the claim forms were incomplete, and
there is no evidence that additional information was requested
from Saylor during the Risk Manager’s investigation. The
parties generally agree the Risk Manager denied Saylor’s
tort claims in a series of letters dated June 15, 2017. Those
denial letters indicated that upon investigating the claims, “it
was determined that there is no evidence of staff misconduct
or negligence.”
Complaint and Motion for
Summary Judgment
On June 16, 2017, Saylor filed a complaint in district
court against the State of Nebraska, DCS, and 10 unnamed
DCS employees (the State). He thereafter filed an amended
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SAYLOR v. STATE
Cite as 306 Neb. 147
complaint, styled as 16 separate causes of action, each one
premised on a tort claim previously submitted to and denied
by the Risk Manager. The State moved to dismiss the amended
complaint for failure to state a claim. 12 The parties stipulated
to the receipt of evidence and agreed the motion should be
treated as one for summary judgment. 13
The State’s sole argument for summary judgment was
that Saylor failed to satisfy the claim presentment provi-
sions of § 81-8,212 with respect to his claimed damages.
The State asserted, summarized, that § 81-8,212 requires all
tort claims to be filed “in the manner prescribed by the State
Claims Board” and that regulations adopted by the State
Claims Board 14 require all claims to “contain all information
called for” on the claim form. 15 The State argued that Saylor’s
claims did not “contain all information called for” on the form
because he did not specify a dollar amount in field No. 9. In
remarks to the court, the State suggested there were other pos-
sible deficiencies in Saylor’s tort claims, but in the interest of
time, it had elected to seek dismissal only on the basis that no
dollar amount was specified in field No. 9. The district court
limited its analysis accordingly.
District Court Order
The district court agreed with the State that by not specify-
ing a dollar amount in field No. 9, Saylor had not filed his
claim in the manner prescribed by the State Claims Board, and
that therefore, he had not complied with § 81-8,212. The court
expressly rejected Saylor’s assertion that the State waived its
right to contest compliance with the claims procedure under
§ 81-8,212 by accepting his claim forms, sending him letters
acknowledging receipt and assigning claims numbers, and then
denying the claims on their merits.
12
See Neb. Ct. R. Pldg. § 6-1112(b)(6).
13
§ 6-1112(b).
14
See § 81-8,221.
15
Neb. Admin. Code, State Claims Board, rule No. 12 (1975).
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The district court granted the State’s motion for summary
judgment and dismissed Saylor’s amended complaint with
prejudice. Saylor timely appealed, and we moved the case to
our docket on our own motion.
ASSIGNMENTS OF ERROR
Saylor assigns, restated, that the district court erred in grant-
ing the State’s motion for summary judgment because (1)
Saylor’s tort claim forms provided the requested information
and substantially complied with the presuit requirements of the
STCA and (2) the State waived any challenge to compliance
with requested information on the tort claim forms.
STANDARD OF REVIEW
[1,2] An appellate court will affirm a lower court’s grant
of summary judgment if the pleadings and admitted evidence
show that there is no genuine issue as to any material facts or
as to the ultimate inferences that may be drawn from those
facts and that the moving party is entitled to judgment as a
matter of law. 16 In reviewing a summary judgment, an appel-
late court views the evidence in the light most favorable to the
party against whom the judgment was granted and gives that
party the benefit of all reasonable inferences deducible from
the evidence. 17
[3] Where the relevant facts are undisputed, whether the
notice requirements of the STCA or the PSTCA have been sat-
isfied is a question of law, on which an appellate court reaches
a conclusion independent of the lower court’s ruling. 18
[4] Statutory interpretation presents a question of law,
for which an appellate court has an obligation to reach an
16
JB & Assocs. v. Nebraska Cancer Coalition, 303 Neb. 855, 932 N.W.2d 71
(2019).
17
Id.
18
Estate of McElwee v. Omaha Transit Auth., 266 Neb. 317, 664 N.W.2d 461
(2003).
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Cite as 306 Neb. 147
independent conclusion irrespective of the decision made by
the court below. 19
ANALYSIS
The sole issue on appeal is whether the district court erred
in dismissing Saylor’s STCA action for failure to comply with
the presuit claim presentment requirement of § 81-8,212. As
stated, that statute requires, in relevant part, that “[a]ll tort
claims shall be filed with the Risk Manager in the manner pre-
scribed by the State Claims Board.” 20
The State Claims Board has adopted rules and regulations
that prescribe not only the manner of filing a tort claim, but
also the form and content of such claims. Assuming without
deciding that the statutory authority to prescribe the “manner”
of filing tort claims with the Risk Manager includes prescrib-
ing the form and content of such claims, we summarize, in
the next section, the pertinent regulations adopted by the State
Claims Board.
[5] A certified copy of those regulations was received into
evidence at the summary judgment hearing. It showed the
regulations were adopted in 1975 and have not been amended
since that time. It also showed the regulations have been signed
and approved by the Governor and the Attorney General, as
well as filed with the Secretary of State. We have held that
agency regulations that are properly adopted and filed with the
Secretary of State have the effect of statutory law. 21
State Claims Board Rules
and Regulations
Regarding the manner of filing a tort claim, the regulations
require it “shall be filed in triplicate with the Secretary of the
Board, State Capitol Building, State House Station, Lincoln,
19
JB & Assocs., supra note 16.
20
§ 81-8,212 (emphasis supplied).
21
Val-Pak of Omaha v. Department of Revenue, 249 Neb. 776, 545 N.W.2d
447 (1996).
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SAYLOR v. STATE
Cite as 306 Neb. 147
Nebraska, 68509.” 22 Regarding the form of filing a tort claim,
the regulations require that it “should be typewritten and upon
a form provided by the Board, but claims printed by hand
upon the Board’s form will be accepted if legible.” 23 And
regarding the content of a tort claim, the regulations require
that “[a]ll claims shall contain all information called for on
the Board’s ‘Claim for Injury or Damage’ form, including
the instructions printed on the back of the blue sheet of the
form set, and also such other information as is pertinent to
the claim.” 24
Also received into evidence was a certified copy of a docu-
ment titled “Standard Operating Procedures: How to File a
Tort Claim Against the State of Nebraska.” According to the
certificate, these operating procedures are available online
and were created by the State’s risk management division of
the Department of Administrative Services. Unlike properly
adopted administrative regulations, an agency’s operating pro-
cedures do not have the force and effect of law. 25
As relevant to the issues on appeal, the Risk Manager’s
operating procedures contain instructions regarding which
form to use when filing a tort claim, how to complete the
form, and how to file the form once completed. These instruc-
tions differ from the State Claims Board’s regulations in
several key respects. Specifically, the Risk Manager’s instruc-
tions do not reference the “Claim for Injury or Damage”
form required by the regulations, and instead, they direct
that a “Tort & Miscellaneous Claim Form” be completed.
The Risk Manager’s instructions do not direct that the claim
form be filed in triplicate with the secretary of the State
22
Neb. Admin Code, State Claims Board, rule No. 6 (1975).
23
Neb. Admin Code, State Claims Board, rule No. 7 (1975).
24
Rule No. 12, supra note 15.
25
See, e.g., Reed v. State, 272 Neb. 8, 717 N.W.2d 899 (2006) (in contrast to
agency regulations, agency manuals and guidelines lack force of law and
do not warrant deference).
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Claims Board as required by the regulations, but instead,
they direct that the form should be submitted electronically to
“as.riskmanagement@nebraska.gov” or mailed to the “Office
of Risk Management” at a specific post office box in Lincoln.
The Risk Manager’s operating procedures also provide that
“[o]nly fully completed and signed Tort Claim Forms will
be accepted by the office of Risk Management.” It is undis-
puted that all of Saylor’s tort claims were accepted by the
Risk Manager and that all were presented using the “Tort &
Miscellaneous Claim Form.”
Arguments of Parties
After Saylor commenced his tort action in district court, the
State sought dismissal based on a single affirmative defense:
that Saylor’s presuit tort claims were deficient because when
he answered field No. 9, asking for the “Total Amount of
Claim,” he did not provide a dollar amount, and instead stated
“[t]o be proven.” The State contends that because the answer
to field No. 9 did not reference a dollar amount, the forms
did not “contain all information called for,” 26 and that thus,
the claims were not filed “in the manner prescribed by the
State Claims Board” as required by § 81-8,212. The State also
asserts, as it did before the trial court, that the substantial com-
pliance doctrine which this court has applied when reviewing
the content of presuit claims under the PSTCA 27 should not
be applied under the STCA. The State argues, summarized,
that the substantial compliance doctrine is inconsistent with
the principle that “requirements of the [STCA] must be fol-
lowed strictly.” 28
26
Rule No. 12, supra note 15.
27
See, e.g., Jessen, supra note 9; West Omaha Inv. v. S.I.D. No. 48, 227 Neb.
785, 420 N.W.2d 291 (1988); Chicago Lumber Co., supra note 10.
28
See Jill B. & Travis B. v. State, 297 Neb. 57, 69, 899 N.W.2d 241, 252
(2017).
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Saylor contends that even though his answer to field No. 9
was not stated in dollars, he nevertheless provided “all infor-
mation called for” 29 on the standard form, and that he thus
substantially complied with the provisions of § 81-8,212. He
also argues it was impossible for him to strictly comply with
the “manner prescribed by the State Claims Board” for fil-
ing claims, pursuant to § 81-8,212, because the State Claims
Board’s rules and regulations are outdated and inconsistent
with the information and instructions on the only claim form
currently made available for filing tort claims—the “Tort &
Miscellaneous Claim Form.”
Substantial Compliance Doctrine
Under PSTCA
[6] In cases under the PSTCA, we have long applied the
substantial compliance doctrine when deciding whether the
content of a claim satisfied the statutory presuit claim present-
ment requirements. 30 Section 13-905 sets out the PSTCA’s pre-
suit claim presentment requirements, and it is the counterpart
to § 81-8,212 under the STCA.
Section 13-905 requires that “[a]ll [tort] claims shall be in
writing and shall set forth the time and place of the occur-
rence giving rise to the claim and such other facts pertinent
to the claim as are known to the claimant.” We pause here to
observe that when the Legislature prescribed the content of
presuit claims under the PSTCA, it identified some require-
ments that are specific and objective (like the time and place
of the occurrence) and some which are nonspecific and subjec-
tive (like “other facts pertinent to the claim as are known to
the claimant”). The challenge of determining compliance with
similar presuit notice requirements that predated the PSTCA
29
Rule No. 12, supra note 15.
30
See, e.g., Jessen, supra note 9; West Omaha Inv., supra note 27; Chicago
Lumber Co., supra note 10.
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led this court, more than a century ago, to adopt the substantial
compliance doctrine.
In City of Lincoln v. Pirner, 31 we applied the substantial
compliance doctrine to a statute requiring that before a tort
action could be commenced against the city, “‘it shall be nec-
essary that the party file in the office of the city clerk, within
three months from the time such right of action accrued, a
statement giving full name and the time, place, nature, cir-
cumstances and cause of the injury or damage complained
of.’” In that case, the plaintiff’s written claim stated that he
fell into a “coal-hole” in a city sidewalk, but it incorrectly
identified the block number. 32 We rejected the city’s argument
that this claim was deficient, reasoning that the presuit notice
requirement “should be liberally construed by the courts” and
that “if the description given and the inquiries suggested by it
will enable the agents and servants of the city to find the place
where the accident occurred, there is a substantial compliance
with the law.” 33
In Chicago Lumber Co. v. School Dist. No. 71, 34 we addressed
whether a letter complied with the presuit claim presentment
requirements of the PSTCA. At the time, those requirements
were codified at Neb. Rev. Stat. § 23-2404 (Reissue 1983) and
provided, as § 13-905 does now, that a claim must “set forth
the time and place of the occurrence giving rise to the claim
and such other facts pertinent to the claim as are known to
the claimant.”
The claim letter at issue did not reference a particular time
or place, but it complained that the plaintiff had provided the
school district with building materials and supplies in connec-
tion with a recent project to renovate a specific school. The
31
City of Lincoln v. Pirner, 59 Neb. 634, 639-40, 81 N.W. 846, 847 (1900)
(quoting Comp. Stat. ch. 13a, § 36 (1899)).
32
Pirner, supra note 31, 59 Neb. at 637, 81 N.W. at 846.
33
Id. at 640, 81 N.W. at 847.
34
Chicago Lumber Co., supra note 10.
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letter cited to statutes requiring the school district to obtain
a construction bond from the contractor. The letter further
stated that the district had failed to obtain such a bond in
connection with the particular renovation project and that the
plaintiff had suffered damages as a result.
[7] On appeal, the school district claimed this presuit
notice was insufficient under the PSTCA because it did not
state with precision the time and location of the occurrence
giving rise to the claim. 35 We disagreed, reasoning that the
language of § 23-2404 did not require a claimant to “state the
indicated information, circumstances, or facts with the full-
ness or precision required in a pleading.” 36 We explained “the
notice requirements for a claim filed pursuant to the [PSTCA]
are [to be] liberally construed so that one with a meritorious
claim may not be denied relief as the result of some techni-
cal noncompliance with the formal prescriptions of the act.” 37
And we said that “substantial compliance with the statutory
provisions pertaining to a claim’s content supplies the requi-
site and sufficient notice to a political subdivision in accord
ance with [the PSTCA], when the lack of compliance has
caused no prejudice to the political subdivision.” 38 Because
the claim letter identified the contractor to whom the plaintiff
had delivered the supplies and identified the particular school
renovation project at issue, we found the content of the claim
substantially complied with the time and place requirements
under the PSTCA.
In West Omaha Inv. v. S.I.D. No. 48, 39 we again addressed
whether the content of a letter complied with the presuit pre-
sentment requirements of the PSTCA. In a letter to the political
35
Id.
36
Id. at 368, 417 N.W.2d at 765.
37
Id. at 369, 417 N.W.2d at 766.
38
Id. (emphasis supplied).
39
West Omaha Inv., supra note 27.
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subdivision, the plaintiff claimed fire damage to specific prop-
erty on a specific date and alleged that a contributing cause of
the fire damage was the defendant’s negligence in failing to
furnish water with which to extinguish the fire. The political
subdivision argued this claim was insufficient because it did
not specify a dollar amount of damage. We held the contents
of the letter were sufficient, noting in part that the statutory
language did not “mandate that the claim contain the amount
of damages or loss.” 40 We also reasoned that the letter substan-
tially complied with the statute because it set forth the date,
location, and circumstances of the event giving rise to the
claim and alleged that property loss had occurred as a result of
the political subdivision’s negligence.
As these cases illustrate, we have long applied the sub-
stantial compliance doctrine when the question presented
was whether the content of a presuit tort claim satisfied the
statute and supplied the political subdivision with sufficient
notice to enable it to accomplish the primary goals of the
presuit claim presentment requirements under the PSTCA
and similar statutes. 41 But as other cases illustrate, we have
declined to apply the substantial compliance doctrine when the
question presented did not involve compliance with content-
based requirements.
We have refused to apply the substantial compliance doc-
trine when the presuit claim was not filed with the statutorily
authorized recipient, 42 reasoning that notice to the wrong
recipient may deprive a political subdivision of the opportunity
40
Id., 227 Neb. at 790, 420 N.W.2d at 295. Compare Jessen, supra note 9
(holding presuit presentment requirements of PSTCA not substantially met
because claim did not make any demand).
41
Accord, Loontjer v. Robinson, 266 Neb. 902, 914, 670 N.W.2d 301, 310
(2003) (Hendry, C.J., concurring) (“‘[s]ubstantial compliance with a statute
is not shown unless it is made to appear that the purpose of the statute is
shown to have been served. What constitutes substantial compliance with
a statute is a matter depending on the facts of each particular case’”).
42
See, e.g., Estate of McElwee, supra note 18; Willis v. City of Lincoln, 232
Neb. 533, 441 N.W.2d 846 (1989).
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to investigate and settle claims and thus must be given to a
person or entity specified in the statute. 43 Similarly, we have
refused to apply the substantial compliance doctrine to presuit
claims that did not comply with the statutory time limits under
the PSTCA, reasoning that, unlike the general requirements
regulating the content of presuit claims, the time limits are
specific and can be determined with precision. 44 And finally,
we have refused to apply the substantial compliance doctrine
when the content of the purported claim was so indefinite or
contingent in nature it could not fairly be characterized as pre-
senting a tort claim at all. 45
Substantial Compliance
Doctrine and STCA
[8] We have not yet had occasion to consider the propriety
of applying the substantial compliance doctrine to the content
of a presuit claim under the STCA. Generally, provisions of the
STCA should be construed in harmony with similar provisions
under the PSTCA. 46 We have expressly recognized the simi-
larity of the presuit content claim presentment requirements
under § 81-8,212 of the STCA and § 13-905 of the PSTCA, 47
and as discussed already, we have consistently applied the
substantial compliance doctrine to the content of such claims
under the PSTCA.
The State concedes the substantial compliance doctrine has
been applied for decades to similar presuit claims under the
43
Willis, supra note 42.
44
See, Big Crow, supra note 9; Schoemaker v. Metro. Utilities Dist., 245
Neb. 967, 515 N.W.2d 675 (1994).
45
See, e.g., Jessen, supra note 9 (letter to physician accusing malpractice
but not making any demand is not written tort claim under § 13-905);
Peterson v. Gering Irr. Dist., 219 Neb. 281, 363 N.W.2d 145 (1985) (letter
to irrigation district that made no actual demand but merely alerted district
to possible claim for damages that may occur is not claim).
46
Cole, supra note 7.
47
See id.
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PSTCA, but it asks us to find the doctrine is incompatible
with the STCA. As support for this argument, the State relies
exclusively on the principle, articulated in Jill B. & Travis B.
v. State, 48 that “because the State has given only conditional
consent to be sued and there is no absolute waiver of immu-
nity by the State, requirements of the [STCA] must be fol-
lowed strictly.” The State argues this principle is incompatible
with the doctrine of substantial compliance.
We agree that strictly following the requirements of the
STCA, and any statute that purports to waive the sovereign
immunity of the state or a political subdivision, 49 is a foun-
dational principle in our sovereign immunity jurisprudence.
But as we explain, we are not persuaded that this principle
is offended by applying the substantial compliance doctrine
to the content of presuit claims under either the PSTCA or
the STCA.
The principle from Jill B. & Travis B. on which the State
relies was not being applied to the content of presuit claims.
Instead, in Jill B & Travis B., we were considering the
applicability of exceptions to the State’s waiver of sovereign
immunity for tort claims arising out of misrepresentation and
deceit. 50 In that context, we emphasized the importance of
strictly construing statutes that are in derogation of sovereign
immunity. 51
The presuit claim procedures under the PSTCA and the
STCA are not statutes in derogation of sovereign immunity,
but, rather, they are administrative in nature, intended to give
the government notice of a recent tort claim so it can investi-
gate and, if appropriate, resolve the claim before suit is com-
menced. 52 Unlike statutes in derogation of sovereign immunity,
48
Jill B. & Travis B., supra note 28, 297 Neb. at 69, 899 N.W.2d at 251-52.
49
Rutledge v. City of Kimball, 304 Neb. 593, 935 N.W.2d 746 (2019).
50
See § 81-8,219(4).
51
Jill B. & Travis B., supra note 28.
52
See, e.g., Cole, supra note 7; Chicago Lumber Co., supra note 10.
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the presuit claim procedures do not identify the particular tort
claims for which the State has conditionally waived its sov-
ereign immunity and consented to suit, 53 nor do they identify
the tort claims the State has exempted from that waiver. 54
Instead, the presuit claim presentment requirements are proce-
dural conditions precedent to commencing a tort action against
the government in district court; they are not jurisdictional. 55
We see no incompatibility between our precedent that rules
of strict construction must be applied to statutes in derogation
of sovereign immunity and our precedent that the doctrine of
substantial compliance may be applied to statutes governing
the content of presuit notice requirements. 56 Indeed, given how
some of the content requirements are described in the statutes
and regulations, it is difficult to imagine how strict compliance
could be utilized by courts if we were to require it.
Applying the substantial compliance doctrine to the general
content provisions under the PSTCA was, in some respects, a
practical necessity because there was no principled way for a
court to determine whether a claimant had strictly complied
with the general requirement in § 13-905 that a claim include
“such other facts pertinent to the claim as are known to the
claimant.” Similarly, under the STCA, we question how a court
would go about determining whether a claimant has strictly
complied with the State Claims Board’s regulation requiring
that a claim include “such other information as is pertinent to
the claim.” 57
But as our cases make clear, our application of the substan-
tial compliance doctrine has been limited to a claim’s content,
53
See, e.g., §§ 81-8,215 and 81-8,215.01.
54
See, e.g., § 81-8,219.
55
See Cole, supra note 7.
56
Accord Franklin v. City of Omaha, 230 Neb. 598, 432 N.W.2d 808 (1988)
(acknowledging some states apply strict construction to all presuit claim
requirements under their tort claims acts, but Nebraska does not).
57
Rule No. 12, supra note 15.
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and the doctrine is not applied to all of the presuit notice
requirements. We still apply rules of strict construction when
considering whether a presuit tort claim has complied with
statutory timing requirements 58 and whether it has been served
on the recipient described in the statute. 59
We therefore disagree with the State that applying the sub-
stantial compliance doctrine when analyzing the content of
presuit tort claims under the PSTCA and the STCA is incon-
sistent with the well-settled principle that statutes in derogation
of sovereign immunity must be strictly construed or with the
principle that the “requirements of the [STCA] must be fol-
lowed strictly.” 60
[9-11] We hold that when a question is raised about whether
the content of a presuit tort claim complied with the manner
in which the State Claims Board prescribed such claims to
be filed, the substantial compliance doctrine may be applied
under the STCA, just as it is applied under the PSTCA. And,
consistent with what we have done under the PSTCA, the
doctrine is limited to the content of the presuit claim and does
not apply when such a claim is not filed with the statutorily
authorized recipient 61 or when it is not filed in compliance
with the statutory time limits. 62 Furthermore, application of
the doctrine of substantial compliance under both the PSTCA
and the STCA is confined to situations where the content of
the presuit claim nevertheless satisfied the primary purpose of
the presuit notice requirements by notifying the state or politi-
cal subdivision about possible tort liability for a recent act or
58
Big Crow, supra note 9; Schoemaker, supra note 44. See, also, State v.
Saylor, 304 Neb. 779, 936 N.W.2d 924 (2020) (strictly construing STCA
statute of limitation provisions).
59
Estate of McElwee, supra note 18; Willis, supra note 42.
60
Jill B. & Travis B., supra note 28, 297 Neb. at 69, 899 N.W.2d at 252.
61
See, e.g., Estate of McElwee, supra note 18; Willis, supra note 42.
62
See, e.g., Big Crow, supra note 9; Schoemaker, supra note 44.
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omission so it may investigate and make a decision whether to
pay or defend the claim. 63
Having concluded the substantial compliance doctrine can
apply to the content of claims under the STCA, we proceed
to analyze whether Saylor’s claim was properly dismissed for
failing to comply with the presuit presentment requirements
under the STCA.
Content of Saylor’s Claim Forms
Substantially Complied
As noted, the State argues that on all 16 of Saylor’s claim
forms, his response to field No. 9 was insufficient in that it
did not reference a dollar amount. Saylor responds that even
though his answers were not stated in dollars, they neverthe-
less contained “all information called for” 64 on the standard
form, and thus, they substantially complied with the provisions
of § 81-8,212. Saylor also contends that on the record in this
case, he could not have strictly complied with all the require-
ments of the State Claims Board.
We agree with Saylor that, in this case, there was no
way he could have strictly complied with the “manner pre-
scribed by the State Claims Board” 65 for filing his tort claims.
This is so for at least two reasons. First, the specific claim
form required by the regulations—the Board’s form entitled
“Claim for Injury or Damage”—is not the same form currently
being used by the Risk Manager—the “Tort & Miscellaneous
Claim Form.” Consequently, there was no way the content of
Saylor’s claims could have strictly complied with the regula-
tion’s requirement that it “contain all information called for
on the Board’s ‘Claim for Injury or Damage’ form.” 66 Second,
the requirement under the regulations that the completed
63
See, Cole, supra note 7; Chicago Lumber Co., supra note 10.
64
Rule No. 12, supra note 15.
65
§ 81-8,212.
66
Rule No. 12, supra note 15.
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claim form be filed in triplicate with the secretary of the State
Claims Board is not the same filing method as is required under
either § 81-8,212 (which requires filing the claim “with the
Risk Manager”) or under the Risk Manager’s standard operat-
ing procedures (which asks that the form be either emailed or
mailed to the Risk Manager). Consequently, although Saylor
filed his claims with the statutorily authorized recipient, there
was no way he could have strictly complied with the statutory
requirement that he do so “in the manner prescribed by the
State Claims Board.” 67 The State’s briefing ignored the dis-
parity between the Board’s adopted regulations and the Risk
Manager’s standard operating procedures, but we agree with
Saylor that, as a practical matter, this disparity prevents strict
compliance with the statutory and regulatory requirements
concerning the manner of filing a tort claim.
The question then is whether the content of Saylor’s
tort claims substantially complied with the requirements of
§ 81-8,212 and its related regulations prescribing the manner
of filing such claims. We conclude that as to the challenged
content, Saylor’s tort claims did substantially comply with the
requirements of § 81-8,212 and afforded the State sufficient
notice to satisfy the purpose of the presuit claim presentment
requirement. 68
The State challenges the sufficiency of Saylor’s responses
to only field No. 9 on the claim forms, which asks for the
“Total Amount of Claim.” The State insists that the term
“Amount” in this context necessarily requires the answer to
be stated in terms of a dollar amount. But the claim form
does not specify that a dollar amount must be provided,
and the regulation governing the content of claims does not
require that a dollar amount be provided. And to the extent
the instructions in the Risk Manager’s operating procedures
can fairly be understood to indicate that “Total Amount of
67
§ 81-8,212.
68
See Cole, supra note 7.
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Claim” should be stated in terms of dollars, those instructions
do not have the force and effect of law. On this record, we
find Saylor’s answer stating “[t]o be proven” substantially
complied with the question asked in field No. 9.
That is particularly so where, as here, the tort claims were
seeking general damages. The State’s singular focus on the
answer to field No. 9 paints an incomplete picture of the
State’s knowledge regarding the damages being sought, and it
ignores altogether the additional information Saylor provided
in the narrative sections of his claim forms, many of which
stated that the various acts and omissions of the State caused
him physical and emotional pain and suffering. So although
it is true that Saylor did not, in either field No. 9 or in his
narratives, place a specific dollar amount on his damages, his
failure to do so is nevertheless consistent with the nature of
his claims and the relief he sought.
Saylor’s tort claims were premised on assertions that the
State had denied him (1) timely and adequate medical care,
(2) the use of his personal property, and (3) access to his
attorney. His claims generally stated that this conduct caused
him physical and emotional pain and suffering. In light of the
nature of Saylor’s claims, his answer that the total amount of
his claim was “[t]o be proven” was entirely consistent with
how we treat allegations of general damages. 69 It would be an
odd result if we were to demand more specificity regarding
general damages in a presuit tort claim than is required in the
complaint once litigation is commenced.
Finally, we do not doubt the State’s assertion that know-
ing the specific dollar amount of a tort claim can make “a
significant difference in terms of how the claim is processed
and at what level.” 70 But given the nature of his claims and the
69
See, e.g., Neb. Ct. R. Pldg. § 6-1108(a) (“[i]f the recovery of money be
demanded, the amount of special damages shall be stated but the amount
of general damages shall not be stated . . .”).
70
Brief for appellee at 6.
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damages he seeks, we cannot find that Saylor’s answer to field
No. 9 caused the State any prejudice regarding its ability to
investigate his claims or decide whether to settle them before
litigation commenced. Indeed, the State’s frank admission
during oral argument that it would have sufficed for Saylor to
write any amount in field No. 9, even an “exorbitant” amount
such as “$20 million,” belies its argument that a particular
dollar amount was essential to the proper investigation and
processing of his claims. Although the Risk Manager certainly
has the prerogative to refuse to accept a tort claim form on the
basis that it does not contain all of the information called for,
that is not what happened here.
On this record, we reject the State’s contention that Saylor’s
presuit tort claims were deficient because they did not state
a specific dollar amount being sought as damages and that
therefore, they were not filed “in the manner prescribed by the
State Claims Board” as required by § 81-8,212. We instead
find, as a matter of law, that the content of Saylor’s presuit
tort claims in regard to damages substantially complied with
the presuit notice provisions of § 81-8,212.
Given this disposition, we do not reach Saylor’s argument
that the State waived his failure to comply with § 81-8,212 by
accepting the forms when submitted.
CONCLUSION
Because the content of Saylor’s tort claims substantially
complied with the requirements of § 81-8,212, the district
court erred in granting summary judgment in favor of the
State and dismissing his action. We therefore reverse the judg-
ment in favor of the State and remand the matter for further
proceedings.
Reversed and remanded for
further proceedings.
Heavican, C.J., and Papik and Freudenberg, JJ., not
participating.
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75 F. Supp. 188 (1947)
FLYING TIGER LINE, Inc., et al.
v.
ATCHISON, T. & S. F. RY. CO. et al.
Civ. No. 7788-PH.
District Court, S. D. California, Central Division.
December 29, 1947.
*189 Hoag & Mack and Richard H. Keating, all of Los Angeles, Cal., for plaintiffs.
Robert W. Walker and L. W. Butterfield, both of Los Angeles, Cal., for defendant Atchison, T. & S. F. Ry. Co.
Sheppard, Mullin, Richter & Balthis, James C. Sheppard, Jr., Cameron W. Cecil and Roy Littlejohn, all of Los Angeles, Cal., for defendant Santa Fe Skyway, Inc.
HALL, District Judge.
I indicated that I thought I would be ready for a decision on certain phases of the matters which had been argued, and I have come to a conclusion and have endeavored to rough out a memorandum here which I will try to follow.
The plaintiffs, by their complaint, seek to permanently enjoin and restrain the defendants from asserted violations of Section *190 401(a) of the Civil Aeronautics Act as amended, 49 U.S.C.A. § 481. Their motion for an injunction pendente lite, and their motion for the production of documents under the discovery provisions of the Federal Rules of Civil Procedure was noticed and set for hearing, along with the defendants' motions to dismiss, last Monday. But in accordance with the understanding of counsel, argument was confined to the motions to dismiss, at the conclusion of which on Wednesday the other motions were continued until today for argument and disposition.
After setting forth the corporate status of the various parties, the complaint in substance alleges that the plaintiffs are authorized common carriers of property only under Letters of Registration, duly issued by the Civil Aeronautics Board, pursuant to the Act and applicable regulations; that they are parties in interest, as that phrase is used in the Civil Aeronautics Act; that the defendant Santa Fe Skyway is operating as a common carrier of property only without authorization of any kind from the Civil Aeronautics Board and in violation of the Civil Aeronautics Act and the applicable regulations; that the defendant Santa Fe Skyway is a wholly owned subsidiary of the defendant Atchison, Topeka and Santa Fe Railway Company, and that both defendants are parties interested in or affected by the instant complaint.
Each of the defendants filed motions to dismiss. While they are stated in different language, the several grounds are as follows: improper joinder of plaintiffs; improper joinder of defendants; that neither of the plaintiffs are parties in interest; that the defendants are not common carriers, and that the complaint fails to show what, if any, injury or damage will result to the plaintiffs from the asserted conduct of the defendants.
The first two points may be disposed of without extended discussion.
Under Federal Rules of Civil Procedure, rules 18, 19, 20 and 21, 28 U.S.C.A. following section 723c, wide latitude is given in the joinder of parties, either permissively or by order of the Court, to the end that multiple litigation of similar or identical controversies may be avoided.
By the complaint each plaintiff has the same status and occupies the same relationships as the other towards both defendants. They seek the same relief. Their basis for relief arises out of the same series of occurrences, transactions and conduct of the defendants. The questions of law and fact are common to each of them. In short, if either of them are in court each of them is entitled to be in court in a separate action. There is thus no improper joinder of the plaintiffs.
It seems to me that under the rules, the allegation in the complaint that Skyway is the wholly owned subsidiary of the Railway company is sufficient to properly join them both as defendants. By such allegation Skyway is completely the creature and agent of the railway company, and a mere actor for it in the transactions complained of. But even if the railway company were not properly joined under the rule, the Civil Aeronautics Act, by Section 1009, 49 U.S.C.A. § 649, permits such joinder. It provides: "In any proceeding for the enforcement of the provisions of this chapter * * * begun originally in any court of the United States, it shall be lawful to include as parties * * * all persons interested in, or affected by the matter under consideration."
It needs no comment to show that if the relief asked by the plaintiffs were granted, the Railway would be "interested in" and "affected by" the judgment. I conclude that the railway is properly joined.
Before discussing the remaining points raised by the motions to dismiss, recourse must be had to the applicable provisions of the statute.
49 U.S.C.A. § 647(a) provides, in the applicable portions, as follows: "If any person violates any provision of this chapter, or any rule, regulation, requirement, or order thereunder, or any term, condition, or limitation of any certificate or permit issued under this chapter, the Board, its duly authorized agent, or, in the case of a violation of Section 481(a) of this chapter, any party in interest, may apply to the district court of the United States, for any district wherein such person carries on his business or wherein the violation occurred, for the enforcement of such provision of *191 this chapter, or of such rule, regulation, requirement, order, term, condition, or limitation; * * *."
That is the end of the quotation. The rest of it is not material except that the section provides for jurisdiction to enforce obedience. So that there is not required to be present in this type of case the usual other elements of jurisdiction, such as diversity of citizenship and the like, because this section confers jurisdiction if there is a violation of the chapter.
49 U.S.C.A. § 481(a) provides that: "No air carrier shall engage in any air transportation unless there is in force a certificate issued by the Board authorizing such air carrier to engage in such transportation: * * *."
And in Section 481(d) (1) it provides for the issuance of certificates of public convenience and necessity, and in Section 481 (d) (2) it provides authorization to the Board to issue limited certificates, that is, a certificate for limited periods.
49 U.S.C.A. § 401 defines the term "air carrier" to mean: "* * * any citizen of the United States who undertakes, whether directly or indirectly or by a lease or any other arrangement, to engage in air transportation: Provided, That the Board may by order relieve air carriers who are not directly engaged in the operation of aircraft in air transportation from the provisions of this chapter to the extent and for such periods as may be in the public interest."
Subdivision (10) of Section 401 defines "air transportation" as follows: "`Air transportation' means interstate, overseas, or foreign air transportation or the transportation of mail by aircraft."
Subdivision (21) of Section 401 provides that: "`Interstate air transportation', `overseas air transportation', and `foreign air transportation', respectively, mean the carriage by aircraft of persons or property as a common carrier for compensation or hire or the carriage of mail by aircraft, in commerce between, respectively ."
Section 421 provides for the creation of the Board, Section 402 is a declaration of policy of Congress, both of which are material in connection with the whole matter, and Section 425(a) defines the general powers and duties of the Board, and particularly in Subdivision (a) it states: "The Board is empowered to perform such acts, to conduct such investigations, to issue and amend such orders, and to make and amend such general or special rules, regulations, and procedure, pursuant to and consistent with the provisions of this chapter, as it shall deem necessary to carry out such provisions and to exercise and perform its powers and duties under this chapter."
Section 496, in Subdivisions (a) and (b) provide that:
"The Board may from time to time establish such just and reasonable classifications or groups of air carriers for the purposes of this subchapter as the nature of the services performed by such air carriers shall require; and such just and reasonable rules, and regulations, pursuant to and consistent with the provisions of this subchapter, to be observed by each such class or group, as the Board finds necessary in the public interest.
"(b) (1) The Board, from time to time and to the extent necessary, may (except as provided in paragraph (2) of this subsection) exempt from the requirements of this subchapter or any provision thereof, or any rule, regulation, term, condition, or limitation prescribed thereunder, any air carrier or class of air carriers, if it finds that the enforcement of this subchapter or such provision, or such rule, regulation, term, condition, or limitation is or would be an undue burden on such air carrier or class of air carriers by reason of the limited extent of, or unusual circumstances affecting, the operations of such air carrier or class of air carriers and is not in the public interest."
Subdivision (2) mentioned in that Subdivision (b) we are not concerned with here, as I read the matter.
The defendants contend that the plaintiffs are not parties in interest under Section 647(a), in that they do not possess a certificate of public convenience and necessity and that the Letters of Registration do not make them such.
In this connection they rely in part on Alaska Air Transport v. Alaska Airplane *192 Charter Co., D.C.Alaska 1947, 72 F. Supp. 609, and Hawaiian Airlines, Ltd., v. Trans-Pacific Airlines, Ltd., D.C.Hawaii 1947, 73 F. Supp. 68, and point out that in each of them the plaintiffs were certified air carriers. In neither of these cases was there an inclusive or exclusive definition of the term "party in interest." The Court merely held that the plaintiffs were each a party in interest, and properly so, it seems to me, without any discussion of that subject.
Section 647(a) of the Civil Aeronautics Act was apparently based on a similar provision first contained in the Interstate Commerce Act, 49 U.S.C.A. § 1(20), and later appearing in the Motor Carriers Act, 49 U.S.C.A. § 305(g).
In Detroit & M. R. Co. v. Boyne City, G. & A. Railroad Co., D.C.E.D.Mich. 1923, 286 F. 540, the plaintiff railroad, a certificated common carrier, and an individual across whose property the proposed extension line of the defendant would run, were each held to be a party in interest under the Interstate Commerce Act.
In Western Pacific, etc., v. Southern Pacific, 1931, 284 U.S. 47, 52 S. Ct. 56, 57, 76 L. Ed. 160, each of the parties were certificated common carriers under the Interstate Commerce Act on a general basis. But neither of the parties were certificated, nor had any approval by the Interstate Commerce Commission of the partial construction which was the basis of that litigation. The Court did not set as a standard the requirement that the plaintiff there must be a certified or was a certified common carrier to constitute a party in interest, but based its decision on the ground that the "unauthorized and therefore unlawful" undertaking by the defendant threatened the welfare of the plaintiff by directly and seriously affecting a transportation project already proposed to be undertaken by the plaintiff, and with which the proposed extension of the defendant would interfere. It must be noted that the suit was filed while an application by the plaintiff for certification of that project was pending before the Interstate Commerce Commission and before the Commission had acted on it one way or the other.
In Singer, etc. v. Union Pacific, 1940, 311 U.S. 295, 61 S. Ct. 254, 257, 85 L. Ed. 198, the plaintiff was the owner of a market whose business would be injured by the and I am quoting now from the decision "competition created by the construction and operation of the rival market, and not the construction or operation of the transportation facilities furnished to it by the defendant or by others engaged in the transportation business."
The Court held thus there was no direct loss, such as appeared in Detroit & M. R. Co. v. Boyne City, G. & A. R. Co., D.C., 286 F. 540, nor as apppeared in Western Pacific v. Southern Pacific, 284 U.S. 47, 52 S. Ct. 56, 76 L. Ed. 160, where the "circumstances disclosed a special interest * * * with probability of direct loss from what the defendant not another proposed to do." It also pointed out that the plaintiffs were "not in competition with the defendant," and were "not engaged in the transportation business." The Court quoted with approval its prior statement in the Western Pacific case, in part as follows: "It will suffice, we think, if the bill discloses that some definite legal right possessed by complainant is seriously threatened, or that the unauthorized and therefore, unlawful action of the defendant carrier may directly and adversely affect the complainant's welfare by bringing about some material change in the transportation situation." The Court held that the plaintiff market was thus not a party in interest and also held that the intervenor City of Kansas City was not a party in interest for the same reasons.
In Claiborne-Annapolis Ferry v. United States, 1932, 285 U.S. 382, 52 S. Ct. 440, 441, 76 L. Ed. 808, the Court held that a ferry line which alleged that another ferry proposed to be constructed by the Chesapeake Beach Railway Company would "interfere with and hamper the efforts of your petitioner to give adequate service on its present route," 20 miles further north, was a party in interest under the Interstate Commerce Act, as "the bill disclosed that the proposed and permitted action might directly and adversely affect its welfare by changing the transportation situation."
In Alton R. Co. v. United States, 1942, 315 U.S. 15, 62 S. Ct. 432, 435, 86 L. Ed. 586, 71 railroad companies joined in a suit *193 in the District Court to review an order of the Interstate Commerce Commission allowing a certificate of public convenience and necessity to one Fleming under the Motor Carriers Act. After pointing out that each of the plaintiff railways was a common carrier and a competitor of Fleming in some portion of the territory which Fleming was authorized to serve, the Court stated as follows: "They clearly have a stake as carriers in the transportation situation which the order of the Commission affected. They are competitors of Fleming for automobile traffic in territory served by him. They are transportation agencies directly affected by competition with the motor transport industry competition which prior to the Motor Carrier Act of 1935 had proved destructive. * * * They are members of the national transportation system which that Act was designed to coordinate. * * * Hence they are parties in interest within the meaning of" the Act.
From the foregoing it seems clear to me that the tests to be applied in determining who or what is a party in interest, as announced to date by the Supreme Court, are whether or not a party has a clear legal right which will be directly affected, such as the legal right to enjoyment of his real property, as did Henry in the case of Detroit & M. R. Co. v. Boyne City, G. & A. R. Co., or whether or not the parties stand in a competitive relationship to one another so that the threatened acts of a defendant will directly and seriously affect a plaintiff by changing the transportation situation. The test is not whether or not the plaintiff possesses a certificate of public convenience and necessity, although that may give a party a clear legal right in certain circumstances, which would be an additional reason for regarding them as a party in interest.
That such a certificate is not a necessary prerequisite to becoming a party in interest is indicated by the Supreme Court in the Western Pacific case, where the plaintiff's position as such was sustained as a party in interest, while their petition for a certificate to cover the disputed operation was pending and before it was acted upon.
In any event, the plaintiffs in this case possess authorization from the Civil Aeronautics Board for their operations in the form of a Letter of Registration issued by the Board prior to suit, under the authority of Title 49 U.S.C.A. § 496(a) and (b), and Regulation 292.5 issued by the Board pursuant to the Act. Such letters of Registration under Section 292.5 are, in essence, a license for a limited time; may not be transferred; may be suspended or revoked; authorize the carriage of property only; and subject the holder to all the provisions of the Act except those special provisions relating to the carriage of persons and mail.
That it was contemplated that the Board should have the power to issue other than only certificates of convenience and necessity is indicated not only by the provisions in Section 496 but as well by the provisions in Sections 425 authorizing the Board to issue and amend such orders as may be necessary to carry out and perform its duties under the chapter, and as well by the provision in Section 647(a) which gives the Board the power to bring a suit for violation of any certificate or permit issued under this chapter, and also by the general declaration of policy contained in Section 402, which is exceedingly broad in its declaration, having particular reference not only to Subdivision (d) of Section 402, "competition to the extent necessary to assure the sound development of an air transportation system properly adapted to the needs of foreign and domestic commerce of the United States, of the Postal Service and of the national defense," but as well by (e) and (f) and particularly the provision of Subdivision (e), "the regulation of air commerce in such manner so as to best promote its development and safety", and by the definitions contained in Section 401(3) of "`air commerce', means interstate, overseas, or foreign air commerce or the transportation of mail by aircraft or any operation or navigation of aircraft within the limits of any civil airway or any operation or navigation of aircraft which directly affects, or which may endanger safety in, interstate, overseas, or foreign air commerce," and by Subdivision (20) of Section 401 which defines "`interstate air commerce', `overseas air *194 commerce', and `foreign air commerce', respectively, mean the carriage by aircraft of persons or property for compensation or hire" I wish to call particular attention to the fact that there is no limitation here as to one being a common carrier " or the carriage of mail by aircraft, or the operation or navigation of aircraft in the conduct or furtherance of a business or vocation, in commerce between, respectively " and the usual definition of the places that it is between.
As indicated by the Civil Aeronautics Board in its introductory statement to Section 292.5 of the regulations, the procedure of issuing such Letters of Registration was made necessary in order to enable the development of the growing air cargo business in the United States pending the time when the Board administratively could hear and determine the various applications for certificates which were and are pending. By the Letters of Registration the plaintiffs become an authorized part of the national air transportation system of the nation, which was referred to in the Alton Railroad case as one of the tests, and which under Section 402 of Title 49 was the declared purpose of Congress to foster and regulate. And by the Letters of Registration the plaintiffs have a legal right to operate under its terms and limits as non-certificated cargo carriers.
In determining whether or not the parties stand in a competitive relationship to one another so that the alleged and threatened acts of the defendants will directly and seriously affect the plaintiffs by changing the transportation system, recourse must be had to the complaint. It is not over-revealing. Were it standing alone it is doubtful if it would state a claim upon which relief could be granted, not only in connection with the allegations of being a party in interest, but also as to the allegations concerning great and irreparable injury. But I am bound by the ruling of the Circuit Court of Appeals of of this circuit in Bowles v. Glick, 9 Cir., 146 F.2d 566, and the Courts have approved on motions to dismiss the use of affidavits to supply facts not appearing in the complaint. (San Francisco Lodge, etc., v. Forrestal, D.C., 58 F. Supp. 466; Central Mexico, etc., v. Munch, 2 Cir., 116 F.2d 85; National War Labor Board v. Montgomery, etc., 79 U.S.App.D.C. 200, 144 F.2d 528.) But of more importance in this connection is the fact that the defendants' motions to dismiss both of them state that they will be based not only on the complaint but also on the affidavits of North, Thomas and Lupton, as well as all other papers, documents and records on file in the action at the time the motion is heard. Numerous other affidavits have been filed not only by the defendants but the plaintiffs as well.
Without any attempt to summarize the many things covered, it appears from the complaint and the affidavits on file, so far as is material to the question of who or what is a party in interest, and the threatened injury to plaintiffs, that the plaintiffs and the defendants do occupy a competitive relationship towards each other for the transportation of cargo by air in much of the same territory.
It also appears that the defendant Skyway has taken some 30-odd of the customers of the plaintiffs and is soliciting actively the business of transportation of cargo by air. While the plaintiffs assert that these customers were taken by reduced rates, this feature is denied, but it is not denied in the affidavits of the defendants that such customers were formerly the customers of the plaintiffs and are now the customers of the defendants.
It also appears that the defendants have neither a certificate of public convenience and necessity nor Letters of Registration as "irregular air carriers" under Regulation 291.1, nor Letters of Registration as "non-certified cargo carriers" under Regulation 292.5. And it further appears that an application for Letters of Registration under Regulation 292.5, filed by the defendants, was denied by the Civil Aeronautics Board by its order on December 5, 1947, after the suit was filed but before the hearing on the motions to dismiss. Under the Rules of Practice of the Civil Aeronautics Board such order of denial is final under Regulation 285.11(d), even though an application for a rehearing is filed and may be pending.
*195 These things are sufficient, in my judgment, to bring the plaintiffs within the tests of being a party in interest as laid down by the above cases under Section 647(a) of Title 49, and to be a sufficient showing of injury so as to warrant the denial of the motions to dismiss on those grounds.
Turning now to the question as to whether or not the allegations of the complaint that the defendant is a common carrier are sufficient.
By Paragraphs VI and IX of the complaint the plaintiffs directly allege that defendant Skyway is and for one year has been engaged as a common carrier of property only. The defendants assert that this is not enough, that is, that such an allegation is not enough, and by their affidavits deny it and allege that they are engaged only as cargo contract carriers and that contract carriers are exempt from those provisions of the Civil Aeronautics Act requiring certification, and the like.
It is not necessary, in ascertaining the sufficiency of the complaint in this connection, to have recourse to the affidavits and counter-affidavits, and counter-affidavits to the counter-affidavits, on the subject of whether or not the defendant Skyway is a common carrier; nor is it necessary to review the numerous decisions cited and argued which deal with the various phases of conduct which may constitute one a common carrier. Whether one is a common carrier or not is, in my judgment, an ultimate fact, and it has been so held in Haynes v. MacFarlane, 207 Cal. 529, 279 P. 436, which ultimate fact may be alleged directly and simply in a complaint, and which is to be proved by evidence of the defendants' conduct just as any other ultimate fact. So many things enter into a determination of whether or not one is a common carrier that to require them to be set forth in a complaint would not serve the purpose of the Federal Rules of Civil Procedure to require that a complaint be "a short and plain statement of the claim showing that the pleader in entitled to relief." Rule 8(a), Federal Rules of Civil Procedure. I conclude that the allegations of the complaint are sufficient in that respect against a motion to dismiss.
Several other matters deserve mention.
It was suggested in argument that the plaintiffs have a remedy at law and that they may, under Section 642 of Title 49, complain to the Board of the alleged unlawful conduct of the defendants. It was also suggested that this was an administrative remedy which had not been exhausted. Neither of the points are, in my judgment, well taken. The remedy is in the alternative as allowed by the Act. Any person can file a complaint with the Board, or any person who is a party in interest may, if he desires, file an action in court under the limitations of Section 647(a) of Title 49. In fact, I see nothing in the Act which would prevent the taking of both procedures at the same time if a person thought it necessary.
Nor do I wish what I have said to be an indication that I agree with the plaintiffs' contention that the statute is penal as to the provisions invoked here by a private person and not the Board. What I have said concerning the determination of the tests of what is a party in interest is not intended to convey the notion that any less than I have indicated must appear from either the complaint or the affidavits which may be properly considered.
The motions to dismiss are denied.
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747 F. Supp. 539 (1990)
Ricky Lee McGOWN, Plaintiff,
v.
UNITED STATES of America, et al., Defendants.
No. N 89-0103 C.
United States District Court, E.D. Missouri, N.D.
October 5, 1990.
*540 Richard A. Mueller, Edwin G. Harvey, John G. Medler, Jr., Coburn, Croft & Putzell, St. Louis, Mo., for plaintiff.
Joseph B. Moore, Asst. U.S. Atty., St. Louis, Mo., Craig D. Galli, U.S. Dept. of Justice, Land & Natural Resources Div., Environmental Defense Section, Washington, D.C., William H. Ward, Office of Regional Counsel, U.S. EPA Region VII, Kansas City, Kan., Angela Bennett, Office of Counsel, U.S. Army Corps of Engineers/Kansas City Dist., Kansas City, Mo., for defendants.
MEMORANDUM
GUNN, District Judge.
This matter is before the Court on defendants' motion to dismiss plaintiff's complaint.
Plaintiff, Ricky Lee McGown (McGown), brings the instant action seeking a declaration that a cease and desist order issued by the United States Army Corps of Engineers (the Corps) to enjoin alleged violations of section 404 of the Clean Water Act (the CWA), 33 U.S.C. § 1344, is void. Plaintiff has named the United States of America; John H. Atkinson, III, District Engineer of the Corps; and William K. Reilly, Administrator, United States Environmental Protection Agency (EPA) as defendants and seeks equitable relief, including a declaration that plaintiff's property does not contain "wetlands" as defined by the CWA and regulations implemented thereunder. Plaintiff also seeks a permanent injunction restraining the Corps and the EPA from asserting jurisdiction under the CWA.
Defendants have moved to dismiss plaintiff's complaint raising several alternative basis for dismissal. Defendants assert that plaintiff's complaint fails to allege a sufficient basis for the exercise of federal subject matter jurisdiction; that the cease and desist order is not subject to judicial review until the EPA or the Corps institutes an enforcement action; that the doctrine of primary jurisdiction vests the EPA and the Corps with the initial responsibility for resolving the issues raised in plaintiff's complaint.
The following facts are pertinent to the resolution of these issues. Plaintiff owns approximately 255 acres of land along the descending right bank of Mussel Fork Creek in Section 26, Township 56 North, Range 18 west in Chariton County, Missouri. On December 3, 1987, a neighboring farmer reported to the Corps that McGown was constructing an agricultural levee on his property. Because McGown had not obtained a permit pursuant to section 404 of the CWA authorizing construction of the *541 levee, the Corps conducted a site investigation of the property. On the basis of this investigation, the Corps determined that the proposed levee site was a "wetland" within the meaning of the CWA and regulations enacted thereunder.
Corps field investigators assisted McGown in completing an application for an "after-the-fact" permit pursuant to 33 C.F.R. § 326.3(e). At the time the application was prepared, McGown had raised 1,550 lineal feet of an existing three-foot agricultural levee to a height of six to eight feet. He sought permission to construct an additional 6,650 feet of new levee at a height of six to eight feet. (One hundred feet of the new levee had already been completed.) On February 17, 1988, the Corps received the signed permit application for processing. In a February 24, 1988 letter to McGown acknowledging receipt of the application, the Corps directed him to do no further work prior to receiving authorization.
During the course of the lengthy and rancorous permit process, the Corps and the EPA performed several site inspections of McGown's property, and McGown met with various representatives of state and federal agencies. Toward the conclusion of the process, the Corps learned that McGown had resumed construction of the levee.
On July 11, 1988, the Corps sent McGown a letter directing him to cease and desist the unauthorized construction. The letter also contained a proposed after-the-fact permit. The proposed permit authorized construction of the levee along an alignment similar, but not identical to, that proposed in the permit application. The proposed permit authorized the construction of a levee protecting McGown's existing cropped areas, but restricted the conversion to cropland of the remaining forested wetland without a section 404 permit.
McGown refused to accept the July 11, 1988 certified letter containing the cease and desist order and the proposed permit. The Corps delivered this letter through his attorney. Counsel for the Corps discussed the terms of the proposed permit with McGown's attorney, advising him that special condition "f," disallowed clearing of the treed areas landward of the levee by bulldozer or similar heavy machinery, and that such clearing in a wetland required a Corps permit.
McGown refused to sign the permit. On September 13, 1988, the Corps delivered a letter to Mrs. McGown, in McGown's absence. The letter directed McGown to remove the levee and restore the area to preconstruction conditions within 30 days.
On October 7, 1988, the Corps sought permission from McGown to enter his property to inspect the levee construction and land clearing. McGown refused to allow the Corps to enter his property. Pursuant to Section 308 of the CWA, the EPA provided inspection credentials to Corps personnel who conducted an inspection of the property on December 12 and 13, 1988. The Corps determined that the removal and restoration activities ordered by the September 13, 1988 letter had not taken place. In addition, the Corps found that many acres of trees and brush had been cleared, and that additional dredged or fill material had been discharged. The Corp furnished McGown's attorney with a copy of the site inspection report.
On March 10, 1989, the Corps wrote to McGown advising him that discharges of stockpiled material had been found during the December site inspection, and once again directing him to do no work without authorization from the Corps. McGown did not claim the certified letter, and it was sent to his attorney. In August, 1989, the Corps determined from a reconnaissance flight that most of the trees remaining in the floodplain had been cleared. On August 13, 1989 McGown filed the instant suit.
Because the issue is dispositive, the Court will first address the availability of pre-enforcement judicial review under the CWA. Defendants contend that such review is not available in this case and, in support of this position, cite the only two federal appellate decisions which have addressed the issue. See Southern Pines Assoc. v. United States, 912 F.2d 713 (4th *542 Cir.1990); Hoffman Group, Inc. v. E.P.A., 902 F.2d 567 (7th Cir.1990). Plaintiff asserts that the CWA does not preclude such review and that jurisdiction is proper under Abbott Laboratories v. Gardner, 387 U.S. 136, 87 S. Ct. 1507, 18 L. Ed. 2d 681 (1967).
In Southern Pines Associates v. United States and Hoffman Group, Inc. v. E.P.A., the respective Courts of Appeal held that Congress, in enacting the CWA, "... impliedly preclude[d] judicial review of EPA compliance orders except in an enforcement proceeding." Southern Pines Associates, at 715 (quoting Hoffman Group, Inc. v. E.P.A., 902 F.2d 567 (7th Cir.1990)). This Court's examination of the statutory language, "the structure of the statutory scheme, its objectives, its legislative history, and the nature of the administrative action involved" also persuades it that Congress did not intend to allow for pre-enforcement judicial review under the CWA of orders such as the cease and desist order at issue here. Id. at 715 (quoting Block v. Cummunity Nutrition Institute, 467 U.S. 340, 345, 104 S. Ct. 2450, 2454, 81 L. Ed. 2d 270 (1984) (citations omitted)). The Court agrees with the Fourth Circuit's conclusion that "Congress intended to allow the EPA to act to address environmental problems quickly and without becoming immediately entangled in litigation." Id. at 716.
Plaintiff asserts that the present case is factually distinguishable from Southern Pines Assoc. v. United States and Hoffman Group, Inc. v. E.P.A. Specifically, plaintiff contends that, unlike the plaintiffs in the other two cases, he endeavored to reach an informal resolution of the dispute within the administrative framework. Although laudable, McGown's efforts to reach a negotiated resolution of this dispute do not alter the rationale underlying the bar to pre-enforcement judicial review Congress' concern that the EPA and the Corps should be able to act promptly and without becoming "immediately entangled" in litigation. See Southern Pines Assoc., at 716; Hoffman Group, Inc., 902 F.2d at 569. Therefore, this factual difference does not render McGown's claim distinguishable from the claims of the plaintiffs in Southern Pines or Hoffman Group.
Plaintiff also contends that his claim is distinguishable from that of the plaintiff in Southern Pines because the existence, not merely the extent, of agency jurisdiction is at issue in this case. This argument was rejected in Southern Pines and must be rejected in this case as well. See Southern Pines, at 717. This Court agrees with the Fourth Circuit's assertion that "[a]llowing the parties to challenge the existence of the EPA's jurisdiction would delay the agency's response in the same manner as litigation contesting the extent of EPA's jurisdiction." Id. (emphasis supplied). In addition, the Court notes that allowing the landowner to litigate the existence of agency jurisdiction prior to the institution of enforcement proceedings would frustrate agency efforts to reach an amicable resolution of disputes concerning compliance with the CWA.
Plaintiff further asserts that this case is not governed by the rulings in Southern Pines and Hoffman Group because the EPA issued compliance orders in those cases but has not done so in this case. The Court finds this distinction immaterial because the rulings in Southern Pines and Hoffman Group were not predicated on the issuance of compliance orders.
Those cases, in particular Southern Pines, stand for the proposition that pre-enforcement judicial review is not available under the CWA. In Southern Pines, the Fourth Circuit held that Congress intended to preclude judicial review "prior to [the institution of] an enforcement action or [the] imposition of penalties...." Southern Pines, at 717. After examining the statutory structure of the CWA, the courts in both cases concluded that a land owner may not obtain judicial review of agency action until the agency exercises one of its two statutory enforcement mechanisms: the assessment of civil penalties or the institution of an enforcement action. Southern Pines, at 716-17; Hoffman Group, 902 F.2d at 569. Although the agency may choose to issue a compliance order before undertaking enforcement, it need not do so. See Southern Pines, at *543 715-16 & n. 3. Although the agencies had chosen to issue compliance orders in the other cases, there is no indication that the absence of a compliance order would have altered the Courts' determinations.
Finally, plaintiff contends that the 1989 Federal Manual for Delineation of Wetlands and other manuals upon which defendants allegedly relied to assert jurisdiction over plaintiff's property are void because they were not promulgated in accordance with the procedures set forth in the Administrative Procedure Act, 5 U.S.C. § 553. The Court concludes that this argument is beyond the scope of the pleadings in this case. Apart from a single, cursory reference to this argument in a footnote to one of plaintiff's briefs, there is no other mention of this argument in the voluminous record now before the Court. See Plaintiff's Memorandum in Response to Defendants' Reply to Plaintiff's Memorandum in Opposition to Defendants' Motion to Dismiss at 13 n. 9. Plaintiff's complaint does not contain allegations which would support such a claim. In addition, plaintiff has not sought leave to amend his complaint to include this legal theory.
With respect to the additional constitutional infirmities asserted by plaintiff, the Court finds that these arguments do not preclude dismissal because plaintiff will have an opportunity to raise them in the context of an enforcement proceeding. See Southern Pines, at 717 (citing Hoffman Group, Inc. v. E.P.A., 902 F.2d 567, 570 (7th Cir.1990)).
On the basis of the foregoing, the Court concludes that plaintiff's complaint shall be dismissed for lack of subject matter jurisdiction.
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This action was instituted against the Meyer-Schmid Grocer Company, a corporation, and Robert C. Rolf, defendants, to recover for personal injuries alleged to have been inflicted upon the plaintiff by a servant of the defendants in charge of a team and wagon belonging to them. At the close of plaintiff's case the court gave two peremptory instructions, one to the effect that under the pleadings and evidence plaintiff could not recover against the defendant Meyer-Schmid Grocer Company, and the other to the effect that under the pleadings and evidence plaintiff could not recover against the defendant Rolf. It appears that the plaintiff did not except to the giving of the peremptory instruction as to the Meyer-Schmid Grocer Company, but did except to the giving of the instructions as to the defendant Rolf; and plaintiff thereupon took an involuntary nonsuit as to defendant Rolf. Thereafter plaintiff moved to set aside the nonsuit, and, upon this motion being overruled, appealed to this court.
The petition charges that on November 2, 1915, an agent and servant of defendants was driving a two-horse team and wagon, belonging to defendants, across the "McKinley Bridge" behind a wagon which plaintiff *Page 513
was driving; that defendants' said servant unlawfully demanded that plaintiff drive his wagon to the side to permit defendants' team and wagon to pass, "and unlawfully, willfully and maliciously then and there made an assault upon plaintiff, for the purpose of forcing plaintiff to get his wagon to the side so that said two-horse team and wagon could pass, and then and there did strike and beat plaintiff in and about the face, head and body, and thereby injured and damaged plaintiff's right arm and left leg. And it is averred that as a result of his said injuries plaintiff has become incapacitated from doing work and will be so incapacitated in the future to his damage in the sum of $5000. It is further alleged that said acts of defendants' servant were done maliciously and without legal justification, entitling plaintiff to recover exemplary damages therefor. Judgment is prayed for $5000 actual and $2500 punitive damages.
The evidence shows that the team and "two-horse wagon" mentioned in the petition were the property of the defendant Rolf, though the wagon had upon it the name "Meyer-Schmid Grocer Company;" and that one Harry Becker, who was upon the wagon, was an employee of defendant Rolf. The goods in the wagon belonged to the Meyer-Schmid Grocer Company, but were being hauled under a contract between that company and the defendant Rolf, upon whom alone plaintiff now seeks to fasten liability for the assault upon him.
When the controversy arose resulting in the assault, plaintiff was driving his wagon westwardly across the McKinley Bridge, i.e. approaching the City of St. Louis, and the said wagon of defendant Rolf — whom we shall hereafter term the defendant — was being driven across the bridge in the same direction. It appears that though Harry Becker was a servant of defendant in charge of the latter's team and wagon, he was not driving the team when the trouble arose, but was seated in the bed of the wagon mending a whip while his brother, *Page 514
John Becker, sat upon the driver's seat and held the reins. John Becker, it is said, was not in defendant's employ, but got upon the wagon, at Harry Becker's invitation, to ride across the river. At the time of the assault plaintiff's wagon was in front of defendant's team and wagon, and both wagons, and other traffic upon the bridge as well, had been stopped by a herd of cattle which was being driven westwardly across the bridge.
The testimony of plaintiff's witnesses is set out in appellant's abstract in narrative form. Respondent, however, has filed an additional abstract setting forth some testimony of the witnesses not included, it is said, in appellant's abstract. We shall undertake to set out the substance of the testimony of the witnesses, so far as here material, as it appears in the two abstracts filed.
The testimony of plaintiff's first witness, one Cannefax, as shown by appellant's abstract, is substantially as follows:
The witness testified that he was with a friend in an automobile on the McKinley Bridge at the time mentioned, driving toward St. Louis, and that they could not proceed forward on account of a large herd of cattle in front of them; that the two wagons, viz., plaintiff's one-horse wagon and defendant's two-horse wagon, were in front of the automobile in which the witness was riding, and were on the north side of the bridge, on the "approach" on the St. Louis side of the river, plaintiff's wagon being immediately in front of defendant's wagon; that the men in defendant's wagon "hollered to plaintiff to get out of the way, plaintiff's wagon at the time being as close to the outside railing as it could be;" that plaintiff told them he could not get out of the way because of the cattle in front of him; that "they then drove the tongue of their wagon against plaintiff's wagon and tried to shove his wagon into the cattle, whereupon plaintiff said he could not get out of the way and could not run over the cattle;" that thereupon *Page 515
one of these men jumped off the wagon, grabbed plaintiff by the neck and tried to pull him from the wagon, and "then went and got a stake from the Meyer-Schmid Grocer wagon and they both ran plaintiff off of his wagon;" that there were two men on the rear wagon, one of whom was driving, the other being seated in the bed of the wagon, and that the one who first got off of the wagon called to the other, saying: "Come on lets get the Jew son of a ____." The witness stated that the "other fellow" then got out of his two-horse wagon, bringing a wagon stake with him, and struck plaintiff, "who at the time was hollering and begging and pleading, and who jumped off his wagon and ran into the herd of cattle." And the witness said that he saw "both men of the Meyer-Schmid Grocer wagon strike plaintiff."
On cross-examination the witness reiterated that he saw both men from the Meyer-Schmid Grocer wagon strike plaintiff.
Further testimony of this witness set out in respondent's abstract is to the effect that he "saw the driver of the stake wagon go up and take the Jew by the neck, and that the Jew hit him with a whip; that the man who had been driving the stake wagon went back and got a stake and called to the other man, who was lying down in the back of the stake wagon, as stated above; that "at this place upon the bridge there was room for two wagons to pass, the plaintiff's wagon being close to the north side of the bridge."
The testimony of plaintiff, as a witness in his own behalf, as preserved in appellant's abstract, shows that plaintiff lived in Venice, Illinois, where he was engaged in the scrap iron and junk business; that on the day mentioned he was driving his wagon to St. Louis across the McKinley bridge from Venice, Illinois, when he came upon a herd of cattle, proceeding in the same direction, on account of which he could not pass, the cattle taking up the entire width of the bridge. He testified that he had his wagon on the north side of the bridge, "against the railing," that a stake wagon drove *Page 516
up behind him and pushed into his wagon, and that "He was holding his horse so that it would not fall;" that he turned about and said to the men in the wagon behind him: "What are you trying to do, you tried to kill my horse;" that the men in the rear wagon then pushed plaintiff's wagon "Down the approach to Broadway where the coal chute is located," and that when plaintiff again asked what they were trying to do, "They said: `Well, I will show you what I am trying to do,' and they got off of the wagon; one came to the right hand side and the other on the left hand side of the plaintiff and that each of them had stakes from the wagon."
Plaintiff's further testimony on direct-examination, as it appeared in appellant's abstract, is as follows:
"That one fellow put one foot on the wagon and one on the shaft and took hold of the side and tried to pull plaintiff off his wagon, and that when plaintiff resisted he went and got a stake from the wagon in the rear, with which he struck plaintiff upon the right hand and left foot and that each of the men from the rear wagon struck him."
On cross-examination plaintiff said that the man who came from the seat of the wagon was the one who tried to pull him from his wagon; that when this man first came up he "tried to pull the plaintiff by the leg and get into the wagon and pull plaintiff off;" that the man then returned to the rear wagon and got a stake, and then came to plaintiff's wagon and struck plaintiff; that "the other man from the rear wagon was on the other side and he also hit plaintiff with a stake." Plaintiff said that he was sure that two men from the rear wagon hit him.
According to the testimony contained in respondent's abstract plaintiff, in testifying, stated that the man who was driving the stake wagon was the only one who had a stake. And he admitted when his deposition was taken that he stated that the other man on the stake wagon did not strike him, "only grabbing hold *Page 517
of his lines;" that when he got to the office at the west end of the bridge the man who had struck him with a stake was gone; that a police officer arrested the other man on the stake wagon, and that he did not appear and prosecute the case.
The testimony of Harry Becker, as preserved in appellant's abstract, may be summarized as follows:
The witness testified that he was in the employ of the defendant Rolf "driving a wagon for the Meyer-Schmid Grocer Company and for Bob Rolf," the latter paying him. He said that about four o'clock in the afternoon of the day mentioned he was returning to St. Louis from Granite City, Illinois, where he had delivered groceries, and that as soon as he completed the deliveries he was to turn into the stable. He testified that he took the team and wagon from the stable of defendant Rolf and was told by the latter to go to the Meyer-Schmid Grocer Company and get his load; that Rolf was his boss. He said that on the return trip he permitted his brother to ride with him across the bridge. He then testified that his brother "got off the wagon and then ran back to the stake wagon and got a stake off the wagon and went after the plaintiff and poked him;" that the witness held the lines while his brother was away from the wagon, "both the first and second times." He further testified that he had been sitting in the bed of the wagon while his brother sat upon the seat and drove, and that when his brother left the wagon and committed the assault upon plaintiff the witness took the reins; that when his brother returned and got a stake from the wagon, the witness did not stop him from striking plaintiff.
According to the testimony of this witness as contained in respondent's abstract, he stated that his brother was not employed by defendant, nor did the latter know that his brother was driving the wagon; that the witness took a seat in the wagon bed to fix a whip which was out of repair; that he had no authority from defendant to allow his brother or anyone else to *Page 518
drive the wagon; that when he first noticed the controversy between plaintiff and his brother, plaintiff drove his wagon past the stake wagon and "cut in so close to the stake wagon" that his brother called to Blumenfeld, and "there were curse words passed between them;" that plaintiff thereupon threw something at his brother and the latter left the stake wagon and went to plaintiff's wagon, and when the witness looked he saw plaintiff hitting his brother with a whip; that his brother then returned to the stake wagon, got a stake and returned to plaintiff's wagon. The witness stated that he took no part in the fight, except to take the stake way from his brother; that the trouble took place "off the Rolf's wagon and at least fifty feet from it."
One Zott, who was in the automobile with the witness Cannefax, after referring to the fact that the herd of cattle blocked the bridge, said: "There was a rag wagon against the cattle, and back of them was a grocery wagon;" that the grocery wagon was "driven up against the rag wagon and they could go no further;" that "they were driving the grocery wagon into the tail gate of the rag wagon, trying to push it further, and he could not go any further, and as they got near the west approach of the bridge one of the fellows jumped off the seat, ran to the Jew and tried to pull him off his wagon;" that "when the Jew resisted him, this fellow went back to his wagon and got a stake and some one of them hit him with the stake and he got off the wagon and ran to the entrance of the bridge." And he said that both men from the rear wagon had stakes, "one on one side and one on the other." On cross-examination he said that he did not know which one of these men hit plaintiff with the stake.
According to respondent's abstract, this witness further stated that plaintiff used his whip upon the man who first ran to his wagon and tried to pull him off.
In passing upon the demurrer to the evidence, the question arises as to whether the acts of John Becker, as shown by the evidence, may be legally attributed to *Page 519
the defendant. As appears above, all of the evidence touching the matter is to the effect that John Becker was not in defendant's employ, but was upon the wagon at the invitation of his brother, Harry Becker, who was defendant's servant in charge of the team and wagon. And there is affirmative testimony that Harry Becker had no authority to allow others to drive the team.
In Mangan v. Foley, 33 Mo. App. 250, the defendant was the owner of a team and wagon which was regularly driven by one Crouch, his servant. On the day in question Crouch did not drive the team and wagon, as was his custom, but engaged one Ramsey to drive in his stead; and while Ramsey was thus in charge of the team and wagon, plaintiffs' child was run over by the wagon and killed. It was held that the defendant was not liable for Ramsey's negligence. In the course of the opinion this court said:
"Crouch is employed to drive this team; instead of doing that which he is employed to do, he does something which he is not employed to do, i.e., hires another man, without the consent or approval of the master, to drive the team, the accident occurs, the master cannot be said to have caused the accident by his servant, and is therefore not responsible.
"In this case the evidence does not show any authority, either special or general, by which we can infer even the right of Crouch to employ Ramsey to drive the team. In no way is the master connected with the employment of Ramsey, all the evidence being the other way, and upon what principle a master can be held for the act of a servant, whom he has not employed and to whose employment he has not even consented, is quite difficult to comprehend."
In James v. Muehlebach, 34 Mo. App. 512, defendants' servant, the driver of their wagon, called one Ehrhard to assist him in doing the master's work, and while unloading some empty barrels from the wagon Ehrhard struck and injured the plaintiff. It was held that the master should not be held liable unless the *Page 520
servant's negligence combined with the particular negligence of the third party in causing the injury. After reviewing a number of authorities touching the matter, the court, through ELLISON, J., said:
"Our conclusion is that Ehrhard was not the servant of the defendants, and if they are to be held liable in this case it must be through the act of the driver. If, therefore, the driver himself negligently threw the barrel, the case is settled at once against the defendants; but if Ehrhard threw it, it must appear that he was directed or requested to do so by the driver. Such direction or request need not, necessarily, be by express words directed to Ehrhard by the driver, but the act must be shown to have been done for the driver and with his assent and by reason of his wish or desire."
A judgment for the plaintiff was affirmed, the court saying that the evidence clearly tended to show that the driver was present and that Ehrhard threw off the barrels for the driver, under the latter's immediate supervision.
In the recent case of Slothower v. Clark, 191 Mo. App. 105, 179 S.W. 55, decided by the Kansas City Court of Appeals, the action was one for personal injuries received in a collision between a hearse on which plaintiff was riding and an automobile belonging to the defendant. It appears that defendant's automobile was in charge of his chauffeur, and it was held that the chauffeur was about the master's business at the time, but in fact the chauffeur had permitted a friend, one Sweeney, to ride with him and, at Sweeney's solicitation, had exchanged seats with the latter, letting him take charge of the steering wheel, and Sweeney was driving when the collision occurred. Touching this matter the court said:
"But it is insisted, that at the time of the collision, Sweeney was running the machine, the chauffeur, as we have seen, having permitted him to take charge of the steering wheel, he sitting beside him. At the trial the parties seemed to consider it was necessary to show *Page 521
that at the time of the collision, the chauffeur was driving. In view of the evidence we think that is a matter of no consequence or importance. When the chauffeur let Sweeny take the wheel, he remaining on the seat beside him, Sweeny's acts, practically speaking, were his, and his act in turning the wheel over to Sweeny was the act of defendant, for it was done in the defendant's service and while carrying out the chauffeur's employment. It was not the act of a servant abandoning his master's service and turning it over to another.
"`In James v. Muehlebach, 34 Mo. App. 512, 518, we said that, `If a servant in charge of his master's carriage should take a stranger with him into the driver's seat, hand him the reins and tell him to drive at a run and an injury happen in consequence of the speed, the master must answer for the damage, for the negligence was that of his servant.
"`But not so if the servant had quit the carriage and substituted the strange in charge, generally, in his stead, without the knowledge of the master. For if an injury happen it is not the act of the servant for whom only is the master liable. In Booth v. Mister, 7 Carr. P. 66, a servant in charge of his master's cart gave over the reins to one in the cart with him, an injury happening in consequence of the negligent driving, the master was made to respond.
"`Lord Abinger said, `As the defendant's Servant was in the cart, I think that the reins being held by another man makes no difference. It was the same as if the servant had held them himself.' That statement of the law is supported by Hollidge v. Duncan, 199 Mass. 121; Thyssen v. Ice Co., 134 Iowa 749; Campbell v. Trimble, 75 Tex. 270, 272; Wellman v. Miner,44 N.Y.S. 417; Bamberg v. International Ry., 103 N.Y.S. 297; Kilroy v. D. H.C. Co., 121 N.Y. 22; Bk. of Cal. v. W.U. Tel. Co., 52 Cal. 280, 290."
In Allen v. Quercus Lumber Co., 190 Mo. App. 399, 177 S.W. 753, the cases of Mangan v. Foley and James v. Muehlebach, supra, were considered by the Springfield *Page 522
Court of Appeals, but were held to be inapplicable to the facts involved; the opinion in the Allen case proceeding on the ground that the servant, who was a foreman, had authority to engage others to assist in carrying on the master's business.
In Wertherman v. Handy, 198 S.W. 459, the Springfield Court of Appeals again considered the question as to whether the master is bound by the negligence of one to whom the servant has undertaken to delegate the duties imposed upon the latter. In the course of the opinion the court said:
"There is considerable conflict in the authorities on this question of the liability of the master for the negligent act of a third party whom the servant without authority calls to his assistance, or substitutes for himself in the performance of the master's business. Whenever the facts show combined or commingled acts of negligence on the part of the servant and such third party, or are such that the servant can be said to be a party to, or to have participated in the negligent act of the third party, then there is liability. This is true because the law holds every person who is guilty of negligence in any way contributing to the injury responsible therefor, and the master, being liable for the negligent acts of one of the parties, is responsible for all. His responsibility, however, is bottomed on the negligence of his servant. [James v. Muehlebach, 34 Mo. App. 512, 518, and cases there cited; Hollidge v. Duncan, 199 Mass. 121, 85, N.E. 186, 17 L.R.A. (N.S.) 982; Board of Trade Building Corporation v. Cralle,109 Va. 246, 63 S.E. 995, 22 L.R.A. (N.S.) 297, 132 Am St. Rep. 917.]"
After citing and quoting from Mangan v. Foley, supra, James v. Muehlebach, supra, and Slothower v. Clark, supra, and after reference to other cases as well, the court held that the defendant was not there liable for the act of the third person, on the ground, however, that the defendant's agent, one Ellis, had undertaken to turn over entirely to a third person the duties entrusted *Page 523
to him and was not present when the negligence of such third person took place.
Touching the question as to the liability of the master for the negligent or tortious act of one whom his servant has undertaken, without authority, to substitute in the servant's place in the performance of the duties of the master, there is considerable conflict of authority. The view taken by the court in the Slothower case, supra, appears to be sound. In this connection see: Thyssen v. Davenport Ice, etc., Co., 134 Iowa 749, 13 L.R.A. (N.S.) 572; Geiss v. Twin City Taxicab Co., 120 Minn. 368, 45 L.R.A. (N.S.) 382; Osteen v. South Carolina Cotton Oil Co., ___ S.C. ___, L.R.A. 1916B, 629; Hollidge v. Duncan,199 Mass. 121. In accordance with this view, if a servant in charge of his master's wagon takes a stranger into the wagon with him and turns the reins over to the latter, the servant remaining in the wagon, the master is liable for the negligence of such driver, upon the theory that the servant remains in charge of the team and wagon, and the negligence of the person driving is in fact the servant's negligence for which the master must respond.
In the instant case it is not sought to hold the defendant for negligence on the part of John Becker with respect to the driving of the vehicle, but to fasten liability upon the defendant for a willful tort committed upon plaintiff by both John Becker and defendant's servant Harry Becker. And if the evidence can be said to show, prima facie, that this assault was committed by them jointly, in the furtherance of defendant's business, namely, in respect to the progress of the wagon, then, we think, the case made was one for the jury.
It may be stated as established doctrine, well supported by the authorities, that the master is not liable for the acts of a stranger, where the servant, without authority so to do, delegates a particular duty in its entirety to such stranger and is not present and does not in any *Page 524
manner cooperate with the latter in the performance thereof. [See Geiss v. Twin City Taxicab Co., supra, 45 L.R.A. (N.S.) 384 and note.] In some cases the master has been held liable upon the theory that it is negligence on the part of the servant to delegate the preformance of a duty resting upon him to another, without authority to do so, or that it is the duty of the servant to prevent intermeddling with his duties by others when known to him [In this connection see Dimmitt v. Railroad,40 Mo. App. 654.] The courts have frequently placed the liability of the master upon the ground that a stranger, to whom the servant has delegated his duties, is a mere instrumentality by which the servant performs such duties, and that therefore the stranger's negligence is that of the servant. This doctrine appears to be sound enough when applied to a case where the servant does not delegate his duties in the entirety, but remains present and the duties performed by the stranger are performed under the eye and the immediate supervision of the servant, as in the Muehlebach and Slothower cases, supra.
In the case before us the testimony of Harry Becker shows that he saw and knew all that took place from the very beginning of the controversy resulting in the assault upon plaintiff. According to his testimony — which is the only testimony which tends to so show — the controversy began when plaintiff drove his wagon by the defendant's wagon and got in front of the latter. And it can be readily inferred from the evidence as a whole that Harry Becker observed all that took place thereafter, and sanctioned it. The evidence is that the "fellows" in defendant's wagon shouted to plaintiff to get out of the way, and that "they" drove the tongue of "their" wagon against the rear of plaintiff's wagon and pushed plaintiff's wagon and team forward until his horse was pushed against the cattle, obviously in an effort to drive defendant's wagon forward. While the reins were held by John Becker, we think that the evidence warrants *Page 525
the conclusion that the driving forward of the wagon in this manner, and all that was done in an apparent effort to get defendant's wagon on its way, was done under the immediate supervision of Harry Becker with his approval, and constituted in law his acts as the servant of the defendant. This phase of the evidence, we think, has an important bearing upon the contention of respondent's learned counsel that even though both John Becker and Harry Becker be regarded as servants of the defendant, nevertheless the assault upon plaintiff was not done in the scope of their employment while furthering the defendant's business.
In Whiteaker v. Railroad, 252 Mo. 438, l.c. 457, 160 S.W. 1009, it is said, by LAMM, J.: "It would be mere ostentatious display of industry and learning to analyze the fourscore cases appellants cite to sustain their contention that the corporate defendant is not liable on the facts of this record, nor the twoscore that respondent cites to sustain his contention contra. This is so because, at bottom, the doctrine of all well-reasoned cases is that, under the maxim respondeat superior, the master must answer in certain circumstances for the wrongful act of his servant precisely as the principal must answer for those of his agent. The general rule is that the maxim, respondeat, applies when the servant, in the line of his employment about his master's business, seeks to accomplish his master's purposes and in doing so acts negligently, or willfully and maliciously, or even contrary to his orders or criminally, in some instances. That general rule is hornbook doctrine and beyond dispute."
And in that connection the following cases are cited; Garretzen v. Duenckel, 50 Mo. 104; Perkins v. Railroad, 55 Mo. 201; Farber v. Railroad, 116 Mo. 81; Brill v. Eddy, 115 Mo. 596; Haehl v. Railroad, 119 Mo. 325; Farber v. Railroad, 139 Mo. 272. In Garretzen v. Duenckel, supra, after a consideration of many other authorities, the learned author quotes approvingly from the opinion in Howe v. Newark, 12 Allen 40, as follows:
"In an action of tort in the nature of an action on the case, the master is not responsible if the wrong *Page 526
done by the servant is done without his authority, and not for the purpose of executing his orders or doing his work. So that if the servant, wholly for a purpose of his own, disregarding the objects for which he is employed, and not intending by his act to execute it, does an injury to another not within the scope of his employment, the master is not liable. But if the act be done in the execution of the authority given him by his master, and for the purpose of performing what the master has directed, the master will be responsible, whether the wrong done be occasioned by negligence or by a wanton or reckless purpose to accomplish the master's business in an unlawful manner." [See also: Hellriegel v. Dunham et al., 192 Mo. App. 43, 179 S.S.W. 763; Shamp v. Lambert, 142 Mo. App. 567, 121 S.W. 770; Bouillon v. Laclede Gas Light Co., 148 Mo. App. 467, 129 S.W. 401; Fellhauer v. Q.O. K.C.R. Co., 191 Mo. App. 137, 177 S.W. 795; Maniaca v. Interurban Express, 266 Mo. 633, 182 S.W. 981.]
In the instant case when the evidence is viewed in the light most favorable to plaintiff, we think it cannot be well doubted that the evidence supports the conclusion that this difficulty arose over an effort on the part of John Becker and Harry Becker to further defendant's business which Harry Becker had in charge, namely, the driving forward of defendant's wagon across the bridge; and that the assault upon plaintiff, which, according to the evidence touching the matter, except the testimony of Harry Becker, was joined in by both John Becker and Harry Becker, arose out of and was an integral part of such effort to further defendant's business, viewing the evidence in the light most favorable to plaintiff, it appears that after the effort had been made to shove plaintiff's wagon forward or out of the way, and when defendant's wagon could proceed no further, John Becker left his seat upon the wagon and ran to plaintiff's wagon attempting to pull plaintiff therefrom; that not succeeding in this he returned to defendant's wagon, called upon his brother *Page 527
Harry Becker to join him, and both took stakes from defendant's wagon and ran to plaintiff's wagon, "one on one side and one on the other," and assaulted plaintiff. Under this evidence, and in the light of what we have said above, we think that the proof shows prima-facie responsibility on the part of the defendant for such assault.
Respondent says that "plaintiff's testimony as to how the fight started is unbelieveable," and calls attention to the fact that plaintiff's wagon was against the north railing of the bridge, and that one witness said that "at this place upon the bridge there was room for two wagons to pass." And it is said that therefore there was no occasion for pushing plaintiff's wagon forward. This argument, however, avails nothing upon a consideration of the ruling on the demurrer to the evidence. The evidence warrants the conclusion that the men upon defendant's wagon, for some reason, sought to go forward by trying to get plaintiff's wagon forward or out of the way. Whether they thought they might pass the cattle by driving as far to the right as possible, or were compelled to remain behind plaintiff's wagon because of other traffic upon the bridge, we cannot tell from this record, nor do we deem it of importance in passing upon the ruling below upon the demurrer.
If any doubt may be entertained as to defendant's responsibility for injuries inflicted upon plaintiff by John Becker, we may add that participation in the assault by Harry Becker, while acting within the scope of his employment, in the furtherance of the business of defendant for which he was employed, being in law defendant's assault, suffices to render defendant liable for the whole of the injuries inflicted upon plaintiff. [See Schafer v. Ostman, 172 Mo. App. 602, 155 S.W. 1102].
We think that plaintiff made a prima-facie case, and it follows that the judgment should be reversed and the cause remanded. It is so ordered. Becker, J., concurs. *Page 528
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01-03-2023
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07-05-2016
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https://www.courtlistener.com/api/rest/v3/opinions/2659762/
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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
________________________________
)
DOUGLAS JONES, )
)
Plaintiff, )
)
v. ) Civil Action No. 13-814 (EGS)
)
OTTENBERG’S BAKERS, INC., )
ET AL. )
)
Defendants. )
________________________________)
MEMORANDUM OPINION
Plaintiff Douglas Jones brings this action alleging racial
discrimination in violation of Title VII of the Civil Rights Act
of 1964 (“Title VII”), 42 U.S.C. § 2000e et seq., against
Ottenberg’s Bakers (“Ottenberg’s”) and its president, Ray
Ottenberg. Plaintiff initially brought this lawsuit in the
Superior Court for the District of Columbia. On May 31, 2013,
the defendants removed the case to this Court pursuant to 28
U.S.C. § 1441. Pending before the Court is defendants’ motion to
dismiss. Upon consideration of the motion, the response and
reply thereto, the applicable law, and the entire record, the
Court GRANTS IN PART AND DENIES IN PART defendants’ motion.
I. BACKGROUND
Plaintiff, an African-American male, was employed by
defendants as a delivery driver for twelve years. First Amended
Compl. ¶¶ 4, 7.1 His complaint centers on the events of July 11,
2008, when his parked delivery truck was hit from behind by
another vehicle, throwing him to the floor of the truck and
injuring him. Id. ¶¶ 9-10. After the accident, Mr. Jones
returned to the defendants’ bakery, where he was ordered to take
a drug test pursuant to a company policy which mandates that
employees who were “involved in an accident and may have
caused/contributed to the accident” take a drug test. Id. ¶¶ 11,
12. Mr. Jones alleges that he “did not in any way cause or
contribute to the accident, as his vehicle was legally parked
and he was inside the truck, in the back, preparing for his next
delivery.” Id. ¶ 13. Accordingly, Mr. Jones alleges that
defendants violated their own policy by ordering that he take a
drug test. Id. ¶ 23. Plaintiff was ultimately terminated from
employment for failing to take the drug test. Id. ¶¶ 14, 24.
Mr. Jones alleges that the defendants’ decisions to
“instruct Plaintiff to take a drug test,” and “terminate
Plaintiff’s employment” for failing to do so, were racially
motivated. Id. ¶¶ 28-30. He also alleges that “Caucasian drivers
who had been involved in accidents” were treated differently.
Id. ¶ 15; see also id. ¶ 19.
1
Citations to “First Amended Compl.” refer to plaintiff’s
amended complaint. Dkt. No. 1-1 at 3-9. Citations to “Compl.”
refer to plaintiff’s initial complaint. Dkt. No. 1-1 at 102-07.
2
On July 22, 2008, Mr. Jones filed a formal complaint of
discrimination with the Equal Employment Opportunity Commission
(“EEOC”), alleging that Ottenberg’s discriminated against him
based on his race, national origin, and age, and that
Ottenberg’s retaliated against him for engaging in protected
activity. Pl.’s EEOC Compl., Dkt. No. 1-1 at 45. Plaintiff
supplemented his EEOC complaint on September 4, 2008. See Pl.’s
Amended EEOC Compl., Dkt. No. 1-1 at 48-60.
The EEOC referred Mr. Jones’s complaint to the District of
Columbia Office of Human Rights. On August 8, 2012, that office
found no probable cause to support plaintiff’s claims. See
Letter of Determination, Dkt. No. 1-1 at 77. The EEOC adopted
that determination on November 26, 2012 and issued a Dismissal
and Notice of Rights, which informed Mr. Jones of the relevant
deadlines for filing a civil action:
You may file a lawsuit against the respondent(s) under
federal law based on this charge in federal or state court.
Your lawsuit must be filed WITHIN 90 DAYS of your receipt
of this notice; or your right to sue based on this charge
will be lost.
EEOC Notice, Dkt. No. 1-1 at 27 (emphasis in original).
The record does not reflect when Mr. Jones received the
Notice, but on January 17, 2013, 52 days after the EEOC issued
it, he filed this lawsuit in the Superior Court for the District
of Columbia, asserting that defendants terminated him because of
his race in violation of the District of Columbia Human Rights
3
Act. Compl. ¶¶ 1, 17-32. Defendants moved to dismiss that
complaint on March 29, 2013. Defs.’ Mot. to Dismiss Initial
Compl., Dkt. No. 1-1 at 30-33. In opposing that motion,
plaintiff argued that the complaint pled “a cause of action
under Title VII” but that “Plaintiff’s counsel only cited to the
D.C. Human Rights Act.” Pl.’s Opp. to Defs.’ Mot. to Dismiss
Initial Compl., Dkt. No. 1-1, at 18. The Superior Court
permitted plaintiff to amend his complaint. Order, Dkt. No. 1-1
at 11-12.
On May 9, 2013, 164 days after the EEOC issued its Notice,
plaintiff filed his First Amended Complaint, which is identical
to his initial complaint, except that all references to the D.C.
Human Rights Act were replaced with references to Title VII.
Compare Compl., with First Amended Compl. On May 31, 2013,
defendants removed the case to this Court pursuant to 28 U.S.C.
§ 1441. Defendants moved to dismiss on June 6, 2013. That motion
is ripe for the Court’s decision.
II. STANDARD OF REVIEW
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
defendant fair notice of what the . . . claim is and the grounds
4
upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,
555 (2007) (quotation marks omitted; alteration in original).
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).2
The Court must construe the complaint liberally in plaintiff’s
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). However, the Court
2
In their briefs, the parties refer to four documents that were
neither attached to nor referenced in the plaintiff’s complaint,
but were transmitted to this Court as part of the Superior Court
record. See Defs.’ Mem. in Supp. of Mot. to Dismiss First
Amended Compl. (“Mem.”), Dkt. No. 4-1 at 1-4; Pl.’s Opp. to Mot.
to Dismiss First Amended Compl. (“Opp.”), Dkt. No. 5 at 2-3.
Defendants ask the Court to consider these documents without
converting the motion into one for summary judgment. See Mem. at
2 n.2. The Court will consider plaintiff’s EEOC Complaint,
plaintiff’s Amended EEOC Complaint, the August 8, 2012 Letter of
Determination, and the November 26, 2012 EEOC Notice in
evaluating the timeliness of plaintiff’s claims, which it may do
without converting the motion into one for summary judgment.
See, e.g., Burkes v. Holder, __ F. Supp. 2d __, 2013 WL 3685016,
at *3 n.3 (D.D.C. July 15, 2013); Ward v. D.C. Dep’t of Youth
Rehab. Servs., 768 F. Supp. 2d 117, 119 & n.2 (D.D.C. 2011). The
Court declines to consider these documents in evaluating
defendants’ other arguments.
5
must not accept plaintiff’s 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).
III. ANALYSIS
Defendants raise three arguments in their motion to
dismiss: (1) that plaintiff’s Title VII claim was not timely
filed, (2) that plaintiff fails to state a claim against Ray
Ottenberg, and (3) that plaintiff fails to state a Title VII
discrimination claim.3 The Court addresses each argument in turn.
A. Plaintiff’s Complaint Was Timely Filed.
Upon receiving the November 26, 2012 EEOC Notice, plaintiff
had 90 days within which to file a civil action to challenge the
EEOC decision. See 42 U.S.C. § 2000e-5(f)(1) (employees must
file a civil action “within 90 days after the giving of such
notice [of final action]”). When, as here, the record does not
reflect when the notice was received, courts generally assume
3
Defendants state in a footnote that “[t]here is also an issue
of defective service of process in this case. Although the
process server’s affidavit states that he served the original
summons and complaint on Ray Ottenberg on February 6, 2013, Mr.
Ottenberg was not personally served.” Mem. at 3 n.3. Because
defendants provide no citation or support for this argument, the
Court declines to consider it. See Hutchins v. District of
Columbia, 188 F.3d 531, 539 n.3 (D.C. Cir. 1999) (“We need not
consider cursory arguments made only in a footnote.”).
6
that it was received either three or five business days after it
was issued. See Ruiz v. Vilsack, 763 F. Supp. 2d 168, 171
(D.D.C. 2011). It is irrelevant which presumption the Court
applies here. Plaintiff’s initial complaint was filed well
within the deadline on January 17, 2013. Plaintiff’s amended
complaint, which raised his Title VII claim for the first time,
was filed well outside the deadline on May 9, 2013. Accordingly,
if plaintiff’s claim is measured with respect to the initial
complaint, it is timely; if not, it is untimely.
Plaintiff argues that his Title VII claim relates back to
the date on which the initial complaint was filed because the
amended complaint alleged identical facts and merely “add[ed]
the appropriate citations to Title VII.” Opp. at 6. Defendants
contend that plaintiff’s amended complaint “inserted a
completely new federal claim, effectively filing a new complaint
under the guise of an amendment.” Defs.’ Reply (“Reply”), Dkt.
No. 6 at 1. The Court agrees with the plaintiff.
Under Federal Rule of Civil Procedure 15(c), an amended
pleading “relates back to the date of the original pleading when
. . . the amendment asserts a claim or defense that arose out of
the conduct, transaction, or occurrence set out—or attempted to
be set out—in the original pleading.” In this Circuit, claims
added to amended complaints are not permitted to relate back to
initial complaints if such claims “attempt[] to introduce a new
7
legal theory based on facts different from those underlying the
timely claims.” United States v. Hicks, 283 F.3d 380, 388 (D.C.
Cir. 2002); see also Caudle v. Thomason, 942 F. Supp. 635, 641-
42 (D.D.C. 1996) (rejecting relation back of amended complaint
seeking damages for slander, when the original complaint sought
damages only for libel and made no reference to slanderous
remarks by an individual implicated in the amended complaint).
Where an amended complaint is logically related to, and
seeks recovery for, the same acts alleged in the initial
complaint, however, this Court permits the later complaint to
relate back to the earlier. See, e.g., Palmer v. Homecomings
Fin. LLC, 677 F. Supp. 2d 233, 240 (D.D.C. 2010) (claim that
lender discriminated against plaintiff during loan refinancing
related back to earlier claims that lender otherwise mistreated
plaintiff in connection with the refinancing because plaintiff
“essentially ascribed a different motive to the same set of
facts”); Kun v. Finnegan, Henderson, Farabow, Garrett & Dunner,
949 F. Supp. 13, 16-18 (D.D.C. 1996) (employee’s poorly drafted
amended complaint related back to earlier timely filed complaint
because it sought recovery for the same alleged acts of
employment discrimination set forth in the earlier complaint).
Ultimately, “[t]he underlying question is whether the original
complaint adequately notified the defendants of the basis for
8
liability the plaintiff[] would later advance.” Meijer, Inc. v.
Biovail Corp., 533 F.3d 857, 866 (D.C. Cir. 2008).
Plaintiff’s claim that his employer’s decision to fire him
for refusing to take a drug test violated Title VII is all but
identical to his initial claim that the same decision violated
the D.C. Human Rights Act. Both are based on identical factual
allegations: that plaintiff was fired for refusing to take a
drug test after an accident for which he was not at fault and
that Caucasian drivers involved in accidents were treated
differently. See Compl. ¶¶ 1-16; First Amended Compl. ¶¶ 1-16.
Both claims allege the same legal wrong: that these decisions
were racially discriminatory. See Compl. ¶¶ 17-32; First Amended
Compl. ¶¶ 17-32. At a minimum, the initial complaint “notified
the defendants of the basis for liability” raised in plaintiff’s
amended complaint. Meijer, 533 F.3d at 866. Compare Jones v.
Bernanke, 557 F.3d 670, 675 (D.C. Cir. 2009) (declining relation
back where the “original complaint nowhere even mention[ed] . .
. the factual basis for [plaintiff’s] discrimination claims”).
Defendants argue that plaintiff “effectively fil[ed] a new
complaint under the guise of an amendment,” Reply at 1, but this
argument relies on cases wherein courts declined to relate an
amended complaint back to the date on which an entirely
different lawsuit was filed. See Neverson v. Bissonnette, 261
F.3d 120, 126 (1st Cir. 2001); Stewart-Veal v. District of
9
Columbia, 896 A.2d 232, 237 (D.C. 2006). Contrary to defendants’
argument, plaintiff may substitute one legal argument for
another within the same lawsuit. “The fact that an amendment
changes the legal theory on which the action initially was
brought is of no consequence if the factual situation . . .
remains the same.” Charles Allen Wright, et al., Federal
Practice & Procedure § 1497 (3d ed. 2013); see also Mayle v.
Felix, 545 U.S. 644, 660 (2005) (relation back is appropriate
where new legal theory addresses the same “episode-in-suit”).
Plaintiff’s Title VII claim reflects the application of a nearly
identical legal theory to identical facts, and thus relates back
to January 17, 2013, the date on which the initial complaint was
filed. Accordingly, plaintiff’s Title VII claims were timely
filed and defendants’ request to dismiss plaintiff’s complaint
as time-barred is denied.
B. Plaintiff Fails to State a Claim Against Ray Ottenberg.
In addition to Ottenberg’s, Mr. Jones has also sued Ray
Ottenberg. Mr. Ottenberg is mentioned in the complaint only
once, in paragraph 6, which alleges that he “at all times
relevant hereto is [sic] the president of Defendant Ottenberg’s
and acted as an agent of the employer” and asserts that he “is
sued both in his official capacity and personally for any
actions taken outside of the scope of his agency.” First Amended
Compl. ¶ 6. Defendants argue that plaintiff’s claims against Mr.
10
Ottenberg should be dismissed because the official-capacity
claim is duplicative of the claim against Ottenberg’s, and
plaintiff alleged no facts to support the individual-capacity
claim. See Mem. at 8; Reply at 4-5. The Court agrees.
Plaintiff correctly concedes that “Title VII claims brought
against corporate officers in their ‘official capacity’ are
dismissed as redundant.” Opp. at 8. Indeed, Mr. Ottenberg “must
be viewed as being sued in his capacity as the agent of the
employer, who is alone liable for a violation of Title VII.”
Gary v. Long, 59 F.3d 1391, 1399 (D.C. Cir. 1995). Thus, a Title
VII claim against Mr. Ottenberg “essentially merges with [a]
claim against [the employer].” Id.; see also Cooke-Seals v.
District of Columbia, 973 F. Supp. 184, 187 (D.D.C. 1997)
(“[b]ecause an official capacity suit against an individual is
the functional equivalent of a suit against the employer,
plaintiff’s claims against the officers are redundant and an
inefficient use of judicial resources”).
Plaintiff’s claim against Mr. Ottenberg as an individual
also must be dismissed because plaintiff did not allege any
facts to support it. The amended complaint describes Mr.
Ottenberg only as “an agent of the employer.” First Amended
Compl. ¶ 6. But “Title VII does not impose individual liability
on supervisory employees.” Gary, 59 F.3d at 1400; see also Craig
v. District of Columbia, 881 F. Supp. 2d 26, 36 (D.D.C. 2012)
11
(“Individuals may not be held liable under Title VII”). Mr.
Jones argues that “[w]ithout the benefit of Discovery, the
Plaintiff cannot say that Mr. Ottenberg, as an individual, does
not meet the definition of ‘employer’ under [Title VII].” Opp.
at 8. This speculation, however, is belied by the assertion in
plaintiff’s complaint that, “at all times relevant hereto,” Mr.
Ottenberg served “as an agent of the employer.” First Amended
Compl. ¶ 4. If Mr. Jones wished to sue Mr. Ottenberg as an
“employer,” he should have pled as much in his complaint. For
these reasons, plaintiff’s claims against Ray Ottenberg are
dismissed.
C. Plaintiff States a Claim Against Ottenberg’s Bakery.
To bring an actionable discrimination claim under Title
VII, Mr. Jones must establish that “(1) [he] is a member of a
protected class, (2) [he] suffered an adverse employment action,
and (3) the unfavorable action gives rise to an inference of
discrimination.” Stella v. Mineta, 284 F.3d 135, 145 (D.C. Cir.
2002) (quotation marks omitted); see also Nguyen v. Mabus, 895
F. Supp. 2d 158, 174 (D.D.C. 2012). Although it is well-
established that “‘an employment discrimination plaintiff is not
required to plead every fact necessary to establish a prima
facie case to survive a motion to dismiss,’” Rodriguez v.
Donovan, 922 F. Supp. 2d 11, 17 (D.D.C. 2013) (quoting Jones v.
Air Line Pilots Ass’n, 642 F.3d 1100, 1104 (D.C. Cir. 2011), a
12
plaintiff must nevertheless “plead sufficient facts to show a
plausible entitlement to relief.” Id.
It is undisputed that plaintiff’s complaint alleges the
first two elements of a prima facie case by asserting that he
“is an African American,” and that he was “terminated . . .
[from employment] for failure to submit to a drug test.” First
Amended Compl. ¶¶ 4, 14. Defendants contend that Mr. Jones has
not alleged facts that give rise to an inference of
discrimination and has instead stated only legal conclusions.
See Mem. at 7; Reply at 3-4. Plaintiff argues that his complaint
sets forth sufficient facts by alleging that he “was ordered to
take a drug test, after being injured in an accident which he
did not cause or contribute to, in contravention of the
Defendant’s own policies, where similarly situated Caucasian
drivers were not.” Opp. at 6. The Court agrees with the
plaintiff.
Plaintiff’s complaint, though sometimes barebones,
describes the events leading to his termination with sufficient
factual particularity. It alleges, and the Court must accept as
true, that Ottenberg’s drug-test policy applies only when an
employee “may have caused/contributed to the accident.” First
Amended Compl. ¶ 12. Plaintiff asserts that Ottenberg’s deviated
from this policy by requiring him to take a drug test when he
could not have been at fault in the July 11, 2008 accident. Id.
13
¶¶ 11-13, 23. Mr. Jones further alleges that this deviation from
standard procedure was motivated by race, id. ¶¶ 28-30, and that
“Caucasian drivers who had been involved in accidents” were
treated differently. Id. ¶¶ 15, 19. If proven, these allegations
could support an inference of discrimination. Indeed,
“deviations from standard procedures” may even “give rise to an
inference of pretext” at the summary-judgment stage. Harrington
v. Aggregate Indus. N.E. Region, 668 F.3d 25, 33 (1st Cir.
2012); see also Hurlbert v. St. Mary’s Health Care Sys., 439
F.3d 1286, 1299 (11th Cir. 2006) (“an employer’s deviation from
its own standard procedures may serve as evidence of pretext”).
Similarly, an allegedly racially motivated deviation from
standard procedure may raise an inference of discrimination at
the motion-to-dismiss stage.
At this stage of the proceedings, plaintiff need only
allege facts sufficient to state “a plausible claim for relief.”
Iqbal, 556 U.S. at 679. Plaintiff provided sufficient factual
detail by alleging that Ottenberg’s deviated from its policy by
requiring him to take a drug test and terminating him for
failing to do so, that this deviation was motivated by Mr.
Jones’s race, and that Caucasian drivers involved in accidents
were treated differently. Accordingly, defendants’ motion to
dismiss plaintiff’s claim against Ottenberg’s is denied.
14
IV. CONCLUSION
For the foregoing reasons, defendants’ Motion to Dismiss
plaintiff’s complaint is hereby GRANTED IN PART AND DENIED IN
PART. An appropriate Order accompanies this Memorandum Opinion.
SO ORDERED.
Signed: Emmet G. Sullivan
United States District Judge
November 21, 2013
15
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01-03-2023
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04-03-2014
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