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https://www.courtlistener.com/api/rest/v3/opinions/1431185/	648 F. Supp. 360 (1986) SKYLINE STEEL CORPORATION, Plaintiff and Counter-Defendant, v. A.J. DUPUIS COMPANY, Defendant and Counter-Plaintiff. Civ. No. 85-75073. United States District Court, E.D. Michigan, S.D. November 19, 1986. 361 362 Peter Swiecicki, Andrea Maya Windholz, Detroit, Mich., for plaintiff and counter-defendant. Robert E. Butcher, Southgate, Mich., for defendant and counter-plaintiff. MEMORANDUM OPINION AND ORDER ANNA DIGGS TAYLOR, District Judge. I. STATEMENT OF FACTS This diversity action, which was tried before the Court without a jury, is to collect payments due under the terms of several contracts. Plaintiff Skyline Steel Corporation ("Skyline") is a New Jersey corporation with its principal place of business in East Rutherford, New Jersey. Skyline sells and leases steel and steel products to customers throughout the United States. Its sales agent for the Midwest region is William ("Bill") Horvath, Jr., a steel broker in Southgate, Michigan. Defendant A.J. Dupuis Company ("Dupuis") is a Michigan corporation which is currently inactive. At all times prior to and immediately after consummation of the contracts presently in dispute, Dupuis was a contracting company with its principal place of business in Southgate, Michigan. Bruce Sells, Jr. was President of the A.J. Dupuis Company and John Perry was a company employee. In 1984, Dupuis was selected as the subcontractor on a municipal project at the Lakewood Street Bridge at Harbor Island in Detroit, Michigan. D. Macro Cement was the general contractor on, and the City of Detroit was the owner of, this project. In mid-June 1984, John Perry telephoned Bill Horvath (as they were the respective agents of Dupuis and Skyline) inquiring about prices and availability of Skyline sheet piling for use in connection with the Harbor Island project. Subsequent telephone conversations between these two agents resulted in two oral contracts whereby Dupuis would purchase and lease sheet piling from Skyline. The terms of these contracts were conveyed to Skyline's credit office in New Jersey for invoicing purposes on June 21, 1984. The relevant terms of the two oral contracts were as follows. According to Skyline, Dupuis agreed to purchase 34,550 pounds of steel sheet piling, at $0.26 per pound, for a total amount of $8,983.00. Payment terms were net 30 days. In addition, Dupuis agreed to lease 37,862 pounds of sheet piling for an initial month's rental fee of $3,123.45 and $340.74 per month thereafter or, in lieu of rental payments, a liquidated cost of $0.26 per pound. Payment terms were net upon Dupuis' receipt of monthly invoices, at the beginning of each monthly period. Skyline alleges delivery of the sheet piling to Dupuis at the Harbor Island construction site on June 29, 1984. On that date, Dupuis was furnished with Skyline's Invoices number DI 29223 and K 35275 reflecting the sheet piling Dupuis had purchased and leased. Notwithstanding delivery, Dupuis did not pay any amounts towards 363 the purchase price of $8,983.00 or the initial month's rental fee of $3,123.45. The only payment Skyline has received to date from Dupuis has been $681.48, representing two monthly payments on the leased piling. This suit is for the sums alleged to be due. At some point after delivery of the steel, a credit manager at Skyline's main office in New Jersey notified sales representative Horvath that no payment had been received on the Dupuis account. Horvath made repeated unsuccessful demands for payment, via telephone conversations and meetings with John Perry and Bruce Sells. Dupuis told Horvath that Skyline would receive payment for its steel upon Dupuis' receipt of payment from either the City of Detroit, the general contractor, or the contractor's bondsman. By November 12, 1984, Dupuis had received more than $82,000.00 from D. Macro Cement, the general contractor, none of which has been applied towards Dupuis' overdue accounts with Skyline. In addition to the Harbor Island project, Defendant Dupuis was also a subcontractor on the Third Street Sewer Outfall Project, on which the City of Detroit was the owner and the Barton-Malow Company was the general contractor. The leased sheet piling used in the former project was subsequently moved by Dupuis to the latter project without authorization from Skyline. Skyline notified the owner and general contractors of the Harbor Island and Third Street projects on March 13, 1985 and June 4, 1985, respectively, that it was claiming the benefit of the Michigan Public Works Bond Act, Public Act No. 213 of 1963, as amended, M.C.L.A. § 129.201 et seq., arising out of Skyline's delivery of sheet piling for use in both projects. Defendant A.J. Dupuis Company does not dispute that it entered into two contracts to purchase and lease sheet piling from Skyline, that the piling was delivered to and accepted by Dupuis, and that it made two rental payments to Skyline totalling $681.48. However, in answering the complaint, Dupuis advances several general and affirmative defenses for nonpayment on its accounts. Dupuis generally alleges that it did not agree to the following contractual terms: the net 30 day payment for the purchased piling; the initial rental payment of $3,123.45 and the liquidated monthly cost of $0.26 per pound for the leased piling; and the monthly prejudgment interest charges of 1.5% and 1.0% on overdue balances. Dupuis affirmatively asserts, inter alia, that Skyline's statutory notice of its claims to the City of Detroit and the general contractors pursuant to the Michigan Public Works Bond Act constituted an election of remedies precluding recovery from Dupuis of payments due. Dupuis has also filed a counterclaim against Skyline alleging failure to deliver the ordered sheet piling on the dates and at the times expressly promised by Skyline's representatives. Anticipating timely delivery, Dupuis had called in work crews who could not function until after delivery of the piling. Efforts to secure piling from other suppliers had been unsuccessful. As a result of the late deliveries, Dupuis allegedly incurred additional labor costs and other incidental expenses. Dupuis has requested the Court to offset these costs against any legitimate claim that Skyline may have against Dupuis. For the reasons to be stated below, the Court will enter judgment for Plaintiff on its breach of contract claim. Judgment will also be entered for Plaintiff on Defendant's counterclaim. II. CHOICE OF LAW Before discussing the merits of this case, the Court must first determine the state law that controls the interpretation of the contracts at issue. The present diversity action was brought in the United States District Court for the Eastern District of Michigan. Since federal courts must follow the choice of law rules of the state in which they sit, Michigan choice of law rules will be applied in the instant case. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 61 S. Ct. 1020, 85 L. Ed. 1477 (1941); Liberty Mut. Ins. Co. v. Vanderbush Sheet Metal 364 Co., 512 F. Supp. 1159, 1166 (E.D.Mich. 1981). "Under Michigan law, interpretation of contract provisions are governed by the law of the state in which the contract was entered into." McLouth Steel Corp. v. Jewell Coal & Coke Co., 570 F.2d 594, 601 (6th Cir.1978). See also Wells v. 10-X Mfg. Co., 609 F.2d 248, 253 (6th Cir.1979). Although there is no evidence that the parties discussed choice of law, the contract undeniably was made and to be performed in the State of Michigan. Therefore, Michigan law will govern Plaintiff's contract claim. III. THE CONTRACTS The parties do not dispute that in 1984 John Perry, acting on behalf of Defendant Dupuis, telephoned Bill Horvath, Midwest Sales Representative for Skyline, and inquired about prices and availability of Skyline steel sheet piling. After several telephone conversations, two oral contracts were entered into whereby Dupuis agreed to purchase and lease sheet piling from Skyline. The terms of these contracts were embodied in confirmatory invoices. Plaintiff's Exhibit 1 is Skyline Invoice number DI 29223 representing Dupuis' purchase of 34,550 pounds of steel sheet piling, at $0.26 per pound, for a total amount of $8,983.00. The order date was June 21, 1984 and the steel was shipped via common carrier on June 29, 1984. Payment terms were net 30 days with a past due interest charge of 1.5%. Plaintiff's Exhibits 2 and 3 are Skyline Invoices number K 35275 and K 35278 representing Dupuis' lease of 37,862 pounds of piling for an initial month's rental fee of $3,123.45 and $340.74 per month thereafter or, in lieu of rental payments, a liquidated cost of $0.26 per pound. The order was dated June 29, 1984 and payment terms were net upon receipt of the invoice with a past due interest charge of 1.0%. For the reasons outlined below, all of Dupuis' arguments are without merit. Dupuis' failure to pay any amount for the purchased sheet piling and the initial month's rental for the leased piling renders it liable for breach of contract. A. THE UNIFORM COMMERCIAL CODE The contracts at issue involve a "transaction in goods": the purchase and lease of steel. Skyline argues that because the underlying transaction involves goods, Article II of the Uniform Commercial Code ("U.C. C." or "Code"), Sales, as adopted in Michigan at M.C.L.A. § 440.2101 et seq., should govern interpretation of the contracts. Dupuis objects to application of the U.C.C. on the ground that Skyline's first references to the Code were at trial; the U.C.C. was never mentioned in any of Skyline's pleadings. Skyline denies an obligation to plead the U.C.C. The Court is in accord with Skyline's position on both counts. Contrary to Dupuis' suggestion, there is no authority whatsoever for imposing upon a party the obligation to specifically plead the U.C.C. and this Court declines to fashion such a rule in the instant case. The purchase and lease of steel is a transaction in goods. Therefore, the contracts will be examined pursuant to the Michigan U.C.C. provisions. See Aaron E. Levine & Co., Inc. v. Calkraft Paper Co., 429 F. Supp. 1039, 1048 (E.D.Mich.1976); Bennett v. Columbus Land Co., 70 Mich.App. 403, 405, 246 N.W.2d 8 (1976). As a defense for nonpayment on its Skyline accounts, Dupuis generally alleges that it did not agree to the following contractual terms. First, Dupuis denies agreement on a net 30 day payment term. Dupuis claims that its receipt of payment from the City of Detroit, the general contractor, or the contractor's bondsman was a condition precedent to Skyline's receipt of payment from Dupuis on the piling contracts. Second, Dupuis denies agreement on the initial rental payment of $3,123.45[1] and the liquidated 365 monthly rental of $0.26 per pound[2] for the leased sheet piling. Application of the relevant MCLA provisions leads this Court to conclude that Dupuis did, in fact, agree to the above-mentioned terms. Assuming, arguendo, that Dupuis did not orally agree to these contractual terms, their appearance in the subsequent written invoices constitute "additional terms." M.C.L.A. § 440.2207(2)(b) and (c) provide that The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless ... they materially alter it; or notification of objection to them has already been given or is given within a reasonable time after notice of them is received. (Emphasis added.) See also Am. Parts Co., Inc. v. Am. Arbitration Ass'n, 8 Mich. App. 156, 166-67, 154 N.W.2d 5 (1967). Skyline argues that even if the so-called "additional terms" were not orally agreed upon by the parties, they became part of the contracts because they did not materially alter the prior oral agreement and the contracts were entered into "between merchants." Dupuis objects to its classification as a merchant. After reviewing testimonial evidence, the Court holds that Dupuis is a merchant within the meaning of the U.C.C. The U.C.C. defines a "merchant" as a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction or to whom such knowledge or skill may be attributed by his employment of an agent or broker or other intermediary who by his occupation holds himself out as having such knowledge or skill. M.C.L.A. § 440.2104(1). Skyline, as the seller of the sheet piling at issue, affirmatively acknowledges its status as a merchant. Bill Horvath, Jr., Skyline's Midwest Sales Representative, testified at trial that he has received a bachelor of science in construction engineering and has been in the construction business for eighteen years. Approximately twelve years ago, Horvath started, and was Vice President and Sales Engineer of, a steel supply firm named Contimco, Inc., which is presently closed. At all relevant times before and after the closing of Contimco, Horvath has been a sales engineer for Skyline and another steel supplier. Dupuis on the other hand, denies that it is a merchant. Dupuis argues that a purchaser of goods, such as itself, is not a merchant. This interpretation of the statutory definition is clearly erroneous. The scope of M.C.L.A. § 440.2104(1) is not limited to a seller or supplier of goods, but also includes anyone else who deals in the goods and holds himself out as having knowledge or skill peculiar to the goods involved in the relevant transaction. Dupuis has done just that. Bruce Sells, Jr. testified that the A.J. Dupuis Company was established in 1899 as a concern specializing in marine construction. Before becoming inactive, Sells served as the company's president for eight to ten years. Dupuis, through John Perry and other company agents or occasionally Sells himself, negotiated with suppliers for the materials needed in Dupuis' subcontracting business. Consideration of the number of years the company was in existence, the nature of its business, and the conduct of company agents leads to the undeniable conclusion that Dupuis previously has dealt in steel sheet piling and its agents have held themselves out as having knowledge or skill peculiar to the use of such piling. Having fallen squarely within the language of the U.C.C., Dupuis must be considered a "merchant" for contract interpretation purposes. 366 Between merchants, additional terms become part of the contract unless the terms materially alter the contract or the buyer objects to such terms within a "reasonable time" after notice of the terms is received. M.C.L.A. § 440.2207(b) and (c). Where a confirmatory writing is received and the recipient has reason to know of its contents, the contract will be enforceable against the recipient "unless written notice of objection to its contents is given within 10 days after it is received." M.C. L.A. § 440.2201(2) (emphasis added). Dupuis has never alleged that the payment or rental terms materially alter the contracts. Similarly, Dupuis has never submitted written notification to Skyline of its objections to the additional terms until commencement of the present lawsuit.[3] The approximate two year period that elapsed after Dupuis received the written invoices and before it first objected to their terms in its answer to Skyline's complaint here does not comply with the 10 day notification period and is not notification within a reasonable time. Due to Dupuis' failure to timely object to the additional terms, the payment and rental terms became and presently are part of the contracts. Dupuis did not make the required payments to Skyline for the purchased and leased sheet piling within net 30 days and net receipt of invoice, respectively. Therefore, the Court finds that Dupuis is liable for breach of contract. B. THE PAROL EVIDENCE RULE Dupuis not only denies agreement to the additional terms, but further alleges that instead of a net 30 day payment term, the parties agreed Skyline would be paid for the purchased steel only after Dupuis received payment from the City of Detroit, the general contractor, or the contractor's bondsman. The Court must bar this latter agreement on the basis of the parol evidence rule. A confirmatory writing containing terms "intended by the parties as a final expression of their agreement ... may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented" by course of dealing, usage of trade or course of performance. M.C.L.A. § 440.2202(a). The testimony of Bruce Sells, Jr. to the effect that the parties agreed Skyline would be paid after Dupuis received payment is evidence of a contemporaneous oral agreement expressly precluded by the parol evidence rule. This testimony cannot be accorded any weight in the present proceedings. The Court, therefore, must conclude that the parties intended Skyline Invoice number DI 29223, containing the net 30 day payment term, to be the final expression of their agreement for the purchase of steel sheet piling. See Watson-Higgins Milling Co. v. Gracyzk, 253 Mich. 175, 178, 234 N.W. 132 (1931). Further support for the conclusion that the parties agreed to a net 30 day payment term is found in the prior course of dealing between the parties. M.C.L.A. § 440.2202(a) provides that terms contained in a confirmatory writing may be explained or supplemented by course of dealing, usage of trade or course of performance. "A course of dealing is a sequence of previous conduct between the parties to a particular transaction which is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct." M.C.L.A. § 440.1205(1). The previous conduct between Skyline and Dupuis mandates a finding of a net 30 day payment term in the present transactions. Bill Horvath, Jr. testified that prior to June 1984, he had received regular inquiries from Dupuis which resulted in several contractual agreements for the purchase, but not lease, of timber and steel 367 products from Skyline and other suppliers. It was common practice between the parties for Horvath and Sells (or another agent of Dupuis) to reach an oral agreement, to have Skyline then furnish a written confirmatory invoice encompassing the terms of the oral agreement, and to have payment terms be "net 30 days." Dupuis had an excellent and timely payment history with Skyline on purchases made before the transactions here in issue. The June 1984 transactions represent the first time Dupuis had purchased and leased steel sheet piling from Skyline. Horvath further testified that with respect to lease agreements, Skyline generally required the initial month's rental fee to be paid cash in advance by the lessee. Because of Dupuis' excellent credit history, however, it was to pay the $3,123.45 fee net upon receipt of Skyline Invoice number K 35275. During his testimony, Bruce Sells for Dupuis, noting Dupuis' excellent record of prompt payment, asserted that in all prior transactions between the parties, Dupuis did always make payment after it had been paid by the general contractor. Skyline countered that no supplier in the construction industry, including itself, would ever agree to such payment terms. Consideration of the prior course of dealing between the parties leads this Court to conclude that the "net 30 day" payment term is the operative and enforceable provision. In addition, the initial payment for the leased steel "net upon receipt of invoice" is equally enforceable. Moreover, this Court must note that, although Dupuis was indeed paid substantially by the general contractor in this case, it has failed to make any payment on this contract. So it did not act here in accordance with the alleged course of dealings. C. THE STATUTE OF FRAUDS The next defense to this claim presented by Dupuis is the Statute of Frauds. Dupuis argues that the contracts for purchase and lease of the sheet piling are not enforceable because the contractual terms are not evidenced by a "writing." Skyline counter-argues that the confirmatory invoices are writings sufficient for the Statute of Frauds. Preliminarily, this Court finds that Dupuis has failed to timely assert the Statute of Frauds defense. Even if the Court were to overlook this defect, however, Skyline's transmission of a written confirmatory invoice and Dupuis' admission that a contract was entered into or, alternatively, Dupuis' receipt and acceptance of the delivered sheet piling are all sufficient, in and of themselves, to take the contracts at issue out of the prohibitions of the Statute of Frauds. The Statute of Frauds is an affirmative defense which must be specifically pleaded in defendant's initial answer to the complaint or in an amended answer thereto. TCP Indus., Inc. v. Uniroyal, Inc., 661 F.2d 542, 547 (6th Cir.1981); R.G. Moeller Co. v. Van Kampen Constr. Co., 57 Mich. App. 308, 311, 225 N.W.2d 742 (1975). The consequence of a failure to plead this defense is that it is waived and all testimony in support thereof is inadmissible. Ben P. Fyke & Sons v. Gunther Co., 390 Mich. 649, 667, 213 N.W.2d 134 (1973). Dupuis neither pleaded the Statute of Frauds defense in its answer nor asserted it in any pretrial documents. In fact, the defense was first raised by Dupuis' counsel at trial during closing argument. A closing argument is an inappropriate and untimely manner in which to raise the Statute of Frauds. Accordingly, the Court may summarily dispose of this argument. Assuming, however, that Dupuis had affirmatively asserted the Statute of Frauds in its pleadings, this defense still would not preclude enforcement of these purchase and lease contracts. Dupuis argues that these contracts are not enforceable because the contractual terms are not evidenced by a "writing." M.C.L.A. § 440.2201(1) provides, in relevant part, that a contract for the sale of goods for the price of $500.00 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate 368 that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker.... (Emphasis added.) The only term which must appear in the contract is the quantity term. West Cent. Packing, Inc. v. A.F. Murch Co., 109 Mich.App. 493, 500-501, 311 N.W.2d 404 (1981); Ace Concrete Prod. Co. v. Rogers Constr. Co., 69 Mich. App. 610, 613-14, 245 N.W.2d 353 (1976). The contracts at issue in this case meet the statutory prerequisites for enforceability. Skyline and Dupuis entered into an oral agreement whereby Dupuis agreed to purchase 34,550 pounds of piling, valued at $8,983.00, and to lease 37,862 pounds of piling, valued at $3,123.45 plus $340.74 per month. Pursuant to company policy Skyline generated invoices embodying the terms of their oral agreement. The Court endorses Skyline's position that a confirmatory invoice is a sufficient writing to satisfy the Statute of Frauds. Harlow & Jones, Inc. v. Advance Steel Co., 424 F. Supp. 770, 775 (E.D.Mich.1979); 2 CORBIN ON CONTRACTS, Statute of Frauds § 506, p. 727. The invoices generated by Skyline do contain the necessary quantity term. Although the invoices are not signed by the party against whom enforcement is sought, namely Dupuis, this does not preclude enforcement of the contracts. The U.C.C. provides that unless the recipient objects in writing to the contents of the confirmation within 10 days after its receipt, the writing will be deemed to satisfy the requirements of the Statute of Frauds. M.C.L.A. § 440.2201(2). See also CALAMARI & PERILLO, CONTRACTS §§ 19-34, pp. 722-23 (2d ed. 1977). As Dupuis did not object within the 10 day notification period, the purchase and lease invoices meet all statutory prerequisites. Even if the Court found the confirmatory invoices to be an insufficient writing, there are other relevant facts which would take the purchase and lease contracts out of the Statute of Frauds. A contract is enforceable "if the party against whom enforcement is sought admits in his pleadings, testimony or otherwise in court that a contract for sale was made...." M.C.L.A. § 440.2201(3)(b) (emphasis added). During his testimony, Bruce Sells admitted that the Skyline invoices were the written documents memorializing the purchase and lease transactions, although he denied agreement on all of the substantive terms. Thus, Dupuis' failure to deny the existence of the contracts will be interpreted as an admission that such contracts do exist. Alternatively, a contract is enforceable under the U.C.C. "with respect to goods for which payment has been made and accepted or which have been received and accepted." M.C.L.A. § 440.2201(3)(c) (citation omitted). Dupuis admits, in its pleadings, its receipt and acceptance of the sheet piling delivered by Skyline. Not only was the piling used in the Harbor Island project but Dupuis has admitted that the piling was subsequently moved to the Third Street Sewer Outfall project.[4] Therefore, the receipt, acceptance and use of the piling constitutes an objective manifestation of Dupuis' assent to the contracts, thereby rendering it liable for the purchase and lease contract prices. West Cent. Packing, Inc. v. A.F. Murch Co., 109 Mich.App. 493, 504, 311 N.W.2d 404 (1981). IV. THE MICHIGAN PUBLIC WORKS BOND ACT A third defense presented by Dupuis for nonpayment on its overdue accounts is that 369 Skyline, by filing a notice of claim under the Michigan Public Works Bond Act, Public Act No. 213 of 1963, as amended, M.C. L.A. § 129.201 et seq., has elected its remedies by choosing to proceed against the general contractors and/or their bondsmen. Because of that "election", Dupuis argues that it is essentially immune from this action. Dupuis further asserts that the contractors, bondsmen and/or the owner of the public works projects are necessary parties in the present action. Skyline counter-argues that there is no inconsistency in protecting its interests by filing a notice of potential claims under the bonding statute while simultaneously pursuing a debt collection from the party with whom it has a direct contractual relationship. In its pleadings, Skyline readily acknowledges that it is not entitled to recovery from more than one party, or to collect more than it is owed. The argument of election of remedies with respect to the Michigan bonding statute is one of first impression before this Court. Consideration of Dupuis' arguments in light of the Court's interpretation of the statute demonstrates the nonapplicability of the election doctrine to the case at bar. The Court further holds that the contractors, bondsmen and/or the owner of the public works projects need not be joined as necessary parties to this lawsuit. The doctrine of election of remedies is an affirmative defense, Kirby v. Monroe Paper Prod. Co., 1 Mich.App. 680, 137 N.W.2d 736 (1965), which "has been defined as the act of choosing between two or more different and coexisting modes of procedure and relief allowed by law on the same set of facts." 25 Am.Jur.2d, Election of Remedies § 1, p. 646 (citation omitted). The doctrine is a procedural rule designed to prevent double recovery for a single wrong. Id. at 647. Accord Stroh Brewery Co. v. Grand Trunk W.R. Co., 513 F. Supp. 827, 834 (E.D.Mich.1981); Riverview Coop., Inc. v. First Nat'l Bank & Tr. Co. of Michigan, 417 Mich. 307, 312, 337 N.W.2d 225 (1983). The validity of the doctrine need not be evaluated in the present case because the Court concludes that it does not prevent Skyline from proceeding against Dupuis for breach of contract. Notwithstanding this conclusion, it is instructive to outline the requirements for application of the election doctrine. In order to apply the election of remedies doctrine in any context, there are three prerequisites that must be met. Dupuis correctly argues that the essential elements of the doctrine are set forth in MLP, Election of Remedies § 1, p. 382: "the existence of two or more remedies, the inconsistency between such remedies, and a choice of one of them." See also Riverview Coop., Inc., supra at 313. Dupuis, however, misapplies the elements to the facts of this case. None of the three preprequisites have been satisfied. The first two prerequisites of the doctrine are that there exist two or more inconsistent remedies.[5] Skyline has two modes of procedure in which to collect the payments due under the terms of the purchase and lease contracts: to proceed against either Dupuis or the general contractors and their bondsmen, or all of the above. Although afforded two avenues of recovery, two or more remedies did not exist. The general theory on which materialmen are permitted to recover on a bond executed in connection with public works and improvements is third-party-beneficiary contract law. 17 Am.Jur.2d, Contractors' Bonds § 80, p. 255. Similarly, the theory of liability against Dupuis in the present action is based on breach of contract. The remedies Skyline would seek to recover in both instances are damages for 370 Dupuis' breach of contract. These remedies are not inconsistent. Where, as here, the available remedies are cumulative and consistent, the election of remedies doctrine has no application. The third and final prerequisite is that the party elect to pursue one of the available remedies. An "election" occurs when one, by actually bringing an action or by some other unambiguous act with knowledge of the facts, indicates his choice of between two or more inconsistent remedies. MLP, Election of Remedies § 3, p. 386. Dupuis alleges that Skyline has made such an election of remedies. Defendant's Exhibit 1 is a letter, dated March 13, 1985, sent by certified mail by Peter Swiecicki, counsel for Skyline, to the City of Detroit and D. Macro Cement. Skyline was submitting written notification that it had furnished sheet piling to the A.J. Dupuis Company for use in connection with the Lakewood Street Bridge, Harbor Island project. The amount due and unpaid as of this letter was $13,810.15. Courtesy copies were sent to Bruce Sells, Jr. (President of Dupuis), Joseph Zavattaro (Credit Manager in Skyline's New Jersey Office), and William Horvath (Skyline's Midwest Sales Representative). Defendant's Exhibit 2 is a second letter, dated June 4, 1985, sent by certified mail by Peter Swiecicki to the City of Detroit and the Barton-Malow Company. Skyline reconfirmed it had supplied piling to Dupuis for use in the Harbor Island project and had made repeated demands for payment, now valued at $14,272.41. The purpose of this letter was to advise Barton-Malow of Skyline's "reasonable belief" that some of its leased piling has been transferred by Dupuis from the Harbor Island to the Third Street Sewer Outfall project, for which the Barton-Malow Company was the general contractor.[6] A courtesy copy was sent to Bruce Sells, Jr. Both letters were submitted pursuant to the Michigan Public Works Bond Act. Dupuis affirmatively asserts that by submitting the foregoing notices (letters) of claim under the Michigan bonding statute, Skyline has unambiguously elected to pursue its remedies against the general contractors and/or their bondsmen, and may not sue Dupuis. Specifically, Dupuis alleges that "[t]he effect of Plaintiff's actions in seeking payment from the contractors and/or bondsmen is to permanently preclude recovery by Defendant of the amounts claimed by Plaintiff from either the contractor or the owner."[7] To support its position, Dupuis cites M.C.L.A. § 129.207, particularly the last sentence which provides as follows: The prime contractor shall not be required to make payment to a subcontractor of sums due from the subcontractor to parties performing except upon the receipt of the written orders of such parties to pay to the subcontractor the sums due such parties. The Court finds Dupuis' interpretation of the statute to be untenable. "The purpose and intent of [the Michigan Public Works Bond Act] is to safeguard and protect contractors and materialmen in the public sector." Adamo Equip. Rental Co. v. Mack Dev. Co., Inc., 122 Mich.App. 233, 236, 333 N.W.2d 40 (1982). Accord 17 Am.Jur.2d, Contractors' Bonds § 44, p. 223. Recovery on the performance bond will be precluded unless the claimant sends written notification by certified mail to the principal contractor and governmental unit within statutorily specified time periods. M.C.L.A. § 129.207; 64 Am.Jur.2d, Public Works and Contracts § 101, p. 964. The statutory notice provisions are strictly construed 371 by the Michigan courts.[8]See Hub Elec. Co., Inc. v. Aetna Casualty & Sur. Co., 400 F. Supp. 77, 79 (E.D.Mich.1975), aff'd, Hub. Elec. Co., Inc. v. Gust Constr. Co., 585 F.2d 183 (6th Cir.1978), cert. denied, 440 U.S. 495, 99 S. Ct. 1282, 59 L. Ed. 2d 495 (1979); Square D. v. Aero Mechanical, 119 Mich.App. 740, 744, 326 N.W.2d 629 (1982); Charles W. Anderson Co. v. Argonaut Ins. Co., 62 Mich.App. 650, 233 N.W.2d 691 (1975). Written notification, however, while statutorily required to protect a supplier's rights, is not sufficient to enforce those rights. The mechanism established by the statute to execute payment under the bond is that the claimant file suit against the bonded entities. M.C.L.A. § 129.209. This Court concludes that Skyline has not elected to pursue its remedies under the Michigan bonding statute, to the exclusion of a suit such as this. Mailing a notice of claim under M.C.L.A. § 129.207 does not represent an election on Skyline's part to collect only from the bonded entities, to the exclusion of Skyline's direct claim against Dupuis. Where, as here, Skyline is statutorily required to submit a notice of claim to adequately protect its interest under the bonding statute, this conduct, without more, does not constitute an unambiguous election of remedies. Even if the Court were to conclude that filing a claim is an election, that conclusion would be of no consequence under the facts of this case. When a party, such as Skyline, is presented with alternate and consistent remedies, pursuit of one remedy in a separate forum (i.e., filing a notice of claim with, or a lawsuit against, the general contractor and its bondsman) is not a bar to commencing a different form of action (i.e., filing a lawsuit against the subcontractor). There is no election until one of the remedies is pursued to judgment. See Rutter v. King, 57 Mich.App. 152, 157-58, 226 N.W.2d 79 (1974), cited in, St. Paul Fire & Marine Ins. Co. v. Michigan Nat'l Bank, 660 F.2d 196, 199 (6th Cir.1981). Since Skyline's notices of claim under the Michigan bonding statute have not been pursued to a final judgment, filing those notices did not preclude commencement of the present lawsuit against Dupuis. In addition to the election of remedies argument, Dupuis further asserts that the contractors, bondsmen and/or the owner of the Harbor Island and the Third Street Sewer projects should have been joined as necessary parties in this lawsuit. The Court cannot agree with this position. As a general rule, "joinder of parties is appropriate in situations in which their respective rights and obligations arise out of the same contract, transaction, occurrence or like circumstances, and any question of law or fact is common to the claims of them all." Yedinak v. Yedinak, 383 Mich. 409, 416, 175 N.W.2d 706 (1970). However, Michigan Court Rule 205.1 contemplates the necessary joinder of parties only when "their presence is essential to permit the court to render complete relief" (emphasis added). The "complete relief" requirement has been interpreted by the Michigan Court of Appeals to denote legal relief only. Troutman v. Ollis, 134 Mich.App. 332, 339, 351 N.W.2d 301 (1984). Where the only relief requested is a money judgment, this requirement is not met and the case is outside the scope of the necessary joinder rule. Id. at 340. Skyline, in the case at bar, has brought suit against Dupuis to collect overdue payments on contracts for the purchase and lease of steel sheet piling. The only relief sought by Skyline is monetary damages equivalent to the contract prices plus accumulated interest. Since no relief other than damages has been requested, the "complete relief" requirement of the necessary joinder rule is not satisfied. The Court, therefore, holds that the contractors, bondsmen and/or the owner of the public works projects were not necessary parties in this litigation. 372 V. DEFENDANT'S COUNTERCLAIM Dupuis has filed a counterclaim against Skyline alleging that the latter failed to deliver the ordered sheet piling on the dates and at the times expressly promised by Skyline's representatives. Anticipating timely delivery, Dupuis allegedly had called in work crews who then could not function until after the tardy delivery of the piling. Efforts to secure piling from other suppliers were unsuccessful. As a result of the late deliveries, Dupuis allegedly incurred additional labor costs and other incidental expenses. Dupuis requests the Court to offset these costs against any legitimate claim that Skyline may have against Dupuis. The Court, finding absolutely no documentary evidence to support this vague and nonspecific late delivery claim, and finding the testimony of Bruce Sells to be substantially incredible, holds that Dupuis' counterclaim must fail. In its complaint, Skyline alleges delivery of the steel sheet piling to Dupuis at the Harbor Island construction site on June 29, 1984. Bill Horvath, Jr., Skyline's Midwest Sales Representative, testified that in mid-June, 1984, he received several telephone calls from Dupuis' agent John Perry inquiring about prices and availability of Skyline sheet piling for use in connection with the Harbor Island project. On June 21, 1984, the parties reached an oral agreement whereby Dupuis would purchase and lease sheet piling from Skyline. The terms of this agreement were conveyed to Skyline's credit office in New Jersey for invoicing purposes on the same day. John Perry initially requested delivery "ASAP" and later specified delivery by June 29, 1984. Skyline Invoices DI 29223 and K 35275 reflect delivery was made as requested on June 29, 1984. Horvath attested to having personal knowledge that the piling was released in one lot per the invoices.[9] He never received any calls from Dupuis' agents regarding any alleged lateness of the delivery. Dupuis counterclaims that the sheet piling was supposed to be delivered in mid-May, not late June, of 1984. Bruce Sells, Jr., former President of the A.J. Dupuis Company, testified that Dupuis began work at the Harbor Island project in early May of 1984. As the first contractor on the site, Dupuis' primary responsibility was to drive the sheet piling, which was to be supplied by Skyline, before any other work could be done on the project. When Skyline allegedly failed to deliver the purchased and leased piling, Sells personally called Bill Horvath several times and a Skyline dispatcher named "Diane" for five consecutive days to complain about the late deliveries.[10] The piling finally was delivered in two or more installments during a two week period from late May to early June. Dupuis' representatives signed a bill of lading[11] as materials were delivered. In light of the foregoing, Dupuis argues that Skyline's confirmatory invoices should not govern this delivery dispute because they are "dummy" invoices generated six weeks after the fact to coverup for Horvath's admitted late delivery. Support for Dupuis' position of a May 1984 delivery date was initially limited to the testimony of Bruce Sells. However, 373 later in the trial, Sells conveniently was able to locate in his personal files a "Construction Progress Chart" for the Harbor Island project, which was admitted into evidence as Defendant's Exhibit 3. The Chart, dated May 15, 1984, was prepared by the project's general contractor, D. Macro Cement, after a preconstruction meeting, was later updated, and then copies were supplied to all subcontractors. According to the Chart, a "Notice to Proceed" was effective April 25, 1984 and the bearing piling was to be started by the 20th day of the project. Dupuis has failed to prove that the sheet piling delivered by Skyline was late for several reasons. First, the proferred Construction Progress Chart is not dispositive on the date of delivery issue because the information contained therein is merely projected starting dates for the various subcontractors. Second, the Chart specifically contemplates that bearing piling will be started by the 20th day of the project.[12] Bruce Sells testified that the sheet piling supplied by Skyline had to be installed before the bearing piling. However, the credibility of this statement was significantly attacked on cross-examination, when Sells reluctantly admitted it was possible that some bearing could have been driven before the sheet piling. On rebuttal, Horvath testified that bearing piling could be driven without any sheet piling; sheet piling is unrelated to bearing and can be driven first or last. A third factor weighing heavily against Dupuis' position of a May 1984 delivery date is its failure to produce any bill of lading allegedly signed by Dupuis' representatives upon Skyline's delivery of the piling at the Harbor Island construction site. Sells testified that a roof leak destroyed Dupuis' copy of the bill of lading with many other of its records. The Court finds that testimony incredible. Therefore, it must be concluded that the purchased and leased sheet piling was delivered in accordance with the date contained in Skyline's Invoices: June 29, 1984. In connection with the foregoing, Dupuis further alleges that as a result of the late deliveries, it incurred additional labor costs and other incidental expenses. Dupuis specifically claims pile-driving is a very specialized and unionized industry. In reliance on repeated promises made by Skyline's dispatcher "Diane", Dupuis kept a pile-driving crew waiting at the jobsite for fear of losing the crew.[13] Dupuis alleges that Skyline agreed to be liable for down time as standard in the industry and in accord with hourly charges for the equipment and personnel on the site. During his testimony, Sells estimated that the costs incurred as a result of down time could be calculated by multiplying Dupuis' alleged hourly down time rate of $375 per hour times 80 hours of down time (10 day delay × 8 hours per day).[14] There was not one bit of corroboration, written or oral, for that testimony. The Court holds that Dupuis' alleged down time costs and other incidental expenses may not be offset against Skyline's legitimate breach of contract claim. Dupuis has failed to provide the Court with any documentation, or other evidence, in support of Sells' frequently contradictory testimony. In fact, Sells acknowledged during trial that Dupuis maintained spotty company records of the down time on the 374 Harbor Island project and that he had been unable to locate his own personal notes for over one year. The absence of documentary evidence to support Dupuis' late delivery and down time claims coupled with the incredibility of Bruce Sells, necessitates that Dupuis' request for damages be denied and that judgment be entered for Skyline on Dupuis' counterclaim. VI. DAMAGES Skyline asserts that under the Uniform Commercial Code, its remedy for Dupuis' nonpayment for goods purchased is the contract price agreed upon between the parties under each contract, plus interest. M.C.L.A. § 440.2709. Specifically, Skyline has calculated and requested damages as follows: Purchased Steel: Sale price for 34,550 lbs. of sheet $8,983.00 piling sold to Defendant at $0.26 per pound. Interest per invoice rate of 1.5% $3,821.01 per month on purchased piling from July 29, 1984 (payment due date of invoice) to September 16, 1986 (trial date). Leased Steel: Liquidation price for 37,862 lbs. of $9,844.12 rented sheet piling not returned by Defendant, at $0.26 per pound. Interest per invoice rate of 1.0% $1,181.29 per month on rented piling from October 29, 1985 (date complaint was filed) to September 16, 1986 (trial date). The total amount due, according to Skyline, as of the trial date of this case is $23,829.42. The measure of damages in an action for breach of contract is determined by the law of the state in which the contract was to be performed. Transit Bus Sales v. Kalamazoo Coaches, Inc., 145 F.2d 804 (6th Cir. 1944); MLP, Damages § 3, p. 23. Since the contracts at issue were entered into and to be performed in the State of Michigan, Michigan law will govern calculation of the damages to which Plaintiff is entitled. Under Michigan law, the party asserting the breach of contract has the burden of proving, by a preponderance of the evidence, its damages with reasonable certainty. Walter Toebe & Co. v. Dept. of State Highways, 144 Mich.App. 21, 373 N.W.2d 233 (1985); Matter of Howarth's Estate, 108 Mich.App. 8, 310 N.W.2d 255 (1981); MLP, Damages § 180, pp. 198-99. The remedy provided by the U.C.C. to a seller for a buyer's failure to pay for goods purchased is the contract price of the goods accepted, together with any incidental damages.[15] M.C.L.A. § 440.2709. See also Haken v. Scheffler, 24 Mich.App. 196, 180 N.W.2d 206 (1970); Brown v. Harris, 139 Mich. 372, 102 N.W. 960 (1905). Plaintiff's Exhibit 1, Skyline Invoice number DI 29223, indicates that Dupuis agreed to purchase 34,550 pounds of steel sheet piling, at $0.26 per pound, for a total contract price of $8,983.00. Dupuis acknowledges it received the steel and was billed for this amount. Therefore, the contract price for the purchased steel is $8,983.00. Plaintiff's Exhibits 2 and 3, Skyline Invoices number K 35275 and K 25278, indicate that Dupuis agreed to lease 37,862 pounds of piling for an initial month's rental fee of $3,123.45 and $340.74 per month thereafter. In lieu of rental payments, Invoice number K 35275 states that a liquidation cost of $0.26 per pound would be imposed on all unreturned piling. Dupuis admits making only two rental payments totalling $681.45 towards the leased piling. Skyline requests this Court to award the liquidated cost of $9,844.12 for the sheet piling leased and as yet unreturned by Dupuis. In its pleadings, Dupuis argues that the parties never discussed or agreed to a liquidated damages provision. Instead, Skyline is said to have unilaterally added the provision 375 to its invoice without Dupuis' consent or approval, subsequent to the order. Skyline, through the testimony of Bill Horvath, asserts that the liquidation provision was discussed with John Perry, an agent of Dupuis, during conversations leading up to consummation of the contracts.[16] As the Court has previously noted, Dupuis denies the parties reached an agreement on several contractual terms, including the liquidation clause. Assuming no prior agreement, the appearance of this clause in the subsequent written invoice constituted an "additional term." M.C.L.A. § 440.2207. This term became part of the contract because Dupuis, as a "merchant" under the U.C.C., failed to object to the clause in writing within 10 days after the invoice was received. M.C.L.A. § 440.2207(b) and (c). Liquidated damages are the amount of damages agreed to and stipulated to by the parties in advance, which are recoverable by either party as just compensation for anticipated or actual harm caused by breach of the contract. Worley v. McCarty, 354 Mich. 599, 605, 93 N.W.2d 269 (1958), citing, Curran v. Williams, 352 Mich. 278, 282, 89 N.W.2d 602 (1958); MLP, Damages § 81, p. 77. Michigan law requires that all liquidated damages provisions be evaluated regarding their reasonableness. St. Paul Fire & Marine Ins. Co. v. Guardian Alarm Co. of Michigan, 115 Mich.App. 278, 284, 320 N.W.2d 244 (1982); In re Constr. Diversification, Inc., 36 B.R. 434 (1983) (applying Michigan law); M.C. L.A. § 440.2718(1).[17] Whether a liquidation provision is unreasonable is a question of law for the court to determine in light of all the circumstances. U.S. v. Swanson, 618 F. Supp. 1231, 1243 (E.D.Mich.1981); Moore v. St. Clair County, 120 Mich.App. 335, 328 N.W.2d 47 (1982). "If the amount stipulated is reasonable with relation to the possible injury suffered, the courts will sustain such a stipulation." Curran v. Williams, supra at 282. Bill Horvath, Skyline's Midwest Sales Representative, testified at trial that the provision of Skyline Invoice number K 35275 providing for liquidated damages at $0.26 per pound for all unreturned steel sheet piling was a fair provision. Since Dupuis had not returned any of the 37,862 pounds of leased piling, the cost of the piling under the liquidation provision would be equivalent to the piling's purchase price. The Court finds the liquidation provision to be commercially reasonable and judicially enforceable, especially in light of Horvath's further testimony that suppliers other than Skyline usually have a liquidation cost greater than the actual purchase price of the leased goods. A second factor indicating the reasonableness of the $0.26 per pound liquidation provision is Dupuis' conduct with respect to the sheet piling. Dupuis initially leased the 37,862 pounds of piling for use in connection with the Harbor Island project. The piling then was transferred to the Third Street Sewer project without Skyline's prior authorization. By doing this, Dupuis converted the sheet piling to its own use. Conversion is an intentional tort. Hansman v. Imlay City State Bank, 121 Mich. App. 424, 428, 328 N.W.2d 653 (1982). The essential elements of conversion are: (1) plaintiff's ownership or right to possession of the property at the time of the conversion; (2) defendant's intent to exercise dominion or control over the property inconsistent with plaintiff's ownership rights; and (3) damages. 18 Am.Jur.2d, Conversion § 2, p. 146. Accord Trial Clinic, P.C. v. Bloch, 114 Mich.App. 700, 705, 319 N.W.2d 638 (1982). When property has 376 been wrongfully converted, the plaintiff may recover damages equivalent to the fair market value ("FMV") of the property at the time of conversion. Larson v. Van Horn, 110 Mich.App. 369, 385, 313 N.W.2d 288 (1981); Willis v. Ed Hudson Towing, Inc., 109 Mich.App. 344, 349, 311 N.W.2d 776 (1981); 18 Am.Jur.2d, Conversion § 105, pp. 219-220. This measure of damages constitutes, in essence, a forced sale. Notwithstanding its use by Dupuis, Skyline was the rightful owner of the steel sheet piling supplied pursuant to the terms of the lease contract. It cannot be denied that Dupuis' exercise of dominion over the piling and the subsequent transfer of that piling to the Third Street Sewer project interferred with Skyline's ownership rights. Skyline was damaged by this conduct and is entitled to the FMV of the piling at the time of conversion. Skyline appears to be uncertain as to the exact date of conversion and has not provided the Court with any FMV approximations. However, viewing the lease contract in light of all the circumstances, the Court estimates that the FMV for the leased piling is equivalent to the sale price per pound for the purchased piling: $0.26 per pound. Therefore, the Court holds that the contract price for the leased sheet piling is the liquidated amount of $9,844.12. Dupuis further argues that the parties never discussed or agreed to the assessment of monthly prejudgment interest on Dupuis' overdue accounts with Skyline. This provision was allegedly added by Skyline subsequent to the order. Skyline, on the other hand, offered testimonial evidence to the effect that the interest penalties for late payment had been discussed with Dupuis' agent John Perry. Dupuis appears to be confusing its duty to pay prejudgment interest with its duty to pay contractually agreed upon monthly interest on overdue accounts. In Michigan, the award of prejudgment interest is provided for by statute. M.C.L.A. § 600.6013 provides that: Interest shall be allowed on any money judgment recovered in a civil action, such interest to be calculated from the date of filing the complaint at a rate of 5% per year unless the judgment is rendered on a written instrument having a higher rate of interest in which case interest shall be computed at the rate specified in the instrument if such rate was legal at the time the instrument was executed. In no case shall the rate exceed 7% per year after the date judgment is entered. The legislative purpose of this statute is to compensate the prevailing party for the expenses incurred in bringing the action and for the delay in receiving monetary damages. Matich v. Modern Research Corp., 146 Mich.App. 813, 381 N.W.2d 834 (1985); Saber v. Saber, 146 Mich.App. 108, 110, 379 N.W.2d 478 (1985). Prejudgment interest is mandatorily imposed by the court in civil actions to which the statute applies, notwithstanding any contrary agreement of the parties. Saber v. Saber, supra. Therefore, the Court does not believe this to be the correct characterization of Dupuis' affirmative defense.[18] The more probable characterization of Dupuis' affirmative defense is as an objection to imposition of the contract's monthly interest penalty for overdue balances. Assuming this position is correct, the Court is of the opinion that based upon the circumstances of this case and upon 377 consideration of the evidence adduced at trial, the award of interest as a measure of damages is appropriate in the case at bar for several reasons. First, by failing to object to inclusion of the interest penalty provision in the lease invoice within 10 days after its receipt, Dupuis has manifested its assent to that provision and thereby is contractually obligated to pay interest accordingly. 5 CORBIN ON CONTRACTS, Damages § 1045, p. 279. A second reason for awarding Skyline's request for interest relates to Dupuis' conduct with respect to the leased sheet piling. As a result of Dupuis' conversion of the piling, Skyline was unjustly deprived of its ownership rights and Dupuis had the benefit of "free" use of the piling for two years. An additional method of compensating Skyline for the inconvenience it has suffered due to Dupuis' nonpayment would be an award of interest. 18 Am.Jur.2d, Conversion § 121, p. 233. Therefore, the Court holds that Skyline is entitled to the contractually agreed-upon interest: 1.5% and 1.0% per month on overdue balances for the purchased and leased sheet piling, respectively.[19] Finally, Dupuis affirmatively asserts that Skyline's failure to mitigate damages by failing to timely reclaim any leased piling precludes recovery on one of the contracts at issue. According to Dupuis, the duty to collect any rented sheet piling rested with Skyline. Such piling presumably could have been reclaimed by Skyline whenever it determined that the contract was in default or deemed it to be completed or otherwise terminated. Under Michigan law, the party injured by a breach of contract must use reasonable efforts to mitigate damages actually sustained. Wells v. 10-X Mfg. Co., 609 F.2d 248, 256 (6th Cir.1979); Higgins v. Lawrence, 107 Mich.App. 178, 309 N.W.2d 194 (1981); MLP, Damages §§ 71-72, pp. 65-70. Although the U.C.C. does not contain a mitigation provision, "Michigan has also recognized the duty to mitigate damages in breach of contract cases subject to the Uniform Commercial Code." TCP Indus., Inc. v. Uniroyal, Inc., 661 F.2d 542, 550 (6th Cir.1981), citing, Ambassador Steel v. Ewald Steel, 33 Mich.App. 495, 190 N.W.2d 275 (1971). Failure to mitigate damages is an affirmative defense. TCP Indus., Inc., supra. As such, the burden of proof is on the defendant to show that the plaintiff has not used every reasonable effort in its power to minimize losses. Lorenz Supply Co. v. American Std., Inc., 100 Mich.App. 600, 300 N.W.2d 335 (1980), aff'd, 419 Mich.App. 610, 358 N.W.2d 845 (1984); Gorman v. Soble, 120 Mich.App. 831, 328 N.W.2d 119 (1982). Dupuis has not met that burden of proof. The Court notes that Dupuis' argument of a failure to mitigate has been raised solely with respect to the leased sheet piling. Since this piling was converted to Dupuis' own use upon its transfer to the Third Street Sewer Outfall project, the Court may summarily dismiss this argument. "The rule requiring the injured party to mitigate damages does not apply where the invasion of property rights is due to defendant's intentional, or positive and continuous, tort." Willis v. Ed. Hudson Towing, Inc., 109 Mich.App. 344, 311 N.W.2d 776 (1981); Allen v. Morris Bldg. Co., 360 Mich. 214, 217, 103 N.W.2d 491 (1960), quoting McCullagh v. Goodyear Tire & Rubber Co., 342 Mich. 244, 69 N.W.2d 731 (1955). Having determined that the Plaintiff is entitled to the contract prices plus interest for the purchased and leased steel sheet piling; and that Defendant is not entitled to any costs on its counterclaim, 378 IT IS ORDERED that judgment be entered accordingly. IT IS SO ORDERED. NOTES [1] The first month's rental for the leased piling was equivalent to one-third the value of the materials. [2] Bruce Sells, Jr., former President of Dupuis, testified that Dupuis had been quoted a liquidation rate of $0.23 per pound. Bill Horvath denied that he had given anyone at Dupuis such a quote. Instead, Horvath stated that he had discussed with John Perry a $0.26 liquidation rate when Dupuis was initially bidding on the Harbor Island project. Horvath's testimony was by far the most credible. [3] Bruce Sells, Jr. testified that upon receipt of Skyline's Invoices, he telephoned Bill Horvath and voiced his objections to the contractual terms contained therein. Since these alleged objections were verbal and not written, as required by the U.C.C., the notification given was insufficient to preclude enforcement against Dupuis of the payment and rental terms of the contracts. [4] Bill Horvath testified that during contract negotiations, there was no discussion between the parties that the leased sheet piling could not be used on other projects because standard rental practices prohibited such inter-project movement. Notwithstanding the absence of an explicit prohibition, it has been Skyline's position throughout this litigation that Dupuis converted the piling to its own use on the Third Street project without prior notice to, or authorization of, Skyline. Horvath, by affidavit, has stated that he was neither informed of nor consented to the transfer of the piling. Dupuis, on the other hand, responds in its pleadings that Skyline and Horvath were aware at all pertinent times of such alternate use because Skyline supplied additional materials for use by Dupuis on the Third Street project. [5] An inconsistency of remedies means that a certain statement of facts is relied upon as the basis to recover diametrically opposed remedies. For example, in a contract case, a party seeks a remedy based on the theory of affirmance of the contract or other transaction while another remedy arising out of the same facts is based on the theory of the contract's disaffirmance or recission. MLP, Election of Remedies § 2, p. 384; 25 Am.Jur.2d, Election of Remedies § 13, pp. 653-54. [6] Dupuis has admitted in its pleadings that the piling was, in fact, moved from the Harbor Island to the Third Street Sewer project without Skyline's prior authorization. [7] Dupuis further contends that the Michigan bonding statute is not intended as a garnishment procedure. Even if the Court were to conclude that Skyline is using the statute for garnishment purposes, "[t]he availability of garnishment as a remedy does not preclude seeking satisfaction of a [claim] through a direct action." MLP, Election of Remedies § 1, p. 118 (Supp.1986), citing, Davis v. Great Am. Ins. Co., 136 Mich.App. 764, 357 N.W.2d 761 (1984). [8] This case was not brought directly under the Michigan Public Works Bond Act. Therefore, the Court expresses no opinion whether Skyline has complied with the statute's notification requirements in a timely manner. [9] According to Horvath, Skyline's inventory of steel sheet piling is located locally in Detroit. All orders are shipped on the date(s) requested, subject to availability. Since inventory was available to satisfy Dupuis' purchase and lease orders, that piling was shipped on June 29, 1984. Dupuis, being a local purchaser, should have received delivery of the piling within four hours after the materials were loaded onto the common carrier. [10] Sells testified that Dupuis' efforts to secure the necessary piling from another supplier were unsuccessful. Although there was only a 2-3¢ per pound price difference among the various suppliers, none of the suppliers contacted by Dupuis had inventory available locally. Purchasing the piling from non-local sources would have resulted in an additional two-to-three week delay. Dupuis alleges that two and one-half weeks after it expected delivery, Skyline asked Dupuis to come and pick up the piling itself. Dupuis had no trucks with which to do so. [11] A "bill of lading" is "a document evidencing receipt of goods for shipment issued by a person engaged in the business of transporting or forwarding goods...." M.C.L.A. § 440.1201(6). [12] Defendant's Exhibit 4 was a letter dated May 25, 1984, from John Perry of Dupuis to D. Macro Cement. This letter advised D. Macro that Dupuis had expended additional time and experienced delay due to the obstruction of pile # 4 on May 17, 1984. An extra charge ($375 per hour × 5 hours expended) would be assessed. Skyline objected to admission of this Exhibit on relevancy grounds. Dupuis' letter, a copy of which Sells testified was not sent to Skyline, refers to bearing piling. Horvath testified that Skyline had delivered the bearing piling separate from, and probably before, delivery of the sheet piling presently at issue. Notwithstanding Skyline's objection, Defendant's Exhibit 4 was admitted into evidence. [13] The piling-drivers were given insignificant busy work while waiting for the piling to arrive. [14] Sells was of the opinion that Dupuis' hourly down time rate of $375 per hour was a very low and reasonable rate. Skyline should have been charged more but was not, due to the previously good business relationship between the parties. [15] The U.C.C. defines "incidental damages" to include "any commercially reasonable charges, expenses or commissions incurred in ... or otherwise resulting from the breach." M.C.L.A. § 440.2710. [16] See supra n. 2 and accompanying text. [17] M.C.L.A. § 440.2718(1) specifically provides that Damages for breach by either party may be liquidated in the agreement but only at an amount which is reasonable in light of anticipated or actual harm caused by the breach, the difficulties of proof of loss, and the inconvenience or nonfeasibility of otherwise obtaining an adequate remedy. A term fixing unreasonably large liquidated damages is void as a penalty. (Emphasis added.) [18] On September 10, 1986, this Court entered a Stipulation and Order whereby the Defendant A.J. Dupuis Company, upon receipt of the arbitration award proceeds from the Barton-Malow Company, would place into escrow the sum of $20,000.00 pending the conclusion of the present lawsuit. At trial, Skyline requested that part of its damages be satisfied out of the escrow account. Dupuis found this request to be premature since no funds had been received as of the trial date. The Court notes that had the $20,000.00 been received and deposited in escrow, prejudgment interest on this amount could have been avoided. Cent. Michigan Univ. Faculty Ass'n v. Stengren, 142 Mich.App. 455, 461, 370 N.W.2d 383 (1985). See also Western Casualty & Sur. Co. v. City of Garden City, 151 Mich.App. 83, 89 (1986) (statutory prejudgment interest does not apply to an arbitration award); Morgan v. Kamil, 144 Mich.App. 171, 375 N.W.2d 378 (same). [19] An award of interest on overdue payments does not preclude a simultaneous award of prejudgment interest. In the context of insurance contracts, the Michigan Court of Appeals has held that a court may properly order payment of both prejudgment interest (under M.C.L.A. § 600.6013) and interest on overdue payments on an award of no-fault personal protection benefits (under M.C.L.A. § 500.3142). Perkins v. Riverside Ins. Co. of America, 141 Mich.App. 379, 389, 367 N.W.2d 336 (1985). This Court concludes that both forms of interest are equally recoverable in the context of commercial contracts.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2860416/	<HTML> <HEAD> <META NAME="Generator" CONTENT="WordPerfect 9"> <TITLE></TITLE> </HEAD> <BODY TEXT="#000000" LINK="#0000ff" VLINK="#551a8b" ALINK="#ff0000" BGCOLOR="#c0c0c0"> <P><SPAN STYLE="font-size: 14pt"><STRONG><CENTER>TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN</STRONG></SPAN></CENTER> </P> <BR WP="BR1"><BR WP="BR2"> <BR WP="BR1"><BR WP="BR2"> <P><STRONG><CENTER></CENTER> </STRONG></P> <P><STRONG><CENTER>NO. 03-95-00748-CR</CENTER> </STRONG></P> <P><STRONG><CENTER></CENTER> </STRONG></P> <BR WP="BR1"><BR WP="BR2"> <BR WP="BR1"><BR WP="BR2"> <P><STRONG><CENTER>Dana Powell, Appellant</CENTER> </STRONG></P> <BR WP="BR1"><BR WP="BR2"> <P><STRONG><CENTER>v.</CENTER> </STRONG></P> <BR WP="BR1"><BR WP="BR2"> <P><STRONG><CENTER>The State of Texas, Appellee</CENTER> </STRONG></P> <BR WP="BR1"><BR WP="BR2"> <BR WP="BR1"><BR WP="BR2"> <P><STRONG><CENTER></CENTER> </STRONG></P> <P><SPAN STYLE="font-family: CG Times" STYLE="font-size: 11pt"><STRONG><CENTER>FROM THE DISTRICT COURT OF BELL COUNTY, 264TH JUDICIAL DISTRICT</CENTER> </STRONG></SPAN></P> <P><SPAN STYLE="font-family: CG Times" STYLE="font-size: 11pt"><STRONG><CENTER>NO. 39,561, HONORABLE JOE CARROLL, JUDGE PRESIDING</STRONG></SPAN><SPAN STYLE="font-family: CG Times"><STRONG></CENTER> </STRONG></SPAN></P> <P><SPAN STYLE="font-family: CG Times"><STRONG><CENTER></CENTER> </STRONG></SPAN></P> <BR WP="BR1"><BR WP="BR2"> <BR WP="BR1"><BR WP="BR2"> <BR WP="BR1"><BR WP="BR2"> <P><SPAN STYLE="font-family: CG Times"><STRONG>PER CURIAM</STRONG></SPAN></P> <P><SPAN STYLE="font-family: CG Times"> This is an appeal from the judgment of conviction for possession of a controlled substance. Appellant has filed a motion to withdraw this appeal. No decision of this Court has been delivered. The motion is granted and the appeal is dismissed. Tex. R. App. P. 59(b).</SPAN></P> <BR WP="BR1"><BR WP="BR2"> <P><SPAN STYLE="font-family: CG Times">Before Justices Powers, Jones and B. A. Smith</SPAN></P> <P><SPAN STYLE="font-family: CG Times">Dismissed on Appellant's Motion</SPAN></P> <P><SPAN STYLE="font-family: CG Times">Filed: February 14, 1996</SPAN></P> <P><SPAN STYLE="font-family: CG Times">Do Not Publish</SPAN></P> </BODY> </HTML>	01-03-2023	09-05-2015
https://www.courtlistener.com/api/rest/v3/opinions/1491366/	818 F. Supp. 707 (1993) MARS, INC., Plaintiff, v. CONLUX USA CORP., Defendant. Civ. A. No. 90-751-RRM. United States District Court, D. Delaware. April 15, 1993. 708 Charles S. Crompton, Jr., and William J. Marsden, Jr., Potter Anderson & Corroon, Wilmington, DE, and John B. Pegram, Peter H. Priest, Bryan C. Zielinski, Wayne S. Breyer, Jeffrey M. Weinick, Davis Hoxie 709 Faithfull & Hapgood, New York City, for plaintiff. Allen Terrell, and Richard Whetzel, Richards, Layton & Finger, Wilmington, DE, and Richard H. Zaitlen, J. Nicholas Gross, Gary D. Mann, and Michael J. Newton, Spensley Horn Jubas & Lubitz, Los Angeles, CA, for defendant. MEMORANDUM OPINION McKELVIE, District Judge. This patent infringement case was tried to a jury after the Court had ordered separate trials on the issues of liability and damages. On May 8, 1992, at the conclusion of the first phase of the trial, the jury returned with a verdict, finding the defendant Conlux USA Corporation ("Conlux") had infringed the plaintiff Mars Incorporated's ("Mars") patent and that the patent was not invalid or unenforceable. Thereafter, the Court entered a judgment in favor of Mars and against Conlux, and enjoined Conlux from making, using, or selling the infringing device. The parties tried the damages issues to the same jury in December of 1992. On December 18, 1992, the jury returned with a verdict of damages of $545,562, and a finding that Conlux had not willfully infringed Mars' patent. Thereafter, the Court entered a judgment in favor of Mars and against Conlux in that amount. Following the liability phase of the trial, Conlux moved for judgment as a matter of law, or alternatively, for a new trial. Following the damages phase of the trial, Mars moved for judgment as a matter of law and for a partial new trial. Mars also moved to amend the verdict. Conlux then moved to stay entry of the judgment, or alternatively, to stay execution of the judgment. This is the Court's decision on those motions. I. LIABILITY PHASE A. The Technology and the Patented Invention The technology in this case relates to electronic coin changers in vending machines, such as the coin changer in a soda machine. As a consumer places coins in the machine, the changer determines the authenticity and denomination of the coin for the purpose of confirming the sale and providing any change due to the consumer. The coin changers in vending machines in the 1950's and 60's were mechanical devices that relied on a number of moving parts. They were complicated, difficult to clean, and would jam under a number of different conditions, including at extreme temperatures or when soda or other items were poured into them. In the 1960's, the vending machine industry began investigating the opportunities to make a transition to electronic coin changers. Mars turned to Arthur D. Little Company for assistance. Engineers at Arthur D. Little began work on an electronic coin changer that would be simple, easy to clean, and inexpensive. One product of that work is the invention described in United States Patent 3,870,137 ("'137 patent"), titled "Method and Apparatus for Coin Selection Utilizing Inductive Sensors," which describes a method of examining the material properties of coins by subjecting them to electromagnetic fields. The inventor listed on that patent is Guy L. Fougere of Arthur D. Little. Mars' U.S. Patent No. 3,918,565 ("'565 patent"), issued November 11, 1975, is a second product of that work. The inventors are Guy Fougere, Walter Greene, and Dr. Dennis Jeffreys. The patent claims an invention of a method and apparatus for coin selection utilizing a programmable memory. A copy of the patent is at Plaintiff's Trial Exhibit 1 ("PX ____"). In essence, the inventors found an application for the semi-conductor memories being developed in the computer industry, as they described a method for assigning numeric values to a coin, storing the values in digital form, and using the stored values as limits to test the authenticity and denomination of a coin placed in the changer. The inventors' concept was to produce a range of numeric values in digital form as representative of a signal of an authentic coin, to store that range of values in a programmable memory, and then compare the numeric values of a test coin's signal to the range of values of the authentic coin's signal. 710 The patent identifies several types of suitable programmable memory, all semiconductor devices, including the preferred Intel type 1701 or 1702 erasable programmable read only memory ("EPROM") and one-time or fusible link programmable read only memory ("PROM"). By incorporating a programmable memory in an electronic coin changer, the inventors had permitted the manufacturer to use specific coins to program the memory of the changer to read for that coin at the time the changer is built. As the EPROM semiconductor devices were reprogrammable, the manufacturer or someone else retained the option to reprogram the memory to read and accept different coins. Thus, for example, when initially manufacturing the changer, the manufacturer could use an American quarter to program or set the memory of an electronically erasable programmable read only memory ("EEPROM") semiconductor device to test for that coin. Thereafter, the manufacturer or someone else could reprogram the memory in the changer with a different coin, such as a token sold by a business such as Chuck E. Cheese restaurants, and the memory would then be used to test for the authenticity of that coin. The inventors assigned their rights under the '565 patent to Mars. Mars' wholly owned subsidiary, Mars Electronics International, Inc. ("MEI"), practices the claimed invention in competition with Conlux. B. The Conlux E920 Conlux is a wholly-owned subsidiary of Nippon Conlux Kabushiki-Kasha, ("Nippon Conlux"), a Japanese corporation. Nippon Conlux began doing business in the U.S. in the early 1980's, prior to forming its U.S. subsidiary. Nippon Conlux designed and manufactures the accused device, the E920 coin changer, which Conlux markets under the name the "Premier." Mars '565 patent includes sixty-three claims. At the trial in April and May of 1992, Mars alleged Conlux was infringing fifteen of those claims by using, selling, and importing the Conlux Premier Coin Changer, which incorporates Conlux's E920 coin discriminator. Four of the fifteen claims asserted by Mars are independent claims; claims 1 and 60 are method claims, claims 20 and 61 are apparatus claims. The independent method claims read as follows: 1. A method of examining coins with respect to authenticity including the steps of examining a first unidentified coin by making a measurement with respect to a first characteristic of the coin and thereby producing a first electrical signal having a quality with a first value indicative of the first characteristic of the first coin, comparing the first value with a stored value of the same quality in a programmable memory, and producing a signal indicative of the acceptability of the first coin with respect to the first characteristic when the first value is within predetermined limits for acceptable coins of a given denomination of the stored value. 60. A method of examining coins with respect to authenticity including the steps of examining a disc of known characteristics and causing a value to be stored in a programmable memory as a result of the examination, examining an unidentified coin at a later time and thereby producing a first electrical signal having a quality with a first value indicative of a first characteristic of the first coin, comparing the first value with the value stored in the programmable memory, and producing a signal indicative of the acceptability of the first coin with respect to the first characteristic when the first value is within pre-determined limits for acceptable coins of a give denomination, the limits being dependent at least in part upon the stored value. The independent apparatus claims read as follows: 20. Apparatus for examining coins with respect to authenticity comprising means for examining a coin by making a measurement with respect to a first characteristic and producing a first electrical signal having a quality representative of the first characteristic, a programmable memory, and means for comparing a first value of the quality of the first signal with one or 711 more values stored in the programmable memory. 61. Apparatus for examining coins with respect to authenticity comprising a coin passageway, means for producing an electromagnetic field in a region of the passageway, means for examining a characteristic of the interaction of a coin in the passageway with the electromagnetic field and producing an electrical signal having a quality representative of that characteristic, a programmable memory, and means for comparing values of said quality with upper and lower limit values stored in the programmable memory. Conlux's E920 coin discriminator has electromagnetic coil sensors that can sense the characteristics of a coin, such as its diameter and thickness. These sensors have a standby voltage that is assigned a value and is stored in a register. When a coin is placed in the discriminator a new voltage signal is generated and stored in a register. The central processing unit ("CPU") then computes a ratio, dividing the voltage generated by the new coin by the standby voltage. This ratio is then stored in another register and compared with ratios stored in a random access memory to determine the coin's authenticity and denomination. The E920 is described in Figure 19 at DX 79. C. The Jury's Finding That Conlux Has Literally Infringed the Claims in the Patent During the liability phase of the trial, Mars offered evidence to show Conlux's E920 infringed the independent claims of the '565 patent, claims 1, 20, 60 and 61, and eleven other claims dependent on those claims. The jury agreed and in its verdict form reported its finding that Mars had shown by a preponderance of the evidence that Conlux had literally infringed claims 1, 2, 3, 8, 11, 20, 21, 22, 23, 24, 27, 49, 57, 60, and 61. See Docket Item 173 ("D.I. ____"). D. Conlux's Motion for Judgment as a Matter of Law Pursuant to Federal Rule of Civil Procedure 50(b), Conlux has moved for judgment as a matter of law in its favor, contending that there is no substantial evidence it infringed the claims of the '565 patent. In moving to set aside the jury's verdict, Conlux must show either that the jury's findings of disputed material facts are not supported by substantial evidence, or that those findings cannot support the legal conclusions to be implied from the verdict. Perkin-Elmer Corp. v. Computervision Corp, 732 F.2d 888, 893 (Fed.Cir.), cert. denied, 469 U.S. 857, 105 S. Ct. 187, 83 L. Ed. 2d 120 (1984); Read Corp. v. Portec, Inc., 970 F.2d 816 (Fed.Cir.1992). In the context of a review of the jury's findings based on a dispute as to the proper interpretation of the claims of a patent, the interpretation of claims is defined as a matter of law based on underlying facts. Tol-O-Matic, Inc. v. Proma Produkt-Und Marketing Gesellschaft m.b.H., 945 F.2d 1546, 1549 (Fed.Cir.1991). If the meaning of a term in a claim is disputed and extrinsic evidence is necessary to explain that term, then an underlying factual question arises, and construction of the claim is left to the jury in its determination of infringement. Palumbo v. Don-Joy, 762 F.2d 969, 974 (Fed.Cir.1985). Conlux has focused the arguments in support of its motion on the two principal independent claims, claims 1 and 60, and argues that the findings of infringement of these method claims should be overturned for the following reasons. 1. Claim 1 of the Patent a. "... comparing the first value with a stored value of the same quality in a programmable memory...." Conlux first argues that its E920 does not infringe claim 1 and the other independent claims in the patent as it does not compare signal values of a particular quality with stored values of the same quality. In the method described in the patent, frequency values are converted into a numeric value corresponding to frequency counts, and a frequency count is then compared to frequency counts for representative coins that are stored in the read only memory ("ROM"). Conlux argues that in its device the voltage value in the sensors is not compared 712 to another voltage value. Rather, the value is converted to a ratio and the E920 compares that ratio to other ratios stored in its memory. Conlux contends that the E920 does not, therefore, directly compare a value having the same quality with values of the same quality stored in a programmable memory. Mars has responded to this argument by noting that the meaning of the word "quality" as used in the patent was the subject of extensive testimony at the trial. For example, while Conlux called Dr. Vernon Rhyne to testify that the E920 does not compare signal values of a particular quality with stored values of the same quality, Mars called Donald R. Kesner, an electrical engineer, to testify that it did. Mr. Kesner testified that, to one skilled in the art in the vending and coin mechanism industry, the term quality should be defined as "meaning that there is something about this particular signal that is representative of the interaction" and that the word as used in the patent should be read as encompassing a function, such as a difference, or Conlux's use of a ratio. See the transcript of his trial testimony at 1652 ("Kesner Tr. ____"). See also the transcript of Dr. Jeffrey's trial testimony at 130 ("Jeffreys Tr. ____"). The Court finds this issue was fairly presented to the jury and that there is substantial evidence in the trial record to support the conclusion that the term "quality" encompassed a function such as Conlux's use of a ratio and, therefore, that the E920 discriminator produces a "first signal having a quality with a first value indicative of the first characteristic of the first coin." There is, therefore, substantial evidence to support this aspect of the jury's finding that Conlux's device infringed claim 1 of the patent. Further, the Court finds Mars has offered the correct interpretation of the word quality as used in the claim. b. "... with a stored value of the same quality in a programmable memory...." Mars' invention provides for using a programmable memory in its coin selector. In the patent, the inventors identified several types of suitable programmable memory, including Intel erasable programmable read only memory ("EPROM") and other one-time or fusible link programmable read only memory ("PROM"). See PX 1 at col. 3, line 63-col. 4, line 35. With an erasable programmable memory, the settings on a coin changer can be modified or reprogrammed so that the changer will accept new or different coins. At the trial, Guy Fougere, one of the inventors of the '565 patent, testified that one of the beauties of the invention is that it can be reprogrammed directly in the field, without having to be brought back to a central maintenance area. The E920 does have an electronically erasable, programmable read only memory that stores coin reference data. It is not, however, erasable or reprogrammable in the field. On the contrary, Conlux has built a lockout feature into its unit which prevents the user from reprogramming the coin data in the EPROM. Conlux argues that, with the addition of this lockout feature, the E920 discriminator does not infringe claim 1 or any other claim in the '565 patent as it does not include a "programmable memory" within the meaning of the claims. At the trial, Mars offered evidence to show that the EPROM in the E920 is erasable and reprogrammable and that Conlux has reprogrammed the E920 at its facilities in Missouri. It argued that while Conlux may have decided to prevent its customers from reprogramming the memory in the field, this does not mean that the E920 discriminator is not reprogrammable. It simply means that Conlux limits who it is that can accomplish that reprogramming. Mars also argued that the term programmable as used in the patent is not limited to erasable programmable memory. While the inventors may have identified EPROMs as the preferred device, they also identified the following as suitable programmable memory: fusible link programmable read only memory; random access memory with a battery ("RAM"); and, read most memory ("RMM"). PX-1 at col. 3, line 63-col. 4, line 35. 713 The Court finds there is substantial evidence in the trial record to support the jury finding that the E920 infringes the claims in the patent even though it may not be programmable in the field. Further, the Court finds that the word programmable as used in the patent should not be read to mean that the programmability is limited to reprogrammability in the field. Rather, the term programmable in the patent includes both one-time and reprogrammable semi-conductor devices. c. "... comparing the first value with a stored value of the same quality in a programmable memory...." Conlux also argues that the E920 does not infringe claim 1 as it does not directly compare the values from the sensors with stored values in the EPROM. In the E920, the values are compared in the RAM, and not in the EPROM. Mars responded at the trial and in its post trial brief by arguing that Conlux is reading limitations into the claim that are not there. Mars contends the claim states that the value of the sensor should be compared, but need not be directly compared. See Kesner Tr. 741-44, and 1661-1662. This issue was presented to the jury and there is substantial evidence in the record to support the jury's verdict that the E920 infringes claim 1 even though it does not directly compare the values from the sensors with values stored in the EPROM. Further, the Court finds that the claim should not be read as requiring that the comparison be direct. 2. Claim 60 Conlux contends that its E920 does not infringe claim 60 as it does not examine a disc of known characteristics, which Conlux would define as a replica. Conlux's E920 uses regular coins rather than a replica. At the trial, Mars offered evidence that the term "disc" in the claim can be read to include both a coin and a token. See Dr. Rhyne Tr. 1541, and Kesner Tr. 1657-58. With this testimony, there is substantial evidence in the trial record to support the jury's verdict that Conlux infringed Claim 60 in using a coin rather than a replica. Accordingly, the Court finds the term disc should not be read to be limited to a replica and that it can be read to include coins. 3. Conlux's Contention that the Claims in the Patent Were Obvious During the trial, Conlux offered evidence to show that the '565 patent should be found invalid because the subject matter as a whole would have been obvious to a person having ordinary skill in the art at the time of the invention in October of 1972. That evidence included three principal prior art references that disclosed electronic coin discriminators and programmable memories prior to the date the invention was made. One of the prior art references is U.S. Patent 3,870,137, titled "Method and Apparatus for Coin Selection Utilizing Inductive Sensors." See PX 24. Mr. Fougere is the inventor on that patent. It relates to a coin changer with a hard wired logic. A second principal prior art reference is U.K. patent 1,196,034 ("'034 patent") by Siemens titled "Improvement in or Relating to Automatic Coin Recognition Arrangements." See DX 286. The '034 patent involves coincidence detection to validate coins. A mechanical finger scans the surface of a coin, producing an electrical variation corresponding to the contour of the surface of the coin. A third reference is U.S. patent 3,373,856, ("'856 patent"), a March 19, 1968, patent by Kusters titled "Method and Apparatus for Coin Selection." See PX 88. The '856 patent involves coin discrimination based on signal loss due to presence of a coin in a magnetic field. Conlux argued that the only significant difference between the claimed invention and these prior art references is the recitation in the patent of "programmable memory." It called Boley A. Andrews, a Vice President of Research at a competing company, Vendo, to testify that those persons of ordinary skill in the art of coin mechanisms were familiar with and had used erasable programmable memories prior to October, 1972. 714 Conlux argues the jury wrongfully ignored these established facts and has moved to set aside the jury's finding that Conlux had not shown by clear and convincing evidence that the claims of the patent were invalid as obvious. See Newell Companies Inc. v. Kenney Manufacturing Co., 864 F.2d 757, 763 (Fed. Cir.1988), cert. denied, 493 U.S. 814, 110 S. Ct. 62, 107 L. Ed. 2d 30 (1989). In opposition to the motion, Mars argues that there is substantial evidence in the record to support the jury's verdict. For example, Mars had called Donald Kesner to testify as an expert witness on the issue of the level of skill in the art at the time of the invention. In contrast to Mr. Andrews' testimony, Mr. Kesner testified that the level of skill was not very high in 1972, and that because the people in the field were not oriented towards the aspects of integrated circuits and microprocessors or controllers, the substitution of programmable memory for the hard wired logic in the '137 patent would not have been obvious. Kesner Tr. 647-49. Mars also notes that Dr. Rhyne, another Conlux expert, conceded on cross examination that one could not simply substitute a programmable memory for the hard wired logic in the '137 patent. Dr. Rhyne Tr. 1553-61. Finally, Mr. Kesner testified that the literature on programmable read only memory devices offered by Conlux did not suggest or teach the claimed application of PROM devices. Conlux also argues that the prior art teaches the second step of claim 1, comparing the first value with a stored value of the same quality in a programmable memory. In response, Mars notes that it offered evidence at the trial to show this was not correct. No memory is present in the '137 patent and no numerical comparison is accomplished in the '856 patent. Further, the memory in the '034 patent does not store values. Dr. Rhyne Tr. 1559-65, and Kesner Tr. 731-36, and 740. Finally, Mars argues that Conlux's claim that the invention was obvious is rebutted by the evidence of the commercial success of its coin changer Mars established through the testimony of Kathy Walters, MEI's Director of Finance, and others. See, e.g., PX 196. This evidence cited by Mars confirms that there is substantial evidence in the record to support the jury's finding that Conlux had not shown by clear and convincing evidence that the claimed subject matter as a whole would have been obvious to a person having ordinary skill in the art. The Court will, therefore, deny Conlux's motion for judgment as a matter of law on this issue. 4. Conlux's Contention that the Patent Violates the Best Mode Requirement In its motion for judgment as a matter of law, Conlux argues that the evidence at the trial demonstrates clearly and convincingly that the '565 patent is invalid for failure to disclose the best mode, as the inventors concealed critical information regarding the sensing stations in the '565 patent and concealed their optimal solution for correcting those problems. On these issues, Mars called Dr. Jeffreys and Mr. Fougere to testify. Both testified that to the extent they had identified problems with the sensors (such as potential problems with forgery by placing tape or plastic on a coin) they never identified a solution to the problems and thus lacked the intent to conceal a mode of practicing the claimed invention which was known to them and that they believed was "best." See, e.g., Dr. Jeffreys Tr. 154-59. Further, with regard to the information concerning the characteristics, sensor location and frequency, both also testified that this information was disclosed in the '137 patent, which was referenced five times in the '565 patent. See, e.g., Dr. Jeffreys Tr. 125 and Fougere Tr. 277. As the '137 patent was issued on March 11, 1975, the disclosure in that patent would have been available at the time of the issuance of the '565 patent on November 11, 1975. There is substantial evidence in the record to support the jury's finding that Conlux had failed to show by clear and convincing evidence that the claims of the '565 patent are invalid on the ground of lack of disclosure of the best mode contemplated by the inventors for carrying out their invention. 715 E. Conlux' Motion for a New Trial based on Mars' Alleged Withholding of Evidence Prior to the liability phase of the trial, Mars filed an application with the Patent Office to correct the listing of the inventors on the '137 patent from Fougere to Fougere, Greene, and Dr. Jeffreys. See Fougere Tr. at 225. In connection with that application, Mars intended to argue in this case that the '137 patent could not be cited as prior art against the '856 patent. See D.I. 152, Exhibit D. As the Patent Office had not acted on that application prior to the trial, Mars went forward at the trial treating the '137 patent as prior art. The liability issues were tried in late April and early May, 1992, with closing arguments and instruction to the jury on Wednesday, May 6, 1992. The jury returned with its verdict in favor of Mars on Friday, May 8, 1992. Thereafter, Conlux learned that the Patent Office had notified Mars on May 4, 1992, that it was denying the application to amend the identification of the inventors on the '137 patent. See D.I. 195, Appendix 11 at A105 (copy of Patent Office's decision). Conlux has moved for a new trial based on Mars' failure to disclose this information as it received it, contending that the Patent Office's decision raises substantial questions about Mars' witnesses' credibility and that the decision raises serious doubts about the jury's non-obviousness conclusion. Mars has responded by arguing that the Patent Office's decision is only preliminary. Further, it notes that the subject matter of the decision was not relevant to the issues presented at trial, as it proceeded at the trial as if the '137 patent were prior art. Conlux has not shown that the Patent Office decision or the information in that decision would have been admissible at trial, or that it would have been appropriate to cross-examine witnesses at the trial based on the statements in the decision. The Court will, therefore, deny the motion for a new trial. II. DAMAGES PHASE A. The Court's Pre-Trial Rulings on Marking and Non-Infringing Alternatives The damages issues were tried to the jury in December of 1992. In November, 1992, the Court granted Conlux's motion for a partial summary judgment, finding that, because Mars had not marked its product with the number of the patent-in-suit, Mars could not recover damages for the period prior to August 10, 1992, the date it gave Conlux actual notice of the claimed infringement. See D.I. 283. One element of the damages Mars sought to recover from Conlux was the estimated profits Mars lost as a result of Conlux's sales of the infringing product for the period from August 10, 1992, to November 11, 1992, the date the patent expired. In pre-trial discovery, Mars disclosed that it intended to argue it was entitled to calculate these lost profits based on all of Conlux's sales, rather than Mars' estimated market share of those sales. To establish the right to that measure of damages, Mars noted that it intended to prove in the damage phase of this case that the alternative product in the market, which is manufactured by Coinco, infringes a number of other patents held by Mars. Conlux introduced its electronic coin changer in the U.S. market in late 1988 and sold its first unit in 1989. Since then, Mars, Coinco, and Conlux have sold the following electronic coin changer units and had the following relative market share in the United States for the period from January 1, 1989, through October, 1992: 1989 1990 1991 1992 units mkt sh. units mkt sh. units mkt sh. units mkt sh. Mars 162,678 51.6% 145,537 58.3% 157,886 64.9% 111,027 54 % Coinco 149,852 47.5% 91,101 36.5% 84,779 34.8% 93,028 45.2% Conlux 2,618 .8% 13,143 4.9% 746 .3% 1,881 .9% ________ ________ _______ _______ Total 315,148 249,781 243,411 205,936 716 See D.I. 370, at 4, and DX 1006. Thus, during the period from 1989 through the fall of 1992, Mars and Coinco dominated the market. Conlux never achieved 5% of the total market share of electronic coin changer sales. With electronic coin changers selling in a range from $150 to $200 a unit, the total dollar value for sales of electronic coin changers was in the range of $50,000,000, with Conlux's annual sales never exceeding $2,500,000. Mars filed this action against Conlux in December of 1990. That same year Mars sued Coinco in the United States District Court in New Jersey, alleging that Coinco's electronic coin changers infringed five other patents held by Mars. See Mars, Incorporated v. Coin Acceptors, Inc.; Mars Electronics International Inc. v. Coin Acceptors, Inc.; v. Mars Electronics International, Inc. and M & M/Mars Incorporated, Civil Action No. 90-49 (JCL). For further information on the claims involved in those cases see exhibit 1 to DI 252. The cases against Coinco apparently are still pending. Prior to the trial on the damages issues, Conlux argued it would be burdensome and distracting to allow Mars to attempt to prove that the Coinco changers were not available as non-infringing alternatives to the Conlux E920, and moved to bar it from seeking damages based on that theory. Conlux noted that, as an alternative measure of damages, Mars could attempt to recover damages based on a combination of lost profits calculated based on Mars' relative market share and a reasonable royalty for the balance of the sales otherwise attributable to Coinco's market share. The Court agreed with Conlux and granted its motion. B. Trial on the Damages Issues The parties tried the damages issues to the jury over the course of eight trial days, with testimony beginning on Wednesday, December 9, 1992, and closing arguments on Thursday, December 17, 1992. During the trial, Mars offered proof to show Conlux's infringement caused the following damages: (1) price erosion damages Mars argued it was entitled to $12,150,381 in damages suffered as a result of having to lower its prices to meet Conlux's competition. (2) lost profits Mars also argued it was entitled to $825,219 in damages for lost profits, including $545,562 as a combination of the lost profits Mars would have earned on its market share of the units sold by Conlux, and a royalty for the balance of the market share attributable to Coinco's sales, plus $279,657 in lost profits from price erosion on those units sold by Conlux. (3) head start damages Mars argued it was entitled to $16,140,308 in estimated damages it would suffer from November 11, 1992, to November 11, 1994, as a result of the head start Conlux will have in competing against Mars as a result of its infringement. (4) employee separation damages Finally, Mars sought $1,800,583 in damages incurred in having to lay employees off as a result of Conlux's competition. See PX 529 (summarizing Mars' damages claims). The total damages sought by Mars was $30,916,491. Adjusted for inflation, the amount was $37,776,065. See PX 530. With a trebling for Conlux's alleged willful infringement, Mars asked the jury to award it approximately $118,000,000. C. The Jury's Verdict The parties submitted the damages issues to the jury with a set of special interrogatories. On December 18, 1992, the jury returned with a verdict rejecting all but one of Mars' claims for compensatory damages, finding Mars was entitled to $545,562 in damages for lost profits. On January 6, 1993, the Court entered a judgment in that amount in favor of Mars and against Conlux. D. Mars' Motion for Judgment as a Matter of Law and for a Partial New Trial Mars has moved for judgment as a matter of law or a new trial contending that the 717 Court erred in its two pre-trial rulings in the damages phase of the case. 1. The August 10, 1990 Notice of Infringement Mars has moved for a new trial on its claim for damages for the period prior to August 10, 1990, the date Mars put Conlux on notice of its infringement claims. Mars seeks an additional $1,424,177 for pre-notice lost profits and $2,969,919 for pre-notice price erosion damages. The Court will deny Mars' motion, as it is in the nature of reargument and fails to identify any new matter that would require the Court to reconsider or change its pre-trial decision. 2. Exclusion of Evidence on Whether Coinco's Product Infringes the '565 Patent Mars contends that the pre-trial decision precluding it from offering evidence to show Coinco's changers were not a non-infringing alternative, prevented it from obtaining an award of damages for price erosion, and from showing that Conlux and Coinco were both tortfeasors causing a single, non-apportionable harm and are, therefore, subject to joint and several liability. It appears Mars may be confused on the relevance of information relating to Coinco and its coin changer. In the pre-trial decision, the Court found that although facts tending to show that Coinco's changer infringed Mars' patents may be relevant to establish Mars' claim for lost profits, the Court would not admit those facts into evidence as the probative value of the facts was outweighed by considerations of relative value of the evidence, the acceptability of alternative measures of damages, and undue delay, burden, and expense that would be required in allowing such facts into evidence. See Federal Rule of Evidence 404. In reporting that decision, the Court did not preclude either party from offering into evidence facts relating to Coinco and the sales of its changer that may be relevant to other issues of fact that are of consequence in the determination of the action. For example, information relating to Coinco's sales might be relevant to whether or not Coinco (as opposed to Conlux) in fact caused the harm for which Mars seeks damages. If competition from Coinco, rather than Conlux, caused Mars to lose market share, then information relating to Coinco's sales is relevant to reduce or limit the price erosion and other market loss damages claimed by Mars without regard to whether or not Coinco's changer infringes Mars' patents. The Court noted this in granting Conlux's motion to preclude the proof on Coinco's alleged infringement. With that decision, both parties offered evidence at the trial on the competition among Conlux, Mars, and Coinco. Mars argued that evidence showed the $37,000,000 in damages it claimed it has and will suffer can be attributed to Conlux. Conlux responded with its own substantial evidence, showing that Mars had not in fact suffered these damages and, even if it had, that its losses should not be attributed to Conlux. That evidence included Mars' own contemporaneous internal documents in which Mars' employees and agents pointed to Coinco as its major competitor and attributed Mars' problems in the market place to Coinco and not Conlux. See, e.g., The Frank Lynn Report, MEI Growth Opportunities in the Vending Market, DX S-1071. A review of those documents shows that Mars repeatedly measured its performance in the market place against Coinco, with hardly a mention of Conlux. See, e.g., DX S-1071, where the author writes: "... Coinco has since matched Mars' performance level and has exceeded Mars' service capabilities.... Mars needs to eliminate inconsistent service levels; Coinco is setting standard." See also S-1069, at 5, ("Coinco is gaining share at MEI's expense due to MEI product/service gaps and Coinco superior enhanced service strategy.") The evidence adduced at the trial suggests that to the extent Mars has in fact suffered $35,000,000 to $40,000,000 in damages as a result of sales of infringing coin changers, Coinco rather than Conlux should be held liable for that harm. It appears the jury appreciated this when it rejected Mars request that it return a verdict of $37,000,000 in damages and instead awarded it $544,000, the sum sought by Mars for lost profits and royalties on Conlux's infringing sales. 718 In its motion for judgment as a matter of law or a new trial, Mars argues that the Court's decision to limit the proof as to Coinco's alleged infringement also prevented Mars from recovering damages from Conlux as a joint tortfeasor with Coinco. For two reasons the Court will deny this claim for relief. First, Mars is too late. Mars failed to identify this theory of liability before or during the trial. It was not in the Pre-Trial Order. Mars did not present evidence in support of the theory at trial. Mars did not ask the jury to award relief based on this theory and it did not ask the Court to identify this claim in the instructions to the jury. Second, it does not appear from the case law cited by Mars in support of the motion that Mars could in any event recover these damages from Conlux based on the theory that Conlux and Coinco were liable as joint tortfeasors. For example, it is not clear Mars could have shown it has suffered a distinct or single harm caused by the two companies or that Conlux could not have shown that these damages could have been apportioned. See U.S. v. Alcan Aluminum Corp., 964 F.2d 252, 268 (3d Cir.1992). On the contrary, it appears that the jury in this case was able to identify the harm which was caused in fact by Conlux's infringing conduct. The Court expects Mars has preserved these damage claims for its case against Coinco, and will deny Mars' motions to set aside the verdict and for a new trial based on the decision not to allow Mars to prove Coinco's infringement in the damage phase of this case. 3. The Jury's Decision that Conlux did not Willfully Infringe the '565 patent. Mars contends the Court erred in giving the following instruction to the jury on the issue of willfulness: Having found that Mars has proved that Conlux infringed the patent in suit, you should consider whether or not Mars has also proved that Conlux's infringement has been willful and deliberate. An act is willfully and deliberately done if it is done voluntarily and intentionally. Whether a party's infringement is willful depends on an evaluation of the totality of the circumstances. Infringement of a patent is willful and deliberate when the infringer knows of the patent and has no reasonable basis to believe he has a good defense that the patent is invalid, not infringed or unenforceable, but nevertheless proceeds to make the patented product or device or to use the patented process. The plaintiff must prove willful infringement by clear and convincing evidence. DI 361, at 1861-62. Mars contends the Court should have given the jury the following instruction it has drawn from Underwater Devices Inc. v. Morrison-Knudsen, Co. Inc., 717 F.2d 1380 (Fed. Cir.1983): When a person is aware of someone else's patent that is relevant to a product he is or is contemplating making, using or selling, or a method or process he is practicing, that person has an affirmative duty of care to respect the rights protected by that patent. Thus duty normally requires that person to obtain competent legal advice from an attorney before engaging or continuing in any potentially infringing activity. The failure of a person in these circumstances to obtain timely, competent, legal advice is an important factor which supports a finding of willfulness. A finding of willfulness does not require a finding of bad faith on the part of Conlux. In determining whether Conlux's conduct was willful, you should determine its state of mind based on all of the direct evidence, if such evidence is available, or based on circumstantial evidence and inference, if direct evidence is not available. D.I. 311, at 43-44 (Plaintiff's Proposed Jury Instructions). In its motion for judgment as a matter of law or for a new trial, Mars argues that the Court erred in failing to give this instruction, as it would have made clear to the jury that once Conlux was on notice of Mars' claim of infringement, it had an affirmative duty of care to respect Mars' rights and that the duty normally required it to obtain competent 719 legal advice before engaging or continuing in any potential infringing activity. The Court will deny Mars' motion for relief on this issue for the following reasons. First, the instruction as given by the Court fairly set out for the jury the legal standard it should look to in determining whether or not the defendant's conduct was willful and deliberate. That is, it instructed the jury to look to Conlux's intent in the context of the totality of the circumstances, including the information available to it and whether or not it had a reasonable basis to believe it had a defense to a claim of infringement. See, e.g., State Industries, Inc. v. Mor-Flo Industries, Inc., 883 F.2d 1573 (Fed.Cir.1989), cert. denied, 493 U.S. 1022, 110 S. Ct. 725, 107 L. Ed. 2d 744 (1990) ("To establish willful infringement, a plaintiff must prove by clear and convincing evidence that the defendant acted with no reasonable basis for believing it had the right to do so.... There are no `hard and fast per se rules,' and the finding is based on the totality of the circumstances...."). In this case, the instruction proposed by Mars would have told the jury that once Conlux was aware of Mars' patent, it had an affirmative duty of care to respect Mars' rights and that this duty required it to obtain competent legal advice from an attorney before engaging or continuing in any potentially infringing activity. There is some case law that suggests this instruction may not be correct. See, e.g., Avia Group Intern, Inc. v. L.A. Gear California, 853 F.2d 1557 (Fed. Cir.1988) (defendant's failure to obtain legal advice is not determinative, rather it is one factor supporting a finding of willfulness.) In addition, the instruction given by the Court avoided two problems presented by the instruction offered by Mars. It avoided the suggestion that a decision of willfulness should turn on any one fact or factor (a requirement that a party obtain legal advice) rather than the totality of circumstances. It avoided the use of the term "duty" and the risk of suggesting to the jury that there was a shifting of the burden of proof. In this context, it may be better to provide the jury with a relatively simple and straight-forward instruction that fairly describes the principles at work and the issue to be resolved, rather than attempt to modify and tailor the instruction to include a summary statement of rules culled from opinions where courts have applied these principles to particular facts and circumstances. The second reason to deny the motion is that the evidence at the trial shows that Conlux did in fact exercise the due care required in the circumstances and did obtain advice from counsel. For example, Conlux called William Androlia, its attorney, to testify at the trial. Androlia is a patent attorney and a partner in the firm of Koda and Androlia. Androlia Tr. 1233. He testified he has a bachelor and master's of science degree in electrical engineering and took and passed the California bar exam in 1973 and the United States Patent Office exam in 1974. Androlia Tr. 1234. He currently teaches patent law at Pepperdine Law School and he works on patent applications and opinions in his practice. Androlia Tr. 1235. Androlia testified he received Mars' initial notice alleging Conlux's E920 infringed Mars' '137 patent and forwarded it to Conlux. He testified that the people at Conlux were very concerned about the matter and wanted his firm to analyze the issues and advise them as to whether or not they were infringing Mars' patent. Androlia Tr. 1241. He also testified to the extensive efforts he undertook in responding to that request, including review of information relating to the E920 and the patent and file history, and investigation as to whether there was literal infringement or infringement under the doctrine of equivalents. Androlia Tr. 1243-46. His advice to Conlux was that it was not infringing the '137 patent and he confirmed that advice in writing to Mars' counsel in July of 1990. Androlia Tr. 1246. Mr. Androlia testified that he then received Mars' August 10, 1990 letter. He forwarded it to Conlux and again they were very concerned. Androlia Tr. 1248. In response to Conlux's request he undertook a second review, this time of the '565 patent. His partner travelled to Japan for at least two meetings with the people at Nippon Conlux and received and reviewed additional information 720 on the E920. Androlia wrote to Mars in October and December to report he was continuing his review of the matter. Androlia Tr. 1252. During a December 21, 1990 meeting he advised Conlux it was his opinion that the E920 did not literally infringe the patent, that there might be a problem under the doctrine of equivalents, but that the patent would probably be held invalid for obviousness. Androlia Tr. 1258. At the trial, Mars tested the sufficiency of Mr. Androlia's representation and advice and argued to the jury that it should reject his work and find Conlux liable for willful infringement. The jury heard that evidence, weighed it, and decided Mars had not proven by clear and convincing evidence that Conlux had willfully infringed Mars' patent. There is substantial evidence in the record to support that verdict, to support the conclusion that Mars had failed to prove Conlux did not have a reasonable basis for believing it was not infringing Mars' patent, to support the conclusion Conlux had not willfully and deliberately infringed the patent, and to support the conclusion that Conlux acted to meet the duty of care identified by Mars, including having sought out and obtained competent legal advice from an attorney before engaging or continuing in the potentially infringing activity. For these reasons, the Court will deny Mars' motion for judgment as a matter of law or a new trial on the issue of willfulness. E. Mars' Motion To Amend the Judgment Mars has moved to amend the judgment to add prejudgment interest and to seek an award of a reasonable royalty. 1. Mars' Motion to Amend the Judgment and Award Prejudgment Interest. Pursuant to 35 U.S.C. 284, Mars has moved the Court to award prejudgment interest on the amount of damages awarded by the jury. Mars has submitted a proposed calculation based on a summary of Conlux's coin changer sales for the period from August 11, 1990 to November 11, 1992. Mars seeks interest at the short term prime rate charged by banks as reported by the Philadelphia Reserve Bank. Mars has calculated that interest on a monthly basis, with interest to be paid on the total of the principal balance and interest due each month. The total pre-judgment interest it seeks under this approach is $77,215.61. Conlux does not oppose an order amending the judgment awarding prejudgment interest. It does, however, oppose Mars' calculation of the amount. First, Conlux argues that Mars was responsible for delays in the resolution of the case and should not, therefore, be awarded any prejudgment interest for the period from resolution of the liability phase to the resolution of the damages phase. There is not a sufficient factual basis to attribute any delay in the litigation to one party or the other, or to suggest that the delay should lead to a forfeiture of a portion of the measure of damages intended to make Mars whole. The Court will not, therefore, reduce Mars' claim for prejudgment interest based on this argument. Second, Conlux argues that the interest rate proposed by Mars is too high. Specifically, Conlux argues that the rate Mars proposes, the short term prime rate, is a rate tied to the cost of borrowing money, and that Mars is not entitled to this rate absent proof it had to borrow or was borrowing money during the period in question. Conlux proposes the Court use a rate that reflects the return Mars would have received on the money if it had invested it, such as the Treasury Bill rates. While the short term prime rates ranged from 10 to 6% during the period from August of 1990, to December of 1992, the monthly Treasury Bill rates ranged from 7.26% to 3.55%. Compare the information from The Federal Reserve Bulletin at Exhibit A of Declaration of Ann Powers, D.I. 346, with the information from the Federal Reserve Bulletins at B-190 to 208, D.I. 373. Using the Treasury Bill rates, Conlux suggests that the judgment should be increased by $47,204.92, rather than the $77,215.61 sought by Mars. If the Court's purpose here is to award interest to make Mars whole for the loss of the use of this money during the period from the date of the harm to the date of the judgment, the prime rate suggested by Mars serves that purpose better than the Treasury 721 Bill rate suggested by Conlux. In this case the cost of borrowing money and not the rate of return on investing money provides a better measure of the harm Mars suffered as a result of the loss of the use of money over time. See Studiengesellschaft Kohle, M.B.H. v. Dart Industries, 862 F.2d 1564 (Fed.Cir.1988). 2. Mars' Motion to Amend the Judgment and Award a Reasonable Royalty One of the damage theories rejected by the jury was Mars' claim for a reasonable royalty on Conlux's inventory of unsold units, which Mars estimates were approximately 11,149 units as of September of 1992. Mars contends the jury erred in not awarding it that amount, and seeks an additional $1,680,513.52 in damages. Conlux argues that the Court should deny this motion as the issue was not fairly presented to the jury. That is, the request for this relief was not identified in the instructions to the jury and not provided for in the verdict form. Further, Conlux cites Fausett v. Pansy Ellen Inc., 19 U.S.P.Q.2d (BNA) 1228 (N.D.Ga.1990) for the proposition that the inventory of units which were manufactured in Japan and stored in the United States are not "infringing" products and not the proper subject of an award of damages. The Court will deny Mars' motion as Mars failed to present this issue to the jury or to preserve it for post-trial review by the Court. F. Conlux's Motion to Stay Entry of Judgment or, Alternatively, to Stay Execution of Judgment Conlux has moved to stay entry of the judgment or execution on the judgment pending the results of a Patent Office reexamination of the '565 patent. The motion to stay entry of the judgment is untimely, as it was filed on January 21, 1993, after the Court had entered judgment based on the jury's verdicts. With regard to the motion to stay pending reexamination, Mars has submitted to the Court a copy of a March 24, 1993, Office Action in Reexamination by which the Examiner confirmed claims 1-19, 22-47, 49-52 and 54-63. The Examiner rejected claims 20, 21, 48 and 53, finding that they were clearly anticipated by U.K. Patent No. 1,196,034 ('034 patent). (In rejecting those claims, the Examiner found that the '034 U.K. patent is directed to a device for checking the authenticity of coins and that the test signals produced by the device are stored in a "programmable memory" in the form of a magnetic tape. The Examiner rejected Mars' argument that the words "a programmable memory" in the claims should be read as limited to semiconductor devices.) Mars reports that this decision renders Conlux's motion to stay moot, as the Examiner did not reject all claims infringed by Conlux and any one of the remaining valid infringed claims would justify the damages judgment. Conlux has not responded to this argument, nor has it argued that this decision is a basis for setting aside the jury's findings that Conlux had not shown by clear and convincing evidence that claims 20 and 21 were invalid on the ground that they would have been obvious. The Court will, therefore, deny Conlux's motion to stay the enforcement of the judgment, subject however to a further application for relief should Conlux take an appeal.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2667966/	UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ) GLENNA LEWIS, as Personal Representative ) of the Estate of Mark Anthony Harris, ) ) Plaintiff, ) ) v. ) Civil Action No. 07-1663 (ESH) ) DISTRICT OF COLUMBIA, et al., ) ) Defendants. ) ) MEMORANDUM OPINION Defendant District of Columbia has filed a Motion for Partial Summary Judgment as to Counts I and III of plaintiff’s complaint. Count I, alleging violations by the District of the due process clause of the Fifth and Fourteenth Amendments and 42 U.S.C. § 1983, is plaintiff’s only federal claim. In her opposition, plaintiff concedes the District’s motion as to Count I, expressly stating that she “shall not be pursuing her constitutional tort claim under Count I of her complaint.” (Opp’n at 1.) Accordingly, the Court will grant as conceded the District’s motion with respect to Count I and will decline to exercise supplemental jurisdiction over plaintiff’s remaining state law claims. When the federal-law claims on which the court’s original jurisdiction is based have been dismissed, the court has discretion in deciding whether to exercise supplemental jurisdiction over the remaining state-law claims. See 28 U.S.C. § 1367(c)(3); Edmondson & Gallagher v. Alban Towers Tenants Ass’n, 48 F.3d 1260, 1265-66 (D.C. Cir. 1995). In making this determination, the court balances the traditional “values of judicial economy, convenience, fairness, and comity.” Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350 (1988). However, “in the usual case in which all federal-law claims are dismissed before trial, the balance of factors . . . will point toward declining to exercise jurisdiction over the remaining state-law claims.” Id. at 350 n.7; see also United Mine Workers v. Gibbs, 383 U.S. 715, 726 (1966) (“Needless decisions of state law should be avoided both as a matter of comity and to promote justice between the parties, by procuring for them a surer-footed reading of applicable law. Certainly, if the federal claims are dismissed before trial, . . . the state claims should be dismissed as well.”). This action is clearly the “usual case,” and in light of the dismissal of plaintiff’s federal claim against the District, the Court sees no reason to retain jurisdiction over the remaining claims. Accordingly, the Court will grant in part and deny in part the District’s motion for partial summary judgment and will dismiss Count I of the complaint with prejudice and the remaining counts without prejudice. A separate Order accompanies this Memorandum Opinion. /s/ ELLEN SEGAL HUVELLE United States District Judge Date: May 28, 2009	01-03-2023	04-04-2014
https://www.courtlistener.com/api/rest/v3/opinions/2663391/	UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ____________________________________ ) PUBLIC EMPLOYEES FOR ) ENVIRONMENTAL RESPONSIBILITY, ) ) Plaintiff, ) ) v. ) Civil Action No. 10-1762 (ABJ) ) OFFICE OF SCIENCE AND ) TECHNOLOGY POLICY, ) ) Defendant. ) ____________________________________) MEMORANDUM OPINION Plaintiff Public Employees for Environmental Responsibility (“PEER”) brings this lawsuit against Office of Science and Technology Policy (“OSTP”), alleging that OSTP violated the Freedom of Information Act (“FOIA”), 5 U.S.C. § 552 (2011), by failing to respond to PEER’s August 11, 2010 FOIA request within the statutory period. Ex. 2 to Pl.’s Opp. & Cross- Mot. for Summ. J. (“Pl.’s Opp.”) ¶ 3; Def.’s Mot. for Summ. J. ¶ 3. OSTP has produced 150 pages of responsive material, some of which was redacted in part or in full. OSTP argued that the 150 pages represented all of the responsive documents that PEER is entitled to under FOIA and that any documents not produced were exempt under 5 U.S.C. § 552(b)(5) or section 552(b)(6) (“Exemption 5” and “Exemption 6”). PEER countered, arguing that OSTP’s withholdings and redactions under the Exemption 5 were excessive, but conceded that the withholdings and redactions under Exemption 6 were appropriate. Both parties have filed cross- motions for summary judgment [Dkt. #7 and #8]. For the following reasons, the Court finds summary judgment is inappropriate at this stage for either party because OSTP’s Vaughn index is legally insufficient for the Court to determine whether the redactions and withholdings were proper under Exemption 5. BACKGROUND On March 9, 2009, President Barack Obama issued a memorandum (“the memorandum”) assigning “to the Director of the Office of Science and Technology Policy (Director) the responsibility for ensuring the highest level of integrity in all aspects of the executive branch’s involvement with scientific and technological processes.” Ex. 1 to Def.’s Mot. for Summ. J. Specifically, the President instructed that “the Director shall confer, as appropriate, with the heads of executive departments and agencies, . . . [and, w]ithin 120 days from the date of this memorandum, . . . develop recommendations for Presidential action designed to guarantee scientific integrity throughout the executive branch.” Id. Pursuant to the memorandum, Director of OSTP, John P. Holdren (“the Director”), “asked federal agencies to identify employees to serve on a working group, whose purpose ‘was to gather input and draft guidance and develop draft recommendations on scientific integrity for [the Director’s] consideration.” Def.’s Mot. for Summ. J. at 2, quoting Leonard Decl. ¶ 5. He also “solicited input from the public through a notice in the Federal Register,” and “conferred with [the Office of Management and Budget] and other federal offices and agencies.” Id. at 3, citing Leonard Decl. ¶¶ 6–7. The entire process took much longer than expected and lasted approximately two years. Def.’s Mot. for Summ. J. at 3. In June 2010, the Director explained the delay to Congress: [T]here were many, many drafts of those guidelines. And what took so long was the complexity of the task of developing guidelines that were both specific enough to add significant value . . . [and,] at the same time, would be general enough to be applicable across all the departments and agencies . . . that deal with science and technology matters. That proved to be a much more demanding task 2 than any of us though at the outset and involved a great deal of debate with virtually every department, agency, and office with a stake in this matter. Id., quoting Leonard Decl. ¶ 8. Then, on December 17, 2010, the Director issued “a Memorandum for the Heads of Executive Departments and Agencies on Scientific Integrity,” which constituted the Director’s “final determination of how to comply with the President’s directive to ‘develop recommendations for Presidential action designed to guarantee scientific integrity throughout the executive branch.’” Id. at 3–4, quoting Leonard Decl. ¶¶ 9–10. The Director’s memorandum reflected the input he received from “the working groups, agency comments, public comments, OSTP staff expertise, comments from other federal executive branch offices and personnel, as well as his own judgment and experience.” Leonard Decl. ¶ 10. It did not, however, officially adopt any of the draft recommendations or comments by any of the groups. Id. ¶¶ 9–11. On August 11, 2010 – prior to the release of the Director’s memorandum – PEER requested several documents from OSTP, pursuant to FOIA. Specifically, PEER requested: (1) [A]ll communications received by OSTP from executive departments and agencies, including the Office of Management and Budget and offices and agencies within the Executive Office of the President concerning the content of these proposed policies, (2) all draft recommendations developed by the interagency panel created by OSTP with representatives from all of the major science offices and agencies, and (3) all decision memoranda, e-mails or other communications discussing the reasons for delay in publication of policies for presidential action as laid out in the March 9, 2009 Executive Memorandum. Pl.’s Opp. at 1–2. Though OSTP “immediately commenced a search” for the requested documents, it did not respond to PEER until September 20, 2010, when OSTP’s general counsel sent a letter to PEER explaining that, “due to the extensive nature of the request, OSTP was unable to complete its review within the [statutory] response period,” Leonard Decl. ¶¶ 13, 15; accord Pl.’s Opp. at 3 2, and “offered Plaintiff the option of narrowing its request to expedite a response,” Def. Mot. for Summ. J. at 4–5. On October 13, 2010, during a telephone conference, OSTP’s general counsel informed PEER that the agency was unable to provide “an expected delivery date for any of the requested documents.” Pl.’s Opp. at 2. PEER filed this lawsuit on October 19, 2010. Id.; Def.’s Mot. for Summ. J. at 5. On December 9, 2010, the parties agreed to a production schedule in which OSTP would produce all non-exempt responsive documents to PEER by February 2, 2011. Pl.’s Opp. at 2–3; Def.’s Mot. for Summ. J. at 5. Approximately 150 pages of documents were produced according to the production schedule. Pl.’s Opp. at 3. OSTP states that its production complied with FOIA and that any withholdings are justified under Exemption 5 and Exemption 6. Def.’s Mot. for Summ. J. at 5. PEER, however, argues that the OSTP did not comply with FOIA because the produced documents contained “excessive redactions.” Pl.’s Opp. at 3 (“Of the approximately 150 pages of records OSTP produced, 114 pages were either redacted in full or were so heavily redacted that only a few words or phrases were visible.”). Subsequently, OSTP moved for summary judgment [Dkt. #7] and PEER filed a cross- motion for summary judgment [Dkt. #8]. Both parties agree to the facts as stated above, and only disagree as to the legal conclusions about whether the redactions and withholdings under Exemption 5 were lawful. See Ex. 3 to Pl.’s Opp. (“Pl.’s Statement of Facts in Dispute”); Def.’s Mot. for Summ. J. at 1–5. STANDARD OF REVIEW “FOIA cases are typically and appropriately decided on motions for summary judgment.” Moore v. Bush, 601 F. Supp. 2d 6, 12 (D.D.C. 2009) (citations omitted). To prevail in a FOIA 4 action where the plaintiff challenges the redactions and withholdings pursuant to one of the exemptions, the agency bears the burden of proving that the asserted exemption justifies the redactions and withholdings. 5 U.S.C. § 552(a)(4)(B); Dickstein Shapiro LLP v. U.S. Dep’t of Def., 730 F. Supp. 2d 6, 8–9 (D.D.C. 2010). To satisfy that burden, the agency “must provide a relatively detailed justification, specifically identifying the reasons why a particular exemption is relevant and correlating those claims with the particular part of a withheld document to which they apply.” Mead Data Cent., Inc. v. U.S. Dep’t of the Air Force, 566 F.2d 242, 251 (D.C. Cir. 1977). The burden “cannot be satisfied by the sweeping and conclusory citation of an exemption plus submission of disputed material for in camera inspection.” Id. Instead, to satisfy this burden and “enable the Court to determine whether documents were properly withheld,” the agency must submit a “Vaughn index and/or accompanying affidavits or declarations” that specifically explains why certain documents were redacted or withheld. Defenders of Wildlife v. U.S. Border Patrol, 623 F. Supp. 2d 83, 88 (D.D.C. 2009); see also Vaughn v. Rosen, 484 F.2d 820, 826–28 (D.C. Cir. 1973); John Doe Agency v. John Doe Corp., 493 U.S. 146 (1989); Judicial Watch, Inc. v. FDA, 449 F.3d 141, 1445–46 (D.C. Cir. 2006); Schoenman v. Fed. Bureau of Investigation, 604 F. Supp. 2d 174, 196 (D.D.C. 2011). To survive a motion for summary judgment, a plaintiff must set forth specific facts showing a genuine issue for trial. Fed. R. Civ. P. 56(e). In the FOIA context, “the sufficiency of the agency’s identification or retrieval procedure” must be “genuinely in issue.” Weisberg v. U.S. Dep’t of Justice, 627 F.2d 365, 370 (D.C. Cir. 1980). Plaintiff “cannot rebut the good faith presumption” afforded to an agency’s supporting affidavits “through purely speculative claims about the existence and discoverability of other documents.” Brown v. U.S. Dep’t of Justice, 742 F. Supp. 2d 126, 130 (D.D.C. 2010) (citation and internal quotation marks omitted). 5 In any motion for summary judgment, the Court “must view the evidence in the light most favorable to the nonmoving party, draw all reasonable inferences in his favor, and eschew making credibility determinations or weighing the evidence.” Montgomery v. Chao, 546 F.3d 703, 706 (D.C. Cir. 2008); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 48 (1986). However, where a plaintiff has not provided evidence that an agency has acted in bad faith, “a court may award summary judgment solely on the basis of information provided by the agency in declarations.” Moore, 601 F. Supp. 2d at 12. The district court must “determine the matter de novo, and . . . the burden is on the agency to sustain its action.” 5 U.S.C. § 552(a)(4)(B); Military Audit Project v. Casey, 656 F.2d 724, 738 (D.C. Cir. 1981). ANALYSIS OSTP concedes that it redacted or withheld documents that were otherwise responsive to PEER’s FOIA request. See Def.’s Mot. for Summ. J. at 5. However, OSTP maintains that the redactions and withholdings were justified under FOIA Exemption 5 and Exemption 6 because the records either were part of the deliberative process or contained personal information about the documents’ authors. Id. at 5, 13–18, 19–21. OSTP also argued that its redactions and withholdings complied with FOIA’s segregability requirements. Id. at 19; see also 5 U.S.C. § 552(b) (“[A]ny reasonably segregable portion of a record shall be provided to any person requesting such a record after deletion of the portions which are exempt . . . .”); Mead Data Cent., Inc., 566 F.2d at 260 (“[N]on-exempt portions of a document must be disclosed unless they are inextricably intertwined with exempt portions.”). 6 PEER concedes that OSTP’s redactions and withholdings pursuant to Exemption 6 are lawful. 1 Pl.’s Opp. at 6. However, it argues that OSTP failed to meet its burden to establish that the redactions and withholdings pursuant to Exemption 5 were lawful, and that OSTP “improperly withheld materials that are purely investigative and factual in nature as deliberative.” Id. at 4. PEER also contends that OSTP’s redactions and withholdings were excessive because OSTP “failed to adequately disclose segregable material in the vast majority of documents that it turned over.” Id. at 6. The Court finds, at this time, that it does not have enough information to grant summary judgment in favor of either party. Exemption 5 provides agencies with the authority to deny FOIA requests where the requested documents include “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). In determining whether a document was properly withheld under subsection (b)(5), a court must determine that the document satisfies “two conditions: its source must be a Government agency, and it must fall within the ambit of a privilege against discovery under judicial standards that would govern litigation against the agency that holds it.” U.S. Dep’t of the Interior v. Klamath Water Users Protective Ass’n, 532 U.S. 1, 8 (2001). With regard to the second condition, the Supreme Court has determined that: [T]hose privileges include the privilege for attorney work-product and what is sometimes called the “deliberative process” privilege. Work product protects “mental processes of the attorney,” while deliberative process covers “documents reflecting advisory opinions, recommendations and deliberations comprising part of a process by which governmental decisions and policies are formulated. 1 Because plaintiff is not challenging OSTP’s redactions and withholdings made pursuant to Exemption 6, the Court will not address that issue. 7 Id. (internal citations omitted); accord Schlefer v. United States, 702 F.2d 233, 237 (D.C. Cir. 1983); Gold Anti-Trust Action Comm., Inc. v. Bd. of Governors of the Fed. Reserve Sys., 762 F. Supp. 2d 123, 134 (D.D.C. 2011). “The deliberative process privilege rests on the obvious realization that officials will not communicate candidly among themselves if each remark is a potential item of discovery,” and the goal behind its exemption “is to enhance ‘the quality of agency decisions’ by protecting open and frank discussion among those who make them within the Government.” Klamath Water, 532 U.S. at 8–9 (internal citations omitted). The deliberative process privilege, however, only “protects agency documents that are both predecisional and deliberative.” Judicial Watch, Inc., 449 F.3d at 151 (emphasis added). The agency bears the burden of proving that the redactions and withholdings were proper under the claimed exemption. In Exemption 5 cases, this typically requires the agency to prove that the withheld information is both predecisional and deliberative. Here, however, PEER does not challenge that the redacted and withheld documents are predecisional, and the Court finds nothing in the record that suggests otherwise. 2 Instead, PEER argues that OSTP failed to meet 2 Though the law is clear that Exemption 5 requires a showing that withheld information is both predecisional and deliberative, courts often combine the two requirements. See Access Reports v. U.S. Dep’t of Justice, 926 F.2d 1192, 1194–95 (D.C. Cir. 1991) (discussing courts’ confusion in assessing whether withheld information satisfies the requirements of Exemption 5). This Circuit, however, has made clear that the two requirements are separate. Id. at 1195. The common test for determining whether a document is predecisional is “whether [the document] was generated before the adoption of an agency policy . . . [and] would inaccurately reflect or prematurely disclose the views of the agency, suggesting as agency position that which is as yet only a personal position.” Coastal States Gas Corp. v. Dep’t of Energy, 617 F.2d 854, 866 (D.C. Cir. 1980). A court also should ask “whether the document is recommendatory in nature or is a draft of what will become a final document.” Id. However, “even if the document is predecisional at the time it is prepared, it can lose that status if it is adopted, formally or informally, as the agency position on an issue or is used by the agency in its dealings with the public.” Id. Here, OSTP states that all the redacted and withheld documents were predecisional because they are all advisory or recommendatory statements made to the Director, who retained sole authority to make the final decision regarding OSTP’s policy, and the Director did not officially adopt any of the recommendations. Leonard Decl. ¶¶ 9–11. PEER does not challenge 8 its burden to establish that the redacted statements and withheld documents were deliberative in nature. Consequently, the Court will only address the latter portion of the test. This Circuit considers a document deliberative if “it reflects the give-and-take of the consultative process.” Judicial Watch, 449 F.3d at 151, quoting Coastal States Gas Corp. v. Dep’t of Energy, 617 F.2d 854, 866 (D.C. Cir. 1980). Whether a document is deliberative and part of the consultative process “can often be resolved by the simple test that factual material must be disclosed but advice and recommendations may be withheld.” Wolfe v. U.S. Dep’t of Health and Human Servs., 839 F.2d 768, 774 (D.C. Cir. 1988). A court, however, must still consider whether factual material should be disclosed because, “[i]n some circumstances, even material that could be characterized as ‘factual’ would so expose the deliberative process that it must be covered by the [deliberative process] privilege.” Id. A court, in determining whether withheld information was deliberative, relies on the agency’s Vaughn index and/or its declarations. It is under this framework that the Court now addresses whether OSTP met its burden of establishing that the redacted information and withheld documents are deliberative. 3 Before reaching the merits of this case, however, the Court finds it helpful to review two previous cases decided by two other courts in this district: in the first case, the Court found the Vaughn index descriptions insufficient to warrant summary judgment, and, in the second case, the Court found the Vaughn index descriptions sufficient to warrant summary judgment. These cases are particularly helpful in explaining what information the agency must provide to the Court in order for the case to be ripe for summary judgment. the predecisional nature of the withheld information and, as mentioned above, the Court finds that OSTP has met its burden of proving that the documents were predecisional. 3 OSTP argues that PEER’s challenges to the redactions and withholdings must fail because they are speculative and do not prove that OSTP acted in bad faith. Def.’s Opp. at 3–4. 9 In the first case, Defenders of Wildlife v. U.S. Border Patrol, both parties moved for summary judgment in an action challenging the U.S. Border Patrol’s response to the plaintiff’s FOIA request. 623 F. Supp. 2d at 85–86. In addition to its motion for summary judgment, the defendant provided the plaintiff and the Court with a Vaughn index. Id. at 86. In reviewing the Vaughn index, the Court noted that it “systematically fail[ed] to identify relevant information such as the originating component agency, the author, and frequently the recipient(s) of the document.” Id. at 88. The Court also noted that the index descriptions were “unduly vague and general,” with the typical entry stating: “Three pages Withheld in Full. Exemption (b)(5) was cited to protect the deliberative process privilege as it is applied to pre-decisional material or discussions, the general purposes of which [are] to encourage open frank discussions among personnel.” Id. at 89. The Court then concluded that the Vaughn index was legally insufficient to warrant summary judgment because there was “no explanation of how any of the documents [were] pre-decisional or deliberative or what deliberative process [was] involved. It [was] not sufficient to state that all withholdings relate to ‘a decision . . . on how to best implement the Arizona Border Control Initiative.’” Id. at 89, 91. Consequently, the Court determined that it could not grant summary judgment in favor of either party until the defendant amended or supplemented the Vaughn index. Id. at 93. Conversely, in People for the Am. Way Found. v. Nat’l Park Servs., another court in this district found the defendant’s Vaughn index sufficient to grant summary judgment where the descriptions showed that the excluded documents were part of the deliberative process. 503 F. Supp. 2d 284, 301 (D.D.C. 2007). Explaining its decision, the Court offered an example of one of the descriptions that provided enough detail to allow the Court to determine whether a FOIA exemption applied: “[Document 12 Description:] This email was redacted in part and describes 10 initial thoughts and reaction to the Lincoln Memorial videotape description from the CNS story in this same email. The redacted portions speculate and describe perceived reactions to the story.” Id. at 295. The specific detail about why the redacted email was deliberative provided the Court with enough information to find that summary judgment in favor of the defendant was appropriate. Here, OSTP’s Vaughn index is more similar to the legally insufficient index in Defenders of Wildlife than to the legally sufficient index in National Park Services. Though OSTP provided information that was otherwise missing in Defenders of Wildlife – the originating component agency, the author, and the recipient(s) of the documents – every declaration for why the document was redacted or withheld contains the same boilerplate language: “This is a preliminary, non-final draft of the memorandum that reflects recommendations from governmental employees,” or “[t]he redacted portions of this e-mail are deliberative because they reflect deliberations among government employees regarding the content of a preliminary, non- final draft of the memorandum.” Ex. 2C to Def. Mot. for Summ. J. In other words, it appears that OSTP did nothing more than copy and paste circular justifications throughout its seventy- nine page Vaughn index instead of providing the Court with the necessary level of information to determine whether the documents were properly withheld under Exemption 5. Likewise, the Leonard declaration – the only declaration provided by OSTP – contains the same conclusory statements justifying the redactions and withholdings. Leonard Decl. ¶¶ 19–23. Though an agency is not required to disclose so much information that it would thwart the purpose of the exemption invoked, Hall v. U.S. Dep’t of Justice, 552 F. Supp. 2d 23, 27 (D.D.C. 2008), summary judgment is inappropriate where the agency provides only conclusory statements and has not satisfied its burden of justifying its withholdings, Defenders of Wildlife, 623 F. Supp. 2d 11 at 88. Without additional information regarding OSTP’s decision to redact and withhold information, the Court does not have sufficient information to grant summary judgment in favor of either party at this time. 4 CONCLUSION For the reasons stated above, the Court denies both OSTP’s motion for summary judgment, and PEER’s cross-motion for summary judgment because OSTP’s Vaughn index does not provide the necessary information the Court needs to determine whether the documents were lawfully redacted or withheld pursuant to Exemption 5. OSTP should amend or supplement its Vaughn index and/or declarations to provide more detail as to why each redacted or withheld document falls within the deliberative process privilege. A separate order will issue. AMY BERMAN JACKSON United States District Judge DATE: November 8, 2011 4 Because the Court has found OSTP’s Vaughn index legally insufficient, the Court cannot determine, at this time, whether OSTP also failed to segregate non-exempt material from exempt material in its withholdings. Therefore, the Court reserves judgment on the issue of segregability until OSTP provides the Court with the needed information. 12	01-03-2023	04-04-2014
https://www.courtlistener.com/api/rest/v3/opinions/1491543/	818 F. Supp. 695 (1993) SANDLER ASSOCIATES, L.P. and Daniel R. McCarthy and all other similarly situated plaintiffs, Plaintiffs, v. BELLSOUTH CORPORATION, Mobile Communications Corporation of America, BLS Acquisition Corp. I, Inc., Xavier W. Nady, John N. Palmer, C. Victor Raiser, II, Thomas G. Barksdale, R. Faser Triplett, M.D. and E. Lee Walker, Defendants. Civ. A. No. 89-457 LON. United States District Court, D. Delaware. April 12, 1993. 696 Mark Minuti, of Saul, Ewing, Remick & Saul, Wilmington, DE, David F. Dobbins, of Patterson, Belknap, Webb & Tyler, New York City, for plaintiffs. Thomas R. Hunt, Jr., and Robert J. Valihura, Jr., of Morris, Nichols, Arsht & Tunnell, Wilmington, DE, Warren R. Stern, and Stephen R. Neuwirth, of Wachtell, Lipton, Rosen & Katz, New York City, for defendants BellSouth Corp. and Mobile Communications Corp. of America. Jesse P. Finkelstein, of Richards, Layton & Finger, Wilmington, DE, Kevin D. McDonald, and Thomas F. Cullen, Jr., of Jones, Day, Reavis & Pogue, Washington, DC, for defendants Xavier W. Nady, John N. Palmer, C. Victor Raiser, II, Thomas G. Barksdale, R. Faser Triplett, M.D. and E. Lee Walker. OPINION LONGOBARDI, Chief Judge. This is a securities action in which the question before the Court is whether the Plaintiffs, Sandler Associates, L.P., Daniel R. McCarthy and all other similarly situated plaintiffs ("Plaintiffs" or the "Sandler Plaintiffs"), are barred by the doctrine of release from prosecuting the instant action by virtue of a class action settlement approved by the Court of Chancery for the State of Delaware. I. BACKGROUND This action and the related action in the Court of Chancery arose out of a merger initiated in February 1988 and completed on April 4, 1989. In that merger the stock of Defendant Mobile Communications Corporation of America ("MCCA") was acquired by a wholly-owned subsidiary of Defendant BellSouth Corporation ("BellSouth")[1] in exchange for BellSouth stock worth approximately $710 million. MCCA's businesses consisted of, among other things, local and regional paging services, mobile telephone services, telephone answering services and cellular radio telephone operations. The merger agreement provided, inter alia, that immediately prior to the merger, MCCA would distribute to its shareholders all of the stock of an MCCA subsidiary owning businesses that BellSouth would not acquire[2] and in the merger, each share of MCCA would be converted into shares of BellSouth stock worth $28.75. The merger agreement was contingent upon a number of conditions including receipt of regulatory and judicial approvals. At a special meeting of shareholders held on August 24, 1988, MCCA shareholders approved the merger agreement. A previously distributed proxy statement summarized the terms of the merger agreement and reprinted the agreement in its entirety. In February 1989, after the fair market value of MCCA was alleged to have risen dramatically above the acquisition price established by the merger agreement and upon receipt of a letter from the instant Plaintiffs' counsel demanding that the merger agreement 697 be terminated, BellSouth commenced an action against MCCA and Mtel in the Court of Chancery for the State of Delaware, seeking a declaratory judgment that the merger agreement was binding and enforceable and that no event that would permit termination had occurred. Several shareholders of MCCA (the "shareholder plaintiffs"), including the Sandler Plaintiffs, then commenced four separate actions in the Court of Chancery. Each shareholder action named the Defendants herein, MCCA, its directors and BellSouth, as defendants. Each action was purportedly brought on behalf of a class consisting of all MCCA shareholders. MCCA and its directors responded by counterclaiming for a declaration that no event had occurred that would permit termination of the merger agreement. The shareholder and declaratory judgment actions were consolidated by the Court of Chancery. The relief sought by the shareholder plaintiffs included, inter alia, a preliminary injunction enjoining the defendants from closing the BellSouth/MCCA merger transaction. The shareholder actions asserted that the alleged increase in the value of MCCA subsequent to the signing of the merger agreement justified MCCA's directors to abandon the merger and seek a superior acquisition offer for the company. They also alleged that the directors were authorized to terminate or rescind the merger under the terms of the merger agreement in spite of terms of the agreement which apparently indicated otherwise.[3] The shareholders contended, however, that the merger agreement expressly permitted MCCA at any time (and thus required the board in the exercise of its good faith judgment as to its fiduciary duties to shareholders of MCCA based upon advice of counsel) to discuss any unsolicited acquisition proposals from third parties, to provide non-public information to such third parties and to enter into an agreement to merge with or be acquired by a third party. Based on these premises, the shareholders argued that the board was obligated to exercise their fiduciary duties to shareholders to abandon the merger. In light of the merger agreement's express "no shop" provision and narrowly drawn termination clause, MCCA and its directors took the position that the merger agreement could be terminated only if MCCA received an unsolicited acquisition offer and the board then determined on the advice of counsel that it was required by its fiduciary duties to accept that offer. In response, the shareholder plaintiffs argued that if the MCCA directors were in fact not permitted to abandon the agreement, then the MCCA proxy statement soliciting shareholder approval of the merger was misleading because it failed to disclose such an "interpretation."[4] The 698 shareholder plaintiffs further contended that as a result of the false and misleading statements and omissions contained in the proxy statement, the majority of MCCA's shareholders were induced to, and did vote, to approve the merger agreement. On March 24, 1989, the parties opened settlement negotiations with all of the shareholder plaintiffs participating in the discussions. These negotiations apparently were unsuccessful. Then, on March 29, 1989, the Court of Chancery denied the preliminary relief sought by the shareholder plaintiffs in the consolidated action. Upon consideration of the pleadings, depositions and affidavits together with the briefs and oral arguments of the parties, Chancellor Allen observed that "[t]his case, as refined by the presentation of counsel at oral argument, presents at this stage principally a question of the adequacy of the disclosure made in the joint solicitation of proxies in connection with the MCCA shareholder approval of the Agreement." In re Mobile Communications Corp. Consol. Litig., Consol. Civ. A. No. 10627, slip op. at 2 (Del.Ch. Mar. 29, 1989) (Allen, C.) ("MCCA Consol. Litig. I"). As aptly summarized by the Court of Chancery in its later memorandum opinion certifying the class and approving the settlement, [t]he court declined to issue ... an injunction, concluding, albeit preliminarily, that the merger agreement did not, in the circumstances, afford to MCCA a right to terminate the agreement and conclud[ed] also that the proxy materials accurately disclosed the narrow and technical matter that had come to plaintiffs to appear critically important. In re Mobile Communications Corp. Consol. Litig., Civ. A. Nos. 10627, 10638, 10644, 10656 and 10697, slip op. at 2, 1991 WL 1392 (Del.Ch. Jan. 7, 1991) (Allen, C.) ("MCCA Consol. Litig. II") (citing MCCA Consol. Litig. I), aff'd without op., 608 A.2d 729 (Del.), cert. denied, ___ U.S. ___, 112 S. Ct. 3032, 120 L. Ed. 2d 902 (1992). In denying the injunction, the Chancellor held that, by reprinting and accurately summarizing the terms of the agreement, the proxy statement had fully and fairly disclosed those terms. The Chancellor found that, among other things, "none of the disclosures made to shareholders reflect[ed] an inaccurate statement concerning the scope or meaning" of the termination provision of the agreement; no relevant fact or conclusion had been omitted from the proxy statement; and the proxy statement could not be said to have contributed to a mistaken interpretation that the agreement granted the MCCA directors "a broad `fiduciary out.'" MCCA Consol. Litig. I, slip op. at 2-6. On March 30, settlement negotiations re-commenced. This time, however, neither the Sandler Plaintiffs nor other plaintiffs represented by the same counsel chose to participate. An agreement in principle to settle the consolidated action was reached on April 1, 1989. The settlement agreement, conditioned upon Court of Chancery approval pursuant to Delaware Chancery Rule ("Chancery Rule") 23(e), provided that, in consideration of a release from any liability to the class, the defendants would increase the value to the individual MCCA shareholders by (1) increasing the number of BellSouth shares to be received by each MCCA shareholder in the merger, (2) timing the merger so that the MCCA shareholders would receive the cash dividend declared by BellSouth for the first quarter of 1989 and (3) increasing the capital of Mtel, which was to be "spun-off" and whose stock was to be distributed to the MCCA shareholders immediately prior to the merger. The Court of Chancery found that the value of these benefits approximated $35 million. 699 The Sandler Plaintiffs, together with the other plaintiffs represented by the same counsel, refused to agree to the settlement or to participate in the final round of settlement discussions. They instead applied for leave to appeal to the Supreme Court of Delaware from the denial of the preliminary injunction motion and for an injunction staying the merger pending that appeal. In denying the application and refusing to certify an interlocutory appeal, Chancellor Allen candidly proffered an evaluation of the strengths of the central claims asserted in the consolidated shareholder action, stating that: "Frankly, I found that the case presented last week was one of the weakest cases legally for the issuance of a preliminary injunction that I have ever encountered in the court. * * * * * * Well, with respect to that aspect of the claim, the probability of success, I have already been as candid as I can be, and more candid than the plaintiffs would care for me to be in telling you that I don't think there is much to this case legally once you get past the practical fact that the plaintiffs may feel that there is more money out there if somebody would just be free to go and look for it." MCCA Consol. Litig. II, slip op. at 3 (citing Transcript of April 3, 1989 hearing). On April 4, 1989, the Delaware Supreme Court denied the application for an interlocutory appeal. BellSouth having obtained the necessary regulatory approvals in the interim, the merger was accomplished the same day with MCCA "spinning-off" Mtel and completing the distribution of Mtel shares to its shareholders and then merging with a subsidiary of BellSouth. On June 6, 1989, a stipulation of settlement was executed by MCCA, BellSouth and the settling shareholder plaintiffs. At that time, the settling parties moved for an order under Chancery Rule 23(e) approving the settlement on behalf of a class certified under Chancery Rules 23(b)(1) and 23(b)(2) (which are materially equivalent to Federal Rules of Civil Procedure 23(b)(1) and 23(b)(2)), and directing that notice of a hearing on the settlement be provided to the proposed class. Included in the class were all persons who held Class A or Class B common stock of MCCA as of July 20, 1988 and their successors in interest or transferees, other than the defendants. The Sandler Plaintiffs demanded that the settlement be summarily rejected and that they and the other plaintiffs represented by their counsel be appointed class representatives. On August 14, 1989, the Court of Chancery rejected these demands, scheduled a hearing on the settlement and directed that notice be given to the class. The Chancellor granted to the Sandler Plaintiffs the right to conduct discovery concerning the settlement and to include a statement of reasons for their objections to the settlement in the hearing notice. See D.I. 42, Ex. N. Nine days later, the Sandler Plaintiffs commenced the instant action in federal court. The class on whose behalf the Sandler Plaintiffs purport to bring this federal action under Federal Rules of Civil Procedure 23(a) and 23(b)(3) consists of all persons who held the common stock of MCCA prior to April 4, 1989, the effective date of the BellSouth/MCCA merger, other than the Defendants. Plaintiff Sandler Associates, L.P. is an investment limited partnership which was the holder of in excess of 718,500 Class A and Class B shares of MCCA common stock during the purported class period. These shares represented over three percent of the outstanding shares of MCCA. Plaintiff Daniel R. McCarthy was the holder of in excess of 11,000 Class A and Class B shares of common stock of MCCA. To date, the Court has not entered a class certification pursuant to Federal Rule of Civil Procedure 23(c)(1), pending the resolution of the Defendants' motion for summary judgment. In the instant action, the Sandler Plaintiffs allege that the Defendants procured MCCA shareholder approval of the merger on the basis of a false and misleading proxy statement which led the shareholders to believe that MCCA had broad rights at any time prior to or after the shareholder approval to terminate the merger agreement in the best interests of the MCCA shareholders. Plaintiffs allege that in denying the MCCA shareholders the value of their company, the Defendants 700 violated the federal securities laws, breached their fiduciary duties at common law and committed common law fraud.[5] Essentially, the complaint repeated the allegations about the MCCA proxy statement that had previously been made in the Court of Chancery, but framed the allegations as purported violations of the federal securities laws. The complaint also repeated the allegations that the MCCA directors had breached their fiduciary duties in completing the merger and in agreeing to settle the shareholder litigation. Moreover, the complaint framed RICO fraud and conspiracy allegations based on the same claims and sought treble damages.[6] While seeking to move litigation of their claims to federal court, the Sandler Plaintiffs continued to pursue their claims in the related proceedings in the Court of Chancery, including vigorous discovery related to the proposed settlement. Pursuant to an order of the Chancery Court dated December 5, 1989, notice of the proposed settlement was sent to all class members. D.I. 42, Ex. P. The notice included a statement on behalf of the objecting plaintiffs, including Plaintiffs herein, explaining their opposition to the proposed settlement as inadequate. The Sandler Plaintiffs submitted briefs and presented oral argument at the settlement hearing on January 18, 1990. In opposing the settlement, they conceded that their claims in the instant action were included within the scope of the release under the proposed settlement, and indeed, made that the central premise of their opposition. See id.[7] On January 7, 1991, in MCCA Consol. Litig. II, Chancellor Allen ruled that the consolidated shareholder action was properly maintained as a class action under Chancery Rules 23(b)(1) and 23(b)(2) and that the settlement was fair and reasonable to the class (with one modification not here relevant). In evaluating whether to approve the proposed class settlement, Chancellor Allen considered all claims that were or could have been asserted by the class, including claims arising under federal law. He rejected the arguments of the Sandler Plaintiffs that the settlement was not reached in good faith, that due process required that class members be given the right to opt out and that a state court could not approve a release unless the release excluded federal claims. Significantly, Chancellor Allen observed that the approval of the proposed 701 settlement under Chancery Rule 23(e) operated to release all related class claims currently pending in the instant federal action. In effect, the settled claims included all claims that related in any way to the merger.[8] In the words of Chancellor Allen, "[t]his agreement would release defendants from all claims that might be asserted in connection with the negotiation or effectuation of the merger." MCCA Consol. Litig. II, slip op. at 11. The Chancellor further stated that [a]pproval by this court of the Stipulation of Settlement would entail the dismissal with prejudice of the claims asserted and the release of all other claims arising from the facts alleged. Although the federal court is, of course, free to determine whether the release in question would be given a preclusive effect on the federal claims, see Kremer v. Chemical Constr. Corp., 456 U.S. 461, 481-83 [, 102 S. Ct. 1883, 1897-99, 72 L. Ed. 2d 262] (1982), I assume for purposes of this analysis that approval of the Stipulation of Settlement's release of the federal claims would result in dismissal of the federal claims as well. See Nottingham Partners v. Trans-Lux Corp., C.A. No. 88-0591-Z [1990 WL 93513], 1990 U.S. Dist. LEXIS 8078 (D.Mass. June 27, 1990). Id. at 13. This Court agrees that the effect of the settlement and release on the Sandler Plaintiffs' federal litigation is ultimately for this Court to decide. See, e.g., Nottingham Partners v. Trans-Lux Corp., 925 F.2d 29, 33-34 n. 4 (1st Cir.1991). On February 6, 1991, Chancellor Allen entered an order and final judgment that (1) certified the shareholder action as a class action under Chancery Rules 23(b)(1) and 23(b)(2), (2) approved the settlement of the action as "fair, reasonable and adequate," (3) dismissed the action "on the merits as to all defendants and with prejudice as against plaintiffs in the Shareholder Actions and all members of the certified class" and (4) directed that the obligations undertaken by the defendants in the settlement "shall be in full settlement, compromise, release and discharge of the Settled Claims, and no Released Party ... shall have any other or further liability or obligations to anyone with 702 respect to the Settled Claims" except for the obligations in settlement. See D.I. 42, Ex. Q. On February 4, 1992, the Supreme Court of Delaware affirmed Chancellor Allen's February 6, 1991 order and final judgment for the reasons set forth by the Court of Chancery in its January 7, 1991 decision. See D.I. 42, Ex. S. On June 29, 1992, the Supreme Court of the United States denied a petition by the Plaintiffs for a writ of certiorari. See D.I. 42, Ex. T. Shortly thereafter, Defendants filed the instant motion for summary judgment. Defendants move for summary judgment on three grounds: (1) that the action should be dismissed because the Plaintiffs' claims have been released, (2) that Counts II through VIII of the amended complaint should be dismissed on the ground of res judicata[9] and (3) that the amended complaint should be dismissed because it fails to state a claim upon which relief can be granted. II. SUMMARY JUDGMENT STANDARD Summary judgment is appropriate under Federal Rule of Civil Procedure 56(c) when the moving party establishes that there is no genuine issue of material fact that can be resolved at trial and that the moving party is entitled to judgment as a matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 2552, 91 L. Ed. 2d 265 (1986). Materiality is determined by the substantive law that governs the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202 (1986). In this inquiry, "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Id. A dispute is "genuine" only if a reasonable jury could return a verdict for the nonmoving party. Id. Following a determination that no genuine dispute of material facts exists, the moving party must demonstrate that it is entitled to judgment as a matter of law. Any doubts as to the existence of genuine issues of fact will be resolved against the moving party and all inferences to be drawn from the material it submits will be viewed in the light most favorable to the party opposing the motion. Norfolk Southern Corp. v. Oberly, 632 F. Supp. 1225, 1231 (D.Del.1986) (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S. Ct. 1598, 1608, 26 L. Ed. 2d 142 (1970)), aff'd, 822 F.2d 388 (3d Cir.1987). If the evidentiary record supports a reasonable inference that the ultimate facts may be drawn in favor of the responding party, then the moving party cannot obtain summary judgment. In re Japanese Elec. Prods. Antitrust Litig., 723 F.2d 238, 258 (3d Cir.1983), rev'd on other grounds sub nom. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986). Regardless of how the Plaintiffs attempt to cast the present dispute, it centers primarily on a matter of law, that is, the Court is called upon to decide as a matter of law whether the release approved by the Court of Chancery for the State of Delaware in the related consolidated state action bars the Sandler Plaintiffs from prosecuting the instant action. Accordingly, if the Court determines that the release operates to preclude this lawsuit, such a conclusion mandates the finding of the absence of any genuine issues of material fact and summary judgment must be granted in favor of the Defendants. In such a situation, the second and third grounds for the motion for summary judgment would be considered moot. III. DISCUSSION At the outset, it is clear that the settlement approved by the Court of Chancery for the State of Delaware embraces all of the 703 claims asserted in this federal action.[10] The Sandler Plaintiffs are members of the certified state court class and each of their claims relates to the merger between BellSouth and MCCA. Specifically, their securities law claims concern the proxy statement and their state law claims for breach of fiduciary duty and common law intentional or negligent misrepresentation concern the merger, the proxy statement and related matters.[11] The issue to be decided, therefore, is the effect of this release on the instant federal litigation. While the issue presently confronting the Court appears to be a question of first impression in the Third Circuit, the Court of Appeals for the First Circuit has addressed a substantially identical question in a case involving a class action settlement and release approved by the Delaware Court of Chancery in Nottingham Partners v. Trans-Lux Corp., 925 F.2d 29 (1st Cir.1991). The Court finds the Nottingham decision persuasive and is guided by it in resolving the instant motion. The facts that follow were gathered from the First Circuit's opinion and the district court's decision in Nottingham Partners v. Trans-Lux Corp., Civ. A. No. 88-0591-Z, 1990 WL 93513, 1990 U.S. Dist. LEXIS 8078 (D.Mass. June 27, 1990). In Nottingham, the plaintiffs ("Nottingham") brought an action in federal district court alleging violations under section 14 of the Securities Exchange Act, 15 U.S.C. § 78n, and Rule 14a-9 promulgated thereunder, alleging that the defendants, Trans-Lux Corporation ("Trans-Lux") and its directors, failed to disclose important information in a proxy statement. The plaintiffs also brought state common law breach of fiduciary duty and statutory claims arising out of the same transactions and proxy statement. The federal suit sought money damages as well as equitable redress. Precipitating this lawsuit and the state action which followed was Trans-Lux's issuance of a proxy statement soliciting votes on a recapitalization plan and various amendments to its certificate of incorporation. Approximately two weeks after the federal action was instituted, a Trans-Lux shareholder filed an individual, class and derivative action in Delaware Chancery Court alleging violations of state law related to, inter alia, disclosures in the proxy statement. Subsequently, the parties in the state litigation entered into a settlement agreement. After notice of the proposed settlement to all prospective class members, including the plaintiffs in the federal action, the Court of Chancery held a hearing to determine whether to approve the proposed settlement. Nottingham appeared at the hearing and objected vehemently to the proposed settlement. The Chancery Court rejected Nottingham's objections and approved the settlement, including the general release contained therein. The court also certified the state case as a class action under Chancery Rule 23(b)(2) and denied Nottingham the opportunity to opt out of the class. Upon appeal by Nottingham, the Delaware Supreme Court upheld the Chancery Court decision in all respects. See Nottingham Partners v. Dana, 564 A.2d 1089 (Del.1989). The decision of that court was aptly summarized by the First Circuit, as follows: "The court held in substance that (1) inasmuch as [the state shareholder] action was primarily equitable in nature, class certification was available despite the `incidental' claim for monetary relief, id. at 1094-97; (2) [Nottingham was] lawfully denied egress from the class, id. at 1097-1101; (3) the class settlement was, as the vice chancellor had found, fair, reasonable and adequate, id. at 1101-04; and (4) because [Nottingham's] federal law claims arose out of the same nucleus of operative fact as the claims prosecuted in [the state shareholder action], the vice chancellor possessed, and appropriately exercised, the power to approve a release that included those claims within its ambit, id. at 1105-07. Lack of jurisdictional competency the fact that a Delaware state court could not have gained subject matter jurisdiction 704 over [Nottingham's] federal securities law claims did not bar the inclusion of those claims within the sweep of the release. Id. at 1104-05." Nottingham, 925 F.2d at 31. After this parade of intervening events, the defendants in the federal action moved for summary judgment on the ground that the claims in that action were released as a result of the settlement in the class action brought in Delaware Chancery Court. The United States District Court for the District of Massachusetts ruled that the defendants were entitled to summary judgment because Nottingham's claims were extinguished at the time the shareholders' class action was resolved in the Delaware courts. Nottingham, 925 F.2d at 30. The First Circuit affirmed. Id. Turning to the case sub judice, it is well settled that a suit can be barred by the earlier settlement of another suit in either of two ways, i.e., by the separate and distinct defenses of release or res judicata. See id. at 31-32 (citations omitted). This proposition is equally applicable to a court-approved class action settlement. See id. at 32. If the release defense operates to bar the federal action in its entirety, the Court need not resolve the res judicata defense. As in Nottingham, the Delaware Chancery Court explicitly found that the claims asserted here arose out of the same transactions as the claims in the related Delaware consolidated action. This Court identically concludes that the federal action shares a common gravamen with the related Delaware consolidated action and all counts of the Plaintiffs' amended complaint arise out of the same acts and transactions that were at issue in the Court of Chancery actions. In the instant case, as in Nottingham, the Delaware Court of Chancery approved a settlement releasing all claims relating to a proxy statement, including federal securities law claims which are within the exclusive jurisdiction of the federal courts. The question that is posed is whether this Court will find the release valid and effective and dismiss the federal claims. When called upon to resolve this question, federal courts have uniformly dismissed claims, including claims committed to their exclusive jurisdiction, that have been released in settlement of class actions brought in state courts. See, e.g., Nottingham, 925 F.2d at 33-34; TBK Partners, Ltd. v. Western Union Corp., 675 F.2d 456, 460 (2d Cir.1982); In re Corrugated Container Antitrust Litig., 643 F.2d 195, 221 (5th Cir.1981); In re Washington Pub. Power Supply Sys. Sec. Litig., 720 F. Supp. 1379, 1413 (D.Ariz.1989), aff'd sub nom. Class Plaintiffs v. City of Seattle, 955 F.2d 1268 (9th Cir.), cert. denied, ___ U.S. ___, 113 S. Ct. 408, 121 L. Ed. 2d 333 (1992); Bernstein v. Mediobanca Banca di Credito Finanziario-Societa Per Azioni, 78 F.R.D. 1, 2 (S.D.N.Y.1978). See also Lowenschuss v. Resorts Int'l, Inc., Civ. A. No. 89-1071, 1989 WL 73254, at 6 & n. 15, 1989 U.S. Dist. LEXIS 7407, at 20 & n. 15 (E.D.Pa. June 29, 1989) ("this [state court settlement] release, by its plain language, bars suits in federal court, including those based upon claims within the federal court's exclusive jurisdictions"); 18 Charles A. Wright et al., Federal Practice and Procedure § 4470 at 688-89 (1981) ("[a]part from claim preclusion as such, settlement of state court litigation has been held to defeat a subsequent federal action if the settlement was intended to apply to claims in exclusive federal jurisdiction as well as other claims"]. Indeed, in Nottingham, in affirming the lower court's dismissal of the federal action on the ground of release, the First Circuit observed that "[s]ince the federal securities claims [i.e., Securities Exchange Act claims,] could only be litigated in a federal court, see 15 U.S.C. § 78aa, appellants hypothesize that those claims, come what may, could not be barred by a state court settlement. We consider this argument to be jejune." Nottingham, 925 F.2d at 33. Based on the weight of authority, this Court concludes that the Chancery Court appropriately exercised its power to approve a release encompassing federal securities law claims under the Securities Exchange Act which were not within the subject matter jurisdiction of the Delaware state courts. In considering the effect of the release on the federal litigation, the Court is 705 guided by the teachings of Nottingham, supra. There, the court explained that [t]he release contained in the [state court] settlement, by its terms, met all the criteria necessary to engage the gears of the release defense for purposes of this suit: it (1) applied to appellants, (2) encompassed the claims asserted [in the federal action], and (3) was legally enforceable.... [F]urther prosecution of appellants' federal suit is foreclosed by the release defense. * * * * * * Once the class action court, affording the process that is due, determines that an objecting party will not be allowed to opt out of a Rule 23(b)(2) class, the objector becomes subject to a resulting settlement, including any release granted therein, to the same extent as any designated class representative or consenting class member. Id. at 32. The facts of the case sub judice fall squarely within Nottingham's parameters for a successful release defense by virtue of the class action settlement and release approved and ordered by the Delaware Chancery Court. The claims asserted in this action are encompassed within the state court release and have been released on behalf of a class that indisputably includes the Plaintiffs. Moreover, the release was approved by the Delaware state courts only after notice and full consideration of the Plaintiffs' objections to the settlement and release. The Court additionally is motivated to conclude that the state court-approved release forecloses this federal action based on principles of comity between state and federal courts. To deny effect to a release of claims merely because it was given in an action commenced in state court would invite unprecedented consequences. Such a doctrine would unjustifiably proliferate litigation, defeat legitimate expectations of the settling parties, engender uncertainty among class members and defendants as to their ability to retain the benefits of settlements, discourage settlements altogether and create unwarranted conflict between state and federal courts. The circumstances of this case make adherence to the settled rules of release particularly appropriate. Here, the Plaintiffs are not only members of the class, but themselves chose to commence the state court class actions in which the release was given and judicially approved. They commenced the federal action only after the Court of Chancery refused to appoint them as class representatives and directed that a hearing be held to consider a settlement proposed by other class action plaintiffs. Even after commencing this action, they chose to continue to litigate their objections to the settlement in the Delaware state courts. The Sandler Plaintiffs were in no sense "absentee" class members. Indeed, the Plaintiffs were given, and vigorously exercised, a constitutionally adequate opportunity to be heard in the Delaware state courts. See, e.g., Nottingham, 925 F.2d at 32. Like the plaintiffs in Nottingham, the Sandler Plaintiffs litigated and lost on the issues which they now contest in their opposition to the Defendants' motion for summary judgment: that the consolidated shareholder action was improperly maintained as a class action under Chancery Rules 23(b)(1) and 23(b)(2), that the settlement was woefully inadequate, that the settlement was not reached in good faith, that a state court could not approve a release unless the release excluded federal claims not within the state courts' jurisdiction and that due process required that class members be given the right to opt out. The Plaintiffs thus became collaterally estopped from relitigating these issues and the defense of release is fully applicable to their claims in this action. See, e.g., Nottingham, 925 F.2d at 32 (plaintiffs were "collaterally estopped from arguing here, contrary to what the Delaware courts found, that they are outside the terms of the decree or that the settlement was unfair or inadequate"). The Court rejects the Plaintiffs' argument that a question of fact exists as to whether the settlement upon which the release was based is facially collusive or the result of coercion. In an attempt to raise a factual issue about coercion, the Plaintiffs rely entirely on the deposition testimony of the 706 chairman of MCCA's board of directors concerning, inter alia, the settlement. This attempt to inject the specter of a factual dispute regarding the settlement is unavailing, however, because no inference of coercion or collusion is present in that deposition testimony. (The Court need not speculate at this point what effect that would have if such an inference had been found.) The Plaintiffs additionally assert that they were not permitted full and adequate discovery on these issues and thus, the existence of coercion is an issue of fact which must be resolved in their favor on the present motion for summary judgment. To the contrary, the record conclusively demonstrates that the Plaintiffs had ample opportunity to contest the issue of whether the settlement was fair and reached in good faith. Moreover, the record emphatically belies the Plaintiffs' contention that they were prevented from conducting discovery on the issue of coercion. In the Delaware court, the Plaintiffs launched an extensive attack on the conduct of the settling parties as part of their overall attack on the fairness of the settlement. See, e.g., MCCA Consol. Litig. II, slip op. at 24-33.[12]Cf. 18 Charles A. Wright et al., Federal Practice and Procedure § 4470 at 688-89 (1981) ("[s]tate court determinations that the settlements [of state court litigation] were fair, indeed, have been held to preclude relitigation of the fairness issue[;] ... [t]hese rulings are surely correct"). The Court likewise rejects the Plaintiffs' argument that it was a denial of due process to prohibit the Plaintiffs from opting out of the certified class and pursuing their exclusive federal damages claims. The Plaintiffs' reliance on Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 810-11, 105 S. Ct. 2965, 2973-74, 86 L. Ed. 2d 628 (1985), in support of their argument is misplaced. Unlike the absent class members in Shutts, the Sandler Plaintiffs were parties to and actively participated in the consolidated class action in Chancery Court throughout the proceedings and consented to the Chancery Court's jurisdiction by filing their class action suit there. "Shutts mandates that a plaintiff be permitted to opt out of a proposed class when the court does not have personal jurisdiction over the plaintiff." In re Drexel Burnham Lambert Group, Inc., 960 F.2d 285, 292 (2d Cir.1992) (citing Shutts, 472 U.S. at 811-12, 105 S.Ct. at 2974-75) (emphasis added), cert. dismissed, ___ U.S. ___, 113 S. Ct. 1070, 122 L. Ed. 2d 497 (1993). Thus, the narrow holding of Shutts has no direct application with respect to these Plaintiffs. Essentially, the Plaintiffs press the opt out argument in an attempt to have this Court review the propriety of the class certification and their inclusion in the class. As with their other arguments, Plaintiffs again cannot prevail. "[A] court-approved settlement containing a release may be applied against a class member who is not a representative member, even if that member objects to the settlement, so long as acceptable procedural safeguards have been employed." Nottingham, 925 F.2d at 33 (citations omitted). Like Nottingham, here, "[t]he Delaware courts, affording all the prophylaxis which the Due Process Clause commands, adjudicated the question of whether [the Sandler Plaintiffs] had a right, or should have been allowed, to opt out of the settlement." Id. In objecting to the class certification and settlement, the Plaintiffs were given, and vigorously exercised, a constitutionally adequate opportunity to be heard on this issue. IV. CONCLUSION For the reasons stated herein, the Court grants the Defendants' motion for summary 707 judgment because the action is barred by a settlement and release approved by the Court of Chancery for the State of Delaware in the related consolidated class action. NOTES [1] This wholly-owned subsidiary, BLS Acquisition Corp. I, Inc. ("BLS"), was named as a Defendant in the case sub judice. BLS, a Delaware corporation, was formed by BellSouth for the purpose of implementing the merger with MCCA. The corporate existence of BLS ended on April 4, 1989, the date on which the merger between BLS and MCCA was consummated, with MCCA surviving as a wholly-owned subsidiary of BellSouth. See BellSouth's Answer to Plaintiffs' Amended Complaint, Docket Item ("D.I.") 27 at ¶ 12. [2] MCCA's subsidiary was Mobile Telecommunications Technologies Corporation ("Mtel"). While MCCA became a wholly-owned subsidiary of BellSouth as a result of the subsequent merger, Mtel was "spun-off" to MCCA shareholders prior to the merger and retained its corporate existence independent of BellSouth. [3] The shareholder plaintiffs relied on the provision of the merger agreement governing "Termination and Abandonment." Specifically, Section 9.01 provided that: This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, before or after the approval by the shareholders of [MCCA]: * * * * * * (f) By the Board of Directors of the Company [MCCA], if it, in the exercise of its good faith judgment, based upon the advice of counsel, determines that its fiduciary duties to the Company's shareholders require that it: (i) not recommend approval of this Agreement by the Company's shareholders, or that it withdraw such recommendation, or (ii) take an action specified in Section 6.01(e)(ii).... The "Effective Time" was defined as occurring after the closing of the merger, when the Certificate of Merger would be filed with the State of Delaware. Section 6.01(e)(ii) of the agreement referred to an action by MCCA to merge with, liquidate into or otherwise combine with any third party or enter into an agreement to do any of the foregoing. See Defendants' Affidavit and Exhibits ("Ex.") in Support of Motion for Summary Judgment, D.I. 42, Ex. A. (Merger Agreement at §§ 9.01, 1.06 and 6.01, respectively). Under the terms of the merger agreement, however, MCCA also agreed not to solicit or initiate discussions with any third party concerning a merger with MCCA or the acquisition of MCCA stock or assets. See id. at § 6.10. Further, MCCA had agreed not to furnish any non-public information to third parties concerning a merger with MCCA or the acquisition of MCCA stock or assets. See id. [4] The Sandler Plaintiffs subsequently amended their complaint in the Court of Chancery to so allege after the Court of Chancery denied the shareholder plaintiffs' application for a preliminary injunction on March 29, 1989. The exact language of the disclosure in the proxy statement regarding the alleged broad "fiduciary out" provision follows: Termination of the Merger Agreement The Merger Agreement may be terminated and the Merger abandoned at any time prior to the Effective Time, whether before or after the approval by the stockholders of MCCA: ... by MCCA if its Board of Directors, in the exercise of its good faith judgment, based upon the advice of counsel as to its fiduciary duties to the MCCA stockholders, determines to (i) withdraw its recommendation that the MCCA stockholders approve the Merger Agreement or (ii) merge with, liquidate into or otherwise combine with any third party or enter into an agreement to do any of the foregoing; provided that, in either event, BellSouth shall have received $25 million in cash as a termination fee prior to such termination. D.I. 42, Ex. A (Proxy Statement). [5] Count I of the amended complaint alleges violations of section 10(b) of the Securities Exchange Act of 1934 (the "Securities Exchange Act"), 15 U.S.C. § 78j(b), and Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240.10b-5. Count II alleges violations of section 17(a) of the Securities Act of 1933 (the "Securities Act"), 15 U.S.C. § 77q(a). Count III alleges violations of section 11 of the Securities Act, 15 U.S.C. § 77k. Count IV alleges violations of section 12(2) of the Securities Act, 15 U.S.C. § 77l(2). Count V alleges violations of section 15 of the Securities Act, 15 U.S.C. § 77o, and section 20 of the Securities Exchange Act, 15 U.S.C. § 78t. Count VI alleges violations of 18 U.S.C. §§ 1962(a)-(d) (Racketeer Influenced and Corrupt Organizations Act) ("RICO"). Count VII alleges breach of fiduciary duty by MCCA's board of directors. Count VIII alleges common law intentional and negligent misrepresentation. Count IX alleges violations of section 14(a) of the Securities Exchange Act, 15 U.S.C. § 78n(a), and Rules 14a-5 and 14a-9 promulgated thereunder, 17 C.F.R. §§ 240.14a-5 and 240.14a-9. [6] Specifically, the complaint alleges, among other things: (1) that the MCCA directors breached their fiduciary duties in consummating the merger and authorizing MCCA to agree to the settlement, (2) that the Defendants violated the federal securities laws and the common law by disseminating the proxy statement, which allegedly failed to disclose an alleged "position" of the Defendants with respect to the meaning of the termination provision of the merger agreement (i.e., that under MCCA's interpretation of the merger agreement and under the then current circumstances, there was no provision which would permit MCCA to terminate the merger agreement), and by filing with the Securities and Exchange Commission in November 1988 a registration statement for the securities of Mtel that was allegedly false and misleading in failing to state that MCCA would transfer additional assets to Mtel prior to the "spin-off" and (3) that the Defendants' conduct in connection with the merger violated RICO. The complaint seeks, inter alia, compensatory damages of "at least $850,000,000," treble damages under RICO of "at least $2.55 billion" and punitive damages. [7] In fact, in the amended complaint in the case sub judice, the Sandler Plaintiffs concede that the settlement was conditioned upon the Delaware Chancery Court's dismissing any and all claims, including those asserted in this case, arising out of or in any way connected with the sale of MCCA to BellSouth. See D.I. 26 at ¶ 90. [8] The stipulation of settlement contained the following release clause: ... IT IS STIPULATED AND AGREED, by and among the parties to this Stipulation, by their attorneys, subject to the approval of the Court of Chancery, in consideration of the substantial benefits that the members of the Class ... have received and will receive from the Settlement, that all claims arising from the beginning of the world up to and including the date of this Stipulation, whether known or unknown, including but not limited to claims for breach of fiduciary duty and/or fraud, that have been or could have been asserted by any member of the Class ..., against any of the defendants, or any of their respective present or former officers, directors, agents, employees, attorneys, advisers (including Prudential-Bache Securities Inc. and Morgan Stanley & Co. Incorporated), ... (defendants and all such other persons and entities being referred to herein as the "Released Parties") in connection with or that may have arisen or hereafter may arise out of or relate in any way to (1) the Shareholder Actions; (2) any discussions or negotiations, whether or not leading to an agreement, concerning the possible acquisition of MCCA or any portion of the assets or stock of MCCA; (3) the Merger Agreement; (4) the Merger; (5) the Proxy Statement; (6) the Special Meeting; (7) the Spin-Off; (8) the Information Statement; (9) any statements, representations, actions and/or decisions not to act or failures to act made or taken by MCCA or the members of the Board of Directors of MCCA or BellSouth or the Board of Directors of BellSouth, either individually or collectively, in connection with the possible purchase or sale of MCCA or any portion of the assets or stock of MCCA; (10) this Settlement (except for compliance with the Settlement); and/or (11) any matters, transactions, occurrences or omissions referred to in the complaints in the Shareholder Actions or the Stipulation (all of which are defined as the "Settled Claims"), shall be compromised, settled, released, discharged and dismissed with prejudice, upon and subject to the following terms and conditions: * * * * * * 4. The obligations of defendants under this Stipulation shall be in full settlement, compromise, release and discharge of the Settled Claims, and no Released Party shall have any other or further liability or obligations to anyone with respect to the Settled Claims except as expressly provided for herein.... D.I. 42, Ex. R (emphasis added). The "Class" comprised all holders (other than defendants in the shareholder actions) of MCCA Class A or Class B common stock as of the close of business on July 20, 1988 and their successors in interest or transferees, immediate and remote. See D.I. 42, Ex. Q. [9] Counts I and IX allege violations of the Securities Exchange Act, that is, claims exclusively within the jurisdiction of the federal courts. See 15 U.S.C. § 78aa. On the other hand, Counts II through VIII allege Securities Act and RICO violations, as well as state law claims. State courts have concurrent jurisdiction over Securities Act claims. See 15 U.S.C. § 77v(a). Civil RICO claims are subject to the concurrent jurisdiction of the state and federal courts. See Tafflin v. Levitt, 493 U.S. 455, 460, 110 S. Ct. 792, 795-96, 107 L. Ed. 2d 887 (1990); McCarter v. Mitcham, 883 F.2d 196, 200-201 (3d Cir.1989). [10] For the text of the release, see supra note 8. [11] To the extent that the Plaintiffs now seek to assert claims in this action purportedly arising from the agreement to settle the Chancery Court actions, such claims also fall plainly within the scope of the release approved by the Chancery Court. [12] The Plaintiffs' own reliance on their December 20, 1989 deposition of MCCA's former CEO and board chairman, John N. Palmer ("Palmer"), to establish the inference of coercion belies their purported lack of discovery on the coercion issue. This deposition represented the second time that Palmer was deposed by the Plaintiffs in the state court action. Plaintiffs themselves supplied the deposition transcript in opposing the Defendants' instant motion for summary judgment. See D.I. 48, Ex. HH. Throughout the deposition, Plaintiffs' counsel repeatedly asked Defendant Palmer about pressures brought to bear by BellSouth on MCCA to close the merger deal and settle with the shareholder plaintiffs in the state court action. The Court finds, however, that nothing contained therein raises a genuine issue of material fact as to whether MCCA was "coerced" into settling the shareholder actions. The record is simply devoid of inferences of coercion.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2406522/	576 F. Supp. 2d 902 (2008) Fares SHALASH, Plaintiff, v. Michael B. MUKASEY, et al., Defendants. No. 07 C 298. United States District Court, N.D. Illinois, Eastern Division. September 12, 2008. 904 Kevin Andrew Raica, Azulay, Horn & Seiden, LLC, Chicago, IL, for Plaintiff. 905 Kurt N. Lindland, AUSA, United States Attorney's Office, Chicago, IL, for Defendant. MEMORANDUM OPINION AND ORDER RUBEN CASTILLO, District Judge. Fares Shalash ("Plaintiff") has been a legal permanent resident of the United States since November 1990. (R. 21, Application for Atty's Fees at 1.) He applied for naturalization on September 9, 2003, and he was interviewed by the United States Citizen and Immigration Services ("CIS") on April 12, 2004. (R. 1, Pet. for Hearing at 3.) He passed the English language, U.S. history, and government tests, but he was informed that he would not be given a decision on his application until a pending fingerprint check was completed. (Id.) By January 17, 2007, CIS had not yet ruled on Plaintiffs naturalization application, and he filed a petition in this Court for a hearing on his application, naming the U.S. Attorney General, U.S. Department of Homeland Security Secretary, U.S. CIS Director, Chicago CIS District Director, and the FBI Director as Defendants. (R. 1, Pet. for Hearing.) Plaintiff mailed a copy of the complaint and waiver of summons forms to Defendants, but Defendants did not sign the waiver forms, were never served with a summons, and no summons was ever issued by this Court. (R. 23, Defs.' Mem. in Supp. of Mot. to Dismiss and Resp. at 2.) At a status hearing on May 30, 2007, Defendants informed the Court that they had not been properly served with Plaintiffs petition for a hearing and that they had not waived service. (Id., Ex. 3, 5/30/07 Tr. at 6-8.) Nevertheless, Defendants represented that they would follow the Court's orders in the matter. (Id.) At the conclusion of the hearing, the Court remanded the case to CIS, ordering that it render a final decision on Plaintiffs pending citizenship application on or before September 28, 2007. (R. 10, 5/20/07 Min. Order.) The Court dismissed Plaintiffs petition without prejudice, with leave to reinstate on or before October 15, 2007, if CIS did not render a decision by September 28, 2007. (Id.) Defendants did not comply with this Court's order to adjudicate Plaintiffs naturalization application by September 28, 2007. Accordingly, on October 5, 2007, Plaintiff filed a motion to reinstate his petition for a hearing. (R. 12, Pl.'s Mot. to Reinstate at 4.) Between October 5, 2007, and February 2008, this Court entered and continued Plaintiffs motion to reinstate five times based on the parties' representations that they were working toward adjudication of Plaintiffs naturalization application. (See R. 14, 11/5/07 Min. Order; R. 15, 11/20/07 Min. Order; 1/2/08 Min. Order; 1/10/08 Min. Order; 1/30/08 Min. Order.) By February 2008, CIS adjudicated Plaintiffs application for naturalization, and Plaintiff became a citizen on February 7, 2008. Subsequently, on March 19, 2008, Plaintiff filed an application for Attorneys' Fees and Costs pursuant to the Equal Access to Justice Act ("EAJA"), 28 U.S.C. § 2412(d), for time reasonably expended and expenses incurred while pursuing his petition for a hearing on his naturalization application. (R. 21, Application for Atty's Fees.) On April 8, 2008, Defendants filed a motion to dismiss Plaintiffs original petition for a hearing under Federal Rules of Civil Procedure 12(b)(4) and 12(b)(5) for insufficient process and insufficient service of process, respectively. (R. 22, Defs.' Mot. to Dismiss and Resp.) Defendants filed their response to Plaintiffs application for fees jointly with their motion to dismiss. (Id.) This was Defendants' first responsive pleading in this action. 906 ANALYSIS Plaintiff filed his petition for a hearing on his naturalization application pursuant to 8 U.S.C. § 1447(b), which states that if CIS fails to make a determination on the application within 120 days of the applicant's naturalization examination, the applicant may apply to the United States district court for a hearing to adjudicate the matter or to remand the matter with instructions for CIS to adjudicate the matter. 8 U.S.C. § 1447(b). Here, almost four years elapsed between Plaintiff's naturalization interview on April 12, 2004, and the adjudication of his naturalization application in February 2008. (R. 1, Pet. for Hearing at 3.) I. Defendants' Motion to Dismiss Plaintiffs Original Petition for a Hearing Defendants' motion to dismiss Plaintiffs original petition for a hearing on his naturalization application comes 15 months after Plaintiff filed the petition, and 2 months after CIS adjudicated Plaintiff's application for naturalization. (R. 22, Defs.' Mot. to Dismiss and Resp.) Defendants argue that Plaintiffs original petition should be dismissed because Plaintiff never effectuated service on them. (Id.) Defendants are correct that Plaintiff did not effectuate service on them. Federal Rule of Civil Procedure 4(i) requires that service on the United States be accomplished via hand delivery of a summons and copy of the complaint to the U.S. Attorneys' Office or delivery by registered or certified mail to the civil process clerk at the U.S. Attorneys' office. In addition, the plaintiff must deliver a summons and copy of the complaint via registered or certified mail to the Attorney General of the United States and the agency. Fed. R.Civ.P. 4(i). Plaintiff did not follow these procedures. Plaintiff argues, however, that Defendants waived their argument because they appeared through counsel at numerous status hearings, but never filed a motion to dismiss for failure to serve. (R. 27, Pl.'s Resp. to Defs.' Mot. to Dismiss at 1-3.) Defenses, such as inadequate service of process, should be promptly asserted to eliminate harmful delay and waste of judicial resources. Trustees of Cent. Laborers' Welfare Fund v. Lowery, 924 F.2d 731, 734 (7th Cir.1991). "A party may waive a defense of insufficiency of process by failing to assert it seasonably in a motion or their first responsive pleading. That defense . . . may be waived by formal submission in a cause, or by submission through conduct. A party need not actually file an answer or motion before waiver is found." Id. at 732-33 (internal citations and quotations omitted). "To permit any other outcome would encourage indefinite compliance with post-judgment collection attempts while one party retains the option of asserting the defense at his leisure, to the detriment of both the plaintiff and the courts." Id. at 734. Defendants filed their first pleading in this action on April 8, 2008, when they filed their motion to dismiss. (R. 22.) Although Defendants notified this Court orally at the May 30, 2007, status hearing that they were never properly served in this matter, by continuing to participate in this case and failing to raise a motion contesting service until long after Plaintiff filed his petitionand after Plaintiffs original petition was mooted by the adjudication of his naturalization application Defendants have in essence waived, or forfeited, their right to claim insufficient service of process. Other courts in this district have come to similar conclusions. See, e.g., Schmude v. Sheahan, 214 F.R.D. 487, 493-94 (N.D.Ill.2003) (holding that defendants waived defense of insufficient service of process because it was never formally raised and the court was not required 907 to consider undeveloped or unsupported claims which were not brought pursuant to an identified rule of federal civil procedure); O'Brien v. Sage Group, Inc., 141 F.R.D. 81, 85 (N.D.Ill.1992) (holding that defendant waived defense of insufficient service of process because "[w]ith full knowledge that it was being sued in this case, [it] sat back and did nothing even though it had at its disposal the means to resolve all doubts about service by making an appropriate motion"). II. Attorneys' Fees and Costs under the EAJA The remaining issue, then, is whether Plaintiff is entitled to attorneys' fees and costs under EAJA. Private litigants in immigration cases are eligible for attorneys' fees under the EAJA if they can establish the statutory grounds for an award. Floroiu v. Gonzales, 498 F.3d 746, 748 (7th Cir.2007). To prevail on a motion for fees under the EAJA, a party must show that: (1) he was a prevailing party; (2) the Government's position was not substantially justified; (3) there existed no special circumstances that would make an award unjust; and (4) he filed a timely and complete application for fees. 28 U.S.C. § 2412(d)(1)(A)-(B). Defendants argue that Plaintiff's petition for fees fails on each of these grounds. A. Timeliness of Application for Fees First, Defendants contend that Plaintiffs application for fees was untimely. An EAJA fee petition must be filed "within 30 days of final judgment." 28 U.S.C § 2412(d)(1)(B). "A `final judgment' means a judgment that is final and not appealable, and includes an order of settlement." 28 U.S.C § 2412(d)(2)(G). The petition for fees thus must be filed within 30 days after the expiration of the 60-day period allowed for an appeal from the final judgment in the action. Richmond v. Chater, 94 F.3d 263, 266 (7th Cir.1996) (citing 28 U.S.C. §§ 2412(d)(1)(B), (2)(G); Shalala v. Schaefer, 509 U.S. 292, 302, 113 S. Ct. 2625, 125 L. Ed. 2d 239 (1993)). In general, the term "`final judgment refers to judgments entered by a court of law, and does not encompass decisions rendered by an administrative agency.'" Schaefer, 509 U.S. at 296, 113 S. Ct. 2625 (quoting Melkonyan v. Sullivan, 501 U.S. 89, 96, 111 S. Ct. 2157, 115 L. Ed. 2d 78 (1991)). The question here is which order, if any, constituted a "final judgment," starting the EAJA's 30-day clock. The government argues that the Court's remand order of May 30, 2007, constituted a final judgment, and that Plaintiffs motion for fees, filed on March 19, 2008, is thus untimely. Although the Supreme Court and the Seventh Circuit have not addressed this specific issue in the context of a district court's review of an immigration case, the Seventh Circuit has indicated that courts should treat an EAJA application for fees after remand of an immigration case the same way courts treat the application for fees after a sentence-four remand in the Social Security context. In Muhur v. Ashcroft, the Seventh Circuit stated that it did not see "any difference" between that case, where the plaintiff applied for EAJA fees after succeeding in having her case remanded for reconsideration of her asylum application, and the situation in Shalala v. Schaefer, 509 U.S. 292, 113 S. Ct. 2625, 125 L. Ed. 2d 239 (1993), where the Supreme Court considered the plaintiffs EAJA application for fees in a sentence-four Social Security case remand. Muhur v. Ashcroft, 382 F.3d 653, 655 (7th Cir.2004); see also Johnson v. Gonzales, 416 F.3d 205, 209 (3d Cir.2005) (agreeing with Seventh Circuit that a remand in an immigration case is essentially the same as a "sentence-four" remand in a Social Security case); Rueda-Menicucci v. INS, 132 F.3d 493, 495 (9th Cir.1997) (concluding that the appellant could be considered a prevailing party 908 based on the court's remand to the Board of Immigration Appeals). Neither party has given the Court any reason to treat the remand in this case differently. In Schaefer, the Supreme Court reviewed an EAJA application for fees filed after the district court remanded a Social Security case pursuant to sentence-four of 42 U.S.C. § 405(g). Schaefer, 509 U.S. at 297-98, 113 S. Ct. 2625. Sentence-four provides the district court with the "power to enter, upon the pleadings and transcript of the record, a judgment affirming, modifying, or reversing the decision of the Commissioner of Social Security, with or without remanding the cause for a rehearing." 42 U.S.C. § 405(g). The Supreme Court ruled that remand pursuant to sentence-four constitutes a final judgment under the EAJA, as it "terminat[es] the litigation with victory for the plaintiff." Schaefer, 509 U.S. at 298, 301, 113 S. Ct. 2625. Thus, the Court held that the 30-day time period for filing an application for EAJA fees after a sentence-four remand begins immediately upon expiration of the time for appeal of the remand. Id. at 297-98, 113 S. Ct. 2625. In Schaefer, however, the district court did not enter a "separate document" of judgment in connection with its remand order. Id. at 302-03, 113 S. Ct. 2625. For the time for appeal to run, a judgment must be entered in compliance with Federal Rule of Civil Procedure 58. Id. at 302, 113 S. Ct. 2625. Rule 58 requires that the district court set forth every judgment "on a separate document." Id. at 302-03, 113 S. Ct. 2625 (citing Fed.R.Civ.P. 58). Therefore, although the sentence-four remand constituted a final judgment under the EAJA, the Supreme Court held that absent a formal, Rule 58 judgment, the remand order remained appealable when the plaintiff filed his application for EAJA fees 15 months later, and thus the application was timely. Id. at 303, 113 S. Ct. 2625. The present case raises the same issue as in Schaefer. When the Court remanded the case to CIS to render a final decision on Plaintiffs naturalization application, the Court did not enter a "separate document" formalizing final judgment pursuant to Rule 58. (R. 10, 5/30/07 Min. Order.) As in Schaefer, although the Court's May 30, 2007, remand order was final for purposes of the EAJA, Plaintiff "is in luck" because a separate Rule 58 document was not entered, preventing the remand order from becoming "not appealable," as required to trigger the time limitations of the EAJA. Kolman v. Shalala, 39 F.3d 173, 176-77 (7th Cir.1994); see also O'Connor v. Shalala, 23 F.3d 1232, 1235 (7th Cir.1994); Raines v. Shalala, 44 F.3d 1355, 1363 (7th Cir.1995). Therefore, although Plaintiff filed his EAJA application for fees 10 months after the remand order, the time for filing has not run out, and Plaintiffs EAJA application for fees is timely. B. Prevailing Party Status Defendants also dispute that Plaintiff was a "prevailing party" under the EAJA. Prevailing party status is obtained "if the plaintiff has succeeded on any significant issue in litigation which achieved some of the benefit sought in bringing suit." Schaefer, 509 U.S. at 302, 113 S. Ct. 2625 (internal citations and quotations omitted). A "prevailing party" must have achieved a "judicially sanctioned change in the legal relationship of the parties," not merely a voluntary change in the defendant's conduct. Buckhannon Bd. & Care Home v. W. Va. Dep't of Health & Human Res., 532 U.S. 598, 605, 121 S. Ct. 1835, 149 L. Ed. 2d 855 (2001). The Schaefer Court held that a sentence-four remand "terminates the litigation with victory for the plaintiff, thus conferring prevailing party status merely 909 by virtue of the remand." Curtis v. Shalala, 12 F.3d 97, 99 (7th Cir.1993) (citing Schaefer, 509 U.S. at 302, 113 S. Ct. 2625). The Seventh Circuit extended Schaefer's reasoning to the immigration context, recently holding that a plaintiff was a prevailing party even though all she achieved was a remand to the immigration service for reconsideration of her asylum application, not an order that she be granted asylum. Muhur, 382 F.3d at 654. Although the May 30, 2007, order gave Plaintiff leave to reinstate the case if Defendants did not comply with the Court's remand order, at that point, once the Court found that Defendants violated Section 1447, "nothing remain[ed] to be done by the court." Muhur, 382 F.3d at 654. The parties' legal relationship changed from this Court's mandate to the agency to expedite processing of Plaintiff's application. The fact that Defendants were never required to file a written response to Plaintiffs original petition does not change this analysis because the violation of Section 1447 was clear on its face. The present case is similar to a recent case before the First Circuit. In Aronov v. Chertoff, the First Circuit held that the plaintiff was a "prevailing party" within the meaning of the EAJA where the plaintiff filed a motion in the district court under Section 1447(b) because more than two and a half years had passed between his citizenship exam and the filing of his action. Aronov v. Chertoff, 536 F.3d 30 (1st Cir.2008). In Aronov, pending the issuance of the remand order, the defendants had completed review of the plaintiffs application for naturalization, and the district court's remand order included the defendant's representation that the plaintiff would be naturalized by a date certain. Id. at 34. The First Circuit held that the district court's remand order was "indispensable to the naturalization outcome," and "ended the dispute by providing [the plaintiff] his sought-after relief." Id. at 38-39. The Aronov Court reasoned that once the plaintiff filed suit in the district court, the court, not CIS, had jurisdiction to adjudicate the plaintiffs naturalization application; thus, the district court reasonably concluded that it was ultimately the remand order, not the agency's voluntary concession, that brought about the material change in the parties' relationship and "place[d] the weight of judicial authority" onto the parties' change in legal relationship, qualifying the plaintiff as a prevailing party. Id. at 38-40. Most district court cases addressing the issue agree that a plaintiff is a prevailing party after achieving a remand order from the district court in response to a Section 1447(b) petition. See Ghanim v. Mukasey, 545 F. Supp. 2d 1146, 1150 (W.D.Wash.2008) (holding that the plaintiff was a prevailing party where CIS did not voluntarily naturalize the plaintiff but was compelled to do so by court's order remanding case to CIS with explicit instructions to adjudicate the application by a date certain); Aboushaban v. Mueller, 475 F. Supp. 2d 943, 946 (N.D.Cal.2007) (holding that plaintiff who obtained court order requiring CIS to adjudicate the plaintiffs application was prevailing party); Alghamdi v. Ridge, No. 3:05cv344-RS, 2006 WL 5670940 (N.D.Fla. Sept.25, 2006) (holding that defendants' actions in processing naturalization application not due to their own voluntary change but to "judicial imprimatur" from order on remand); Aarda v. U.S. Citizenship and Immigration Servs., Civ. No. 06-1561, 2008 WL 974916, at 5 (D.Minn. Apr. 8, 2008) (holding that by virtue of the court's remand of the application to CIS with instructions to adjudicate it within 120 days, Plaintiff was the prevailing party in the action).[1] The Court agrees with the 910 reasoning of these cases and finds that Plaintiff is a prevailing party under the EAJA. C. Substantially Justified Next, the government bears the burden of establishing that its position was "substantially justified," such that Plaintiff, as the prevailing party, is not entitled to attorneys' fees. Floroiu, 498 F.3d at 748. A position that is substantially justified is one that is "justified in substance or in the main or justified to a degree that could satisfy a reasonable person." Id. (internal citations and quotations omitted). In other words, the government's position must have a reasonable basis in law and fact, and there must exist a reasonable connection between the facts and the government's legal theory. Cunningham v. Barnhart, 440 F.3d 862, 863-64 (7th Cir.2006). A court may award attorney fees on the basis of the agency's prelitigation conduct, which gave rise to litigation in the district court, or the agency's litigation position, but the district court is to make only one determination for the entire civil action. Id.; Conrad v. Barnhart, 434 F.3d 987, 990 (7th Cir.2006). Defendants argue that whether their position was substantially justified "cannot be decided here," because "[t]here is simply no record here of the defendants' position" because they were never properly served and thus were not required to assert a position. (R. 23, Defs.' Mem. in Supp. of Mot. to Dismiss and Resp. at 7.) Contrary to Defendants' arguments, there is ample record of their position in this case. First, Defendants asserted a "prelitigation" position when the agency failed to timely adjudicate Plaintiffs naturalization application. See, e.g., Aronov, 536 F.3d 30 (agency's failure to timely adjudicate the plaintiffs naturalization application constituted pre-litigation position). Second, by failing to timely abide by the Court's order to adjudicate Plaintiffs application, Defendants arguably asserted a litigation position that the long delay in processing the application was proper. Third, Defendants are currently asserting a litigation position, advocating dismissal of Plaintiffs original petition for a hearing. Moreover, it is the government's burden, not Plaintiffs burden, to establish that its position was "substantially justified." Floroiu, 498 F.3d at 748. Defendants state that "were [they] required to assert a position" to show their position was substantially justified, they would contend that CIS's delay in adjudicating Plaintiffs naturalization application was substantially justified because Congress requires the FBI to conduct a background check before CIS can adjudicate a naturalization application, and the FBI had not completed the background check. (R. 23, Defs.' Mem. in Supp. of Mot. to Dismiss and Resp. at 9-10.) Defendants' purported justification for their delay in processing Plaintiffs application, however, is not a substantial justification for Defendants' pre-litigation and litigation position. This Court agrees with the only appellate court to have addressed this exact issue: general justifications for the delay, including the agency's policy of requiring name checks for security purposes and the significant backlog of names that the FBI is processing, do not justify the agency's disregard of the clear statutory 911 mandate of Section 1447 that naturalization applications be processed within 120 days of the examination. See Aronov, 536 F.3d at 47-48. In Aronov, as in the instant case, the government argued that its delay in processing the plaintiffs application for naturalization was justified because the immigration agency had to complete a personal investigation and receive confirmation from the FBI that a full criminal background check had been completed before the agency could adjudicate an application for naturalization. Id. at 45-49. The First Circuit held that although "the agency has validindeed persuasivereasons for requiring comprehensive FBI name checks under ordinary circumstances, that policy determination cannot justify the failure to comply with a statutory deadline." Id. Therefore, the First Circuit determined that the government's assertion that it was required to wait until the plaintiffs FBI name check was completed before adjudicating his naturalization application did not have "a reasonable basis in law and fact" and did not substantially justify the defendants' noncompliance with the 120-day statutory requirement. Id. District courts that have addressed this issue have come out the same way. One court stated the matter particularly aptly: "[A] reasonable person would require a satisfactory justification for a substantial delay in completing the background check.... Here, Defendants offer no justification for the delay; rather, they merely state that `background checks were necessary and had to be completed before the plaintiff could be naturalized.' This explanation merely restates, in a conclusory manner, the necessity of completing the background check; it does not justify the delay." Alghamdi, 2006 WL 5670940, at 14. Moreover, if the government's burden to show substantial justification could be satisfied "by a general appeal to delays attributable to the FBI background check process," the 120-day statutory window mandated in 8 U.S.C. § 1447(b) "would be of no effect." Berishev v. Chertoff, 486 F. Supp. 2d 202, 207 (D.Mass.2007); see also Ghanim, 545 F.Supp.2d at 1151 (holding that CIS's delay in processing the plaintiffs naturalization application was not substantially justified where defendants argued that they could not adjudicate the application until the name check was complete, but they failed to explain why the name check was delayed); Phompanya, 2008 WL 538981, at 5 (holding that CIS's delay in processing the plaintiffs naturalization application was not substantially justified by "insufficient resources to do the job that Congress has charged the agency with doing"); Aarda, 2008 WL 974916, at 5 (holding that defendants' contention that government was extremely backlogged with name-check requests necessary to complete the background check for the naturalization applications did not substantially justify delay in processing applications). Finally, there are no special circumstances in this casebeyond the issues already addressed abovethat would make an award of attorneys' fees unjust. See Floroiu, 498 F.3d at 748. III. Attorneys' Fees Calculation In the application for fees and costs, Plaintiff requests a total of $9,652.95 in attorneys' fees, constituting a rate of $285 per hour, far in excess of the statutory maximum award. (R. 21, Application for Atty's Fees at 8-9.) The EAJA provides that "attorney fees shall not be awarded in excess of $125 per hour unless the court determines that an increase in the cost of living or a special factor, such as the limited availability of qualified attorneys for the proceedings involved, justifies a higher fee." 28 U.S.C. § 2412(d)(2)(A)(ii). Attorneys with specialized 912 immigration experience may be entitled, in certain cases, to an award in excess of the statutory maximum; however, "[i]mmigration lawyers are not ipso facto entitled to fees above the statutory ceiling." Muhur, 382 F.3d at 656. "Such an award may be appropriate when a petitioner demonstrates that his attorney brought relevant expertise to a case, such as knowledge of foreign cultures or of particular, esoteric nooks and crannies of immigration law, in which such expertise is needed to give the alien a fair shot at prevailing." Floroiu, 498 F.3d at 749 (citing Muhur, 382 F.3d at 655). Defendants argue that Plaintiffs attorneys are not entitled to fees in excess of the statutory maximum because they did not use any "specialized knowledge and skill" in litigating this case, and the number of hours they billed were excessive. (R. 23, Defs.' Mem. in Supp. of Mot. to Dismiss and Resp. at 11-12.) This Court agrees, in part. Plaintiffs attorneys' brief statement that "[t]his case required specialized knowledge of immigration law," combined with an affidavit from both attorneys attesting to their years of experience in immigration law, is insufficient to exceed the statutory ceiling. (See R. 21, Application for Atty's Fees at 8-9; id., Ex. G, Affs.) A request for additional attorneys' fees will not succeed if it "is unaccompanied by sufficient information regarding the particular qualifications of the attorney involved, the manner in which those qualifications were brought to bear on this litigation or information regarding the availability of attorneys with qualifications that would permit them to pursue adequately this case." Floroiu, 498 F.3d at 749. As in Floroiu, counsel in this case provide only a "blanket statement of the difficulty of the issues presented and the[ir] years of experience." Id. Moreover, in Floroiu, the plaintiffs attorney had 20 years experience, while in this case, Plaintiffs two attorneys have a combined total of only 11 years experience.[2] (R. 21, Application for Atty's Fees at 8-9; id., Ex. G, Affs.) Accordingly, the Court finds that Plaintiffs attorneys are entitled to no more than the statutory maximum of $125 per hour.[3] Contrary to Defendants arguments, the Court does not find the number of hours billed to be excessive, given the number of hearings held and briefs filed in this Court. Thus, Plaintiffs application for attorneys' fees is granted at the rate of $125 per hour. Plaintiffs counsel also seek $350 in costs. (R. 21, Application for Atty's Fees at 8-9; id., Ex. G, Affs.) Although the government does not contest this figure, Plaintiff does not provide a bill of costs in support. Rather, this figure is mentioned only in the last line of Plaintiffs attorneys' affidavits, as a summary request, with no explanation. (See id.) This unsupported request for costs does not satisfy the showing needed for a judgment of costs under the EAJA, 28 U.S.C. 913 § 2412(a)(1). Accordingly, the Court denies Plaintiffs application for costs. CONCLUSION For the reasons set forth above, Defendants' motion to dismiss Plaintiffs petition for a hearing on his naturalization application is denied (R. 22), and Plaintiffs motion to reinstate his petition for a hearing is denied as moot because CIS already adjudicated his application. (R. 12.) Further, the Court grants Plaintiffs application for attorneys' fees, but orders the amount to be recalculated at the $125 per hour statutory rate. (R. 21, Application for Atty's Fees.) The Court denies Plaintiff's application for costs. (Id.) NOTES [1] Cases finding that the plaintiff was not a prevailing party and denying EAJA fees are distinguishable. See Chebli v. Chertoff, 07-CV-10750, 2008 WL 302317, at 3 (E.D. Mich. Feb 4, 2008) (holding that plaintiff was not a prevailing party in Section 1447(b) case where parties privately settled matter before Court held naturalization hearing); Al Amri v. Mukasey, No. C07-590MJP, 2008 WL 687439, at 1-2 (W.D.Wash. Mar. 11, 2008) (holding that plaintiff was not a prevailing party where defendants adjudicated plaintiff's application after the court denied motion to remand to hold its own evidentiary hearing). [2] In Plaintiff's response to Defendants' motion to dismiss, Plaintiff adds that his case "required a detailed analysis of the immigration consequences of criminal activity, necessitating a comprehensive review of both applicable criminal statutes and the Immigration & Nationality Act, and implementing regulations." (R. 27, Pl.'s Resp. to Defs.' Mot. to Dismiss at 10.) Researching two statutes, however, does not represent any particular expertise or "knowledge of foreign cultures or of particular, esoteric nooks and crannies of immigration law" warranting an increase in attorneys' fees. Floroiu, 498 F.3d at 749 [3] Plaintiff's attempt to account for cost of living adjustments to the $125 ratea U.S. Department of Labor spreadsheet pulled from the Department of Labor websitefalls short of establishing what the cost of living adjustment to the $125 should be, especially in light of the fact that the Seventh Circuit found the $125 rate adequate in Floroiu, a case only one year old. See Floroiu, 498 F.3d at 749-50.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/4240646/	Fourth Court of Appeals San Antonio, Texas January 23, 2018 No. 04-17-00808-CV Daniel CRISP, Appellant v. Ismael CLAY, Appellee From the 131st Judicial District Court, Bexar County, Texas Trial Court No. 2017CI10107 The Honorable Angelica Jimenez, Judge Presiding ORDER The reporter’s record was due January 2, 2018, but was not filed. On January 10, 2018, the court reporter, Maria E. “Mary Helen” Vargas, filed a notification of late record stating her potion of the reporter’s record was not filed because appellant has not paid or made arrangements to pay the reporter’s fee to prepare the record and appellant is not entitled to the record without paying the fee. Accordingly, we ORDER appellant to provide written proof to this court on or before February 2, 2018 that either (1) the reporter’s fee has been paid or arrangements satisfactory to the reporter have been made to pay the reporter’s fee; or (2) appellant is entitled to the reporter’s record without prepayment of the clerk’s fee. See TEX. R. APP. P. 20.1, 35.3(a). If appellant fails to file such proof within the time provided, this appeal will be dismissed for want of prosecution. See id. R. 37.3(b). We order the clerk of this court to serve a copy of this order on all counsel, the court reporter, and the district clerk. _________________________________ Marialyn Barnard, Justice IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the said court on this 23rd day of January, 2018. ___________________________________ KEITH E. HOTTLE, Clerk of Court	01-03-2023	01-31-2018
https://www.courtlistener.com/api/rest/v3/opinions/2986195/	August 20, 2013 JUDGMENT The Fourteenth Court of Appeals JOHN MANUEL CASTILLO, Appellant NO. 14-13-00543-CR V. THE STATE OF TEXAS, Appellee ________________________________ This cause was heard on the transcript of the record of the court below. The record indicates that the appeal should be DISMISSED. The Court orders the appeal DISMISSED in accordance with its opinion and this decision be certified below for observance.	01-03-2023	09-23-2015
https://www.courtlistener.com/api/rest/v3/opinions/1491853/	42 F.2d 775 (1930) CAMPBELL RIVER MILLS CO., Limited, et al. v. CHICAGO, M., ST. P. & P. R. CO. No. 402. District Court W. D. Washington, N. D. July 11, 1930. 776 777 Walter B. Whitcomb, of Bellingham, Wash., for plaintiffs. F. M. Dudley and A. J. Laughon, both of Seattle, Wash., for defendant. NETERER, District Judge. The state court admittedly had jurisdiction of the parties, but defendant challenges its jurisdiction of the subject-matter. Regulation of interstate commerce is exclusive in the federal courts only in exceptional cases where the jurisdiction is restricted by Congress. Grubb v. Public Utilities of Ohio, etc., 281 U.S. 470, 50 S. Ct. 374, 74 L. Ed. 972, decided May 19, 1930. There is no restriction here. This identical issue, the validity of the order of the Public Service Commission, was presented to and determined by the state court. The computation as to the amount of recovery in the supplemental order is not questioned. Every available ground to challenge the order was necessarily presented. The judgment was upon the merits, and, unless judicial infirmity appears, the judgment of the state court is res adjudicata. Grubb v. Public Utilities of Ohio, etc., supra. The federal court will not disregard the construction placed upon a state statute by the highest court of the state, especially if it involves giving the statute one meaning for the purpose of determining whether the acts in question are within its terms, and another meaning for the purpose of escaping the federal question. Baccus v. Louisiana, 232 U.S. 334, 34 S. Ct. 439, 58 L. Ed. 627. The Interstate Commerce Act, as amended Acts of Cong. June 29, 1906 (34 Stat. 584), April 13, 1908 (35 Stat. 60); June 18, 1910 (36 Stat. 539), May 29, 1917 (40 Stat. 101), August 10, 1917 (40 Stat. 272), and February 28, 1920 (41 Stat. 456) applies to common carriers engaged in transportation of property under a common control for continuous shipment, but does not apply to goods of foreign origin but not shipped from a foreign country. "Shipment" is the act of dispatching or delivery on board of the carrier. Fisher v. Minot, 76 Mass. (10 Gray) 260; Ledon v. Havemeyer, 121 N.Y. 179, 24 N.E. 297, 8 L. R. A. 245; Schmertz v. Dwyer, 53 Pa. 335; State v. Carson, 147 Iowa, 561, 126 N.W. 698, 140 Am. St. Rep. 330. A common carrier is one who undertakes to transport for hire from one place to another goods for such as employ him. Bay v. Merrill & Ring Lbr. Co. (D. C.) 211 F. 717, 720. A concern is not a common carrier carrying only its own products. Bay v. Merrill & Ring Lbr. Co., supra. See, also, Nordgard v. Marysville & N. R. Co. (D. C.) 211 F. 721, affirmed (C. C. A.) 218 F. 737; Id., 243 U.S. 36, 37 S. Ct. 374, 61 L. Ed. 578. The logs in issue had not entered commerce until committed for shipment. Commerce is a practical legal conception drawn from the course of business. Savage v. Jones, etc., 225 U.S. 501, 32 S. Ct. 715, 56 L. Ed. 1182. There is a distinction between interstate commerce and interstate transportation. 778 One is governed by the nature of the business; the other by the nature of the particular transportation. "Commerce" is within inhibitions of the Sherman Act (15 USCA §§ 1-7, 15), but "transportation" may have no relation to interstate rates on shipment of the same goods within the same state. Atl. Coast Line R. Co. v. Standard Oil (C. C. A.) 12 F.(2d) 541, 547, 60 A. L. R. 1456; Atl. C. L. R. Co. v. R. R. Com. of Georgia (D. C.) 281 F. 321, See, also, C., M. & St. P. R. R. Co. v. Iowa, 233 U.S. 334, 34 S. Ct. 592, 58 L. Ed. 988; Gulf, C. & S. F. R. Co. v. Texas, 204 U.S. 403, 27 S. Ct. 360, 51 L. Ed. 540. The defendant railroad company had nothing to do with the transportation prior to delivery to it for shipment by the plaintiff. Atl. Coast Line R. Co. v. Standard Oil Co., supra. There was no joint arrangement or common control, even though the logging trucks were furnished for loading prior to hauling over the private logging road of plaintiff and delivery on defendant's siding, for shipment by defendant. C., M. & St. P. R. Co. v. Iowa, supra. The issue is not the relation of the logs to public policy, but relation of transportation to the logs. The logs were of foreign origin, and this inhered, irrespective of transportation, but this origin does not ipso facto attach to the initial shipping point for transportation. Hauling the logs across the boundary line over plaintiff's private logging road is not "under regulation of the Interstate Commerce Act" (Atl. Coast Line R. Co. v. Railroad Commission of Georgia, supra), and the Interstate Commerce Commission found it had not jurisdiction to consider the lawfulness of the rate assailed; and the view of the Commission was recognized by the Supreme Court in declining to review the decision of the Supreme Court of the state when the issue was directly presented as the federal question involved. The Department of Public Works and the state court had jurisdiction of the parties and subject-matter. While denial of certiorari is not viewed in the light of final judgment upon the issue, it is in the instant case most persuasive. While the granting or refusal of the petition for the writ adds or withholds no sanction to the decision, rule 38 [former rule 35] of the Revised Rules of the Supreme Court (28 USCA § 354) says a review on writ of certiorari is not a matter of right, but of sound judicial discretion, and will be granted only where there are especially important reasons therefor, such as where a state court has decided a federal question not determined by the Supreme Court, or probably not in accord with the decisions of that court, or where there is a conflict of decisions of the same matter in the Courts of Appeals in the different circuits, or the Circuit Court has decided an important question of local law probably in conflict with legal decisions or the weight of authority, or a question of law which should be settled by the Supreme Court, or a federal question in conflict with applicable decisions of the Supreme Court, or departed from the usual course of judicial proceeding as to call for the exercise of the supervisory power. It is apparent that the federal question involved was before the Supreme Court upon the petition for writ, and the rule of court and the denial of the writ would appear to be conclusive. See discussion, "certiorari denied," Stamey v. U. S. (D. C.) 37 F.(2d) 188. The state court having jurisdiction, the judgment of that court upon federal questions is res adjudicata. Mitchell v. First Nat. Bank, 180 U.S. 471, 21 S. Ct. 418, 45 L. Ed. 627. The answer raises a right and immunity under the "commerce clause" of the Constitution. The identical issue was before the state court by defendant's invitation on petition for review, and that question was considered by the state court and decided against the defendant, and the decision may not be reviewed or reversed by this court. Boston v. McGovern (C. C. A.) 292 F. 705. The transportation was of a local nature Columbia, in the United States, to Bellingham. The issue was decided, and the parties are bound by the decree. Puget Sound Elec. Ry. Co. v. Lee (D. C.) 207 F. 860; Detroit & M. R. Co. v. Mich. R. R. Comm. (D. C.) 203 F. 864, affirmed 235 U.S. 402, 35 S. Ct. 126, 59 L. Ed. 288. The conclusion is final (Lawrence v. Nelson, 143 U.S. 215, 12 S. Ct. 440, 36 L. Ed. 130; Jeter v. Hewitt, 22 How. 352, 16 L. Ed. 345), and may not be again challenged in this proceeding (Dowell v. Applegate, 152 U.S. 327, 14 S. Ct. 611, 38 S. Ct. 463). "The foundation of the doctrine of res judicata, or estoppel by judgment, is that both parties have had their day in court. 2 Black, Judgts., secs. 500, 504. The general principle was clearly expressed by Mr. Justice Harlan, speaking for this court in Southern Pacific R. Co. v. United States, 168 U.S. 1, 48, 18 S. Ct. 18, 27, 42 L. Ed. 355, `that a right, question or fact distinctly put in issue and directly determined by a court of competent jurisdiction, as a ground of recovery, cannot be disputed in a subsequent suit between 779 the same parties or their privies.'" United States v. Sakharam Ganesh Pandit (C. C. A.) 15 F.(2d) 285, 286. A review of the very many cases cited by the respective parties would serve no useful purpose. Judgment for plaintiff for the sum prayed for, including $6,500 attorney's fees.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2562473/	440 F. Supp. 2d 970 (2006) Mary H. BENDZAK, individually and on behalf of all others similarly situated, Plaintiff, v. MIDLAND NATIONAL LIFE INSURANCE COMPANY, Defendant. No. 4:05-CV-00649. United States District Court, S.D. Iowa, Central Division. July 27, 2006. 971 972 973 974 Steve W. Berman, Hagens Berman Sobol Shapiro LLP, Seattle, WA, Elizabeth A. Fegan, Timothy A. Scott, Hagens Berman Sobol Shapiro LLP, Chicago, IL, J. Barton Goplerud, Michael Mallaney, Hudson Mallaney & Shindler PC, West Des Moines, IA, for Plaintiff. Randall G. Horstmann, Nyemaster Goode West Hansell & O'Brien, PC, Des Moines, IA, Linda B. Oliver, Robert D. Phillips, Jr., Marshall C. Wallace, Reed Smith LLP, Oakland, CA, for Defendant. ORDER PRATT, Chief Judge. Before the Court is Defendant's Motion to Dismiss or Stay Proceedings and Alternative Motion to Strike Claims Barred by the Statute of Limitations (Clerk's No. 14), filed on March 10, 2006. Plaintiff filed a Resistance (Clerk's No. 24) on April 26, 2006, and Defendant filed a Reply (Clerk's No. 25) on May 3, 2006. The matter is fully submitted. I. FACTS Marie H. Bendzak ("Bendzak") filed a Class Action Complaint (Clerk's No. 1) in this Court on December 8, 2005. Bendzak is a senior citizen who purchased eight deferred annuity policies from Defendant, Midland National Life Insurance Company ("Midland"), between April 2001 and January 2002. Compl. ¶ 6. The premiums for the policies totaled more than $200,000. Id. Bendzak purchased the policies through Cleveland Senior's Financial Services ("Cleveland Senior's"), a licensed agent of Midland. Cleveland Senior's is not currently a party to this lawsuit, but Bendzak states in her Complaint that she may amend it at a future date to name "additional parties of interest." Compl. TT 8, 9. Bendzak claims that high surrender charges make deferred annuities an inappropriate product for senior citizens. A deferred annuity differs from a traditional annuity in that the purchaser of a deferred annuity does not receive payments immediately after purchasing the annuity. Instead, the purchaser begins receiving payments after the annuity has matured, typically years later. See Compl. ¶¶ 11-13; see also Lander v. Hartford Life & Annuity Ins. Co., 251 F.3d 101, 104 (2d Cir.2001). Typically, deferred annuities are subject to high surrender charges if the purchaser seeks to withdraw money before the annuity has matured. See id. T 13. When Bendzak purchased eight deferred annuities from Midland, she was 82 and 83 years old. Id. ¶ 21. The annuities will not mature until 2018 and 2019, when Bendzak will be 100 and 101 years old. Id. In Bendzak's terms, this is "well beyond her actuarial life expectancy." Id. Bendzak states that she cannot access "the vast amount of money held in the annuities for housing costs or general health care [for] the first fourteen years of the annuities without incurring substantial surrender changes as high as 25%." Id. T 22. Bendzak filed this action on behalf of a proposed nationwide class consisting of: All persons in the United States who have incurred, or could possibly incur, a surrender charge, whether upon surrender or a death benefit claim, under a Midland deferred annuity policy issued where the annuitant or owner was over the age of 65 at the time of sale, and where the date that the distribution payments 975 from the annuity commences is beyond the annuitant's actuarial life expectancy. Compl. ¶ 23. Bendzak claims that Midland's marketing and sales practices were illegal with respect to the deferred annuities. Bendzak's Complaint contains three counts. In Count One, Bendzak claims that Midland violated the provisions of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq. In Count Two, Bendzak claims that Midland engaged in common law civil conspiracy under Iowa and other states' laws. And in Count Three, Bendzak claims that Midland has been unjustly enriched through the wrongful collection of premiums, penalties, and surrender charges relating to its deferred annuity plans. II. JURISDICTION AND VENUE This Court has subject matter jurisdiction over this case pursuant to 28 U.S.C. § 1331 and supplemental jurisdiction over Plaintiff's state law claims pursuant to 28 U.S.C. § 1367. Bendzak alleges that some members of the proposed class are citizens of different states than the Defendant, and that the amount in controversy exceeds $5,000,000, making federal jurisdiction proper pursuant to 28 U.S.C. § 1332(d) as well. Midland's principal offices are located in Sioux Falls, South Dakota, but its annuity division operations are located in West Des Moines, Iowa. Bendzak alleges that the acts giving rise to her claims occurred in the Southern District of Iowa, making venue proper under 28 U.S.C. § 1391(b). III. STANDARD FOR MOTION TO DISMISS When ruling on a motion to dismiss, the Court must "accept the allegations contained in the complaint as true and draw all reasonable inferences in favor of the nonmoving party." Coons v. Mineta, 410 F.3d 1036, 1039 (8th Cir.2005). The Court applies a stringent standard to a Rule 12(b)(6) motion to dismiss, and "[a] complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Panes v. Gateway 2000, Inc., 122 F.3d 539, 545-46 (8th Cir. 1997) (quoting Fusco v. Xerox Corp., 676 F.2d 332, 334 (8th Cir.1982) (citation omitted)). Accordingly, a motion to dismiss will be granted "only in the unusual case in which a plaintiff includes allegations that show on the face of the complaint that there is some insuperable bar to relief." Id. at 546. IV. LAW & ANALYSIS Midland argues that Bendzak's Complaint should be dismissed, partially dismissed, or stayed for four different reasons.[1] First, Midland argues that the case should be dismissed because adjudication of Bendzak's claims in federal court would improperly interfere with state insurance regulation. Second, Midland argues that Bendzak's Complaint must be dismissed with respect to seven of the eight annuities she purchased because the statute of limitations has run for her claims relating to those annuities. Third, Midland contends that Bendzak has failed to state a claim upon which relief can be granted under RICO because she has not alleged facts that, if proved, would satisfy the elements of a RICO claim. Finally, Midland argues that Bendzak's claim for common law civil conspiracy must fail because she has not alleged a viable underlying wrong. Def.'s 976 Br. in Supp. of Mot. to Dismiss at 2. Each of Midland's arguments is discussed below. A. Interference with State Insurance Regulation Midland contends that Bendzak's Complaint should be dismissed because adjudication of her claim in federal court would improperly interfere with state insurance regulation. Midland first cites the McCarran-Ferguson Act (the "Act"), 15 U.S.C. § 1011 et seq., stating that the Act dictates that annuities "are subject to state, not federal, regulation." Def.'s Br. in Supp. of Mot. to Dismiss at 7. Midland next argues that the case should be dismissed pursuant to the primary jurisdiction doctrine because resolution of Bendzak's claims would undermine established state administrative regulations. In the alternative, Midland argues that the Court should abstain pursuant to the doctrine established by the Supreme Court in Burford v. Sun Oil Company, 319 U.S. 315, 63 S. Ct. 1098, 87 L. Ed. 1424 (1943). Each of these arguments is addressed in turn. 1. McCarran-Ferguson Act. Midland points to the McCarran-Ferguson Act, 15 U.S.C. § 1011 et seq., and states that the Act indicates that annuities, which are insurance contracts, are subject to state, not federal, regulation.[2] The Act states, in relevant part: "No Act of Congress shall be construed to invalidate, impair, or supersede any law enacted by any State for the purpose of regulating the business of insurance, or which imposes a fee or tax upon such business, unless such Act specifically relates to the business of insurance." 15 U.S.C. § 1012(b). In Humana Inc. v. Forsyth, the Supreme Court considered whether the McCarran-Ferguson Act precluded a RICO claim brought by a group of plaintiffs who held health insurance policies issued by Humana. 525 U.S. 299, 303, 119 S. Ct. 710, 142 L. Ed. 2d 753 (1999). The Court held that the Act did not preclude the plaintiffs' claim, concluding that RICO's private right of action and treble damages provision complemented the Nevada statutory scheme at issue. Id. at 313-14, 119 S. Ct. 710. In the absence of any assertion that allowing Bendzak's RICO claim to proceed in this case would interfere with a state regulatory scheme in some way that the RICO claim in Humana did not, the Court concludes that the McCarran-Ferguson Act is not a ground for dismissal in this case. 2. Primary jurisdiction doctrine. Midland argues that the Court should dismiss Bendzak's action because it "represents an attempt to re-legislate a subject matter that has already been the subject of careful policymaking by state legislators and state insurance regulators." Def.'s Br. in Supp. of Mot. to Dismiss at 7. Specifically, Midland contends that the annuities that Bendzak purchased are insurance contracts that are regulated under Ohio law because Bendzak is an Ohio citizen who purchased the annuities from an Ohio broker. Accordingly, Midland argues, the Court should dismiss or stay Bendzak's claims because hearing the case would interfere with work that should be left to the Ohio Department of Insurance. The primary jurisdiction doctrine is a common law doctrine that is "concerned with promoting proper relationships between the courts and administrative agencies charged with particular regulatory duties." United States v. W. 977 Pac. R.R. Co., 352 U.S. 59, 63, 77 S. Ct. 161, 1 L. Ed. 2d 126 (1956). The primary jurisdiction doctrine allows a federal district court to refer a claim to an appropriate administrative agency. See Great Plains Coop v. Commodity Futures Trading Comm'n, 205 F.3d 353, 355 (8th Cir. 2000). The doctrine promotes uniformity and consistency, as well as the optimal use of an agency's expertise and experience. United States v. Henderson, 416 F.3d 686, 691 (8th Cir.2005). The doctrine is invoked sparingly because it often leads to additional expense and delay. Alpharma, Inc. v. Pennfield Oil Co., 411 F.3d 934, 938 (8th Cir.2005). There is no fixed formula for applying the primary jurisdiction doctrine. In each case, the Court must consider whether the reasons for the doctrine are present and whether application of the doctrine would promote the purposes for which the doctrine was created. Id. In examining these questions, a court may consider whether the legal question is of a nature that requires the benefit of agency expertise, or if it is a question that falls within the "conventional experience of judges." Id (citation omitted). Midland argues that the Ohio Legislature and the Ohio Department of Insurance have "comprehensively legislated and regulated deferred annuity contracts in Ohio," and that Bendzak's action would interfere with the regulatory structure that is already in place. Def.'s Br. in Supp. of Mot. to Dismiss at 9. Bendzak, on the other hand, contends that her claim is not about an insurance regulatory matter, but rather is about whether Midland illegally engaged in a scheme to market annuities to seniors. Pl.'s Resistance Br. at 8. In her Resistance to Midland's Motion to Dismiss, Bendzak points to cases from Iowa and Ohio holding that the primary jurisdiction doctrine should not apply in the insurance context where the "outcome will depend on application of common-law corporate tort concepts, not the expertise of the insurance industry." Rowen v. Le-Mars Mut. Ins. Co., 230 N.W.2d 905, 912 (Iowa 1975); see also Zangara v. Travelers Indent. Co. of Am., 423 F. Supp. 2d 762, 776 (N.D.Ohio 2006) (holding that Ohio Superintendent of Insurance did not have primary jurisdiction where plaintiff brought common law claims for fraud and unjust enrichment), vacated on other grounds by Zangara v. Travelers Indem. Co. of Am., No. 1:05-cv-731, 2006 WL 825231 (N.D.Ohio Mar. 30, 2006). The Sixth Circuit reached a similar conclusion in a case involving an insurance-related RICO claim, noting that "claims based on fraud and deceit do not require agency expertise for their treatment because such claims are within the conventional expertise of judges." Dana Corp. v. Blue Cross & Blue Shield Mut. of N. Ohio, 900 F.2d 882, 889 (6th Cir.1990). As discussed above, Bendzak's Complaint contains three counts: (1) violations of RICO, (2) common law civil conspiracy, and (3) unjust enrichment. In support of her RICO claim, Bendzak alleges predicate acts of mail fraud and wire fraud. Compl. ¶ 38. All of these claims are claims that are within the conventional expertise of judges, and none. of them require the special expertise of a state insurance commission. While it is true that the Ohio Legislature and the Ohio Department of Insurance have established a thorough regulatory scheme for the insurance industry in Ohio, this fact alone does not mean that the Court should transfer jurisdiction to the state administrative body. Because Bendzak's claims are "within the conventional expertise" of federal district courts, the Court declines to dismiss or stay the action under the primary jurisdiction doctrine. See id. 978 3. Burford Abstention. Midland next argues that the Court should abstain pursuant to the doctrine articulated by the Supreme Court in Burford v. Sun Oil Company, 319 U.S. at 318, 63 S. Ct. 1098. In Burford, the Supreme Court examined whether a federal district court should have abstained from deciding a case that implicated complex state administrative procedures for the conservation of oil and gas in Texas. Id. The Court held that the district court should have abstained, explaining that "[c]onflicts in the interpretation of state law, dangerous to the success of state policies, are almost certain to result from the intervention of the lower federal courts." Id. at 334, 63 S. Ct. 1098. In subsequent cases explaining the doctrine that is now known as Burford abstention, the Supreme Court has indicated that federal courts sitting in equity should defer to state administrative procedures under the following circumstances: (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 Pub. Serv., Inc. v. Council of the City of New Orleans, 491 U.S. 350, 361, 109 S. Ct. 2506, 105 L. Ed. 2d 298 (1989) ("NOPSI") (quoting Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 814, 96 S. Ct. 1236, 47 L. Ed. 2d 483 (1976)). A critical limitation of Burford abstention is that it applies only in cases where the relief sought is in the form of injunctive or declaratory relief. Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 731, 116 S. Ct. 1712, 135 L. Ed. 2d 1 (1996). In Quackenbush., the Supreme Court considered whether abstention could be invoked in an action for monetary damages. The Court concluded that Burford abstention is not appropriate in an action for monetary damages, observing that, in previous cases, the Court "recognized that the authority of a federal court to abstain from exercising its jurisdiction extends to all cases in which the court has discretion to grant or deny relief." Id. at 718, 116 S. Ct. 1712 (emphasis added). Accordingly, the Court held that "federal courts have the power to dismiss or remand cases based on abstention principles only where the relief being sought is equitable or otherwise discretionary." Id. at 731, 116 S. Ct. 1712. The Court also reiterated its previous observation that courts should only decline to exercise their discretion in "exceptional circumstances." Id. at 716, 116 S. Ct. 1712. Here, Bendzak requests relief in the form of compensatory damages, consequential and incidental damages, interest, and punitive damages. See Compl. at p. 20. The only equitable relief Bendzak requests is the imposition of "a constructive trust and equitable lien . . . against all money paid to and/or wrongfully withheld by the Defendant." Id. The purpose of this request is clearly to secure any monetary relief that Bendzak is awarded in the event that she prevails in her claims. Because Bendzak's action is for damages, the Court cannot invoke Burford abstention in this case. See Quackenbush, 517 U.S. at 731, 116 S. Ct. 1712. B. Statutes of Limitations Midland next argues that Bendzak's RICO and conspiracy claims, as they relate to the first seven annuity contracts that she purchased, are barred by the applicable statutes of limitations. Bendzak alleges that she purchased eight deferred annuity policies, with initial premiums 979 exceeding $200,000, between April 2001 and January 2002. Compl. ¶ 6. Midland contends that the statutes of limitations for seven of the eight policies expired before Bendzak filed her Complaint on December 8, 2005. 1. Statute of limitations for Bendzak's RICO claim. Midland contends that Bendzak's RICO claim is time-barred as to the first seven of the eight annuities that she purchased. Although Bendzak's Complaint does not state the exact dates on which she purchased each polity, Bendzak does not dispute Midland's contention that she purchased seven of the policies before December 2001. Copies of the policies, attached to Midland's Motion to Dismiss, indicate that Bendzak purchased the eight policies on the following dates: April 24, 2001, May 25, 2001, May 31, 2001, July 3, 2001, July 6, 2001, November 5, 2001, November 5, 2001, and January 10, 2002.[3] The statute of limitations for a civil RICO action is four years, as is discussed in detail below. Agency Holding Corp. v. Malley-Duff & Assoc., Inc., 483 U.S. 143, 152, 107 S. Ct. 2759, 97 L. Ed. 2d 121 (1987). Thus, if the statute of limitations began to run on the date of purchase, Bendzak's claim would be time-barred as to the first seven policies. Bendzak contends that the Court should toll the statute of limitations "pursuant to the discovery rule, the equitable tolling doctrine, and fraudulent concealment." Compl. ¶ 60. Bendzak's arguments are based in her contention that Midland committed mail fraud and wire fraud in the marketing and sale of the deferred annuities, and that the alleged fraud is reason to toll the statute of limitations. RICO does not provide an express statute of limitations for civil enforcement actions. Malley-Duff 483 U.S. at 146, 107 S. Ct. 2759. In Malley-Duff, the Supreme Court "borrowed" the four-year statute of limitations from the Clayton Act, 15 U.S.C. § 15b, for civil RICO claims. Id. at 152, 107 S. Ct. 2759; see also Rotella v. Wood, 528 U.S. 549, 553, 120 S. Ct. 1075, 145 L. Ed. 2d 1047 (2000). In Klehr v. A.O. Smith Corporation, the Supreme Court rejected the theory that the statute of limitations in civil RICO cases began to run anew upon each predicate act forming part of the RICO claim. 521 U.S. 179, 189, 117 S. Ct. 1984, 138 L. Ed. 2d 373 (1997). And in Rotella, the Supreme Court rejected the plaintiff's contention that the statute of limitations in a civil RICO action accrues when "the claimant discovers, or should discover, both an injury and a pattern of RICO activity." Rotella, 528 U.S. at 553-54, 120 S. Ct. 1075. The Court left open at least two possibilities for when a civil RICO claim accrues: the date when a plaintiff discovers or should have discovered her injury, or the date when the injury occurs. See id., 528 U.S. at 553-M & n. 2, 120 S. Ct. 1075; see also Mathews v. Kidder, Peabody & Co., Inc., 260 F.3d 239, 245 (3d Cir.2001) (analyzing Rotella). The Eighth Circuit, which adopted the "pattern discovery rule" prior to the Court's rejection of that rule in Rotella, has not yet determined which of the two remaining options applies. See Granite Falls Bank v. Henrikson, 924 F.2d 150, 154 (8th Cir. 980 1991) (adopting pattern discovery rule), abrogated by Rotella, 528 U.S. at 553-54, 120 S. Ct. 1075. Other district courts in the Eighth Circuit have concluded that the civil RICO limitations period begins to run when a plaintiff discovers or should have discovered the injury that underlies her cause of action. See Misischia v. St. John's Mercy Health Sys., No. 4:04-cv-1161, 2005 WL 1875035, at 7 (E.D.Mo. Aug. 5, 2005); Heaven & Earth, Inc. v. Wyman Props. Ltd. P'ship, No. Civ. 03-3327, 2003 WL 22680935, at 5 (D.Minn. Oct. 21, 2003); Wal-Mart Stores, Inc. v. Watson, 94 F. Supp. 2d 1027, 1033 (W.D.Ark.2000). In light of the Eighth Circuit's pre-Rotella ruling adopting the pattern discovery rule, and in light of Rotella itself, which discussed the injury discovery rule at some length, the Court will apply the injury discovery rule in this case. See Rotella, 528 U.S. at 555, 120 S. Ct. 1075; Granite Falls Bank, 924 F.2d at 154. Under the rule as it is described in Rotella, "discovery of the injury, not discovery of the other elements of a claim, is what starts the clock." Rotella, 528 U.S. at 555, 120 S. Ct. 1075. The discovery rule employs both a subjective and an objective inquiry. The Court must ask whether the plaintiff actually knew of her injury, and also, using a reasonable person standard, whether she should have known. See Great Rivers Coop. of Se. Iowa v. Farmland Indus., Inc., 120 F.3d 893, 896 (8th Cir.1997). Midland contends that Bendzak knew or should have known about her injury on the dates that she purchased each deferred annuity policy. Midland cites Bendzak's Complaint, which states that Bendzak "was harmed by the purchase of Midland deferred annuities. . . ." Compl. ¶ 22 (emphasis added). Midland also argues that Bendzak fully knew the contract terms at the time of purchase, and therefore should have known of any resultant injury. Def.'s Br. at 12. Bendzak, on the other hand, argues that the very fact that she purchased multiple deferred annuities indicates that she did not know of her injury upon purchasing each one. Construing the facts in favor of the plaintiff, Bendzak has alleged facts sufficient to support her argument that she did not know of her injury, as a subjective matter, at the time she purchased each annuity. The next question for the Court is whether Bendzak should have known of her injury on the date of purchase for each annuity. A number of federal courts have applied already-existing inquiry notice rules, or slightly modified inquiry notice rules, to limitations questions in RICO cases where some type of fraud is alleged. See, e.g., KCI Mgmt. Corp. v. Posternak, Blankenstein & Lund, LLP, ___ F.3d ___, ___ 2006 WL 1735284, at 1 (4th Cir.2006); Sims v. Ohio Cas. Ins. Co., 151 Fed.Appx. 433, 2005 WL 2508567, at 2 (6th Cir.2005); Prudential Ins. Co. of Am. v. U.S. Gypsum Co., 359 F.3d 226, 238 (3d Cir.2004) (noting that to equitably toll the running of a limitations period, plaintiffs must have exercised "reasonable diligence" to discover their claim); Mathews, 260 F.3d at 250 (adopting inquiry notice rule for RICO claim alleging securities fraud); Pincay v. Andrews, 238 F.3d 1106, 1110 (9th Cir.2001). In this case, the Court will look to the Eighth Circuit's own inquiry notice rule, which is set forth in Great Rivers Coop., 120 F.3d at 896; see also Ritchey v. Horner, 244 F.3d 635, 639 (8th Cir.2001). The Eighth Circuit has held that "inquiry notice exists when there are `storm warnings' that would alert a reasonable person of the possibility of misleading information, relayed either by an act or by omission." Great Rivers Coop., 120 F.3d at 896. Although it is often inappropriate 981 to decide the issue of inquiry notice on a motion to dismiss, doing so may be proper in a given case. Dutton v. D & K Healthcare Res., No. 4:04-cv-147, 2006 WL 1778863, at 2 (June 23, 2006). "The determination of whether inquiry notice exists is an objective standard based upon the facts known to the victim." Great Rivers Coop., 120 F.3d at 896. As such, the Court must determine the following: (1) the facts of which Bendzak was aware; (2) whether a reasonable person with knowledge of those facts would have investigated the situation further; and (3) upon investigation, whether that reasonable person would have acquired actual notice of the alleged misrepresentations. Id. Midland argues that, as a matter of law, Bendzak fully knew the terms of each annuity at the time of purchase. In the securities fraud context, the Eighth Circuit has held that when an investor receives written information that contradicts oral statements made by the seller of the security, that information may be considered a "storm warning" for purposes of the inquiry notice standard. See Davidson v. Wilson, 973 F.2d 1391, 1401-02 (8th Cir.1992); Koke v. Stifel, Nicolaus & Co., Inc., 620 F.2d 1340, 1343 (8th Cir.1980) (concluding that confirmation slips and monthly account statements were sufficient to require a reasonable person to ask questions, even though they were "not a model of clarity for the novice investor"). Similarly, in Mathews, the Third Circuit held that "investors are presumed to have read prospectuses, quarterly reports, and other information relating to their investments. Mathews, 260 F.3d at 252. The court added: "This comports with the general purpose of civil RICO to encourage plaintiffs to actively investigate potential criminal activity, to become `prosecutors, private attorneys general, dedicated to eliminating racketeering activity.'" Id. (quoting Rotella, 528 U.S. at 557, 120 S. Ct. 1075). The Court concludes that Bendzak knew or should have known the terms of each policy on the date of purchase, since those terms were in the written policies themselves and Bendzak does not contest Midland's assertion that she had access to, or copies of, the policies. The information that Bendzak knew includes the maturity date for each policy, which is not buried in fine print, but is clearly printed on the "specifications page" of each policy.[4] Each policy also contained information about the relevant surrender charges. See Attachments to Clerk's No. 14. However, the Court will not assume that Bendzak knew the implications of the maturity date and the other terms in the policy, particularly in light of her allegation that Midland "intentionally and fraudulently misrepresent[ed] the true nature of the deferred annuity products" that it marketed to senior citizens. Construing the facts in Bendzak's favor, the Court concludes that Bendzak was aware of the language in each policy, but was not necessarily aware of its meaning. The next question for the Court is whether a reasonable person with knowledge of the facts in this case, most notably the maturity date and surrender charges should have inquired further. As the Supreme Court has observed, "[t]he prospect is not so bleak for a plaintiff in possession of the critical facts that he has been hurt and who has inflicted the injury. He is no longer at the mercy of the latter. There are others who can tell him if he has been wronged, and he need only ask." Rotella, 528 U.S. at 556, 120 S. Ct. 1075 (quoting United States v. Kubrick, 444 982 U.S. 111, 122, 100 S. Ct. 352, 62 L. Ed. 2d 259 (1979)). In light of the case law indicating that confirmation slips and other written documents constitute storm warnings, the Court can only conclude that a reasonable person should have made further inquiry upon reading the maturity date in the policy. See Davidson, 973 F.2d at 1402; Koke, 620 F.2d at 1343; see also Pincay, 238 F.3d at 1110; Prieto v. John Hancock Mut. Life Ins. Co., 132 F. Supp. 2d 506, 521 (N.D.Tex.2001). Bendzak does not state that she did inquire further upon reading the policies, or that she undertook any form of investigation upon receiving the policies. See Mathews, 260 F.3d at 252 (concluding that once the defendants establish the existence of storm warnings, the burden shifts to the plaintiff to indicate that she exercised reasonable due diligence and yet was unable to discover her injuries). The Court's conclusion is bolstered by the Supreme Court's decision in Klehr, 521 U.S. at 194, 117 S. Ct. 1984. In Klehr, the Supreme Court held that in the context of civil RICO, "a plaintiff who is not reasonably diligent may not assert `fraudulent concealment'" in order to toll the statute of limitations. Klehr, 521 U.S. at 194, 117 S. Ct. 1984. In so holding, the Court observed that private civil RICO actions "seek not only to compensate victims but also to encourage those victims themselves diligently to investigate and thereby to uncover unlawful activity." Id. at 195, 117 S. Ct. 1984. This decision, along with the Court's decision in Rotella, puts the onus on the plaintiff to seek to identify the cause of her injury in a diligent manner. Id.; see also Rotella, 528 U.S. at 561, 120 S. Ct. 1075. Bendzak contends that the diligent investigation requirement should be waived where the plaintiff alleges a fiduciary relationship together with an allegation of fraudulent concealment. Bendzak cites this Court's decision in Grove v. Principal Mutual Life Insurance Company, 14 F. Supp. 2d 1101 (S.D.Iowa 1998). Unlike the plaintiff in Grove, whose complaint included a claim for breach of fiduciary duty, Bendzak's Complaint does not allege that a fiduciary relationship existed between Bendzak and Midland. Even if the Court could glean an allegation of a fiduciary relationship from the facts stated in Bendzak's Complaint; it is not clear that the law in Grove can be transferred to the civil RICO context. In Grove, this Court applied Iowa law to determine whether the plaintiffs state law claim for fraud was time-barred. Grove, 14 F.Supp.2d at 1108. Citing cases from the Iowa Supreme Court, the Court noted that the plaintiffs allegation of a fiduciary relationship, combined with the allegation that the defendant failed to reveal facts it was under a duty to disclose, were sufficient to meet the requirements of the fraudulent concealment doctrine under Iowa law. Id. at 1109; see also DeRance, Inc. v. Paine-Webber, Inc., 872 F.2d 1312, 1321 (7th Cir.1989) (reviewing a jury instruction based on Wisconsin law). Given the United States Supreme Court's emphasis on the plaintiffs obligation to investigate potential claims in Klehr, it is questionable whether the "fiduciary relationship" exception is available in civil RICO cases. See Pincay, 238 F.3d at 1109 (holding that constructive notice of the injury, via written disclosures, begins to run the statute of limitations in a civil RICO case regardless of whether a fiduciary relationship exists, and that fraudulent concealment will not toll the limitations period where the plaintiff is on constructive notice of the facts and fails to investigate). This, combined with the fact that Bendzak has not pled a fiduciary relationship, counsels against applying such an exception here. Finally, the Court can see no other equitable tolling doctrine that would merit tolling 983 the statute of limitations in this case.[5] In Rotella, the Supreme Court noted that equitable tolling is available in civil RICO cases, stating: "[w]here a pattern remains obscure in the face of a plaintiff's diligence in seeking to identify it, equitable tolling may be one answer to the plaintiffs difficulty." Rotella, 528 U.S. at 561, 120 S. Ct. 1075. But this statement, like the Court's other cases in this area, emphasizes the need for the plaintiff to seek to discover her injury once she has notice of it. While barring the action at this early stage based on the statute of limitations produces a harsh result, the Supreme Court has made it clear that district courts should not toll the statute of limitations in a civil RICO action where a plaintiff has not exercised diligence in the discovery of her injury. See id. at 556, 120 S. Ct. 1075. Because Bendzak did not seek to discover her injury once she had, notice of it, her RICO claim is time-barred as to the first seven of the eight policies that she purchased. 2. Statute of limitations for Bendzak's conspiracy claim. Midland next argues that Bendzak's conspiracy claim is time-barred as to the first seven of the eight annuity policies that she purchased. Bendzak's Complaint may fairly be read to contain two conspiracy claims: conspiracy to violate civil RICO under 18 U.S.C. § 1962(d), and conspiracy to engage in unfair competition under state law.[6]See Compl. 1152. The Court will first address the statute of limitations for the civil RICO conspiracy claim, and will then move on to the remaining state law claims. Under 18 U.S.C. § 1962(d), it is "unlawful for any person to conspire to violate" any RICO provision. 18 U.S.C. § 1962(d). Like the statute of limitations under the other civil RICO provisions, the statute of limitations for civil RICO conspiracy claims is four years. See Hodas v. Sherburne, Powers & Needham, P.C., 938 F. Supp. 60, 65 (D.Mass.1996). Moreover, the analysis for civil RICO conspiracy claims is the same as that for civil RICO claims brought under 18 U.S.C. § 1962(c). See id. For the reasons discussed above, Bendzak's civil RICO conspiracy claim, if there is one, is time-barred as to the first seven of the eight annuities she purchased. Bendzak's Complaint also alleges violations of the common law of civil conspiracy, with unfair competition as the underlying tort. Compl. ¶ 52. Before analyzing whether this claim has expired, the Court must consider which state's laws apply. Federal district courts must apply the choice-of-law rules of the forum state, whether sitting in diversity or deciding federal question cases with supplemental state law claims. DCS Sanitation Mgmt., Inc. v. Casillo, 435 F.3d 892, 895 (8th Cir.2006); Cole v. Wells Fargo Bank, N.A., No. 437 F. Supp. 2d 974 n. 5, ___ n. 5 (S.D.Iowa 2006). The Iowa Supreme Court has adopted the Second Restatement of Conflicts to govern choice-of-law questions. Cole v. State Auto. & Cas. Underwriters, 984 296 N.W.2d 779, 781 (Iowa 1980). The choice of law for a civil conspiracy claim is governed by the "most significant relationship" test. Am. Online. Inc. v. Nat'l Health Care Discount, Inc., 121 F. Supp. 2d 1255, 1269 & n. 11 (N.D.Iowa 2000). Under this test, the Court must consider: the place where the injury occurred, the place where the conduct causing the injury occurred, the place of domicile, residence, incorporation or business of the parties, and the place where the relationship between the parties is centered. Id. at 1269; see also Restatement (Second) Conflict of Laws § 145 (1971). In this case, Bendzak resides in Ohio; however, her Complaint indicates that the proposed class of plaintiffs may be located in a large number of states. See Compl. t 24. According to Bendzak's Complaint, Midland's annuity operations are located in Iowa. Id. ¶ 7. Bendzak's injuries occurred in Ohio, while the conduct causing the injury likely occurred either in Ohio, where Bendzak alleges she was a target of Midland's marketing, or in Iowa, where the business is located. The relationship between Bendzak and Midland is best characterized as being centered in Ohio, where all of Bendzak's contacts with Midland occurred. In sum, these factors do not point conclusively towards applying the law of a single state. Other relevant factors to consider include the needs of the interstate system, the relevant policies of the forum, the relevant policies of other interested states, the protection of justified expectations, the basic policies underlying the particular field of law, certainty and predictability, and ease in the determination and application of the law. Restatement (Second) Conflict of Laws § 6 (1971); see Am. Online, 121 F.Supp.2d at 1269. Here, two factors are of particular relevance. First, although Bendzak is in Ohio, the proposed class members will be scattered around the country, and many of them will not have any contacts with Ohio. Second, while Bendzak's injuries occurred in Ohio, Iowa has an obvious interest in regulating businesses that are incorporated in Iowa. On balance, the Court concludes that Iowa's statute of limitations should apply to Bendzak's common law civil conspiracy claim. Under Iowa law, the statute of limitations for conspiracy to commit a tort is the same as the statute of limitations for the underlying tort that furthered the conspiracy. Cimijotti v. Paulsen, 230 F. Supp. 39, 43 (N.D.Iowa 1964). As discussed above, Bendzak's Complaint alleges conspiracy to engage in unfair competition under state law.[7] Compl. ¶ 52. Under Iowa law, a common law claim for unfair competition is subject to a five-year statute of limitations. Iowa Code § 614.1(4); Amana Refrigeration, Inc. v. Consumers Union of United States, Inc., 431 F. Supp. 324, 325 (N.D.Iowa 1977). Bendzak purchased each of her eight annuities between April 2001 and January 2002, and filed her Complaint on December 8, 2005. Thus, she filed her Complaint within Iowa's five-year statute of limitations for unfair competition. Her claim for conspiracy to engage in unfair competition, if there is such a claim, is timely. 985 C. RICO Pleading Requirements Midland next argues that Bendzak's RICO claim should be dismissed because she has not adequately alleged a claim for mail or wire fraud, and because she does not allege the existence of an "enterprise." Before considering Midland's pleading arguments, the Court will examine whether Bendzak could possibly prevail on her RICO claim in light of the fact that the statute of limitations has run with respect to seven of the eight annuities she purchased. 1. Can Bendzak prevail in her RICO claim despite the fact her claim is time-barred with respect to all but one annuity? "To establish a RICO violation, a plaintiff must allege and prove (1) the existence of an enterprise; (2) defendant's association with the enterprise; (3) defendant's participation in predicate acts of racketeering; and (4) defendant's actions constitute a pattern of racketeering activity." Sinclair v. Hawke, 314 F.3d 934, 943 (8th Cir.2003) (citations omitted). Having decided that the statute of limitations has run with respect to all but one of the annuities Bendzak purchased, the Court must decide whether the allegations in her Complaint, read only with respect to one annuity, are sufficient to meet the "pattern" requirement. The Court concludes that they are, at least at this early stage in the litigation. In H.J. Inc. v. Northwestern Bell Tel. Co., the Supreme Court examined the "pattern" requirement in civil RICO cases. 492 U.S. 229, 109 S. Ct. 2893, 106 L. Ed. 2d 195 (1989). The Court observed that "pattern" is not defined in the RICO statute, and endeavored to clarify its meaning. After examining the statute's legislative history, the Court concluded that the pattern requirement can be fulfilled by proving "that the racketeering predicates are related, and that they amount to or pose a threat of continued criminal activity." Id. at 239, 109 S. Ct. 2893 (emphasis in original). The Court explained that the two requirements relatedness and continuing racketeering activity are subject to a flexible interpretation. Id. at 241, 109 S. Ct. 2893. More importantly for this case, the Court rejected the notion that a single fraudulent scheme is never enough to support a RICO claim. Id. at 241-42, 109 S. Ct. 2893. The concurring members of the Court agreed with the majority on this point, noting that "nothing in the statute supports the proposition that predicate acts constituting part of a single scheme (or single episode) can never support a cause of action under RICO." Id. at 256, 109 S. Ct. 2893 (Scalia, J., concurring); see also Terry A. Lambert Plumbing, Inc. v. Western Sec. Bank, 934 F.2d 976, 980 (8th Cir.1991) (observing that "a single scheme can constitute a RICO claim" if it meets the requirements of relatedness and continuity). Having briefly outlined the "pattern" requirement, the Court will turn to the question of whether Bendzak's RICO claim is viable, considering that her suit is timely as to only one of the eight annuities that she purchased. As discussed above, the Supreme Court rejected the theory that the statute of limitations in civil RICO cases began to run anew upon each predicate act forming part of the RICO claim in Klehr. Klehr, 521 U.S. at 189, 117 S. Ct. 1984. Using the Clayton Act, 15 U.S.C. § 15b, as an analogy, the Court observed that "the commission of a separate new overt act generally does not permit the plaintiff to recover for the injury caused by old overt acts outside the limitations period." Id. But the Court observed, apparently approvingly, that under the rule in some circuits, the plaintiff may "point to new predicate acts that took place after [the accrual date]." Id. Thus, while Bendzak 986 may not recover for any injuries that occurred more than four years before she filed her Complaint, it is possible that she may recover for the later injury. To support her RICO claim, Bendzak has pled predicate acts of mail fraud and wire fraud, including the allegedly fraudulent marketing or sale of living trust forms; processing applications for deferred annuities; issuing age waivers; processing premium payments; payment of sales commissions; and processing penalties and surrender charges. It is these predicate acts not the injury itself-that Bendzak must prove in order to satisfy the "pattern" requirement. See generally Handeen v. Lemaire, 112 F.3d 1339, 1353 (8th Cir.1997). Accordingly, it would be inappropriate to dismiss Bendzak's RICO claim entirely at this early stage of the litigation for the sole reason that she cannot recover for injuries caused by her purchase of the first seven annuities. 2. Has Bendzak met the requirements of Rule 9(b)? The Court next turns to Midland's assertion that Bendzak's RICO claim should be dismissed because she has not adequately alleged a claim for mail or wire fraud. Midland's argument is based on Federal Rule of Civil Procedure 9(b), which states: "In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity. Malice, intent, knowledge, and other condition of mind of a person may be averred generally." Fed.R.Civ.P. 9(b). Midland contends that Bendzak has not pled fraud with sufficient particularity because her Complaint does not allege the time, place, or contents of any of the allegedly false representations by Midland. Midland also contends that Bendzak has failed to identify any misrepresentation or concealment. Midland correctly states that Rule 9(b) applies to allegations of mail fraud and wire fraud when used as predicate acts for a civil RICO claim. See Murr Plumbing, Inc. v. Scherer Bros. Fin. Servs. Co., 48 F.3d 1066, 1069 (8th Cir. 1995). The "circumstances of fraud," as the term is used in Rule 9(b), "include such matters as the time, place and contents of false representations, as well as the identity of the person making the misrepresentation and what was obtained or given up thereby." Murr Plumbing, 48 F.3d at 1069. Despite this heightened pleading requirement, Rule 9(b) must be read in conjunction with the more liberal pleading standard in Rule 8. Abets v. Farmers Commodities Corp., 259 F.3d 910, 920 (8th Cir.2001). As the Eighth Circuit has observed, "[t]he special nature of fraud does not necessitate anything other than notice of the claim; it simply necessitates a higher degree of notice, enabling the defendant to respond specifically, at an early stage of the case, to potentially damaging allegations of immoral and criminal conduct." Id. The Court will begin with Midland's contention that Bendzak's Complaint has not identified any misrepresentation or concealment. Bendzak's RICO claim is predicated on alleged acts of mail fraud, 18 U.S.C. § 1341, and wire fraud, 18 U.S.C. § 1343. These offenses "consist in the foreseeable use of the mails or wires for the purpose of carrying out a scheme to defraud." Abels, 259 F.3d at 918. Neither offense requires that a plaintiff plead that the defendant made misrepresentations of fact. Id. "Because misrepresentations of fact are not necessary to the offense, it follows that no misrepresentations need be transmitted by mail or wire: even routine business communications in these media may suffice to make a scheme of false dealing into a federal offense." Id. Because it is not necessary to plead misrepresentations of fact, the Court will not 987 dismiss Bendzak's RICO claim on the basis that she has not identified any misrepresentation or concealment. The next question for the Court is whether Bendzak's Complaint is inadequate because she has not pled "the who, what, when, where and how." Parnes, 122 F.3d at 550 (quoting DiLeo v. Ernst & Young, 901 F2d 624, 627 (7th Cir.1990)) (discussing what is required under Rule 9(b)). In describing the alleged fraud that took place, Bendzak states: Many of the precise dates of Defendant Midland's uses of the U.S. mails and interstate wire facilities (and corresponding acts of mail and wire fraud) have been deliberately hidden and cannot be alleged without access to the Defendant's books and records. Indeed, an essential part of the successful operation of the scheme to target senior citizens for inappropriate deferred annuity products depended on secrecy, and the Defendant withheld details of the scheme from the Plaintiff and members of The Class. Generally however, Plaintiff can describe the occasions on which the predicate acts of mail fraud and wire fraud occurred, and how those acts were in furtherance of the scheme. They include thousands of communications to perpetuate and maintain the scheme throughout the Class Period, including, inter alia: (i) funding of the marketing and/or sale of the living trust forms; (ii) processing of applications for deferred annuity products; (iii) issuing age waivers for applicants over 65 years of age; (iv) processing premium payments; (v) payment of commissions for sales of deferred annuity products; and (vi) processing penalties and "surrender charges" for early access to funds trapped in the deferred annuity products. Compl. ¶ 38. Bendzak also alleges that "Defendant Midland's pattern of racketeering activity likely involved thousands of separate instances of use of the U.S. Mails or interstate wire facilities in furtherance of its scheme to target senior citizen investors for inappropriate deferred annuity products." Id. ¶ 40. In deciding this question, the Court is mindful that Bendzak has not yet had an opportunity to undertake discovery in this case. See Abels, 259 F.3d at 921 (observing that "a court cannot reasonably expect highly specific allegations before allowing at least a brief discovery period"). The Court is also aware that, "[w]here a plaintiff is not a party to a communication, particularity in pleading may become impracticable." Id. This seems particularly true in a proposed class action such as this one, where the class has not yet been certified. Nonetheless, Bendzak's Complaint is devoid of any specific information about the "who, what, when, where, and how," particularly as those facts relate to Bendzak herself. While Bendzak generally alleges that "[t]he scheme begins with Midland's licensed agents marketing living trusts via seminars, meetings and in home visits used to encourage seniors to purchase living trusts and the sale of the living trusts," see Compl. ¶ 15, Bendzak does not state whether she ever attended such a seminar. Nor does she state whether she received any mail or telephone calls soliciting her business, or whether she engaged in any mail or telephone communications with Midland or its agents. Bendzak does allege that Midland's licensed agent, Edward J. Brzuski of Cleveland Senior's, sold the eight deferred annuities to her, but she does not state where, when, or how the sales occurred.[8]See Compl. ¶ 21. In this respect 988 Bendzak's Complaint differs from the complaint that the Eighth Circuit held to be sufficient in Abels. In Abels, the complaint set forth "times and places of numerous meetings, marketing seminars, and private conversations." Abels, 259 F.3d at 920. The plaintiffs in Abels also attached exhibits to their complaint that included the dates and contents of the defendants' mail communications, which the court considered as incorporated into the pleadings. Id. Cf. Bennett v. Berg, 685 F.2d 1053, 1062 (8th Cir.1982) (holding that allegations were not sufficiently particular to satisfy Rule 9(b) where they stated only that allegedly false statements were made in a "pamphlet," "promotional material," or "a typical life-care contract"). Here, Bendzak has not alleged a single date or location of any communication that facilitated the alleged scheme to defraud, even with respect to her own purchase of the annuities. For this reason, Bendzak's Complaint does not satisfy Rule 9(b). Given that this is a Motion to Dismiss at an early stage in the case, and that no discovery has yet taken place, the Court will allow Bendzak ten days to amend her Complaint to satisfy the requirements of Rule 9(b). See Fed.R.Civ.P. 15(a) (stating that leave to amend shall be "freely given when justice so requires"). 3. Has Bendzak alleged a distinct enterprise? Midland next argues that Bendzak's Complaint fails to allege an enterprise distinct from the pattern of racketeering, as required to make out a civil RICO claim. See Bennett, 685 F.2d at 1060. Midland also argues that the Complaint does not allege any conduct by Midland in furtherance of the enterprise's affairs, as opposed to its own affairs. Br. in Supp. of Mot. to Dismiss at 18. An "enterprise" is defined by RICO as including: "any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity." 18 U.S.C. § 1961(4). "The existence of an enterprise at all times remains a separate element which must be proved by the [plaintiff]." United States v. Turkette, 452 U.S. 576, 583, 101 S. Ct. 2524, 69 L. Ed. 2d 246 (1981). The Eighth Circuit has identified three characteristics possessed by all RICO enterprises: "(1) a common or shared purpose; (2) some continuity of structure and personnel; and (3) an ascertainable structure distinct from that inherent in a pattern of racketeering." Handeen, 112 F.3d at 1351. Midland contends that Bendzak has not satisfied the third requirement. In determining whether an enterprise has an ascertainable structure distinct from that inherent in a pattern of racketeering, courts consider whether the enterprise would still exist if the predicate acts were removed from the equation. Id. at 1352. Bendzak alleges that the RICO enterprise in her case consists of associations in fact between Midland and Licensed Agents of Midland, such as Cleveland Senior's, which sold Bendzak her annuities. Compl. ¶ 30. Bendzak alleges that "Defendant Midland National Life Insurance Company is, and at all relevant times herein was, a stock insurance corporation which, since 1999, has been duly organized and existing under and by virtue of the laws of Iowa and authorized to transact and does transact the business of insurance." Compl. ¶ 7. Bendzak also alleges that Midland operates in 49 states through 12,000 licensed sales professionals, 989 and describes the corporate structure of Midland is it relates to its parent company. Id. These allegations are sufficient to establish that Midland provides legitimate services and has an ascertainable structure apart from any alleged racketeering activity. See Bennett, 685 F.2d at 1060. Accordingly, Bendzak's Complaint adequately alleges an enterprise that satisfies the third characteristic of the enterprise description. Midland also argues that RICO may not be applied to Midland just because Midland operates through agents. Midland relies on Fitzgerald v. Chrysler Corp., a case in which the Seventh Circuit held that RICO could not be applied to a free-standing corporation in that case, Chrysler just because the corporation did business through dealers. 116 F.3d 225, 227 (7th Cir.1997) (observing that an employer and its employees cannot constitute a RICO enterprise). However, in Fitzgerald, the plaintiffs contended that Chrysler violated RICO by issuing extended warranties that provided less protection than promised. The court held that Chrysler, its dealers, and other subsidiaries did not constitute an enterprise, noting that "Wile dealers were merely a conduit, and the trusts and foreign subsidiaries were not even that." Id. at 227. The court observed: "The dealers did not, by their incidental role in the alleged fraud . . . lend an air of legitimacy to a person or entity that unless masked by a legitimate-seeming enterprise would be quickly discovered to be engaged in criminal acts." Id. at 227-28. The court wryly noted that "Chrysler has a greater appearance of probity than any automobile dealer." Id. at 228. Here, Bendzak alleges that Midland's licensed agents worked in tandem with Midland to perpetuate the fraud by marketing deferred annuities to seniors. Compl. ¶ 14. Bendzak alleges that Midland's agents hold seminars in seniors' homes, senior centers, and other locations, and gather the seniors' financial information by convincing seniors to purchase a living trust so that the information can be used to market deferred annuities. Id. t 15. Bendzak also alleges that Midland encourages its agents by offering high commissions for the sale of deferred annuities. Id. ¶ 17. The gravamen of Bendzak's Complaint is that seniors put their trust in the various agents, who then convince them to buy deferred annuities from Midland, despite the agents' knowledge of the inappropriate nature of such an investment. This is different from the situation where a consumer buys a Chrysler from a car dealer, who may or may not know that the manufacturer's warranty will provide less coverage than advertised, and in whom the consumer is likely to put very little trust. The Court concludes that Bendzak has sufficiently alleged the existence of a RICO enterprise. D. Common Law Civil Conspiracy Midland next argues that the Court should dismiss Bendzak's common law civil conspiracy claim because Bendzak has failed to state a claim under RICO, the underlying act. As discussed above in Part IV.B.2, Bendzak's Complaint can fairly be read to allege a conspiracy to violated civil RICO, as well as a conspiracy to engage in unfair competition under Iowa law. And, as discussed above in Part IV. C.2, Bendzak has not pled wire fraud or mail fraud with sufficient particularity to satisfy Rule 9(b). If Bendzak is unable to amend her Complaint to satisfy Rule 9(b), her claim of conspiracy to violate civil RICO must be dismissed. However, her claim of conspiracy to engage in unfair competition under state law will remain, as there has been no motion to dismiss that claim. *990 V. CONCLUSION For the reasons discussed above, the Court concludes that Bendzak's Complaint does not interfere with state insurance regulation in violation of the primary jurisdiction doctrine or Burford abstention principles. The Court also concludes that Bendzak's RICO claim is time-barred as to seven of the eight deferred annuities that she purchased. Bendzak's claim for conspiracy to violate civil RICO is similarly time-barred as to the first seven annuities. However, Bendzak's claim for conspiracy to engage in unfair competition is not time-barred. The Court concludes that Bendzak has not pled mail fraud or wire fraud with sufficient particularity to satisfy Rule 9(b). Bendzak will be given ten days from the date of this order to amend her Complaint to plead fraud in a way that comports the requirements of Rule 9(b). If Bendzak does not so amend her Complaint, her RICO claim and her claim of conspiracy to violate civil RICO will be dismissed. Finally, the Court concludes that Bendzak's Complaint can fairly be read as alleging a claim for conspiracy to violate unfair competition under Iowa law, which remains part of her Complaint. Midland's Motion to Dismiss (Clerk's No. 14) is GRANTED in part and DENIED in part. IT IS SO ORDERED. NOTES [1] Although Bendzak filed her claim as a class action, she has not yet filed a motion for class certification. Accordingly, the Court will consider only Bendzak's allegations for the purpose of deciding this motion to dismiss. See Cunningham v. PFL Life Ins. Co., 42 F. Supp. 2d 872, 878 n. 1 (N.D.Iowa 1999). [2] Despite citing the McCarran-Ferguson Act, Midland does not appear to assert that the Act itself is grounds for dismissal. Nonetheless, the Act deserves brief discussion in light of its relevance to the issues in this case and in light of Bendzak's discussion of it in her Resistance. [3] Normally, the Court does not consider documents outside the pleadings on a motion to dismiss. In this case, however, Bendzak herself cites the attached copies of the policies in her Resistance. Because the policies are "undisputedly authentic document[s]" that are a source of Bendzak's claims, the Court will consider them in ruling on Midland's Motion to Dismiss. See Parnes, 122 F.3d at 546 n. 9 (considering prospectus where plaintiff's claims were based upon the prospectus, even though the prospectus was not attached to the complaint) [4] The Court recognizes that the clarity of the print in the policy is a factual question best left to a jury. Nonetheless, the Court must conclude that, as a matter of law, Bendzak was on notice of the information contained in her printed policies. [5] Bendzak contends that, under Iowa law, allegations of fraud toll the statute of limitations. Bendzak cites Cunningham, 42 F.Supp.2d at 892. As discussed at length above, the RICO statute of limitations may only be tolled due to an allegation of fraud where the plaintiff is diligent in discovering her injury. Moreover, Cunningham was decided before Rotella and does not contain a discussion of the Supreme Court's cases in this area. In fact, it is not clear whether the statute of limitations question in Cunningham pertained to the plaintiffs' RICO claim, or just to the state law claims. [6] Count II of Bendzak's Complaint is entitled "Common Law Civil Conspiracy," which may indicate that she does not allege a conspiracy to violate civil RICO, as it is a statutory cause of action. However, Bendzak's Complaint can be read to assert a claim for conspiracy to violate civil RICO, see Compl. ¶ 52, and the Court will construe the Complaint liberally at this early stage in the litigation. [7] Midland incorrectly asserts that Bendzak's only alleged tort is her RICO claim. Bendzak's Complaint states: "Midland and its Licensed Agents committed one or more overt acts in furtherance of this course of action, including engaging in racketeering activity in violation of RICO . . . and engaging in unfair methods of competition and/or unfair or deceptive acts in violation of Iowa (and similar sister state) statutes. . . ." Compl. ¶ 52. Under Iowa law, a plaintiff may assert a claim for conspiracy to engage in unfair competition. See generally Basic Chems., Inc. v. Benson, 251 N.W.2d 220 (Iowa 1977). [8] Bendzak alleges that she purchased the annuities "[b]etween April 2001 and January 2002." Compl. ¶ 6. The issue date of each policy is notably absent from Bendzak's Complaint, although the dates are present on the copies of the policies themselves, which Midland attached to its Motion to Dismiss.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2564915/	277 F.Supp.2d 189 (2003) UNITED STATES of America, v. Glen NORRIS, Defendant. No. 99-CR-705 (JBW). United States District Court, E.D. New York. August 13, 2003. 190 Lawrence Gerzog, New York City, Mildred M. Whalen, Brooklyn, NY, for Defendant. Nikki Kowalski, Brooklyn, NY, for Plaintiff. MEMORANDUM & ORDER WEINSTEIN, Senior District Judge. I. Introduction Following a guilty plea, the district court sentenced defendant Glen Norris to 120 months' incarceration for conspiring to distribute five or more kilograms of cocaine. See United States v. Norris, 143 F.Supp.2d 243 (E.D.N.Y.2001) ("Norris I"). The court refused to consider three sentencing enhancements sought by the government based on its finding that Apprendi v. New Jersey, 530 U.S. 466, 120 S.Ct. 2348, 147 L.Ed.2d 435 (2000), prohibited sentencing enhancements that were not charged in the indictment and supported by a factual finding by a jury beyond a reasonable doubt. The Court of Appeals for the Second Circuit vacated the sentence, finding Apprendi inapplicable. See United States v. Norris, 281 F.3d 357 (2d Cir.2002) ("Norris II"). It remanded for resentencing. After a hearing, this court resentenced Norris to 121 months' incarceration. This Memorandum and Order explains the basis the sentence. II. Factual Background On June 17, 1999, Norris contacted a confidential informant ("CI") and stated that he was interested in purchasing 10 kilograms of cocaine. See Letter of Assistant U.S. Attorney Thomas R. Fallati, May 13, 2003, at 1. The CI stated that he could supply the cocaine for $18,000 per kilogram. Norris and the CI met two days 191 later while agents conducted surveillance. See id. at 1. At the meeting, Norris told the CI that he wanted to buy five or six kilograms of cocaine and would contact him when he had assembled the funds. See id. at 1. The CI and Norris met again on June 23. At the meeting, which was again under surveillance, Norris told the CI that he would be picking up the money to buy the cocaine that night and would have enough cash to purchase five kilograms of cocaine. The CI offered to sell the sixth kilogram on credit. See id. at 1-2. On June 25, the CI arrived at Norris's house. He was greeted by Michael Mitchell, who led the CI into the kitchen on the first floor. There, the CI was introduced to Irvin Hall. The four men sat at a table while Norris, Mitchell, and Hall counted the purchase money. Purportedly to retrieve the cocaine, the CI then went outside. The police entered the house, and arrested the three men. Agents seized $115,000 in currency; a protective sweep revealed ammunition. Norris told the agents that he owned a firearm. They recovered a loaded .38 caliber firearm in a stand in the bedroom on the second floor. See id. at 2. Hall made post-arrest statements to the effect that on three prior occasions he had assisted Norris by counting money for cocaine purchases. See Norris I, 143 F.Supp.2d at 245. He estimated that he counted about $60,000 on the first occasion; $90,000 on the second occasion; and $100,000 on the third occasion. See id. at 245. These incidents were not alleged in Norris's indictment and occurred sometime prior to his June arrest. On October 6, 1999, Norris pled guilty to conspiring to distribute five or more kilograms of cocaine in violation of Title 21, United States Code, section 846. See id. at 2. During the plea, he indicated that he was satisfied with his legal representation. See id. at 2-3. On March 9, 2000, while out on bond, Norris allegedly killed his estranged wife in the presence of their young daughter in a dispute over the purchase of shoes. He was arrested and charged in state court with intentional murder. Norris was set to be sentenced pursuant to his guilty plea in the drug case prior to the state murder trial. The government asked the trial judge to consider three sentencing enhancements: a two-point enhancement to reflect Norris's involvement with 20.27 kilograms of cocaine (the calculation is explained infra); a two-point enhancement for the possession of a firearm; and a two-point enhancement because Norris supervised his accomplices. The trial court refused to consider the proposed enhancements. It held that the Supreme Court's decision in Apprendi v. New Jersey, 530 U.S. 466, 120 S.Ct. 2348, 147 L.Ed.2d 435 (2000), required that "all facts exposing the defendant to a particular sentence range must be included in the indictment and found by a jury to have been proven beyond a reasonable doubt." Norris I, at 249. Norris had pled guilty to conspiring to distribute five or more kilograms of cocaine. See Transcript of Plea, Oct. 6, 1999, at 8. During his plea, he stated that he was attempting to purchase nine kilograms of cocaine. See id. at 18. He did not allocute to possessing a firearm, supervising associates, or conspiring to distribute 20.27 kilograms of cocaine. Because these three facts were neither allocuted to during the plea nor proven beyond a reasonable doubt, the trial judge refused to consider them in determining Norris's sentence. See Norris I, 143 F.Supp.2d at 249. The trial court found that the base offense level for the crime to which Norris 192 had pled was 32. See id. at 245. It subtracted three offense levels for his acceptance of responsibility, yielding an adjusted offense level of 29. See id. at 245. Norris had three prior convictions for harassing his estranged wife, putting him in criminal history category II. That calculation led to a Guidelines range of 97-121 months. The statutory minimum sentence was ten years. On May 11, 2001, the trial judge sentenced Norris to the mandatory minimum period of incarceration 120 months. Judgement was entered on June 22, 2001. The government appealed. On January 17, 2002, while the federal sentence was on appeal, Norris was convicted in Queens County Supreme Court of murder. He was sentenced to a term of twenty years to life. One month later, the Court of Appeals for the Second Circuit vacated defendant's federal sentence. It held, inter alia, that Apprendi did not apply to enhancements that determine a sentence that is within the applicable statutory maximum. Norris II, 281 F.3d at 359. Here, the statutory maximum sentence is life imprisonment. See 21 U.S.C. § 841(b)(1)(A). Consequently, Apprendi does not apply to the enhancements sought by the government. See Norris II, 281 F.3d at 361. The court of appeals also reaffirmed that the proper standard of proof when considering enhancements is a preponderance of the evidence, not clear and convincing evidence as Norris claimed. See id. at 361-62. It remanded the case "so that the District Judge to whom the remand is assigned can proceed with the fact-finding contemplated by the Guidelines" and conduct a "resentencing consistent with this opinion" Id. at 361, 362. The mandate was issued on July 10, 2002. Upon the district court's request, the Probation Department then prepared an addendum to Norris's Presentence Report ("PSR"). The revised PSR recommended that the resentencing court take cognizance of Norris's intervening murder conviction. Doing so would move him from criminal history category II to III and would eliminate the three-point reduction in offense level for acceptance of responsibility. On April 28, 2003, more than three-and-a-half years after pleading guilty, Norris moved to withdraw his plea, alleging that his prior counsel had been ineffective in advising him to plead guilty. She submitted an affidavit in response to the motion stating that while she believed that Norris had a non-frivolous basis for bringing a suppression motion, the government would likely convict at trial even if the results of the search were suppressed. She also stated that she had told Norris that if he wished to cooperate with the government, he would have to forego a suppression motion and plead guilty. Based on the motion's lack of merit, the court denied Norris's motion on May 15, 2003. On July 31, 2003, Norris was sentenced to 121 months' incarceration. III. Analysis A. The Feeney Amendment On April 30, 2003, President Bush signed Public Law 108-21, including the so-called "Feeney Amendment." It was in effect and binding at the time of resentencing. Cf. United States v. Greer, 285 F.3d 158, 180-81 (2d Cir.2002) (defendants should be resentenced under the law in effect at the time of the resentencing). The Feeney Amendment added subsection (g) to section 3742 of Title 18 of the United States Code. Subsection (g)(1) requires a resentencing court to apply the Sentencing Guidelines in effect on the date of the original sentencing. Subsection (g)(2) prohibits courts sentencing a defendant on 193 remand from imposing a sentence outside the Guidelines range unless the ground was specifically raised (in writing) at the original sentencing or was held by the court of appeals to be a permissible ground of departure. Because the original sentencing judge did not grant a departure at the original sentencing and the court of appeals's mandate does not contemplate one, this court appears to be prohibited from considering a downward departure. B. Nature of the Mandate Fundamentally, there are two ways to conceptualize the mandate. One is as a limited mandate. If the mandate is a limited one, this court's duty is merely to correct that portion of the sentence that the court of appeals vacatedi.e., the refusal to consider the three two-point enhancements sought by the government. A limited mandate would preclude this court from considering whether the intervening murder conviction should raise Norris's criminal history category or affect the three-point reduction he originally received for acceptance of responsibility. The other way to analyze the mandate is as a general sentencing mandatea so-called "clean slate" resentence. If the mandate is a general one, this court's duty would be to conduct a de novo sentencing. The Feeney Amendment narrows the scope of de novo sentencing somewhat by requiring that courts sentencing defendants on remand not consider departures from the Guidelines unless the ground for departure was raised at the original sentencing or was approved by the court of appeals in the remand. If the trial court conducts a de novo sentencing, it would need to take into account Norris's intervening murder conviction. This conviction would: (1) change his criminal history category from II to III; and (2) potentially preclude Norris from gaining a reduction in offense level for acceptance of responsibility. The net effect would increase his sentencing range to 151 to 365 months, instead of 97 to 235 months, the range under a limited mandate. The Court of Appeals for the Second Circuit has held that to determine whether a mandate is limited or general, courts must "look to both the specific dictates of the remand order as well as the broader `spirit of the mandate.'" United States v. Quintieri, 306 F.3d 1217, 1227 (2d Cir. 2002). Here, both the specific language of the mandate and its "spirit" indicate that the Second Circuit intended a limited mandate since the error in the first sentence was improperly applying Apprendi, not in making any other mistake. At the resentencing hearing, the government argued that the Norris II court vacated Norris I "without any indication at all that it was in any way limiting the scope of the sentencing to the issues [...] that were raised at the time of the original sentence." July 31, 2003 Sentencing Transcript ("S.Tr."), at 16. According to the government, the court of appeals's silence should be construed as permitting a de novo sentencing. Such an argument directly contradicts the court of appeals's admonition that a silent mandate should be read as a limited one: [A]bsent explicit language in the mandate to the contrary, resentencing should be limited [to issues specified in the Court of Appeals's mandate] when the Court of Appeals upholds the underlying convictions but determines that a sentence has been erroneously imposed and remands to correct that error. United States v. Carpenter, 320 F.3d 334, 340-41 (2d Cir.2003) (quoting Quintieri, 306 F.3d at 1228 (emphasis in original)). In Norris II, as in Quintieri, the court 194 upheld Norris's conviction but vacated the sentence. An examination of Norris II reveals that, far from being silent, the Second Circuit specifically contemplated a limited resentencing. It held that remand was necessary "so that the District Judge [...] can proceed with the fact-finding contemplated by the Guidelines." Norris II, 281 F.3d at 361. The purpose of the remand was for the district court to correct the original sentence, not to sentence the defendant de novo: "the case is remanded for resentencing consistent with this opinion." Id. at 362. C. Acceptance of Responsibility The government contends that, based on the murder conviction, Norris should not be given a three-point reduction in offense level of acceptance of responsibility. Specifically, it argues that according to section 3E1.1, Application Note 3, of the Guidelines, a defendant who enters a guilty plea is not entitled to an adjustment as a matter of right. Application Note 3 also notes that a guilty plea and admission of the conduct comprising the offense may be outweighed by conduct of the defendant that is inconsistent with an acceptance of responsibility. Application Note 1 provides a non-exhaustive list of factors to be considered by a court in determining whether to grant a reduction in offense level for the acceptance of responsibility. The factors include the defendant's "voluntary termination or withdrawal from criminal conduct" and "post-offense rehabilitative efforts." In light of the limited mandate, the government's argument must be rejected. The court of appeals remanded the case solely so that the district court could evaluate whether the three two-point enhancements were applicable. The intervening murder does not vitiate the fact that by pleading guilty, Norris accepted responsibility for the federal drug offense. The original sentencing judge was aware of the fact that Norris had been arrested for (and had confessed to) killing his estranged wife at the time of sentencing and nonetheless permitted a three-level reduction in offense level. D. Criminal History Category For the same reason, the court utilizes the criminal history category employed by the original sentencing judge when he sentenced Norris. His criminal history category is II (reflecting three prior convictions for harassing his estranged wife), not III (were the murder conviction to be considered). E. Enhancements 1. Cocaine Quantity (U.S.S.G. § 2D1.1(c)) Norris pled guilty to conspiracy to distribute and possess with intent to distribute five or more kilograms of cocaine. The government sought to enhance the offense level by two points to reflect Norris's involvement with 20.27 kilograms of cocaine. The cocaine quantity enhancement was calculated as follows: the $115,000 found in Norris's residence was added to the $250,000 that Hall said he had previously counted in connection with other drug transactions. The sum, $365,000, was then divided by $18,000, the per kilogram price agreed upon by Norris and the CI. That calculation yielded a total of slightly more than 20.27 kilograms of cocaine. Neither Norris's present nor former counsel contested the application of a two-point enhancement for the quantity of cocaine. See Letter of Lawrence Gerzog, July 22, 2003; Letter of Mildred Whalen, Nov. 22, 2002. Based on this fact, and on 195 the information contained in the PSR, the court is satisfied that Norris was involved in a single conspiracy to distribute approximately 20.27 kilograms of cocaine. 2. Possession of a Firearm (U.S.S.G. § 2D1.1(b)(1)) The original presentence report recommended a two-point enhancement because Norris had a stolen and loaded .38 caliber handgun on a shelf in the upstairs bedroom. The gun was stolen. Some three months prior to Norris's arrest, the Criminal Court in Queens, New York issued an order of protection against Norris to stay away from his estranged wife. The order also prohibited Norris from possessing and/or purchasing a firearm. See PSR at ¶ 13, 19. Application Note 3 to U.S.S.G. § 2D1.1 states that the firearm enhancement should be applied if the weapon was present unless it is "clearly improbable that the weapon was connected with the offense." A two-point enhancement is appropriate if the government can show by a preponderance of the evidence that Norris possessed a firearm in connection with the offense. This court conducted an evidentiary hearing to determine whether the firearm was possessed in connection with the offense. Norris gave the following explanation for the presence of the gun: I had the gun in the house if somebody broke in. I built the house from scratch. It has a big lot connected to the side of the house and people have tried to break in on two occasions. As far as what was taking place that day, it had nothing to do with that and it was downstairs. It was upstairs in a room besides my bed with big patio doors. S. Tr., at 10-11. The government did not cross-examine Norris nor did it call any witness to rebut Norris's account. The gun was not found in proximity to the location of the drug transaction. It was in an upstairs bedroom near the dresser. Norris's explanation for his possession of a gun is credible. It is "clearly improbable" that the gun was possessed in connection with the offense. The court so finds. 3. Organizer Enhancement (U.S.S.G. § 3B1.1(c)) The original PSR recommended a two-point enhancement because Norris had a supervisory role. According to the PSR, Norris supervised the activities of Irvin Hall and Michael Mitchell. See PSR at ¶ 14. At the resentencing, the government added that Norris negotiated the transaction and made repeated calls to the CI. See S. Tr., at 14. Defense counsel explained that Norris, Hall, and Mitchell operated in the same way a "law firm works with separate partners." Id. at 12. He added, "It is like a lawyer bringing in a client and then all the partners of the firm working on the matter and sharing in the proceeds." Id. at 12. Norris, Hall, and Mitchell were "coequals" and Norris "had no responsibility for ordering them to do any particular task." Id. at 12. At the time of the offense, Norris was 35 or 36 years old; Mitchell was 32 and Hall about 30 years old. See id. at 13. According to Norris, the three men had been doing business for a few weeks. See id. at 13. He also claimed that both Hall and Mitchell had more drug dealing experience than he. See id. at 13. The government has failed to prove by a preponderance of the evidence that Norris was an "organizer, leader, manager, or supervisor" as required in order to merit a two-point increase in offense level. See U.S.S.G. § 3B1.1(c). Although Norris did negotiate drug prices with the CI, that *196 alone does not merit the enhancement. See id., Application Note 4 ("This adjustment does not apply to a defendant who merely suggests committing the offense."). F. Concurrent versus Consecutive Sentences Norris is presently 43 years old, and has seventeen more years to serve on his state conviction. As the government conceded, the court may in its discretion order the federal sentence to be served concurrently, partially concurrently, or consecutively with the state sentence. See S. Tr., at 20; U.S.S.G. § 5G1.3(c). At the resentencing hearing, the government urged the court to order the sentences to run consecutively. If the sentences were ordered to run concurrently, the government asserted, "the defendant is not going to be penalized for his narcotics conduct here." S. Tr., at 21. This court disagrees. The present conviction will be considered by the state parole board in seventeen years. As the court noted, because "the State of New York is not known for its leniency towards murderers and drug sellers," Norris is "liable to stay in state prison for the rest of his life." Id. at 21-22. The court finds that a concurrent sentence best achieves a "reasonable punishment for the instant offense." as required by the Guidelines. U.S.S.G. § 5G1.3(c). G. Calculation The final calculation of Norris's sentence is as follows. The base offense level is 32. See U.S.S.G. § 2D1.1(c). Two points are added for drug quantity; three are subtracted for acceptance of responsibility. This yields an adjusted offense level of 31. The relevant criminal history category is II. This yields a Guideline range of 121-151 months' imprisonment. The statutory minimum sentence is ten years' imprisonment. IV. Conclusion Instead of the original sentence of 120 months, Norris is sentenced to 121 months' imprisonment to run concurrently with the State sentence. Three years of supervised release subject to the conditions set forth orally on the record and a $100 special assessment are imposed. SO ORDERED.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2663857/	UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ) WARREN K. GLADDEN, ) ) Plaintiff, ) ) v. ) Civil Action No. 10-1997 (ESH) ) CHARLES F. BOLDEN, Jr., ) Administrator, National Aeronautics and ) Space Administration ) ) Defendant. ) ) MEMORANDUM OPINION AND ORDER Plaintiff Warren Gladden has filed a pro se action against the Administrator of the National Aeronautics and Space Administration (“NASA”) for race and age discrimination in violation of Title VII of the Civil Rights Act of 1964 (“Title VII”), 42 U.S.C. § 2000e et seq, and the Age Discrimination in Employment Act of 1967 (“ADEA”), 29 U.S.C. § 621 et seq. Defendant has moved to dismiss for failure to timely exhaust his administrative remedies and for failure to state a claim upon which relief may be granted. Because Gladden filed this lawsuit more than ninety days after receiving NASA’s final agency decision (“FAD”), defendant’s motion will be granted and this action will be dismissed with prejudice. BACKGROUND I. FACTUAL HISTORY From June 2007 to July 2007, plaintiff, then a 53-year-old African American male applied for a series of jobs at NASA, including a Management and Program Analyst position, two General Engineer positions, and a Program Analyst position. (Plaintiff’s Complaint [“Compl.”] ¶¶ 29, 39, 50, 58.) In order to complete his applications, plaintiff was asked to submit a resume highlighting his relevant experience for each of the positions. (Id. ¶¶ 21-22.) As GS-13, 14, and 15 positions, the vacancies required successful applicants to have high-level scientific and managerial skills in addition to “one year of specialized experience equivalent to the next lower grade.” (Id. ¶¶ 31, 41, 52, 60.) When the application periods closed, RESUMIX, the automated hiring system that NASA uses to assess minimum qualifications, evaluated the resumes of each applicant and rated and ranked the applicants according to how closely their work experience aligned with the desired qualifications of each position. (Id. ¶ 23.) On August 11, 2007, plaintiff’s applications for employment were denied on the grounds that he was not highly qualified for the positions. (Id. ¶¶ 29, 39, 50, 58.) Importantly, plaintiff was also informed “that only those applications that receive a highly qualified rating by the RESUMIX system are forwarded for further assessment by selecting officials.” (Compl. Attach. 1 at 4.) In light of his purportedly “extensive” experience, (Compl. ¶ 21), plaintiff argues that his unsuccessful attempts at employment are a result of “the systematic devaluation of [his] credentials by RESUMIX.” (Id. ¶ 25.) Furthermore, plaintiff alleges that the RESUMIX selection process is discriminatory, and that it denied him employment on the basis of his race and age (id. ¶¶ 84-91), notwithstanding the fact that RESUMIX “does not take race, gender, or age into consideration when analyzing applicant resumes and generating a score for resumes.” (Defendant’s Motion to Dismiss [“Def.’s Mot.”], Ex. 1 ¶ 8.) Defendant maintains that plaintiff’s applications were rejected because he was not highly qualified for any of the positions. (Def.’s Mot. at 3.) II. PROCEDURAL HISTORY Plaintiff filed a formal complaint of discrimination with NASA on December 27, 2007. (Compl. ¶ 10.) After defendant completed its investigation, plaintiff requested a hearing before an Administrative Judge of the Equal Employment Opportunity Commission (“EEOC”) on June 2 4, 2008. (Id. ¶ 12.) On January 4, 2010, after engaging in extensive discovery and having received no decision from the EEOC Administrative Judge, plaintiff withdrew his hearing request and asked NASA to issue a FAD. (Id. ¶¶ 13-14.) On August 10, 2010, NASA issued its FAD and found that “Complainant has failed to establish that management’s reasons are pretextual or that he was, in fact, discriminated against on the bases of his race or age.” (Id. ¶ 15, Attach. 1 at 12.) Upon receiving the FAD on August 16, 2010, plaintiff was advised that if he was dissatisfied with the decision, he had the right either to appeal directly to the EEOC or to file a civil action in district court “within 90 days of receipt of this final decision if no appeal has been filed.” (Id. ¶ 15, Attach. 1 at 2; see also 29 C.F.R. § 1614.407(a).) Plaintiff chose the latter and filed this action on November 16, 2010 (ninety-two days after receiving his FAD), alleging that NASA’s refusal to hire him constituted discrimination in violation of Title VII (Count I) and the ADEA (Count II). ANALYSIS I. LEGAL STANDARDS Despite some confusion in this jurisdiction regarding “whether a failure to exhaust administrative remedies is properly brought in a Rule 12(b)(1) motion, as a jurisdictional defect, or in a Rule 12(b)(6) motion for failure to state a claim,” recent cases “favor treating failure to exhaust as a failure to state a claim.” Hansen v. Billington, 644 F. Supp. 2d 97, 102 (D.D.C. 2009) (listing cases); see also Kilby-Robb v. Spellings, 309 F. App’x 422, 423 n.1 (D.C. Cir. 2009) (“[T]he mandatory exhaustion requirement is not jurisdictional.”). As the Supreme Court recently held in Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), “[t]o survive a motion to dismiss [under Rule 12(b)(6) of the Federal Rules of Civil Procedure], a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Id. at 1949 (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 3 (2007)). A complaint must be dismissed under Rule 12(b)(6) if it consists only of “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements.” Id. “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) (internal quotation marks omitted). The allegations in plaintiff’s complaint are presumed true at this stage and all reasonable factual inferences must be construed in the plaintiff’s favor. Maljack Prods., Inc. v. Motion Picture Ass’n of Am., 52 F.3d 373, 375 (D.C. Cir. 1995). In deciding a Rule 12(b)(6) motion, a court may consider only “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.” Hansen, 644 F. Supp. 2d at 102 (internal quotation omitted). A motion for summary judgment “should be rendered if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). There is a “genuine issue” of material fact if a “reasonable jury could return a verdict for the nonmoving party.” Galvin v. Eli Lilly & Co., 488 F.3d 1026, 1031 (D.C. Cir. 2007) (quoting Anderson, 477 U.S. at 248). A moving party is thus entitled to summary judgment against “a party who fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial.” Waterhouse v. District of Columbia, 298 F.3d 989, 992 (D.C. Cir. 2002) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)). When considering a motion for summary judgment, “[t]he evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor.” Anderson, 477 U.S. at 4 255; see also Wash. Post Co. v. U.S. Dep’t of Health and Human Servs., 865 F.2d 320, 325 (D.C. Cir. 1989). However, the non-moving party “may not rely merely on allegations or denials in its own pleading.” Fed. R. Civ. P. 56(e)(2). “While summary judgment must be approached with special caution in discrimination cases, a plaintiff is not relieved of her obligation to support her allegations by affidavits or other competent evidence showing that there is a genuine issue for trial.” Calhoun v. Johnson, No. 95-2397, 1998 U.S. Dist. LEXIS 22376, at 3 (D.D.C. Mar. 31, 1998), aff’d No. 99-5126, 1999 U.S. App. LEXIS 25165 (D.C. Cir. Sept. 27, 1999) (internal citation omitted). II. EXHAUSTION OF TITLE VII AND ADEA CLAIMS Defendant moves to dismiss on the basis that plaintiff failed to timely file this action following the exhaustion of his administrative remedies. (Def.’s Mot. at 6.) The Court agrees. The D.C. Circuit has recognized that the EEOC has been given “broad authority to enforce [Title VII’s] antidiscrimination mandate within the federal government, including responsibility for issuing regulations to control federal agencies’ processing of discrimination complaints.” Bowden v. United States, 106 F.3d 433, 437 (D.C. Cir. 1997) (citing 42 U.S.C. § 2000e-16.) Pursuant to that authority, the EEOC has created an administrative framework designed to facilitate the quick and proper resolution of discrimination complaints by imposing a series of time limits for when agency appeals and civil law suits must be filed. Id. (citing 29 C.F.R. § 1614). Following the receipt of a FAD, EEOC regulations give a prospective plaintiff one of two choices: he can appeal the FAD internally with the Office of Federal Operations, 29 C.F.R. § 1614.401, or he can bypass the Commission’s appeals process and file a civil suit in district court, provided that he does so within ninety days of receiving the FAD. 29 C.F.R. §1614.407(a). 5 These requirements are “part and parcel of the congressional design to vest in the federal agencies and officials engaged in hiring and promoting personnel ‘primary responsibility’ for maintaining nondiscrimination in employment.” Kizas v. Webster, 707 F.2d 524, 545 (D.C. Cir. 1983) (quoting 42 U.S.C. §2000e-16(e)). Moreover, by giving the “federal agenc[y] an opportunity to handle matters internally whenever possible,” the administrative framework also “ensure[s] that the federal courts are burdened only when reasonably necessary.” Brown v. Marsh, 777 F.2d 8, 14 (D.C. Cir. 1985). As such, “[c]ourts apply the ninety-day time limit strictly and will dismiss a suit for missing the deadline by even one day.” McAlister v. Potter, 733 F. Supp. 2d 134, 142 (D.D.C. 2010) (citing Smith v. Dalton, 971 F. Supp. 1, 2-3 (D.D.C. 1997)). Here, it is undisputed that plaintiff failed to timely file this action. He received his FAD on August 16, 2010 (Compl. ¶ 15; see also Attach. 1 at 14), and he filed this action on November 16, 2010. Even accounting for the one-day window to which plaintiff was entitled because his ninetieth day fell on Sunday, November 14, 2010, plaintiff still failed to comply with the statute of limitations by filing this action ninety-two days after receiving his FAD. Because he filed suit two days after the expiration of the ninety-day statute of limitations, plaintiff’s suit is untimely. 1 1 Plaintiff incorrectly argues that his complaint was timely because it was postmarked on November 15 (Opp. at 9, Attach. 2), citing to a provision regarding the filing requirements for administrative claims before the EEOC. See 29 CFR § 1614.604(b). For civil actions filed in district court, however, “the date of the filing is established by the official docket.” Smith v. Dalton, 971 F. Supp. 1, 3 (D.D.C. 1997); accord Innovatit Seafood Sys., LLC v. Comm’r for Patents, 240 F.R.D. 23, 25 (D.D.C. 2007) (“[F]or purposes of the statute of limitations, the filing date is the date that the complaint is tendered to the clerk . . . .”); Tyler v. District of Columbia, No. 05-2259, 2006 WL 2024377, 1, fn.1 (D.D.C. Jul. 18, 2006) (“For statute of limitations purposes, a complaint is deemed to be filed with the Clerk when it is placed in the Clerk’s custody . . . .”); Lyons v. Goodson, 787 F.2d 411, 412 (8th Cir.1986) (“[A] complaint is “filed” when it is lodged with the court . . . .”); Loya v. Desert Sands Unified Sch. Dist., 721 F.2d 279, 281 (9th Cir.1983) (“[F]or purposes of the statute of limitations the district court should regard as “filed” a complaint which arrives in the custody of the clerk within the statutory period . . . .”). 6 “[T]he plaintiff who fails to comply, to the letter, with administrative deadlines ordinarily will be denied a judicial audience.” Brown, 777 F.2d at 13 (internal citations & quotation marks omitted). It is within this Court’s discretion, however, to excuse a plaintiff’s failure to meet administrative time limits by applying the doctrine of equitable tolling. Johnson v. Billington, 404 F. Supp. 2d 157, 162 (D.D.C. 2005). The D.C. Circuit has “set a high hurdle for equitable tolling, allowing a statute to be tolled only in extraordinary and carefully circumscribed instances,” Communications Vending Corp. of Az. v. FCC, 365 F.3d 1064, 1075 (D.C. Cir. 2004) (internal citation & quotation marks omitted), including “where a motion for appointment of counsel is pending and equity would justify tolling the statutory period[,] . . . where the court has led the plaintiff to believe that she had done everything required of her, . . . [or] where affirmative misconduct on the part of a defendant lulled the plaintiff into inaction,” Baldwin County Welcome Ctr. v. Brown, 466 U.S. 147, 151 (1984) (internal quotation marks omitted); see also Smith-Haynie v. District of Columbia, 155 F.3d 575, 580 (D.C. Cir. 1998) (allowing for equitable tolling when a plaintiff was found to be non compos mentis). A plaintiff’s failure to exercise due diligence when filing suit, however, is not sufficient to warrant the application of equitable tolling. See Battle v. Rubin, 121 F. Supp. 2d 4, 8 (D.D.C. 2000) (plaintiff must have exercised due diligence and her excuse for failure to timely file must be “more than a garden variety claim of excusable neglect”). Moreover, plaintiff bears the burden of proving “facts supporting equitable avoidance” of the result. Bowden v. United States, 106 F.3d 433, 437 (D.C. Cir. 1997). Plaintiff has not carried this burden. Although plaintiff brings this action pro se, he is an experienced litigant in the area of employment law, having filed at least ten other employment 7 discrimination cases throughout the country. 2 Plaintiff was on notice of the time limits affecting his right to file a civil action upon the receipt of his FAD. (Attach. 1 at 2.) Indeed, plaintiff was advised by the agency to file his suit within thirty days of receiving his FAD, as some jurisdictions have interpreted the Civil Rights Act to impose a thirty-day statute of limitations period. (Id.) III. SUMMARY JUDGMENT Even if there was some conceivable argument in favor of tolling, which there is not, plaintiff cannot as a matter of law survive summary judgment given that his employment application was rejected by an automated computer system (RESUMIX) that does not take race, gender, or age into consideration as an input variable when analyzing or scoring resumes. (Mot. at Ex. 1.) Several courts have examined claims brought where RESUMIX has blindly screened and excluded applicants, and have consistently dismissed such claims. See, e.g., Rumburg v. Secretary of the Army, 2011 WL 1595067 at 7 (E.D. Mich. 2011) (“There is nothing to suggest, let alone create a triable issue of fact, that reliance on the RESUMIX system is a pretext for discrimination. . . . [T]he RESUMIX system . . . blindly scored the resumes, which in turn blindly excluded Plaintiff from consideration.”); Tuttle v. McHugh, 2010 WL 4323078 at 4 (W.D.Va. 2010) (explaining that “the RESUMIX system did not consider age in generating the qualified-candidate pool” and that the plaintiff “has submitted no evidence from which a reasonable jury could find that [the defendant] somehow discriminated against [plaintiff] because 2 See Gladden v. Locke, 10-01665-PJM, Gladden v. Locke, 10-cv-01756-PJM, Gladden v. McHugh, 10- 1793, Gladden v.McHugh, 10-cv-3402, filed in U.S. District Court for the District of Maryland; Gladden v. Vilsack, 10-cv-5228-LFS, Gladden v. Solis, 10-cv-5475-LFS filed in U.S. District Court for the Eastern District of Pennsylvania; Gladden v. Solis, 10-cv-1905 (ESH) in this Court; Gladden v. Geren, 08-cv-1180 in U.S. District Court for Middle District of Pennsylvania; and Gladden v. Advanced Micro Dev., 99-cv-0096 in the U.S. District Court for the Western District of Texas. 8 of his age by using an age-neutral computer program to screen applicants”); O’Neal v. R.L. Brownlee, 2004 WL 2827052, at *8 (E.D.Pa. 2004) (“In awarding the promotion to Wasakanes defendant considered only the information submitted by plaintiff and Wasakanes through the Resumix system. Plaintiff has not presented evidence that defendant considered the two candidates’ applications under different sets of standards or that race played a factor in the determination of the candidates’ application scores.”). In response, plaintiff argues that defendant’s refusal to turn over data to plaintiff regarding the race and gender of every applicant for every position that he applied for is “prima facie” evidence of discrimination, and mandates the inference that defendant’s use of a race and age-neutral computer screening system has an adverse impact on applicants based on race and age. (See Opp. at 14-19.) As defendant points out, however, such statistical data regarding age is not collected, and the provisions cited by plaintiff do not require its collection. See 29 CFR § 1607.3. In addition, plaintiff’s request for the “race, age, and year of birth” for every applicant (Opp. at 15), and not merely those applicants who provided such information voluntarily, was justifiably refused by defendants as overbroad. In short, plaintiff has not presented any evidence suggesting that defendant’s use of RESUMIX was pretext for race or age discrimination. 9 CONCLUSION For the foregoing reasons, defendant’s motion for summary judgment and to dismiss for failure to exhaust [Dkt. No. 13] is GRANTED. The complaint is DISMISSED with prejudice. This is a final appealable order. SO ORDERED. /s/ ELLEN SEGAL HUVELLE United States District Judge Date: August 16, 2011 10	01-03-2023	04-04-2014
https://www.courtlistener.com/api/rest/v3/opinions/2663861/	SUMMARY MEMORANDUM OPINION; DO NOT PUBLISH IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA MICHAEL BOYD, ) ) Plaintiff, ) ) vs. ) Civil Action No. 11-cv-452 (RLW) ) SECURITAS SERVICES, INC., ) ) Defendant. ) ) MEMORANDUM OPINION Plaintiff Michael Boyd brings this complaint against Securitas Services, Incorporated for Wrongful Termination (Count I) and Breach of Contract (Count II) pursuant to District of Columbia law. (Doc. 16-1; see Doc. 9.) Presently before the Court is Defendant’s motion to dismiss or, in the alternative, motion for summary judgement. (Doc. 6.) For the reasons spelled out below, Defendant’s motion shall be granted. Prior to his separation of employment, Boyd was employed as a Captain of Security detailed to protect students attending school in the District of Columbia. During his tenure, Boyd complained to Securitas management about working conditions, low pay and safety issues. After an altercation involving a school visitor who injured another Securitas employee, Boyd complained about Securitas’ treatment of the employee who was injured in the incident. According to Boyd, Securitas responded by stripping him of his authority and regulating him to nominal duties. Page 1 of 4 SUMMARY MEMORANDUM OPINION; DO NOT PUBLISH In response to Defendant’s motion to dismiss or for summary judgment, Plaintiff fails to dispute any of the material facts spelled out by defendant in its motion. ANALYSIS “Wrongful discharge” in the District of Columbia has three distinct usages. In one, wrongful discharge is identical to breach of contract; discharge is wrongful if it violates contractual provisions. See Nickens v. Labor Agency of Metro. Wash., 600 A. 2d 813, 817 (D.C.1991). In another, discharge is wrongful because it violates a statute. See Freas v. Archer Servs., 716 A.2d 998, 1000-01 (D.C.1998); Thigpen v. Greenpeace, Inc., Civ. A. No. 93-7587, 1993 WL 762109 (D.C.Super.Sept.14, 1993). Finally, wrongful discharge may refer to the fact that an “employer engages in tortious conduct when it fires an at-will employee for that employee's refusal to break the law at the employer's direction.” See Adams v. George W. Cochran & Co., Inc., 597 A.2d 28, 30 (D.C.1991); see also Freas, 716 A.2d at 1000. Davis v. Gables Residential/H.G. Smithy, 525 F. Supp. 2d 87, 101 (D.D.C. 2007). The wrongful discharge tort also extends to an employer’s termination of an employee who is discharged in violation of public policy. Fingerhut v. Children’s Nat’l Med. Ctr., 738 A.2d 799, 806 - 7 (D.C. 1999). This public policy exception to the at-will employment doctrine is a very “narrow” exception. Id. at 803. A majority of judges on the D.C. Court of Appeals have explained that the courts should consider only those cases involving a clear mandate of public policy- i.e., those that make a clear showing, based on some identifiable policy that has been “officially declared” in a statute or municipal regulation, or in the Constitution, that a new exception is needed. Furthermore, there must be a close fit between the policy thus declared and the conduct at issue in the allegedly wrongful termination. Carl v. Children’s Hosp., 702 A.2d 159, 164, 166 (D.C. 1997) (footnotes omitted). Page 2 of 4 SUMMARY MEMORANDUM OPINION; DO NOT PUBLISH In the instant case, Plaintiff has failed to plead any facts which might indicate that his separation from employment constituted a breach of contract. Indeed, the employment documents he signed clearly indicate Plaintiff’s employment was at-will: I understand and agree that nothing in the Handbook creates or is intended to create a promise or representation of continued employment and that employment at Securitas is employment at will. Employment may be terminated at the will of either the Company or myself, with or without cause. (Def. Ex. B.) More importantly, in his brief, Plaintiff does not dispute or even address Defendant’s argument that he voluntarily resigned from his position because he disagreed with certain management practices. Indeed, the record contains Plaintiff’s resignation letter, in which he cites “lack of team work and unacceptable work ethic shown by” his supervisors as the reason he had “no other choice but to put in [his] two weeks resignation.” (Def.’s Ex. A.) Furthermore, none of the evidence proffered by Plaintiff establishes that he was terminated in violation of a public policy. Given this evidence, Plaintiff has failed to create a genuine issue of material fact regarding the reasons for his separation from employment. Accordingly, Defendant is entitled to summary judgment on both of Plaintiff’s claims. 1 CONCLUSION For the reasons spelled out above, by separate order, Defendant’s motion shall be granted 1 Because this Court relied on documents outside of the pleadings, the Defendant’s motion is being treated as a motion for summary judgment. See Fed. R. Civ. P. 12(d). Page 3 of 4 SUMMARY MEMORANDUM OPINION; DO NOT PUBLISH and this action dismissed, with prejudice. SO ORDERED. August 16th, 2011 /s/ ___________________________ Robert L. Wilkins United States District Judge Page 4 of 4	01-03-2023	04-04-2014
https://www.courtlistener.com/api/rest/v3/opinions/2663867/	ml UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA FILED AUG 12 2011 Jo ANN MYERS STEPNEY, ) ¢¢e,k, U_S_ D,Smct and ) Ba"k"*-\|P¥CV Courts Plaintiff, ) ) . v. ) civil Acu490 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. Ia'. 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. Hernandez, 504 U.S. 25, 33 (1992). 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 Haines 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. DATE; y/z,//,	01-03-2023	04-04-2014
https://www.courtlistener.com/api/rest/v3/opinions/2663921/	UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ____________________________________ ) UNITED STATES OF AMERICA ) ) v. ) ) Crim. No. 10-mj-215 (DAR) SCOTT J. BLOCH, ) ) Defendant/Appellant. ) ____________________________________) MEMORANDUM OPINION & ORDER Before the Court is defendant Scott Bloch’s appeal [70] of the Magistrate Judge’s denial [47] of his unopposed motion to withdraw his guilty plea [37], or alternatively, of the Magistrate Judge’s denial [54] of his motion to reconsider [50]. The government does not oppose [72] defendant’s appeal of the denial of his unopposed motion to withdraw his guilty plea. In light of the government’s lack of opposition, and upon consideration of the appeal, the response thereto, the entire record herein, and the applicable law, the Court REVERSES the Magistrate Judge’s denial [47] of defendant’s unopposed motion to withdraw his guilty plea. I. FACTUAL AND PROCEDURAL BACKGROUND On April 22, 2010, the government charged defendant by Information with one count of misdemeanor Contempt of Congress in violation of 2 U.S.C. § 192. On April 27, 2010, the government and defendant reached a plea agreement in which defendant agreed to plead guilty to misdemeanor Contempt of Congress in violation of 2 U.S.C. § 192, in exchange for the government’s promise “not to oppose a sentence at the low end of the applicable Guidelines range,” which the agreement calculated as “0 to 6 months.” Plea Agreement 3–4 [3]. The agreement indicated that “the charge carries a maximum sentence of not more than twelve 1 months’ imprisonment, a maximum fine of $100,000, and a $25 special assessment,” but did not otherwise inform defendant of any mandatory minimum sentence. Id. at 1. On April 27, 2010, Magistrate Judge Deborah Robinson conducted defendant’s plea hearing. At no time during the Rule 11 plea colloquy did the Magistrate Judge inform defendant that he faced a one-month mandatory minimum period of incarceration for pleading guilty to 2 U.S.C. § 192. See Tr. of Apr. 27, 2010 Plea Hr’g. And as both defendant and the government argue, the Magistrate Judge’s reference to imprisonment during the plea colloquy suggested that a period of incarceration was optional rather than mandatory. See id. at 9 (“Do you understand . . . that if you are sentenced to a period of incarceration, you will not be released early on parole?”) (emphasis added). Indeed, the Magistrate Judge herself acknowledges that she failed to inform defendant that he was subject to a mandatory minimum sentence as part of his plea. See Mem. Op. and Order 9 [47] (“While the court neglected during the 45-minute Rule 11 colloquy to inform Defendant of the mandatory minimum penalty provision for the offense to which he wished to plead guilty . . .”). After conducting the colloquy, verifying that defendant had not been coerced into signing the plea agreement, and hearing the factual proffer, the Magistrate Judge accepted defendant’s plea. Prior to defendant’s scheduled sentencing date, the U.S. Probation Office prepared a draft presentence investigation (PSI) report indicating that 2 U.S.C. § 192 carried a “minimum term of imprisonment [of] one month.” Draft Presentence Investigation Report 19 [7]. After reviewing the draft PSI, the government objected that “while 2 U.S.C. § 192 indicates a term of imprisonment of 1 to [12] months, this statute does not make the 1 month of incarceration a mandatory minimum period of incarceration.” Final Presentence Investigation Report 23 [8]. On July 13, 2010, the Probation Office issued its final PSI, which—in response to the government’s 2 objection—reiterated that 2 U.S.C. § 192 required a “minimum sentence of imprisonment [of] 30 days in a common jail.” Id. The Magistrate Judge subsequently ordered the parties to brief the issue of whether the statute permitted a sentence of probation. See Minute Order, July 23, 2010. In response, the parties submitted a total of four sentencing memoranda [15, 16, 23, 24] in which they argued that the statute constituted a probation-eligible offense and did not mandate incarceration. On September 8, 2010, the Magistrate Judge held a hearing on the issue, during which the government stated that the parties had entered into the plea relying on the joint understanding that the statute was a probation-eligible offense and that, should the Magistrate Judge find otherwise, fundamental fairness would permit defendant to withdraw his plea. Tr. of Sept. 8, 2010 Hr’g 8–9, 19–20, 23 [67]. Several months later, on February 2, 2011, the Magistrate Judge determined that 2 U.S.C. § 192 carried a mandatory minimum sentence of thirty days. See Mem. Op. [32]. On February 17, 2011, defendant filed an unopposed motion to withdraw his April 27, 2010 guilty plea, arguing that the Magistrate Judge’s Rule 11 colloquy “did not advise him that he was facing a charge that the Court subsequently ruled mandates a minimum sentence.” Unopp. Mot. to Withdraw Guilty Plea 1 [37]. The government filed a response confirming that it did not oppose defendant’s motion. Gov’ts Resp. to Unopp. Mot. to Withdraw Guilty Plea [39]. On March 9, 2011, the Magistrate Judge denied defendant’s unopposed motion. Mem. Op. and Order [47]. In so doing, she found that her failure to inform defendant of the mandatory minimum penalty provision in 2 U.S.C. § 192 was harmless because he was “cognizant of the full extent of the provisions of the statute.” Id. at 11. She focused on the fact that defendant is a lawyer himself and was represented by counsel, id. at 5; that the mandatory minimum provision “is plainly included in the statute [and defendant] does not claim that he was unaware of the 3 provision,” but only that he believed that probation was possible, id. at 20; and that defendant was advised that he could receive up to one year in prison. Id. at 5–6, 9, 12–14, 20. Defendant subsequently filed a motion for reconsideration [49], which the government supported [52]. On March 29, 2011, the Magistrate Judge denied defendant’s unopposed motion for reconsideration. Mem. Op. and Order [54]. One day later, the Magistrate Judge held a sentencing hearing during which the parties— arguing that the court had erred in refusing to grant defendant’s motion to withdraw—asked that the court sentence defendant to probation. Tr. of Mar. 30, 2011 Sent. Hr’g 14–24 [68]. The Magistrate Judge nevertheless sentenced defendant to a mandatory term of thirty days’ incarceration, see Minute Order, Mar. 30, 2011, and entered a stay of sentence pending appeal. See Order, Apr. 6, 2011 [62]. Defendant timely filed a notice of appeal in this Court under Federal Rule of Criminal Procedure 58(g)(2). See Notice of Appeal, Apr. 7, 2011 [63]. II. STANDARD OF REVIEW In reviewing the Magistrate Judge’s rulings, this Court applies the same standard that a federal appellate court applies when reviewing a district court case. Fed. R. Crim. P. 58(g)(2)(D). Thus, the Court reviews the Magistrate Judge’s denial of defendant’s motion to withdraw his guilty plea for abuse of discretion. See United States v. Berkeley, 567 F.3d 703, 708 (D.C. Cir. 2009) (“We review a district court’s refusal to permit withdrawal [of a guilty plea] only for abuse of discretion.”). The Court reviews the Magistrate Judge’s findings of fact—such as her finding that defendant understood that he faced one month of mandatory incarceration—for clear error. See, e.g., United States v. Rivera-Gonzalez, 626 F.3d 639, 643 (1st Cir. 2010) (“The trial court’s subsidiary findings of fact in connection with the plea-withdrawal motion are reviewed only for clear error.”) (internal citations and quotation marks omitted). 4 III. DISCUSSION Defendant argues that the Magistrate Judge abused her discretion in denying his withdrawal motion and motion for reconsideration despite her acknowledged violation of Rule 11. He asserts that the record indisputably shows a Rule 11 error in that the Magistrate Judge failed to advise him of the mandatory minimum sentence he later received at sentencing. He further asserts that this error was not harmless, as he “had no knowledge of the mandatory minimum sentence, and if he had, he would not have pleaded guilty.” Br. of Def.-Appellant 12– 13 [70]. Defendant points to his unrebutted sworn affidavit and to the circumstances surrounding the plea hearing to demonstrate that he was not aware that 2 U.S.C. § 192 carried a mandatory minimum sentence. He contends that the Magistrate Judge’s omission “not only rendered his plea legally involuntary, it also defeated the purpose of [his] plea agreement, because both parties agreed that probation was possible and that the Government would recommend a sentence on the low end of the ‘0 to 6’ month range.” Id. at 13. The government does not oppose defendant’s appeal of the denial of his withdrawal motion. The government agrees—as it has at every stage of the proceedings since defendant’s plea colloquy—that the Magistrate Judge’s failure to inform defendant that he faced a mandatory minimum sentence constituted a Rule 11 error. The government further argues that the Magistrate Judge’s assertion that her error was harmless because defendant must have known that he faced a mandatory minimum sentence “is belied by the record in this case.” Gov’ts Resp. to Def.’s Appeal 3 [72]. First, the government states that the record demonstrates that defendant believed he could receive a sentence of probation when he pled guilty on April 27, 2010. The government notes that it “shared this same belief,” in part because the U.S. Probation Office had concluded one year earlier that 2 U.S.C. § 192 allowed for a sentence of probation in United 5 States v. Miguel Tejada, 09-mj-077. Id. at 4. In short, the government argues, “it was not unreasonable” for defendant to have believed that he could receive a sentence of probation when he pled guilty. Id. The government further states that it “has no reason to doubt the veracity” of defendant’s statement that he would not have pled guilty had he understood that he faced one month of mandatory incarceration. Id. at 6. Thus, the government asserts, the Magistrate Judge’s “Rule 11 error was not harmless and the defendant should therefore have been allowed to withdraw his plea.” Id. Federal Rule of Criminal Procedure 11(b)(1) provides, in relevant part, “Before the court accepts a plea of guilty . . . the court must address the defendant personally in open court. During this address, the court must inform the defendant of, and determine that the defendant understands . . . any mandatory minimum penalty.” Fed. R. Crim. P. 11(b)(1)(I) (emphasis added). Rule 11 further permits a defendant to withdraw a guilty plea after the court accepts the plea if “the defendant can show a fair and just reason for requesting the withdrawal.” Fed. R. Crim. P. 11(d)(2)(B). Here, there is no dispute that the Magistrate Judge failed to inform defendant during his Rule 11 colloquy that he was subject to a mandatory minimum period of incarceration. See Mem. Op. and Order 9 [47] (“While the court neglected during the 45-minute Rule 11 colloquy to inform Defendant of the mandatory minimum penalty provision for the offense to which he wished to plead guilty . . .”). The question for this Court, then, is whether defendant has shown, based on the Magistrate Judge’s omission, a “fair and just reason for requesting the withdrawal.” Fed. R. Crim. P. 11(d)(2)(B). The D.C. Circuit has stated that—although it reviews a district court’s denial of a withdrawal motion only for abuse of discretion—“[w]ithdrawal of a guilty plea prior to sentencing is to be liberally granted, and permitted for ‘any fair and just reason.’” United States 6 v. Taylor, 139 F.3d 924, 929 (D.C. Cir. 1998). In reviewing a district court’s denial of a withdrawal motion, the D.C. Circuit has focused on three factors: “(1) whether the defendant has asserted a viable claim of innocence; (2) whether the delay between the guilty plea and the motion to withdraw has substantially prejudiced the government's ability to prosecute the case; and (3) whether the guilty plea was somehow tainted.” Id. Here, defendant does not assert a claim of innocence, and the government does not argue that it will be prejudiced if defendant is permitted to withdraw his guilty plea. Thus, the Court will focus on the third factor—which the D.C. Circuit considers the “most important” factor in its analysis. United States v. Ford, 993 F.2d 249, 251 (D.C. Cir. 1993). As to the third factor, the D.C. Circuit has explained that the standard for withdrawal of a plea is “very lenient when the plea was entered . . . contrary to Rule 11 procedures. Such pleas should almost always be permitted to by withdrawn . . . regardless of whether the movant has asserted his legal innocence.” United States v. Barker, 514 F.2d 208, 221 (D.C. Cir. 1975). “Thus, when the defendant can show that the initial plea colloquy was not conducted in ‘substantial compliance’ with [Rule 11], the defendant should ‘almost always’ be permitted to withdraw his plea.” Ford, 993 F.2d at 251 (quoting United States v. Abreu, 964 F.2d 16, 18 (D.C. Cir. 1992) (per curiam)); see also United States v. Cray, 47 F.3d 1201, 1206 (D.C. Cir. 1995) (“The key to this inquiry is whether the plea was entered in accordance with Rule 11. If the plea is defective under Rule 11, then withdrawal should almost always be permitted.”) (internal citations and quotation marks omitted). Not every Rule 11 error justifies withdrawal of a guilty plea. Rather, Rule 11 provides that “[a] variance from the requirements of this rule is harmless error if it does not affect substantial rights.” Fed. R. Crim. P. 11(h). To determine whether a Rule 11 error has affected a 7 defendant’s “substantial rights,” a reviewing court should determine whether the error would have affected the defendant’s decision to plead guilty. United States v. Robinson, 587 F.3d 1122, 1130 (D.C. Cir. 2009) (“In order to establish that the court’s error affected [a defendant’s] substantial rights, [] he ‘must show a reasonable probability that, but for the error, he would not have entered the plea.’”) (quoting United States v. Dominguez Benitez, 542 U.S. 74, 83 (2004)); see also United States v. Herndon, 7 F.3d 55, 58 (5th Cir. 1993) (“Whether the mandatory minimum had an effect on the sentence is not the question[]. The question is whether awareness of a mandatory minimum would have affected the defendant’s decision to plead guilty.”) (emphasis added). On the basis of the record, the Court finds that defendant—as both he and the government consistently have argued—believed that he could receive a sentence of probation when he pled guilty. First, the plea agreement itself demonstrates that the parties believed that defendant could receive probation. There, the parties stipulated to a sentencing guidelines range of “0 to 6 months” and agreed that a sentence within this range “would constitute a reasonable sentence.” Plea Agreement 3 [3]. As the government argued to the Magistrate Judge, the possibility of “0” months implied that the parties understood that “probation was a reasonable sentence in this case.” Tr. of Mar. 30, 2011 Sent. Hr’g 17–20 [68]. Defendant confirmed this belief in his sworn affidavit to the Magistrate Judge, stating: “At the time I negotiated my guilty plea to one count of contempt of congress pursuant to 2 U.S.C. § 192, I believed that such an offense was probation- eligible, and I believed that it was possible that I could be sentenced to probation.” Def.’s Reply in Supp. of Unopp. Mot. to Withdraw Guilty Plea Ex. A [42-1]. Importantly, the government agrees with defendant that he “had no understanding that he faced one month of mandatory incarceration by pleading guilty.” Gov’ts Resp. to Def.’s Mot. to 8 Withdraw 2 [39]. Indeed, the government has argued repeatedly that “both parties entered into the April 27, 2010 plea with the good-faith belief that 2 U.S.C. § 192 was a probation-eligible offense.” Id. at 3. The parties “shared this same belief” due to precedent on the issue of whether 2 U.S.C. § 192 is a probation-eligible offense. See Gov’ts Resp. to Def.’s Appeal 4 [72]; see also Gov’ts Mem. in Aid of Sent. 6 n.2 [10] (“The government does not see anything in the Guidelines or the U.S. Code requiring jail time of at least one month, or precluding a sentence of probation for violations of 2 U.S.C. § 192. To this end, the last two criminal prosecutions of 2 U.S.C. § 192 in this jurisdiction . . . resulted in [a] sentence of probation.”) (emphasis added). As the government explained to the Magistrate Judge, the defendant in United States v. Miguel Tejada, 09-mj-077, received a sentence of one year of probation after pleading guilty to Contempt of Congress in violation of 2 U.S.C. § 192—notably, only one year before defendant in this case pled guilty to the very same charge. Gov’ts Supp. Mem. in Aid of Sent. 2 [15]. Similarly, the defendant in United States v. Abrams, 91-cr-575, received a sentence of two years of probation after pleading guilty to two counts of Contempt of Congress in violation of 2 U.S.C. § 192. Id. at 3–4. In light of the parties’ shared belief that probation was possible, the government has maintained that fairness requires that defendant be permitted to withdraw his plea, “because otherwise the plea agreement would not accurately reflect what the parties negotiated and agreed to in good-faith.” Gov’ts Resp. to Def.’s Mot. to Withdraw 3 [39]. It is worth noting, moreover, that the Magistrate Judge requested that both parties brief the issue of whether 2 U.S.C. § 192 requires the imposition of a minimum period of incarceration. See Minute Order, July 23, 2010. Several months after this request—after the parties had submitted several responsive memoranda, and after the court had held a hearing on the issue—the Magistrate Judge determined that 2 U.S.C. § 192 carried a mandatory minimum 9 sentence of thirty days. See Mem. Op., Feb. 2, 2011 [32]. The fact that the court and the parties spent several months discussing the issue demonstrates how unique and contested that issue truly was. And given such confusion, it is reasonable that defendant believed that he could receive a sentence of probation when he pled guilty. In light of the facts discussed above, the Court finds that the Magistrate Judge clearly erred when she concluded that defendant “was cognizant of the full extent of the provisions of the statute.” Mem. Op. and Order 11 [47]. Indeed, the Magistrate Judge’s conclusion that defendant’s “awareness of the [mandatory minimum] provision cannot be credibly challenged,” id. at 9, is inapposite. The question here is not whether defendant was aware of the statute’s provisions, but whether he understood that he faced one month of mandatory incarceration by pleading guilty. And as the record demonstrates, both defendant and the government believed that defendant could receive probation. 1 The Court pauses here to note that 2 U.S.C. § 192 plainly states that misdemeanor Contempt of Congress is “punishable by a fine of not more than $1,000 nor less than $100 and imprisonment in a common jail for not less than one month nor more than twelve months.” 2 U.S.C. § 192. And as the record confirms, there is no dispute that defendant read the statute under which he was charged in this case. See Br. of Def.-Appellant 8 [70]. The Court recognizes that Tejada and Abrams informed the parties’ belief that the statute does not require a mandatory minimum sentence—and not unreasonably so. That said, the Court finds it surprising that none 1 The Magistrate Judge, in denying defendant’s withdrawal motion, emphasized that defendant was “well aware that he could have been sentenced to a period of incarceration of up to one year.” Mem. Op. and Order 9 [47]; see also id. at 5–6, 12–14, 20. But defendant’s understanding as to the statute’s maximum sentence says nothing about whether he believed that probation was available. Nor does the fact that the Magistrate Judge advised defendant as to the statute’s maximum sentence cure her failure to inform him of the minimum mandatory sentence. 10 of the attorneys in this case—neither those for the government, nor those for defendant— questioned such precedent upon reading the statute. This is, at bottom, a situation in which lawyering has fallen short. Again, however, the relevant question is what defendant believed when he pled guilty, however inexplicable that belief. Having found that defendant believed that he could receive probation when he pled guilty, the Court must determine whether he has demonstrated that the Magistrate Judge’s Rule 11 error affected his “substantial rights” and thus was not “harmless error.” Fed. R. Crim. P. 11(h). That determination comes down to whether defendant has established that the Rule 11 error affected his decision to plead guilty—in other words, that he would not have pled guilty had he understood that he faced a one-month mandatory minimum period of incarceration. See Robinson, 587 F.3d at 1130. In his sworn affidavit, defendant states: “If I had been informed that 2 U.S.C. § 192 was not a probation-eligible offense, or that any sentence under 2 U.S.C. § 192 required a mandatory minimum term of incarceration, I would not have pleaded guilty.” Def.’s Reply in Supp. of Unopp. Mot. to Withdraw Guilty Plea Ex. A [42-1]. Similarly, defendant’s counsel, Ryan Sparacino, has stated in a sworn affidavit: I am certain that Mr. Bloch would not have pleaded guilty to a misdemeanor Contempt of Congress offense under 2 U.S.C. § 192 if, prior to the plea hearing, Mr. Sullivan or I had informed him that it was our opinion that 2 U.S.C. § 192 was not probation-eligible, or if [the Magistrate Judge] had informed him during the Rule 11 colloquy that such offense was not probation eligible. Mot. for Recons. Ex. A, at ¶ 5 [49-1]. The Magistrate Judge, in denying defendant’s withdrawal motion, stated that his assertion that he would not have pled guilty is “not entitled to credence” in light of its “contradiction” with his plea agreement and his representations during the Rule 11 colloquy. Mem. Op. and Order 11–14 [47]. Specifically, the court focused on defendant’s acknowledgement that the court was not bound by the plea agreement’s stipulated sentencing 11 range of 0 to 6 months; that no one had promised him what sentence would actually be imposed; and that he faced a maximum sentence of one year. See id. But none of these representations— and nothing else in the plea agreement or Rule 11 colloquy—demonstrates that defendant understood that he faced a mandatory minimum sentence. And in the absence of such evidence in the record, there is nothing to refute defendant’s assertion that he would not have pled guilty had he been informed that he faced a mandatory minimum sentence. For its part, the government—arguing that the Magistrate Judge’s error was not harmless—states that it “has no reason to doubt the veracity of [defendant’s and counsel’s] representations [and that] there is nothing in the current record to refute these assertions.” Gov’ts Resp. to Def.’s Appeal 6 [72]. Indeed, the record shows that defendant promptly moved to withdraw his guilty plea upon the Magistrate Judge’s determination that 2 U.S.C. § 192 carried a mandatory minimum sentence. See Unopp. Mot. to Withdraw Guilty Plea [37]. Common sense thus suggests that defendant would not have pled guilty had he understood that he faced a mandatory minimum sentence. In sum, the totality of the circumstances—namely, the representations of both parties and defendant’s prompt attempt to withdraw his plea— demonstrates that the Magistrate Judge’s Rule 11 error affected defendant’s decision to plead guilty. The Court thus finds that the Magistrate Judge clearly erred in finding that her error was harmless. See Robinson, 587 F.3d at 1130 (“In order to establish that the court's error affected [a defendant’s] substantial rights, [] he ‘must show a reasonable probability that, but for the error, he would not have entered the plea.’”) (quoting Dominguez Benitez, 542 U.S. at 83). In moving to withdraw his guilty plea, defendant demonstrated, on the basis of the record, that the Magistrate Judge’s Rule 11 error was not harmless. The Magistrate Judge therefore should have permitted him to withdraw his guilty plea. See Ford, 993 F.2d at 251 12 (“Thus, when the defendant can show that the initial plea colloquy was not conducted in ‘substantial compliance’ with [Rule 11], the defendant should ‘almost always’ be permitted to withdraw his plea.”) (quoting Abreu, 964 F.2d at 18). Accordingly, this Court finds that the Magistrate Judge abused her discretion in denying defendant’s motion to withdraw his guilty plea. IV. CONCLUSION For the reasons discussed above, it is hereby ORDERED that the Magistrate Judge’s denial [47] of defendant’s unopposed motion to withdraw his guilty plea is REVERSED; and it is furthermore ORDERED that defendant’s appeal of the Magistrate Judge’s denial [54] of his motion to reconsider is MOOT. SO ORDERED. Signed by Royce C. Lamberth, Chief Judge, on August 3, 2011. 13	01-03-2023	04-04-2014
https://www.courtlistener.com/api/rest/v3/opinions/2663927/	UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA 16TH & K HOTEL, LP, Plaintiff, Civil Action No. 11-759 (BAH) v. Judge Beryl A. Howell COMMONWEALTH LAND TITLE ) INSURANCE COMPANY, et al., Defendants. MEMORANDUM OPINION The Plaintiff 16th & K Hotel, LP, is the owner of the St. Regis Hotel at 16th and K Streets, N.W. in Washington, D.C. The plaintiff’s plans to expand the hotel to an adjacent lot literally hit an unexpected brick wall, which had not been disclosed on the surveys relied upon in obtaining financing for the construction. In this case, the plaintiff sues the surveyors and the title insurer for over $23,000,000 in damages due to the alleged nondisclosure on the surveys of a party wall with an adjoining property. Pending before the Court is the motion by the defendant title insurer, Commonwealth Land Title Insurance Company (hereinafter “Commonwealth”), to dismiss the action against it, pursuant to Federal Rule of Civil Procedure 12(b)(7), for failure to join the plaintiff’s lenders as “necessary parties in this case.” Commonwealth P. & A. Supp. Mot. Dismiss, ECF No. 8, at 2-3. For the reasons set forth below, this motion is DENIED. 1 1 The Court has diversity jurisdiction over this matter pursuant to 28 U.S.C. § 1332 because the amount in controversy exceeds the jurisdictional limit and the parties have complete diversity of citizenship. 1 I. BACKGROUND The plaintiff, a Delaware limited partnership, purchased the St. Regis Hotel, located at 923 16th Street, N.W., in 2005 and thereafter explored the feasibility of expanding the hotel’s facilities by purchasing an adjacent lot with a townhouse at street address 1528 K Street, N.W. (referred to as “Parcel Two” in this litigation). Compl. ¶¶ 9-10, 12-13. 2 From 2005 through 2007, the plaintiff contracted with the surveyors, defendant Bruce C. Landes, who is a resident of Virginia, and defendant Landmark-Fleet Surveyors, P.C., a Virginia professional corporation with its principal place of business in Virginia, to prepare a series of certified surveys of Parcel Two. Id. ¶¶ 14, 16, 51; Commonwealth Cross-Claim, ECF No. 15, ¶¶ 2-3. The defendant surveyors supplied surveys of Parcel Two in December 2005, November 2006, December 2006, April 2007, and July 2007. Compl. ¶¶ 16, 51; see also Commonwealth Cross-Claim, ECF No. 15, ¶¶ 8-13. These surveys consistently showed that the townhouse on Parcel Two was a “free- standing structure, without material easements or encroachments thereon.” Compl. ¶¶ 17, 51. The plaintiff “reasonably concluded” that the townhouse could be fully demolished and redeveloped as part of the needed hotel facilities and, consequently, in April 2006, purchased Parcel Two. Id. ¶¶ 32-33. Thereafter, in 2006, the plaintiff commenced extensive renovations on the St. Regis, plans for which included demolition of the townhouse on Parcel Two and reconstruction of an addition to the hotel on that parcel. Id. ¶¶ 32, 35. In connection with a modification of its construction financing, plaintiff purchased from Commonwealth, a Nebraska corporation with its principal place of business in Jacksonville, Florida, an Owner’s Policy of Title Insurance, Policy No. 08-001112, issued on April 2, 2008, for an insurance amount of $172 million (hereinafter the “Owner’s Policy”). Id. ¶ 38; 2 The Complaint also indicates that Parcel Two “bears a street address of 1522 K Street, N.W.,” Compl. ¶ 22, but this address is elsewhere identified as that of the property adjoining and sharing a party wall with Parcel Two. See Commonwealth Cross-Claim, ECF No. 15, ¶ 8. 2 Commonwealth Cross-Claim, ECF No. 15, ¶ 1; Compl., Ex. A, Owner’s Policy of Title Insurance, at 4. The Owner’s Policy insured plaintiff “against, inter alia, loss or damage sustained or incurred by the reason of defect in or lien or encumbrance on or unmarketability of title for [the St. Regis] and Parcel Two.” Compl. ¶¶ 37-38; see also Commonwealth Answer, ECF No. 15, ¶ 38 (“Commonwealth admits that it sold Owner’s Policy No. 08-001112 to the Plaintiff”). 3 The Owner’s Policy is a binding agreement between the plaintiff and defendant Commonwealth. Compl. ¶ 67; Commonwealth Answer, ECF No. 15, ¶ 67. The Owner’s Policy includes a so-called “ALTA 16 Mezzanine Endorsement,” which provides that Barclays Capital Real Estate Finance, Inc. (hereinafter “plaintiff’s Mezzanine Lender”) has an interest in some or all of the proceeds of any claim under the Owner’s Policy up to the amount of the outstanding indebtedness under the Mezzanine Loan between the plaintiff and the Mezzanine Lender. Compl. Ex. A, Owner’s Policy of Title Insurance; Commonwealth Mot. Dismiss, ECF No. 8, Ex. A-1, Mezzanine Endorsement, at 1-2; Commonwealth Cross- Claim, ECF No. 15, ¶ 17. 4 The Mezzanine Endorsement states, in relevant part, that: 2.(a) [the Plaintiff] has assigned to the Mezzanine Lender the right to receive amounts otherwise payable to the insured under this policy, not to exceed the outstanding indebtedness under the Mezzanine Loan; . . . . 3 A year earlier, in February 2007, Commonwealth had issued a Loan Policy of Title Insurance, Policy No. 06-1574, to Barclay’s Capital Real Estate, Inc. (hereinafter “Plaintiff’s Mortgage Lender”) for an insurance amount of $135 million (“Loan Policy”). Pl.’s P. & A. Opp’n Mot. Dismiss, ECF No. 21, at 2 n.2 (hereinafter “Pl.’s Opp’n Mem.”); Commonwealth Cross-Claim, ECF No. 15, ¶ 15. The Loan Policy is not at issue in any count of the Complaint. Pl. Opp’n Mem., at 2 n.2. 4 “[A] mezzanine loan is secured not by the real property itself, but by stock of or some ownership interest in the company that owns the real property. In the area of real estate finance, a mezzanine loan is typically used by developers to secure supplementary financing for development projects in cases where the primary mortgage or construction loan equity requirements are larger than [ten percent].” Ramco Hartland L.L.C. v. Landmark/Mansour Dev. LLC, No. 294877, 2011 Mich. App. LEXIS 233, at 9-10 (Mich. Ct. App. Feb. 8, 2011) (alteration in original) (internal quotations and citations omitted). 3 6. (a) that the amount of insurance under this policy shall be reduced by any amount [Commonwealth] may pay under any policy insuring a mortgage to which exception is taken in Schedule B . . . and the amount so paid shall be deemed a payment under this policy; . . . 7. If the insured, the Mezzanine Lender or others have conflicting claims to all or part of the loss payable under the Policy, [Commonwealth] may interplead the amount of the loss into Court. The insured and the Mezzanine Lender shall be jointly and severally liable for [Commonwealth’s] reasonable cost for the interpleader and subsequent proceedings, including attorney’s fees. [Commonwealth] shall be entitled to payment of the sums for which the Insured and Mezzanine Lender are liable under the preceding sentence from the funds deposited into Court, and it may apply to the Court for their payment. Commonwealth Mot. Dismiss, ECF No. 8, Ex. A-1, Mezzanine Endorsement, at 1-2. In late April 2008, while construction on Parcel Two was underway, the plaintiff first discovered the existence of the party wall and immediately stopped construction. Compl. ¶ 52; Commnwealth Cross-Claim, ECF No. 15, ¶ 18. The party wall, which is 12 inches wide, serves as both the east wall of the townhouse on Parcel Two and the west wall of the office building on the adjoining property at 1522 K Street, N.W. Compl. ¶ 52; see also Commonwealth Cross- Claim, ECF No. 15, ¶ 8. The existence of the party wall, which was not disclosed on any of the surveys supplied by the defendant surveyors, rendered Parcel Two “substantially useless” to the plaintiff. Compl. ¶¶ 53, 59. The plaintiff claims that it has incurred damages in excess of $23,000,000 due to the costs of repairing the damage to the party wall, restoring the townhouse 4 on Parcel Two and its inability to meet its deadlines and obligations under the original construction plans. Id. ¶¶ 58, 73. Subsequent to the discovery of the party wall, in January 2009, Barclays Capital Real Estate, Inc., which was the plaintiff’s Mortgage Lender, and Barclays Capital Real Estate Finance, Inc., which was the plaintiff’s Mezzanine Lender (hereinafter collectively referred to as “plaintiff’s Lenders”), notified Commonwealth of their claims for reimbursement of their losses against Commonwealth under both plaintiff’s Owner’s Policy and under the Loan Policy. See Commonwealth Mot. Dismiss, ECF No. 8, Ex. B, Notice of Claim Letter from plaintiff’s Lenders to Commonwealth dated Jan. 16, 2009, at 1-2; 5 Commonwealth Cross-Claim, ECF No. 15, ¶¶ 19-20. 6 Both of the plaintiff’s Lenders are Delaware corporations, with their principal place of business in New York. Commonwealth P. & A. Supp. Mot. Dismiss, ECF No. 8, at 2. According to the plaintiff, a “Substitute Trustees’ Deed” indicates that, in March 2011, the plaintiff’s Mortgage Lender recorded a Notice of Foreclosure with the District of Columbia Recorder of Deeds and, a month later, sold “the subject real property” 7 at public auction for $25,000,000 to STR DC, LLC, a Delaware limited liability company, which thereafter assigned its right, title and interest to SRDC8 OWNER, LLC. See Pl.’s P. & A. Opp’n Mot. Dismiss, ECF 5 Commonwealth indicates that “Barclays” may have assigned its loan to a third party, whose identity is likely known by the plaintiff, but does not make clear whether this “Barclays” reference is to one or both of plaintiff’s Lenders. Commonwealth P. & A. Supp. Mot. Dism., ECF No. 8, at 2. 6 Commonwealth asserts that it determined that the plaintiff’s loss was $141,114.00, an amount which it has offered and continues to be willing to pay to the plaintiff or its lender, whichever is entitled to payment. Commonwealth Cross-Claim, ECF No. 15, ¶ 21. 7 While the Court assumes that the plaintiff refers, in whole or part, to Parcel Two, this is not clear from the Substitute Trustees’ Deed, which pertains to property on lot numbered 65 in square numbered 199, as per plat recorded in the Office of the Surveyor for the District of Columbia. Pl.’s Opp’n Mot. Dismiss, ECF No. 21, Ex. A, Substitute Trustees’ Deed, at 4. This lot number, however, differs from that provided for Parcel Two in other documentation provided by the parties. Cf. Compl. ¶13 (Parcel Two is on lot 814 in square numbered 199); Commonwealth Reply Supp. Mot. Dismiss, ECF No. 22, Ex. A, Deed of Trust between the plaintiff and Mortgage Lender, at 27 (same). 5 No. 21 (hereinafter “Pl.’s Opp’n Mem.”), at 3; Pl.’s Opp’n Mot. Dismiss, ECF No. 21, Ex. A, Substitute Trustees’ Deed. Plaintiff initiated this suit in Superior Court of the District of Columbia on March 31, 2011, and the Defendant Commonwealth removed it to this Court on April 20, 2011. Notice of Removal, ECF No. 1, ¶ 1. The Complaint contains four counts, asserting, in Count I, breach of the Owner’s Policy against defendant Commonwealth and, in Counts II through IV, negligence against the defendant surveyors. Compl. ¶¶ 66-100. On April 25, 2011, the defendant filed the pending motion to dismiss. 8 Commonwealth Mot. Dismiss, ECF No. 8. II. DISCUSSION Defendant Commonwealth urges the Court either to require the plaintiff to join its Lenders as party plaintiffs or to dismiss this action since, without joinder of the plaintiff’s Lenders, any judgment in this case will not accord complete relief among the existing parties, the plaintiff’s Lenders’ ability to protect their interests will be impaired, and defendant Commonwealth will be subject to “substantial risk of incurring inconsistent obligations.” Commonwealth P. & A. Supp. Mot. Dismiss, ECF No. 8, at 1. The Court, however, is not persuaded that the plaintiff’s Lenders are required parties in this action. A. LEGAL STANDARD Federal Rule of Civil Procedure 12(b)(7) permits dismissal of a complaint for failure to join a party under Rule 19, but courts are generally “reluctant to grant motions to dismiss of this type.” 5C Charles A. Wright & Arthur R. Miller, Federal Practice & Procedure § 1359 (3d ed. 2004); FED. R. CIV. P. 12(b)(7). In evaluating the need for the absent person under Rule 12(b)(7), 8 All three defendants, including Commonwealth, have filed answers to the Complaint, and Commonwealth has cross-claims against the surveyor co-defendants for negligent misrepresentation and negligence. See Commonwealth’s Answer, Affirmative Defenses, and Cross-Claims, ECF No. 15; Bruce C. Landes and Landmark- Fleet Surveyors’ Answer, ECF No. 10. 6 the court must accept as true the allegations in the complaint, and may also consider extrinsic evidence submitted by the parties. Davis Cos. v. Emerald Casino, Inc., 268 F.3d 477, 479 n.2, 480 n.4 (7th Cir. 2001); Raytheon Co. v. Cont’l Cas. Co., 123 F. Supp. 2d 22, 32 (D. Mass. 2000). The burden is on the defendant seeking dismissal for failure to name an absent person to show “the nature of the interest possessed by an absent party and that the protection of that interest will be impaired by the absence.” Citadel Inv. Grp., L.L.C. v. Citadel Capital Co., 699 F. Supp. 2d 303, 317 (D.D.C. 2010) (quoting Citizen Band Potawatomi Indian Tribe of Okla. v. Collier, 17 F.3d 1292, 1293 (10th Cir. 1994)); see also Lenon v. St. Paul Mercury Ins. Co., 136 F.3d 1365, 1372 (10th Cir. 1998); Ilan-Gat Eng’rs, Ltd. v. Antigua Int’l Bank, 659 F.2d 234, 242 (D.C. Cir. 1981). The moving party may carry its burden “by providing affidavits of persons having knowledge of these interests as well as other relevant extra-pleading evidence.” Citadel Inv. Grp., L.L.C., 699 F. Supp. 2d at 317 (internal quotation marks omitted); see generally 5C Charles A. Wright & Arthur R. Miller, Federal Practice & Procedure § 1359 (3d ed. 2004). Thus, courts may consider both exhibits to pleadings and materials outside the pleadings in resolving a motion to dismiss under Rule 12(b)(7), without converting the motion into a Rule 56 motion for summary judgment. Three Affiliated Tribes of the Fort Berthold Indian Reservation v. United States, 637 F. Supp. 2d 25, 29 (D.D.C. 2009); see also Anderson v. Hall, 755 F. Supp. 2, 5 (D.D.C. 1991). Federal Rule of Civil Procedure 19 prescribes a three-part test for determining whether litigation may proceed in the absence of a particular person. Capitol Med. Ctr., LLC v. AmeriGroup Md., Inc., 677 F. Supp. 2d 188, 191-92 (D.D.C. 2010); OAO Healthcare Solutions, Inc. v. Nat’l Alliance of Postal & Fed. Emps., 394 F. Supp. 2d 16, 19 (D.D.C. 2005); FDIC v. 7 Bank of N.Y., 479 F. Supp. 2d 1, 9 (D.D.C. 2007); Pueblo of Sandia v. Babbitt, 47 F. Supp. 2d 49, 52 (D.D.C. 1999). First, the Court must determine if the absent person is required for a just adjudication. OAO Healthcare Solutions, 394 F. Supp. 2d at 19. In making the determination of whether the absent person “must be joined,” the court considers the factors set forth in Rule 19(a)(1). Id. Specifically, the court must consider whether “in that person’s absence, the court cannot accord complete relief among existing parties” or proceeding would either (i) impair the absent person’s ability to protect its interest or (ii) leave an existing party subject to a substantial risk of incurring double, multiple or otherwise inconsistent obligations because of the absent person’s interest in the action. FED. R. CIV. P. 19(a). Second, after making the threshold determination that an absent person is required to be a party under Rule 19(a)(1), the Court must determine whether joinder of the person is feasible. FED. R. CIV. P. 19(b). Finally, if the absent person required as a party cannot be joined, the court must determine whether in equity and in good conscience, the action should proceed among the existing parties or be dismissed. FED. R. CIV. P. 19(b). As the Supreme Court observed, “[r]equired persons may turn out not to be required for the action to proceed after all.” Republic of Philippines v. Pimentel, 553 U.S. 851, 863 (2008). Rule 19(b) outlines a nonexclusive set of “overlapping” factors to be considered in making this determination, including (1) the extent to which judgment rendered in the person’s absence might be prejudicial to that person or existing parties; (2) “the extent to which any prejudice could be lessened or avoided by protective provisions in the judgment, shaping of relief, or other measures;” (3) “whether a judgment rendered in the person’s absence would be adequate;” and (4) “whether the plaintiff would have an adequate remedy if the action is dismissed for nonjoinder.” FED. R. CIV. P. 19(b)(1)-(4); see 8 also Commentary to 1966 Amendment to FED. R. CIV. P. 19. “[M]ultiple factors must bear on the decision whether to proceed without a required person. This decision ‘must be based on factors varying with the different cases, some such factors being substantive, some procedural, some compelling by themselves, and some subject to balancing against opposing interests.’” Pimentel, 553 U.S. at 863 (quoting Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U.S. 102, 119 (1968)). Applying each part of this test is a fact-specific inquiry that “can only be determined in the context of particular litigation.” Provident Tradesmens Bank & Trust Co., 390 U.S. at 118; see also Kickapoo Tribe of Indians of the Kickapoo Reservation in Kansas v. Babbitt, 43 F.3d 1491, 1495 (D.C. Cir. 1995) (Rule 19 calls for “a pragmatic decision based on practical considerations in the context of particular litigation”); KPMG Fin. Advisory Servs.v. Diligence LLC, No. 05-cv-2204, 2006 U.S. Dist. LEXIS 8241, at 6-8 (D.D.C. Feb. 14, 2006) (same); Primax Recoveries, Inc. v. Lee, 260 F. Supp. 2d 43, 50 (D.D.C. 2003) (same). Based upon the record before the Court, 9 the plaintiff’s absent Lenders are not required parties to this lawsuit. The Court need not therefore consider the second and third parts of the test under Rule 19, namely, whether joinder of the plaintiff’s absent Lenders is feasible and, if infeasible, whether the case should be dismissed. B. DISCUSSION The crux of defendant Commonwealth’s motion is that the Owner’s Policy obligates it to 9 In addition to the pleadings, the parties have supplemented the record for this motion with the following six documents: (1) Owner’s Policy of Title Insurance, Compl., Ex. A; Commonwealth Mot. Dismiss, ECF No. 8, Ex. A- 1; (2) Loan Policy of Title Insurance, Commonwealth Mot. Dismiss, ECF No. 8, Ex. B at 5-37; (3) Plaintiff’s Notice of Claim Letter dated August 14, 2008 to Commonwealth under the Owner’s Policy, Commonwealth Mot. Dismiss, ECF No. 8, Ex. B, at 3-4; (4) Notice of Claim Letter from plaintiff’s Lenders to Commonwealth dated Jan. 16, 2009, Commonwealth Mot. Dismiss, ECF No. 8, Ex. B, at 1-2; (5) Substitute Trustees’ Deed dated May 12, 2011 for Lot numbered 65 in Square numbered 199, Pl.’s Opp’n Mot. Dismiss, ECF No. 21, Ex. A; (6) Construction Deed of Trust dated Feb. 1, 2007 from plaintiff, as borrower, to Lawyers Title Realty Services, Inc, as Trustee, for benefit of Barclays Capital Real Estate, Inc., Commonwealth Reply Supp. Mot. Dismiss, ECF No. 22, Ex. A. 9 pay, first, the plaintiff’s Mortgage Lender and the Mezzanine Lender at least the first $135,000,000 of any proper claim and, then, the plaintiff any amount in excess of the amount owed to both Lenders up the total amount of the insurance of $172,000,000. 10 Defendant Commonwealth asserts that the primacy of both Lenders’ claims makes them “necessary parties” to adjudication of Count I of the Complaint against it for breach of the Owner’s Policy. 11 Commonwealth P. & A. Supp. Mot. Dismiss, ECF No. 8, ECF No. 8, at 2-3. In these circumstances, unless joinder is required, Commonwealth argues that (1) “the Court cannot grant complete relief among the parties” since, under the Owner’s Policy, Commonwealth cannot pay any claim to plaintiff without paying the first $135,000,000 to the Mortgage Lender and some unknown amount to the Mezzanine Lender, id. at 3; (2) the Lenders will be unable to protect their own interests if Commonwealth is required to pay a judgment in the instant suit to the plaintiff rather than to the Lenders, id.; and (3) the Lenders would be able to assert claims against Commonwealth and thereby subject the latter to multiple suits, with “a substantial risk of incurring multiple and possibly inconsistent obligations, when pursuant to its contractual obligations, Commonwealth is obligated to the lender for the first $135 million of any proper claim and then to Plaintiff for the amounts in excess of $135 million, up to $172 million.” Id. Each of these arguments is addressed seriatim below. 10 Commonwealth asserts that the Mortgage Lender is due the “proceeds of any insurance policies until the Mortgage Lender’s $135 million loan is satisfied in full” and the Mezzanine Lender is due “amounts otherwise payable to the insured under this [Owner’s] policy, not to exceed the outstanding indebtedness under the Mezzanine loan, the amount of which is unknown.” Commonwealth Reply Supp. Mot. Dismiss, ECF No. 22, at 3. 11 Both parties use the terms “necessary” or “indispensable,” rather than “required,” person as used in the current version of Rule 19. Vann v. Kempthorne, 534 F.3d 741, 745 (D.C. Cir. 2008) (“The words ‘necessary’ and ‘indispensable’ have become obsolete in the Rule 19 context as a result of stylistic changes to the Rule”); Pimentel, 553 U.S. at 862-63 (2008) (noting the replacement in Rule 19 of “necessary” with “required,” and the deletion of “indispensable” and observing that “the term ‘indispensable party’ might have implied a certain rigidity” that would be in tension with this case-specific approach. The word ‘indispensable’ had an unforgiving connotation that did not fit easily with a system that permits actions to proceed even when some persons who otherwise should be parties to the action cannot be joined.”); Orff v. United States, 545 U.S. 596, 602-03 (2005) (“Though the Rule no longer describes such parties as “necessary,” “necessary party” is a term of art whose meaning parallels Rule 19(a)’s requirements.”). 10 First, neither of the plaintiff’s Lenders is required for the Court to grant complete relief among the parties to this action. The Complaint in Count One alleges that Commonwealth has breached its obligations under the Owner’s Policy, to which only the plaintiff and Commonwealth are in direct privity. Commonwealth’s relationship with the plaintiff under the Owner’s Policy is different from its relationship with the Lenders. Indeed, payment of any policy proceeds to the plaintiff’s Lenders is entirely contingent upon whether plaintiff’s claim under the policy is viable and has merit. In other words, if plaintiff’s claim against Commonwealth is not sustained, the Lenders are entitled to none of the proceeds. See, e.g., Wometco Home Theatre, Inc. v. Lumbermens Mut. Cas. Co., 468 N.Y.S.2d 625 (N.Y. App. Div. 1983) (“[A]’loss payee’ is not itself an insured under the policy; it is merely the designated person to whom the loss is to be paid. It is established that such a loss payee may only recover if the insured could have recovered.”). A loss payee is “a mere appointee to receive the proceeds to the extent of his interest.” Granite State Ins. Co. v. Employers Mut. Ins. Co., 609 P.2d 90, 92 (Ariz. Ct. App. 1980) (quoting 5A J. Appleman, Insurance Law and Practice § 3335). The fact that if the plaintiff’s claim against the defendant Commonwealth is successful, the plaintiff’s Lenders may be entitled to payment from the proceeds of the Owner’s Policy, does not mean that relief is incomplete or inadequate among the existing parties. Accord Bedel v. Thompson, 103 F.R.D. 78, 80 (S.D. Ohio 1984) (“The ‘complete relief’ provision of Rule 19 relates to those persons already parties and does not concern any subsequent relief via contribution or indemnification for which the absent party might later be responsible.”). Joinder of the Lenders as parties is simply “not integral to the fair disposition of the contract claims at issue,” and they therefore are not required to be joined. See OAO Healthcare Solutions, Inc., 11 394 F. Supp. 2d at 20 (joinder of OPM not required in breach of contract action, even though agency was responsible for plaintiff’s termination and evaluation of plaintiff’s performance under subcontract); Sorrels Steel Co., Inc. v. Great Sw. Corp., 906 F.2d 158, 168 (5th Cir. 1990) (when complete relief, including damages, can be provided, absent person is not indispensable). Second, defendant Commonwealth raises concern over impairment of the plaintiff’s Lenders’ ability to protect their interests in the Owner’s Policy proceeds if they are not joined. Since any interest these Lenders may have in the policy proceeds is wholly contingent on the success of the plaintiff’s claim, the Lenders’ interests are not impaired but rather protected by the fact that the plaintiff is asserting a claim in this lawsuit. The case of Markel American Ins. Co. v. Cockrell, No. 06-cv-603, 2008 U.S. Dist. LEXIS 8085 (M.D. La. 2008), which is relied upon by the plaintiff, is particularly apposite for the proposition that a loss payee in the position of plaintiff’s Lenders is not a required party. In Cockrell, the plaintiff insurance company issued an insurance policy to the defendant for a boat, which subsequently crashed while the defendant was operating it. Id. at 5-6. The plaintiff insurance company then filed a declaratory judgment action against the defendant insured seeking a declaration that any damage to the boat was excluded under the policy due to the insured’s operation of the boat while intoxicated. Id. The insured counterclaimed for damages. Id. at 2. The plaintiff sought dismissal of the counterclaim for failure to join the lender bank, which was “listed as a mortgagee under a loss payable clause contained in the insurance policy.” Cockrell, 2008 U.S. Dist. LEXIS 8085, at 7. The plaintiff insurance company argued, similarly to Commonwealth in the instant matter, that without the absent mortgagee, complete relief could not be obtained and the insurance company “may be subject to additional, inconsistent lawsuits.” Id. at 6. The court rejected these 12 grounds, noting that the “mortgagee is only a conditional appointee of the mortgagor to receive part of the proceeds in case of loss,” and “recovers solely on the right of the mortgagor.” Id. at 7. The court found that the lender bank’s “interests are derivative of the [insured’s] rights under the insurance contract, and as such, the [insured’s] assertion of rights under the policy adequately protects [the lender bank’s] derivative interest and shields [the insurer] from independent lawsuits by [the lender bank].” Id. at 8-9. As a result, the court denied the insurance company’s motion to dismiss the counterclaim for failure to join the lender bank as an indispensable party under Rule 19. Id. at 9. Similarly, here, the plaintiff’s Lenders’ interests in the Owner’s Policy at issue are entirely derivative of the plaintiff. If the plaintiff has satisfied its debts to the Lenders, the plaintiff’s Lenders have no interest whatsoever in the Owner’s Policy, let alone an interest that would be unprotected in their absence. Finally, defendant Commonwealth’s assertion that it may be subject to multiple and inconsistent obligations to pay the plaintiff in this lawsuit and then the Lenders in some other lawsuit is incorrect. At the outset, this presumes that the plaintiff will not satisfy its debts, prompting the Lenders to turn to Commonwealth directly for payment from the policy proceeds. This presumption is purely speculative and, in any event, the mere risk of potential litigation is not enough to require joinder. See FDIC v. Bank of New York, 479 F. Supp. 2d 1, 12 (D.D.C. 2007) (“‘In order to qualify as a necessary party under Rule 19(a), the possibility of being subject to multiple or inconsistent obligations must be real, and not a mere possibility.’”) (quoting TRT Telecomm. Corp. v. W. Union Tel. Co., No. 87-cv-2760, 1988 WL 19259, at 2 (D.D.C. 1988)); Daudert v. State Farm Fire & Cas. Co., No. 06-cv-13269, 2007 U.S. Dist. LEXIS 22764, at *12 (E.D. Mich. Mar. 29, 2007) (absent mortgage company “is not a 13 necessary party” warranting dismissal of insured’s suit against casualty insurance company when “if, and only if, [insureds] default on their loan payments will [mortgage company] be in a position to bring suit against Defendant. This potential for litigation is too attenuated to require joinder at this juncture. Complete relief can be accorded without joining [mortgage company] to this action.”). Whether the plaintiff has any continuing indebtedness to the Lenders and, if so, the amount of such debt, is entirely unclear from the current record. The fact that both Lenders provided Commonwealth with notice of potential claims under the Owner’s Policy and Loan Policy in January 2009, over two and one-half years ago, does not mean they continue to carry any of plaintiff’s debt that might be subject to payment from the proceeds of the Owner’s Policy. 12 Should it become clear during the course of discovery that the Lenders have a continuing interest in the proceeds of the Owner’s Policy, reconsideration of their joinder may be appropriate. To the extent that the plaintiff has continuing indebtedness to the Lenders that may be subject to satisfaction from the proceeds of the Owner’s Policy, the Lenders may seek those funds directly from the plaintiff without the necessity of being parties to the instant lawsuit. Moreover, defendant Commonwealth should have no concern regarding a “double” or “multiple” recovery against it because liability under the Owner’s Policy is limited to the amount owed to the plaintiff. Commonwealth P. & A. Supp. Mot. Dismiss, ECF No. 8, at 3. In other words, defendant Commonwealth owes no more to the plaintiff’s Lenders than is owed to 12 The plaintiff is vague, at best, on the amount owed under the mortgage and Mezzanine Loan, stating only “while the exact amount of [plaintiff’s] remaining indebtedness to Barclays Finance, if any, remains unknown, it is certainly not $135,000,000,” and regarding the Mezzanine Loan, “the amounts paid by the purchaser at the . . . foreclosure auction must be applied against underlying indebtedness.” Pl.’s Opp’n Mem., at 5. The plaintiff’s own purported lack of clarity about the precise amounts, if any, that it owes to its Lenders is puzzling, but resolution of the exact amount, if any, of plaintiff’s continued indebtedness to the Lenders is not necessary for resolution of this motion. 14 the plaintiff. In this respect, the plaintiff is sole possessor of the contractual claim against Commonwealth. See Primax Recoveries, Inc. v. Lee, 260 F. Supp. 2d 43, 51 (D.D.C. 2003) (holding that joinder was not required where plaintiff was the “sole possessor of the rights being asserted” and hence no multiple or inconsistent obligations could arise). Should the plaintiff have any remaining indebtedness to the Lenders, and Commonwealth is found liable to pay proceeds under the Owner’s Policy in excess of the $141,114 to which it concedes liability, Commonwealth Cross-Claim, ECF No. 15, ¶ 21, it may interplead that amount, in accordance with the terms of the Mezzanine Endorsement for payment to the plaintiff or Lenders, as appropriate and at no cost to itself. Under the Mezzanine Endorsement, Commonwealth is entitled to payment of the costs, including attorney’s fees, for all such interpleader proceedings. Defendant Commonwealth has not shown that the plaintiff’s Lenders are required parties to this action and, thus, no inquiry under Rule 19(b) is necessary. See Temple v. Synthes Corp., 498 U.S. 5, 8 (1990) (when Rule 19(a) threshold requirements not satisfied, Rule 19(b) analysis not necessary). III. CONCLUSION Defendant Commonwealth has failed to establish that the plaintiff’s Lenders are required parties to this action and, therefore, its motion to dismiss under Rule 12(b)(7) for failure to join a party under Rule 19 is DENIED. An order consistent with this memorandum opinion will be entered. DATED: AUGUST 3, 2011 /s/ Beryl A. Howell BERYL A. HOWELL United States District Judge 15	01-03-2023	04-04-2014
https://www.courtlistener.com/api/rest/v3/opinions/3283600/	Upon the authority of the case entitled In the Matter of theNaturalization of August Hermann Sielcken, ante, p. 538, [197 P. 668], the petition for a writ of review herein is dismissed. *Page 792	01-03-2023	07-05-2016
https://www.courtlistener.com/api/rest/v3/opinions/4240647/	Fourth Court of Appeals San Antonio, Texas January 23, 2018 No. 04-17-00369-CV CITY OF SAN ANTONIO, Appellant v. John AGUERO, Appellee From the County Court at Law No. 2, Bexar County, Texas Trial Court No. 388746 Honorable Judge Timothy Johnson, Judge Presiding ORDER The appellee’s unopposed motion for extension of time to file brief is hereby GRANTED. _________________________________ Rebeca C. Martinez, Justice IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the said court on this 23rd day of January, 2018. ___________________________________ KEITH E. HOTTLE, Clerk of Court	01-03-2023	01-31-2018
https://www.courtlistener.com/api/rest/v3/opinions/1491973/	818 F. Supp. 1534 (1993) Gabriel SCHLOSSER, Plaintiff, v. Pamela COLEMAN, et al., Defendants. No. 90-1406-CIV-T-17B. United States District Court, M.D. Florida, Tampa Division. April 20, 1993. 1535 Gabriel Schlosser, Sarasota, FL, pro se. Stephanie A. Daniel, Tallahassee, FL, for defendants. ORDER KOVACHEVICH, District Judge. Plaintiff, a former prisoner, commenced this pro se action pursuant to 42 U.S.C. § 1983 on November 8, 1990. On October 21, 1992, the Court ordered Plaintiff to complete and return summons and 285 forms within 20 days. On November 21, 1991, the Court dismissed this case for Plaintiff's failure to complete and return summons and 285 forms within the time allotted. On December 1, 1992, Plaintiff filed a motion for reinstatement of the case for excusable neglect. On January 7, 1992, the Court stayed ruling on Plaintiff's motion pursuant to Plaintiff's completing summons and 285 forms. The Court stated, "If Plaintiff returns completed summons and 285 forms within 30 days of the date of this order, the Court will grant Plaintiff's motion for reinstatement of the case for excusable neglect and will direct the Clerk to reopen the case." After the Court granted several motions for extension of time to complete summons and 285 forms, Plaintiff returned the completed forms and the Court ordered the Marshal to serve Defendants on April 29, 1992. Return of service was executed by James Parker and Michael O'Brien. However, service was returned unexecuted as to Pamela Coleman on May 13, 1992. On May 26, 1992, Defendants Parker and O'Brien filed a motion to dismiss Plaintiff's amended complaint, although the Court had no record of an amended complaint having been filed. The Court ordered Plaintiff to respond to Defendants' motion to dismiss on June 18, 1992. On July 1, 1992, Plaintiff filed a motion for extension of time to respond to the motion to dismiss. Plaintiff stated that he had been released from prison on June 23, 1992. On July 22, 1992, the Court granted Plaintiff's motion for reinstatement of this case for excusable neglect and granted Plaintiff's motion for an extension of time to respond to Defendants' motion to dismiss. On August 6, 1992, the Court ordered Plaintiff to complete and return a new Affidavit of Indigency. On August 25, 1992, Plaintiff filed a motion to have service of process reattempted on Defendant Coleman and a motion to proceed in forma pauperis. On September 3, 1992, Plaintiff filed a motion to amend the complaint and a memorandum in opposition to the motion to dismiss. 1536 On September 25, 1992, the Court granted Plaintiff's motion to file an amended complaint but denied Plaintiff's motion to proceed in forma pauperis. The court ordered Plaintiff to pay the $120.00 filing fee.[1] The court also denied Plaintiff's motion to have service of process reattempted on Defendant Coleman because Plaintiff was no longer indigent, and was, therefore, responsible for service. Plaintiff filed his amended complaint on October 14, 1992. On December 11, 1992, Defendants Parker and O'Brien filed a motion to dismiss Plaintiff's amended complaint. On February 2, 1993, the Court ordered Plaintiff to file his response to Defendants' motion to dismiss the amended complaint. Plaintiff filed his response on March 19, 1993. Pamela Coleman has not been served. Therefore, the complaint will be dismissed, without prejudice, as to this Defendant, pursuant to Rule 4(j) of the Federal Rules of Civil Procedure. PLAINTIFF'S ALLEGATIONS In this action pursuant to 42 U.S.C. § 1983 Plaintiff sues suing Pamela Coleman, Plaintiff's probation officer; Michael O'Brien, an assistant state attorney; and the Honorable James Parker, formerly a circuit court judge in the Twelfth Judicial Circuit of Florida and now a judge on the Second District Court of Appeals of Florida. Plaintiff alleges that the Defendants violated his rights as guaranteed under the Fourth, Sixth, Eighth, and Fourteenth Amendments to the United States Constitution. Specifically, Plaintiff alleges that the Defendants denied him substantive and procedural due process; imposed cruel and unusual punishment; imposed excessive bail; and maliciously prosecuted him for violation of his probation because a false warrant was issued without probable cause. According to Plaintiff, Ms. Coleman issued a warrant for his arrest for the "technical violation for the nonpayment of monthly supervision fees of $40.00 per month." Plaintiff claims that the probable cause affidavit for this warrant was false because the Florida Department of Corrections records, which Ms. Coleman allegedly did not check before signing the affidavit, stated that all of Plaintiff's monthly supervision payments had been paid. The warrant was further flawed, according to Plaintiff, because Ms. Coleman based the issuance of the warrant on Plaintiff's failure to pay restitution according to the terms of a plea agreement. Plaintiff asserts that Ms. Coleman knew that he was financially unable to pay his restitution and that the plea agreement allowed him to forego his restitution payments. Plaintiff further alleges that Defendant O'Brien conspired with Ms. Coleman to violate his probation when Defendant O'Brien approved the arrest warrant knowing that the information in the warrant was false and untrue. Plaintiff states that Defendant O'Brien acted as an "advisor" to Ms. Coleman when Defendant O'Brien allowed her allegedly false statements to be used as probable cause for the arrest warrant. Plaintiff adds Defendant Parker to this alleged conspiracy by asserting that Defendant Parker conspired with the other Defendants to keep Plaintiff in jail without probable cause and that Defendant Parker denied Plaintiff a bail hearing. Plaintiff argues that Defendant Parker knew the warrant was false since the judge had accepted the plea agreement in question. Plaintiff asserts that Defendant Parker's sole reason for approving the warrant was to "teach him a lesson." At some point, Plaintiff's probation was reinstated. Shortly thereafter, in September, 1988, Plaintiff was arrested on what this Court assumes to be a different warrant from the one previously discussed. According to Plaintiff, Defendant Parker heard this case as well and set bail at $600,000.00. Plaintiff alleges that, in imposing this bail, Defendant Parker denied him access to the courts and the opportunity to defend himself. Plaintiff also alleges that Defendant Parker conspired with Defendant O'Brien to deny him access to the courts when they did not allow him to attend a bond reduction hearing. In sum, Plaintiff alleges that all of the Defendants acted in conspiracy with each other to maliciously allow Plaintiff to be arrested. Apparently, Plaintiff's liability theory is based on his erroneous interpretation of 1537 his plea agreement. The agreement states in part that Plaintiff was to pay $10,000.00 in restitution by a certain date and that if the money was not paid, the plea was "null and void." Plaintiff argues that this language means that he did not have to pay restitution. A more accurate reading is that Plaintiff had to pay restitution and if he did not, the state was free to prosecute him on the original charges. Plaintiff seeks punitive and compensatory damages, injunctive relief, and attorney's fees. STANDARD FOR DISMISSAL In determining whether to grant a Fed. R.Civ.P. 12(b)(6) motion, the Court primarily considers the allegations in the complaint. For purposes of the motion to dismiss, the complaint is construed in the light most favorable to Plaintiff and its allegations are taken as true. 5 C. Wright and A. Miller, Federal Practice and Procedure § 1357 (1969). A motion to dismiss will be denied unless it appears beyond all doubt that Plaintiff can prove no set of facts in support of his claims that would entitle him to relief. Luckey v. Harris, 860 F.2d 1012, 1016 (11th Cir.1988), reh'g denied en banc, 896 F.2d 479 (11th Cir.1989), and cert. denied, 495 U.S. 957, 110 S. Ct. 2562, 109 L. Ed. 2d 744 (1990). The allegations in the complaint must be taken as true for purposes of the motion to dismiss. Id. In the case of a pro se action, moreover, the Court should construe the complaint more liberally than it would formal pleadings drafted by lawyers. Hughes v. Rowe, 449 U.S. 5, 9, 101 S. Ct. 173, 175, 66 L. Ed. 2d 163 (1980) (per curiam). After reading Plaintiff's complaint in a liberal fashion, the Court concludes that Plaintiff can prove no set of facts in support of his claim which would entitle him to relief. As previously mentioned, Plaintiff bases much of his cause of action on a misinterpretation of his plea agreement. However, even if his interpretation were correct, this Court would dismiss his claims because Plaintiff has failed to specifically allege a conspiracy and because the Defendants are immune from § 1983 claims for damages and injunctive relief. CONSPIRACY In § 1983 civil rights actions, a complaint containing conclusory, vague, and general allegations of conspiracy will be dismissed as insufficient. Fullman v. Graddick, 739 F.2d 553, 556-57 (11th Cir.1984); Kearson v. Southern Bell Telephone & Telegraph Co., 763 F.2d 405, 407 (11th Cir.1985), cert. denied, 474 U.S. 1065, 106 S. Ct. 817, 88 L. Ed. 2d 790 (1986). In Slotnick v. Staviskey, 560 F.2d 31 (1st Cir.1977), cert. denied, 434 U.S. 1077, 98 S. Ct. 1268, 55 L. Ed. 2d 783 (1978) the court observed that courts insist that plaintiff's state with specificity the facts supporting an allegation of conspiracy in order to control frivolous conspiracy suits under § 1983. The court stated that it "need not conjure up unpleaded facts to support [] conclusory suggestions." Id. at 33. The Eleventh Circuit recently clarified what a § 1983 plaintiff must allege to withstand a motion to dismiss: To prove a 42 U.S.C. § 1983 conspiracy, a plaintiff "must show that the parties `reached an understanding' to deny the plaintiff his or her rights [and] prove an actionable wrong to support the conspiracy." Bendiburg v. Dempsey, 909 F.2d 463, 468 (11th Cir.1990), cert. denied, ___ U.S. ___, 111 S. Ct. 2053, 114 L. Ed. 2d 459 (1991). .... [T]he linchpin for conspiracy is agreement, which presupposes communication.... Bailey v. Board of County Comm'rs of Alachua County, 956 F.2d 1112 (11th Cir.), cert. denied, ___ U.S. ___, 113 S. Ct. 98, 121 L. Ed. 2d 58 (1992). Plaintiff has failed to show that the Defendants reached some sort of understanding. Indeed, according to Plaintiff's allegation, all that the Defendants did was take the usual, required steps to procure an individual's arrest. Plaintiff has failed to describe the nature of the alleged conspiracy, he only claims that one existed. Therefore, Plaintiff's conspiracy allegations are insufficient to state a cause of action and must be dismissed. 1538 JUDICIAL IMMUNITY Judges are absolutely immune from § 1983 damage liability for acts committed within their judicial jurisdiction. See McNamara v. Moody, 606 F.2d 621 (5th Cir.1979), cert. denied, 447 U.S. 929, 100 S. Ct. 3028, 65 L. Ed. 2d 1124 (1980); Humble v. Foreman, 563 F.2d 780 (5th Cir.), reh'g denied, 566 F.2d 106 (5th Cir.1977) (en banc), and overruled in part by Sparks v. Duval County Ranch Co., Inc., 604 F.2d 976 (5th Cir.1979).[2] Judges enjoy only qualified immunity for administrative functions. See Forrester v. White, 484 U.S. 219, 108 S. Ct. 538, 98 L. Ed. 2d 555 (1988) (holding that a state judge is not entitled to absolute immunity for the allegedly unconstitutional discharge of a state employee). If a judge's actions are taken pursuant to a judicial function, the judge will not be deprived of immunity even if his actions are in error, malicious, or in excess of his authority. Stump v. Sparkman, 435 U.S. 349, 356-57, 98 S. Ct. 1099, 1104-05, 55 L. Ed. 2d 331 (1978). When Defendant Parker approved the warrant application, set bail, approved the plea agreement, and oversaw the hearings at issue, he was acting pursuant to his judicial functions. Florida Statutes, section 34.13 (1991) states that a county court judge shall issue arrest warrants upon submission of affidavits from the state attorney. Section 903.03(1) provides that county courts have the jurisdiction "to hear and decide all preliminary motions regarding bail...." Thus, the actions Plaintiff alleges Defendant Parker took fall within the judicial function as defined by the relevant state statutes. Defendant Parker's actions cannot be characterized as administrative in nature. Therefore, Defendant Parker is immune from Plaintiff's § 1983 damages claims. Judges are not immune from § 1983 claims for injunctive relief. Pulliam v. Allen, 466 U.S. 522, 541-42, 104 S. Ct. 1970, 1980-81, 80 L. Ed. 2d 565 (1984).[3] To have standing to seek injunctive relief under Article III of the United States Constitution, a plaintiff must meet three requirements. He must demonstrate that he is likely to suffer future injury, that he is likely to suffer such injury at the hands of the defendant, and that the relief he seeks will likely prevent the injury from occurring. Cone Corp. v. Florida Dept. of Transp., 921 F.2d 1190, 1203-04 (11th Cir.) (citations omitted), cert. denied, ___ U.S. ___, 111 S. Ct. 2238, 114 L. Ed. 2d 479 (1991). In O'Shea v. Littleton, 414 U.S. 488, 493-96, 94 S. Ct. 669, 675-76, 38 L. Ed. 2d 674, judgment vacated sub nom. Spomer v. Littleton, 414 U.S. 514, 94 S. Ct. 685, 38 L. Ed. 2d 694 (1974),[4] the Supreme Court stated that the first requirement is designed to ensure that a case or controversy exists and that it is not satisfied by "general assertions or inferences" that individuals will be prosecuted in the future for violations of valid laws. Id. at 497, 94 S.Ct. at 677. The O'Shea Court found that plaintiffs challenging alleged discriminatory bail-setting, jury selection, and sentencing had no standing to seek an injunction because they did not show that they were likely to be arrested again and subjected to the same challenged practices. Id. at 498, 94 S.Ct. at 677. Thus, according to O'Shea, a plaintiff must not only show that he will likely be subjected to a future injury, but that he will be subject to the same type of injury as has already occurred. In the present case, Plaintiff "requests injunctive relief to prevent Defendant Parker from hearing any further actions of *1539 the Plaintiff in both civil and post conviction appeals...." As in O'Shea, Plaintiff has failed to demonstrate that he is likely to be subjected to the same alleged injury. The fact that Plaintiff's alleged injuries occurred in 1988 and have not been repeated suggests there is little chance of the same injury occurring in the future. Thus, because Plaintiff has failed to allege that he will likely suffer a future injury, Plaintiff has no standing to seek an injunction against Defendant Parker. PROSECUTORIAL IMMUNITY Prosecutors are absolutely immune from § 1983 damage claims for actions which are "an integral part of the judicial process." Imbler v. Pachtman, 424 U.S. 409, 430, 96 S. Ct. 984, 995, 47 L. Ed. 2d 128 (1976). In initiating a prosecution and in presenting the state's case, a prosecutor is immune from a § 1983 damages claim. Id. at 431, 96 S.Ct. at 996. Actions by a prosecutor which are investigative or administrative in nature are subject only to qualified immunity. Fullman v. Graddick, 739 F.2d 553 (1984). The Supreme Court clarified which prosecutorial acts are subject to absolute immunity in Burns v. Reed, ___ U.S. ___, 111 S. Ct. 1934, 1942, 114 L. Ed. 2d 547 (1991) where it held that a prosecutor's appearance in court and the presentation of evidence at that hearing are protected by absolute immunity. The Burns Court also held that a prosecutor receives only qualified immunity for rendering legal advice to police officers. Id. at ___, 111 S.Ct. at 1944. In the instant case, Plaintiff complains of prosecutorial actions which are an integral part of the judicial process. Defendant O'Brien's actions in seeking a warrant for Plaintiff's arrest, including his appearances before Defendant Parker in probable cause hearings, are steps Defendant O'Brien took in initiating a prosecution of Plaintiff for Plaintiff's violation of his probation. Defendant O'Brien was not, as Plaintiff suggests, rendering "advice" to Ms. Coleman when he based the warrant for Plaintiff's arrest on Ms. Coleman's affidavit. Therefore, Defendant O'Brien's actions, including his alleged perjury, are subject to absolute immunity and Plaintiff's claim is dismissed as to Defendant O'Brien. Accordingly, it is ORDERED that Pamela Coleman is dismissed from this action, and that Defendants Parker and O'Brien's motion to dismiss is granted. The Clerk is directed to close this case. DONE AND ORDERED. NOTES [1] Plaintiff paid the filing fee on February 24, 1993. [2] Sparks v. Duval County Ranch Co., Inc., 604 F.2d 976 (5th Cir.1979), cert. granted by Dennis v. Sparks, 445 U.S. 942, 100 S. Ct. 1336, 63 L. Ed. 2d 775, and cert. denied by Sparks v. Duval County Ranch Co., Inc., 445 U.S. 943, 100 S. Ct. 1339, 63 L. Ed. 2d 777, and aff'd, 449 U.S. 24, 101 S. Ct. 183, 66 L. Ed. 2d 185 (1980). [3] But compare, Sun v. Forrester, 939 F.2d 924 (11th Cir.1991), cert. denied, ___ U.S. ___, 112 S. Ct. 1299, 117 L. Ed. 2d 521 (1992) ("[a] judge is absolutely immune from suit in performing his judicial responsibilities"). [4] For a complete history of this case, see the following references: Littleton v. Berbling, 468 F.2d 389 (7th Cir.), stay granted, 409 U.S. 1053, 93 S. Ct. 547, 34 L. Ed. 2d 507 (1972), and cert. granted sub nom. O'Shea v. Littleton, 411 U.S. 915, 93 S. Ct. 1544, 26 L. Ed. 2d 306, and cert. granted sub nom. Spomer v. Littleton, 411 U.S. 915, 93 S. Ct. 1544, 36 L. Ed. 2d 306 (1973), and cert. denied, 414 U.S. 1143, 94 S. Ct. 894, 39 L. Ed. 2d 97, and judgment rev'd sub nom. O'Shea v. Littleton, 414 U.S. 488, 94 S. Ct. 669, 38 L. Ed. 2d 674, and judgment vacated, 414 U.S. 514, 94 S. Ct. 685, 38 L. Ed. 2d 694 (1974).	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/1431701/	484 F. Supp. 125 (1980) Juris G. CEDERBAUMS, as next of friend, attorney for and, in behalf of Fernando Martinez, Petitioner, v. David HARRIS, Superintendent, Greenhaven Correctional Facility, Respondent. No. 79 Civ. 330 (CHT). United States District Court, S. D. New York. January 30, 1980. 126 Juris G. Cederbaums, pro se. Robert Abrams, Atty. Gen. of the State of New York, New York City, for respondent; Stephen M. Jacoby, Asst. Atty. Gen., New York City, of counsel. OPINION TENNEY, District Judge. In an Opinion and Order dated July 20, 1979, the Court denied Fernando Martinez' habeas corpus petition. By motion made returnable August 20, 1979, Martinez, by his counsel, Juris G. Cederbaums, moved for an order pursuant to 28 U.S.C. § 2107 extending Martinez' time to appeal the denial of the petition. On August 28, the Court denied that motion by Memorandum Endorsement. Cederbaums now seeks reargument of that denial and seeks permission to file a notice of appeal. For the reasons given briefly below, the motion for reargument is granted. BACKGROUND In the motion for an extension of time, Cederbaums stated that he had filed with Governor Hugh Carey of the State of New York a petition for executive commutation of sentence and stated also that the commutation, if granted, would render this action moot. Affirmation of Juris G. Cederbaums, dated August 8, 1979, ¶ 3. Cederbaums expected a decision "in the very near future." Id. ¶ 4. He explained that Martinez' family "is of limited financial means, and the expenses of perfecting an appeal in this matter are such that we want to avoid them unless absolutely necessary." Id. 127 The Court denied the motion for extension by Memorandum Endorsement dated August 28, 1979. The Court concluded that 28 U.S.C. § 2107, by its plain terms, did not encompass the basis for Martinez' request. Specifically, the Court reasoned that Martinez sought the extension in order to conserve financial resources, but that section 2107 allows a district court to grant an extension only "upon a showing of excusable neglect based on failure of party to learn of the entry of the judgment, order or decree." Accordingly, the Court concluded that it was powerless to grant the requested relief. On October 2, 1979 Cederbaums moved to reargue the Court's denial of the extension of time to appeal. Affidavit of Juris G. Cederbaums, dated September 27, 1979. He set out additional circumstances explaining his failure to file a timely notice of appeal from the Court's original decision. One such circumstance was his receiving notice from the State Attorney General's office stating that it would not oppose the request for an extension. He subsequently called this Court's chambers and "expressed his feeling that the motion would be granted since opposing counsel had consented." Id. ¶ 4. The law clerk stated that Cederbaums could not assume that the motion would be granted. On September 19, 1979, the day before a notice of appeal would have been duehad the extension been grantedCederbaums again called the Court. He was informed that the motion for an extension had been denied on August 28. He explains that he never received notification of the denial of the extension from the Clerk of the Court of the Southern District ("Court Clerk"). Against this background, Cederbaums contends that the Court's failure to rule on the motion for an extension within the original time to appeal or its failure to give notice of the proposed ruling unfairly deprived his client of appeal. On that basis and on the Court Clerk's failure to notify him of the denial of the extension, he prays for a grant of his motion to reargue and for permission to file a notice of appeal and certificate of probable cause. DISCUSSION The Court notes that the motion for reargument was made more than 10 days after both the denial of the motion for an extension, on August 28, and counsel's learning of the denial, on September 19, and would appear to be barred on that basis. General Rule of the Southern District 9(m). The motion is timely, however, under Federal Rule of Civil Procedure 60(b)(1) (excusable neglect). Counsel has moved, as Rule 60(b)(1) requires, within a reasonable time and within a year of the denial of the extension. Alternatively, the Court could construe the motion as a new motion for an extensionthough the Court does not do so. Construing the motion as one within Rule 60(b)(1), the Court concludes that Martinez' counsel has demonstrated excusable neglect within the meaning of this Rule. The attorney's otherwise diligent efforts on behalf of his client, including seeking executive commutation, his timely efforts to ascertain the status of the motion, his failure to receive notice from the Court Clerk's office, and the lack of prejudice or even opposition from the State are among the factors favoring relief in this instance. The next question is whether Cederbaums now demonstrates excusable neglect in failing to file a notice of appeal within the original 30-day period. In addressing this question, the Court notes that in its denial of the original and timely motion for an extension, the Court looked to the meaning of excusable neglect under 28 U.S.C. § 2107. That section provides in part: The district court may extend the time for appeal not exceeding thirty days from the expiration of the original time herein prescribed, upon a showing of excusable neglect based on failure of a party to learn of the entry of the judgment, order or decree. (Emphasis added). Based on that standard, the Court concluded that it was powerless to grant the extension. Memorandum Endorsement 128 dated August 28, 1979. The Court should not, however, have relied on the limited statutory standard for excusable neglect under section 2107 in denying the extension. To the extent that section 2107 conflicts with Federal Rule of Appellate Procedure 4(a), the latter governs. 28 U.S.C. § 2072; 9 Moore's Federal Practice ¶¶ 201.07, 204.07 (2d ed. 1975). Rule 4(a) does differ from section 2107 in the pertinent provision. Rule 4(a) provides in part: Upon a showing of excusable neglect, the district court may extend the time for filing the notice of appeal by any party for a period not to exceed 30 days from the expiration of the time otherwise prescribed by this subdivision. Such an extension may be granted before or after the time otherwise prescribed by this subdivision has expired; but if a request for an extension is made after such time has expired, it shall be made by motion with such notice as the court shall deem appropriate. Rule 4(a) is without the limitation on excusable neglect found in section 2107 (see emphasized portion of section, supra) and has provisions regarding the timing of extensions. Rule 4(a), therefore, rather than section 2107, applies to this case. The applicability of Rule 4(a) and its broader standard of "excusable neglect" would not have led to a different result on the original motion for an extension of time, however. Saving the costs of appeal would still not amount to excusable neglect, given the strictness with which that term is to be construed and the compelling circumstances needed to satisfy it. See Fase v. Seafarers Welfare and Pension Plan, 574 F.2d 72, 76-77 (2d Cir. 1978). The Court concludes, however, that Cederbaums has demonstrated excusable neglect on his motion for reconsideration. Had he been aware that the motion for an extension had not been granted on August 20, he could that day have filed a timely notice of appeal. The circumstances that underlay his incorrect assumption and his failure to learn of the denial amount, in the circumstances of this case, to excusable neglect. Conserving the financial resources of a needy family is still an insufficient basis for finding excusable neglect, but this purpose led counsel to conclude that he had shown a basis for an extension and to assume that the extension would be granted. Of greater weight are his efforts to ascertain the status of the motion in time to file a notice of appeal should the motion be denied. The Court did not inform him of the denial in time for him to appeal within the original 30-day period. In fact, the motion was decided on August 28eight days after the return date and eight days too late to file a timely appeal. The Court Clerk's office did not subsequently inform him of the denial. Had it done so, presumably Cederbaums would have earlier sought reconsideration. Cf. id. at 77 (not excusable neglect where opposing party promptly received court's opinion and order, and the only extenuating circumstance is failure of clerk to send notice of entry of judgment) (original emphasis). Additionally, the lack of opposition by the State to the motion for an extension led Cederbaums to expect that the motion would be granted. The fact of the timely motion for an extension also supports granting relief here; although Cederbaums sought to delay the filing of the notice of appeal, he appeared to intend to pursue appeal diligently if the governor did not grant the commutation in the near future. The Court does not, of course, mean either to encourage less than diligent pursuit of appealwith all its prerequisitesnor to excuse less than diligent pursuit. As a matter of discretion, however, the Court decides that in the circumstances of this case counsel should be able to pursue his appeal. One final question remains: whether at this stage, after the original 30-day period and the 30-day extension period, where granted, have both elapsed, the Court retains power to allow Cederbaums to appeal. In C-Thru Products, Inc. v. Uniflex, Inc., 397 F.2d 952 (2d Cir. 1968), the court of appeals upheld the allowance of an appeal in the following circumstances. The district 129 court filed an amended judgment on July 27, 1967. Plaintiff filed a notice of appeal and bond, with a motion for an extension, on September 20, 1967. Defendant responded on September 29 with affidavits and memoranda on the motion. Plaintiff replied on October 2. The court held a hearing on October 4. On October 10 the court rendered a decision; on October 25 it entered an order extending the time to appeal based on a sufficient showing of excusable neglect; and on November 2, it entered an order that the notice of appeal filed September 20 was deemed timely filed. In opposing the extension, the defendant argued that Rule 73, then applicable, had to be strictly construed to require both the showing of excusable neglect and the entry of the order of extension to be made within 60 days of the order appealed from. The court of appeals responded: Such an interpretation would be unduly harsh and contrary to the spirit and purpose of Rule 73 as in effect in 1967. The time limitation is intended to set a period on which the parties may rely for required action by a litigant, not to dragoon a busy trial court into hasty and ill-considered action by the risk of destruction of appellate rights if the court does not meet the fixed deadline. Id. at 955. The court of appeals further noted that the 60th day passed while defendant was taking nine days to respond to the motion. The court of appeals further noted that the defendant was on notice on September 20 that plaintiff intended to appeal; it could therefore prepare to resist the appeal. Accordingly, the court of appeals held plaintiff's action timely and the court's ruling effective. Id. In Stirling v. Chemical Bank, 511 F.2d 1030 (2d Cir. 1975), the court of appeals concluded that a district court has in appropriate circumstances the power to grant an extension nunc pro tunc. The district court dismissed complaints in two actions on September 30, 1974. On November 8, the court filed orders effecting the dismissals; on November 11, judgment on the order was entered in one of the two actions. Plaintiffs did not file notices of appeal until December 19, 38 days after the judgment appealed from in one action and 41 days from the order appealed from in the other action. Defendants moved to dismiss the appeals for lack of jurisdiction because the appeals were not filed within the 30 days allowed by Rule 4(a). Plaintiffs, in opposing the motions, relied on the following circumstances: (1) timely notices of appeal were served on opposing counsel, and (2) a filing agent representing plaintiffs had timely tried to file the notices with the district court, but had failed because the agent did not tender filing fees. Plaintiffs' counsel, regarding the second circumstance, authorized the filing agent to advance the fees and were assured that the notices would be filed that same morning. The service failed to file the notices. When plaintiffs' counsel learned of this failure, he filed the notices on December 19beyond the 30 days allowed. The court of appeals held that the efforts to file the notices within the 30 days did not satisfy the mandatory and jurisdictional timeliness requirementespecially where plaintiffs were represented by experienced counsel. Id. at 1031-32. It also concluded that the application for an extension nunc pro tunc to December 19 should have been addressed to the district court, not to the court of appeals. Id. at 1032. The court of appeals then concluded that the district court would not have jurisdiction to grant a nunc pro tunc extension if an appellant had within the 60 days neither filed a notice of appeal nor moved in the district court for an extension. On the facts before it, the court of appeals held that the district court could treat the notice of appeal as the equivalent of a motion for an extension on the ground of excusable neglect. To support this conclusion, the court of appeals relied on the filing of notices of appeal within the 60 days, the prima facie showing of excusable neglect, and the timely service of notices of appeal on opposing counsel. Nothing in Rule 4(a) precludes the district court, more than 60 days after entry of judgment, from granting an extension of time to sanction the late filing of a *130 notice of appeal within the second half of the 60-day period, provided a purported notice of appeal has actually been filed within that period. Id., citing, e. g., C-Thru Products, Inc., supra. On another ground, the court of appeals dismissed the appeal in one of the actions. Stirling, supra, 511 F.2d at 1033. In the instant case, Cederbaums did move for an extension within 60 days of the order appealed from, and the circumstances establish excusable neglect. The Court has the impression that Cederbaums attempted to file a notice of appeal within the 60 days, but the Court is unable to so determine from the record. Rather than reaching the question whether the motion for an extension is sufficient in these circumstances for the Court to allow the appeal, and to supplement the record, the Court will give Cederbaums 20 days from the entry of this order to provide affidavits bearing on whether he did attempt to file a notice of appeal. After that 20-day period, the Court will enter an order either allowing or disallowing Cederbaums to proceed with the appeal. CONCLUSION In conclusion, the Court grants Cederbaums' motion for reargument of the Court's original denial of an extension of time to appeal. Cederbaums has 20 days from the entry of this order to provide affidavits establishing that he attempted to file a notice of appeal within 60 days of the order appealed from. At the end of that 20-day period, the Court will determine whether Cederbaums may proceed with the appeal. So ordered.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/4160837/	Cite as 2017 Ark. 135 SUPREME COURT OF ARKANSAS Nos. CR-92-1385 & CR-00-528 Opinion Delivered: April 17, 2017 DON WILLIAM DAVIS APPELLANT MOTION TO RECALL THE MANDATE AND FOR STAY OF V. EXECUTION [BENTON COUNTY CIRCUIT COURT NO. CR-91-80-1] STATE OF ARKANSAS APPELLEE DISSENTING OPINION. SHAWN A. WOMACK, Associate Justice Don William Davis and Bruce Earl Ward ask us to recall the mandates in their capital murder cases and stay their executions.1 Davis comes to us on what appears to be at least the 29th appellate review of his case (either individually or collectively with other litigants) since the murder of 62-year-old Jane T. Daniel on October 12, 1990. Similarly, Ward appears before this court after an exhaustive list of appeals and after being sentenced to death by three separate juries for the August 11, 1989, murder of 18-year-old Rebecca Lynn Doss. Their argument can be stated concisely: The state and federal courts involved in their cases have grievously misinterpreted the United States Supreme Court’s holding in Ake v. Oklahoma, 470 U.S. 68 (1985). I would deny these motions for three independently 1 Davis and Ward filed their motions jointly due to the identical legal arguments presented, but this court has chosen to dispose of them separately. As such, I address the history and claims of both movants together. Cite as 2017 Ark. 134 sufficient reasons. First, our precedent firmly establishes that we have ruled on this precise issue and held their view of Ake is wrong. Second, it has not been the practice of this court to grant the extraordinary relief they request in similar circumstances. Third, even if the Supreme Court decides McWilliams in precisely the way that the petitioners predict, it is not clear that Davis or Ward will have any avenues for relief. First, Ake held that criminal defendants are constitutionally entitled to “access to a competent psychiatrist who will conduct an appropriate examination and assist in evaluation, preparation, and presentation of the defense.” Id. at 83. Petitioners argue that this language requires that the state pay for a psychiatrist assigned exclusively to assist the defense rather than a neutral evaluator. Davis previously argued this same point before the trial court, this court on direct appeal,2 this court in his petition for postconviction relief,3 the federal district court, and the United States Court of Appeals for the Eighth Circuit.4 Ward also made the argument before the trial court, this court during the course of his multiple direct appeals,5 postconviction petition,6 and federal habeas action.7 Notably, we addressed this exact argument in Ward’s prior attempts to have us recall his mandate, which became the law of the case.8 Davis and Ward both assert that their psychiatric evaluations in the state hospital do not meet the Ake requirement. This court has consistently held that the state’s protocol 2Davis v. State, 314 Ark. 257, 265, 863 S.W.2d 259, 269 (1993). 3Davis v. State, 345 Ark. 161, 170, 44 S.W.3d 726, 731 (2001). 4 Davis v. Norris, 423 F.3d 868, 875 (8th Cir. 2005). 5 Ward v. State, 308 Ark. 415, 827 S.W.2d 110 (1992); Ward v. State, 321 Ark. 659, 906 S.W.2d 685 (1995); Ward v. State, 338 Ark. 619, 1 S.W.3d 1 (1999). 6 Ward v. State, 350 Ark. 69, 84 S.W.3d 863 (2002). 7 Ward v. Norris, 577 F.3d 925 (8th Cir. 2009). 8 Ward v. State, 2015 Ark. 60, 455 S.W.3d 303; Ward v. State, 2015 Ark. 61, 455 S.W.3d 818. 2 Cite as 2017 Ark. 134 satisfies the requirements of Ake. See, e.g., Branscomb v. State, 299 Ark. 482, 774 S.W.2d 426 (1989). As Davis demonstrates in his petition, we are in a minority on this issue but by no means alone. See Woodward v. Epps, 580 F.3d 318 (5th Cir. 2009); McWilliams v. Comm’r Ala. Dep’t of Corr., 634 F. App’x 698 (11th Cir. 2015); Woodward v. State, 726 So. 2d 524 (Miss. 1997). Second, even the movants recognize that neither a motion to recall the mandate nor to stay an execution is the appropriate forum to reargue a point of constitutional interpretation that this court has already addressed to exhaustion. The overriding interest in the finality of judgments limits these remedies to exceedingly narrow circumstances. We have looked at requests to recall mandates with such skepticism that we have described some of the rare instances in which we grant the relief as “one of a kind, not to be repeated.” Robbins v. State, 353 Ark. 556, 564, 114 S.W.3d 217, 223 (2003). Instead of bare restatement of their underlying interpretive claims, then, they argue that the United States Supreme Court’s decision to grant certiorari in McWilliams v. Dunn, 634 F. App’x 698 (11th Cir. 2015), cert. granted, __ U.S. __, 137 S. Ct. 808 (2017), overleaps our high bar and requires us to grant their motions, at least until that case has been argued and decided by Supreme Court. Movants cannot point to a controlling statement that this court recalls mandates or stays executions due to the speculative outcome of a pending argument before the United States Supreme Court. This is because such precedent does not exist. In Pickens v. Tucker, 316 Ark. 811, 875 S.W.2d 835 (1994), this court denied a stay of execution through a per curiam opinion. As the concurrence makes clear, we denied the stay even though an active 3 Cite as 2017 Ark. 134 petition for certiorari in Otey v. Hopkins, 5 F.3d 1125 (8th Cir. 1993), was before the Supreme Court and the case involved legal issues similar to the ones in Pickens. Id. (Brown, J., concurring). In State v. Earl, 336 Ark. 271, 984 S.W.2d 442 (1999), we even declined to recall a mandate when the Supreme Court had already ruled on the arguably related case, which held that a traffic stop similar to the one in Earl’s case violated the Fourth Amendment. Id. The majority declined to recall the mandate due to Earl’s failure to challenge the disputed rule in the original proceeding, while the dissenting justices argued for recall of the mandate in light of Earl’s brisk action following the new Supreme Court precedent. Id. Given our reluctance to recall the mandate when we had the conflicting Supreme Court opinion squarely in front of us, I would decline to do so here based solely on reading the tea leaves about how the Court might act in McWilliams. Third, I am convinced that the majority’s decision to grant the petition is based on the mistaken assumption that movants’ boldly predicted outcome in McWilliams will have any impact on their available remedies. It is the rule both generally and in the habeas context that new rules of law announced by the Supreme Court apply to cases still on direct review, but only retroactively in a narrow set of circumstances. See, e.g., Harper v. Virginia Dep’t of Taxation, 509 U.S. 86, 97 (1993). Movants can muster only that the question of retroactivity under Arkansas law is “unresolved” and that “[t]his case presents an opportunity for the Court to determine that question.” They argue that a favorable outcome in McWilliams would not be a new rule, but instead a simple clarification that this state and other jurisdictions adopting a similar view of Ake have been in clear violation of the plain language of that opinion. I disagree. If the Supreme Court determines that over 30 years of practice 4 Cite as 2017 Ark. 134 by this and other states in applying Ake’s commands about psychiatric evaluations has been constitutionally inadequate, that is a new rule of constitutional law of the sort not typically applied retroactively. On a final note, and of no less importance, the majority, in a 4-3 decision, is granting relief to the two individuals who were convicted of murdering Rebecca Lynn Doss and Jane T. Daniel. The petitioners had their day in court, the jury spoke, and decades of appeals have occurred. The families are entitled to closure and finality of the law. It is inconceivable that this court, with the facts and the law well established, stays these executions over speculation that the Supreme Court might change the law. This court has a duty to apply the laws of Arkansas as they exist today. While the Supreme Court could certainly change the law on any given day, that does not mean we can ignore our responsibility and refuse to perform our duty. Today, justice has been denied by the majority. I dissent. WOOD, J., joins in this dissent. 5	01-03-2023	04-17-2017
https://www.courtlistener.com/api/rest/v3/opinions/1508612/	841 F.Supp. 186 (1992) T.A. GRANT III v. FARM CREDIT BANK OF TEXAS, REW Enterprises, Inc., FCS Servicing, The Law Firm of Milling, Benson, Woodward, Hillyer, Pierson & Miller, Wesley Slay and Herbert Haynes Civ. A. No. 92-0916. United States District Court, W.D. Louisiana, Monroe Division. October 27, 1992. 187 Thomas A. Grant, III, pro se. Jean Marie Sweeney, Mark P. Dauer, Milling, Benson, Woodward, Hillyer, Pierson & Miller, New Orleans, LA, for Farm Credit Bank of Texas and FCS Servicing. 188 Ellen Rose Eade, McLeod, Verlander, Eade & Verlander, Monroe, LA, for REW Enterprises, Inc. William E. Wright, Jr., Robert E. Kerrigan, Jr., Deutsch Kerrigan & Stiles, Jean Marie Sweeney, Mark P. Dauer, Milling, Benson, Woodward, Hillyer, Pierson & Miller, New Orleans, LA, for Milling, Benson, Woodward, Hillyer, Pierson & Miller, Wesley Slay and Herbert Haynes. LITTLE, District Judge. RULING Plaintiff T.A. Grant III brings this suit seeking damages, injunctive relief, and recognition of rights that he claims in certain immovable property located in Moorehouse, Ouachita, and Union Parishes. In 1983 and 1985, Plaintiff granted mortgages on the property as security for approximately $16.5 million in loans that he borrowed from the Federal Land Bank of Jackson (FLBJ). Plaintiff defaulted in January 1986 and one month later brought suit in Louisiana state court seeking, among other things, to enjoin FLBJ from foreclosing. In May 1988, Farm Credit Administration appointed REW Enterprises, Inc. (REW) as receiver for FLBJ. The trial court denied REW's motion for summary judgment, but the Court of Appeal of Louisiana for the Second Circuit reversed and remanded for entry of judgment in favor of the defendants. See Grant v. Federal Land Bank, 559 So.2d 148 (La.Ct.App.2d Cir.), writs denied, 563 So.2d 886 and 563 So.2d 887 (La.1990), cert. denied, 498 U.S. 922, 111 S.Ct. 301, 112 L.Ed.2d 254 (1990). In June 1990, REW conveyed its interest in the notes and collateral to Farm Credit Bank of Texas (FCBT). On 13 July 1990, the trial court entered judgment in favor of FCBT for approximately $31 million and recognized the mortgages. The Court of Appeal dismissed Plaintiff's appeals on 25 September 1991. See Grant v. Federal Land Bank, 586 So.2d 685 (La.Ct.App.2d Cir.1991). On 26 February 1992, in execution of the judgment, FCBT had the mortgaged property seized and sold at public auction, where FCBT purchased it on a bid for approximately $14 million. The property was appraised at that time as having a fair market value of $16.9 million. A deficiency of approximately $18 million remains due on the $31 million judgment debt. The sheriff's deed to the property was delivered to FCBT on 13 March 1992. On 27 March 1992, FCBT's executive director Herbert Haynes notified Plaintiff of FCBT's election to sell the property and of Plaintiff's right of first refusal under 12 U.S.C. § 2219a. On 13 April 1992, Plaintiff counteroffered $16.9 million in exchange for the property and FCBT's release of all claims against Plaintiff. On 1 May 1992, after the thirty-day period for submission of offers by previous owners had expired, Haynes informed Plaintiff that no exercise of first refusal rights had occurred. Plaintiff now brings this suit claiming violations of his rights under the Farm Credit Act of 1971, the Agricultural Credit Act of 1987, and Louisiana tort law. Plaintiff alleges that the defendants, all motivated by a personal animus against Plaintiff, have conspired in an elaborate scheme of the most heinous and objectionable type of behavior with the single goal of driving Plaintiff to financial ruin. Before the court are four motions: (1) defendant REW's motion to dismiss pursuant to Rule 12(b)(6); (2) defendants Wesley Slay and Herbert Haynes' motion to dismiss pursuant to Rule 12(b)(6); (3) defendant Milling, Benson, Woodward, Hillyer, Pierson & Miller's motion to dismiss pursuant to Rule 12(b)(6); and (4) FCBT's motion for summary judgment. We will first address the motions to dismiss. I. MOTIONS TO DISMISS OF REW ENTERPRISES, INC., WESLEY SLAY, HERBERT HAYNES, AND THE LAW FIRM OF MILLING, BENSON, WOODWARD, HILLYER, PIERSON & MILLER Plaintiff argues that the allegations in his amended complaint state a cause of action for flagrant bad faith abuse of discretionary powers under the Farm Credit Act of 1971 and the Agricultural Credit Act of 1987. Plaintiff also argues that the allegations in his complaint state claims under Louisiana law for intentional infliction of emotional distress, 189 abuse of process, and intentional interference with contractual rights. When considering a motion to dismiss for failure to state a claim, we must accept all well-pleaded facts as true and view them in the light most favorable to the plaintiff. McCartney v. First City Bank, 970 F.2d 45, 47 (5th Cir.1992). The motion should be granted "only if the plaintiff can prove no set of facts that would entitle him to the relief for which he prays." Id. A. Violations of The Farm Credit Act of 1971 and The Agricultural Credit Act of 1987 Plaintiff alleges that the defendants have conspired to bring him to financial ruin by denying his borrower's rights under the Farm Credit Act of 1971 and its amendment, the Agricultural Credit Act of 1987. 12 U.S.C.S. §§ 2001-2279 (Law.Co-op 1984 & Supp.1992). The defendants argue that Plaintiff has no express or implied private right of action under these provisions. We agree. Every circuit that has confronted the issue has held that no private right of action can be inferred in favor of borrowers for violations of the Farm Credit Act of 1971. See Redd v. Federal Land Bank, 851 F.2d 219 (8th Cir.1988); Bowling v. Block, 785 F.2d 556 (6th Cir.), cert. denied sub nom. Bower v. Lyng, 479 U.S. 829, 107 S.Ct. 112, 93 L.Ed.2d 60 (1986); Smith v. Russellville Prod. Credit Ass'n, 777 F.2d 1544 (11th Cir. 1985). The same is true for the Agricultural Credit Act of 1987. See Saltzman v. Farm Credit Services, ACA, 950 F.2d 466, 467-469 (7th Cir.1991); Zajac v. Federal Land Bank, 909 F.2d 1181, 1182-83 (8th Cir.1990) (en banc); Griffin v. Federal Land Bank, 902 F.2d 22, 24 (10th Cir.1990); Harper v. Federal Land Bank, 878 F.2d 1172, 1173 (9th Cir.1989), cert. denied, 493 U.S. 1057, 110 S.Ct. 867, 107 L.Ed.2d 951 (1990). In light of legislative history and the comprehensive administrative remedial scheme created by the acts, these courts have concluded that Congress did not intend for borrowers to enforce the provisions through private law suits. See, e.g., Harper, 878 F.2d at 1175-77; Smith, 777 F.2d at 1547-48. We adopt the reasoning of these courts and therefore conclude that Plaintiff has no cause of action against the defendants for any alleged violation of the Farm Credit Act of 1971 and Agricultural Credit Act of 1987. B. State Tort Claims We now turn to the state tort claims. Plaintiff alleges that the defendants have engaged in a conspiracy and series of activities designed to ruin Plaintiff financially, to inflict intentionally emotional distress upon Plaintiff, and to interfere intentionally with Plaintiff's contractual rights. Plaintiff also alleges that the defendants have committed abuse of process in the course of carrying out this dastardly scheme. 1. Intentional Infliction of Emotional Distress To state a claim for intentional infliction of emotional distress under Louisiana law, the plaintiff must allege: (1) extreme and outrageous conduct; (2) severe emotional distress; and (3) an intent to cause severe emotional distress. See White v. Monsanto Co., 585 So.2d 1205, 1209 (La.1991). To give rise to this cause of action, the defendant's conduct must be "beyond all possible bounds of decency and to be regarded as utterly intolerable in a civilized community." Id. at 1210-11. Plaintiff alleges no act committed by any of the defendants that could possibly be construed as the sort of extreme and outrageous conduct required to state a cause of action for intentional infliction of emotional distress under this standard. See id. at 1209-11. Moreover, Plaintiff fails to allege severe emotional distress. Plaintiff clearly fails to state a cause of action for intentional infliction of emotional distress against any of the defendants. 2. Intentional Interference with Contractual Rights Louisiana has adopted a very narrow form of the tort of intentional interference with contractual rights. In 9 to 5 Fashions, Inc. v. Spurney, 538 So.2d 228 (La.1989), the Louisiana Supreme Court recognized "only a corporate officer's duty to refrain from intentional and unjustified interference with the contractual relation between his employer 190 and a third person." Id. at 234. Plaintiff points to no particular allegations that might give rise to the claim. Thus, we must search for any allegation that might arguably fit within the narrow cause of action laid out by the Louisiana Supreme Court in 9 to 5 Fashions, supra. We find none. Plaintiff has alleged nothing that could possibly be construed as tortious interference by any of the defendants. More importantly, Plaintiff fails to allege the existence of a contractual right with which the defendants could interfere. At the time REW sold and assigned the note to FCBT, the Louisiana Court of Appeal had already decided in favor of REW on the note and mortgage and ordered dismissal of Plaintiff's claims. Thus, from its conception, the relationship between FCBT and Plaintiff was not a contractual one, but one of judgment creditor and judgment debtor. See Schouest v. Franke, 526 So.2d 1342 (La.Ct.App. 5th Cir.), writ denied, 531 So.2d 473 (La.1988). The obligations that FCBT owed to Plaintiff did not derive from contract, but rather from the federal statutes governing Farm Credit System institutions and from Louisiana laws governing foreclosure and the collection of a judgment debt. Even if FCBT had owed a contractual right to Plaintiff, Plaintiff would nevertheless fail to state a cause of action for tortious interference against Slay and Haynes because corporate officers are immune from liability for intentional interference "committed within the scope of corporate authority for the corporation's benefit." 9 to 5 Fashions, 538 So.2d at 232. Although Plaintiff argues that Slay and Haynes did not act in FCBT's best interest, it is obvious even from the face of Plaintiff's complaint that these two officers were at all times acting within the scope of their authority as officers of FCBT and were simply attempting to collect the judgment debt owed by Plaintiff to FCBT. None of Plaintiff's allegations against Slay and Haynes falls within the narrow cause of action laid out in 9 to 5 Fashions. The Milling firm is legal counsel for FCBT. Plaintiff alleges that the Milling firm orally agreed to draft a document concerning a group of investors assembled by Plaintiff but then denied making such an agreement. Even if true, this allegation does not state a claim for tortious interference with a contractual right because Plaintiff had no contract with FCBT. 3. Abuse of Process To state a claim for abuse of process under Louisiana tort law, a plaintiff must allege two essential elements: (1) an ulterior purpose; and (2) a willful act in the use of process that is not in the regular conduct of the proceeding. See, e.g., Weldon v. Republic Bank, 414 So.2d 1361, 1365 (La. Ct.App. 2d Cir.1982). Even if a party has an ulterior purpose in making use of some legal process, no cause of action exists unless there has been some abuse. Id. As for Plaintiff's claims against defendants REW, Slay, and Haynes, Plaintiff fails to allege even a use of process, much less an improper use. Plaintiff alleges that the Milling firm scheduled depositions and then failed to appear. Even if true, this is not a use of process outside the regular conduct of the proceeding. Plaintiff does not specify during which of his many law suits that these events allegedly occurred, but discovery matters such as this are within the jurisdiction and control of the court governing the case. If such conduct persists, it perhaps should prompt a motion to the court for intervention in the discovery process. But it is not the sort of misuse of legal process that gives rise to a cause of action for abuse of process. For these reasons, we find that Plaintiff has stated no cause of action against REW, Wesley Slay, Herbert Haynes, or the law firm of Milling, Benson, Woodward, Hillyer, Pierson & Miller. Accordingly, the defendants' motions to dismiss are GRANTED. II. FCBT'S MOTION FOR SUMMARY JUDGMENT Summary judgment will be granted only if the pleadings, depositions, answers to interrogatories, and admissions, together with affidavits, show that no genuine issue as to any material fact exists and that the defendant is entitled to judgment as *191 a matter of law. Fed.R.Civ.Proc. 56. In our analysis, we view the facts and inferences from the evidence in the light most favorable to the nonmoving party. Lavespere v. Niagara Machine & Tool Works, Inc., 910 F.2d 167, 178 (5th Cir.), reh'g denied, 920 F.2d 259 (5th Cir.1990). Before we can find that no genuine issues of material fact exists, we must be satisfied that no reasonable trier of fact could have found for the nonmoving party. Id. But the nonmoving party may not rest solely on denials contained in the pleadings; he must also set forth specific facts showing that a genuine issue exists for trial. Fed.R.Civ.P. 56(e); see also Topalian v. Ehrman, 954 F.2d 1125, 1131 (5th Cir.), reh'g denied, 961 F.2d 215 (5th Cir.), cert. denied, ___ U.S. ___, 113 S.Ct. 82, 121 L.Ed.2d 46 (1992). Mere conclusory rebuttals by the nonmoving party will not defeat a motion for summary judgment. Id. at 1131. For the reasons stated in our ruling on the motions to dismiss, we hold that no private right of action exists under the Farm Credit Act of 1971 or the Agricultural Credit Act of 1987. Thus, FCBT is entitled to judgment in its favor as a matter of law on Plaintiff's claims regarding alleged violations of these provisions. As we discussed in our ruling on the motions to dismiss, a claim for intentional infliction of emotional distress under Louisiana law requires a showing of extreme and outrageous conduct and severe emotional harm. See White v. Monsanto Co., 585 So.2d 1205, 1209 (La.1991). The evidence reveals no act of FCBT that could be characterized as extreme and outrageous. Nor does Plaintiff offer any evidence that he has suffered severe emotional harm. Consequently, we find that FCBT is entitled to judgment as a matter of law on this claim. With regard to Plaintiff's claim of intentional interference with contractual rights, Plaintiff has offered no evidence that FCBT has committed any act that would amount to tortious interference as recognized in 9 to 5 Fashions, Inc. v. Spurney, 538 So.2d 228 (La.1989). Indeed, Plaintiff fails to establish the existence of any contractual rights with which FCBT might of interfered. The evidence shows that at the time REW sold and assigned Plaintiff's note and mortgage to FCBT, the Louisiana Court of Appeal had already ordered that judgment on the debt be entered in favor of REW. Thus, the relationship between FCBT and Plaintiff was one of judgment debtor and judgment creditor, and any obligations that FCBT owed to Plaintiff regarding collection of the debt were statutory, not contractual. Plaintiff points to no other contractual right with which FCBT might of interfered. Consequently, we find that no genuine issues as to material facts exist and FCBT is therefore entitled to judgment in its favor as a matter of law. To establish a claim for abuse of process, the plaintiff must show an ulterior purpose and a willful act in the use of legal process that is not in the regular conduct of the proceeding. See, e.g., Weldon v. Republic Bank, 414 So.2d 1361, 1365 (La.Ct.App. 2d Cir.1982). The only allegations that Plaintiff offers in support of this claim is that FCBT has refused to make discovery of certain documents and FCBT has scheduled depositions with Plaintiff and failed to appear. Even if Plaintiff had offered evidence to support these allegations, these acts would not amount to abuse of process. As we stated in our ruling on the Milling firm's motion to dismiss, discovery matters such as these are not outside the regular conduct of the proceeding and are within the control of the court governing the case. Accordingly, we find that FCBT is entitled to judgment as a matter of law on this claim as well. For these reasons, defendant FCBT's motion for summary judgment is GRANTED.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2664015/	UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA KENNETH CHAPLIN, ) ) Plaintiff, ) ) v. ) Civ. Action No. 10-0518 (ESH) ) WILLIAM G. STEWART, JR. et al., ) ) Defendants. ) ____________________________________) MEMORANDUM OPINION In this action brought pro se under the Freedom of Information Act (“FOIA”), 5 U.S.C. § 552, plaintiff, a federal prisoner, challenges the response of the Executive Office for United States Attorneys (“EOUSA”) to his request for records pertaining to his sentencing proceedings. By Order of January 10, 2011, the Court denied defendant’s motion for summary judgment and directed it to release 202 pages of previously identified responsive records and to process records that were located at the Office of the United States Attorney for the Eastern District of Pennsylvania. (See generally Mem. Op. of Jan. 10, 2011.) EOUSA notified the Court on January 20, 2011, that it had released the foregoing 202 responsive pages to plaintiff [Dkt. # 29], and it now moves to dismiss under Federal Rule of Civil Procedure 12(b)(6) or for summary judgment under Rule 56. Upon consideration of the current motion and plaintiff’s response thereto, the Court will grant defendant’s renewed motion for summary judgment. 1. EOUSA’s Supplemental Processing of Records In response to the Court’s initial ruling, defendant searched its office in the Eastern District of Pennsylvania for the following three categories of records: witness testimony, money laundering documents, and proffer statements. (Second Decl. of Vinay J. Jolly [Dkt. # 38-4] ¶ 5.) It located approximately 6,100 pages “of potentially responsive documents.” (Id. ¶ 6.) By letter of February 18, 2011, defendant informed plaintiff of the foregoing results and requested an advance payment of $852, to cover search fees for nine hours expended ($252) and duplication costs ($600). (Id. ¶¶ 7, 8 & Exs. C, D.) Defendant informed plaintiff that he could reduce his costs by reformulating the request to limit the number of pages he wished to receive or specifying a maximum amount he was willing to pay. (Id., Ex. D.) Defendant included a form for plaintiff to check his options and return, and notified plaintiff that his failure to respond by April 1, 2011, would result in his request being closed. (Id.) As of April 29, 2011, plaintiff had not paid the assessed fee. (Jolly Decl. ¶ 10.) 2. Analysis In his opposition to the pending dispositive motion, plaintiff admits that he did not respond to EOUSA’s letter and has not paid the fee. He argues that he should not be required to pay the fee “due to defendant’s non-compliance and/or violations of the FOIA over the Past 4 1/2 years.” (Response in Opp’n to Def.’s Mot. for Enlargement of Time and Request for Disclosure of Responsive Records [Dkt. # 41-1] at 3-4.) Plaintiff’s argument lacks merit. The FOIA confers upon the court jurisdiction to enjoin an agency from improperly withholding agency records and to order the production of such records. 5 U.S.C. § 552(a) (4)(B); McGehee v. CIA, 697 F.2d 1095, 1105 (D.C. Cir. 1983) (citing Kissinger v. Reporters 2 Committee for Freedom of the Press, 445 U.S. 136, 150 (1980)). An agency’s FOIA obligations are triggered by its receipt of a FOIA request “made in accordance with published rules stating the . . . fees (if any), and procedures to be followed . . . . 5 U.S.C. § 552(a)(3)(A). An agency may charge a requester reasonable fees for the search, review, and duplication of responsive documents. 5 U.S.C. § 552(a)(4)(A). There is no charge for the first two hours of search time or for the first 100 pages of duplication if the requester, like plaintiff, has no commercial purpose for the requested records.1 5 U.S.C. § 552(a) (4)(A)(iv)(II). If, pursuant to Department of Justice (“DOJ”) regulations, the agency determines or estimates that the fees to be charged will exceed $25, it must notify the requester of the actual or estimated fee, and offer the requester an opportunity to reformulate the request to reduce costs. 28 C.F.R. § 16.11(e). The agency neither considers a request received nor performs any further work on a request until the requester agrees in writing to pay the anticipated total fee. Id. If the agency determines or estimates that the total fee to be charged will exceed $250, the agency may require the requester to make an advance payment before it begins to process the request. 28 C.F.R. § 16.11(i)(2). The commencement of a civil action pursuant to the FOIA does not relieve a requester of his obligation to pay any assessed fees. See Pollack v. Dep't of Justice, 49 F.3d 115, 120 (4th Cir. 1995); accord Trueblood v. U.S. Dep’t of Treasury, 943 F. Supp. 64, 68 (D.D.C. 1996) (“Regardless of whether the plaintiff ‘filed’ suit before or after receiving a request for payment, the plaintiff has an obligation to pay for the reasonable copying and search fees assessed by the defendant.”) (citation omitted) (alteration in original). 1 In calculating the fee, EOUSA took “into account the first 100 free pages . . . ., Second Jolly Decl., Ex. D, and the two hours of free search time were exhausted in 2009. See Mem. Op. I at 4. 3 It is undisputed (1) that defendant complied with DOJ regulations by informing plaintiff about the fee requirements and suggesting ways to reduce his costs, and (2) that plaintiff has neither paid nor committed to paying the assessed fees. Therefore, the Court, having no further statutory authority, finds that defendant is entitled to judgment as a matter of law. See Skinner v. U.S. Dep’t of Justice, 744 F. Supp. 2d 185, 195 (D.D.C. 2010) (“Summary judgment is appropriate when the plaintiff has failed to comply with agency fee regulations.”); cf. with Perry v. Block, 684 F.2d 121, 125 (D.C. Cir. 1982) (“[H]owever fitful or delayed the release of information under the FOIA may be, once all requested records are surrendered, federal courts have no further statutory function to perform.”); accord Richardson v. U.S. Dep’t of Justice, 730 F. Supp. 2d 225, 231-32 (D.D.C. 2010). A separate Order accompanies this Memorandum Opinion. ____________s/______________ ELLEN SEGAL HUVELLE DATE: July 14, 2011 United States District Judge 4	01-03-2023	04-04-2014
https://www.courtlistener.com/api/rest/v3/opinions/2664020/	UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ____________________________________ ) MICHAEL WILLIAM FLAHERTY, ) ) Plaintiff, ) ) v. ) Civil Action No. 11-124 (RBW) ) PRESIDENT OF THE UNITED STATES, ) et al., ) ) Defendants. ) ____________________________________) MEMORANDUM OPINION Michael William Flaherty, the pro se plaintiff in this civil case, seeks declaratory and injunctive relief to enforce his right to prompt disclosure of government agency records under the Freedom of Information Act ("FOIA"), 5 U.S.C. § 552 (a)(3)(A)(ii) (2006). Complaint ("Compl.") at 2. Currently before the Court is the Internal Revenue Service's ("IRS") motion to substitute itself as the named defendant, to dismiss all other defendants from this case, and to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) based on the plaintiff's failure to exhaust his administrative remedies. 1 For the reasons that follow, the Court concludes that it must grant the IRS's motion to substitute the IRS as the named defendant and to dismiss all other defendants from this case, and grant the IRS's (hereinafter the "defendant") motion to dismiss. 2 1 As the Court is considering the defendant's motion to dismiss, the outcome of which will impact the resolution of the plaintiff's discovery motions, these motions only need to be considered by the Court if the plaintiff's dismissal motion is denied. 2 In addition to the plaintiff's complaint and the IRS' Motion to Substitute Named Defendants and to Dismiss (the "Def.'s Mot."), the Court considered the following documents in rendering its decision: (1) the Memorandum of Points & Authorities in Support of The Internal Revenue Service's Motion to Substitute Named Defendants and to Dismiss (the "Def.'s Mem."); (2) the defendant's Declaration of Elizabeth S. McBrearty (the "McBrearty Decl."); (3) I. BACKGROUND Over the course of five years, the plaintiff submitted what he maintains were four separate FOIA requests to the IRS concerning "government assessments" of tax records. Compl. ¶ 13. The plaintiff made these purported FOIA requests in order to access information allegedly material to his defense in a separate claim filed against him by the United States. 3 Id. ¶¶ 25-30, 35-36. The first request made by the plaintiff to the IRS is dated May 30, 2005, and was addressed to the IRS Fresno Campus Disclosure Office. McBrearty Decl. ¶ 5; Gov't Ex. 1 (May 30, 2005). The plaintiff requested from the defendant a copy of "Treasury/IRS 24.030 CADE Individual Master File (IMF), (Formerly: Individual Master File (IMF)[)] [and] Treasury/IRS 34.037 IRS Audit Trail and Security Records System from 1999 to present." McBrearty Decl. ¶ 5; Gov't Ex. 1 (May 30, 2005). In a letter dated June 9, 2005, the Fresno Disclosure Office sent the plaintiff twenty pages of IMF MCC Specific and Literal Transcripts that it deemed responsive to his request. 4 McBrearty Decl. ¶ 6; Gov't Ex. 2 (June 9, 2005). The letter advised the plaintiff that there would be "considerable fees" associated with a search of his audit trail, and therefore, before beginning the search, the IRS would need a guarantee that these fees would Government Exhibits 1-8 (Gov't Ex.); (4) the Plaintiff's Reply to the IRS' Motion to Substitute Named Defendants and to Dismiss ("Pl.'s Reply"); (5) the Plaintiff's Memorandum in Support of his Reply to the IRS' Motion to Substitute Named Defendants and to Dismiss ("Pl.'s Mem."); and the IRS's Reply Memorandum ("Def.'s Reply"). 3 See United States v. Flaherty, No. 1:08-cv-00493 (SOM/KSC), 2010 WL 4273001 (D. Haw. Oct. 22, 2010). The United States filed an action against the plaintiff in the United States District Court for the District of Hawaii, seeking to reduce federal income tax assessments to judgment and to foreclose federal tax liens on real property. Id. at 1. In that case, the court granted summary judgment to the United States on October 22, 2010, id. at 6, which the plaintiff has appealed to the United States Court of Appeals for the Ninth Circuit and resolution of the appeal is currently pending. See United States v. Flaherty, No. 11-15217 (9th Cir.). Additionally, on March 15, 2011, the plaintiff filed a complaint in the District of Hawaii wherein the same requests at issue in this case has been made. See Flaherty v. President of the United States, No. 1:11-cv-00173 (D. Haw.). The defendant's motion to dismiss in that case remains pending and a hearing has been scheduled for September 19, 2011. See June 2, 2011 Minute Order, United States v. Flaherty, No. 11-cv-00173, (ACK) (D. Haw). 4 The full name of "IMF MCC Specific and Literal Transcripts" is not provided in any documents filed by the plaintiff. 2 be paid and that any cost over $250.00 would be prepaid. McBrearty Decl. ¶ 6; Gov't Ex. 2 (June 9, 2005). According to the defendant, "nothing in the IRS disclosure file" indicated that the plaintiff responded to the Fresno Campus Disclosure Office's request for a "firm commitment" to pay for audit trail fees. McBrearty Decl. ¶ 7. The plaintiff's second request to the IRS is dated November 24, 2008, and was addressed to the Fresno Campus Disclosure Office. McBrearty Decl. ¶ 8; Gov't Ex. 3 (November 24, 2008). The plaintiff requested "copies of the actual Audit, Summary Record and Lien against [him] or any document with a IRS assessment officer agent's signature." McBrearty Decl. ¶ 8; Gov't Ex. 3 (November 24, 2008). In a letter dated December 5, 2008, the Fresno Disclosure Office asked the plaintiff to provide additional information in order to establish his identity, such as a copy of a driver's license, and his social security number. McBrearty Decl. ¶ 9; Gov't Ex. 4 (December 5, 2008). According to the defendant, "nothing in the IRS disclosure file indicates that [the plaintiff] responded to the Fresno Disclosure Office's request for plaintiff to establish his identity and to provide his social security number." McBrearty Decl. ¶ 10. The third request from the plaintiff to the IRS is dated December 15, 2008, and was addressed to the Laguna Nigel Disclosure Office. McBrearty Decl. ¶ 11; Gov't Ex. 5 (December 15, 2008). The plaintiff requested "a copy of any document in [his] individual Master File with an assessment officer's signature and date on it for the years 1999, 2000, and 2001." McBrearty Decl. ¶ 11; Gov't Ex. 5 (December 15, 2008). In a letter dated January 26, 2009, the Laguna Nigel Disclosure Office sent the plaintiff twelve pages of account transcripts, but informed him that the IRS was "unable to find any documents specifically responsive to [his] request." McBrearty Decl. ¶ 12; Gov't Ex. 6 (January 26, 2009). Enclosed in the letter was a notification of the plaintiff's appeal rights. Gov't Ex. 6 (January 26, 2009). Also on January 26, 2009, the 3 plaintiff called a Disclosure Specialist to discuss this request. McBrearty Decl. ¶ 13; Gov't Ex. 7 (January 28, 2009). The Disclosure Specialist explained to the plaintiff what documents would be sent to him in response to his request and "directed [the plaintiff] to call the Taxpayer Advocate if he had any further concerns." McBrearty Decl. ¶ 13; see Gov't Ex. 7 (January 28, 2009). The defendant maintains that the plaintiff did not file an administrative appeal regarding this request. See McBrearty Decl. ¶ 17. The plaintiff's fourth request to the IRS is dated January 28, 2009, and was also addressed to the Laguna Nigel Disclosure Office. McBrearty Decl. ¶ 14; Gov't Ex. 7 (January 28, 2009). The plaintiff requested "any document in [his] Individual Master File with an Assessment Officer's signature and date on it for the years 1999, 2000, and 2001," as well as a document entitled Preparation of Seizure Disposition 6670 Report. McBrearty Decl. ¶ 14; Gov't Ex. 7 (January 28, 2009). The plaintiff requested expedited treatment for this request. McBrearty Decl. ¶ 14; Gov't Ex. 7 (January 28, 2009). In a letter dated February 5, 2009, the Laguna Nigel Disclosure Office denied his request for expedited processing and included a notice of the plaintiff's administrative appeal rights. McBrearty Decl. ¶ 15; Gov't Ex. 8 (February 5, 2009). In a separate letter dated February 11, 2009, the Laguna Nigel Disclosure Office sent the plaintiff fifteen pages of Revenue Accounting Control System ("RACS") reports and account transcripts for the tax years 1999, 2000, and 2001, but informed him that there were no documents responsive to his request for Form 6670. McBrearty Decl. ¶ 16; Gov't Ex. 9 (February 11, 2009). According to the IRS, the plaintiff did not file an administrative appeal regarding this request. See McBrearty Decl. ¶ 17. The plaintiff filed this case on January 19, 2011. See Compl. He alleges that "despite these repeated requests . . . no procedurally correct, signed assessment was ever produced . . . ." 4 Id. ¶ 14. The plaintiff asserts that his administrative remedies were exhausted within the meaning of 5 U.S.C. § 552 when the IRS Disclosure Office failed to reply to his third request in a timely manner. Id. ¶ 16. In response, the IRS asserts that it should be substituted as the sole named defendant in this case, and that all other defendants should be dismissed because the case concerns only the requests made by the plaintiff to the IRS and because the FOIA only authorizes claims against agencies, not individuals. See Def.'s Mem. at 5. The IRS further contends that the plaintiff's failure to file any administrative appeals with the IRS demonstrates his failure to exhaust his administrative remedies. Def.'s Mot. at 2; Def.'s Mem. at 7. II. STANDARDS OF REVIEW A. Rule 12(b)(6) Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of an action where a complaint fails to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). Where the sufficiency of a complaint is challenged under 12(b)(6), all the factual allegations must be presumed true and liberally construed in the plaintiff's favor. Porter v. CIA, __ F. Supp. 2d __, __, No. 10-cv-050 (JEB), 2011 WL 1497648, at 3 (D.C. Cir. April 21, 2011) (citing Leatherman v. Tarrant Cnty. Narcotics and Coordination Unit, 507 U.S. 163 (1993)). Despite this liberal standard, a court must not, "accept inferences drawn by plaintiffs if such inferences are unsupported by the facts set out in the complaint." Voinche v. Obama, 744 F. Supp. 2d 165 (D.C. Cir. 2010) (quoting Kowal v. MCI Commc'ns Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994)). Therefore, in evaluating a Rule 12(b)(6) motion, the complaint must plead "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Atherton v. D.C. Office of the Mayor, 567 F.3d 672, 681 (D.C. Cir. 2009) (quoting Ashcroft v. Iqbal, __ U.S. __, __, 129 S. Ct. 1937, 1949 (2009). This standard requires "more 5 than a sheer possibility that a defendant has acted unlawfully; a complaint alleging facts that are merely consistent with a defendant's liability . . . stops short of the line between possibility and plausibility of entitlement to relief." Voinche, 744 F. Supp. 2d at 170 (internal quotation marks and citations omitted) (quoting Iqbal, S. Ct. at 1949). B. Pro Se Litigants The pleadings of pro se parties are to be "liberally construed, and a pro se complaint, however inartfully pleaded, must be held to less stringent standards than formal pleadings drafted by lawyers." Erickson v. Pardus, 551 U.S. 89, 94 (2007) (internal quotation marks and citations omitted). However, even though a pro se complaint must be construed liberally, the complaint must still "present a claim on which the Court can grant relief." Chandler v. Roche, 215 F. Supp. 2d 166, 168 (D.D.C. 2002) (citing Crisafi v. Holland, 655 F.2d 1305, 1308 (D.C. Cir. 1981)). III. LEGAL ANALYSIS A. The Defendant's Motion to Substitute Named Defendants The first issue for the Court to address is whether an individual public official can be named as a defendant in a FOIA claim. The FOIA itself makes clear that it authorizes suits only against federal agencies, not individuals. See 5 U.S.C. § 552(a)(4)(B); Leitner v. United States, 725 F. Supp. 2d 36, 45 (D.C. Cir. 2010) ("It is well established that '[t]his Court's jurisdiction to enforce the FOIA is limited to enjoining agency noncompliance.'" (quoting Stone v. Def. Investigative Serv., 816 F. Supp. 782, 785 (D.D.C. 1993))). This Circuit has, in the past, therefore, upheld the dismissal of cases in which a plaintiff named individuals, including public officials, as defendants. See Martinez v. Bureau of Prisons, 444 F.3d 620, 624 (D.C. Cir. 2006) (differentiating the obligations imposed by the FOIA on agencies from the individual employees within those agencies); Voinche, 744 F. Supp. 2d at 172 ("[The] plaintiff's FOIA claims against 6 former President Bush and President Obama must be dismissed because 'no FOIA claim may be asserted against individual federal officials.'" (quoting Whittle v. Moschella, 756 F. Supp. 589, 596 (D.D.C. 1991))). The defendant asserts that it should be substituted as the sole named defendant in this case because this action only concerns requests from the plaintiff to the IRS, and that the other defendants should be dismissed based on the FOIA's authorization of suits only against federal agencies. See Def.'s Mem. at 5. The plaintiff's opposition to this motion arises from allegations concerning the named defendants that are seemingly relevant not to this FOIA claim, but to a separate claim filed against him in another case by the United States. See supra note 3; see generally Pl.'s Mem. at 1, 7-8. In light of both the FOIA's statutory language and this Circuit's application of the FOIA in prior cases, it is clear for two reasons that the IRS is the only proper defendant in this case. First, the plaintiff's requests pertained only to the IRS. Second, because the other named defendants are individuals, they cannot be parties to a suit brought pursuant to the FOIA. Accordingly, the IRS shall be substituted as the named defendant in this case and all defendants other than the IRS shall be dismissed. B. The Defendant's Motion to Dismiss The second issue before the Court is whether the plaintiff exhausted his administrative remedies with regard to the four requests he made to the IRS. Exhaustion of administrative remedies in FOIA cases is "generally required before filing suit in federal court so that the agency has an opportunity to exercise its discretion and expertise on the matter and to make a factual record to supports its decision." Oglesby v. Dep't of Army, 920 F.2d 57, 61 (D.C. Cir. 1990); see Sinito v. Dep't of Justice, 176 F.3d 512, 516 (D.C. Cir. 1999) (explaining that the 7 FOIA requires the requester to exhaust administrative remedies); Dettmann v. Dep't of Justice, 802 F.2d 1472, 1476 (D.C. Cir. 1986) ("It goes without saying that exhaustion of remedies is required in FOIA cases."); Almy v. Dep't of Justice, No. 2:90-cv-362, 1997 WL 267884, at 3 (9th Cir. May 7, 1997) ("[T]he FOIA requires exhaustion of administrative remedies before the filing of a lawsuit."); Taylor v. Appleton, 30 F.3d 1365, 1367 (11th Cir. 1994) ("The FOIA clearly requires a party to exhaust all administrative remedies before seeking redress in the federal courts."); McDonnell v. United States, 4 F.3d 1227, 1240-41 (3d Cir. 1993); Voinche v. Dep't of the Air Force, 983 F.2d 667, 669 (5th Cir. 1993) ("We conclude that the FOIA should be read to require that a party must present proof of exhaustion of administrative remedies prior to seeking judicial review."). Although administrative exhaustion "is not jurisdictional because the FOIA does not unequivocally make it so . . . as a jurisprudential doctrine, failure to exhaust precludes judicial review if the purposes of exhaustion and the particular administrative scheme support such a bar." Hidalgo v. F.B.I., 344 F.3d 1256, 1258-59 (D.C. Cir. 2003) (internal quotation marks omitted) (citing I.A.M. Nat'l Pension Fund Benefit Plan C v. Stockton T.R.I. Indus., 727 F.2d 1204, 1208 (D.C. Cir. 1984)). Further, judicial review prior to agency exhaustion would "undercut the purposes of exhaustion, namely, preventing premature interference with agency processes, ... afford[ing] the parties and the courts the benefit of [the agency's] experience and expertise, ... [or] compil[ing] a record which is adequate for judicial review." Hidalgo, 344 F.3d at 1259 (alteration in original) (internal quotation marks omitted) (citing Ryan v. Bentsen, 12 F.3d 245, 247 (D.C. Cir. 1993)). Accordingly, if a FOIA plaintiff attempts to obtain judicial review without first properly exhausting administrative remedies, the lawsuit is subject to dismissal. Wilbur v. CIA, 355 F.3d 675, 676 (D.C. Cir. 2004) (citing Oglesby, 920 F.2d at 61- 8 64, 65 n.9) (explaining that "a requester under the FOIA must file an administrative appeal within the time limit specified in an agency's FOIA regulations or face dismissal of any lawsuit complaining about the agency's response"). While it is settled in this Circuit that the exhaustion requirement is a condition precedent to the bringing of a FOIA action, because "exhaustion of administrative remedies in a FOIA case is not a jurisdictional bar to judicial review. . . ," Jones v. Dep't of Justice, 576 F. Supp. 2d 64, 66 (D.C. Cir. 2008) (citing Hidalgo, 344 F.3d at 1258), when a FOIA defendant disputes that a FOIA plaintiff has fulfilled the exhaustion requirements, "the matter is properly the subject of a motion brought under Rule 12(b)(6) for failure to state a claim upon which relief may be granted." 5 Id. 1. The Plaintiff's Failure to Comply with Agency Regulations "A party requesting agency records under the FOIA must comply with the procedures set forth in the regulations promulgated by that agency." Calhoun v. Dep't of Justice, 693 F. Supp. 2d 89, 91 (D.C. Cir. 2010); see 5 U.S.C. § 552(a)(3) (providing that an agency must make records promptly available upon any request "made in accordance with published rules stating the time, place, fees (if any), and procedures to be followed"). Where a request does not comply with published regulations, the FOIA claim is subject to dismissal for failure to exhaust administrative remedies. Calhoun, 693 F. Supp. 2d at 91; see Matsey v. Dep't of Justice, No. 03- cv-889 (PLF), 2005 WL 1017867, at 7 (D.D.C. May 2, 2005) ("By failing to follow the procedures set forth [in the pertinent regulations for requesting agency records, the plaintiff] failed to exhaust his administrative remedies under the FOIA."). 5 Courts in other jurisdictions have held that dismissal for failure to exhaust administrative remedies is appropriate under to Rule 12(b)(1). See McDonnell v. United States, 4 F.3d 1227, 1240 & n.9 (3d Cir. 1993) (affirming dismissal for lack of subject matter jurisdiction because plaintiff failed to exhaust administrative remedies); Trenerry v. IRS, No. 95-5150, 1996 WL 88459, at 1 (10th Cir. Mar. 1, 1996) (confirming that court lacked subject matter jurisdiction "where plaintiff has failed to exhaust her administrative remedies"). 9 The IRS has promulgated regulations that specify procedures that must be complied with when costs associated with a FOIA search exceed the amount to which the requester consented, as well as how a requester must establish his or her identity. 26 C.F.R. 601.702(c)(5)(iii), (f)(4)(i). Here, the plaintiff failed to approve a projected fee associated with his first request as instructed by the IRS's reply letter and in accordance with the IRS's regulations. Gov't Ex. 2 (June 9, 2005). The plaintiff also failed to properly file his second request by omitting proper identification. Gov't Ex. 3 (November 24, 2008). Because the plaintiff's first and second requests did not comply with the IRS's published regulations, the plaintiff's FOIA claims based on these two requests fail the exhaustion requirement and will therefore be dismissed. 2. The Plaintiff's Failure to Pursue an Administrative Appeal The exhaustion of administrative remedies requires the timely filing of an administrative appeal from an agency's determination as to whether it can or will produce records responsive to a FOIA request. See Hidalgo, 344 F.3d at 1259 (citing an administrative appeal as a requirement for exhaustion); Oglesby, 920 F.2d at 61-62 (stating that exhaustion of the appeal process is necessary prior to judicial review). A requester can also appeal a determination that no records responsive to the FOIA request exist, such as in the present case with respect to the plaintiff's third and fourth FOIA requests. 26 C.F.R. § 601.702(c)(10)(i); see Gov't Ex. 6 (January 26, 2009), 8 (February 5, 2009), 9 (February 11, 2009). To file an administrative appeal, the requester must submit a letter to the Commissioner of Internal Revenue postmarked within 35 days after (1) the later date of any letter of notification of the adverse determination of the requester's fee waiver or reduction request, (2) the date of any letter determining that no responsive records exist, or (3) the date of the last transmission of the last records released. 26 C.F.R. § 601.702(c)(10)(i). 10 Here, the defendant asserts that the plaintiff failed to exhaust his administrative remedies by not filing administrative appeals in regards to any of his requests. Def.'s Mot. at 2; Def.'s Mem. at 7. The plaintiff does not dispute his failure to file an administrative appeal. See generally Compl. Further, the defendant's national FOIA request database makes clear that no administrative appeal was filed by the plaintiff with respect to his four requests. McBrearty Decl. ¶ 17. The plaintiff's only response is that he constructively exhausted his administrative remedies due to the defendant's "failure to respond in a timely manner" to the third request. Compl. ¶ 16. Thus, the plaintiff effectively concedes, and this Court now finds, that the plaintiff failed to exhaust his administrative remedies with respect to the fourth request. Accordingly, the Court will dismiss the plaintiff's claims stemming from his fourth request. 6 3. The Plaintiff's Constructive Exhaustion Arguments The FOIA permits requesting parties to treat an agency's failure to comply with its own specific time limits as constructive exhaustion of the requesters' administrative remedies. 5 U.S.C. § 552(a)(6)(C) (2006); Judicial Watch Inc. v. Rossotti, 326 F.3d 1309, 1310 (D.C. Cir. 2003); see Nurse v. Sec'y of the Air Force, 231 F. Supp. 2d 323, 328 (D.D.C. 2002) ("The FOIA is considered a unique statute because it recognizes a constructive exhaustion doctrine for purposes of judicial review upon the expiration of certain relevant FOIA deadlines."). Therefore, if an agency fails to notify a requester as to whether it will comply with the request within the twenty-day statutory time limit (excluding Saturdays, Sundays, and legal public holidays), the requester can seek judicial review even though he or she has not filed an administrative appeal. Judicial Watch, 326 F.3d at 1310; see Oglesby, 920 F.2d at 62 ("If the agency has not responded within the statutory time limits, then, under 5 U.S.C. § 552(a)(6)(C), the requester may bring 6 In accord with this analysis, the plaintiff's first and second FOIA requests would similarly be subject to dismissal for the plaintiff's failure to pursue his administrative remedies if dismissal on other grounds had not already been ordered. 11 suit."); Gabel v. IRS, No. 97-1653 (MMC), 1998 U.S. Dist. LEXIS 12467, at 10 (N.D. Cal. June 25, 1998) (ruling that a plaintiff who did not receive a timely response "was entitled to file his complaint without further pursuing an administrative appeal or seeking further explanation"). This right to judicial review based on constructive exhaustion ends, however, if an agency responds at any time before the requester files suit. See Judicial Watch, 326 F.3d at 1310 (concluding that the agency can cure its constructive waiver of the exhaustion requirement by providing the required notice to the requester, even if tardy, before the requester files suit); Smith v. FBI, 448 F. Supp. 2d 216, 220 (D.D.C. 2006) (citing Ogelsby, 920 F.2d at 62); Pollack v. Dep't of Justice, No. 89-2569, 1993 WL 293692, at 4 (D. Md. July 23, 1993) ("Under [the] FOIA's statutory scheme, when an agency fails to comply in a timely fashion with a proper FOIA request, it may not insist on the exhaustion of administrative remedies unless the agency responds to the request before suit is filed."). The plaintiff maintains that his administrative remedies with respect to his third FOIA request were exhausted when the IRS failed to respond within the twenty-day statutory time limit and that he therefore was not required to file an administrative appeal prior to seeking judicial review. 7 Compl. ¶ 16. The defendant asserts correctly, however, that although the IRS Disclosure Office responded after the statutory deadline, because the plaintiff did not file an administrative appeal after the IRS did respond on January 26, 2009, the plaintiff did not exhaust his administrative remedies. Def.'s Mem. at 9. More precisely, because the plaintiff did not file a lawsuit after the expiration of the twenty day statutory time period but before the IRS's response, the constructive exhaustion was cured and an administrative appeal had to be filed to satisfy the exhaustion requirement. See Judicial Watch, 326 F.3d at 1310. Thus, although the 7 As explained above, the defendant responded to all of the plaintiff's requests within the statutory time limit except for his third request. 12 defendant failed to respond within the twenty-day statutory time limit, because the plaintiff did not file a lawsuit before the defendant's untimely response to his third request on January 26, 2009, the plaintiff cannot now claim constructive exhaustion. Accordingly, the plaintiff's claims arising from his third request must be dismissed. IV. CONCLUSION For the foregoing reasons, the Court concludes that the IRS is the only proper defendant in this case, that all other named defendants shall be dismissed, and that the plaintiff has failed to state a claim upon which relief may be granted. Accordingly, the Court will grant the defendant's motion to dismiss the plaintiff's complaint under Rule 12(b)(6). SO ORDERED this 13th day of July, 2011. 8 REGGIE B. WALTON United States District Judge 8 An order will be issued consistent with this memorandum opinion. 13	01-03-2023	04-04-2014
https://www.courtlistener.com/api/rest/v3/opinions/2664049/	UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ____________________________________ ) FARZAD DARUI, ) ) Plaintiff, ) ) v. ) Civil Action No. 09-02093 (ABJ) ) UNITED STATES DEPARTMENT OF ) STATE, ) ) Defendant. ) ___________________________________ ) MEMORANDUM OPINION Plaintiff Farzad Darui brought this action against the United States Department of State seeking the release of documents under the Freedom of Information Act. Defendant has moved for summary judgment. Upon consideration of the motion, plaintiff’s opposition, the Court’s own review of the documents themselves, and the entire record of the case, the Court will grant defendant’s motion. I. Background Plaintiff Farzad Darui was the business manager of the Islamic Center (the “Center”) in Washington D.C., and his responsibilities included paying the Center’s invoices by mailing checks to its various vendors. United States v. Darui, Criminal No. 07-00149 (RCL), Compl. ¶¶ 5, 8 (D.D.C. Oct. 12, 2006) (“Crim. Compl.”). On October 12, 2006, the United States filed criminal charges against Darui in this Court, alleging that Darui had altered the payee line on multiple checks intended for the Center’s vendors and had instead deposited them to a bank account held by a corporation in which he was the chief executive officer. Id. ¶¶ 8 11. The government charged him with mail fraud and interstate transportation of stolen property. Id. ¶ 2. During the course of plaintiff’s criminal trial, the government made known its intention to call a witness who worked for the Royal Embassy of Saudi Arabia (the “Embassy”). Def.’s Mot. for Summ. J., Ex B, United States v. Darui, Criminal No. 07-00149 (RCL), Trial Transcript at 83 (D.D.C. May 19, 2008) (“Crim. Tr.”). Before the witness testified, the Court reviewed two letters under seal between the Department of State (“State” or “defendant”) and the Ambassador of Saudi Arabia concerning a limited waiver of sovereign immunity for the Embassy witness under the Vienna Convention on Diplomatic Relations. Crim. Tr. at 84, 89. The limited waiver of sovereign immunity authorized the witness to testify in the criminal proceedings against plaintiff about certain documents he saw while working at the Embassy. Id. at 85. The Court reviewed the letters, and on May 19, 2008, the Court directed that they be shown to plaintiff and his defense counsel for purposes of limiting the scope of cross-examination. Id. at 88 90. The Court also placed the documents and any further discussion of them under seal. Id. at 89–90. On June 17, 2008, plaintiff submitted a document request to State under the Freedom of Information Act (“FOIA”), 5 U.S.C. § 552. Declaration of Margaret P. Grafeld (“Grafeld Decl.”) ¶ 4. The initial request sought all documents collected and maintained by State regarding plaintiff. Id. On October 2, 2008, plaintiff narrowed his FOIA request to three sets of documents. Id. ¶ 10. These categories are: (1) communications between State and the Department of Justice (“DOJ”) in May 2008 regarding plaintiff; (2) any communications between State and the Embassy regarding plaintiff between August 2006 and October 2008; (3) any communications between State and the Islamic Center of Washington, D.C. regarding plaintiff between August 2006 and October 2008. Id. Upon receiving the narrowed request, State asserts that it initiated a comprehensive search of the Central Foreign Policy Records, the 2 Bureau of Near Eastern Affairs, the Office of the Legal Advisor, and the United States Embassy in Riyadh. Def.’s Mem. in Support of Mot. for Summ. J. (“Def.’s Mem.”) at 4. On November 6, 2009, plaintiff filed this action seeking a court order requiring the release of all responsive records under FOIA. Compl. ¶ 1. On March 17, 2010, defendant informed plaintiff that its search of the Central Foreign Policy Record, the Bureau of Near Eastern Affairs and the Office of the Legal Advisor had resulted in three responsive documents. Grafeld Decl. ¶ 16, Ex. 12. The March 17 correspondence further explained that State was withholding all three documents, in full, pursuant to FOIA Exemption 1 (properly classified materials authorized to be kept secret in the interest of national defense and foreign policy), Exemption 5 (inter- or intra-agency memoranda which would not be available by law to a party other than an agency in litigation with the agency), and Exemption 7(A) (records or information compiled for law enforcement purposes, the production of which could reasonably be expected to interfere with enforcement proceedings). Id. On April 8, 2010, State wrote plaintiff again, notifying him that it had completed its search of the United States Embassy at Riyadh and had located no further responsive documents. Id. ¶ 17, Ex. 13. On May 3, 2010, State wrote plaintiff a third time. Def.’s Mot. for Summ. J., Ex. C. The letter included a Vaughn index that described the three responsive documents and explained the FOIA exemptions under which they were being withheld. Id. at 2–3. The Vaughn index explained that Document 1 consisted of a series of emails between attorneys at State and the Department of Justice and was being withheld pursuant to FOIA Exemptions 5 and 7(A). Id. at 2. Document 2 was described as a letter from an official at State to the Ambassador of Saudi Arabia, and Document 3 was a letter from the Ambassador of Saudi Arabia to the United States. 3 Id. at 2–3. The May 3 letter also informed plaintiff that Documents 2 and 3 were being withheld in full pursuant to FOIA exemptions 1 and 7(A). Id. Meanwhile, the government’s criminal case against plaintiff resulted in a hung jury; thereafter, the government moved to dismiss the criminal charges. Def.’s Mot. for Summ. J., Ex. A at 18, 29. On August 16, 2010, the Court granted the government’s motion. Id. State then informed plaintiff that it would no longer assert an exemption of the responsive documents under FOIA Exemption 7(A) but that it would continue to withhold Document 1 under Exemption 5, and withhold Documents 2 and 3 under Exemption 1. Def.’s Mem. at 5. On September 17, 2010, defendant State moved for summary judgment pursuant to Fed. R. Civ. P. 56. Attached to the motion is the Declaration of Margaret P. Grafeld, the Acting Deputy Assistant Secretary for Global Information Services and the Director of the Office of Information Programs and Services of the Department of State. Grafeld Decl. at 1. On June 30, 2011, the Court directed defendant to produce the three documents at issue to chambers for in camera inspection to assist the Court in making a responsible de novo determination. II. Standard of Review The purpose of the Freedom of Information Act, 5 U.S.C. § 552, is to require the release of government records upon request. “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 governors accountable to the governed.” NLRB v. Robbins Tire & Rubber Co., 437 U.S. 214, 242 (1978). “Yet Congress realized that legitimate governmental and private interests could be harmed by release of certain types of information and provided nine specific exemptions under which disclosure could be refused.” FBI v. Abramson, 456 U.S. 615, 621 4 (1982). These exemptions “must be narrowly construed,” Dep’t of Air Force v. Rose, 425 U.S. 352, 361 (1976), while still “hav[ing] meaningful reach and application,” John Doe Agency v. John Doe Corp., 493 U.S. 146, 152 (1989). Congress’s aim with FOIA was to establish a balance between the public’s right to know and the need for the government to protect sensitive information. See id. “FOIA cases are typically and appropriately decided on motions for summary judgment.” Moore v. Bush, 601 F. Supp. 2d 6, 12 (D.D.C. 2009) (citations omitted). Fed. R. Civ. P. 56(a) provides that “[t]he court shall grant summary judgment 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.” In a motion for summary judgment, the Court “must view the evidence in the light most favorable to the nonmoving party, draw all reasonable inferences in his favor, and eschew making credibility determinations or weighing the evidence.” Montgomery v. Chao, 546 F.3d 703, 706 (D.C. Cir. 2008). See also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 48 (1986). “In a FOIA case, a court may award summary judgment solely on the basis of information provided by the agency in declarations” in certain circumstances. Moore, 601 F. Supp. 2d at 12. Those circumstances exist when the 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). The district court must “determine the matter de novo, and . . . the burden is on the agency to sustain its action.” 5 U.S.C. § 552(a)(4)(B); see also Military Audit Project, 656 F.2d 5 at 738. The court has the discretion to conduct an in camera review of the withheld material in order to make a responsible de novo determination on the claims of exemption. Ray v. Turner, 587 F.2d 1187, 1195 (D.C. Cir. 1978). But, “in conducting de novo review in the context of national security concerns, courts ‘must accord substantial weight to an agency’s affidavit concerning the details of the classified status of the disputed record.’” Wolf v. CIA, 473 F.3d 370, 374 (D.C. Cir. 2007), quoting Miller v. Casey, 730 F.2d 773, 776 (D.C. Cir. 1984). The Court must be aware “that any affidavit or other agency statement of threatened harm to national security will always be speculative to some extent, in the sense that it describes a potential future harm.” Halperin v. CIA, 629 F.2d 144, 149 (D.C. Cir. 1980). “Ultimately, an agency’s justification for invoking a FOIA exemption is sufficient if it appears ‘logical’ or ‘plausible.’” Wolf, 473 F.3d at 374 75. III. Analysis A. Document 1 is Properly Withheld Pursuant to FOIA Exemption 5 FOIA Exemption 5 provides for withholding “inter-agency or intra-agency memorandums or letters which would not be available by law to a party . . . in litigation with the agency.” 5 U.S.C. § 552(b)(5). Put another way, Exemption 5 provides for the protection of information “normally privileged in the civil discovery context.” NLRB v. Sears, Roebuck & Co., 421 U.S. 132, 149 (1975). “To qualify as exempt under [Exemption 5], a document must meet two conditions: ‘[1] its source must be a Government agency, and [2] it must fall within the ambit of a privilege against discovery under judicial standards that would govern litigation against the agency that holds it.’” Stolt-Nielsen Transp. Grp. Ltd. v. United States, 534 F.3d 728, 733 (D.C. Cir. 2008), quoting Dep't of Interior v. Klamath Water Users Protective Ass'n., 532 U.S. 1, 8 (2001). The Court has determined that Document 1 meets both conditions. 6 Plaintiff does not dispute that Document 1 is a series of email exchanges between attorneys for the Department of Justice and for the Department of State. See Grafeld Decl. at 14 15; Pl.’s Opp. at 9. However, plaintiff asserts that defendant has failed establish the second element – that the information would be subject to privilege in the normal course of civil litigation discovery. To qualify for protection under the attorney work-product doctrine, the material in question must (1) be a document or tangible thing, (2) which was prepared in anticipation of litigation, and (3) was prepared by or for a party, or by or for its representative. See Fed. R. Civ. P. 26(b)(3)(A) (“[A] party may not discover documents and tangible things that are prepared in anticipation of litigation or for trial by or for another party or its representative (including the other party’s attorney. . . ).”). Moreover, “[a]ny part of [a document] prepared in anticipation of litigation, not just the portions concerning opinions, legal theories, and the like, is protected by the work product doctrine and falls under exemption 5.” Tax Analysts v. IRS, 117 F.3d 607, 620 (D.C. Cir. 1997). The test for whether a document was prepared “in anticipation” of litigation is “whether, in light of the nature of the document and the factual situation in the particular case, the document can fairly be said to have been prepared or obtained because of the prospect of litigation.” Wright & Miller, 8 Fed. Prac. & Proc. Civ. § 2024 (emphasis added). See also SafeCard Servs., Inc. v. SEC, 926 F.2d 1197, 1203 (D.C. Cir. 1991) (“[W]here an attorney prepares a document in the course of an active investigation focusing upon specific events and a specific possible violation by a specific party, it has litigation sufficiently ‘in mind’ for that document to qualify as attorney work product.”) 7 Here, Grafeld’s declaration establishes each of the elements of attorney work product. First, the materials in question are documents – a series of emails. Grafeld Decl. at 14. Second, the emails “were prepared in connection with a law enforcement proceeding.” Id. at 15. The emails are dated May 5 7, 2008, which was two weeks before the Court heard arguments in the underlying criminal case regarding Saudi Arabia’s partial waiver of sovereign immunity. Given both the subject matter of the emails and the timing, and in light of the Court’s own review of the material, it is clear to the Court that the government attorneys were “focusing upon specific events,” and “a specific party,” thus “ha[ving] litigation sufficiently ‘in mind’” for the documents to qualify as attorney work product. SafeCard Servs., 926 F.2d at 1203. Third, Grafeld’s declaration establishes that the emails were prepared by attorneys for DOJ and State. Grafeld Decl. at 15. The attorneys from DOJ were representing the United States in the criminal case against the plaintiff, so the emails qualify as being prepared “by or for another party or its representative (including the other party’s attorney. . . ).” Fed. R. Civ. P. 26(b)(3)(A). Plaintiff argues that defendant fails to specify “how the attorney-work product privilege applies to the withheld documents.” Pl.’s Opp. at 12. He also argues that “[t]here is no discussion of who the attorneys actually are, what offices they represent as attorneys, and what relationship they have to the underlying legal proceedings.” Id. The Court’s review of the documents satisfies the Court that the exchange specifically involved the prosecuting attorneys in plaintiff’s criminal case, and that they were prepared in anticipation of the sovereign immunity hearing. Grafeld Decl. at 15. Thus, Grafeld’s declaration is sufficient to establish the “logical” or “plausible” conclusion, see Wolf, 473 F.3d at 375, that emails between attorneys at DOJ and State discussing plaintiff’s hearing on sovereign immunity fall within the attorney work product privilege. Viewing the evidence in the light most favorable to the nonmoving party, it is evident 8 to the Court that these emails would not have been discoverable in the course of plaintiff’s criminal trial and therefore properly withheld under Exemption 5. Defendants also argue that Document 1 falls within attorney-client and deliberative process privileges. However, the Court need not reach these arguments, given the conclusion that Document 1 is protected by attorney work-product privilege, and is therefore properly withheld under Exemption 5. B. Documents 2 and 3 Are Properly Withheld Pursuant to FOIA Exemption 1 FOIA Exemption 1 provides that disclosures do not apply “to 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 actually classified pursuant to such an Executive order.” 5 U.S.C. § 552(b)(1). The Court will grant defendant’s motion for summary judgment because defendant has established the requirements of nondisclosure under Exemption 1, and because plaintiff cannot show that defendant waived the right to invoke Exemption 1. 1. Defendant Properly Classified Documents 2 and 3 In Accordance With Executive Order 13526 On December 29, 2009, President Obama issued Executive Order 13526, 75 Fed. Reg. 707 (Dec. 29, 2009), which replaced Executive Orders 13292 and 12958. Information is subject to classification under Executive Order 13526 if it meets the following conditions: (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 or 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 9 the national security, which includes defense against transnational terrorism, and the original classification authority is able to identify or describe the damage. Exec. Order No. 13,526, § 1.1(a). The Court has determined that defendant has established each of these elements. First, Grafeld’s declaration establishes that she is a proper classifying authority. Grafeld Decl. ¶ 1. Plaintiff’s attempt to refute this fact is unpersuasive. Plaintiff proffers no evidence to support his contentions that Grafeld lacks the authority to classify information, that Grafeld is perjuring herself in her declaration, or that she has failed to comply with the Executive Order’s requirements for classification authority. See Pl.’s Opp. at 5. Second, plaintiff does not refute that Documents 2 and 3 – diplomatic cables between the governments of the United States and Saudi Arabia – are “owned, produced by or for, or under . . . the control of the United States Government.” Exec. Order No. 13,526, § 1.1(a)(2). Third, Documents 2 and 3 meet the requirements of section 1.4 of Executive Order 13526. Section 1.4 details seven categories of information that may be considered for classification. It includes information that relates to “foreign relations or foreign activities of the United States, including confidential sources.” Exec. Order No. 13,526, § 1.4(d). Grafeld stated in her signed, sworn declaration that Documents 2 and 3 “concern U.S. foreign relations, specifically, correspondence with a foreign government on a matter regarded by that government as sensitive, namely, archival inviolability under the Vienna Convention on Diplomatic Relations.” Grafeld Decl. ¶ 35. The Court’s review of the documents bears out this description. Moreover, section 1.4(b) of the Executive Order permits classifying “foreign government information.” Exec. Order No. 13,526, § 1.4(b). Section 6.1(s) of the Executive Order defines the term foreign government information as “information provided to the United States Government by a foreign government . . . with the expectation that the information, the source of 10 the information, or both, are to be held in confidence.” Id. § 6.1(s). Grafeld declared that Document 3 was “obtained in confidence from a foreign government . . . . Diplomatic exchanges are premised upon, and depend upon, an expectation that confidentiality will be observed.” Grafeld Decl. ¶ 33. Thus, Document 2 falls within category 1.4(d). And Document 3 – the letter from the Ambassador of Saudi Arabia to the United States – falls within categories of information listed in Sections 1.4(b) and 1.4(d). Finally, Grafeld determined that the disclosure of Documents 2 and 3 “reasonably could be expected to result in damage to the national security.” Exec. Order No. 13,526, § 1.1(a)(4). Regarding both Documents 2 and 3, Grafeld stated that “[t]he inability of the United States to maintain confidentiality in its diplomatic exchanges would inevitably chill relations with other countries. It would damage national security by diminishing our access to vital sources of information.” Grafeld Decl. ¶ 33. See also id. ¶ 35 (“The release of this information could reasonably be expected to cause damage to U.S. relations with a foreign government that expects diplomatic relations to be conducted in confidence.”). Furthermore, the disclosure of Document 3, which qualifies as foreign government information, “is presumed to cause damage to national security.” Exec. Order No. 13,526, Section 1.1(d). Grafeld stated that this presumption holds true here. See Grafeld Decl. ¶ 34. Plaintiff argues that defendant has failed to claim a reasonable degree of specificity, that evidence in the record controverts defendant’s claims, and that Documents 2 and 3 were not classified at the time of his criminal trial. Pl.’s Opp. at 7 8. The Court rejects these arguments. On the one hand, Plaintiff acknowledges that “[g]overnment classification decisions receive a great amount of deference.” Pl.’s Reply at 6 (citing Morley v. CIA, 508 F.3d 1108, 1124 (D.C. Cir. 2007)). But immediately thereafter, plaintiff argues that defendant has failed to specify the 11 actual harm that would result from disclosure. As plaintiff’s own cited authority recognized, “the text of Exemption 1 itself suggests that little proof or explanation is required beyond a plausible assertion that information is properly classified.” Morley, 508 F.3d at 1124. Here, as in Morley, plaintiff’s “argument for declassification does not overcome the ‘substantial weight’ the court must accord ‘to an agency’s affidavit concerning the details of the classified status of the disputed record.’” Id., quoting Military Audit Project, 656 F.2d at 738. Second, plaintiff argues that the government’s actions during the criminal proceedings undermine any deference to be accorded to the government’s decision to withhold the documents. Pl.’s Opp. at 8. It is true that the Assistant United States Attorney (“AUSA”) involved in plaintiff’s criminal case commented at the sovereign immunity hearing that “if the material was placed in the public domain, ‘the Government’s not going to shed tears over it.’” Id., quoting Crim. Tr. at 90. But at the same time, the government sought to have Documents 2 and 3, as well as any discussion of them, placed under seal, and the Court granted that request. See Crim. Tr. at 89:25–90:4. Thus, while the records were disclosed to the plaintiff’s counsel during proceedings related to the criminal trial, the government never consented to their release into the public domain. Moreover, the AUSA does not have the authority to classify or de- classify the documents, played no role in their classification, and does not work for State, the party in this action seeking nondisclosure. In sum, the AUSA’s single offhand remark is insufficient to overcome the substantial weight due to the Grafeld declaration. The fact that plaintiff viewed Documents 2 and 3 during his criminal trial does not undermine the government’s position under the circumstances in this case. Viewing documents under seal as a litigant is different than requesting the same documents as a member of the public under FOIA. The Court concluded in the criminal trial that plaintiff – as a criminal defendant in 12 the underlying proceeding – deserved access to Documents 2 and 3 in order to understand the limits of the waiver of sovereign immunity that would apply to the Embassy witness. But those documents were under seal, which prevents the public from viewing them. See Morgan v. U.S. Dep’t of Justice, 923 F.2d 195, 197 n.2 (D.C. Cir. 1991) (“Fed. R. Civ. P. 26(c) . . . gives the court the discretion both to place documents in the court record under seal and to issue detailed protective orders prohibiting disclosure of documents obtained through discovery.”) There would be no such restrictions if the government were to produce the documents pursuant to FOIA; the statute establishes the “public[’s] right to secure such information.” John Doe Agency, 493 U.S. at 151 (emphasis added). Moreover, the documents at issue were subsequently classified in accordance with Executive Order 13526, Section 1.1(a). Therefore, the fact that plaintiff viewed the documents under seal at one time does not entitle the public to broad access to classified documents now. Finally, plaintiff argues the current classified status of Documents 2 and 3 is deficient because they were not classified at the time of his criminal trial. Pl.’s Opp. at 8 n.2. Again, the Court points out that while the documents were revealed to the plaintiff during the trial, they have never been disclosed to the public. And Executive Order 13526 allows for the classification of national security information after it has been requested under FOIA. Information that has not previously been disclosed to the public under proper authority may be classified . . . after an agency has received a request for it under the Freedom of Information Act . . . only if such classification meets the requirements of this order and is accomplished on a document-by-document basis with the personal participation or under the direction of the agency head, the deputy agency head, or the senior official designated under section 5.4 of this order. Exec. Order No. 13,526, § 1.7(d). Grafeld’s declaration establishes the defendant’s compliance with section 1.7(d). 13 2. Defendant Has Not Waived Its Right to Classify Documents 2 and 3 In rare circumstances, actions by the government may waive its ability to withhold information sought under FOIA. However, the stringent test for waiver of a FOIA exemption has not been met in the instant case. “[A]lthough an agency bears the burden of proving that a FOIA exemption applies to a given document, a plaintiff asserting that information has been previously disclosed bears the initial burden of pointing to the specific information in the public domain that duplicates that being withheld.” Pub. Citizen v. Dep’t of State, 11 F.3d 198, 201 (D.C. Cir. 1993), citing Afshar v. Dep’t of State, 702 F.2d 1125, 1130 (D.C. Cir. 1983). “[FOIA] bars the courts from prying loose from the government even the smallest bit of information that is properly classified.” Afshar, 702 F.2d at 1130. The D.C. Circuit has held that “when information has been ‘officially acknowledged[]’ its disclosure may be compelled even over an agency’s otherwise valid exemption claim.” Fitzgibbon v. CIA, 911 F.2d 755, 765 (D.C. Cir. 1990). The Court identified three requirements to determine whether the government has waived its right to withhold the sought information by officially acknowledging it: First, the information requested must be as specific as the information previously released. Second, the information requested must match the information previously disclosed . . . . Third, . . . the information requested must already have been made public through an official and documented disclosure. Fitzgibbon, 911 F.2d at 765, citing Afshar, 702 F.2d at 1133. 1 1 In Afshar, the Court denied a claim of waiver for requested information that appeared in books written by former C.I.A. agents and in documents previously released by the C.I.A., State, and the F.B.I. 702 F.2d at 1132 35. The Court reasoned that the statements in the book failed to meet the “official and documented disclosure” element and the released documents were either less specific than the requested information or contained information that was sufficiently different. Id. In Fitzgibbon, the court denied the plaintiff’s allegation of waiver even when the information sought – the location of a C.I.A. station – had been disclosed in a congressional 14 Here, plaintiff is able to establish that Documents 2 and 3 meet the first and second elements of a waiver argument. Identical copies of Documents 2 and 3 were made available to plaintiff in his criminal trial, thus meeting the required level of specificity. However, plaintiff cannot establish the third element. Documents 2 and 3 were placed under seal in the criminal proceedings, and therefore, there has been no official, documented, public disclosure that could form the predicate for a waiver. IV. Conclusion For the foregoing reasons, the Court grants defendant’s motion for summary judgment. A separate order will issue. AMY BERMAN JACKSON United States District Judge DATE: July 11, 2011 committee report because the congressional report related to events from a different time period. 911 F.2d 755, 765 66. 15	01-03-2023	04-04-2014
https://www.courtlistener.com/api/rest/v3/opinions/2668125/	UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ) EDAR ROGLER, ) ) Plaintiff, ) ) v. ) Civil Action No. 07-2308 (RMC) ) WILLIAM BIGLOW, et al., ) ) Defendants. ) ) MEMORANDUM OPINION This case is the first of three filed by Edar Rogler, an attorney who is proceeding pro se, all of which arise from the same set of facts.1 Ms. Rogler worked as an associate chaplain for the United States Department of Health and Human Services at the National Institute of Health. In this case, Ms. Rogler alleges that her employment was terminated and that a false document concerning her performance was created in retaliation for her agreeing to testify as a witness in an administrative proceeding before the Equal Employment Opportunity Commission.2 She sues 13 named federal employees and 25 unnamed Does in their personal capacities seeking money damages for alleged 1 A fourth action arising from the same set of facts is pending in the United States District Court for the District of Maryland. See Rogler v. Leavitt, Civil Action No. 07-726 (D. Md.). That case alleges violations of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. Ms. Rogler also filed, voluntarily dismissed, but then appealed, a lawsuit in the District of Maryland alleging violations of the Privacy Act, 5 U.S.C. § 552a. See Rogler v. HHS, Civil Action No. 07- 1676 (D. Md.). Thereafter she filed another Privacy Act lawsuit with this Court. See Rogler v. HHS, Civil Action No. 08-570 (D.D.C.). 2 Ms. Rogler’s Complaint consists of 34 pages, containing over 200 allegations, some of which are brought on behalf of other individuals. Despite the fact that Ms. Rogler is a lawyer, the Court has construed her pro se Complaint liberally in her favor. See Brown v. District of Columbia, 514 F.3d 1279, 1283 (D.C. Cir. 2008). violations of the First, Fourth and Fifth Amendments to the Constitution,3 and of 42 U.S.C. § 1985. Defendants move to dismiss. This case will be dismissed because Ms. Rogler has failed to state a claim upon which relief can be granted. I. LEGAL STANDARD A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) challenges the adequacy of a complaint on its face, testing whether a plaintiff has properly stated a claim. Federal Rule of Civil Procedure 8(a) requires that a complaint contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a). A complaint must be sufficient “to give a defendant fair notice of the claims against him.” Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955, 1964 (2007). Although a complaint 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. at 1964-65 (internal citations omitted). Rule 8(a) requires a “showing” and not just a blanket assertion of a right to relief. Id. at 1965 n.3. A court must treat the complaint’s factual allegations as true, “even if doubtful in fact,” id. at 1965, and must draw all reasonable inferences in the plaintiff’s favor. Macharia v. United States, 334 F.3d 61, 64, 67 (D.C. Cir. 2003). Even so, the facts alleged “must be enough to raise a right to relief above the speculative level,” Twombly, 127 S. Ct. at 1965, and the court need not accept as true inferences unsupported by facts set out in the complaint or legal conclusions cast as factual allegations. Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). “[A] complaint 3 Ms. Rogler appears to be attempting to state a cause of action under Bivens v. Six Unknown Named Agents of the Federal Bureau of Narcotics, 403 U.S. 388 (1971). -2- needs some information about the circumstances giving rise to the claims.” Aktieselskabet Af 21. Nov. 2001 v. Fame Jeans, Inc., 525 F.3d 8, 16 n.4 (D.C. Cir. 2008) (emphasis in original). II. ANALYSIS Ms. Rogler alleges that the individual Defendants violated her First, Fourth and Fifth Amendment rights by conspiring to retaliate against her for agreeing to testify as a witness in an administrative proceeding before the EEOC concerning a different employee. Title VII provides a remedy for federal employees who are retaliated against for participating in EEOC proceedings. See 42 U.S.C. §§ 2000e-3(a); 2000e-16; Porter v. Adams, 639 F.2d 273, 277-78 (5th Cir. 1981) (§ 2000e-16 prohibits retaliation against federal employees for invoking Title VII rights). Indeed, Ms. Rogler has a Title VII lawsuit pending in the United States District Court for the District of Maryland. See supra note 1. That remedy is Ms. Rogler’s exclusive remedy. Brown v. GSA, 425 U.S. 820, 835 (1976). She cannot recast her Title VII retaliation claims as constitutional claims. Ethnic Employees of the Library of Cong. v. Boorstin, 751 F.2d 1405, 1414-15, n.12 & 13 (D.C. Cir. 1985). Because that is precisely what she has done here, the Court will dismiss her constitutional claims with prejudice. See id. at 1415 (“the district court properly dismissed those constitutional claims that simply restated claims of racial, ethnic or other discrimination cognizable under Title VII, or claims of retaliation for the invocation of Title VII rights”); cf. Morris v. Wash. Metro. Area Transit Auth., 702 F.2d 1037, 1039-40 (D.C. Cir. 1983) (federal employee’s first amendment claim for retaliatory discharge prohibited by Title VII would be barred). Nor can Ms. Rogler recast her Title VII retaliation claims as conspiracy claims redressable under 42 U.S.C. § 1985. See Great Am. Fed. Sav. & Loan Ass’n v. Novotsky, 442 U.S. 366, 372-78 (1979) (claims alleging a conspiracy to violate Title VII are not actionable under -3- § 1985). Thus, Ms. Rogler’s § 1985 claims fail for the same reasons her constitutional claims fail. They too will be dismissed with prejudice. The Court recognizes that Defendants have argued in the alternative that the Court lacks personal jurisdiction over them and that venue in this judicial district is improper. Nevertheless, because Ms. Rogler’s lawsuit is, at bottom, a meritless Bivens suit, the Court dismisses her claims on the merits with prejudice. See Simpkins v. District of Columbia, 108 F.3d 366, 369-70 (D.C. Cir. 1997); Cameron v. Thornburgh, 983 F.2d 253, 257-58 & n.5 (D.C. Cir. 1993). To dismiss for lack of personal jurisdiction or transfer for improper venue “would be inconsistent with the duty of the lower federal courts to stop insubstantial Bivens actions in their tracks and get rid of them.” Simpkins, 108 F.3d at 370. III. CONCLUSION For the foregoing reasons, the Court will grant Defendant’s Motion to Dismiss [Dkt. # 11]. The Court will deny as moot Plaintiff’s Motion to Stay or in the Alternative Leave to Amend [Dkt. # 124] and Plaintiff’s Motion for Continuance for Partial and Jurisdictional Discovery [Dkt. # 126]. A memorializing Order accompanies this Memorandum Opinion Date: April 29, 2009 /s/ ROSEMARY M. COLLYER United States District Judge -4-	01-03-2023	04-04-2014
https://www.courtlistener.com/api/rest/v3/opinions/2668154/	UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ____________________________________ ) FALEN GHEREBI, ) ) Petitioner, ) ) v. ) Civil Action No. 04-1164 (RBW) ) BARACK H. OBAMA, ) President of the United States, ) and ROBERT M. GATES, ) Secretary of Defense, ) ) Respondents. ) ____________________________________) ) TAJ MOHAMMAD, ) ) Petitioner, ) ) v. ) Civil Action No. 05-879 (RBW) ) BARACK H. OBAMA, ) President of the United States, et al., ) ) Respondents. ) ____________________________________) ) KARIN BOSTAN, ) ) Petitioner, ) ) v. ) Civil Action No. 05-883 (RBW) ) BARACK H. OBAMA, ) President of the United States, et al., ) ) Respondents. ) ____________________________________) ) NASRULLAH, ) ) Petitioner, ) ) v. ) Civil Action No. 05-891 (RBW) ) BARACK H. OBAMA, ) President of the United States, et al., ) ) Respondents. ) ____________________________________) ) ASIM BEN THABIT AL-KHALAQI, ) ) Petitioner, ) ) v. ) Civil Action No. 05-999 (RBW) ) BARACK H. OBAMA, ) President of the United States, et al., ) ) Respondents. ) ____________________________________) ) MOHAMMED AMON, ) ) Petitioner, ) ) v. ) Civil Action No. 05-1493 (RBW) ) BARACK H. OBAMA, ) President of the United States, et al., ) ) Respondents. ) ____________________________________) 2 ) ABDULLAH M. AL-SOPAI ) ex rel. ABDALHADI M. AL-SOPAI, ) ) Petitioner, ) ) v. ) Civil Action No. 05-1667 (RBW) ) BARACK H. OBAMA, ) President of the United States, et al., ) ) Respondents. ) ____________________________________) ) KADEER KHANDAN, ) ) Petitioner, ) ) v. ) Civil Action No. 05-1697 (RBW) ) BARACK H. OBAMA, ) President of the United States, et al., ) ) Respondents. ) ____________________________________) ) ISSAM HAMID ALI BIN ALI AL JAYFI, ) et al., ) ) Petitioners, ) ) v. ) Civil Action No. 05-2104 (RBW) ) BARACK H. OBAMA, ) President of the United States, et al., ) ) Respondents. ) ____________________________________) 3 ) SHARAF AL SANANI, et al., ) ) Petitioners, ) ) v. ) Civil Action No. 05-2386 (RBW) ) BARACK H. OBAMA, ) President of the United States, et al., ) ) Respondents. ) ____________________________________) ) WASIM and QAYED, ) ) Petitioners, ) ) v. ) Civil Action No. 06-1675 (RBW) ) BARACK H. OBAMA, ) President of the United States, et al., ) ) Respondents. ) ____________________________________) ) RABIA KHAN ex rel. MAJID KHAN, ) ) Petitioner, ) ) v. ) Civil Action No. 06-1690 (RBW) ) BARACK H. OBAMA, ) President of the United States, et al., ) ) Respondents. ) ____________________________________) 4 ) MUHAMMAD MUHAMMAD SALEH ) NASSER ex rel. ABDULRAHMAN ) MUHAMMAD SALEH NASSER, ) ) Petitioner, ) ) v. ) Civil Action No. 07-1710 (RBW) ) BARACK H. OBAMA, ) President of the United States, et al., ) ) Respondents. ) ____________________________________) ) ABDUL RAHMAN UMIR AL QYATI ) and SAAD MASIR MUKBL AL AZANI, ) ) Petitioner, ) ) v. ) Civil Action No. 08-2019 (RBW) ) BARACK H. OBAMA, ) President of the United States, et al., ) ) Respondents. ) ____________________________________) MEMORANDUM OPINION The petitioners in the cases captioned above are detainees at the Guantanamo Bay Naval Base in Guantánamo Bay, Cuba. They challenge the legality of their confinement by the government, 1 seeking the issuance of writs of habeas corpus to secure their release from detention. Remarkably, despite the years that have passed since these habeas corpus petitions 1 In addition to the President, who is named as a respondent in his official capacity in each of these cases, many of the petitioners name various government officials as additional respondents in their habeas corpus petitions. A motion is currently pending before Judge Thomas F. Hogan of this Court to clarify that the Secretary of Defense is the only proper respondent in these cases. Because Judge Hogan has not yet resolved that motion, and for ease of reference, the Court refers to the respondents collectively as the “government” for purposes of this memorandum opinion. 5 were filed, the state of the law regarding the scope of the President’s authority to detain the petitioners remains unsettled. Bereft of any definitive guidance from the Supreme Court or the Court of Appeals for this Circuit on this point of law, the Court must attempt to ascertain for itself whether the President has the authority to detain individuals as part of its ongoing military campaign against the terrorist organization known as al-Qaeda and, if so, what is the scope of that authority. This memorandum opinion represents the Court’s attempt to answer those threshold legal questions. 2 I. Background On September 11, 2001, nineteen individuals affiliated with the Sunni extremist movement known as al-Qaeda hijacked four commercial passenger jet airliners in a coordinated terrorist attack against this country. The 9/11 Commission Report: Final Report of the National Commission on Terrorist Attacks upon the United States 4 (W.W. Norton & Co., Inc.). Two of the airliners were flown into the World Trade Center in New York City, id. at 4-8; a third crashed into the Pentagon in Arlington, Virginia, id. at 8-10. The fourth airliner, United Airlines Flight 93, crashed into an empty field near Shanksville, Pennsylvania, after passengers aboard 2 In preparing this memorandum opinion, the Court considered the following documents submitted or incorporated by reference by the parties: (1) Petitioners’ Memorandum of Law Concerning the Appropriate Definition of “Enemy Combatant” filed by Mohammed Ahmed Saeed Hidar a/k/a Mohammed Ahmed Said Haidel (ISN 498) in al Sanani v. Obama, Civil Action No. 05-2386 (RBW) (D.D.C.) (the “Pet’rs’ Mem.”), (2) Petitioner’s Memorandum of Law Defining “Enemy Combatant” filed in al Sattar v. Obama, Civil Action No. 08-1236 (JDB) (D.D.C.), (3) Petitioner’s Motion for Expedited Judgment submitted by Umar Abdalayev (ISN 257) in al Sanani v. Obama, Civil Action No. 05-2386 (RBW) (D.D.C.), (4) Petitioner’s Memorandum of Law Concerning the Appropriate Definition of “Enemy Combatant” filed in al-Adahi v. Obama, Civil Action No. 05-280 (GKK) (D.D.C.) , (5) Petitioner’s Motion for Expedited Judgment on the Record filed by Jamil Ahmed Saeed Nassir (ISN 728) in al Sanani v. Obama, Civil Action No. 05-2386 (RBW) (D.D.C.), (6) Respondents’ Memorandum in Opposition to Petitioners’ Motions for Expedited Judgment on the Record (the “Gov’t’s Opp’n”), (7) Respondents’ Memorandum Regarding the Government’s Detention Authority Relative to Detainees at Guantanamo Bay (the “Gov’t’s Mem.”), (8) Majid Khan’s Supplemental Memorandum Regarding the Government’s Detention Authority (the “Khan Mem.”), (9) Respondents’ Reply to Majid Khan’s Supplemental Memorandum Regarding the Government’s Detention Authority (the “Gov’t’s Reply”), and (10) Petitioners’ Joint Memorandum in Reply to Respondents’ Memorandum of March 13, 2009 (the “Pet’rs’ Reply”). The Court has also consulted numerous treatises, commentaries, and articles on this subject, many of which are cited herein. 6 the flight attempted to commandeer the plane. Id. at 10-14. Exactly one week later, Congress passed a joint resolution authorizing the President to “use all necessary and appropriate force against those nations, organizations, or persons he determines planned, authorized, committed, or aided” those attacks “to prevent any future acts of international terrorism against the United States by such nations, organizations[,] or persons.” Authorization for Use of Military Force (the “AUMF”), Pub. L. No. 107-40, § 2(a), 115 Stat. 224, 224 (2001). Pursuant to this authorization of force, Operation Enduring Freedom, a collaborative military operation conducted by a coalition of nations principally consisting of troops from the United States and the United Kingdom, commenced on October 7, 2001. GlobalSecurity.org, Text: President Bush Announces Military Strikes in Afghanistan (Oct. 7, 2001), http://www.globalsecurity.org/military/library/news/2001/10/mil-011007-usia01.htm. The stated purpose of this operation “included the destruction of terrorist training camps and infrastructure within Afghanistan, the capture of al Qaeda leaders, and the cessation of terrorist activities in Afghanistan.” Christopher B. Hynes et al., National Security, 41 Int’l Law. 683, 685 (2007). Working with the United Islamic Front for the Salvation of Afghanistan, also known as the “Northern Alliance,” coalition forces succeeded in removing from power the Taliban regime and installing a democratic form of government in Afghanistan in 2004. However, remnants of the Taliban regime still wield influence in many regions of Afghanistan and neighboring Pakistan, Osama bin Laden and other al-Qaeda leaders remain at large, and al-Qaeda continues to operate today, albeit with a diminished capacity. See Michael Chertoff, Tools Against Terror: All of the Above, 32 Harv. J.L. & Pub. Pol’y 219, 219-21 (2009) (concluding that “al Qaeda no longer has a state sponsor” and “neither owns nor has free reign over an entire country anymore,” and that “[m]uch of its original leadership has been brought to justice in one way or another”). 7 Consequently, Operation Enduring Freedom remains in effect some seven-and-a-half years after it was first initiated. The scope of the detention authority claimed by the President in the armed conflict authorized by the AUMF began to take shape within months of the passing of the joint resolution. On November 13, 2001, President Bush issued a Military Order entitled Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism, 66 Fed. Reg. 57,833 (Nov. 13, 2001). In that order, the President, citing both the AUMF and “the authority vested in [him] as . . . Commander[-]in[-]Chief of the Armed Forces” pursuant to Article II of the Constitution, concluded that it was “necessary for individuals subject to this order . . . to be detained, and, when tried, to be tried for violations of the laws of war and other applicable laws by military tribunals.” Id. President Bush defined the term “individual subject to this order” to mean any non-United States citizen for whom there was “reason to believe” that he (1) was a present or past member of al-Qaeda, (2) had “engaged in, aided or abetted, or conspired to commit[] acts of international terrorism, or acts in preparation therefor” that “caused, threaten[ed] to cause, or ha[d] as their aim to cause[] injury to or adverse effects on” the United States, its citizens, “national security, foreign policy, or the economy,” or (3) “knowingly harbored” such an individual, provided that detention was “in the interest of the United States.” Id. at 57,834. The President also delegated authority to the Secretary of Defense to detain and try individuals subject to the order. Id. at 57,834-57,835. Individuals detained by President Bush’s Military Order were subsequently labeled “enemy combatants” by the Department of Defense, harkening back to a phrase used by the Supreme Court in a World War II-era case known as Ex parte Quirin, 317 U.S. 1 (1942). Louis Fisher, Military Tribunals and Presidential Power 220-22 (Univ. Press of Kan. 2005). On 8 November 26, 2002, the General Counsel for the Department of Defense, William J. Haynes, II, defined an enemy combatant as “‘an individual who, under the laws and customs of war, may be detained for the duration of an armed conflict.’” Id. at 221 (quoting Letter from William J. Haynes II, General Counsel, Department of Defense, to Senator Carl Levin (Nov. 26, 2002) (the “Haynes Letter”) at 1-2). Haynes further noted the “‘consistency’” of the Department of Defense’s practices with the following language from Quirin: “‘“Citizens who associate themselves with the military arm of the enemy government, and[,] with its aid, guidance[,] and direction enter this country bent on hostile acts are enemy belligerents within the meaning of the Hague Convention and the law of war.”’” Id. at 222 (quoting Haynes Letter at 1-2 (quoting Quirin, 317 U.S. at 37-38)). These wide-ranging assertions of detention authority by the executive branch were tested for the first time in Hamdi v. Rumsfeld, 542 U.S. 507 (2004), where the Supreme Court considered whether the “necessary and appropriate force” authorized by the AUMF and the President’s inherent authority as Commander-in-Chief of the Armed Forces under Article II of the Constitution permitted the President to detain an American citizen alleged to have taken up arms against the United States on behalf of the Taliban. “Born in Louisiana in 1980,” Yaser Esam Hamdi “moved with his family to Saudi Arabia as a child,” then migrated to Afghanistan by 2001. Id. at 510. “At some point that year, he was seized by members of the Northern Alliance, . . . and eventually was turned over to the United States military.” Id. The United States designated Hamdi as an “enemy combatant” subject to indefinite detention “without formal charges or proceedings.” Id. In June of 2002, Hamdi’s father filed a habeas corpus petition on Hamdi’s behalf in the United States District Court for the Eastern District of Virginia, “contend[ing] that Hamdi’s 9 detention was not legally authorized” and requesting, inter alia, the appointment of counsel, an order barring the government from further interrogating Hamdi, a declaration that the government’s conduct violated Hamdi’s Fifth and Fourteenth Amendment rights as an American citizen, an evidentiary hearing to resolve any disputes Hamdi might have with the material factual allegations made against him, and release from custody. Id. at 511. After the Fourth Circuit reversed the district court’s order appointing an attorney for Hamdi and ordering that the attorney be given access to Hamdi, the government moved to dismiss Hamdi’s petition on the grounds that he was an “enemy combatant.” Id. at 512. The district court denied this motion, id. at 513, but the Fourth Circuit reversed the district court again, finding that the evidence adduced by the government—a single declaration from the Special Advisor to the Under Secretary of Defense for Policy—“provided a sufficient basis upon which to conclude that the President had constitutionally detained Hamdi pursuant to the President’s war powers.” Id. at 514. “On the more global question of whether legal authorization exist[ed] for the detention of citizen enemy combatants at all, the Fourth Circuit rejected Hamdi’s arguments that . . . any such detentions [were] unlawful,” finding authorization for his detention in the AUMF. Id. at 515. On writ of certiorari to the Supreme Court, the Court considered “[t]he threshold question . . . whether the Executive has the authority to detain citizens who qualify as ‘enemy combatants.’” Id. at 516 (plurality opinion). Noting “some debate as to the proper scope of this term,” the Court defined the term “for purposes of th[e] case” as meaning “an individual who . . . was part of or supporting forces hostile to the United States or coalition partners in Afghanistan and who engaged in an armed conflict against the United States there.” Id. (internal citation and quotation marks omitted) (emphasis added). The Court then proceeded to inquire “whether the detention of citizens falling within that definition [was] authorized.” Id. 10 A plurality of the Court answered the latter question in the affirmative, concluding “that Congress ha[d] in fact authorized Hamdi’s detention[] through the AUMF.” Id. at 517. After rejecting Hamdi’s argument that his detention was forbidden by 18 U.S.C. § 4001(a), id., the plurality reasoned that “[t]here [could] be no doubt that individuals who fought against the United States in Afghanistan as part of the Taliban, an organization known to have supported the al[-]Qaeda terrorist network responsible for those attacks, [were] individuals Congress sought to target in passing the AUMF,” id. at 518. Specifically, the plurality found that “detention of individuals falling into the limited category” before it; i.e., an individual in Hamdi’s particular situation, was “so fundamental and accepted an incident to war as to be an exercise of the ‘necessary and appropriate force’ Congress ha[d] authorized the President to use.” Id. The plurality therefore concluded that “[t]he United States may detain, for the duration of these hostilities, individuals legitimately determined to be Taliban combatants who ‘engaged in an armed conflict against the United States’” because, assuming that the “the record establishe[d] that United States troops [were] still involved in active combat in Afghanistan, those detentions [would be] part of the exercise of ‘necessary and appropriate force,’ and therefore [would be] authorized by the AUMF.” Id. at 521. Having determined that the President could potentially detain “enemy combatants,” the plurality turned to “the question of what process is constitutionally due to a citizen who disputes his enemy-combatant status.” Id. at 524. The plurality rejected the notion that such a determination could be made “purely as a matter of law, with no further hearing or factfinding necessary,” id. at 526, choosing instead to apply the balancing test adopted in Mathews v. Eldridge, 424 U.S. 319 (1976), to determine the extent of the process to be afforded to citizens challenging their designations as “enemy combatants.” Id. at 528-29. Measuring Hamdi’s 11 “interest in being free from physical detention by one’s own government,” id. at 529, against “the weighty and sensitive governmental interests in ensuring that those who have in fact fought with the enemy during a war do not return to battle against the United States,” id. at 531, the plurality concluded “that a citizen-detainee seeking to challenge his classification as an enemy combatant must receive notice of the factual basis for his classification[] and a fair opportunity to rebut the [g]overnment’s factual assertions before a neutral decisionmaker,” id. at 533. Aside from these “core elements,” however, the plurality contemplated that “enemy- combatant proceedings [might] be tailored to alleviate their uncommon potential to burden the Executive at a time of ongoing military conflict.” Id. The plurality went on to explain how that “burden” might be lessened: Hearsay, for example, [might] need to be accepted as the most reliable evidence from the [g]overnment in such a proceeding. Likewise, the Constitution would not be offended by a presumption in favor of the [g]overnment’s evidence, so long as that presumption remained a rebuttable one and fair opportunity for rebuttal were provided. Thus, once the [g]overnment puts forth credible evidence that the habeas petitioner meets the enemy- combatant criteria, the onus could shift to the petitioner to rebut that evidence with more persuasive evidence that he falls outside the criteria. Id. at 533-34. Justice Souter and Justice Ginsberg concurred in the judgment of the plurality, but dissented in part from the plurality’s opinion. In a separate opinion joined by Justice Ginsburg, Justice Souter argued that 18 U.S.C. § 4001(a) “require[s] a clear statement of authorization to detain,” Hamdi, 542 U.S. at 545 (Souter, J., concurring in part and dissenting in part), which the AUMF did not, in his estimation, necessarily provide, id. at 547-48. Justice Souter conceded that a plausible argument could be made that the AUMF authorized the President “to deal with enemy belligerents according to the treaties and customs known collectively as the laws of war,” 12 id. at 548, but concluded that the government could not invoke such authority because it did not treat Hamdi as a prisoner of war as required by the laws of war, id. at 549-51. Justice Scalia and Justice Stevens dissented from the plurality’s opinion, asserting that United States citizens could only be tried in civilian courts absent lawful suspension of the writ of habeas corpus by Congress. See id. at 554-579 (Scalia, J., dissenting) (reasoning that “[a]bsent suspension” of the writ of habeas corpus, “the Executive’s assertion of military exigency has not been thought sufficient to permit detention without charge”). Justice Thomas wrote a separate dissent in which he “agree[d] with the plurality that the [f]ederal [g]overnment has [the] power to detain those that the [e]xecutive [b]ranch determines to be enemy combatants,” id. at 589 (Thomas, J., dissenting), but rejected the balancing test adopted by the plurality as a means of determining the amount of process that must be afforded to citizens charged as enemy combatants, see id. at 589-92 (“[T]he Executive’s decision that a detention is necessary to protect the public need not and should not be subjected to judicial second- guessing.”). Instead, he concluded that “an Executive, acting pursuant to statutory and constitutional authority, may, consistent with the Due Process Clause, unilaterally decide to detain an individual if the Executive deems this necessary for the public safety even if he is mistaken.” Id. at 590 (emphasis in original). Based on this somewhat unusual voting alignment, the Supreme Court vacated the Fourth Circuit’s judgment and remanded the case for further proceedings. Id. at 539 (plurality opinion). However, neither the plurality nor any of the partially concurring or dissenting justices attempted to address the outer boundaries of the “enemy combatant” definition. Instead, the plurality predicted that “[t]he permissible bounds of the category [would] be defined by the lower courts as subsequent cases [were] presented to them.” Id. at 522 n.1. 13 This prediction did not come to pass—at least, not in the manner foreseen by the plurality. On the same date that it issued Hamdi, a majority of the Supreme Court held in Rasul v. Bush, 542 U.S. 466 (2004), that alien detainees designated as enemy combatants could contest their detention at the Guantanamo Bay Naval Base in Guantánamo Bay, Cuba, under the federal habeas corpus statute, 28 U.S.C. § 2241. See Rasul, 542 U.S. at 484 (“We . . . hold that § 2241 confers on the [d]istrict [c]ourt jurisdiction to hear petitioners’ habeas corpus challenges to the legality of their detention at the Guantanamo Bay Naval Base.”). However, Congress effectively neutralized this ruling by passing the Detainee Treatment Act of 2005 (the “DTA”), Pub. L. No. 109-148, 119 Stat. 2680 (2005), which, inter alia, stripped the federal courts of jurisdiction over habeas corpus petitions filed by aliens detained at Guantánamo Bay or by individuals determined to have been properly detained as enemy combatants under the procedures set up by the DTA. Id. § 1005(e), 119 Stat. at 2741-42. And when the Supreme Court thereafter held that the DTA did not apply retroactively to bar habeas corpus proceedings pending at the time of the DTA’s enactment, Hamdi v. Rumsfeld, 542 U.S. 507, 575-84 (2006), Congress passed the Military Commissions Act of 2006 (the “MCA”), Pub. L. No. 109-366, 120 Stat. 2600 (2006), which amended § 2241 to strip the federal courts of jurisdiction over detainee habeas corpus petitions retroactively as well as prospectively, Pub. L. No. 109-366, § 7(a), 120 Stat. at 2636. Instead, it was not until the Supreme Court issued its decision in Boumediene v. Bush, ___ U.S. ___, 128 S. Ct. 2229 (2008), that the designation of individuals as “enemy combatants” by the President became susceptible to judicial review. In that case, the Supreme Court held that individuals detained at Guantánamo Bay, Cuba, were protected by the Suspension Clause of the Constitution, and therefore were “entitled to the privilege of habeas corpus to challenge the legality of their detention.” Id. at ___, 128 S. Ct. at 2262. The Court further found that the 14 review procedures established by the DTA did not constitute an adequate substitute for habeas corpus review. Id. at ___, 128 S. Ct. at 2262-74. The Court therefore held that “§ 7 of the [Military Commissions Act] operate[d] as an unconstitutional suspension of the writ” of habeas corpus for the Guantánamo Bay detainees. Id. at 2240. The Supreme Court’s ruling in Boumediene cleared the way for the first opinion by a circuit court of appeals to address at length the scope of the President’s authority to detain individuals as enemy combatants. In al-Marri v. Pucciarelli, 534 F.3d 213 (4th Cir. 2008), vacated sub nom. al-Marri v. Spagone, ___ U.S. ___, 129 S. Ct. 1546 (2009) (“Spagone”), the Fourth Circuit addressed the legality of the military detention of a Qatari citizen (and United States resident) detained at the Naval Consolidated Brig in South Carolina. Along with his wife and children, al-Marri entered the United States on September 10, 2001, ostensibly to obtain his master’s degree at Bradley University located in Peoria, Illinois. Id. at 219 (Motz, J., dissenting in part and concurring in part). “Three months later, . . . FBI agents arrested al-Marri at his home in Peoria as a material witness in the [g]overnment’s investigation of the September 11th attacks.” Id. The government charged al-Marri with various offenses relating to the fraudulent obtainment and use of credit card numbers, but the criminal charges against him were dismissed when President Bush determined that al-Marri was an enemy combatant and ordered the Attorney General to surrender him to the custody of the Secretary of Defense. Id. Eventually, al-Marri’s counsel filed a habeas corpus petition on his behalf in the United States District Court for the District of South Carolina. Id. at 220. In response, the government submitted a declaration from Jeffrey N. Rapp, Director of the Joint Intelligence Task Force for Combating Terrorism (the “Rapp Declaration”), in which Rapp asserted, inter alia, that al-Marri was sent by 15 al-Qaeda to the United States “to serve as a ‘sleeper agent’ to facilitate terrorist activities and explore disrupting this country’s financial system through computer hacking.” Id. After denying al-Marri’s motion for summary judgment, the district court referred the case to a magistrate judge “for consideration of the appropriate process to be afforded al-Marri in light of Hamdi.” Id. at 221. “The magistrate judge ruled that the Rapp Declaration provided al- Marri with sufficient notice of the basis of his detention as an enemy combatant and directed al- Marri to file rebuttal evidence.” Id. When al-Marri failed to do so, contending instead “that the [g]overnment had an initial burden to produce evidence that he was an enemy combatant and that the Rapp Declaration did not suffice,” the magistrate judge recommended dismissal of al-Marri’s habeas corpus petition. Id. The district court adopted that recommendation and dismissed al- Marri’s petition in August of 2006. Id. On appeal to the Fourth Circuit, a panel of the court reversed the district court’s judgment and remanded the case for further proceedings. Id. However, the government successfully moved for rehearing en banc, resulting in a per curiam judgment that again reversed the district court and remanded the case “for further proceedings consistent with the [court’s several] opinions.” Id. at 216-17. Specifically, by a 5-to-4 vote, a majority of the court concluded “that, if the [g]overnment’s allegations about al-Marri [were] true, Congress ha[d] empowered the President to detain him as an enemy combatant,” while a second 5-to-4 ruling by a separate majority of the court held that “al-Marri ha[d] not been afforded sufficient process to challenge his designation as an enemy combatant.” Id. at 216. With respect to the first question; i.e., whether the government’s allegations against al- Marri sufficed to justify his detention as an “enemy combatant,” the court issued four separate opinions. Three members of the court joined in an opinion written by Judge Motz in which she 16 concluded that al-Marri was not an “enemy combatant” under the traditional laws of war. Id. at 217-53 (Motz, J., dissenting in part and concurring in part). Judge Traxler, who sided with the majority on both questions before the Court, wrote a separate opinion explaining his belief that al-Marri was an “enemy combatant” based upon the plain language of the AUMF. Id. at 257-62 (Traxler, J., concurring). Chief Judge Williams wrote a separate opinion in which he concluded that under Quirin and Hamdi, an individual is an enemy combatant if “(1) he attempts or engages in belligerent acts against the United States, either domestically or in a foreign combat zone[] (2) on behalf of a an enemy force.” Id. at 285 (Williams, C.J., concurring in part and dissenting in part). Finally, Judge Wilkinson issued a lengthy opinion joined by Judge Duncan in which he concluded, after a sustained statutory and constitutional analysis, that to be an enemy combatant “the person must (1) be a member of (2) an organization or nation against whom Congress has declared war or authorized the use of military force, and (3) knowingly plans or engages in conduct that harms or aims to harm persons or property for the purpose of furthering the military goals of the enemy nation or organization.” Id. at 325 (Wilkinson, J., concurring in part and dissenting in part). 3 Boumediene’s effects were quickly felt in this Circuit as well. On remand in Boumediene v. Bush, 583 F. Supp. 2d 133 (D.D.C. 2008), Judge Leon of this Court proceeded to determine “what definition of ‘enemy combatant’ should be employed in the upcoming hearings in [that] case.” Id. at 134. Declining to engage in what he described as the “temptation . . . to engage in the type of judicial craftsmanship . . . exhibited in” al-Marri, Judge Leon chose instead 3 Following this split decision from the Fourth Circuit, al-Marri successfully petitioned the Supreme Court to issue a writ of certiorari to decide whether the President could detain him as an “enemy combatant.” al-Marri v. Pucciarelli, ___ U.S. ___, ___, 129 S. Ct. 680, 680 (2008). However, the current administration, reversing the position of the prior administration, declined to hold al-Marri as an “enemy combatant” any further, and released him into the custody of the Attorney General so that he could indicted and tried for the various criminal offenses that led to his initial arrest. This decision caused the Supreme Court to dismiss the case before it and vacate as moot the Fourth Circuit’s decision. Spagone, ___ U.S. at ___, 129 S. Ct. at 1546. 17 to adopt the definition of “enemy combatant” “crafted by the Department of Defense in 2004 for the type of Combatant Status Review Tribunal (‘CSRT’) proceedings that [the six petitioners in the case before him] were given.” Id. at 134. Judge Leon considered this definition to have been “blessed by Congress” when, in drafting the Military Commissions Act, “Congress, in defining the term ‘unlawful enemy combatant,’ specifically provided that it included persons who had been ‘determined to be an unlawful enemy combatant by a Combatant Status Review Tribunal or another competent tribunal established under the authority of the President or the Secretary of Defense.’” Id. (quoting 10 U.S.C. § 948a). Adopting the same definition “employed” in such tribunals, Judge Leon defined an enemy combatant as “an individual who was part of or supporting Taliban or al-Qaeda forces, or associated forces that are engaged in hostilities against the United States or its coalition partners,” including “any person who has committed a belligerent act or has directly supported hostilities in aid of enemy armed forces.” Id. at 135. Following the process utilized by Judge Leon, the undersigned member of the Court ordered briefing from individual petitioners who sought immediate release from detention solely on the grounds that the factual allegations made by the government, even if true, did not suffice as a legal matter to justify their detention. The Court scheduled hearings on the merits of three such requests for January 21, 2009. However, less than an hour after the inauguration of President Obama, the government requested a temporary stay of these hearings so that it could reassess its position on the scope of the President’s authority to detain the petitioners as so-called “enemy combatants.” After a series of requests for extension of this stay by the government, the undersigned member of the Court joined several other members of the Court in directing the government to file a memorandum of law reflecting any changes in its position by March 13, 2009. 18 The government made use of this opportunity, modifying its standard for detaining individuals like the petitioners. Whereas it had previously asserted that the President could detain as an enemy combatant “those individuals who were part of, or supporting, forces engaged in hostilities against the United States or its coalition partners and allies,” Gov’t’s Opp’n at 3, the government now argues that it can detain “persons who were part of, or substantially supported, Taliban or al-Qa[e]da forces or associated forces that are engaged in hostilities against the United States or its coalition partners, including any person who has committed a belligerent act, or has directly supported hostilities, in aid of such enemy forces.” Gov’t’s Mem. at 2 (emphasis added). The government has also clarified that it believes that its detention authority arises solely from the AUMF. Id. at 1. 4 However, the government believes that “[i]t is neither possible nor advisable . . . to attempt to identify[] in the abstract[] the precise nature and degree of ‘substantial support,’ or the precise characteristics of ‘associated forces.’” Id. at 2. Instead, it opines that “the contours of the ‘substantial support’ and ‘associated forces’ bases of detention will need to be further developed in their application to concrete facts in individual cases.” Id. The government recommends that the Court look to “various analogues from traditional armed conflicts” in deciding these individual cases. Id. 4 Under the Bush administration, the government had repeatedly asserted that it could detain individuals pursuant to the President’s authority as Commander-in-Chief under Article II, § 2, clause 1 of the Constitution, which provides that “[t]he President shall be Commander in Chief of the Army and Navy of the United States, and of the Militia of the several States.” See, e.g., Hamdi, 542 U.S. at 516-17 (plurality opinion) (“The [g]overnment maintains that no explicit congressional authorization is required[] because the Executive possesses plenary authority to detain pursuant to Article II of the Constitution.”); al-Marri, 534 F.3d at 221 (Motz, J., dissenting in part and concurring in part) (“Alternatively, the [g]overnment contends that even if the AUMF does not authorize the President to order al- Marri’s military detention, the President has ‘inherent constitutional power’ to do so.”). Similar assertions were previously made to this Court. See Resp’ts’ Opp’n at 9 (“[T]he President’s power under the Constitution . . . confirm[s] his authority to detain these petitioners under the [g]overnment’s proposed enemy combatant definition.”). These contentions are absent from the government’s most recent memorandum of law. 19 The petitioners, for their part, find the government’s “refined” position no more palatable than its original one, finding it overly broad and ambiguous. They argue that only those individuals who “actually and directly engaged in the armed conflict against the United States in Afghanistan” are subject to detention pursuant to Hamdi, Pet’rs’ Reply at 22, and that “the military detention power claimed by [the government] is neither consistent with nor derived from the traditional law of war,” id. at 21. “Rather, it represents an attempt by [the government] to legislate new and far broader standards for a conflict that . . . is not appropriately governed by the standards that are a matter of ‘universal agreement and practice.’” Id. at 21 (quoting Hamdan, 542 U.S. at 518). At least one petitioner, Majid Khan, 5 advances an even narrower view of the scope of the President’s detention authority. 6 According to Khan, the government may not rely upon “law of war principles applicable to international armed conflicts,” Khan Mem. at 3, because the conflict between the United States and al-Qaeda is a non-international armed conflict for purposes of international law, id. at 2, 10-11. Arguing that “the legal basis for detention” in a non- international armed conflict “is located in domestic law, not international law,” id. at 9, Khan submits that the President’s detention authority “must be authorized by domestic law,” id. at 3. He further argues that the AUMF is not such a source of authority, id. at 11-16, and therefore asserts that detainees like him “must be charged in a civilian court or released,” id. at 16. 5 Another petitioner, Sanad Ali al-Kazimi, has explicitly joined in Khan’s memorandum of law, and a ruling in Khan’s favor would obviously benefit the petitioners as a whole because of the general applicability of such a ruling. 6 The Court initially ordered the petitioners to file one consolidated memorandum of law in response to the government’s revised position on the scope of the President’s detention authority and designate one attorney to argue the merits of that brief at the oral argument scheduled by the Court. The Court subsequently granted Khan leave to file a supplemental memorandum of law and argue separately at the hearing on the merits of the parties’ positions when it became clear to the Court that Khan intended to advance arguments not raised by the other petitioners that were nevertheless applicable to many of them. 20 The Court heard argument from the parties regarding the scope of the President’s authority to detain individuals pursuant to the terms of the AUMF on March 23, 2009. At the conclusion of that hearing, the Court concluded that the issue before it was too complex to be resolved by way of an oral ruling and indicated that it would memorialize its conclusions in a memorandum opinion to be issued as soon as was practicable. The analysis below represents the Court’s best effort to fulfill that promise, and, at least for those cases pending before this member of the Court, hopefully marks a significant step towards the resolution of these seemingly interminable proceedings. II. Legal Analysis Based upon the positions taken by the parties in their respective memoranda of law, the issues before the Court are two-fold. First, the Court must determine whether the AUMF authorizes the President to detain anyone incidental to the government’s conflict with any organization (as opposed to nation) responsible for the 9/11 attacks. Second, assuming such authority exists, the Court must then determine whether the AUMF permits the government to detain individuals who have “substantially supported” such organizations as the government suggests, or if instead a different, narrower standard must prevail. 7 For the reasons explained at length below, the Court agrees with the government that the AUMF functions as an independent basis in domestic law for the President’s asserted detention authority, and adopts the basic framework advanced by the government for determining whether an individual is subject to that authority. The Court therefore adopts the “substantial support” standard employed by the 7 This memorandum opinion concerns itself solely with the question of the scope of the President’s authority to detain all of the petitioners; thus, it does not address the many other issues arising from the petitioners’ detention that is specific to individual detainees, such as whether the President can militarily detain an individual subject to the protections of the United States Constitution and 18 U.S.C. § 4001(a), or whether the conflict between the United States and the Taliban should be considered an international or non-international armed conflict since the installment of a new government in Afghanistan in 2004. These issues must be resolved on a case-by-case basis. 21 government as the governing standard for detention in these cases, but only insofar as the government’s announced standard is consistent with that framework. A. The President’s Detention Authority in a Non-International Armed Conflict The first task before the Court is to determine whether the AUMF permits the President to detain any individual in connection with the conflict between the United States and the enemy “organizations” named in that joint resolution. Majid Khan argues that it does not. He asserts that the AUMF “does not authorize military detention beyond the limited authority to detain that is incident to the use of force under the law of war principles governing international armed conflict.” Khan Mem. at 12 (emphasis removed). Because the conflict between the United States and any “organizations” named in the AUMF, such as al-Qaeda, is not, according to Khan, an international armed conflict for purposes of the laws of war, he argues that the AUMF does not reach individuals fighting on behalf of those organizations. Id. at 13-16. Instead, he opines that such individuals may be detained only under the sole domestic law that applies to them; i.e., the various statutes in the United States code criminalizing terrorist activities. See id. at 16 (“Khan . . . must be charged in a civilian court or released.”). Khan’s position cannot be reconciled with the plain language of the AUMF. In that joint resolution, Congress conferred upon the President all “necessary and proper” authority to execute military combat against both “nations” and “organizations” that carried out the 9/11 attacks. And in Hamdi, the Supreme Court found that the “detention of individuals falling into the limited category” before it was “so fundamental and accepted an incident to war as to be an exercise of the ‘necessary and appropriate force’ Congress ha[d] authorized the President to use.” Hamdi, 542 U.S. at 518 (plurality opinion). Given that the “detention of individuals” is an “exercise” of military force authorized by Congress in the AUMF with respect to the enemy 22 nations named therein, and given that Congress authorized the same amount of force with respect to enemy “organizations” as it did with respect to enemy nations, it stands to reason that Congress intended to confer upon the President the same authority to detain individuals fighting on behalf of enemy organizations that it conferred upon him with respect to enemy nations. See al-Marri, 534 F.3d at 260 (Traxler, J., concurring) (“[I]t strains reason to believe that Congress, in enacting the AUMF in the wake of [the 9/11] attacks, did not intend for it to encompass al[-]Qaeda operatives standing in the exact position as the attackers who brought about its enactment.” (emphasis in original)). Khan attacks this straightforward proposition in a number of ways, but none are persuasive. First, he argues that the plurality opinion in Hamdi is not binding on this Court because Justice Souter, whose concurring opinion provided the fifth vote for the judgment in favor of Hamdi, concluded that “[the] AUMF does not authorize detention.” Khan Mem. at 12. Khan is wrong on both counts. Justice Souter allowed for the possibility that the AUMF could authorize the detention of individuals “according to the treaties and customs known collectively as the laws of war,” Hamdi, 542 U.S. at 548 (Souter, J., concurring). However, he found “no need . . . to address the merits” of that argument because, in his view, the government’s failure to accord Hamdi the full protections of the Geneva Conventions prevented the President from invoking such authority. Id. at 549. He did not purport to answer the question of the President’s detention authority under the AUMF one way or the other. In any event, Justice Souter concurred only in the plurality’s judgment of reversal, not its conclusion that the AUMF authorized the detention of enemy combatants. See id. at 553 (joining with the plurality “to give practical effect to the conclusions of [the] eight Members of the Court rejecting the [g]overnment’s position . . . on terms closest to those [Justice Souter] 23 would impose”). It was Justice Thomas, dissenting from the judgment, who “agree[d] with the plurality that the [f]ederal [g]overnment has [the] power to detain those that the [e]xecutive [b]ranch determines to be enemy combatants.” Id. at 589 (Thomas, J., dissenting). Thus, a majority of the Court embraced the position that the AUMF authorizes the President to detain individuals as a “fundamental and accepted . . . incident [of] war.” Id. at 518 (plurality opinion). Khan also argues that Hamdi does not apply to him (and other similarly situated petitioners) because Hamdi involved an individual fighting on behalf of the Taliban on the battlefield in Afghanistan, not a member of a terrorist organization like al-Qaeda. Khan draws a distinction between the conflict between the United States and the Taliban, which he characterizes as “international” in nature for purposes of the Geneva Conventions, and the conflict between the United States and organizations like al-Qaeda, which is not. Khan Mem. at 12-14. He posits that in finding detention authority to be a “fundamental . . . incident of war,” the Supreme Court “merely interpreted the AUMF to authorize that which was already an incident of the laws of war applicable to international armed conflict—the power under the Geneva Conventions to detain ‘combatants’ in the international armed conflict between the United States and the Taliban government forces of Afghanistan.” Id. at 13. According to Khan, “Hamdi therefore cannot be said to apply to or govern detention in [a] non-international armed conflict because . . . the law of war principles for detention applied by the Court in Hamdi are absent from the laws of war applicable to non-international armed conflict.” Id. at 13-14. This is a strained interpretation of Hamdi at best. As the government points out, “Hamdi did not limit the detention authorized by the AUMF to cases of international armed conflict or to cases in which enemy forces satisfy the prisoner-of-war provisions of Article 4 of the Third Geneva Convention,” but rather “determined that the scope of detention authority would have to 24 be decided in future cases.” Khan Reply at 2 (citing Hamdi, 542 U.S. at 522 n.1 (plurality opinion)). In point of fact, the plurality did not even mention the Geneva Conventions in concluding that the AUMF implicitly conferred detention authority upon the President, choosing instead to rely primarily upon its own prior decision in Quirin, a smattering of treatises and law review articles on the subject, and the Ninth Circuit’s decision in In re Territo, 156 F.2d 142 (9th Cir. 1946). What little insight the plurality provided in Hamdi concerning how it would treat individuals fighting on behalf of al-Qaeda suggests that the result would be no different from the conclusion the Court reached with respect to Hamdi. It is telling that the plurality expressed “no doubt that individuals who fought against the United States in Afghanistan as part of the Taliban, an organization known to have supported the al[-]Qaeda terrorist network responsible for those attacks, [were] individuals Congress sought to target in passing the AUMF.” Hamdi, 542 U.S. at 518 (plurality opinion) (emphasis added). If the Court had “no doubt” that Congress “sought to target” individuals who merely fought on behalf of “an organization known to have supported” al-Qaeda, it beggars belief to suggest that the Supreme Court would not find congressional authorization for the President to “target” individuals who fight on behalf of al-Qaeda itself. But regardless of whether this Court is bound by the plurality’s decision in Hamdi, the fact remains that Khan has no adequate explanation for why the Court should not apply the plurality’s reasoning to the conflict between the United States and enemy organizations named in the AUMF. The only reason provided by Khan is that the war against the Taliban is an “international” conflict, whereas the war against al-Qaeda and its ilk are not. 8 But, as the 8 In Hamdan, the Supreme Court held that the conflict between the United States and al-Qaeda is at least a non- international armed conflict subject to Common Article 3, but did not reverse the determination made by the District of Columbia Circuit that the conflict was not an international conflict subject to Common Article 2. See Hamdan, (continued . . .) 25 analysis below demonstrates, that is no reason to refuse to apply the plurality’s logic in Hamdi to the situation at hand. The distinction drawn between “international” and “non-international” conflicts has its roots in the Geneva Conventions, four treaties that comprise a part of “the rules and precepts of the law of nations.” Hamdan, 548 U.S. at 613. Two articles are identical in the Third and Fourth Conventions, and thus are known as “common articles”: Common Article 2, which specifies that the Conventions apply to “all cases of declared war or any other armed conflict which may arise between two or more of the High Contracting Parties,” Geneva Convention Relative to the Treatment of Prisoners of War art. 2, Aug. 12, 1949, 6 U.S.T. 3316, 75 U.N.T.S. 135 (the “Third Geneva Convention”), and Common Article 3, which governs “armed conflict[s] not of an international character,” id., art. 3. 9 Participants in a conflict falling under Common Article 2 are subject to the requirements and protections of the Conventions, whereas participants in a conflict falling under Common Article 3 are subject only to the strictures of that article, essentially making Common Article 3 a “mini-convention.” International armed conflicts are also governed by a subsequently enacted treaty known as the Protocol Additional to the Geneva Conventions of 12 August 1949, and relating to the Protection of Victims of International Armed Conflicts, or “Additional Protocol I,” whereas yet another treaty, the Protocol Additional to the Geneva Conditions of 12 August 1949, and relating to the Protection of Victims of Non- 548 U.S. at 628-29 (declining “to decide the merits” of the government’s argument that the conflict between the United States and al-Qaeda is not an international armed conflict “because there [was] at least one provision of the Geneva Conventions that applie[d]” to the conflict). The Court is therefore constrained by the precedent of the Supreme Court and the District of Columbia Circuit to treat the conflict between the United States and al-Qaeda as a non-international armed conflict for purposes of the Geneva Conventions. 9 For ease of reference, the Court cites only to the common articles in the Third Geneva Convention. 26 International Armed Conflicts, or “Additional Protocol II,” applies to non-international armed conflicts. 10 Among the protections afforded in international armed conflicts are the prisoner-of-war provisions set forth in the Third Geneva Convention. These provisions, which apply to prisoners of war as that term is defined in Article 4 of the Third Geneva Convention, regulate virtually every aspect of a prisoner of war’s detention, including, inter alia, the manner in which they may be treated by their captors, see, e.g., id., art. 13-18, the conditions of their confinement, see, e.g., id., art. 25-32, 34-42, and the termination of their detention, see, e.g., id., art. 109-19. In contrast, Common Article 3 is silent with respect to prisoners of war. Thus, in non-international armed conflicts, the Geneva Conventions are “silent, in deference to national law, on questions of detention.” Gabor Rona, An Appraisal of U.S. Practice Relating to “Enemy Combatants”, 10 Y.B. Int’l Humanitarian L. 232, 241 (2007). Khan argues that this silence forecloses military detention in non-international armed conflicts under the AUMF. As noted above, he conflates the plurality’s conclusion in Hamdi that the “detention of individuals” is a “fundamental and accepted . . . incident to war” with “the 10 The United States has signed but not ratified Additional Protocol I. It has neither signed nor ratified Additional Protocol II. However, the Department of State has explicitly recognized that “certain provisions” of Additional Protocol I reflect customary international law, see Michael J. Matheson, The United States Position on the Relation of Customary International Law to the 1977 Protocols Additional to the 1949 Geneva Conventions, 2 Am. Univ. J. Int’l L. & Pol’y 419, 421 (1987), including “the principle that no order be given that there shall be no survivors . . . contained in [A]rticle 40” of the protocol, “the principle that persons entitled to combatant status be treated as prisoners of war in accordance with the 1949 Geneva Conventions,” id. at 425, the principle that “immunity not be extended to civilians who are taking part in hostilities,” id. at 426, and, “in particular[,] the fundamental guarantees contained in [A]rticle 75” of the protocol, “such as the principle that all persons who are in the power of a party to a conflict and who do not benefit from more favorable treatment under the [Geneva] Conventions be treated humanely in all circumstances,” id. at 427. Similarly, the Department of State has opined that “[t]he basic core of [Additional] Protocol II,” as “reflected in [C]ommon [A]rticle 3 of the 1949 [Geneva] Conventions[,] . . . is[ ] and should be[ ] a part of generally accepted customary law.” Id. at 430-31. “This specifically includes its prohibitions on violence toward persons taking no active part in hostilities, hostagetaking, degrading treatment, and punishment without due process.” Id. at 431. The Court therefore construes Additional Protocol I and Additional Protocol II to constitute customary international law at least with respect to the principles listed above, and also as elucidations of the customary humanitarian protections enshrined in the Geneva Conventions where appropriate. 27 power under the Geneva Conventions to detain ‘combatants’ in [an] international armed conflict.” Khan Mem. at 13. Given that there is no such “power” in the Geneva Conventions with respect to non-international armed conflicts, Khan concludes that the AUMF could not have conferred any detention authority to the President with the “clear statement” required for such a grant of authority to be constitutional. Id. at 16. He cites an article written by an international humanitarian law scholar and an amicus brief filed by experts in the laws of war in Ali al-Marri’s Supreme Court case as support for this view. See id. at 9 (citing Rona, supra, at 240-41, and Brief for Amici Curiae Experts in the Law of War, al-Marri v. Spagone, No. 08-368, at 22 (Jan. 28, 2009) (the “Law of War Experts’ Br.”)). 11 This proposition depends upon the decidedly suspect notion that the laws of war in general, and the Third Geneva Convention in particular, do not simply regulate the conditions of detention in an international armed conflict, but also actually authorize detention in such a conflict. From this premise, proponents of this view equate the absence of regulations regarding detention in Common Article 3 with a total lack of authorization for a state engaged in a non- international armed conflict to detain individuals at all. The academics cited by Khan explain this position as follows: As reflected in the plurality decision in Hamdi, [the laws of war] suppl[y] definite authority for the detention as “combatants” of individuals fighting on behalf of an enemy nation. See 542 U.S. at 11 Khan also cites Ex parte Milligan, 71 U.S. 2 (1866), as a case that “squarely addresses the authority of the Executive to detain civilians under law of war principles applicable to non-international armed conflict[s].” Khan Mem. at 15 (emphasis removed). Milligan does nothing of the sort. In that case, Lambdin Milligan, a resident of Indiana and citizen of the United States, “was brought before a military commission” in October of 1864, “tried on certain charges and specifications[,] found guilty, and sentenced to be hanged.” Id. at 107. Finding Milligan to be neither “a resident of one of the rebellious states” of the Confederacy “[n]or a prisoner of war, but a citizen of Indiana . . . [who was] never in the military or naval service,” id. at 118, the Supreme Court held that trying Milligan by a military commission constituted a violation of his constitutional rights, id. at 122-25. As the Supreme Court subsequently explained in Quirin, the case stands for the proposition that a person may not be subjected to military detention if the person is “not . . . a part of or associated with the armed forces of the enemy.” Quirin, 317 U.S. at 45. In other words, Milligan concerns the rights of individuals who are not party to non-international armed conflicts; it says nothing about the laws of war governing such conflicts. 28 518; see also Third Geneva Convention, art. 21 (“The Detaining Power may subject prisoners of war to internment.”); Gabor Rona, An Appraisal of U.S. Practice Relating to “Enemy Combatants”, 10 Y.B. of Int’l Humanitarian L. 232, 240-41 (2009) (“In international armed conflicts, the Geneva Conventions have long supplied a clearly defined and established legal framework for detention.”), available at http://papers.ssrn.com/so13/papers.sfm?abstract_id=1326551. Such authorization makes sense in the context of inter-state conflict, which often is conducted outside the territory of the power seeking to prevent the return of fighters to the battlefield, far from the arena of domestic laws and institutions. See, e.g., id. at 240-41; John Cerone, Jurisdiction and Power: The Intersection of Human Rights Law and the Law of Non-International Armed Conflict, 40 Isr. L. Rev. 396, 402 (2007). ... To the contrary, Common Article 3 affords certain humanitarian protections to those detained, as does [A]rticle 5 of Additional Protocol II (insofar as it applies), which lists a number of provisions governing treatment of “[p]ersons whose liberty has been restricted.” But neither treaty furnishes independent authorization for the detention of any defined class of people. Law of War Experts’ Br. at 19-20, 22-23 (emphasis in original). Unfortunately for Khan, neither the Geneva Conventions nor the additional protocols to those conventions support this hypothesis. As an initial matter, Article 21 of the Third Geneva Convention—the sole article of the Geneva Conventions cited by Khan’s experts as “authoriz[ing] detention”—concerns the internment, not the detention, of prisoners of war. See Third Geneva Convention, art. 21 (“The Detaining Power may subject prisoners of war to internment. It may impose on them the obligation of not leaving, beyond certain limits, the camp where they are interned, of if the said camp is fenced in, of not going outside its perimeter.”). As the International Committee of the Red Cross explains in its commentary on this article, “[t]o intern a person is to put him in a certain area or place—in the case of prisoners of war, usually a camp—and to forbid him to leave its limits.” International Committee of the Red Cross, 29 Commentary on the Geneva Convention Relative to the Treatment of Prisoners of War, at 178 (Pictet et al. eds. 1960) (the “ICRC Third Geneva Convention Commentary”). 12 This “concept . . . should not be confused with that of detention.” Id. Prior to internment, “[p]risoners of war are [already] in the power of the [s]tate which has captured them.” Id. Article 21 is not unique in presuming detention of the individuals protected by the Third Geneva Convention. In fact, all of the articles regulating the detention of prisoners of war— including the article defining the term “prisoner of war”—presuppose rather than provide for detention by the enemy. See, e.g., Third Geneva Convention, art. 4(A) (“Prisoners of war, in the sense of the present Convention, are persons belonging to one of the following categories, who have fallen into the power of the enemy . . . .”). Additional Protocol I is structured in the same manner. See Additional Protocol I, art. 44.1 (“Any combatant . . . who falls into the power of an adverse Party shall be a prisoner of war.”); see also International Committee of the Red Cross, Commentary on the Additional Protocols of 8 June 1977 to the Geneva Conventions of 12 August 1949, at 522 (Sandoz et al. eds. 1987) (the “ICRC Additional Protocols Commentary”) (“Those combatants complying with the general conditions laid down in Article 43, which gives an overall definition of armed forces, have the right, when captured, to prisoner-of-war status.” (emphasis added)). 13 Nothing in the texts of the Geneva Conventions or Additional Protocol I 12 “The International Committee of the Red Cross is referred to by name in several provisions of the [ ] Geneva Conventions and is the body that drafted and published the official commentary to the Conventions. Though not binding law, the commentary is . . . relevant in interpreting the Conventions’ provisions.” Hamdan, 548 U.S. at 619 n.48. 13 The phrase “fallen into the power” has been interpreted by the International Committee of the Red Cross as having a broader meaning than the term “captured.” ICRC Additional Protocols Commentary, supra, at 481. The latter phrase suggests that the individual “ha[s] been taken into custody,” id., whereas the former term refers to any situation where “the adverse [p]arty . . . is able to impose its will upon” the individual in question. Id. at 485. This broader interpretation is necessary to protect combatants who have been rendered hors de combat; i.e., out of the fight, but have not yet been physically apprehended. See id. at 481 (explaining the need “to create a concrete link between the moment when an enemy soldier is no longer a combatant because he is hors de combat, and the moment (continued . . .) 30 remotely support the proposition that the laws of war “suppl[y] definite authority for the detention as ‘combatants’ of individuals fighting on behalf of an enemy nation.” Law of War Experts’ Br. at 19. To the contrary, the commentary to the Third Geneva Convention provided by the International Committee of the Red Cross makes clear that the prisoner-of-war provisions of that convention restrict rather than enable the discretion of the detaining state. The commentary explains that In ancient times, the concept of “prisoner of war” was unknown. Captives were the “chattels” of their victors who could kill them or reduce them to bondage. Throughout the ages, innumerable captives owed humane treatment no doubt to the mercy of their victors. . . . [M]ore than a century [from the French Revolution] had to elapse, and the Hague Convention of 1899 . . . to be reached, before the [s]tates were ready to limit their respective sovereign rights concerning the treatment of prisoners of war, and before prisoners were granted their own statute in international law[] protecting them from arbitrary treatment by the [d]etaining [p]ower, and which may also be invoked by them against that [p]ower. ICRC Third Geneva Convention Commentary, supra, at 45-46. Indeed, detention in lieu of the barbaric rule of “no quarter” is itself a restriction on the “sovereign rights” of the state. See Additional Protocol I, art. 40 (“It is prohibited to order that there shall be no survivors, to threaten an adversary therewith[,] or to conduct hostilities on this basis.”); see also ICRC Additional Protocols Commentary, supra, at 381-82 (noting the “humanitarian rules” that “prohibit refusing to give quarter”); William Winthrop, Military Law and Precedents 788 (William S. Hein & Co. 2d ed. 2000) (“The time has long passed when ‘no quarter’ was the rule on the battlefield, or when a prisoner could be put to death by virtue simply when he becomes a prisoner of war”). It has no bearing as to whether the Third Geneva Convention or Additional Protocol I authorize detention in the first instance. 31 of his capture,”). As the International Committee of the Red Cross notes in its commentary to Additional Protocol I, “[i]nitially this rule was accepted with regard to peoples of the same race, the same religion, or with whom there were neighbo[rly] relations in times of peace, but eventually it was also imposed, though not without difficulty, in favo[r] of those who were also considered strangers.” ICRC Additional Protocols Commentary, supra, at 474. Absent this proscription, the state could simply kill members of the enemy force rendered hors de combat; i.e., out the fight. See Winthrop, supra, at 783 (opining that persons “not recognized . . . as legitimate troops or entitled, when taken, to be treated as prisoners of war, . . . may upon capture be summarily punished even with death”). 14 The laws of war governing non-international armed conflicts are no different in this regard. Common Article 3 requires that “members of [the enemy’s] armed forces who have laid down their arms . . . be treated humanely.” Third Geneva Convention, art. 3(1). This includes a proscription against “violence to [the] life and person” of the surrendered enemy fighter, “in particular[,] murder of all kinds.” Id., art. 3(1)(a). Additional Protocol II is even more direct: it explicitly provides that “[i]t is prohibited to order that there shall be no survivors.” Additional Protocol II, art. 4.1. Thus, regarding the “authority” to detain individuals in an armed conflict, the laws of war are silent with respect to both international and non-international armed conflicts. Yet, these same laws require the state to detain rather than summarily execute fighters in such conflicts. The obvious implication, consistent with historical practice, is that these provisions, far from “authorizing” detention in one context but not another, act as restraints on 14 Winthrop’s treatise on the laws of war obviously predates the broader protections accorded to enemy fighters by the Geneva Conventions and their additional protocols, but this actually makes it more helpful in understanding the sovereign rights of the state absent the restrictions of those treaties. 32 the inherent authority of the state to exercise military force in whatever manner it deems appropriate. The Court is therefore baffled by the assertion, repeated throughout Khan’s memorandum of law and at oral argument, that the President could take military action against an organization like al-Qaeda under the AUMF but could not detain anyone fighting on behalf of that organization as part of that military action. See Khan Mem. at 4 (“Even if the government were authorized under the AUMF to use force against [Khan,] . . . that power would not provide related authority to detain him in the context of the non-international armed conflict with . . . [a]l[-]Qaeda.”); id. at 12 (“The AUMF also contains no express authorization for military detention; its focus is clearly on the use of military force.”); id. at 17 (“[E]ven if Congress has authorized the use of lethal force against . . . [a]l-[Q]aeda forces wherever they are located throughout the world, that does not mean that the government may detain someone who is suspected of being a[n] [a]l[-]Qaeda fighter indefinitely under the AUMF.”); Hr’g Tr. 7:6-9, Mar. 23, 2009 (“MR. DIXON: . . . [U]nder the laws of war, the right to use force and the right to detain are not the same.”). As the foregoing analysis demonstrates, detention is an exercise of the state’s “right to use force,” and often a required one at that. And it is in this sense that detention is, as the plurality noted in Hamdi, “a fundamental incident of waging war.” Hamdi, 542 U.S. at 519 (plurality opinion). That the plurality in Hamdi supported this observation through recourse to cases arising in the context of international armed conflicts does not restrict the logic of its observation to that milieu. Non-international armed conflicts, no less than their international counterparts, require the exercise of military force by the state, else they would not qualify as “armed conflicts” in the first place. See ICRC Third Geneva Convention Commentary, supra, at 37 (“[I]t must be 33 recognized that the conflicts referred to in Article 3 are armed conflicts, with armed forces on either side engaged in hostilities . . . .” (emphasis in original)). And whenever the President can lawfully exercise military force, so, too, can he incapacitate the enemy force through detention rather than death. Cf. ICRC Third Geneva Convention Commentary, supra, at 45-46 (noting that “[t]hroughout the ages, innumerable captives owed humane treatment no doubt to the mercy of their victors”). This authority inheres in the right to exercise military force itself, not the regulatory schemes of the Geneva Conventions and its additional protocols. If Khan were correct, Osama bin Laden could be killed but not detained by the United States military, and provisions in the Geneva Conventions intended to restrict a state’s sovereign authority must be interpreted as providing that authority. The Court declines to indulge such fantasies. The reality is that Congress authorized the same use of military force, and thus conferred upon the President the same degree of detention authority, with respect to “organizations” responsible for the 9/11 attacks as it did with respect to the “nations” responsible for those attacks. Only the extent to which that authority is restricted by the laws of war varies based on whether the armed conflict falls under the rubric of Common Article 2 or Common Article 3. Khan’s arguments to the contrary are without merit and are therefore rejected in their entirety. B. Scope of the President’s Detention Authority Having concluded that the AUMF authorizes the detention of individuals in the non- international armed conflict between the United States and the enemy “organizations” named in the AUMF, the Court turns to the question of the scope of that authority. The government suggests that in non-international armed conflicts, the President can detain anyone who is a member of a “dissident armed force[]” or “other organized armed group[]” engaged in hostilities 34 with the United States. Gov’t’s Mem. at 9. It further asserts that the determination whether an individual is a member of such a group must be informed by “[p]rinciples derived from law-of- war rules governing international armed conflicts,” id. at 1, such as the criteria for “determining whether someone is part of an irregular volunteer militia that would be covered under Article [4] of [the Third Geneva Convention],” Hr’g Tr. 49:24-50:1, Mar. 23, 2009. “Evidence relevant” to this determination “might range from formal membership, such as through an oath of loyalty, to more functional evidence, such as training with al-Qa[e]da.” Gov’t’s Mem. at 6. The petitioners take a very different view. Looking to the other articles of the Third Geneva Convention and Additional Protocol I for guidance, they distinguish between “‘combatants,’ who may be properly detained, and ‘non-combatants,’ who may not.” Pet’rs’ Reply at 16. They describe the “combatant” category as consisting of “members of State armed forces and other forces described in Article 4 of the Third Geneva Convention,” as well as “civilians who actively and directly participate in hostilities.” Id. Because the members of al- Qaeda and similar organizations do not qualify as “combatants” under Article 4, the petitioners contend that the only individuals subject to detention in this non-international armed conflict are “civilians who give up the protections of civilian status by participating actively and directly in hostilities as part of an organized armed force.” Pet’rs’ Mem. at 5. The petitioners defend this “‘direct participation in hostilities’ standard” as “a critical distinction in the law of armed conflict,” for whereas “combatants” within the meaning of Article 4 of the Third Geneva Convention “may be deliberately targeted with deadly force, . . . civilians who are not participating in hostilities may not.” Id. at 6. The petitioners’ reliance on the standards governing international armed conflict is understandable given the government’s longstanding justification of its detention of the 35 petitioners on the grounds that they were “enemy combatants.” This term has meaning under the Geneva Conventions only insofar as it is construed as a subset of “prisoner of war” status, which the Third Geneva Convention defines at length. See Third Geneva Convention, art. 4(A) (delineating the categories of individuals who qualify for prisoner of war status); see also Additional Protocol I, art. 44.1 (providing that “combatant[s] . . . who fall[] into the power of an adverse Party” are prisoners of war); ICRC Additional Protocols Commentary, supra, at 515 (“All members of the armed forces are combatants, and only members of the armed forces are combatants.”). Status as a “combatant” is actually a privilege—“the right to participate in hostilities,” Additional Protocol I, art. 43.2—to be earned through fidelity to the requirements of Article 4. At least for those petitioners detained due to their associations with terrorist organizations like al-Qaeda, there is little question that such individuals fail to satisfy these requirements. While the term “armed forces” is defined broadly in the Third Geneva Convention, “the non- recognized government or authority” sponsoring the putative “armed forces” in question “must represent, or must claim to represent, a subject of international law recognized as such by the other Party to the conflict,” ICRC Additional Protocols Commentary, supra, at 508, and must be “indissolubly bound” by the rules that govern international warfare, id. at 513. “Anyone who participates directly in hostilities without being subordinate to an organized movement” that “enforc[es] compliance with these rules[] is a civilian.” Id. at 514. Thus, under the combatant/civilian distinction formerly drawn by the government, the petitioners would appear to fall under the rubric of “civilians.” See Additional Protocol I, art. 50.1 (defining the term “civilian” to mean “any person who does not belong to one of the categories of persons referred to in Article 4(A) (1), (2), (3), and (6) of the Third Convention and 36 in Article 43 of [Additional Protocol I]”). And as civilians, the petitioners would not be subject to military force “unless and for such time as they [took] a direct part in hostilities.” Id., art. 51.1, 51.3. In its most restrictive interpretation, this standard would require “a direct causal relationship between the activity engaged in and the harm done to the enemy at the time and the place where the activity [took] place.” ICRC Additional Protocols Commentary, supra, at 516. 15 But the government no longer seeks to detain the petitioners on the theory that they are “enemy combatants,” and neither Common Article 3, Additional Protocol II, nor the respective commentaries on these treaties by the International Committee of the Red Cross make any reference whatsoever to the term “combatant.” “The reason for the absence of combatant status 15 It is far from clear that the definition of “direct participation” set forth in the commentary to Additional Protocol I is correct. See Jean-Marie Henckaerts, 87 Int’l Rev. of the Red Cross 175, 190 (March 2005) (noting “the absence of a precise definition of the term ‘direct participation in hostilities’” in international and non-international armed conflicts). Indeed, the petitioners’ own expert witness, Gary Solis, advocates an expansive meaning of the term. In his declaration submitted in support of the petitioners’ original memorandum of law, Solis opines that “senior terrorist leaders and terrorist weapons specialists and fabricators should be considered to continually be taking a direct part in hostilities.” Pet’rs’ Mem., Ex. 1 (Declaration of Gary D. Solis) ¶ 6(g). Thus, according to Solis, “Osama bin Laden . . . is continually taking a direct part in hostilities and is always a lawful target, no matter where located, no matter what his activity.” Id. Assuming that the Court were inclined to treat individuals fighting on behalf of an enemy organization as civilians as the petitioners request, it would likely conclude that Solis’s broad understanding of the term “direct participation,” while perhaps not quite broad enough, is a step towards the right answer, at least where non- international armed conflicts are concerned. The narrower definition espoused in Additional Protocol I makes sense in an international armed conflict, where the sole object of defining “direct participation” is to delineate the circumstances under which one party may detain persons who have no formal or enduring role in the command structure of the parties to the conflict. Because it is relatively clear in the international armed conflict context which persons may be detained by virtue of their ongoing direct participation in hostilities (i.e., membership in the enemy state’s armed forces), it is logical to presume that civilians do not directly participate in hostilities on an ongoing basis—indeed, it is reasonable to presume that they do not participate in hostilities at all. The onus should therefore rest on the detaining party to establish that the civilian in question has actually directly participated in hostilities. But however reasonable this presumption might be in an international armed conflict, it would not make sense in a non-international armed conflict where the members of the enemy organization’s armed forces were considered civilians by default precisely because those “civilians” would be as likely as not to engage in direct hostilities at any time depending upon their membership in the armed forces of the enemy organization. Moreover, defining the term “direct participation” narrowly “would make it virtually impossible for state armed forces to employ force offensively rather than defensively, except when [the enemy fighter] deploy[ed] to directly participate in hostilities.” J.K. Kleffner, From “Belligerents” to “Fighters” and Civilians Directly Participating in Hostilities— on the Principle of Distinction in Non-International Armed Conflicts One Hundred Years After the Second Hague Peace Conference, 54 Netherlands Int’l L. Rev. 315, 332-33 (2007). Thus, even if the Court were to adopt the “direct participation” model in determining the scope of the President’s detention authority in this non-international armed conflict, it would interpret that standard broadly to mean that, consistent with the analysis below, all members of the armed forces of the enemy are directly participating in hostilities at all times for the duration of their membership. 37 in non-international armed conflicts is obvious: states are not prepared to grant their own citizens, and even less others who might engage in fighting on behalf of a non-state group, the right to do so.” J.K. Kleffner, From “Belligerents” to “Fighters” and Civilians Directly Participating in Hostilities—on the Principle of Distinction in Non-International Armed Conflicts One Hundred Years After the Second Hague Peace Conference, 54 Netherlands Int’l L. Rev. 315, 322 (2007). Thus, whereas the Geneva Conventions rigorously protect individuals who participate in hostilities in the international context, they are silent with respect to individuals who engage in intranational (or, in this case, transnational) combat. The petitioners evidently interpret this lack of protection for “combatants” in non- international armed conflicts to mean that every individual associated with the enemy to any degree in such a conflict must be treated as a civilian. As with Khan’s argument regarding the source of the President’s ability to detain individuals in armed conflicts in general, this assumption rests on the notion that the Geneva Conventions must specifically enable its signatories to act in a specific manner for a signatory to have the authority necessary to take such action. See supra, part II.A. And, as with Khan’s prior argument, this notion gets things exactly backwards. The Geneva Conventions restrict the conduct of the President in armed conflicts; they do not enable it. And the absence of any language in Common Article 3 and Additional Protocol II regarding prisoners of war or combatants means only that no one fighting on behalf of an enemy force in a non-international armed conflict can lay claim to the protections of such status, not that every signatory to the Geneva Conventions must treat the members of an enemy force in a civil war or transnational conflict as civilians regardless of how important the members in question might be to the command and control of the enemy force or how well organized and coordinated that force might be. 38 The text of Common Article 3 impliedly supports this conclusion. The article provides in pertinent part that “[p]ersons taking no active part in the hostilities, including members of armed forces who have laid down their arms and those placed hors de combat by sickness, wounds, detention, or any other cause” must be treated “humanely.” Third Geneva Convention art. 3(1) (emphasis added). This restriction on the conduct of the state engaging in a non-international armed conflict carries with it two distinct implications. The first implication, correctly identified by the government, is that “[S]tates engaged in such conflicts can detain those who are part of [enemy] armed groups.” Gov’t’s Mem. at 9. Otherwise, there would be no “[p]ersons . . . placed hors de combat by . . . detention” to treat “humanely.” Second, the fact that “members of armed forces who have laid down their arms and those placed hors de combat” are not “taking [an] active part in the hostilities” necessarily implies that “members of armed forces” who have not surrendered or been incapacitated are “taking [an] active part in the hostilities” simply by virtue of their membership in those armed forces. And the fact that the category of “[p]ersons taking no active part in the hostilities” only “includ[es]” surrendered or incapacitated members of an armed force necessarily suggests that there is a category of persons in non-international armed conflicts that, by virtue of their lack of membership in the armed forces of the enemy, are not “taking [an] active part in hostilities.” This equivalency in treatment reflects the “fundamental principle of the law of war that those who do not participate in the hostilities [should] not be attacked,” in which respect “harmless civilians and soldiers hors de combat are a priori on the same footing.” ICRC Additional Protocols Commentary, supra, at 482. Common Article 3 therefore implicitly bifurcates individuals associated in some sense with the enemy in a non-international armed conflict into two groups: “members of armed 39 forces” who necessarily always actively participate in hostilities; i.e., would-be combatants, and individuals who are not a part of the enemy’s armed forces and therefore do not actively participate in hostilities; i.e., civilians and soldiers rendered hors de combat. It is not surprising to discover, then, that the International Committee of the Red Cross makes just this sort of distinction in its commentaries to the Third and Fourth Geneva Conventions. It focuses its commentary on Article 3, sub-paragraph (1) of the Third Geneva Convention on “prisoners of war, who are covered by the Third Convention,” ICRC Third Geneva Convention Commentary, supra, at 38, while restricting the focus of its commentary on the identical provision in the Fourth Geneva Convention to “points which more particularly concern persons protected under the Fourth Convention,” which governs the treatment of civilians, International Committee of the Red Cross, Commentary on the Geneva Convention Relative to the Protection of Civilian Persons in Time of War, at 38 (Pictet et al. eds., 1958) . This bifurcation is also apparent in Additional Protocol II. Part IV of that protocol “is aimed at developing the legal protection to which the civilian population is entitled,” ICRC Additional Protocols Commentary, supra, at 1443, and to that end Article 13 of the protocol provides that “[t]he civilian population and individual civilians shall enjoy general protection against the dangers arising from military operations,” Additional Protocol II, art. 13.1, and that “[t]he civilian population as such, as well as individual civilians, shall not be the object of attack . . . unless and for such time as they take a direct part in hostilities,” id., art. 13.2-13.3. Of course, it would be odd for the drafters of Additional Protocol II to devote a portion of the convention to protecting a discrete group of individuals labeled “civilians” if every member of the enemy in a non-international armed conflict is a civilian, as the petitioners suggest. It would also cripple a state’s capability to effectively combat the enemy force in a non-international 40 armed conflict if the members of that enemy force, including those members in a command position, could only be detained whenever there was “a sufficient causal relationship between the [member’s] act of participation and its immediate consequences,” as the International Committee of the Red Cross defines the term “direct part in hostilities” for purposes of Article 13.3. ICRC Additional Protocols Commentary, supra, at 1453. But, lest there be any confusion on the matter, the Committee itself explicitly notes that, unlike civilians, “[t]hose who belong to armed forces or armed groups may be attacked at any time.” Id. In short, Common Article 3, Additional Protocol II, and the commentaries of the International Committee of the Red Cross all contemplate a division in the treatment of the members of an enemy’s “armed forces” and civilians. Unless they surrender or are incapacitated, members of the enemy’s armed forces are always “taking [an] active part in hostilities,” Third Geneva Convention, art. 3(1), and therefore “may be attacked” and, incident to that attack, detained “at any time,” ICRC Additional Protocols Commentary, supra, at 1453. “[C]ivilians who do not participate in hostilities,” on the other hand, “should be spared” those consequences. Id. at 1443. Interpreting Common Article 3 and Additional Protocol II in this manner comports with customary international law. As the International Committee of the Red Cross noted in its recent study of that body of law, “[s]tate practice establishes” the rule distinguishing civilians from fighters “as a norm of customary international law applicable in both international and non- international armed conflicts.” 1 Int’l Comm. of the Red Cross, Customary International Humanitarian Law 3 (Jean-Marie Henckaerts & Louise Doswald-Beck, eds., Cambridge Univ. Press 2005) (the “ICRC Study”). Several states have either explicitly or impliedly required that their armed forces distinguish between fighters and civilians, see id. at 6 (listing states with 41 military manuals, legislation, or official statements imposing this rule), “to the effect that only the former may be targeted,” id. And the International Committee of the Red Cross “has called on parties to both international and non-international armed conflicts to respect the distinction between [fighters] and civilians.” Id. at 8. 16 This result is also consonant with the intended purpose of Common Article 3. While its scope may encompass the transnational conflict at issue here, the article was drafted “to aid the victims of civil wars and internal conflicts.” ICRC Third Geneva Convention Commentary, supra, at 28. As counsel for the government pointed out at oral argument on this issue, permitting a State to detain members of the armed forces of a non-state entity in a non- international armed conflict only when those members directly participated in hostilities, at least as that term is defined by the petitioners, “would encourage . . . armed groups to try to blend into the civilian population, which then necessarily subjects the civilian population to increased danger.” Hr’g Tr. 63:11-14, Mar. 23, 2009. And the practical absurdity of the petitioners’ approach is evident when one considers the impact such a standard would have had on the “civil wars and internal conflicts” experienced by this nation in the past. The Court therefore rejects the petitioners’ argument that the laws of war permit a state to detain only individuals who “directly participate” in hostilities in non-international armed conflicts. Common Article 3 is not a suicide pact; it does not provide a free pass for the members of an enemy’s armed forces to go to and fro as they please so long as, for example, 16 Throughout its study, the International Committee of the Red Cross distinguishes between “combatants” and civilians rather than “fighters” and civilians, but it clarifies that “[t]he term ‘combatant’ . . . is used in its generic meaning, indicating persons who do not enjoy the protection against attack accorded to civilians,” and not as “imply[ing] a right to combatant status or prisoner-of-war status.” ICRC Study, supra, at 3. To avoid confusion between the “generic” use of the term “combatant” and the use of the term in Additional Protocol I, the Court has substituted the appellation “fighters” in place of the potentially confusing term “combatant.” At least one commentator has suggested just this approach. See Kleffner, supra, at 330 (opining that “[o]ne could refer” to members of the enemy armed forces in a non-international armed conflict “as ‘fighters’ in order to avoid any confusion about their lacking the entitlement to combatant-privilege and prisoner of war status”). 42 shots are not fired, bombs are not exploded, and planes are not hijacked. Consistent with Common Article 3 and Additional Protocol II, the President may detain anyone who is a member of the “armed forces” of an organization that “he determines planned, authorized, committed, or aided” the 9/11 attacks, as well as any member of the “armed forces” of an organization harboring the members of such an organization. Pub. L. No. 107-40 § 2(a), 115 Stat. at 224. 17 As for the criteria used to determine membership in the “armed forces” of the enemy, the Court agrees with the government that the criteria set forth in Article 4 of the Third Geneva Convention and Article 43 of Additional Protocol I should inform the Court’s assessment as to whether an individual qualifies as a member of the “armed forces” of an enemy organization like al-Qaeda. Although these provisions obviously cannot be applied literally to the enemy organizations contemplated in the AUMF—if that were the case, the conflict at hand would not be governed by Common Article 3 in the first place—they may nevertheless serve as templates from which the Court can glean certain characteristics necessary to identify those individuals who comprise an “armed force” for purposes of Common Article 3. This approach is also consistent with Common Article 3’s command that the “[p]arties to the conflict . . . endeavor[r] to bring into force . . . all or part of the other provisions of the [Third Geneva Convention].” 18 Foremost among these basic distinguishing characteristics of an “armed force” is the notion that the group in question be “organized . . . under a command responsible . . . for the 17 Because the authority claimed by the President by the AUMF does not run afoul of the laws of war, the Court need not consider whether the AUMF is sufficiently clear to obviate concerns that it has delegated excessive lawmaking power to the President in contravention of the Constitution, or violates any other canon of construction raised by the petitioners. See Pet’rs’ Mem. at 17 (challenging as, inter alia, an unconstitutional delegation of congressional authority any interpretation of the AUMF that would allow “the President to abandon the United States’[s] long-standing commitment to the traditional law[s] of war, or to ignore the country’s existing treaty obligations”). 18 Common Article 3 contemplates that the additional provisions of the Third Geneva Convention be enforced “by means of special agreements” between the parties to the non-international armed conflict. However, such agreements seem unlikely to occur in the conflict at hand. 43 conduct of its subordinates,” Additional Protocol I, art. 43.1. Although “[t]he term ‘organized’ is obviously rather flexible, . . . [a]ll armed forces, groups[,] and units are necessarily structured and have a hierarchy.” ICRC Additional Protocols Commentary, supra, at 512; see also Kleffner, supra, at 332 (“Members of organi[z]ed armed groups do not act as atomi[z]ed individuals, but as part of a structured collective whose very purpose it is to use armed force and inflict death and injury to objects of such an intensity so as to reach the threshold of non- international armed conflict.”). Thus, mere sympathy for or association with an enemy organization does not render an individual a member of that enemy organization’s armed forces. Instead, the individual must have some sort of “structured” role in the “hierarchy” of the enemy force. Obviously, “the ‘organizations’ that the President is authorized to target under the AUMF do not . . . issue membership cards or uniforms.” Gov’t’s Opp’n at 6. Nevertheless, there is a distinction to be made between members of a terrorist organization involved in combat operations and civilians who may have some tangential connections to such organizations. As Curtis Bradley and Jack Goldsmith note in their lengthy article on the validity of the AUMF and its implications, “terrorist organizations do have leadership and command structures, however diffuse, and persons who receive and execute orders within this command structure are analogous to combatants” in international armed conflicts. Curtis A. Bradley & Jack L. Goldsmith, Congressional Authorization and the War on Terrorism, 118 Harv. L. Rev. 2048, 2114-15 (May 2005). Thus, under Additional Protocol I, only “persons who receive and execute orders” from the enemy’s “command structure” can be considered members of the enemy’s armed forces. Sympathizers, propagandists, and financiers who have no involvement with this “command structure,” while perhaps members of the enemy organization in an abstract sense, 44 cannot be considered part of the enemy’s “armed forces” and therefore cannot be detained militarily unless they take a direct part in the hostilities. At the same time, the armed forces of the enemy consist of more than those individuals who would qualify as “combatants” in an international armed conflict. See ICRC Third Geneva Convention Commentary, supra, at 51. (“At the Conference on Government Experts, the question arose as to the advisability of giving a more exact definition of armed forces by stating . . . that the term covers both combatants and non-combatants. It was finally considered that this fact was usually implicit in any general reference to armed forces . . . .”); ICRC Additional Protocols Commentary, supra, at 510 (noting that under the Hague Regulations that informed the drafting of Article 4 of the Third Geneva Convention and Article 43 of Additional Protocol I, “[t]he armed forces of the belligerent parties may consist of both combatants and non- combatants”). The key question is whether an individual “receive[s] and execute[s] orders” from the enemy force’s combat apparatus, not whether he is an al-Qaeda fighter. Thus, an al-Qaeda member tasked with housing, feeding, or transporting al-Qaeda fighters could be detained as part of the enemy armed forces notwithstanding his lack of involvement in the actual fighting itself, but an al-Qaeda doctor or cleric, or the father of an al-Qaeda fighter who shelters his son out of familial loyalty, could not be detained assuming such individuals had no independent role in al- Qaeda’s chain of command. See Kleffner, supra, at 334 (“[P]ersons who accompany the armed forces without actually being members thereof should be immune from being made the object of attack, unless and for such time as they directly participate in hostilities.”). 19 19 Kleffner argues that “only ‘fighters’ should be liable to attack for the entire duration of their membership” in the enemy armed forces because “organi[z]ed armed groups may include members devoted to functions other than fighting.” Kleffner, supra, at 333. The problem with this approach is that many members of the armed forces who, under different circumstances, would be “fighters” may be assigned to non-combat roles at the time of their apprehension. These individuals are no less a part of the military command structure of the enemy, and may assume (or resume) a combat role at any time because of their integration into that structure. For example, an al-Qaeda cook (continued . . .) 45 With these non-exclusive limiting principles in mind, the Court agrees with the government that “[i]t is neither possible nor advisable” to define “the precise nature and degree of ‘substantial support,’ or the precise characteristics of ‘associated forces,’ that are or would be sufficient to bring persons and organizations” within the government’s proposed standard for detention. Gov’t’s Mem. at 2. As the government aptly suggests, the exact contours of the standard must and will be fleshed out on a case-by-case basis. Id. Certainly, there is no shortage of scenarios arising out of the conflict at hand from which to identify these contours. But while the precise meaning of the definition for detention now invoked by the government cannot be definitively settled in the abstract, it is not the case that the standard is, as the petitioners’ designated lead counsel suggests, “entirely nebulous.” Hr’g Tr. 65:16, Mar. 23, 2009. For, as counsel for the government conceded at oral argument on this issue, the “substantial support” model advanced by the government is restricted to those individuals that are “effectively part of the [armed] force[s]” of the enemy. Hr’g Tr. 53:23, Mar. 23, 2009. And that inquiry must, at a minimum, be made consistent with the limiting principles articulated above. Any attempt by the government to apply its “substantial support” standard in a manner contradictory to these principles would give rise to the constitutional concerns raised by the petitioners regarding the clarity of the scope of Congress’s delegation of authority to the President and, as such, would have to be rejected by the Court. See supra, n.17. In other words, the Court interprets the government’s “substantial support” standard to mean individuals who were members of the “armed forces” of an enemy organization at the time of their initial detention. It is not meant to encompass individuals outside the military command structure of an enemy organization, as that term is understood in view of the limiting principles who has trained at an al-Qaeda camp and sworn allegiance to Osama bin Laden is no less dangerous than his comrade guarding the camp entrance, and must be incapacitated for the same reasons. 46 set forth above. With these caveats in play, the Court adopts the government’s “substantial support” standard for detention in favor of the “direct participation” model advanced by the petitioners. 20 III. Conclusion At first blush, the refinements made by the government to its suggested standard for detention appear to be of a minimal if not ephemeral character. Replacing a standard that authorizes the detention of individuals who “support” an enemy organization with a standard that permits the detention of individuals who “substantially support” that enemy doubtless strikes the casual reader as a distinction of purely metaphysical difference, particularly when the government declines to provide any definition as to what the qualifier “substantial” means. Indeed, the Court shares the petitioners’ distaste for the government’s reliance on the term “support” at all, laden as it is with references to domestic criminal law rather than the laws of war that actually restrict the President’s discretion in this area. See Allison M. Danner, Defining Unlawful Enemy Combatants: A Centripetal Story, 43 Tex. Int’l L.J. 1, 9-10 (Fall 2007) (noting the heavy reliance of the government’s “support” standard for detention “on concepts imported from domestic criminal law, particularly conspiracy and aiding and abetting”). Nevertheless, the Court is convinced upon closer inspection that the government’s revised standard, as explained by the government in its memorandum of law announcing that standard and, most especially, during the oral argument held before this Court on March 23, 20 The Court notes that the government’s “substantial support” standard, as limited by the Court’s interpretation of that standard set forth above, is not so different from the expansive “direct participation” standard advanced by the petitioners’ expert witness. See supra, n. 15; see also Kleffner, supra, at 333 (recognizing that “[t]o construe membership in an organi[z]ed armed group as permanent direct participation . . . produces the same results” as treating all members of the enemy’s armed forces as subject to detention). The latter approach, however, is “open to the objection that it conflates two conceptually distinct categories of persons—members of armed groups and others who directly participate in hostilities without being members of such groups—under one and the same heading of ‘direct participation.’” Id. 47 2009, comports with the laws of war as the Court understands them. The Court will therefore adopt the government’s standard for detention as its own, subject to the interpretation of that standard provided by the Court above. However, the Court will strictly adhere to its interpretation of that standard in considering the specific cases before it, and therefore will not, in applying that standard on a case-by-case basis, deviate from the limiting principles articulated above. With that understanding, the Court concludes as a matter of law that, in addition to the authority conferred upon him by the plain language of the AUMF, the President has the authority to detain persons who were part of, or substantially supported, the Taliban or al-Qaeda forces that are engaged in hostilities against the United States or its coalition partners, provided that the terms “substantially supported” and “part of” are interpreted to encompass only individuals who were members of the enemy organization’s armed forces, as that term is intended under the laws of war, at the time of their capture. 21 SO ORDERED this 22nd day of April, 2009. 22 REGGIE B. WALTON United States District Judge 21 The government also asserts that the President may detain individuals who substantially support “forces” that are “associated” with the Taliban and al-Qaeda. Gov’t’s Mem. at 2. The meaning of the term “associated forces,” and the propriety of detaining members of such forces under the laws of war, were not argued in any detail by the parties and may not concern many of the petitioners with habeas corpus petitions pending before this member of the Court. The issue must therefore await resolution at a later date if that becomes necessary. 22 Consistent with the supplemental case management order entered by this Court on February 19, 2009, as amended by the Court on March 27, 2009, the Court will enter an order contemporaneous with this memorandum opinion directing the petitioners to file or renew their motions for expedited judgment, if any they wish to have decided by this Court, within ten days of the entry of the order. 48	01-03-2023	04-04-2014
https://www.courtlistener.com/api/rest/v3/opinions/2664202/	FILED .\|UN ' 8 2011 C\|erk. U.S. District & Bankruptcy UNITED STATES DISTRICT COURT Courts for the District of Columbla FOR THE DISTRICT OF COLUMBIA Troy Jennings, ) ) Plaintiff, ) ) v. ) Civil Action No. f g~ ;~ ) 1000 Federal Bureau of Prisons et al., ) ) Defendants. ) MEMORANDUM OPINION This matter is before the Court on plaintiff`s pro se complaint and application to proceed in forma pauperis The Court will grant plaintiffs application and dismiss the complaint on the ground of resjudicata. Under the principle of resjudz`cata, a final judgment on the merits in one action "bars any further claim based on the same ‘nucleus of facts’ . . . ." Page v. United Stales, 729 F.Zd 818, 820 (D.C. Cir. l984) (quoting Expert Elec., Inc. v. Levz'ne, 554 F.2d 1227, 1234 (D.C. Cir. 1977)). Res judicata bars the relitigation "of issues that were or could have been raised in [the prior] action." Drake v. FAA, 291 F.3d 59 (D.C. Cir. 2()02) (emphasis in original) (quoting Allen v. McCurry, 449 U.S. 90, 94 (1980)); see I.A.M Nal’l Pension Fund v. Indus. Gear Mfg. Co., 723 F.Zd 944, 949 (D.C. Cir. 1983) (noting that res judicata "forecloses all that which might have been litigated previously"). Plaintiff, a prisoner at the United States Penitentiary in Coleman, Florida, has submitted a complaint consisting mostly of various attachments. He argues that the Bureau of Prisons has not given him sufficient good-time credit for his educational pursuits between 2003 and 201 l, and seeks the correction of his records and monetary damages exceeding $100,000 under the Privacy Act, 5 U.S.C. § 552a. See Compl. at 5-8 (page numbers supplied). However, this Court previously adjudicated the merits of plaintiffs claims covering the period of 2003 to 2008 in an action brought against the same defendants. See Opinion, Jennz`ngs v. F ederal Bureau of Prisons, Civ. No. 08-1475 (PLF) (D.D.C., Sept. 25, 2009) [Dkt. # 24] (concluding that plaintiff had failed to state claims under the Privacy Act); App. No. 09-5348, Order (Aug. 10, 2010) [Dkt. # 27]) (dismissing appeal for lack of prosecution). Although plaintiff now claims violations up to 2011, he has not stated any additional facts and his administrative remedy dated January 26, 201 l, again sought good-time credit from February 6, 2003 to February 6, 2008. Compl., Ex. l. Because plaintiff is foreclosed from relitigating that issue, the case will be dismissed. A separate Order accompanies this Memorandum Opinion. Sr'" United States District Judge 2011 Date: June I 9	01-03-2023	04-04-2014
https://www.courtlistener.com/api/rest/v3/opinions/4555638/	Nebraska Supreme Court Online Library www.nebraska.gov/apps-courts-epub/ 08/14/2020 08:08 AM CDT - 38 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. PRICE Cite as 306 Neb. 38 State of Nebraska, appellee, v. James S. Price, appellant. ___ N.W.2d ___ Filed June 5, 2020. No. S-19-192. 1. Effectiveness of Counsel: Appeal and Error. Assignments of error on direct appeal regarding ineffective assistance of trial counsel must specifically allege deficient performance, and an appellate court will not scour the remainder of the brief in search of such specificity. 2. Trial: Prosecuting Attorneys: Appeal and Error. When a defendant has not preserved a claim of prosecutorial misconduct for direct appeal, an appellate court will review the record only for plain error. 3. Appeal and Error. An appellate court may find plain error on appeal when an error unasserted or uncomplained of at trial, but plainly evi- dent from the record, prejudicially affects a litigant’s substantial right and, if uncorrected, would result in damage to the integrity, reputa- tion, and fairness of the judicial process. Generally, an appellate court will find plain error only when a miscarriage of justice would other- wise occur. 4. Motions for New Trial: Appeal and Error. The standard of review for the denial of a motion for new trial is whether the trial court abused its discretion in denying the motion. 5. Convictions: Evidence: Appeal and Error. Regardless of whether the evidence is direct, circumstantial, or a combination thereof, and regardless of whether the issue is labeled as a failure to direct a ver- dict, insufficiency of the evidence, or failure to prove a prima facie case, the standard is the same: In reviewing a criminal conviction, an appellate court does not resolve conflicts in the evidence, pass on the credibility of witnesses, or reweigh the evidence; such matters are for the finder of fact, and a conviction will be affirmed, in the absence of prejudicial error, if the evidence admitted at trial, viewed and construed most favorably to the State, is sufficient to support the conviction. - 39 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. PRICE Cite as 306 Neb. 38 6. Sentences: Appeal and Error. An appellate court will not disturb a sen- tence imposed within the statutory limits absent an abuse of discretion by the trial court. 7. Judgments: Words and Phrases. An abuse of discretion occurs when a trial court’s decision is based upon reasons that are untenable or unrea- sonable or if its action is clearly against justice or conscience, reason, and evidence. 8. Appeal and Error. Under the law-of-the-case doctrine, the holdings of an appellate court on questions presented to it in reviewing proceedings of the trial court become the law of the case; those holdings conclu- sively settle, for purposes of that litigation, all matters ruled upon, either expressly or by necessary implication. 9. Actions: Appeal and Error. The law-of-the-case doctrine operates to preclude a reconsideration of substantially similar, if not identical, issues at successive stages of the same suit or prosecution. 10. ____: ____. On appeal, the law-of-the-case doctrine is a rule of prac- tice that operates to direct an appellate court’s discretion, not to limit its power. 11. ____: ____. The law-of-the-case doctrine does not apply if consider- ations of substantial justice suggest a reexamination of the issue is war- ranted. But matters previously addressed in an appellate court are not reconsidered unless the petitioner presents materially and substantially different facts. 12. Motions for Mistrial: Prosecuting Attorneys: Waiver: Appeal and Error. A party who fails to make a timely motion for mistrial based on prosecutorial misconduct waives the right to assert on appeal that the court erred in not declaring a mistrial due to such prosecutorial misconduct. 13. Trial: Prosecuting Attorneys: Words and Phrases. Prosecutorial mis- conduct encompasses conduct that violates legal or ethical standards for various contexts because the conduct will or may undermine a defendant’s right to a fair trial. 14. Trial: Prosecuting Attorneys: Juries. Prosecutors are charged with the duty to conduct criminal trials in such a manner that the accused may have a fair and impartial trial, and prosecutors are not to inflame the prejudices or excite the passions of the jury against the accused. 15. ____: ____: ____. A prosecutor’s conduct that does not mislead and unduly influence the jury does not constitute misconduct. 16. Trial: Prosecuting Attorneys. In assessing allegations of prosecutorial misconduct in closing arguments, a court first determines whether the prosecutor’s remarks were improper. It is then necessary to determine the extent to which the improper remarks had a prejudicial effect on the defendant’s right to a fair trial. - 40 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. PRICE Cite as 306 Neb. 38 17. Criminal Law: Evidence: Appeal and Error. When a criminal defend ant challenges the sufficiency of the evidence upon which a conviction is based, the relevant question for an appellate court is whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt. 18. Sentences: Appeal and Error. Where a sentence imposed within the statutory limits is alleged on appeal to be excessive, the appellate court must determine whether a sentencing court abused its discretion in con- sidering and applying the relevant factors as well as any applicable legal principles in determining the sentence to be imposed. Appeal from the District Court for Lancaster County: Andrew R. Jacobsen, Judge. Affirmed. Matthew K. Kosmicki for appellant. Douglas J. Peterson, Attorney General, and Austin N. Relph for appellee. Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, Papik, and Freudenberg, JJ. Miller-Lerman, J. NATURE OF CASE James S. Price appeals his convictions and sentences in the district court for Lancaster County for aiding and abetting rob- bery and for aiding and abetting first degree assault. Price was convicted in his second jury trial after his first trial ended in a deadlocked jury and the court declared a mistrial. Price claims on appeal that the court erred in the first trial when it failed to inquire of the jury whether it was deadlocked on each count and when it overruled the plea in bar he filed after the declaration of a mistrial and before the second trial. We note with regard to these two claims that Price unsuc- cessfully appealed to the Nebraska Court of Appeals, which rejected his assignments of error regarding polling of jurors and overruling the plea in bar. State v. Price, No. A-17-565, 2018 WL 718501 (Neb. App. Feb. 6, 2018) (petition for further review denied). - 41 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. PRICE Cite as 306 Neb. 38 Price further claims on appeal that in the second trial, (1) the State committed prosecutorial misconduct by making improper statements during closing argument, (2) the court abused its discretion when it denied his motion for a new trial, (3) coun- sel was ineffective, (4) there was not sufficient evidence to support his convictions, and (5) the court imposed excessive sentences. We affirm Price’s convictions and sentences. STATEMENT OF FACTS First Trial, Declaration of Mistrial, and Plea in Bar. Price was charged with aiding and abetting robbery and aiding and abetting first degree assault based on an incident that occurred in the early hours of October 3, 2014, in which two men were robbed and assaulted by two other men. Price was first tried on the charges in December 2016. The case was submitted to the jury at around 11 a.m. on December 9, and deliberations continued on December 12. The following facts come from the Court of Appeals’ memorandum opinion in an earlier appeal in this case: [T]he jury, during its deliberations, sent a note to the judge on December 12, 2016, stating, “We are having dif- ficulty with a unanimous decision. What else can we do?” The judge conferred with counsel for both sides, and upon agreement of the parties, an instruction was given to the jury urging them to review the court’s prior instructions, reconsider the evidence, and to continue their discussions in order to reach a verdict; but to let the court know if a unanimous decision ultimately could not be reached. After the jury continued to deliberate for approxi- mately another couple of hours, it sent another note to the court stating, “We have reviewed the judge’s instructions numerous times. We have carefully reviewed the evidence multiple times. We have taken multiple votes and are still deadlocked.” The following line of questioning then took place in open court between the court, the presiding juror, and both attorneys (with Price present): - 42 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. PRICE Cite as 306 Neb. 38 “THE COURT: [Presiding juror], do you think any further deliberations would result in a verdict in this case? “PRESIDING JUROR: It doesn’t appear so. “THE COURT: Okay. Well, let me ask you this. Do you think the jury is hopelessly deadlocked? “PRESIDING JUROR: Yes. I — “THE COURT: I’m sorry? “PRESIDING JUROR: Yeah. I — yeah. “THE COURT: Okay. All right. “Any comments, [counsel for the State]? “[Counsel for the State]: No. “THE COURT: Any comments, [counsel for Price]? “[Counsel for Price]: Would the Court entertain polling the jury panel as to that issue? “THE COURT: I’m not going to poll the jury as to that issue. I think if the foreperson says they are deadlocked, I will take his word for it.” Price’s counsel then objected to a mistrial in a side-bar with the court and counsel for the State, and asked for another instruction to the jury to keep deliberating. The court overruled the objection and declared a mistrial, not- ing the jury had been deliberating for over 8 hours. The court indicated the case would be set for further proceed- ings and trial would be scheduled in the next trial term commencing in February 2017. Price filed a plea in bar on January 23, 2017, assert- ing that “[t]rying [Price] a second time would violate the right to be free from Double Jeopardy, Due Process, and to a Fair Trial, all as secured by the United States and Nebraska constitutions.” The district court entered an order on May 18, finding that “the jury’s statement that it was unable to reach a verdict amounts to ‘mani- fest necessity’ and [Price’s] Plea In Bar is, therefore, overruled.” State v. Price, No. A-17-565, 2018 WL 718501 at 1 (Neb. App. Feb. 6, 2018). - 43 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. PRICE Cite as 306 Neb. 38 Price’s Appeal of Denial of Plea in Bar. Price appealed the district court’s denial of his plea in bar to the Court of Appeals. He claimed that the court erred when it (1) refused his request to poll the jury individually when it indicated it was deadlocked and (2) overruled his plea in bar. The Court of Appeals rejected both assignments of error and affirmed the district court’s order overruling Price’s plea in bar. State v. Price, supra. Regarding Price’s claim that the court erred when it denied his request to poll the jury, the Court of Appeals determined that it lacked jurisdiction to consider an error arising from Price’s trial because there had not yet been a final order or judgment in the trial and the only final, appealable order it had jurisdiction to review was the order overruling Price’s plea in bar. The Court of Appeals determined, however, that the jury polling issue could be addressed in the context of the denial of Price’s plea in bar. Regarding the denial of the plea in bar, the Court of Appeals cited the proposition that where a mistrial is declared over a defendant’s objection, he or she may be retried only if the prosecution can demonstrate a manifest necessity for the mis- trial. Therefore, a second trial was allowed and the plea in bar was properly denied if there was a manifest necessity for the mistrial. The Court of Appeals rejected Price’s arguments that the trial court had abused its discretion when it granted the mistrial, and it agreed with the district court’s determination that the jury’s statement that it was unable to reach a verdict amounted to a manifest necessity. As part of this analysis, the Court of Appeals considered Price’s argument that he was entitled to poll the jury indi- vidually regarding whether the jury was deadlocked rather than relying on the assertion of the presiding juror. The Court of Appeals stated that the statutory right to poll jurors under Neb. Rev. Stat. § 29-2024 (Reissue 2016) was lim- ited to polling jurors regarding a verdict reached by the jury - 44 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. PRICE Cite as 306 Neb. 38 and did not apply when a verdict had not been reached. The Court of Appeals also distinguished State v. Combs, 297 Neb. 422, 900 N.W.2d 473 (2017), in which the defendant learned after a mistrial was declared that the jury had voted to acquit him on three of four charges but had reported that it was deadlocked because it thought it had to be unanimous as to all four counts. We concluded in Combs that because the defendant had sought the mistrial, he could not chal- lenge the district court’s failure to inquire whether the jury was deadlocked as to all counts; however, we stated that “the better practice would have been for the district court to have inquired of the jury whether it was deadlocked on every count before it granted a mistrial.” 297 Neb. at 430, 900 N.W.2d at 481. The Court of Appeals in this case determined that Combs did not create a new right to poll the jury individually before declaring a mistrial. The Court of Appeals also noted that there were “no facts in the record that call into question the jury being deadlocked as to all counts in the present case, as was the case in Combs.” State v. Price, No. A-17-565, 2018 WL 718501 at 5 (Neb. App. Feb. 6, 2018). The Court of Appeals further noted that when Price requested to poll the jury, he did not raise an issue of whether the jury might be deadlocked as to only one of the two counts, but instead focused on polling jurors as to whether the jury was actually deadlocked. The Court of Appeals concluded that “while it would have been helpful and perhaps the ‘better practice’ to poll the jurors, it was not an abuse of discretion for the dis- trict court to rely on the presiding juror’s representation to the court that the jury was deadlocked and to decline individual polling of the jurors.” Id. The Court of Appeals concluded that because the district court did not abuse its discretion when it declared a mistrial, it also did not err when it overruled Price’s plea in bar. We denied Price’s petition for further review of the Court of Appeals’ decision. - 45 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. PRICE Cite as 306 Neb. 38 Second Trial. After the Court of Appeals affirmed the denial of the plea in bar, the district court held a second trial, in June 2018. The evidence presented by the State included the following: Patrick Pantoja testified that at around 2:45 a.m. on October 3, 2014, he and a friend, Emmanuel Nartey, were walking north on 14th Street toward downtown Lincoln. As they passed by the Nebraska State Capitol Building, walking toward K Street, a group of three men approached and asked them if they had money. Pantoja said they did not, and he and Nartey continued walking north. Seconds later, Pantoja felt a hit to the back of his head; his memories after that became spotty, and his next clear memory was waking in a hospital room. Pantoja was able to describe the three men in general terms of race and clothing, but at trial, he did not identify Price or any other person as an assailant. Pantoja further testified regarding items of value that he had on his person immediately prior to the incident and that he did not have afterward. Pantoja testified regarding the injuries he received and the effects of such injuries. The doctor who treated Pantoja also testified at trial and stated that when Pantoja arrived at the hos- pital, he was in a coma and required both a breathing tube and a feeding tube. Pantoja was diagnosed with severe traumatic brain injury; the doctor testified that such injury was consis- tent with being repeatedly punched and kicked in the head and that without medical intervention, his injuries could have been life threatening. Nartey also testified, and he was able to provide more details regarding the incident. When the three men initially approached Nartey and Pantoja, one of the men told them to empty their pockets. Nartey and Pantoja ignored the men and continued walking; one of the men then hit Pantoja “from the back.” At trial, Nartey described the three men as “[o]ne black guy and two white guys.” He further described one of the “white guys” as having a “bald head” and wearing a “white shirt . . . with black markings on the shirt,” and he testified - 46 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. PRICE Cite as 306 Neb. 38 that this man was the man who first hit Pantoja. Nartey testi- fied that after the man first hit Pantoja, the second white man asked, “What are you guys doing?” and suggested they leave. The second white man either left or was otherwise not involved in what occurred after the first hit. Pantoja fell to the ground after being hit the first time. When Nartey “went in to separate” the white man from Pantoja, “the black guy came on to [Nartey] to push [him] away.” Pantoja had stood up, and so both the white man and the black man “went onto him to just hit him back to the ground . . . just punching him.” When Nartey “went in again to separate them,” the black man hit Nartey in the face and tried to empty Nartey’s pocket. Nartey decided to run, and when he ran, both men stopped hitting Pantoja and chased after Nartey. After Nartey got about a block away, he turned around and saw the two men had stopped chasing him. Nartey stopped and watched as the two men walked back toward Pantoja, who had stood up again; the two men knocked Pantoja to the ground again, and they “started kicking him in the face, in the head, anywhere”, and Nartey “saw them empty [Pantoja’s] pocket.” “[A]fter hitting [Pantoja] for several times, [the two men] just left.” After the two men left, Nartey ran to Pantoja and saw that “he had blood all over his face.” Nartey also saw that Pantoja’s “pocket was empty” and had apparently been searched. He also saw certain of Pantoja’s belongings, including a wallet and credit cards, “scattered around his body.” Nartey looked for and found his cell phone, which he had dropped while running from the men. As he called for emergency assistance, an officer in a police car arrived. The State asked Nartey at trial whether he saw “the white guy in court that [he] saw kicking and punching [Pantoja],” and Nartey identified Price. The State asked Nartey about his testimony that the “white guy . . . had a bald head.” Nartey testified that Price had “very short hair at the time,” but Nartey noted that at the time of the trial, Price’s hair had grown and was “longer now than it was then.” - 47 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. PRICE Cite as 306 Neb. 38 On cross-examination, Price asked Nartey about his testi- mony in this case and his statements prior to trial describing the white man who hit Pantoja as being “bald” or having “no hair whatsoever.” Price also cross-examined Nartey with a deposition in which Nartey described the man as wearing a “white shirt” but did not describe the shirt as having black lettering. Price also asked Nartey about being shown “six pho- tographs of the white suspects” and whether he would agree that he was “unable to identify any one in that photo lineup . . . as being the white man who assaulted . . . Pantoja.” The court sustained the State’s hearsay objection before Nartey could answer. Jerad McBride testified that he was the police officer who stopped upon seeing Pantoja on the ground with Nartey stand- ing next to him, trying to wave McBride down. McBride observed that Pantoja was unconscious and “gasping for air” and had sustained injuries to his face and trauma to his head. McBride testified that Nartey described to him what had occurred when Nartey and Pantoja were approached by the three men. McBride asked Nartey for descriptions of the men; McBride testified that Nartey described the white man as having “a slim build with like a shaved head, short hair” and wearing “a white shirt.” A patrol officer who had arrived on the scene drove around the nearby area looking for men matching the description given by Nartey but did not find anyone. As part of their investigation of this case, McBride and other officers requested video surveillance from security employees at the Nebraska State Capitol, who provided video that they thought might be relevant. McBride watched one surveillance video that was taken at around 2:44 a.m. on October 3, 2014, and depicted a portion of the Governor’s residence located near the Capitol building. McBride was attempting to determine whether persons depicted in the video matched the descriptions given of the suspects in this case. McBride asked another offi- cer, Andrew Vocasek, to watch the video because he had been in the area on the night of the incident. - 48 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. PRICE Cite as 306 Neb. 38 Vocasek testified at trial that in the early hours of October 3, 2014, he was working foot patrol in the area of 14th and O Streets in downtown Lincoln. Vocasek remembered talking to Price “sometime before 2 a.m.” on October 3. Vocasek knew Price from “see[ing] him around” and “chatting” with him on several prior occasions. Vocasek testified that he had a “casual conversation” with Price and that Price “was with another gen- tleman” at the time. Vocasek testified that when he watched the surveillance video, he recognized one of the persons depicted in the video, and that the appearance of the person was consistent with how Price looked when Vocasek had seen him earlier. Price thereafter became a suspect in the investigation, and police obtained a warrant to search the apartment in which Price lived with two other men, one of whom was Stelson Curry, who is a black male. In a search conducted on October 30, 2014, police found, inter alia, several items of clothing that matched the clothing worn by the two persons shown in the surveillance video. Certain of the pieces of clothing were found in a room that was identified as being Price’s bedroom. An officer interviewed Price at the police station while the search warrant was being executed. Price denied taking part in the assault and initially stated that he likely had not left his apartment that night. After being shown still photographs from the surveillance video recorded around the time and location of the assault, Price stated that he may have gone out to one of two locations that night, but neither location was near where the surveillance camera was located. Another investigator testified that she listened to the record- ing of a call that Curry placed to Price from jail on October 31, 2014, the day after the search. The call occurred after the interview of Price described above and at a time when Price had been released but Curry was in jail. In the conversation, Price listed for Curry the items that had been seized in the search of the apartment. In this call, Price identified some of the items of clothing as belonging to Curry and some as belonging to himself. - 49 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. PRICE Cite as 306 Neb. 38 Police later submitted items found in the search for foren- sic testing. The testing showed that Pantoja’s blood was on a pair of shoes that had been identified as belonging to Curry. Thereafter, in February 2015, Curry was arrested in this case. Price was again interviewed by a police officer in April 2015. Price still denied being involved in the assault; he no longer stated that he might have gone to one of the two locations he mentioned in the earlier interview, and instead, he said that he might have walked around with Curry smok- ing a marijuana cigarette. Price was arrested in this case in July 2015. At the close of the State’s case, Price moved for a directed verdict and the court overruled the motion. Price chose not to testify, and he presented no other evidence in his defense. After resting his defense, Price renewed his motion for a directed verdict and the court again overruled the motion. Price’s counsel made no objections during the State’s clos- ing argument. The jury thereafter returned verdicts finding Price guilty on both counts. Prior to sentencing, at Price’s request, the court discharged his counsel and appointed new counsel to represent Price. The court overruled Price’s motion for new trial. The court thereafter sentenced Price to concur- rent terms of imprisonment for 25 to 40 years on the two convictions. Price appeals his convictions and sentences. ASSIGNMENTS OF ERROR Price first makes two claims related to the first trial and the plea in bar: (1) that the court erred when it failed to inquire of the jury whether it was deadlocked on each count before it declared a mistrial and (2) that the court abused its discretion when it overruled his plea in bar. With regard to the second trial, Price claims that (1) the State committed prosecutorial misconduct by making various improper statements during closing argument, (2) the court abused its discretion when it overruled his motion for a new - 50 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. PRICE Cite as 306 Neb. 38 trial, (3) the evidence was insufficient to support his convic- tions, and (4) the court imposed excessive sentences. Price also set forth an assignment of error reading as fol- lows: “[Price’s] Counsel was ineffective and thus his constitu- tional right to the effective assistance of counsel as guaranteed by the Sixth and Fourteenth Amendments to the United States Constitution and the respective guarantees in Article I § II of the Nebraska Constitution were violated.” In his assignment of error, Price did not specify how counsel’s performance was alleged to be deficient. [1] As we declared in State v. Mrza, 302 Neb. 931, 926 N.W.2d 79 (2019), assignments of error on direct appeal regarding ineffective assistance of trial counsel must specifi- cally allege deficient performance, and an appellate court will not scour the remainder of the brief in search of such speci- ficity. Recently, in State v. Guzman, ante p. 376, 940 N.W.2d 552 (2020), we noted that the requirement had been repeated in subsequently published decisions and noted that the defend ant’s brief in Guzman had been filed 3 months after our April 19, 2019, pronouncement in Mrza but failed to comply with the requirement. We rejected the defendant’s argument in Guzman that he met the requirement because his assignment of error informed us that the particular allegations of ineffective assistance would be set forth elsewhere in the brief with more particularity and because in the heading of his argument on the issue, he identified particular deficiencies in all bold and capi- tal letters. We declined to excuse counsel’s failure to comply with the pronouncement in Mrza, noting that his brief was filed 3 months after the pronouncement in Mrza. Price’s brief in the present case was filed on August 22, 2019, 4 months after our pronouncement in Mrza. The State in its brief noted the failure of Price’s assignment of error to com- ply with Mrza. In his reply brief, Price argues, similarly to the appellant in Guzman, that his “claims of ineffective assistance of counsel were properly presented” because such claims were “separately numbered and specifically discussed in detail” in - 51 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. PRICE Cite as 306 Neb. 38 the argument section of his brief. Reply brief for appellant at 2, 3. However, because in Guzman, we did not afford judicial grace to a brief filed 3 months after Mrza, a fortiori, such grace will not be afforded a brief filed 4 months after Mrza. We therefore do not consider Price’s assignment of error alleging ineffective assistance of counsel. STANDARDS OF REVIEW [2,3] When a defendant has not preserved a claim of prose- cutorial misconduct for direct appeal, we will review the record only for plain error. State v. Mrza, 302 Neb. 931, 926 N.W.2d 79 (2019). An appellate court may find plain error on appeal when an error unasserted or uncomplained of at trial, but plainly evident from the record, prejudicially affects a litigant’s substantial right and, if uncorrected, would result in damage to the integrity, reputation, and fairness of the judicial process. Id. Generally, we will find plain error only when a miscarriage of justice would otherwise occur. Id. [4] The standard of review for the denial of a motion for new trial is whether the trial court abused its discretion in denying the motion. State v. Krannawitter, ante p. 66, 939 N.W.2d 335 (2020). [5] Regardless of whether the evidence is direct, circumstan- tial, or a combination thereof, and regardless of whether the issue is labeled as a failure to direct a verdict, insufficiency of the evidence, or failure to prove a prima facie case, the stan- dard is the same: In reviewing a criminal conviction, an appel- late court does not resolve conflicts in the evidence, pass on the credibility of witnesses, or reweigh the evidence; such mat- ters are for the finder of fact, and a conviction will be affirmed, in the absence of prejudicial error, if the evidence admitted at trial, viewed and construed most favorably to the State, is suf- ficient to support the conviction. State v. Case, 304 Neb. 829, 937 N.W.2d 216 (2020). [6,7] An appellate court will not disturb a sentence imposed within the statutory limits absent an abuse of discretion by the - 52 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. PRICE Cite as 306 Neb. 38 trial court. State v. Becker, 304 Neb. 693, 936 N.W.2d 505 (2019). An abuse of discretion occurs when a trial court’s deci- sion is based upon reasons that are untenable or unreasonable or if its action is clearly against justice or conscience, reason, and evidence. Id. ANALYSIS Assignments Related to First Trial and Plea in Bar. Price’s first two assignments of error relate to the district court’s declaration of a mistrial in the first trial and its over- ruling of his plea in bar prior to the second trial. We determine that the Court of Appeals’ decision in Price’s appeal from the overruling of the plea in bar establishes the law of the case on both topics, and we therefore reject these two assignments of error. [8,9] Under the law-of-the-case doctrine, the holdings of an appellate court on questions presented to it in reviewing pro- ceedings of the trial court become the law of the case; those holdings conclusively settle, for purposes of that litigation, all matters ruled upon, either expressly or by necessary implica- tion. State v. Lavalleur, 298 Neb. 237, 903 N.W.2d 464 (2017). The law-of-the-case doctrine operates to preclude a reconsid- eration of substantially similar, if not identical, issues at suc- cessive stages of the same suit or prosecution. Id. [10,11] On appeal, the law-of-the-case doctrine is a rule of practice that operates to direct an appellate court’s discre- tion, not to limit its power. State v. Merchant, 288 Neb. 439, 848 N.W.2d 630 (2014). We have recognized that the doctrine does not apply if considerations of substantial justice suggest a reexamination of the issue is warranted. Id. But matters pre- viously addressed in an appellate court are not reconsidered unless the petitioner presents materially and substantially dif- ferent facts. State v. Lavalleur, supra. In the present case, Price had the opportunity and the incen- tive to raise matters regarding the plea in bar and the court’s - 53 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. PRICE Cite as 306 Neb. 38 treatment of the deadlocked jury in the context of his appeal to the Court of Appeals from the denial of his plea in bar. Such matters were considered in that appeal, and the Court of Appeals’ rulings on the issues resulted in affirmance of the denial of Price’s plea in bar. We denied further review of the Court of Appeals’ rulings, and therefore, such rulings establish the law of the case. Although it determined that it did not directly have jurisdic- tion to consider orders other than the order which denied the plea in bar, the Court of Appeals nevertheless was obligated to consider Price’s challenge regarding mistrial in the context of the plea in bar. And without further review, the Court of Appeals’ assessments with regard to the grant of mistrial estab- lished the law of the case. Price’s claim in this appeal differs from his claim in the first appeal, wherein he asserted that it was error not to poll the jury. Here, he focuses on inquiring of the jurors whether they were deadlocked as to just one or both counts. As noted in the facts section above, in the earlier appeal, the Court of Appeals acknowledged and rejected Price’s arguments based on his reading of State v. Combs, 297 Neb. 422, 900 N.W.2d 473 (2017). Instead, the Court of Appeals emphasized our statement in Combs that, although not required, it was “the bet- ter practice [to inquire] of the jury [and in doing so] whether it was deadlocked on every count before it granted a mistrial.” 297 Neb. at 430, 900 N.W.2d at 481. Thus, as the Court of Appeals noted, there was no abuse when the district court did not poll the jury in the first trial. The force of that reasoning continues to be the law of the case, and we do not think that in the current appeal, Price has presented materially and sub- stantially different facts that would prompt us to reconsider those rulings. For example, Price has not, as did the defendant in Combs, shown evidence that jurors in his case were in fact not deadlocked on both counts or thought they had to be unani- mous as to both counts. - 54 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. PRICE Cite as 306 Neb. 38 We therefore conclude that as to Price’s first two claims, the decision of the Court of Appeals affirming the denial of the plea in bar establishes the law of the case, and that although they are recast, we will not reconsider those rulings in this appeal. We reject both assignments of error. Prosecutor’s Comments During Closing Argument. [12] Price next claims that the State committed prosecuto- rial misconduct based on various allegedly improper comments made during closing argument. Price acknowledges that he did not object to those statements at the time they were made and that he did not move for a mistrial based on the statements. A party who fails to make a timely motion for mistrial based on prosecutorial misconduct waives the right to assert on appeal that the court erred in not declaring a mistrial due to such prosecutorial misconduct. State v. Mrza, 302 Neb. 931, 926 N.W.2d 79 (2019). Because Price did not move for a mistrial, the alleged error was waived, and accordingly, our review of the issue is confined to a search for plain error. See id. [13-16] Prosecutorial misconduct encompasses conduct that violates legal or ethical standards for various contexts because the conduct will or may undermine a defendant’s right to a fair trial. Id. Prosecutors are charged with the duty to conduct criminal trials in such a manner that the accused may have a fair and impartial trial, and prosecutors are not to inflame the prejudices or excite the passions of the jury against the accused. Id. A prosecutor’s conduct that does not mislead and unduly influence the jury does not constitute misconduct. Id. In assessing allegations of prosecutorial misconduct in closing arguments, a court first determines whether the prosecutor’s remarks were improper. It is then necessary to determine the extent to which the improper remarks had a prejudicial effect on the defendant’s right to a fair trial. Id. Price sets forth 35 remarks made by the prosecutor during closing arguments that he asserts were improper. He generally - 55 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. PRICE Cite as 306 Neb. 38 groups the remarks into five categories, including remarks that he alleges (1) state the personal belief or opinion of the pros- ecutor regarding the credibility of testimony or the strength of the evidence; (2) label Price as a liar or imply that incon- sistencies in his statements are evidence of guilt; (3) inflame prejudices or excite passions of the jury; (4) misstate evidence, refer to matters not in evidence, suggest improper influences, or invite speculation; or (5) refer to other acts or wrongs that are not in evidence and would not have been allowed into evidence. We have reviewed each of the instances and find no plain error. Much of Price’s argument focuses on the prosecutor’s com- ments on the evidence, the strength of evidence, and the cred- ibility of testimony. While we have recognized that a prosecu- tor should not express his or her personal belief or opinion as to the truth or falsity of any testimony or evidence or the guilt of the defendant, we have further stated: [W]hen a prosecutor’s comments rest on reasonably drawn inferences from the evidence, the prosecutor is permitted to present a spirited summation that a defense theory is illogical or unsupported by the evidence and to highlight the relative believability of witnesses for the State and the defense. Thus, in cases where the prosecutor comments on the theory of defense, the defendant’s verac- ity, or the defendant’s guilt, the prosecutor crosses the line into misconduct only if the prosecutor’s comments are expressions of the prosecutor’s personal beliefs rather than a summation of the evidence. State v. Gonzales, 294 Neb. 627, 645-46, 884 N.W.2d 102, 117 (2016). We reasoned in Gonzales that the danger of a prosecu- tor’s expressing a personal opinion is that the jurors may infer the prosecutor has access to information not in evidence and that with that inference and the imprimatur of the government, the jury might rest a decision on the government’s opinion rather than its own view of the evidence. In Gonzales, we rejected a rule that it is per se misconduct for the prosecutor to - 56 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. PRICE Cite as 306 Neb. 38 state that the defendant lied or is a liar. Instead, we adopted an approach that looks at the entire context of the language used to deter- mine whether the prosecutor was expressing a personal opinion or merely submitting to the jury a conclusion that the prosecutor is arguing can be drawn from the evidence. If the prosecutor is commenting on the fact that the evi- dence supports the inference that the defendant lied, as opposed to a personal opinion carrying the imprimatur of the government, the comment is not misconduct. This is distinguishable from calling the defendant a “liar,” which is more likely to be perceived as a personal attack on the defendant’s character. Id. at 647, 884 N.W.2d at 118. Reviewing the State’s remarks in this case under that approach and considering them in context, we believe the remarks challenged by Price were inferences from the evidence rather than statements of the prosecutor’s personal opinion. Among his challenges, Price points to the instances where the prosecutor told the jurors to ask themselves “why is [Price] lying” and stated, “You know that is a lie.” However, when viewed in context, the remark arose where the prosecutor was discussing evidence from which it could be inferred that Price gave inconsistent statements and may have lied in order to cover his involvement. Other statements that Price character- izes as misstating the evidence or referring to matters not in evidence were instances of the prosecutor’s remarking on infer- ences that could be drawn from the evidence. Price also asserts that the State referred to other wrongs or acts that were not in evidence and would not be allowed into evidence. These remarks were in the context of discussing the surveillance video and the prosecutor’s characterizing the movements and actions of Price and his companion as indicat- ing that “they are going out to take stuff,” “checking cars,” “out to steal,” and “out to take things from other people.” Such remarks do not state that Price actually committed wrongs or - 57 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. PRICE Cite as 306 Neb. 38 acts, other than those acts charged in this case, such as steal- ing from cars or from people other than Pantoja, and so are not improper references to other acts or crimes that were not and could not be in evidence. Instead, the prosecutor was com- menting on what was depicted in the surveillance video and suggesting possible inferences the jury might make based on Price’s actions and movement depicted in the video. We do not find the remarks challenged by Price to be improper, and we therefore do not find error, let alone plain error, when the court did not sua sponte declare a mistrial based on alleged prosecutorial misconduct. We reject this assignment of error. Motion for New Trial. Price next claims that the district court abused its discretion when it overruled his motion for new trial. We find no such abuse of discretion. In his arguments in support of the motion for new trial, Price focused in large part on the alleged prosecutorial misconduct during closing argument. As we discussed above, we do not find such remarks to be improper, and as we did not find plain error in the failure to declare a mistrial based on such remarks, we also determine the court did not abuse its discretion when it denied a new trial based on the same remarks. See State v. Cotton, 299 Neb. 650, 910 N.W.2d 102 (2018) (finding no plain error in prosecutor’s statement to which defendant did not object and consequently finding no error in overruling motion for new trial based on prosecutorial misconduct), disapproved on other grounds, State v. Avina-Murilla, 301 Neb. 185, 917 N.W.2d 865 (2018). A second reason Price urged for a new trial was that, as he asserts in his brief, a police officer testified regarding “how photo lineups are created with mugshots including a mugshot of [Price].” Brief for appellant at 44. Price appears to imply that because there was a “mugshot” of Price, he had com- mitted other crimes. Id. However, the record shows that in - 58 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. PRICE Cite as 306 Neb. 38 direct questioning by the State, the officer merely referred to the photographs as “still photos” or “local photos.” Price did not object to such testimony. Further information regard- ing the photographic lineup was adduced by Price on cross- examination when he asked a series of questions about how the lineup was created. In response, the officer referred to “book-in photos” and does not appear to have referred to “mugshots.” Whether such testimony was unresponsive or inadmissible, it was minor in the context of the entire trial and not unfairly prejudicial. The court did not abuse its discretion by determin- ing it did not require a new trial. Finally, Price argued for a new trial because he alleged there was insufficient evidence to support the convictions. As discussed below, we conclude there was sufficient evidence. We therefore conclude that the district court did not abuse its discretion when it overruled Price’s motion for a new trial. We reject this assignment of error. Sufficiency of Evidence. Price next claims that the evidence was not sufficient to support his convictions. We conclude that the evidence was sufficient. [17] When a criminal defendant challenges the sufficiency of the evidence upon which a conviction is based, the relevant question for an appellate court is whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt. State v. Case, 304 Neb. 829, 937 N.W.2d 216 (2020). Price was charged with aiding and abetting a robbery and for aiding and abetting a first degree assault. Robbery is defined in Neb. Rev. Stat. § 28-324 (Reissue 2016) as being when, “with the intent to steal, [one] forcibly and by violence, or by putting in fear, takes from the person of another any money or personal property of any value whatever.” First degree assault is defined in Neb. Rev. Stat. § 28-308 (Reissue - 59 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. PRICE Cite as 306 Neb. 38 2016) as when one “intentionally or knowingly causes serious bodily injury to another person.” The theory of aiding and abetting a criminal act is described in Neb. Rev. Stat. § 28-206 (Reissue 2016) which provides that a “person who aids, abets, procures, or causes another to commit any offense may be prosecuted and punished as if he [or she] were the principal offender.” Our case law further defines “aiding and abetting” as follows: [A]iding and abetting requires some participation in a criminal act which must be evidenced by word, act, or deed, and mere encouragement or assistance is sufficient to make one an aider or abettor. No particular acts are necessary, however, nor is it necessary that the defendant take physical part in the commission of the crime or that there was an express agreement to commit the crime. Yet, evidence of mere presence, acquiescence, or silence is not enough to sustain the State’s burden of proving guilt under an aiding and abetting theory. State v. Stubbendieck, 302 Neb. 702, 716-17, 924 N.W.2d 711, 723 (2019). In this case, there was sufficient evidence, including the testimony of both Nartey and Pantoja, to establish that two men punched and kicked Pantoja to the extent of causing him serious bodily injury and that through the use of such vio- lence, the men took property of value from Pantoja’s person. Nartey identified Price as one of the men who carried out the assault and robbery, and there was also circumstantial evidence including the surveillance video and the testimony of a police officer that placed Price in the vicinity of the incident around the time that the incident occurred. To the extent the evidence is not specific regarding which of the two men delivered the specific punches and kicks that caused Pantoja serious bodily injury or which of the two men took property of value from Pantoja’s person, the evidence was sufficient to show that if Price did not himself perform such acts, he aided and abet- ted the other man in doing so. See State v. Thomas, 210 Neb. - 60 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. PRICE Cite as 306 Neb. 38 298, 314 N.W.2d 15 (1981) (in context of brawl, attributing particular injuries to particular actions was difficult, but as participant in conspiratorial effort to harm victim, defendant was liable for all victim’s injuries). The evidence in this case indicates that two men participated in the criminal acts and that Price’s participation went beyond mere presence, acquies- cence, or silence. Much of Price’s argument with regard to sufficiency of the evidence focuses on the credibility of Nartey’s identification of Price as one of the assailants. He argues that Nartey’s tes- timony was inconsistent and that Nartey’s description of the white man’s appearance and clothing differed from Price’s appearance and clothing at the time of the incident as shown in the surveillance video. For example, Nartey described the white male sometimes as being “bald” and other times as hav- ing “very short hair,” and Price asserts that the video shows that he “ha[d] hair” at the time, brief for appellant at 57. Price also argues that the clothing as shown in the video differs from Nartey’s description and that the video shows features such as tattoos, a watch, and earrings that Nartey did not include in his description of the assailant. Price argues that Nartey’s identifi- cation of Price was key to the case because there was no other evidence such as DNA, fingerprints, or other witness testimony to identify him as the assailant. With respect to inconsistencies, we note that Price was able to call the jury’s attention to any alleged inconsisten- cies in Nartey’s testimony and the jury was able to watch the video to determine whether Price’s appearance and cloth- ing on that night were consistent with Nartey’s description of the assailant; it was then the jury’s duty to determine the credibility of Nartey’s in-court identification of Price as the assailant. We do not pass on the credibility of witnesses on appeal, State v. Case, 304 Neb. 829, 937 N.W.2d 216 (2020), and Nartey’s identification of Price, if believed by the jury, along with the other evidence presented at trial, supports Price’s convictions. - 61 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. PRICE Cite as 306 Neb. 38 We conclude that there was sufficient evidence to support Price’s convictions for aiding and abetting robbery and aid- ing and abetting first degree assault. We therefore reject this assignment of error. Excessive Sentences. Price finally claims that the district court imposed excessive sentences. We conclude that the sentences were within statu- tory limits and that the court did not abuse its discretion when it imposed the sentences. Section 28-206 provides that one who aids and abets a crime “may be . . . punished as if he [or she] were the principal offender.” Under §§ 28-324(2) and 28-308(2), respectively, robbery and first degree assault are both Class II felonies. Under Neb. Rev. Stat. § 28-105(1) (Reissue 2016), the sen- tence for a Class II felony is imprisonment for a minimum of 1 year and a maximum of 50 years. The concurrent sentences of imprisonment for 25 to 40 years that the court imposed on Price were therefore within statutory limits. [18] Where a sentence imposed within the statutory limits is alleged on appeal to be excessive, the appellate court must determine whether a sentencing court abused its discretion in considering and applying the relevant factors as well as any applicable legal principles in determining the sentence to be imposed. State v. Becker, 304 Neb. 693, 936 N.W.2d 505 (2019). In determining a sentence to be imposed, relevant fac- tors customarily considered and applied are the defendant’s (1) age, (2) mentality, (3) education and experience, (4) social and cultural background, (5) past criminal record or record of law- abiding conduct, and (6) motivation for the offense, as well as (7) the nature of the offense and (8) the amount of violence involved in the commission of the crime. Id. The appropriate- ness of a sentence is necessarily a subjective judgment and includes the sentencing judge’s observation of the defendant’s demeanor and attitude and all the facts and circumstances sur- rounding the defendant’s life. Id. - 62 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. PRICE Cite as 306 Neb. 38 Price argues that the district court ignored or failed to give adequate consideration to mitigating factors, including trauma and abuse in his childhood and mental health issues that arose therefrom, the likelihood he would be responsive to probation supervision based on how he had conducted himself in custody during the pendency of this case, letters attesting to his charac- ter, and the effect of his potential imprisonment on his wife and young child. He also argues that the court did not adequately consider he had a lower level of culpability in the crime than Curry, who Price argues was the “main aggressor” and “caused the serious injuries to [Pantoja].” Brief for appellant at 61. Price asserts that Curry was given “exactly the same sentence” as Price despite Curry’s greater culpability and less-compelling mitigating factors. Id. At sentencing, the court noted that it had reviewed the pre- sentence report and heard argument by Price’s counsel, as well as Price’s own statement to the court. The presentence report and the statements at the sentencing hearing include the miti- gating factors set forth above. The court stated that in deter- mining Price’s sentence, it had regard for, inter alia, Price’s “history character and condition.” But the court also considered factors urged by the State, particularly noting the seriousness of the crime and the impact of the “severe injuries” to Pantoja on his life, his future, and his family and friends. There is noth- ing to indicate that the court considered inappropriate factors or that it ignored mitigating factors. We cannot say that the sentences were an abuse of discretion. We reject this assign- ment of error. CONCLUSION Having determined that Price’s assignments of error are either without merit or cannot be considered in this appeal, we therefore affirm Price’s convictions and sentences. Affirmed.	01-03-2023	08-14-2020
https://www.courtlistener.com/api/rest/v3/opinions/2470999/	753 F. Supp. 2d 813 (2009) Basil NIMRY, Plaintiff, v. IOWA DEPARTMENT OF NATURAL RESOURCES, Defendant. No. 4:08-cv-00407-JEG. United States District Court, S.D. Iowa, Central Division. November 30, 2009. 814 Kimberly S. Bartosh, John F. Fatino, Whitfield & Eddy PLC, Des Moines, IA, for Plaintiff. David S. Steward, Attorney General, Des Moines, IA, for Defendant. ORDER JAMES E. GRITZNER, District Judge. Before the Court is a motion by Plaintiff Basil Nimry (Nimry) to hold in abeyance the motion for summary judgment filed by Defendant Iowa Department of Natural Resources (the Department) pending the ruling of the Iowa Public Employee Relations Board (PER Board). The Court held a hearing on the motion on November 24, 2009. Attorney John Fatino represented Nimry. Assistant Attorney General David Steward represented the Department. The matter is fully submitted and ready for disposition. Nimry, a native of Jordan, worked for the Department from October 13, 1989, until January 31, 2008. Nimry brings this employment discrimination claim alleging that during his employment with the Department, his immediate supervisor, Linda Hanson, and upper management staff subjected him "to harsher treatment than his white Anglo-Saxon counterparts." Compl. at ¶ 10. According to Nimry, Hanson fabricated a number of complaints against him, which culminated with Hanson subjecting Nimry to disproportionate discipline on June 28, 2007. On November 8, 2007, the Department suspended Nimry indefinitely pending completion of a formal investigation by the Department of Administrative ServicesHuman Resource Enterprise (DAS-HRE). During his period of suspension, Nimry filed claims with the Equal Employment Opportunity Commission (EEOC) and Iowa Civil Rights Commission (ICRC), alleging discrimination based on national origin. On January 31, 2008, the DAS-HRE issued its investigation findings and conclusions; and the same day, the Department issued a letter informing Nimry his employment with the Department had been terminated. Pertinent to the motion currently before the Court, Nimry filed a formal grievance of his termination with the PER Board. On October 8, 2008, after receiving right to sue letters from the EEOC and the ICRC, Nimry filed this lawsuit against the Department, alleging claims of discrimination based on national origin and/or race and retaliation under both Title VII of the Civil Rights Act of 1964 and the Iowa Civil Rights Act (ICRA). Nimry's PER Board grievance review case was tried to an administrative law judge in December 2008. The PER Board decision is still pending. A procedural collision has developed as a result of Nimry's appropriate exercise of his rights as a public employee, the need to timely file his action in this Court, and the lack of resolution of the PER Board proceedings. Counsel could not provide the Court with any information regarding the delay or likely conclusion of the PER Board action. It is clear, however, that the filing of a decision by the administrative law judge is subject to internal appeal and judicial review through the state district and appellate courts, potentially extending the process by many months. Thus, with a limited record herein regarding the details of the PER Board hearing and the currently unknowable nature of the ultimate PER Board findings, this Court must evaluate the potential impact of the PER Board proceedings on the nature of this action in an effort to determine 815 if the unusual delay inherent in the pending motion is justifiable. In the present case, the Department moved for summary judgment on October 28, 2009, asserting the following: (1) Nimry cannot establish a prima facie case of discrimination; (2) even if the Court were to find Nimry established a prima facie case of discrimination, the Department has articulated a legitimate, nondiscriminatory reason for disciplining and discharging Nimry; and Nimry cannot demonstrate that the Department's reason for the investigation and termination were mere pretext for unlawful discrimination; (3) Nimry cannot establish a prima facie case of retaliation because he failed to establish a causal connection between any protected activity and his discipline or discharge; and (4) Nimry has failed to demonstrate a genuine issue of material fact exists as to whether the Department acted on a good faith belief that Nimry violated Department workplace rules. Nimry filed the present motion requesting the Court hold the Department's motion for summary judgment in abeyance until the PER Board issues its decision in Nimry's grievance action. In support of the motion, Nimry asserts that (1) discovery has not yet closed; (2) the dispositive motion deadline has not lapsed; and (3) if the Court proceeds, the Court's findings could potentially conflict with the PER Board's findings. The Department resists, arguing that the issue before the Court on the Department's motion for summary judgment is whether the Department acted with discriminatory animus toward Nimry, not whether the Department can show Nimry committed the acts of misconduct reported to the Department by his co-workers that formed the basis of the DAS-HRE investigation. At bottom, the Department argues that it acted on the basis of investigation results, not discrimination, and that remains true whether the PER Board determination is consistent or inconsistent with the underlying investigative conclusions. After careful consideration of the extraordinary procedural circumstances herein, the Court must conclude Nimry has failed to demonstrate the evidentiary value the PER Board decision could have on this Court's summary judgment consideration. At the hearing, Nimry's counsel informed the Court that (1) it is unlikely that there will be a need for further discovery as a result of the PER Board decision, (2) counsel was unable to specifically support or argue that the PER Board decision will have a preclusive effect upon the issues before this Court, and (3) the PER Board decision, in whole or in part, may ultimately be inadmissible in this proceeding. Nimry cites Allen v. McCurry, 449 U.S. 90, 94-96, 101 S. Ct. 411, 66 L. Ed. 2d 308 (1980), and Gurley v. Hunt, 287 F.3d 728, 731 (8th Cir.2002), for the premise that courts apply the doctrines of collateral estoppel and res judicata to state and agency adjudicatory decisions that resolve disputed facts that were properly before those tribunals and the parties had an adequate opportunity to litigate. However, this record is inadequate to demonstrate which disputed facts were before the PER Board that are material to the issues before this Court, the procedural details in the administrative proceeding that would support application of estoppel, res judicata, or issue or claim preclusion, the specific legal bases for application of those doctrines, or the specific legal bases upon which evidence from the administrative proceeding would be admissible in this action. While such a showing may be unusually elusive in this odd procedural circumstance, the Court must require a persuasive showing to support a potentially extraordinary delay. Accordingly, Nimry *816 has failed to demonstrate that holding this matter in abeyance will likely result in the availability of further record on material issues before this Court on the pending motion for summary judgment. For the reasons stated, Nimry's Motion to Hold the Motion for Summary Judgment in Abeyance (Clerk's No. 25) must be denied. As directed in this Court's text order of November 13, 2009, Nimry shall have twenty (20) days from the date of this order to file his resistance to the Department's motion for summary judgment. IT IS SO ORDERED.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/3520754/	The appellants were prosecuted for unlawful seining. The affidavit was made out before a justice of the peace of district 5 in Itawamba county, and the affidavit charged that "Henry Ray, E.L. Sappington, Wiley Ray, Hugh Nichols and E.L. Kennedy, on or about the 10th day of July, 1929, in the county aforesaid in said Justice District did wilfully and unlawfully take or kill game fish not with hook and line or dip nets and not from private ponds or from barrow pits, or overflow ponds which go dry in summer when cut off from the regular stream said fish being taken with seine from a running body of water, to-wit: the `Fish Lake' which does not go dry in summer, same being in Tombigbee River Bottom against the peace and dignity of the state of Mississippi." It appears that appellants, on or about the day mentioned in the affidavit, went to a body of water in the Tombigbee river bottom, which body of water was fed from the overflow of a creek which ran into the Tombigbee river, and that during a good part of the year the water was running water and that some of the water constituted lakes that did not go dry in the summer. The proof shows that the appellants went into some of the water, and that it was too deep to seine successfully, and they did not catch anything in this deep water. They Page 890 went to another lake or place of the slough, it not being then a running body of water, and went into a prong which was separated from the other lake and which, according to the proof of the defendants, would go dry in the summer, and seined therein and caught some fish. These witnesses for the defendants testified that they went to the lake about the time the court convened, and the place where the lake or body of water in which they did the seining and caught the fish had been, was entirely dry, and that it frequently went dry in the dry season of the year. This body of water where the seining was done had banks, and at some parts of the year was connected with the other body of water and slough, and during some seasons of the year constituted a running stream. The proof for the state tended to show that the lake never went dry, and that it was a part of the chain of lakes or waters which at some time of the year constituted a running stream, and at other times there was land between the two bodies of water which was dry, but the lake in which the seining itself was done never went entirely dry. The court granted the state two instructions reading as follows: "The court charges the jury for the state that if the jury believes from all the evidence in the case, beyond all reasonable doubt, that the waters seined by the defendants were a part of the system of lakes, connected by a well defined channel through which the water flowed from one lake to the other below it during the greater part of the year, then same would not be an overflow pond and it would be against the law to seine same at any time and take game fish thereby and the only way that same would be permitted by law to be seined, would be with a seine of two inches or more mesh and then no game fish could thus be legally taken." And: "The court charges the jury for the state that if they believe from the evidence in the case, beyond a reasonable doubt, that the defendant seined for and thereby caught and took Page 891 game fish at the time and place and in the manner and form as charged in the affidavit, then you would find the defendants guilty as charged and that is no defense under the law, that the lake seined goes dry in some places during the summer, but in order to be a defense, the entire lake would have to usually go dry in the summer." It refused all the instructions requested by the defendants; the requested and refused instructions reading as follows: "The court charges the jury if the place where the defendants took fish was fed from the overflow of the creek or river and frequently during the summer was dry or practically dry, the lake or pond in question was an overflow pond and defendants taking fish therefrom was not in violation of the law and unless the state proves beyond a reasonable doubt that the place where the defendants took the fish was a place that did not go dry you will return a verdict of not guilty." And: "The court charges the jury that if the place where the defendants took fish was fed entirely from overflow of the river or creek and became dry in summer, defendants cannot be convicted and you will return a verdict of not guilty." And: "The court charges the jury for the defendant that if the pond where the defendants took fish was at the time that they took the fish cut off from a running stream, you will return a verdict of not guilty." And: "The court charges the jury for the defendants that the defendants say that the place where they took the fish was from an overflow pond, which at the time was cut off from the main or regular stream, and unless the state proves beyond all reasonable doubt and to a moral certainty that the place where the defendants took the fish was not such a place you will find the defendants not guilty." We think the question ought to have been submitted to the jury on appropriate instructions. The instructions given the state were erroneous. Hathorn v. State, 151 Miss. 778, 119 So. 303. In that case the Chief Justice, speaking for the court, said: "This is an appeal from a Page 892 conviction for unlawfully taking game fish out of a pond or lake with a seine in violation of subsection (b) of section 9, chapter 178, Laws of 1926, which provides: `It shall be unlawful to take or kill game fish in any way except by hook and line or dip nets, except in private ponds or in barrow pits, or overflow ponds which go dry in summer, when same is cut off from the regular stream.' The evidence discloses, without real conflict, that the pond or lake from which the fish were taken is about one-half or three-quarters of a mile long, and is parallel with, and only a short distance from, a large creek; that it connects with said creek at each end, and is fed entirely by overflow from the creek at its upper connection therewith. When the water in the creek is low, it ceases to flow into the lake or pond, and frequently during the summer the lake is practically dry, with the exception of one or two holes, across which a man can step, and at times is wholly dry. On this evidence, the lake or pond in question must be characterized as an overflow pond which goes dry in the summer when cut off from the regular stream." If the defendants' evidence be true, the lake which was seined and in which the fish were caught is an overflow pond, which goes dry annually, and within the meaning of the statute. The first and second instructions for the defendants should have been given. The other instructions requested by the defendants are not entirely accurate. The law does not authorize the seining of lakes which constitute a part of a water course and which run during a portion of the year, unless these ponds usually go dry in dry seasons of the year. The public are entitled to have the game fish protected where they move from place to place during the season when the stream is a running stream, although the fish may be confined at a particular lake during a portion of the year, and subject to be taken by the owner of the lake for his own use or to be taken by hook and line during the season that it is Page 893 cut off. The public have an interest in preserving the game for food supply where, during a portion of the year, they may migrate from place to place, but, where an overflow lake or pond usually goes dry, the fish will be lost to the public and be destroyed by animals and birds of prey when the lake goes dry. For the errors indicated, the judgment will be reversed, and the cause remanded for a new trial. Reversed and remanded.	01-03-2023	07-05-2016
https://www.courtlistener.com/api/rest/v3/opinions/3520756/	Mrs. Dorothy Cassity brought suit in the circuit court of Scott county against the Reliance Life Insurance Company on behalf of herself and a minor child upon two policies of insurance, each for five thousand dollars, dated March 15, 1924, issued by the appellant to Allen D. Cassity, and containing provisions for benefits in case of total disability, reading as follows: "If the insured, after one full year's premium has been paid on this policy and before a default in the payment of any subsequent premium or within sixty days after default, shall furnish proof satisfactory to the company that while this policy is in force without default he has become totally and permanently disabled for life by bodily injury or disease, the company will grant the following benefits: "(1) Waiver of premium. Commencing with the anniversary of the policy next succeeding the receipt of such proof, The Company will on each anniversary waive payment of the premium for the ensuing insurance year, and, in any settlement of the policy, the Company will not deduct the premiums so waived. In such event, the cash, loan and surrender values shall increase from year to year in like manner as if the premiums had been regularly and duly paid by the insured. Page 845 "(2) Installment payments. Beginning immediately on receipt of such proof, the Company will pay to the insured a monthly income of one per cent of the face amount of the policy during the period of total and permanent disability until the death of the Insured. When the policy becomes a claim by death, or matures as an endowment, the full face value of the policy shall be payable in accordance with its terms, less any existing indebtedness, without any deduction for income payments. "B. If the disability occurs after the anniversary of the policy nearest to the rated age of sixty years. "(1) Waiver of premium. Commencing with the anniversary of the policy next succeeding the receipt of such proof, the Company will on each anniversary waive payment of the premium for the ensuing insurance year, and thereupon the face of the policy will be reduced by the amount of each premium so waived and any loan and nonforfeiture values shall be based upon the amount of insurance thus reduced. "Definition of disability. Disability will be deemed to be total when it is of such an extent that the Insured is prevented thereby from engaging in any occupation or performing any work for compensation or financial gain, and such total disability will be presumed to be permanent when it is present and has existed continuously for not less than ninety days. Without prejudice to any other cause of disability the entire and irrevocable loss of the sight of both eyes, or the severance of both hands at or above the wrists, or of both feet at or above the ankles, or of one entire hand at or above the wrist, and one entire foot at or above the ankle, will be considered as total and permanent disability. "Recovery from disability. If the Company accepts proof of disability under this policy, it shall have the right, at any time thereafter, but not more frequently than once a year, to require proof of the continuance of Page 846 such disability, and if the insured shall fail to furnish such proof, or if it appears at any time that the insured has become able to engage in any occupation whatsoever for remuneration or profit, no further premiums shall be waived, and no further income payments shall be made hereunder on account of such disability." On or about September 1, 1932, the policies having remained in force during said period, with a loan procured on each, Allen D. Cassity went to the office of the Jackson, Mississippi, agency which had issued the policies, for the purpose of propounding a claim of disability thereunder. He had been sick since about June 20, 1932, and had been unable to work, having had malaria and also a certain rectal trouble, and, in fact having tuberculosis, although he did not know it at the time. He discussed with the cashier of the Jackson agency his purpose of filing a claim for disability, and had certain conversations in regard thereto. The cashier of the Jackson agency wrote the home office of the Reliance Life Insurance Company at Pittsburgh, Pennsylvania, as follows: "Mr. Cassity was in our office and advised us that he had been disabled for fourteen weeks and that at present, he is still disabled and may continue so for several months longer. Therefore he requests that you supply him with blanks for filing claim for total and permanent disability." The assistant claim examiner of the home office, on September 7, 1932, replied to the above letter as follows: "We are in receipt of your letter of September 1st in which you report contemplated claim for disability benefits under the above numbered policies. However, before giving the claim the necessary consideration, we must request that you advise us of the nature of the insured's disability, the date of commencement of same, and the name and address of the physician who is treating him. Upon receipt of the desired information, the claim will be given every possible consideration." Page 847 The cashier of the Jackson agency testified that upon receipt of this letter he communicated with Cassity with reference thereto, and requested the desired information, and never received a reply to his inquiry, nor was the requested data furnished. The cashier wrote to the home office that Mr. Cassity had decided not to file a claim — that he had read his policy and concluded that he was not entitled thereto, and the cashier testified to the same effect. Cassity continued to pay the premiums for several months after this application for blanks, and then ceased, and on June 20, 1934, he died. After his death, his father knowing that he had some insurance, sought the cashier for information with reference thereto, and as to the condition of the policies, and subsequently the attorney representing the appellees in this suit, together with the former agent of the Reliance Life Insurance Company, who solicited and procured an application, had an interview with the cashier of the Jackson office in reference thereto. It appeared from the evidence that the cashier of the local office was the proper person for the policyholders to contact if they desired to file claims for benefits under policies. We quote from the testimony as follows: "Q. State whether or not the cashier at the Jackson, Mississippi, agency of the Reliance Life Insurance Company was the person who customarily did contact with and treat with persons desiring of filing claims for any of the benefits contained in the policy? (Objected to, ruling reserved.) A. It was. "Q. State whether or not the cashier customarily would give information and such facts as were in his possession to any person interested in a policy of insurance that had been issued by the Reliance Life Insurance Company, especially by the Jackson, Mississippi, agency? A. They did. Page 848 "Q. Would such information also be given customarily by such cashier to attorneys representing parties interested in this manner? A. It would. "Q. State whether or not this action or those actions on the part of the cashiers of the Jackson, Mississippi, agency were facts that were known to the home office of the Reliance Life Insurance Company? (Objected to and objection overruled.) A. I am sure that the answer is `yes.' The fact that the cashier did it and held his job with the Reliance Life Insurance Company is positive proof to me that the home office knew and approved it. You see the cashier was the contact man with the public. A man would go in there and the cashier is the first man he would see. If he wrote in there, about anything pertaining to his policy, the cashier answered it, and if he came in to see about his policy, he came in looking for the cashier, because his name was signed to the letter. Of course, I didn't see the correspondence between the cashier and the Reliance Life Insurance Company, nor did I see a contract if there was one. I don't know what the cashier was paid, but the fact that he did those things, and did them efficiently and happily, and held his job, the Reliance Life Insurance Company must have known and approved. "Q. State whether or not it was done year in and year out? A. Continuously throughout my seven years by the lamented Sam Thompson, and by Mr. Morgan who succeeded him. "Q. In December, 1934, when you had a conversation or when we had a conversation with Mr. Morgan in Jackson, I will ask you to state whether or not Mr. Allen D. Cassity — whether or not Mr. Morgan stated that Mr. Allen D. Cassity did or did not come to his office for the purpose of filing a claim for total and permanent disability? A. He said he did come for that purpose. "Q. When did he say that he came? A. It was in the summer of 1932, I believe, sometime in the summer. Page 849 "Q. What did he say that Mr. Cassity came to do? A. Came to file a claim for total and permanent disability. "Q. State whether or not Mr. Morgan stated to you and to me as to whether or not he advised Mr. Cassity at the time with regard to the requirements of the Reliance Life Insurance Company in regard to the amount of proof necessary to establish claim for total and permanent disability. (Objections, ruling reserved.) A. He did, and he went ahead to state that a great many people who came in to make claims did not have grounds for claims, and in order to qualify the matter and clarify the matter in the claimant's mind, that he always explained to them the benefits under the policy, and what they would have to prove in order to qualify for the benefits. He stated that he explained to him that under the provisions of the policy he would have to be totally disabled for ninety days, and at the end of the ninety days be in such condition that he would presumably be disabled for life. When he made this statement, I told him that I had to differ with him, that the terms of that particular policy — (Objections.) "Q. Just let it be eliminated. Mr. Gainey, state also what Mr. Morgan at that time said, if anything, that he told Cassity would be required by the company in order for him to establish proof of total disability. A. He stated that he told him that he would have to be totally disabled, contemplated that he could not do any work of any kind, and that during those three months' period required to establish his total disability, that he hadn't done any work of any kind, and that his condition would have to be such as presumably he would never be well again. Then he said that Mr. Cassity said, `Well, I hope to be well again,' and indicated that he would not try to make proof to the effect that he would never be well again, but that he hoped he would be well. Then he told him to go away and write him a letter telling him about Page 850 the case and giving him a history of the case and send him that letter." It appeared from the evidence that Cassity had, during the ninety days, been to his place of business on a number of days staying there only a short time, he and his father being a partnership in the paint business. It also appeared that one of the physicians who treated Cassity discovered his rectal troubles, and that a fistula existed, and advised him to be thoroughly examined and to have an operation, but that Cassity never returned for the operation. At the time, one of the physicians suspected that Cassity was afflicted with tuberculosis. At a later date, Cassity secured some employment, for a short time, with some relief agency, and earned seventy-five to one hundred dollars a month, but was forced to abandon same on account of his physical condition. He was then examined in a hospital by X-rays which disclosed that he had a very serious and hopeless condition, having tuberculosis, and that his lungs were practically gone on account of the ravages of the disease, and he died, as stated, on June 20, 1934. A physician testified that the rectal trouble and the fistula were always caused by some wasting disease, and that generally there is a suspicion of tuberculosis when such conditions appear. One of the physicians who treated Cassity prior to his hospital examination which revealed tuberculosis suspected it and suggested an examination by X-ray, which was not done at the time. Had this been done it would certainly have disclosed tuberculosis, since the physicians who examined the X-ray pictures testified that, in their opinion, such condition had existed from two and one-half to three years. When the evidence for the plaintiff was closed, the appellant made a motion to have same excluded, and a verdict directed for the appellant, and also requested a peremptory instruction. This was based upon the theory that the deceased had failed to file proof of total Page 851 disability with the company, and was, therefore, within the principles announced in Berry v. Lamar Life Ins. Co., 165 Miss. 405,142 So. 445, 145 So. 887; N.Y. Life Ins. Co. v. Alexander,122 Miss. 813, 85 So. 93, 15 A.L.R. 314. We are of the opinion that the case at bar is not controlled by said cases, and others of similar import. The proof of both the appellant and the appellee showed that the cashier of the Jackson office had authority to transmit applications for benefits under policies issued by the company in this state to the home office. It is true that the cashier did not pass upon the sufficiency of the proof to establish liability, but he was authorized to assist policyholders in preparing applications. It was his duty to transmit them to the home office, and to advise policyholders as to what their rights were under the policies, and what proof was necessary for them to furnish to the company in order to sustain their claims; and, as stated by the company's former agent, frequently claims were adjusted and disabilities paid, although in the opinion of the agent of the company they were not strictly bound thereby. In other words, the cashier of the local office was an agent for the company for receiving applications to be transmitted to the home office. That being true, the cashier of the Jackson office was the agent of the company or its alter ego, under section 5196, Code 1930, and the cases there cited and Aetna Ins. Company v. Lester, 170 Miss. 353, 154 So. 706. In Mutual Life Ins. Co. v. Vaughn, 125 Miss. 369, 88 So. 11, it was held that delivery of a policy by an agent, in violation of instructions to secure medical certificates, was the act of the insurer. In Hartford Fire Ins. Co. v. Clark, 154 Miss. 418, 419,122 So. 551, it was held that ordinary knowledge acquired by an agent in the scope of his authority is imputed to the insurer. Page 852 In Lamar Life Ins. Co. v. Kemp, 154 Miss. 890, 891, 124 So. 62, it was held that the act of insurer's agent in delivering a policy without collecting the first premium was the act of the insurer, notwithstanding the provision in the application for insurance and in the policy to the contrary. See, also, Interstate Life Accident Company v. Ruble, 160 Miss. 206,133 So. 223. The cashier of the Jackson office, in his conversations with the deceased, represented to him that in order to secure the benefits he was applying for, it would be necessary for him to prove that he had done no work during ninety days, and that at the end of the ninety days his physical condition would have to be such as that, presumably, he would be forever disabled, and prevented from performing any gainful labor. This was misleading, and was sufficient to convince the deceased that if that statement was true he need not apply because he was neither absolutely helpless nor hopeless. He hoped to be in a better condition at some time, and because of his not being utterly helpless and hopeless, he had no right to the benefits under the policies. The interpretation placed upon these provisions by this and other courts is not as stated by the cashier of the Jackson office. In Mutual Ben. Health Accident Ass'n v. Mathis,169 Miss. 187, 142 So. 494, it was held that the "insured under health policy is `totally disabled,' if his illness prevents him from doing the substantial acts required of him in his business, or if his physical condition is such that, in order to effect a cure or prolongation of life, common care and prudence require that he cease all work." See, also, Metropolitan Casualty Ins. Co. v. Cato, 113 Miss. 283, 74 So. 114; Equitable Life Assurance Society v. Serio, 155 Miss. 515, 124 So. 485, and Metropolitan Life Ins. Co. v. Lambert, 157 Miss. 759, 128 So. 750. Had the cashier, the agent of the appellant, truly disclosed to Cassity the proof of disability required by Page 853 law to substantiate his claim or right in regard to his disability, he would, doubtless, have procured a proper examination by competent physicians and presented his claim to the insurance company, and if he had done so, there can be no question, under the proof in this record, but what his rights would have been established, and the benefits under his policies paid to him. It was not necessary that the cashier should have intended to defraud or misrepresent the facts. He, perhaps, was giving his honest opinion as to the legal effect of the policies, and of the degree of proof required by the company; but, in dealing with his act in reference thereto, we are to treat it as though it was the act of the insurance company itself, and the company having so acted, and in effect misrepresented the amount of proof that would be required, it is not now in a position to avail itself of the claim that the necessary proof was not actually presented. Had the company been silent as to the matter, or taken no act in reference thereto, a different case would have been presented, and the policies announced in Berry v. Lamar Life Ins. Co., 165 Miss. 405, 142 So. 445, 145 So. 887; N.Y. Life Ins. Co. v. Alexander, 122 Miss. 813, 85 So. 93, 15 A.L.R. 314, and cases following these would have been applicable. The cashier, being the particular agent of the insurance company, was in a superior position to know what the meaning and effect of the contract was as against the deceased. Therefore, the company, through its agent, having undertaken to state what would be required, and having stated that inaccurately, is not now in a position to avail itself of the wrong or error. We find no reversible error in the record, and the judgment of the court below will be affirmed. Affirmed. Page 854	01-03-2023	07-05-2016
https://www.courtlistener.com/api/rest/v3/opinions/1432089/	545 F. Supp. 359 (1982) BILL'S CRANE SERVICE, INC., a Hawaii Corporation, and Hanna Enterprises, Inc., a Hawaii Corporation, Plaintiffs, v. Walter B. QUISENBERRY, George A. L. Yuen, James S. Kumagai, Shinji Soneda, Ralph K. Yukumoto, Harold Younquist, Henri P. Minette, Peter H. Sakai, Denis Tulang, John K. Ishikawa, Harold K. Yee, and George Fujimoto, Defendants. Civ. No. 78-0042. United States District Court, D. Hawaii. August 10, 1982. 360 Steven H. Levinson, Damon, Key, Char & Bocken, Honolulu, Hawaii, Boris Haskell, Washington, D. C., for plaintiffs. Lawrence K. Lau, Deputy Atty. Gen., Tany S. Hong, Atty. Gen., State of Hawaii, Honolulu, Hawaii, for defendants. ORDER GRANTING PARTIAL SUMMARY JUDGMENT SAMUEL P. KING, Chief Judge. Background. Plaintiffs filed the original complaint in this matter on February 8, 1978. On September 25, 1980, the court dismissed the complaint with leave to amend within 60 days. On November 24, 1980, plaintiffs filed their First Amended Complaint ("Complaint"), involving various claims of unequal treatment and denial of due process with respect to the application and enforcement of Department of Health ("DOH") rules relating to the certification and approval of private sewage treatment plants ("STPs").[1] Defendants now move for summary judgment on the grounds that the Complaint fails to state a claim upon which relief can be granted and that plaintiffs' claims are barred by the statute of limitations. Failure to State a Claim. The allegation that defendants acted with discriminatory purpose and in violation of the applicable DOH rules and regulations in certifying and approving the installation of plaintiffs' competitors' STPs does not state a constitutional deprivation cognizable under 42 U.S.C. § 1983. 361 The due process clause protects only against a deprivation of liberty or property interests. Board of Regents v. Roth, 408 U.S. 564, 92 S. Ct. 2701, 33 L. Ed. 2d 548 (1972). Privileges, licenses, certificates, and franchises now do qualify as property interests for purposes of procedural due process. [citation omitted] But due process only becomes relevant where such property is "deprived" e.g. where welfare benefits are terminated, [citation omitted]; where public employees are discharged, [citation omitted]; or where licenses are revoked [citation omitted]. Wells Fargo Armored Service Corp. v. Georgia Public Service Comm'n, 547 F.2d 938, 941 (5th Cir. 1977) ("Wells Fargo"). The only injury allegedly resulting from defendants actions is that "plaintiffs lost numerous contracts to these competitors which plaintiffs had or would otherwise have obtained, ...." Complaint ¶¶ 27, 41. Thus, despite plaintiffs' claim of "arbitrary discrimination," it is clear that Counts One and Two do not allege a violation of due process, and thus do not state a claim cognizable under § 1983. See Wells Fargo, 547 F.2d at 942; Jacobson v. Hannifin, 627 F.2d 177 (9th Cir. 1980). Accordingly, this court need not and does not consider defendants' arguments regarding abstention with respect to these counts. Counts Three, Four and Five do state possible claims under section 1983, because they allege constitutional deprivations which directly involve plaintiffs' STPs. Statute of Limitations. Since congress did not provide a specific statute of limitations for § 1983 actions, courts have looked to state statutes to determine the appropriate limitations period. In Sotomura v. County of Hawaii, 402 F. Supp. 95 (D.Haw.1975), this court looked to the nature of the claim asserted, found that the action most closely resembled one involving compensation for breach of a contract involving real estate, and applied the six-year statute of limitations applicable to actions of that nature. The court noted that other § 1983 actions may more closely resemble other causes of actions and involve different statutes of limitations. In light of recent trends within the Ninth Circuit, it is appropriate to reconsider this decision. As stated in Smith v. Cremins, 308 F.2d 187 (9th Cir. 1962), Inconsistency and confusion would result if the single cause of action created by Congress were fragmented in accordance with analogies drawn to rights created by state law and the several differing periods of limitation applicable to each state-created right were applied to the single federal cause of action. Id. at 190. In the Ninth Circuit, the favored characterization of a § 1983 action is as an "action created by statute." See, e.g., Rose v. Rinaldi, 654 F.2d 546 (9th Cir. 1981) (Washington) (applying "catch-all" statute of limitations because no specific statute available); Major v. Arizona State Prison, 642 F.2d 311 (9th Cir. 1981) (Arizona); May v. Enomoto, 633 F.2d 164 (9th Cir. 1980) (California); Mason v. Schaub, 564 F.2d 308 (9th Cir. 1977) (Nevada); Strung v. Anderson, 452 F.2d 632 (9th Cir. 1971) (Montana). It follows that this court should adopt a similar characterization. Whenever possible, the court should apply the state limitations period governing actions founded on a liability created by statute. The alternative is to apply the state's "catch-all" statute of limitations. See Rose v. Rinaldi, 654 F.2d at 547. The question, then, is whether Hawaii has a limitations period which specifically applies to actions created by statute. Haw.Rev.Stat. § 657-11 provides as follows: Recoveries authorized by federal statute. Whenever any federal statute provides for an imposition of a civil penalty or liquidated damages or imposes a new liability or enlarges any existing liability and the statute does not specify the period within which suit to recover the penalty, liquidated damages, or any sum arising *362 out of any new or enlarged liability may be brought, the suit, if brought in a state court, shall be commenced within one year from the date the cause of action arises or be thereafter barred. Id. As noted above, a § 1983 action is most accurately characterized as an action created by statute. Further, the section imposes a "new" liability in the sense that it creates a cause of action which did not exist at common law. Thus, although Haw. Rev.Stat. § 657-11 does not mention the possibility of declaratory or injunctive relief, it is the most appropriate statute of limitations to apply.[2] Tolling. Plaintiffs contend that the statute of limitations should be tolled as to Counts One, Two and Four by the pendency of an administrative proceeding ordered by the state court in a similar lawsuit filed by plaintiffs. This argument is without merit. In § 1983 actions, federal courts are to follow the state tolling rules unless such rules are plainly inconsistent with the federal policy governing the cause of action under consideration. Board of Regents v. Tomanio, 446 U.S. 478, 100 S. Ct. 1790, 64 L. Ed. 2d 440 (1980). Hawaii has no tolling rules relevant to the case at bar, and plaintiffs have not supported their allegation that tolling is appropriate. The administrative proceeding referred to by plaintiffs only involves a single model (the "Completaire") of an STP marketed by one of plaintiffs' competitors. The only portions of plaintiffs' complaint which the proceeding is conceivably related to are Counts One and Two, which, as noted above, do not state claims cognizable under § 1983. Further, the outcome of the proceeding will not have any effect upon plaintiffs' other claims. It follows that tolling is inappropriate in this case. Plaintiffs' claims under Counts Three, Four and Five are thus barred to the extent that they seek relief for actions occurring prior to February 8, 1977.[3],[4] Conclusion. Accordingly, it is ORDERED that Summary Judgment is granted in favor of Defendants and against Plaintiffs as to Counts One and Two, and as to all claims arising prior to February 8, 1977 in Counts Three, Four and Five. NOTES [1] Count One alleges that the defendants wrongfully approved and wrongfully authorized the approval of the installation of STPs which had not been properly certified, and that many of these plants were inferior to those marketed by plaintiffs and could not have been properly approved for installation. Count Two alleges that defendants wrongfully certified and wrongfully refused to decertify STPs marketed by plaintiffs' competitors. Count Three alleges that defendants wrongfully decertified plaintiffs' "Cavitette" STP from late 1973 or early 1974 through October, 1976, without prior notice or hearing, and that after the Cavitette STP was recertified, DOH employees continued to inform potential customers of plaintiff that it could not be used. Count Four alleges that defendants have delayed and are delaying approvals and have selectedly enforced and are selectively enforcing regulations in connection with their review of plans which propose the installation of plaintiffs' STPs. (Counts Four and Five seek injunctive relief.) Count Five alleges that DOH employees have harassed and are harassing owners and tenants of buildings using plaintiffs' STPs by selectively and discriminatorily enforcing various DOH regulations and policies. [2] A one year limitations period was found not to be inconsistent with the purposes of section 1983 in Major v. Arizona State Prison, 642 F.2d 311 (9th Cir. 1981). Cf. Johnson v. Railway Express Agency, Inc., 421 U.S. 454, 462-465, 95 S. Ct. 1716, 1721-1722, 44 L. Ed. 2d 295 (1975) (upholding one year statute of limitations period for action under 42 U.S.C. § 1981). [3] With respect to Count Three, it is important to distinguish between the allegation of wrongful decertification of the Cavitette, which is barred by the statute of limitations, and the allegation of wrongful conduct by DOH employees after the Cavitette was recertified, which may be pursued to the extent that the conduct occurred on or after February 8, 1977. See London v. Coopers & Lybrand, 644 F.2d 811 (9th Cir. 1981). [4] It is undisputed that defendants Quisenberry, Minette, and Sakai ceased working for the DOH in 1974, 1974, and 1972, respectively, and have had no involvement in DOH decisions regarding the approval, disapproval, or review of STPs since then. It is clear that the statute of limitations has run as to these defendants.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2471057/	769 F.Supp.2d 1211 (2011) Lorelei Aki SAKUGAWA an individual, Plaintiff, v. COUNTRYWIDE BANK F.S.B., a Business Entity, form unknown; Service Link, a Business Entity, form unknown; and Does 1-100, inclusive, Defendants. CV. No. 10-00503 DAE-KSC. United States District Court, D. Hawai`i. February 14, 2011. 1213 Lorelei Aki Sakugawa, Kihei, HI, pro se. 1214 Patricia J. McHenry, Cades Schutte, Honolulu, HI, for Defendants. AMENDED ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS COMPLAINT DAVID ALAN EZRA, District Judge. On January 3, 2011, the Court was scheduled to hear Defendants Countrywide Bank F.S.B. and Service Link's Motion to Dismiss Complaint. Plaintiff Lorelei Aki Sakugawa ("Plaintiff") failed to appear at the hearing on behalf of herself[1]; Patricia McHenry, Esq., appeared at the hearing on behalf of Defendants Countrywide Bank F.S.B. and Service Link (collectively, "Defendants"). Because Plaintiff did not appear at the hearing, pursuant to Local Rule 7.2(d), the Court finds this matter suitable for disposition without a hearing. After reviewing the supporting memoranda, the Court GRANTS IN PART and DENIES IN PART Defendants' Motion to Dismiss Complaint. (Doc. # 8.) The Complaint is DISMISSED as against all Defendants with the exception of Plaintiff's TILA rescission claim, which survives the Motion to Dismiss. BACKGROUND On September 1, 2010, Plaintiff Lorelei Aki Sakugawa ("Plaintiff") filed a Complaint against Defendants Countrywide Bank F.S.B. ("Countrywide"), Service Link, and Does 1-100, alleging that Plaintiff had been lured into a predatory mortgage loan.[2] ("Compl.," Doc # 1.) Specifically, Plaintiff's Complaint alleges Counts: (Count I) Declaratory Relief (Compl. ¶¶ 41-45); (Count II) Injunctive Relief (id. ¶¶ 46-49); (Count III) Contractual Breach of Implied Covenant of Good Faith and Fair Dealing (id. ¶¶ 50-56); (Count IV) Violation of TILA, 15 U.S.C. § 1601, et seq. (id. ¶¶ 57-65); (Count V) Violation of Real Estate Settlement and Procedures Act ("RESPA") (id. ¶¶ 66-69); (Count VI) Rescission (id. ¶¶ 70-74); (Count VII) Unfair and Deceptive Business Act Practices ("UDAP") (id. ¶¶ 75-80); (Count VIII) Breach of Fiduciary Duty (id. ¶¶ 81-85); (Count IX) UnconscionabilityUCC-2-3202[3] (id. ¶¶ 86-89); (Count X) Predatory Lending (id. ¶¶ 90-102); and (Count XI) Quiet Title (id. ¶¶ 103-106). Plaintiff resides in the State of Hawaii. (Id. ¶ 1.) Plaintiff entered into a loan repayment and security agreement on or about November 29, 2007. (Id. ¶ 3.) Plaintiff executed two notes with Countrywide, the first in the principal amount of $281,624[4], and the second as a home equity line 1215 of credit in the principal amount of $35,000, both recorded on December 20, 2007 in the Bureau of Conveyances. (Motion to Dismiss Complaint, "Mot.," Doc. # 8 at 2.) The real property at issue in this loan transaction is located at 480 Kenolio Rd., Apt. 23-105, Kihei, HI 96753 (the "Subject Property"). (Compl. ¶ 2.) Plaintiff alleges that Defendants Countrywide and Service Link "intentionally concealed the negative implications of the loan they were offering," putting Plaintiff in a position of potentially "losing their home to the very entity and entities who placed them in this position." (Id. ¶ 16.) Plaintiff also contends that Defendants "hold an interest in a loan that was improperly handled from its inception", and used "acts of deception violat[ing] several statutes and in essence creat[ing] an illegal loan." (Id. ¶¶ 18, 23.) In addition, Plaintiff asserts that Countrywide "illegally, deceptively, and/or otherwise unjustly, qualified Plaintiff for a loan which [they] knew or should have known that Plaintiff could not qualify for or afford...." (Id. ¶ 24.) On October 8, 2010, Defendants filed a Motion to Dismiss ("Motion") for failure to state a claim upon which relief can be granted. ("Mot.," Doc. # 8.) No Opposition has been filed by Plaintiff. STANDARD OF REVIEW I. Federal Rule of Civil Procedure 12(b)(6) Pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure ("Rule"), a motion to dismiss will be granted where the plaintiff fails to state a claim upon which relief can be granted. Review is limited to the contents of the complaint. See Clegg v. Cult Awareness Network, 18 F.3d 752, 754 (9th Cir.1994). A complaint may be dismissed as a matter of law for one of two reasons: "(1) lack of a cognizable legal theory, or (2) insufficient facts under a cognizable legal claim." Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir.1984) (citation omitted). Allegations of fact in the complaint must be taken as true and construed in the light most favorable to the plaintiff. See Livid Holdings Ltd. v. Salomon Smith Barney, Inc., 416 F.3d 940, 946 (9th Cir.2005). A complaint need not include detailed facts to survive a Rule 12(b)(6) motion to dismiss. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). In providing grounds for relief, however, a plaintiff must do more than recite the formulaic elements of a cause of action. See id. at 556-57, 127 S.Ct. 1955; see also McGlinchy v. Shell Chem. Co., 845 F.2d 802, 810 (9th Cir.1988) ("[C]onclusory allegations without more are insufficient to defeat a motion to dismiss for failure to state a claim.") (citation omitted). "The tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions," and courts "are not bound to accept as true a legal conclusion couched as a factual allegation." Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (internal quotations and citations omitted). Thus, "bare assertions amounting to nothing more than a formulaic recitation of the elements" of a claim "are not entitled to an assumption of truth." Moss v. U.S. Secret Service, 572 F.3d 962, 969 (9th Cir.2009) ("[T]he non-conclusory `factual content,' and reasonable inferences from that content, must be plausibly suggestive of a claim entitling 1216 the plaintiff to relief.") (internal quotations and citations omitted). A court looks at whether the facts in the complaint sufficiently state a "plausible" ground for relief. See Twombly, 550 U.S. at 570, 127 S.Ct. 1955. A plaintiff must include enough facts to raise a reasonable expectation that discovery will reveal evidence and may not just provide a speculation of a right to relief. Id. at 586, 127 S.Ct. 1955. When a complaint fails to adequately state a claim, such deficiency should be "exposed at the point of minimum expenditure of time and money by the parties and the court." Id. at 558, 127 S.Ct. 1955 (citation omitted). If a court dismisses the complaint or portions thereof, it must consider whether to grant leave to amend. Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir.2000) (finding that leave to amend should be granted "if it appears at all possible that the plaintiff can correct the defect") (internal quotations and citations omitted). II. Federal Rule of Civil Procedure 9(b) Federal Rule of Civil Procedure 9(b) requires that "[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." Fed.R.Civ.P. 9(b). Under Ninth Circuit law, "Rule 9(b) requires particularized allegations of the circumstances constituting fraud." In re GlenFed, Inc. Sec. Litig., 42 F.3d 1541, 1547-48 (9th Cir.1994) (en banc), superseded on other grounds by 15 U.S.C. § 78u-4. In their pleadings, plaintiffs must include the time, place, and nature of the alleged fraud; "mere conclusory allegations of fraud are insufficient" to satisfy this requirement. Id. at 1548 (quoting Moore v. Kayport Package Express, Inc., 885 F.2d 531, 540 (9th Cir.1989)). "[T]he circumstances constituting the alleged fraud [must] `be specific enough to give defendants notice of the particular misconduct ... so that they can defend against the charge and not just deny that they have done anything wrong.'" Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir.2009) (quoting Bly-Magee v. California, 236 F.3d 1014, 1019 (9th Cir.2001)); see also Moore, 885 F.2d at 540 (finding that Rule 9(b) requires a plaintiff to attribute particular fraudulent statements or acts to individual defendants). However, "[m]alice, intent, knowledge, and other conditions of a person's mind may be alleged generally." Fed.R.Civ.P. 9(b); see also In re GlenFed, Inc. Sec. Litig., 42 F.3d at 1547 ("We conclude that plaintiffs may aver scienter ... simply by saying that scienter existed."); Walling v. Beverly Enter., 476 F.2d 393, 397 (9th Cir.1973) (finding that Rule 9(b) "only requires the identification of the circumstances constituting fraud so that the defendant can prepare an adequate answer from the allegations" (citations omitted)). A motion to dismiss for failure to plead with particularity is the functional equivalent of a motion to dismiss under Rule 12(b)(6) for failure to state a claim. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1107 (9th Cir.2003). In considering a motion to dismiss, the court is not deciding the issue of "whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974) overruled on other grounds by Davis v. Scherer, 468 U.S. 183, 104 S.Ct. 3012, 82 L.Ed.2d 139 (1984). DISCUSSION For the reasons set forth below, the Court concludes that Defendants' Motion to Dismiss should be granted in part and denied in part. With the exception of Plaintiff's TILA rescission claim, the Complaint 1217 is dismissed as against all Defendants. I. Counts I and II: Declaratory Relief and Injunctive Relief Count I of the Complaint asserts a claim for declaratory relief to prevent Defendants from foreclosing on the Subject Property, because Defendants' interest in the Subject Property has allegedly been rendered void due to violations of law. (Compl. ¶¶ 41-45.) Count II of the Complaint seeks an injunction preventing Countrywide from proceeding with its foreclosure action and Plaintiff argues that "injunctive relief ... is necessary and appropriate at this time to prevent irreparable loss to Plaintiff." (Id. ¶¶ 46-49.) Plaintiff's requests in Count I and II fail to satisfy the minimum pleading requirements of Rules 8 and 9(b). Count I alleges that "Defendants did not properly comply with proper delivery procedures under RESPA," and that "Defendants [sic] actions in the processing, handling and attempted foreclosure of this loan has contained numerous violations of State and Federal laws...." (Id. ¶¶ 42-43.) Count II contends that "Plaintiff has suffered and will continue to suffer in the future unless Defendants' wrongful conduct is restrained and enjoined...." (Id. ¶¶ 49.) Here, Plaintiff fails to allege any facts and solely provides legal conclusions regarding Defendants' purported wrongful conduct and violations of State and Federal laws. Such legal conclusions are not entitled to an assumption of truth when ruling on a motion to dismiss. See Iqbal, 129 S.Ct. at 1949. As such, Plaintiff's conclusory allegations are insufficient to state a claim for relief. Additionally, Plaintiff contends, in Count I, that "the Defendants perpetrated a fraudulent loan transaction." (Compl. ¶¶ 42.) To the extent that Plaintiff brings allegations of fraud against Defendants, Plaintiff has failed to satisfy the heightened fraud pleading standard under Rule 9(b). The Court discusses this at length in Section XI of the instant Order below. Accordingly, the Court GRANTS Defendants' Motion to Dismiss as to Plaintiff's claims for declaratory and injunctive relief. II. Count III: Contractual Breach of Implied Covenant of Good Faith and Fair Dealing Count III of the Complaint alleges that Defendants "willfully breached their implied covenant of good faith and fair dealing," by withholding numerous disclosures; withholding notices with regards to excessive fees and closing costs, below standard and non-diligent underwriting standards, good faith estimates, yield spread premiums, disclosures of additional income due to interest rate increases, failure to disclose when negative credit scores were disseminated, failure to provide disclosures of business affiliations, kickback fees and rescission/right to cancel disclosures; and willfully placing Plaintiff in a loan that she did not qualify for and could not afford. (Compl. ¶ 54.) In Hawaii, commercial contracts are subject to a statutory duty to perform in good faith. Haw.Rev.Stat. § 490:1-304. Further, Hawaii law recognizes that "every contract contains an implied covenant of good faith and fair dealing that neither party will do anything that will deprive the other of the benefits of the agreement." Best Place, Inc. v. Penn Am. Ins. Co., 82 Hawai'i 120, 920 P.2d 334, 337-38 (Haw. 1996) (citations omitted). Here, Plaintiff fails to allege any specific facts and solely provides legal conclusions regarding Defendants' purported violation of the implied covenant of good faith and fair dealing. While Plaintiff provides a laundry list of disclosures and notices allegedly withheld by Defendants, she fails 1218 to state how Defendants' actions constitute a breach of the implied covenant of good faith and fair dealing. Moreover, Plaintiff fails to show that any of the allegedly withheld notices were required under statute or any other law. Simply making such conclusory allegations is insufficient to properly plead this claim. Thus, Plaintiff's legal conclusions are entitled to no weight. See Iqbal, 129 S.Ct. at 1949. Accordingly, the Court GRANTS the Motion to Dismiss as to Plaintiffs' claim for breach of the implied covenant of good faith and fair dealing. III. Count IV: Violation of TILA, 15 U.S.C. § 1601, et seq. Count IV of the Complaint alleges that Defendants violated the Truth in Lending Act ("TILA") by failing to provide Plaintiff with all of the required disclosures. (Compl. ¶¶ 57-65.) Specifically, Plaintiff alleges that Countrywide failed to provide Plaintiff with "a properly disclosed interest rate, an accurate Good Faith Estimate, disclosures that accurately reflect the legal obligation between the parties, or a disclosure relating to Property/Hazard Insurance, which are all required under the Code of Federal Regulations. (Id. ¶ 60.) Plaintiff asserts rescission (Id. ¶ 62) and civil liability (Id. ¶ 63) for the purported TILA violations. Defendants contend that Plaintiff's TILA claim for rescission has not been sufficiently pled, and that Plaintiff's TILA claim for damages is barred by the statute of limitations and that equitable tolling does not apply. (Mot. at 17-23.) The Court will address these arguments separately. A. Rescission Under 15 U.S.C. § 1635 Section 1635(a), TILA's so-called buyer's remorse provision, gives borrowers three business days to rescind the loan agreement without penalty. 15 U.S.C. § 1635(a); Semar v. Platte Valley Fed. Sav. & Loan Ass'n, 791 F.2d 699, 701 (9th Cir.1986) (citing 15 U.S.C. § 1635(a)). To invoke this provision, the loan must be a consumer loan using the borrower's principal dwelling as security. 15 U.S.C. § 1635(a). If the lender fails to deliver certain forms or disclose important terms accurately, Section 1635(f) gives the borrower the right to rescind until "three years after the consummation of the transaction or ... the sale of the property, whichever occurs first." 15 U.S.C. § 1635(f); see also King v. California, 784 F.2d 910, 913 (9th Cir.1986). Defendants argue that Plaintiff must allege that she is able to tender the proceeds of the loan, and given that she has failed to do so, her claim for rescission under TILA fails. (Mot. at 21-23.) Defendants cite to a number of district court decisions which have recently held that in order to maintain a claim for rescission under TILA, a plaintiff must show an ability to tender the principal balance of the subject loan. (Id.) While the Court acknowledges that Plaintiff's Complaint entirely fails to plead an ability to tender the full amount of the loan, the Court is not convinced that Plaintiff is required to make such a pleading. Defendants are correct in recognizing that district courts are split in their holdings on this issue, and have failed to reach a consensus on the TILA rescission pleading requirement. Compare, e.g., Agustin v. PNC Financial Services Group, Inc., 707 F.Supp.2d 1080, 1090 (D.Haw.2010), with Angel v. BAC Home Loan Servicing, LP, 2010 WL 4386775, at 6 (D.Haw.2010). However, since no consensus exists, this Court must come to a conclusion after a careful independent review of the relevant case law. The myriad of interpretations on this issue come from differing readings of the Ninth Circuit's decision in Yamamoto v. Bank of New York, in which the court explained that a district court may alter 1219 the rescission procedures described in TILA, and retains "discretion to condition rescission on tender by the borrower of the property he had received from the lender." 329 F.3d 1167, 1171 (9th Cir. 2003). Courts which require a plaintiff to plead ability to tender have "extended Yamamoto to hold that a claim for rescission under TILA is subject to dismissal at the pleading stage if the borrower fails to allege a present ability to tender the loan proceeds." Avina v. BNC Mortg., No. C 09-4710 JF (RS), 2009 WL 5215751 at 2 (N.D.Cal. Dec. 29, 2009) (citations omitted).[5] Courts ruling the opposite have found that "Yamamoto did not hold that a district court must, as a matter of law, dismiss a case if the ability to tender is not pleaded," ING Bank v. Ahn, No. C 09-00995 THE, 2009 WL 2083965, at 2 (N.D.Cal. July 13, 2009), and that "Yamamoto does not hold that a claim for rescission cannot survive a motion to dismiss until the right to rescind is adjudicated in the plaintiff's favor," Singh v. Wash. Mut. Bank, No. C-09-2771 MMC, 2009 WL 2588885, at 4 (N.D.Cal. Aug. 19, 2009). This Court pays particular attention to Yamamoto's conclusion that "a court may impose conditions on rescission that assure that the borrower meets her obligations once the creditor has performed its obligations." 329 F.3d at 1173 (emphasis added). Moreover, Yamamoto suggests that a district court's imposition of a requirement that a plaintiff show an ability to tender is based on the "circumstances" and "evidence" of each case. Id. Thus, the Court does not foresee a reasonable method for district courts to impose a pleading requirement on all plaintiffs that ultimately requires a case-by-case analysis. Additionally, this interpretation of Yamamoto is consistent with the liberal pleading standards under Federal Rule of Civil Procedure 8, and the TILA rescission statute which itself does not contain such a requirement. See Fed.R.Civ.P. 8; 12 C.F.R. § 226.23(a)(1). In light of this Court's interpretation of Yamamoto and the TILA rescission pleading requirements, Plaintiff's complaint may not be dismissed at this stage for failure to plead ability to tender loan proceeds. Additionally, Defendants do not allege any other deficiency in Plaintiff's TILA rescission claim, and as such, Plaintiff's claim survives Defendants' challenge. Accordingly, the Court DENIES Defendants' Motion to Dismiss as to Plaintiff's TILA rescission claim. B. Damages Under 15 U.S.C. § 1640 In addition to rescission, TILA authorizes civil liability in the form of actual damages, statutory damages, costs, and attorneys fees. 15 U.S.C. § 1640. Pursuant to Section 1640(e), there is a one-year statute of limitations for civil liability claims under TILA. Id. § 1640(e). The limitations period generally runs from the date of consummation of the transaction. King, 784 F.2d at 915. Here, Plaintiff entered into the loan transaction on November 29, 2007, and initiated the present lawsuit on September 01, 2010. As such, more than one year elapsed between the consummation of the loan and the filing of the instant action. Therefore, Plaintiff's claim for damages under TILA is barred by the statute of limitations unless equitable tolling applies. As a general matter, "[e]quitable tolling may be applied if, despite all due diligence, a plaintiff is unable to obtain vital information bearing on the existence 1220 of his claim." Santa Maria v. Pac. Bell, 202 F.3d 1170, 1178 (9th Cir.2000); see also O'Donnell v. Vencor, Inc., 465 F.3d 1063, 1068 (9th Cir.2006) ("Equitable tolling is generally applied in situations `where the claimant has actively pursued his judicial remedies by filing a defective pleading during the statutory period, or where the complainant has been induced or tricked by his adversary's misconduct into allowing the filing deadline to pass.'" (quoting Irwin v. Dep't of Veterans Affairs, 498 U.S. 89, 96, 111 S.Ct. 453, 112 L.Ed.2d 435 (1990))). In a TILA damages action specifically, equitable tolling may suspend the limitations period "until the borrower discovers or had reasonable opportunity to discover the fraud or nondisclosures that form the basis of the TILA action." King, 784 F.2d at 915. However, when a plaintiff fails to allege facts demonstrating that the plaintiff could not have discovered the purported TILA violation with reasonable diligence, dismissal is appropriate and equitable tolling will not apply. See Meyer v. Ameriquest Mortg. Co., 342 F.3d 899, 902 (9th Cir.2003) (refusing to apply equitable tolling for failure to make required disclosures under TILA when the plaintiff was in full possession of all loan documents and did not allege fraudulent concealment or any other action that would have prevented discovery of the violation); Hubbard v. Fidelity Fed. Bank, 91 F.3d 75, 79 (9th Cir.1996) (holding that the plaintiff was not entitled to equitable tolling of her TILA claim because "nothing prevented [the plaintiff] from comparing the loan contract, Fidelity's initial disclosures, and TILA's statutory and regulatory requirements"). In this case, Plaintiff alleges that Defendants violated TILA by failing to provide Plaintiff with all of the required disclosures. (Compl. ¶¶ 57-65.) As in Meyer and Hubbard, Plaintiff fails to allege any facts to demonstrate that equitable tolling applies. Plaintiff's assertion that Defendants "fail[ed] to effectively provide the required disclosures and notices," (Id. ¶ 61) is conclusory and does not justify application of equitable tolling. Plaintiff offers no explanation as to why she was unable to discover the TILA violations within the one-year statutory period. Plaintiff's conclusory allegations without more are insufficient for her to invoke the doctrine of equitable tolling. Accordingly, the Court GRANTS Defendants' Motion to Dismiss as to Plaintiff's TILA damages claim. IV. Count V: Real Estate Settlement Procedures Act Violations Count V of the Complaint alleges that Defendants violated RESPA by "[giving], provid[ing], or receiv[ing] a hidden fee or thing of value for the referral of settlement business, including but not limited to, kickbacks, hidden referral fees, and/or loan origination fees ... fail[ing] to disclose all affiliated business arrangements to Plaintiff," and "charg[ing] fees in excess of the reasonable value of goods provided and/or services." (Compl. ¶ 68.) Defendants assert that Plaintiff's claims are barred by the statute of limitations and that equitable tolling does not apply. (Mot. 11-12.) RESPA imposes either a one-year or a three-year statute of limitations depending on the violation alleged. 12 U.S.C. § 2614 (proscribing a one-year statute of limitations for violations of Sections 2607 and 2608 and a three-year statute of limitations for violations of Section 2605). Plaintiff fails to cite any specific provision of RESPA that was violated by Defendants, which is grounds for dismissal of the claim, alone. See Rosal v. First Federal Bank of California, 671 F.Supp.2d 1111, 1125 (N.D.Cal.2009); Mansour v. Cal-Western Reconveyance Corp., 618 1221 F.Supp.2d 1178, 1183 (D.Ariz.2009).[6] Although FRCP Rule 8 requires only that a complaint include a "short and plain statement of the claim showing that the pleader is entitled to relief," the complaint must sufficiently put Defendants on fair notice of the claim asserted and the ground upon which it rests. Defendants, nor the Court, are required to speculate as to which provisions Plaintiff is suing under or how Defendants violated such provisions. Vague allegations containing mere labels and conclusions are insufficient to survive a motion to dismiss. See Twombly, 550 U.S. at 555, 127 S.Ct. 1955. While Plaintiff fails to specify under which section of the statute her alleged RESPA claim arises, it appears that Plaintiff is alleging a violation of 12 U.S.C. § 2607, which relates to kickbacks and unearned fees. (See Compl. ¶ 68(b)-(d).) Because Plaintiff's alleged RESPA claim arose out of the loan origination, which occurred more than one year before Plaintiff filed the instant action, Plaintiff's claim is barred by the statute of limitations. As discussed above, Plaintiff is not entitled to equitable tolling because she has failed to allege specific facts showing why she could not bring her suit within the limitations period. Accordingly, the Court GRANTS Defendants' Motion to Dismiss as to the RESPA claims. V. Count VI: Rescission Count VI of the Complaint alleges that Plaintiff is entitled to rescind her loan under violations of TILA, RESPA, fraudulent concealment, Deceptive Acts and Practices (UDAP), and under public policy grounds. However, rescission is a remedy and not an independent cause of action, thus there must be grounds on which to support an award of rescission. See Bischoff v. Cook, 118 Hawai'i 154, 185 P.3d 902, 911 (Haw.App.2008). For the reasons stated above in the Court's analysis of Plaintiff's TILA claim, Defendants' Motion to Dismiss Plaintiff's TILA rescission claim is denied. However, Plaintiff's claim for rescission under RESPA fails because rescission is not a form of relief offered by the statute. See 12 U.S.C. § 2601-2617. Additionally, as stated above, Plaintiff's claim for RESPA fails, thus any derivative claim fails as well. Plaintiff's third and fourth bases for rescission, fraudulent concealment and UDAP, fail for the reasons discussed below in Sections XI and VI, respectively. Finally, Plaintiff's claim for rescission on "public policy grounds" is wholly unsupported, simply a legal conclusion, and entitled to no weight. See Iqbal, 129 S.Ct. at 1949. Accordingly, the Court GRANTS Defendants' Motion to Dismiss as to Plaintiff's claim for rescission of the loan.[7] VI. Count VII: Unfair and Deceptive Trade Practices Act ("UDAP") Violations Count VII of the Complaint alleges that Defendants "violated the Unfair and Deceptive Acts and Practices by consummating an unlawful, unfair, and fraudulent business practice, designed to deprive Plaintiff of her home, equity, as well as her past and future investment." (Compl. ¶ 79.) Again, Plaintiff fails to cite any specific provision of the statute that 1222 was violated by Defendants, which, as stated above, is grounds for dismissal of the claim. While Plaintiff fails to cite to any specific statute, Hawaii Revised Statute section 480-2(a) provides that "[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are unlawful." Haw.Rev.Stat. § 480-2(a). "Two distinct causes of action have emerged under [section] 480-2(a): (1) claims alleging unfair methods of competition; and (2) claims alleging unfair or deceptive acts or practices."[8]Haw. Med. Ass'n v. Haw. Med. Serv. Ass'n, Inc., 113 Hawai'i 77, 148 P.3d 1179, 1207 (Haw. 2006); see also Star Markets, Ltd. v. Texaco, Inc., 945 F.Supp. 1344, 1346 (D.Haw. 1996). Section 480-13 provides a private right of action for violations of section 480-2.[9] Haw.Rev.Stat. § 480-13. To maintain this cause of action, the plaintiff must demonstrate: (1) a violation of section 480-2; (2) injury to the consumer caused by such a violation;[10] and (3) proof of the amount of damages. Davis v. Wholesale Motors, Inc., 86 Hawai'i 405, 949 P.2d 1026, 1038 (Haw.App.1997) (citations omitted). Plaintiff's UDAP claim consists entirely of conclusory allegations, which are insufficient to survive a motion to dismiss. Plaintiff merely provides that "Defendants failed to undergo a diligent underwriting process ... failed to properly adjust and disclose facts and circumstances relating to Plaintiff's mortgage loan and place Plaintiff in a loan ... that he [sic] should never have been approved for." (Compl. ¶ 76.) Plaintiff further alleges that "Defendants used various rates and charges to disguise the actual payment schedule and loan amount ... enjoyed unjust enrichment and have profited and deceptively preyed upon Plaintiff," and "intentionally concealed business affiliates and rushed the closing" of the loan. (Id. ¶ 77-78.) Plaintiff fails to specify what "facts or circumstances," or "rates and charges" she is referring to. She fails to specify any "concealed business affiliates" or how the closing of the loan was rushed. In sum, Plaintiff utterly fails to elaborate on the basis of these claims or provide any level of factual detail as to Plaintiff's UDAP claim. Because Plaintiff's Complaint fails to provide any facts as to Defendants' purported unfair or deceptive acts or practices and unfair methods of competition, it fails to state a claim for a UDAP violation. See Iqbal, 129 S.Ct. at 1949 ("Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice."). Accordingly, the Court 1223 GRANTS the Motion to Dismiss as to Plaintiffs' UDAP claim. VII. Count VIII: Breach of Fiduciary Duty Count VIII of the Complaint states that "Defendant owed a fiduciary duty to Plaintiff and breached that duty by [f]ailing to advise or notify Plaintiff ... that Plaintiff would or had a likelihood of defaulting on the loan...." (Compl. ¶ 82.) Defendants argue that they owed Plaintiff no fiduciary duty, and as such, the instant Count should be dismissed. (Mot. at 13-14.) Defendants are correct in asserting that there traditionally exists no fiduciary duty between borrowers and lenders. Unless a special relationship exists between a borrower and lender that elevates the lender's responsibility, the standard "arms-length business relationship" applies. Giles v. General Motors Acceptance Corp., 494 F.3d 865, 883 (9th Cir.2007); see also Pension Trust Fund for Operating Engineers v. Federal Ins. Co., 307 F.3d 944, 954 (9th Cir.2002). In the instant Complaint, Plaintiff makes no allegations suggestion that her relationship to Defendants is anything other than an ordinary, arms-length, lender-borrower relationship. Simply stating that "[d]efendants owed a fiduciary duty to Plaintiff and breached that duty" is insufficient to establish the existence of a fiduciary duty. Thus, Plaintiff's allegations in Count VIII are wholly conclusory and unsupported. See Iqbal, 129 S.Ct. at 1949. Accordingly, the Court GRANTS Defendants' Motion to Dismiss as to Plaintiff's claim for breach of fiduciary duty. VIII. Count IX: Unconscionability In Count IX of the Complaint, Plaintiff brings a claim for unconscionability alleging that, "based on the deception, unfair bargaining position, lack of adherence to the [law] ... the court may find that the loan agreement and trust deed are unconscionable." (Compl. ¶ 89.) According to the Hawaii Supreme Court, unconscionability is a cause of action[11] asserted to prevent the enforcement of a contract where, "the clauses are so one-sided as to be unconscionable under the circumstances existing at the time of the making of the contract...." (emphasis added) Lewis v. Lewis, 69 Haw. 497, 748 P.2d 1362, 1366 (1988) (citations omitted). Here, Plaintiff's allegations fail to address any contract terms between Plaintiff and Defendants, and instead, addresses Defendants' alleged conduct generally. These allegations do not speak to any unconscionable terms in the contract, nor are they limited to behavior that affected the circumstances under which the contract was made. For this reason, Plaintiff's contentions in Count IX fail to state a claim for unconscionability. Accordingly, the Court GRANTS Defendants' Motion to Dismiss as to Plaintiff's claims for unconscionability. IX. Count X: Predatory Lending Count X of the Complaint contends that Defendants engaged in predatory lending practices by: including excessive closing fees and costs, offering a loan at one rate and then changing the loan program at the last moment, not prominently disclosing the good faith estimate of 1224 closing costs, not advising Plaintiff of business affiliations, requiring Plaintiff to pay rates and fees that were not justified by the marketplace, marketing the loan in a way that did not disclose its material terms, basing the loan on a loan application that is inappropriate for the borrower, and underwriting the loan without due diligence. (Compl. ¶¶ 94-102.) Despite Plaintiff's laundry list of allegations, the Court is entirely unclear as to what cause of action Plaintiff is bringing this claim under. Plaintiff fails to cite any relevant statute or law under which Defendants' alleged behavior is prohibited. Aside from citing to the Office of Comptroller of Currency's definition of predatory lending, Plaintiff fails to identify any Hawaii or federal law creating a cause of action for predatory lending. (Compl. ¶ 91.) As stated above, Defendants, nor the Court, are required to speculate as to what law Plaintiff is suing under or how Defendants violated such law. Vague allegations containing mere labels and conclusions are insufficient to survive a motion to dismiss. See Twombly, 550 U.S. at 555, 127 S.Ct. 1955. As such, Plaintiff's claim for predatory lending fails. Accordingly, the Court GRANTS Defendants' Motion to Dismiss as to Plaintiff's claim for predatory lending. X. Count XI: Quiet Title In Count XI of the Complaint, Plaintiff seeks to quiet title in the Subject Property via a declaration from the Court that "the title to the Subject Property is vested in Plaintiff alone and that the Defendants herein, and each of them, be declared to have no estate, right, title or interest in the Subject Property...." (Compl. ¶ 106.) Under Hawaii Law, an action to quiet title "may be brought by any person against another person who claims, or who may claim adversely to the plaintiff, an estate or interest in real property, for the purpose of determining the adverse claim." Haw.Rev.Stat. § 669-1(a). Plaintiff states that "Defendants, and each of them, claim an interest in the Subject Property," and that "said Defendants have no legal or equitable right, claim, or interest in the Property." (Compl. ¶ 105.) However, this is merely a formulaic recitation of an element of the claim. Plaintiff fails to plead any facts suggesting what interests are being claimed by Defendants and the nature of those interests. Throughout the Complaint, Plaintiff makes blanket statements about Defendants without recognizing that Defendants constitute multiple entities. As such, the Court is unable to determine what rights and interests in the Subject Property each defendant is claiming, thus Plaintiff's claim for quiet title fails.[12] Accordingly, the Court GRANTS Defendants' Motion to Dismiss as to Plaintiff's claim to quiet title. XI. Fraud Throughout Plaintiff's Complaint, she makes various allegations suggesting fraudulent conduct on the part of Defendants. (See e.g. Compl. ¶¶ 42, 56, 65, 71, 79, 82, 93, 98.) These allegations are insufficient to meet Plaintiff's burden under Rule 8, much less the more rigorous requirements of Rule 9 that apply to allegations of fraud or mistake. See Fed. R.Civ.P. 9(b) (requiring a party to state with particularity the circumstances constituting fraud or mistake). Plaintiff fails to plead the time and place of any alleged 1225 fraud and she also does not specify what role each defendant played in the alleged misconduct. Furthermore, Plaintiff's statements that "Defendants perpetrated a fraudulent loan transaction" (Compl. ¶ 42), that Defendants' actions were fraudulent and malicious (Compl. ¶¶ 56, 65), and that Defendants partook in Fraudulent Concealment (Compl. ¶ 71), are legal conclusions entitled to no weight. See Iqbal, 129 S.Ct. at 1949. Accordingly, the Court GRANTS Defendants' Motion to Dismiss as to any claims made by Plaintiff regarding fraud. XII. Leave to Amend The Court recognizes that it may be possible for Plaintiff to state a claim if provided the opportunity to amend her Complaint. With the exception of Plaintiff's TILA rescission claim, which states a valid claim, the Complaint is DISMISSED as against all Defendants in this action with leave to amend no later than 20 days from the filing of this Order. Failure to do so and to cure the pleading deficiencies will result in dismissal of this action with prejudice. Plaintiff is advised that the amended complaint must clearly state how each of the named defendants have injured her, and it must also clearly identify the statutory provisions under which Plaintiff's claims are brought. If Plaintiff chooses to file an amended complaint, she must (1) follow the directions in this Order; and (2) be ready, willing, and able to pursue her claims, which includes attending hearings and conferences in person unless there is a legitimate excuse. A legitimate excuse involves more than being too busy with other matters. CONCLUSION For the reasons stated above, the Court GRANTS IN PART and DENIES IN PART Defendants' Motion to Dismiss Complaint. (Doc. # 8.) The Complaint is DISMISSED as against all Defendants with the exception of Plaintiff's TILA rescission claim, which survives the Motion to Dismiss. IT IS SO ORDERED. NOTES [1] Three calls were made in the hallway for Plaintiff with no response. The Court acknowledges that Plaintiff faxed in a request on December 30, 2010 at 4:36 p.m. to continue the hearing for 7 days. Given the last minute nature of the request, and Plaintiff's failure to show good cause for postponement of the hearing, the request was denied. Additionally, the Court instructs Plaintiff for future reference that, according to Local Rule 7.4, an opposition to a motion set for hearing shall be filed no less than 18 days prior to the date of the hearing, unless otherwise ordered by the Court, and not on the date of the hearing. [2] Plaintiff presumably filed the Complaint in this Court on the basis of diversity jurisdiction pursuant to 28 U.S.C. § 1332, although Plaintiff does not provide as much in her Complaint. Plaintiff represents that she is a resident of the State of Hawaii, that Countrywide has business addresses in Virginia and California, and that Service Link has a business address in California. (Compl. ¶¶ 1, 4-5.) [3] The Court assumes Plaintiff actually means Uniform Commercial Code § 2-302Unconscionable Contract or Clause. [4] Plaintiff's Complaint states that the amount of the first note is $284,624. However, Defendants' Motion to Dismiss attaches both mortgages as Exhibits A and B, and Exhibit A clearly states that the first note was in the amount of $281,624. Pursuant to Federal Rule of Evidence 201, the Court takes judicial notice of the mortgages attached to Defendants' Motion to Dismiss, as they are "matters of public record" and may be considered on a motion to dismiss. See Lee v. City of Los Angeles, 250 F.3d 668, 688-689 (9th Cir. 2001). "Therefore, on a motion to dismiss a court may properly look beyond the complaint to matters of public record and doing so does not convert a Rule 12(b)(6) motion to one for summary judgment." Mack v. South Bay Beer Distrib., Inc., 798 F.2d 1279, 1282 (9th Cir.1986), overruled on other grounds by Astoria Fed. Sav. and Loan Ass'n v. Solimino, 501 U.S. 104, 111, 111 S.Ct. 2166, 115 L.Ed.2d 96 (1991). [5] The Court cites to unpublished cases here, not as precedent, but to examine the split amongst district courts within the Ninth Circuit as to the TILA rescission pleading requirement. [6] Although the Court does not cite to other district courts as precedent, it notes that the cases cited here have also visited a similar issue. [7] The Court does not construe Count VI: Rescission as a separate claim for TILA rescission, so although Plaintiff's TILA rescission claim survives the instant Motion to Dismiss, Count VI is still dismissed for the aforementioned reasons. [8] Although "[a]ny person" may bring an action for unfair methods of competition in violation of section 480-2, only consumers, the attorney general, or the director of the office of consumer protection may bring an action for unfair or deceptive acts or practices in violation of section 480-2. Haw.Rev.Stat. § 480-2(d), (e); see also Davis v. Four Seasons Hotel, Ltd., 122 Hawai'i 423, 228 P.3d 303, 307 (Haw.2010). A "consumer" is a "natural person who, primarily for personal, family, or household purposes, purchases, attempts to purchase, or is solicited to purchase goods or services or who commits money, property, or services in a personal investment." Haw.Rev.Stat. § 480-1. [9] Specifically, section 480-13(a) provides a cause of action for "any person who is injured in the person's business or property by reason of anything forbidden or declared unlawful by this chapter," and section 480-13(b) provides a cause of action for "[a]ny consumer who is injured by any unfair or deceptive act or practice" in violation of section 480-2. Haw. Rev.Stat. § 480-13(a), (b). The plaintiff may sue for both injunctive relief and damages under sections 480-13(a) and (b). Id. [10] In an unfair method of competition claim, the second element is injury to the plaintiff's business or property resulting from the section 480-2 violation. Haw. Med. Ass'n, 148 P.3d at 1216. [11] Defendants argue in their Motion that unconscionability is not an affirmative claim for relief. (Mot. at 15.) While Defendants correctly cite to courts that have found unconscionability to be a defense and not an affirmative claim, see e.g. Gaitan v. Mortgage Elec. Registration Sys., 2009 WL 3244729, at 13 (C.D.Cal. Oct. 5, 2009), the Hawaii Supreme Court has addressed unconscionability as a separate cause of action on at least one occasion. See Thompson v. AIG Haw. Ins. Co., 111 Hawai'i 413, 142 P.3d 277 (2006). [12] Defendants argue, amongst other things, that Plaintiff "has not alleged that she is able to tender the entire amount of her indebtedness." (Mot. at 31.) The Court need not reach this argument because of its determination that Plaintiff has failed to state a claim to quiet title.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2471084/	758 F.Supp.2d 75 (2010) LINDA E., Individually and on behalf of her daughter, S.E., Plaintiffs, v. BRISTOL WARREN REGIONAL SCHOOL DISTRICT, Defendant. Bristol Warren Regional School District, Plaintiff, v. Linda E. as parent and legal Guardian of SE, Defendant. No. C.A. 10-129ML, C.A. 10-132ML. United States District Court, D. Rhode Island. December 1, 2010. 77 Amy R. Tabor, Hardy, Tabor & Chudacoff, Pawtucket, RI, Mary Ann F. Carroll, Brennan, Recupero, Cascione, Scungio & McAllister, LLP, Providence, RI, for Plaintiffs/Defendant. AMENDED MEMORANDUM AND ORDER MARY M. LISI, Chief Judge. The case before this Court involves the determination of eligibility for benefits pursuant to the Individuals with Disabilities Education Act, 20 U.S.C. § 1400 et seq. ("IDEA"). The Bristol Warren Regional School District (the "School") has appealed the Administrative Decision (the "Decision") of an Impartial Due Process Hearing Officer (the "Hearing Officer") which requires the School to provide its student, S.E., with (1) special education in a residential school placement, and (2) twenty-one weeks of compensatory education. Following the Hearing Officer's determination, S.E.'s mother, Linda E. (the "Parent"), filed a complaint in this Court to recover attorney's fees and costs as the prevailing party in a Due Process Hearing. On its part, the School filed an appeal of the Decision by the Hearing 78 Officer pursuant to Section 1415 of the IDEA and Rhode Island General Laws Sections 16-24-1 et seq. and 42-35-15. The cases were consolidated and the matter is now before the Court on the parties' cross-motions for summary judgment on the complaints. For the reasons that follow, with respect to the School's appeal from the Hearing Officer's Decision, the Parent's motion for summary judgment is GRANTED and the School's motion for summary judgment is DENIED. I. Factual Background[1] S.E. was born in 1993 and lives with her mother in Warren, Rhode Island. Since age 4, S.E. has demonstrated behavioral problems, including extreme rage, temper tantrums, and violent outbursts in response to circumstances in her environment. SSUF ¶ 1, PSUF ¶ 4. According to the Parent, S.E.'s anger was primarily directed at her mother and S.E. would, at times, "kick, spit, bite and punch her mother" and once threatened to stab her with a butter knife. PSUF ¶ 4. Beginning at age six, S.E. was taken by her mother to counseling by clinical social worker Denise Fragoza ("Fragoza") to address S.E.'s temper tantrums and out-of-control physical behavior. Hr'g Tr. I, 35:7-36:23. The counseling sessions ended when Fragoza recommended that the Parent file a wayward child petition[2] against S.E. at age ten and the Parent refused. Id. 60:17-61:23. S.E.'s report cards from Kindergarten through grade 5 do not reflect any particular difficulties, SSUF ¶ 8, apart from noting in third grade that, at times, S.E. "tuned the teacher out," Res. Ex.[3] 7, and that she had difficulties in fifth grade in completing her homework. R. Ex. 9. In general, S.E. was progressing satisfactorily and was regularly promoted to grades 2, 3, 4, and 5. SSUF ¶¶ 9-12. When S.E. was 8 years old, she was taken to the police station in a squad car after she "chased her mother through the house, pointing the sharp end of [a] steak knife at her" because the macaroni in her soup was not in her favorite shape. PSUF ¶ 7. On another occasion, S.E. held a knife up "to her own chest and threatened to stab herself if her mother did not get off the telephone." PSUF ¶ 8. After she expressed a specific plan to kill herself, elementary school staff arranged for her to participate in a social skills group and have weekly meetings with a school psychologist or social worker. PSUF ¶ 9. A June 2002 neuropsychological evaluation of S.E. by Brett Leimkuhler, Ph.D. ("Leimkuhler") and Kathleen M. Rafuse Parnell, Ph.D. ("Rafuse Parnell") states that S.E. "was diagnosed with ODD [oppositional defiant disorder] by Dr. William Geary when she was 3 years old," and that "[f]rom 1999 to 2001 behavior therapy was undertaken." Pet. Ex. 1, at 1, 2. A questionnaire filled out by S.E.'s classroom teacher at that 79 time showed that S.E. was in the "markedly atypical" range with respect to social problems, attention deficit hyperactive disorder ("ADHD"), and global restless/impulsive. PSUF ¶ 10, 11. The Leimkuhler/Rafuse Parnell report notes that S.E.'s academic grades were good, but that "her behavior and social skills in school have been more of a problem this year." Pet. Ex. 1 at 2. According to the report, S.E. "presents a complicated clinical picture with elements of several disorders;" she "clearly meets the criteria for ODD in the home environment;" S.E.'s "combativeness, aggressiveness and physical cruelty" suggest a more serious conduct disorder; and her "clinical picture includes elements of a mood disorder and/or ADHD." Id. at 6. While S.E.'s "mood fluctuations are significant particularly at home, . . . they are beginning to be observed at school as well." The report recommends that S.E. undergo a clinical psychological evaluation, followed by child psychiatric consultation and that she receive regular counseling with both cognitive therapy and behavioral management techniques. Id. at 6. With respect to S.E.'s schooling, the report states that, if ADHD is confirmed, S.E. "will require a 504 Plan[4] with appropriate classroom modifications, and resource services." Id. Within weeks of the Leimkuhler/Rafuse Parnell report, S.E. underwent a psychological evaluation by clinical psychologist Judith Lubiner, Ph.D. ("Lubiner"). SSUF ¶ 6. Lubiner's report notes that, during the past school year, S.E. "has had difficulty understanding oral directions and containing her behavior;" she was punished several times for refusing to follow directions; and "[h]her social skills are a problem, and she does not have good friendships with other children." Id. Lubiner concluded that S.E. was depressed and suggested that S.E.'s "tantrums are related to her problems with self-control," which, in turn, "are probably related to Attention Deficit/Hyperactivity Disorder." Pet. Ex. 2 at 4. Based on Linda E.'s description of S.E.'s behavior as "cycling," Lubiner questioned whether S.E. suffered from bipolar disorder. Lubiner stated that "[b]ehaviorally, [S.E.'s] actions could indicate Bipolar Disorder. However, because there are usually clear triggers to her misbehavior, the combination of AD/HD and Major Depressive Disorder can account for her symptoms." Id. Lubiner's diagnosis of S.E. included major depressive disorder, AD/HD, problems in primary social group, and academic problems. Lubiner recommended that (1) S.E. see a pediatric psychiatrist "who can treat the complex set of symptoms that she presents;" (2) S.E. receive individual and family therapy; and (3) "[i]f a social skills group is available at her community mental health center, or at school, [S.E.] would benefit from this treatment modality." Pet. Ex. 2 at 5, SSUF ¶ 6. According to the Parent, she provided the two reports to the School[5] "but was advised by school personnel that there was nothing the school could do to help." PSUF ¶ 15. From the third through the fifth grade, S.E. also received mental 80 health services from Dr. Ethan Kisch ("Dr. Kisch"), a psychiatrist who had been recommended to the Parent by Leimkuhler's office. Dr. Kisch put S.E. on various medications, including lithium. Tr. Vol. I. 63:15-65:23. In June 2005, at the end of fifth grade, S.E. moved out of her mother's home to live with her father. SSUF ¶ 13. S.E.'s father insisted that Dr. Kisch take S.E. off her medications. SSUF ¶ 15, Tr. Vol. I. 66:24-67:5. S.E. moved back with her mother in March 2006 after alleging that her stepmother was abusing her. SSUF ¶ 14. In sixth grade, the School documented some incidents of behavioral problems by S.E., including rudeness, disruptive behavior, and one incident of theft. PSUF ¶ 17. It was also discovered that S.E. was cutting herself in school. PSUF ¶ 18. The Parent arranged for CFIT (Child and Family Intensive Therapy) services which continued through seventh grade. PSUF ¶ 18, 22. In January and March 2006, the School informed the Parent that S.E. was in serious danger of failing for the year. Pet. Ex. 8, 9. At the end of sixth grade, S.E. was getting Ds in language arts and science and she was failing math, although she passed her other classes. Res. Ex. 10. In April 2007, S.E.'s teacher notified the Parent that S.E. had been "inappropriate during class and disrupting the learning environment," for which she received two days' detention. Pet. Ex. 13. During that time, S.E.'s behavior resulted in police being called to the home repeatedly. PSUF ¶ 26. On those occasions, the police would transport S.E. to the police station and then to Hasbro Children's Hospital, where she would be kept for several hours and then be sent home. PSUF ¶ 28. After one such incident, the Parent filed a wayward child petition against her daughter. SSUF ¶ 17. As a result, the Department for Children, Youth, and their Families ("DCYF") took S.E. into custody and, at first, placed her in a shelter, then, in a staff-secure facility, and finally, into a DCYF group home. PSUF ¶¶ 29, 30, SSUF ¶ 17. S.E. finished her seventh grade at Kickemuit Middle School and passed every subject. SSUF ¶¶ 17, 18. After the Parent discovered that S.E. had stolen some items from a fellow student at her school, S.E. was charged in juvenile court for possession of stolen property and placed on probation. PSUF ¶ 31. According to the Parent, S.E. blamed the girl from whom she had taken the items, "often expressing threats to hurt her." PSUF ¶ 32. While living in the group home, S.E. attended public school in Newport, receiving passing grades, except for an F in English Language Arts and a "Not Met Standard" in Literature. PSUF ¶ 34. Concerned with the threats S.E. had expressed against her fellow student, the Parent enrolled S.E. in parochial school when S.E. moved home and arranged for counseling at the East Bay Mental Health Center ("East Bay"). PSUF ¶ 35. S.E. completed eighth grade at Mt. Carmel, where she made some progress in all her subjects. The Mt. Carmel cumulative record indicates no areas of concern under effort, cooperation, respect, responsibility, or self-control. SSUF ¶¶ 24, 25. Following her expulsion from a YMCA summer camp in 2008 after stealing a cell phone and physically attacking a counselor, S.E. ingested a number of over-the-counter pills and was admitted to Bradley Children's Hospital ("Bradley"). PSUF ¶ 37, 38, SSUF ¶ 26. After a week on the locked ward, she was discharged to an acute residential treatment services ("ARTS") program. PSUF ¶ 39, SSUF ¶ 26. S.E. stayed at the ARTS facility 81 until September 19, 2008, after which she began ninth grade at Mt. Hope High School ("Mt. Hope"). PSUF ¶ 43, 44, SSUF ¶ 27. Prior to her attendance there, the Parent informed S.E.'s guidance counselor of S.E.'s hospitalization at Bradley and subsequent placement at the ARTS program. PSUF ¶ 42, 43. Within weeks of starting classes at Mt. Hope, S.E. was having difficulties; she fell asleep in her English class and did not complete her homework. Although S.E. agreed to stay after school and work with the English teacher on making up her work, she never followed through. PSUF ¶ 45. S.E. also had some disciplinary issues, SSUF ¶ 28, and received two days of office detention for being absent from class, Pet. Ex. 15, 17-19. In November 2008, S.E. received a progress report that showed she was failing all of her classes. SSUF ¶ 30, Pet. Ex. 20. After East Bay staff observed that S.E. was again engaged in cutting behaviors and that she had increasing homicidal thoughts and difficulty managing aggression, S.E. was admitted to a Partial Hospitalization Program ("PHP") at East Bay for an intensive full day therapeutic program. PSUF ¶ 48-50, SSUF ¶ 27. The Parent informed S.E.'s guidance counselor at Mt. Hope of S.E.'s admission to the PHP and requested that S.E. be provided with tutors. East Bay informed the School District that S.E. would be in the PHP Monday through Friday from 9:00 a.m. to 3:00 p.m. PSUF ¶ 52, 53. Pet. Ex. 27. East Bay sent a follow-up letter signed by S.E.'s treating psychiatrist Michael Wilberger, M.D. ("Dr. Wilberger"), which explained that S.E. was exhausted at the end of the daily program and that tutorial services "may be needed to support her academics," as she was unable to attend classes. PSUF ¶ 55, Pet. Ex. 28 at 1. The letter also included a "Diagnosis Page" that lists ODD and Mood Disorder under "Focus of Clinical Attention." Pet. Ex. 28 at 2. According to Dr. Wilberger and Patricia Arel, Manager of the PHP, S.E. "exhibited an extremely high level of impulsivity and extremely inappropriate social behaviors... aggressive with peers ... often short-tempered, irritable, and verbally abusive, swearing at others in a manner geared toward violence." PSUF ¶ 57. Escalations in S.E.'s behavior were often sudden and unexpected and "at times so severe that she had to be separated from others." PSUF ¶ 57. It is undisputed that during her time at the PHP from November 6 to December 3, 2008, S.E. received no academic instruction from the School or any other source. PSUF ¶ 58. After East Bay staff informed the Parent that she could request special education services for S.E., the Parent wrote a letter to School Special Services on November 28, 2008 and requested an IEP (Individualized Education Program). The Parent advised the School that S.E.'s mental health issues impacted her ability to maintain good grades, attention and focus, and that S.E. had missed school and was in need of tutoring. PSUF ¶ 61. On December 4, 2008, S.E. was placed at Butler Hospital's Adolescent Unit ("Butler") after she attacked her mother physically. On that occasion, S.E. refused to agree to a safety plan and stated at the PHP that, "if she went home, she'd kill her mother." PSUF ¶ 63-65, SSUF ¶ 32, Hr'g Tr. III 85:7-15. S.E. also reported that the fights with her mother had become physical, but denied other stressors. SSUF ¶ 33. S.E. remained at Butler as an inpatient until March 17, 2009. While at Butler, S.E. participated in a school program provided by Education, Inc. for an hour and a half to two hours per day. SSUF ¶ 36. By December 24, 2008, the 82 Parent was offered passes for S.E. to go home and work toward reintegration but the Parent refused. SSUF ¶ 37. On several occasions, S.E. stated that her anger and her aggression were directed at her mother. SSUF ¶ 38. S.E.'s treating psychiatrist at Butler, Dawn Picotte, M.D. ("Dr. Picotte") expressed in a January 9, 2009 letter that, in her opinion, "[S.E.] requires ongoing treatment in a residential treatment setting that would provide a highly structured, cognitive behaviorally or dialectally behaviorally based program and psychopharmacotherapy with daily, professionally administered clinical program throughout her waking hours that integrates academic instruction with an intensive integrated therapeutic component. This should provide a low student-teacher ratio and significant individualized attention to each student, with academics appropriate to [S.E.'s] cognitive abilities." Pet. Ex. 55 at 1. Dr. Picotte noted further that S.E.'s clinical condition had deteriorated over the past two years and opined that "[b]ased on the severity and duration of illness, and lack of response to treatment," S.E. was "incapable of making reasonable academic or emotional progress in any setting other than residential placement at this time." Id. at 1, 2. SSUF ¶ 43. In the interim, the Parent was exploring options for alternative academic services for her daughter. PSUF ¶ 71-73. On January 9, 2009, the Parent delivered Dr. Picotte's letter to the School. PSUF ¶ 85. At a "Referral Meeting" on January 26, 2009, the School first provided the Parent with a written description of the procedural rights of parents who believe their children have special needs. PSUF ¶¶ 86, 74. The School also informed the Parent that it required more information before determining S.E.'s eligibility and requested that S.E. be evaluated by Dana M. Osowiecki, Ph.D., ("Osowiecki"), a Clinical Child Neuropsychologist. SSUF ¶ 42. The Parent agreed to authorize the release of records from Butler, East Bay, the ARTS facility, and other prior treatment providers. PSUF ¶ 87. The Parent also agreed to an evaluation by Osowiecki to "identify [S.E.'s] cognitive strengths and weaknesses, to assess her social, emotional, and behavioral functioning, and to offer recommendations for educational and treatment planning." PSUF ¶ 87, Pet. Ex. 56. Osowiecki reviewed prior assessments of S.E. by Karen Holler, Ph.D., Lubiner, and Rafuse Parnell and Leimkuhler. She also noted her behavioral observations of S.E. and administered a number of tests related to academic achievement, sensory perceptual and motor functioning, auditory/verbal functioning, visual-spatial functioning, and attention. Osowiecki concluded that S.E. "presents a complicated diagnostic picture," including ADHD, Conduct and Mood Disorders, Parent-Child Relational Problem, and a recently diagnosed Personality Disorder. Pet. Ex. 56 at 9, 10. In her summary, Osowiecki states that S.E. "will best respond in environments that provide external structure, clear expectations for performance, and consistent responses to her behavior" and that she "would benefit from accommodations and modifications to address her executive functioning difficulties and her emotional and behavioral needs as they impact academic functioning." Id. Osowiecki notes that "[w]herever [S.E.] goes to school, a plan would need to be put in place to address [her] ongoing emotional and behavioral issues with clear guidelines regarding how to address behavior, safety, and emotional functioning." This statement is followed by five pages of detailed recommendations to assist S.E. to address 83 her social/emotional/behavioral issues and to achieve academic success. Id. at 10-15. Following Osowiecki's assessment, the School scheduled an "Eligibility Meeting" on March 11, 2009 to discuss whether S.E. was eligible for special education services. PSUF ¶ 104. Prior to the meeting, the Parent provided a letter from Dr. Wilberger to the School recommending residential placement for S.E. PSUF ¶ 105, SSUF ¶ 56. In the letter, Dr. Wilberger stated that even the intense full-time PHP S.E. received was insufficient "to maintain [S.E.'s] personal independent decision making in the face of her suicidal and homicidal ideation and her labile mood," or to help S.E. "master strategies for solving interpersonal conflicts without harming herself or others." Pet. Ex. 30. Dr. Wilberger concluded that, in order to make reasonable educational progress, S.E. needed a "highly structured therapeutic residential placement that will provide a consistent, daily, professionally-administered clinical programming throughout her waking hours." Id. At the Eligibility Meeting, in addition to Osowiecki's report and Dr. Wilberger's letter, the School also had the benefit of reports by Rafuse Parnell/Leimkuhler and Lubiner, the ARTS facility records, reports by Drs. Picotte and Wilberger, neuropsychological reports of Karen Holler, Ph.D., as well as all of S.E.'s academic and disciplinary records. PSUF ¶ 108. The School discussed Osowiecki's evaluation and concluded that S.E. was not eligible for special education. SSUF ¶ 47. The School then issued an "Evaluation Team Summary" that indicated, inter alia, that the School took the position that S.E. does not have a disability which adversely impacts school performance and requires special education services. PSUF ¶ 110 D, Pet. Ex. 67. S.E. was released from Butler on March 17, 2009, SSUF ¶ 17, 2009, with a GAF (Global Assessment of Functioning) score of 45,[6] which indicates "functioning in between major impairment in several areas and serious symptoms in several areas." PSUF ¶¶ 118, 119. It is undisputed that, while S.E. was an inpatient at Butler, the School paid for one-half to two hours per day of instruction that Butler arranged through a private agency; however, no grades or credits were recorded by the School for such instruction. PSUF ¶¶ 112, 115. The School held a "Transition Meeting" on April 7, 2009, where it proposed that S.E. be placed at the East Bay Career Academy, a small alternative high school for students with behavioral or psychological problems, extreme depression, or school phobia. PSUF ¶¶ 124, 125. Although the Parent was of the opinion that S.E. required residential placement, she agreed to cooperate with the School's suggestion. PSUF ¶ 124.5, SSUF ¶ 64. On April 20, 2009, S.E. began attending East Bay Career Academy. PSUF ¶ 124.6, SSUF ¶. It is undisputed that, prior to that date, S.E. had received no educational instruction since her discharge from Butler. PSUF ¶ 122. During her time at East Bay Career Academy, there were no unusual incidents similar to those described by the Parent. SSUF ¶ 66. According to a letter from the school's director, S.E. had three unexcused and four excused absences on the 15 days she attended the school, but, "when present, 84 [S.E.] did her work and had overall good days." Pet. Ex. 49. S.E.'s placement at the East Bay Career Academy was not successful. Within three weeks, she was admitted to East Bay Mental Health Center's Intensive Outpatient Program after she stole her grandfather's car and had an accident. PSUF ¶ 129, SSUF ¶ 67. On May 23, 2009, the School offered S.E. a place in the District's Extended Day Program.[7] PSUF ¶ 132. On May 28, 2009, the School held a "Resolution Conference" in connection with the Parent's request for an Impartial Due Process Hearing. PSUF ¶ 134. The School again determined that S.E. was not eligible for special education and proposed that she be found eligible for a 504 Plan. PSUF ¶ 135, SSUF ¶ 68. As part of the 504 Plan, S.E. would come to Mt. Hope at 1:30 p.m. and work on her own by using an interactive computerized teaching program named PLATO, after which she would participate in the Extended Day Program. The plan was then revised to offer S.E. transportation from East Bay Mental Health to Mt. Hope. SSUF ¶ 69. The purpose of having S.E. participate in the Extended Day Program was to "get her back into the building, make her feel more comfortable, and to allow the staff to monitor her." SSUF ¶ 70. S.E. attended the Extended Day Program from May 29 to June 19, 2009. PSUF ¶ 137. Following the end of the school year, the School enrolled S.E. in a 4-week "Freshman Credit Recovery Program," although S.E. did not meet the admission criteria. PSUF ¶¶ 143, 151. According to the school, the "credit program is not a full year of instruction" and was designed to provide students a foundation. SSUF ¶ 71. The intent behind enrolling S.E. in the credit recovery program was to "provide her a little bit of a support system or safety net and an opportunity for success as she transitioned back into high school." SSUF. ¶ 72. S.E. missed nearly 8 hours of class time, twice the permissible limit, but was given full credit for each of her four courses. PSUF ¶¶ 154-156. According to testimony by her teachers, S.E. was friendly toward her teacher in math class and toward other students. SSUF ¶ 74. Her social studies teacher described her as having a great attitude with other students and a pretty good relationship with the teacher. SSUF ¶ 77. Her science teacher reported that, on the second day of class, S.E. was texting in class and was suspended for a day after she refused to turn over her cell phone and used inappropriate language. S.E. then returned after the suspension and completed a task that had been assigned. SSUF ¶ 78, Pet. Ex. 32. Subsequently, the School enrolled S.E. in a "Survival Skills for High School" summer class. PSUF ¶ 159. Little information has been provided regarding this program, apart from S.E.'s "skipping 5.5 hours of the 10 hours of her Freshman Recovery English class." PSUF ¶ 161. S.E.'s 2009-2010 school year was no more successful. She failed to turn in a number of biology homework assignments and her overall grade was a 63.[8] PSUF ¶ 167. S.E.'s overall grades in Algebra and American Literature were failing as well. PSUF ¶¶ 170, 171-173. The School 85 made changes to S.E.'s 504 plan on October 9, 2010, which also involved assigning her to the School's "Planning Center" taught by special education teacher Michael Teves ("Teves") in a small group setting. PSUF ¶ 178-182. The Planning Center is a regular education resource available to all students and is designed to "service Students with social, emotional and academic needs." SSUF ¶ 92. According to the School, S.E. was assigned to the Planning Center because "she was playing catch-up" and "needed a small and quieter environment to stay focused and to get caught up." SSUF ¶¶ 93, 94. Teves provided one-on-one instruction to students at the Planning Center, and S.E. also received individual instructions from some of her other teachers. PSUF ¶¶ 179, 184, 186. According to Teves, S.E. was "outstanding" in the Planning Center in that she was "[w]illing to work, ready to work, prepared." SSUF ¶ 96. It was Teves' belief that S.E. did not need specialized instruction. SSUF ¶ 97. Nevertheless, S.E. was still struggling and continued to fail biology. PSUF ¶ 187. During that time, S.E. also sought help from the school psychologist regarding events in her personal life that were upsetting her. PSUF ¶ 188. On October 27, 2009, S.E. was assessed by her therapists at East Bay and was returned to the PHP for the 9:00 a.m. to 3:00 p.m. daily program. PSUF ¶ 189. The School again revised S.E.'s 504 Plan and arranged for her to attend the after-school Extended Day Program for one-on-one tutoring in her five core academic subjects. PSUF ¶ 194. The Parent proceeded with an Impartial Due Process hearing which took place between late July and early November 2009. PSUF ¶ 194.5. By the end of the hearings, S.E. was still attending the PHP full time, unable to attend school during the regular school day, and failing her academic courses. PSUF ¶ 195. II. Procedural History The Parent first filed a request on May 11, 2009 for an Impartial Due Process Hearing to determine S.E.'s eligibility for special education and to request placement at a residential school as well as compensatory educational services. Decision 3. The Rhode Island Department of Education appointed a Hearing Officer who conducted twelve days of hearings between July 28, 2009 and November 9, 2009. Decision 3-4. In the course of the hearings, the parties presented the testimony of 26 witnesses and 126 exhibits. Id. at 4. Following the hearings, the parties submitted trial briefs to the Hearing Officer. Id. On February 23, 2010, the Hearing Officer issued a 12-page written opinion, holding that the "Student's Psychiatric Condition Constitutes Sufficient Emotional Disturbance to Warrant Special Education Needs and Related Services in a Residential School Placement." Decision 1. Specifically, the Hearing Officer determined that, in order to receive the Free Appropriate Public Education ("FAPE") required under the IDEA, S.E. needs "special education and related services in a residential school placement," which will also meet her "psychiatric and psychopharmacotherapy needs with a daily, professionally administered program." Decision 11, ¶ 4. The Hearing Officer also found that S.E. "lost substantial time in a proper academic program at no fault of the LEA [Local Education Agency]" and directed that S.E. receive twenty-one weeks of compensatory education. Id. at ¶ 5. Finally, the Hearing Officer determined that S.E. "did not receive FAPE in accordance with the IDEA" and Rhode Island law. Id. at ¶ 6. 86 On March 9, 2010, the School convened an Individual Education Plan ("IEP") meeting, which the Parent attended. The School then sent out referrals to three residential schools, including the F.L. Chamberlain School ("Chamberlain"), a therapeutic residential school licensed as a special educational facility in Middleboro, Massachusetts. On March 17, 2010, the Parent filed a complaint against the School in this Court, seeking reimbursement of $77,370 in attorney's fees and costs she incurred in connection with the Due Process Hearing. On the same day, the School filed an appeal of the Hearing Officer's Decision on the grounds that the Decision was clearly erroneous and not supported by evidence on the record. On April 28, 2010, S.E. began attending Chamberlain where she currently remains. On June 7, 2010, the School informed Chamberlain that it would be financially responsible for S.E.'s placement at Chamberlain only through June 21, 2010. On June 21, 2010, the Parent filed motions for a temporary restraining order ("TRO") and preliminary injunction in the nature of "Stay-Put"[9] to prevent removal of S.E. from Chamberlain. After a conference with counsel for all parties on June 22, 2010, the Court granted the requested TRO. On July 9, 2010, the parties submitted a stipulated agreement for issuance of a preliminary injunction until this Court renders a decision on the parties' cross-motions for summary judgment regarding the School's appeal of the Hearing Officer's Decision. On August 26, 2010, the parties submitted their respective motions for summary judgment, together with supporting memoranda and statements of undisputed facts. On August 28, 2010, the parties stipulated their agreement to the following findings of the Hearing Officer: 1. The Student has met the necessary criteria to fulfill the IDEA's definition of a child with a disability under 20 U.S.C.A. Section 1401(3)(A)(I) of emotional disturbance; 2. The Student has met the necessary criteria to fulfill the Rhode Island Regulations' definition under Section 300.7(A)(1) and under Section 300.7(C)(4)(i)(c) and (d) of a child with a disability of emotional disturbance; and 3. Such emotional disturbance is such that it adversely affected this Student in her educational performance and this Student needs special education and related services by reason of this disability. August 26, 2010 Stipulation, Decision ¶¶ 1, 2, 3. On September 15, 2010, the Parent submitted a response in opposition to the School's motion for summary judgment, together with a statement of disputed facts. Finally, on September 29, 2010, the School submitted a reply memorandum and a statement of disputed facts. III. Standard of Review In reviewing an appeal from an administrative decision under IDEA, the Court accords "due deference" to the Hearing Officer's findings of fact and reviews the Hearing Officer's rulings of law under the IDEA framework de novo. Abrahamson v. Hershman, 701 F.2d 223, 230 (1st Cir.1983) ("courts must give "`due weight'" to state administrative agencies," but "ultimately must make `independent 87 decision[s] based on a preponderance of the evidence'"); Ross v. Framingham Sch. Comm., 44 F.Supp.2d 104, 111-12 (D.Mass.1999), aff'd 229 F.3d 1133 (1st Cir. 2000) ("Court's review of hearing officer's findings is "appropriately `thorough yet deferential'"... Legal rulings are subject to nondeferential (or de novo) review."); Slater v. Exeter-West Greenwich Reg'l Sch. Dist., 2007 WL 2067719 2 (D.R.I., July 16, 2007). "[A]ny rulings about applicable law that are not in conformity with applicable statutes and precedents" are disregarded. Ross v. Framingham Sch. Comm., 44 F.Supp.2d at 112. The First Circuit has described the applicable standard of review as "intermediate," requiring "a more critical appraisal of the agency determination than clear-error review entails, but which, nevertheless, falls well short of complete de novo review." Rafferty v. Cranston Pub. Sch. Comm., 315 F.3d 21, 25 (1st Cir.2002). The Court is mindful that "[j]urists are not trained, practicing educators." Roland M. v. Concord Sch. Comm., 910 F.2d 983, 989 (1st Cir.1990); see Rafferty v. Cranston Pub. Sch. Comm., 315 F.3d at 25 ("While the court must recognize the expertise of an administrative agency, as well as that of school officials, and consider carefully administrative findings, the precise degree of deference due such a finding is ultimately `left to the discretion of the [examining] court.'") (citations omitted). When the parties choose not to submit additional evidence, "the motion for summary judgment is a procedural device through which the court decides the case on the basis of the administrative record." Cranston Sch. Dist. v. Q.D., 2008 WL 4145980 5 (D.R.I., Sept. 8, 2008) (citing Bristol Warren Reg'l Sch. Comm. v. R.I. Dep't of Educ., 253 F.Supp.2d 236, 240 (D.R.I.2003)); Slater v. Exeter-West Greenwich Reg'l Sch. Dist., 2007 WL 2067719 at 3 (if no additional materials are to be considered, the Court may "decide the case on the basis of the administrative record by way of a motion for summary judgment"). However, "[r]ather than considering the facts in the light most favorable to the non-moving party," the party "`challenging the outcome of the administrative decision'", here the School, "bears the burden of proof." Cranston School Dist. v. Q.D., 2008 WL 4145980 at 5; Bristol Warren Reg'l Sch. Comm. v. R.I. Dep't of Educ. and Secondary Educs., 253 F.Supp.2d at 240. The submitted administrative record consists of (1) the Hearing Officer's Decision, together with various stipulations and administrative documents submitted to the Hearing Officer, (2) the transcripts of the proceedings before the Hearing Officer, (3) the parties' post-hearing briefs, and (4) the admitted exhibits, including nine exhibits expressly referred to and relied upon in the Hearing Officer's Decision. Those exhibits consist of three psychological or neuropsychological evaluation reports, Pet. Ex 1, 2, and 56; a letter confirming S.E.'s partial hospitalization at East Bay Center, Pet. Ex. 27; three letters from physicians at Butler Hospital and East Bay Center, where S.E. received mental health care services, Pet. Ex. 28, 30, and 55; and the curricula vitae of Dr. Wilberger and Dr. Picotte, Pet. Ex. 29 and 64, respectively. The parties have submitted no additional evidence. IV. Discussion A. The IDEA Statutory Framework The purpose of the Individuals with Disabilities Education Act, 84 Stat. 175, as amended, 20 U.S.C. § 1400 et seq., is "to ensure that all children with disabilities have available to them a free appropriate public education that emphasizes special education and related services designed to 88 meet their unique needs and prepare them for further education, employment, and independent living." 20 U.S.C. § 1400(d)(1)(A). Winkelman ex rel. Winkelman v. Parma City School, 550 U.S. 516, 538, 127 S.Ct. 1994, 2008, 167 L.Ed.2d 904 (2007). The IDEA provides federal funding to the States, provided they "make a `free appropriate public education' (FAPE) available to all children with disabilities residing in the State." Forest Grove Sch. Dist. v. T.A., ___ U.S. ___, 129 S.Ct. 2484, 2487-88, 174 L.Ed.2d 168 (2009). A FAPE "encompasses `special education and related services,'... including `specially designed instruction, at no cost to parents, to meet the unique needs of a child with a disability.'" Mr. I. ex rel. L.I. v. Maine. Sch. Admin. Dist. No. 55, 480 F.3d 1, 4 (1st Cir.2007) (quoting 20 U.S.C. § 1401(9) and (29)). A child is eligible to receive special education and related services under the IDEA if the child qualifies as a "child with a disability." Mr. I. ex rel. L.I. v. Maine. Sch. Admin. Dist. No. 55, 480 F.3d at 4-5. A child who suffers from serious emotional disturbance and/or specific learning disabilities who "by reason thereof, needs special education and related services," qualifies under the IDEA as a child with a disability. Id.; 20 U.S.C. § 1401(3)(A). The burden of identifying children with disabilities rests on each state. Id. at 5. A parent who is dissatisfied with "any matter relating to the identification, evaluation, or education placement of [her] child" or feels her child is not receiving a FAPE, may request an impartial due process hearing by the local educational authority ("LEA"). 20 U.S.C. § 1415(b)(6), (f)(1). Rafferty v. Cranston Pub. Sch. Comm., 315 F.3d at 25. The findings and decision of the LEA can be appealed to the state educational agency, and, if the parent remains dissatisfied, he or she can bring a civil action in federal district court. Id.; 20 U.S.C. § 1415(i)(2). B. The Hearing Officer's Decision The Hearing Officer first determined that S.E. "lost most of the school academic year during the ninth grade" as a result of hospitalizations at Butler and participation in the East Bay PHP and that such loss was due to treatment of S.E. for "serious emotional disturbance." Decision 4. That determination was supported by the Hearing Officer's review of the submitted medical and neuropsychological records and evaluations, including (1) the Leimkuhler/Parnell Report (Pet. Ex. 1), (2) the Lubiner Report, (Pet. Ex. 2), and (3) three reports from East Bay (Pet. Ex. 27, 28, 30). The Hearing Officer specifically lists the diagnoses set forth in those records and references particularly S.E.'s "frequent and violent outbreaks of rage, temper and harmful behavior" documented therein. Id. at 5. The Hearing Officer also quotes from the reports by Drs. Wilberger and Picotte, including the psychiatrists' opinion of the appropriate and necessary learning environment for S.E. As noted in the Decision, Dr. Wilberger opined that S.E. requires "a highly structured therapeutic residential placement" without which "she would be unable to make reasonable educational progress." Id. at 7. Dr. Picotte agreed that S.E. "requires ongoing treatment in a residential treatment setting," noting that such setting would provide "a highly structured, cognitive behaviorally or dialectally behaviorally based program and psychopharmacotherapy with daily, professionally administered clinical program." Id. Next, the Hearing Officer reviewed the neuropsychological evaluation performed by clinical child and adolescent psychologist Osowiecki on behalf of the 89 LEA. Although Osowiecki's report does not expressly state that S.E. requires a residential setting, the Hearing Officer notes that Osowiecki, along with Drs. Wilberger and Picotte, "arrived at the same position that the Student has serious psychiatric needs that must be attended in a highly structured setting..." Decision at 9. The Hearing Officer determined and, as indicated by the parties' stipulation, the School now agrees, that S.E. qualifies as a "child with a disability" under the IDEA and Rhode Island Regulations who requires special education and related services. Id. The Hearing Officer also found the LEA's position that S.E.'s academic needs could be fulfilled at the LEA's public high school "not compatible" with the reports and testimony regarding S.E's psychiatric condition. Id. 9-10. He concluded that "based upon the psychiatric needs of [S.E.] ... she needs a special education in a residential school placement in a separate facility whose special education program has been approved by the Rhode Island Commissioner of Elementary and Secondary Education and which facility shall also meet the psychiatric needs and psychopharmacotherapy needs with a daily professionally staffed clinical program." Id. at 10. The final determination by the Hearing Officer relates to compensatory education for time lost by S.E. With respect to S.E.'s participation in the East Bay PHP, the Hearing Officer notes that the LEA did not provide requested tutoring for a four-week period. Id. at 6, 10. S.E. also lost approximately 10 weeks of academic experience while hospitalized at Butler, an additional five weeks while she was participating at the East Bay PHP, and two weeks following that period until she was enrolled in the Extended Day Program. Id. 10. Based on these calculations and a finding that S.E. had not received a FAPE in accordance with the IDEA and Rhode Island Regulations, the Hearing Officer awarded to S.E. twenty-one weeks of compensatory education. Id. 11-12. C. The School's Appeal of the Hearing Officer's Decision 1. Award of Therapeutic Residential Placement As set forth in the stipulation by the parties, it is undisputed that S.E. is suffering from an emotional disturbance that adversely affects her in her educational performance and that she requires special education and related services because of her condition. The issues that remain for determination are (1) whether, in order to provide S.E. with a FAPE, S.E. must be provided with therapeutic residential placement; and (2) whether S.E. is entitled to 21 weeks of compensatory education because she lost substantial time in a proper academic program. With respect to the first issue, the School argues that the Hearing Officer's Decision should be overturned because he "did not provide well reasoned explanations for his determination that the Student needed a residential placement for educational reasons." School's Mem. 15. Specifically, the School suggests that the Hearing Officer "did not explain why he accepted the opinion of providers rather than the educators when it came to the ability of the educators to provide a program for the Student." School Mem. 17. Although the Decision does not specifically cite to the testimony and opinions of the educators, it is clear, and the Hearing Officer expressly states, that he considered such evidence. First, the Hearing Officer notes that, prior to issuing the Decision, he had the benefit of testimony by seven witnesses on the School's behalf, together 90 with 24 full exhibits presented by the School. Decision 4. The Hearing Officer also observed that the School's position, as represented by "faculty and professional administrative staff," of what constitutes an appropriate educational environment for S.E., is "opposite" that taken by psychiatrists and psychologists regarding S.E.'s psychiatric needs to allow her to achieve her academic needs. Id. at 9-10. The Hearing Officer's Decision notes particularly that Dr. Wilberger has nearly thirty years of experience in child psychiatry and that Dr. Picotte is a Board certified psychiatrist as well as the Unit Chief at the Adolescent Unit of Butler Hospital. Decision 7. Likewise, the Hearing Officer reviewed in detail the report and credentials of clinical psychologist Osowiecki, who had been engaged by the School to conduct an evaluation of S.E. while she was at Butler. Based on the entire body of submitted evidence and testimony, the Hearing Officer arrived at the opinion that S.E.'s need for special education in a residential school placement was driven by her psychiatric needs. The School now suggests that "the Student's problems are segregable from the learning process," because "all of the Student's problems occurred outside of the school setting," and that "[a]t no time did issues of an abnormal nature occur in the school setting." School Mem. 17. This statement is clearly inconsistent with the documentation submitted to the Hearing Officer and the undisputed facts submitted to this Court. As early as second grade, S.E.'s classroom teacher reported that S.E. seemed "unaware of her body [and on] numerous occasions she has pushed someone down with the movement of her body" and that she sometimes appeared "unconcerned about misbehaving." PSUF ¶ 12. S.E.'s disciplinary record from sixth grade reports incidents of rudeness, disruptive behavior, and theft. PSUF ¶ 17. At that time, it was also discovered by school personnel that S.E. was cutting herself in school. PSUF ¶ 18. The record provided to the Hearing Officer documents in detail S.E.'s conduct in school and includes, inter alia, reports by the bus driver of S.E. "being out of control," Pet. Ex. 3; assignments to the focus room for disruptive behavior, Pet. Ex. 4, 5, 6, 7; Saturday detention notification for disruptive behavior for which S.E. had to be removed from assembly by the principal, Pet. Ex. 12; and disciplinary referral letters to the Parent, informing her of S.E.'s suspension for skipping class or detention, Pet. Ex. 17, 18, 19. S.E.'s disciplinary record shows increasingly disturbing behavior in seventh grade (notwithstanding testimony by Melinda Theis, Assistant Superintendant of Schools that "nothing in this behavior indicates a student who did not belong at [the middle school]" and "this behavior is not uncommon at a middle school"). School's Statement of Disputed Facts ¶ 22. In fact, according to the record, S.E.'s misconduct included pinching a male student's buttocks; saying she would get a gun and shoot another student; striking that student with her purse; and slapping another student in the face hard enough to leave a red mark. PSUF ¶ 22. After S.E., while attending seventh grade at a different middle school, stole another girl's pocketbook and iPod, the Parent decided not to return S.E. to the public middle school for eighth grade because S.E. was continuing to express threats to hurt the girl. PSUF ¶ 31, 35. As a result of her behavior in school, S.E. had to be removed from the class room on occasion and/or was given detention or other disciplinary measures. In sum, while the record reflects that there are particular difficulties in the relationship 91 and interaction S.E. has with her mother, S.E.'s difficulties and troubling conduct were not limited to the home setting. Moreover, the clinical psychologist engaged by the School agreed "that [S.E.'s] overall performance is impacted by her psychiatric status and that she would do better as her psychiatric status improved." Decision 9, Pet. Ex. 56 at 6. The School also suggests that neither of S.E.'s treating psychiatrists testified "that the residential placement was in order to make educational progress." School Mem. 19. However, a review of Dr. Wilberger's and Dr. Picotte's testimony shows otherwise. Dr. Wilberger stated that, "part of the reason [S.E.] needs residential care is that she can't function adequately at home or at school ... There's also been multiple disruptions in her education because of these psychiatric difficulties, because of those problems, and she's going from program to program and that forces changes in her education." Hr'g. Tr. III 100:4-20. When specifically asked by the Hearing Officer whether S.E.'s psychiatric needs were such that they would impair her ability to learn, Dr. Wilberger responded that "[i]f [S.E.] were in a proper program where her acting-out behaviors could be contained ... then she could learn." Id. at 101: 9-17. Further, Dr. Wilberger expressed his concern regarding S.E.'s ability to hold down a job and her general functioning in the future and that S.E.'s "education is being disrupted by the psychiatric disorder. But is she capable of learning, I think that she is. The primary need is for the residential care, in my opinion." Moreover, in his written opinion, Dr. Wilberger states unequivocally that "if [S.E.] is to make reasonable educational progress [S.E.] needs a highly structured therapeutic residential placement." Pet. Ex. 30 at 2. In the same vein, Dr. Picotte concluded that "S.E. is incapable of making reasonable academic or emotional progress in any setting other than residential placement at this time." Pet. Ex. 55 at 2. Dr. Picotte stated at the Hearing that S.E.'s "escalating behaviors over the course of several years, despite intensive treatment efforts ... suggest to me that she needs a more structured environment, residential treatment where she can receive her services on an ongoing basis on site." Hr'g Tr. V 37:21-38:2. Dr. Picotte also testified that S.E. "did very well in our highly structured program" and she agreed that that was needed for S.E.'s ability to participate in an educational environment. Hr'g Tr. V 40:10-20. When asked by the Hearing Officer to explain her opinion, Dr. Picotte stated that "what [S.E.] brings to the educational environment is not limited to just the educational environment. [S.E.] brings her difficulty modulating affect wherever she goes. And in order to assist her in learning, how to accomplish that better, it's important that she's being coached in each of her settings, including when she goes home on passes with her mother, that her mother is aware of the plan and her mother is coaching in similar ways. I mean, certainly [S.E.] is a bright girl and nobody argues with that, and that in turn will actually help her prognosis. But I think that it's very important for her to have the same highly structured environment across the realm." Hr'g Tr. V 40: 17-41:13. In sum, both treating psychiatrists stated at the hearing and in writing that S.E. required residential placement in order to make educational progress. Although the School maintains that S.E. "has been able to be successful in all of her school settings and does not need a residential placement to be educated," School Mem. 18, it has submitted no evidence that 92 would support such a contention. On the contrary, every program the School has made available to S.E. has consistently failed to forward S.E.'s academic progress. Although S.E. agreed to work with the English teacher after school, S.E. never followed through. PSUF ¶ 45. S.E.'s enrollment in East Bay Career Academy lasted no more than three weeks. PSUF ¶ 128. There is no evidence that, during the three weeks S.E. attended the School's Extended Day Program, S.E. actually did any work. PSUF ¶ 138-141. Similarly, it is unclear why S.E. received certain credits for the Freshman Credit Recovery Program, as she apparently did not meet the admission criteria and also exceeded the limit for absences. PSUF ¶ 151-156. S.E. also failed the subsequent Survival Skills for High School Class. PSUF ¶ 159. Based on that evidence, the Hearing Officer was well within his discretion to give no deference to the School's position that S.E. has the ability to make progress within the school setting and that she can be successful at Mt. Hope High School. School Mem. 21, 23. In light of the undisputed facts in this case and the testimony and the exhibits submitted in the administrative record, the Court is of the opinion that the School has not met its burden to establish that the Hearing Officer's determination was erroneous regarding the need for residential placement of S.E. in order to comply with the mandate of IDEA. 2. Award for Compensatory Education A student who has been deemed eligible for special education services under the IDEA "may be entitled to further services, in compensation for past deprivations." Maine Sch. Admin. Dist. No. 35 v. Mr. and Mrs. R., 321 F.3d 9, 17-18 (1st Cir.2003); Pihl v. Mass. Dept. of Educ., 9 F.3d 184, 188-189 ("[C]ompensatory education is available to remedy past deprivations."). A student is considered deprived of the appropriate education guaranteed by IDEA, "[w]hen an IEP fails to confer some (i.e. more than de minimis) educational benefit to a student." M.C. on Behalf of J.C. v. Cent. Reg'l Sch. Dist., 81 F.3d 389, 396 (3d Cir.1996). The right to compensatory education accrues from the point that the school district knows or should know of the IEP's failure. Maine Sch. Admin. Dist. No. 35 v. Mr. and Mrs. R., 321 F.3d at 17-18 ("[C]laim for compensatory education begins to accrue when his or her IEP is so inappropriate that the child is receiving no real educational benefit.")(citing M. C. on Behalf of J.C. v. Central Reg'l Sch. Dist., 81 F.3d at 396.) With respect to the award for compensatory education, the School maintains that (1) S.E. received between one and one half and two hours daily academic instruction while she was an inpatient at Butler; (2) while participating in the PHP, S.E. refused offered services through the Extended Day program; and (3) S.E. was enrolled in the summer credit recovery program to make up for lost academic time. School's Mem. at 24. The Parent, on her part, asserts that the education services provided to S.E. were "inappropriate no later than January 2009"[10] and that the School should have proceeded with an evaluation of S.E.'s special needs and the drafting and implementation of an appropriate IEP. Parent's Mem. 69. The Hearing Officer's determination that S.E. is entitled to 21 weeks of 93 compensatory education is well supported by the undisputed facts in this case. Even prior to S.E.'s admission to Butler, the Parent requested an IEP for S.E., to which the School failed to respond. PSUF ¶¶ 61-62. During S.E.'s stay at East Bay's PHP, she received no academic instruction of any kind. PSUF ¶ 58. Once S.E. was admitted to Butler, her academic instruction was limited to one and one-half to two hours per day that the hospital arranged through a private agency. PSUF ¶ 112. Although the School paid for the private instruction, there is no evidence that anyone from the School ever communicated with Butler or the private agency that provided the instruction. PSUF ¶ 113, SSUF ¶ 113. It is also undisputed that the School did not record any grades or credits for S.E. for the private instruction she received while at Butler. PSUF ¶ 115. For those reasons, the Hearing Officer was well within his discretion to determine that S.E. had "lost the full value of an academic school experience during her stay at Butler," and to award to S.E. compensatory education from December 4, 2008 through March 17, 2009 less the Christmas period. Decision at 10. Although it is correct that S.E. did not participate in the Extended Day Program offered to her while she was in the PHP, the evidence presented to the Hearing Officer offered a plausible explanation. In a letter signed by East Bay's Children's Manager Patricia A. Arel ("Arel") and Dr. Wilberger, the School was informed on November 22, 2008 that S.E. "was exhausted by the end of the PHP program daily and alternate accommodations may be needed to support her academics. If tutoring is available, this may be a support that would have success as [S.E.] is behind in all her classes." Pet. Ex. 28. At the hearing, Arel further explained that she was concerned that "there would be an after school program or something [S.E.] would be attending, but [S.E.] could barely hold it together during the PHP program. So, then, if she would go to something after that, my concern was that she would lose control." Hr'g Tr. III 37:18-38:5. With respect to the Freshmen Credit Recovery Program, the progress report for Session I reveals that, in the second week, S.E.'s "attitude was somewhat defiant, leading to her being removed from the classroom and suspended the following day (She refused to turn in her phone after texting and escalated to using profanity.)" In the third week, S.E. attended only two full days of English instruction after being one and three quarter hours late on two days and absent on a third; inexplicably, the School assigned her full credit for the subject. Pet. Ex. 32. Finally, as noted by the Hearing Officer, several weeks elapsed after S.E.'s discharge from Butler until she was enrolled in the East Bay Career Academy and, after S.E. left the Career Academy, there was an additional two week period without instruction before S.E. started attending the Extended Day Program. Decision 10, PSUF ¶¶ 122, 124.6. During the entire process and through the end of the Independent Due Process Hearing, the School maintained its position that S.E. was not disabled and did not qualify for special education and related services. Based on those undisputed facts, and in the absence of any evidence that the School fashioned and implemented an appropriate IEP for S.E. during the time periods in question, the Court is of the opinion that the School has failed to establish that the Hearing Officer's award of compensatory education was in error. Therefore, the School's appeal of the Hearing Officer's Decision is denied and the award of 21 weeks of compensatory education is upheld. 94 D. Attorney's Fees Under the IDEA, the parent of a child with a disability, who prevails in the administrative proceeding or litigation related to a due process hearing, may be entitled, in the discretion of the Court, to reimbursement of reasonable attorney's fees. 20 U.S.C. § 1415(i)(3)(B)(i)(I);[11]Smith v. Fitchburg Pub. Sch., 401 F.3d 16, 22 (1st Cir.2005)(IDEA provides recovery of reasonable attorney's fees to prevailing party in the court's discretion). "[A] prevailing party is any party who `succeed[s] on any significant issue ... which achieves some of the benefits plaintiffs sought in bringing suit.'" Maine Sch. Admin. Dist. No. 35 v. Mr. and. Mrs. R., 321 F.3d at 14. A party in a proceeding or law suit related to IDEA is considered "prevailing" when there is a "material alteration of the legal relationship of the parties" as well as "judicial imprimatur on the change." Smith v. Fitchburg Pub. Sch., 401 F.3d at 22 (quoting Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep't of Health & Human Res., 532 U.S. 598, 121 S.Ct. 1835, 149 L.Ed.2d 855 (2001)). Such "judicial imprimatur" includes an administrative hearing involving a hearing officer. Smith v. Fitchburg Pub. Sch., 401 F.3d at 22 n. 9. ("[F]or purposes of the IDEA, a party may `prevail' in an administrative hearing thus the appropriate involvement of a [state educational agency] hearing officer can provide the necessary `judicial imprimatur.'"). The Parent's complaint seeks (1) reimbursement of $77,370 in attorney's fees and costs which the Parent incurred in connection with the Due Process Hearing, and (2) the costs of this action, including attorney's fees. In her motion for summary judgment, the Parent submits that, because she and her daughter are the prevailing parties in this matter, they should be awarded reasonable attorney's fees. As the Parent points out, the School has now stipulated that S.E. is a child with a disability and, therefore, she is eligible for special education services. At this time, the Parent's request is limited to seeking a ruling that she and her daughter are the prevailing parties and to reserve the right to file a motion for attorney's fees once the Court has determined the School's appeal of the Hearing Officer's Decision. Parent Mem. 70. The School, on its part, has taken no position in its memoranda regarding the Parent's request for reimbursement of attorney's fees. In light of this Court's determination denying the School's appeal of the Hearing Officer's Decision and affirming that Decision in its entirety, the parties are directed to submit, within 30 days of this Memorandum and Order, legal memoranda addressing their respective positions on the matter of attorney's fees. Counsel are reminded, as well, to comply with the provisions in Local Rule LR Cv 54.1. SO ORDERED. NOTES [1] The facts are taken from the Parent's Statement of Undisputed Facts ("PSUF") and the School's Statement of Undisputed Facts ("SSUF"), to the extent they are unchallenged, and from testimony and exhibits presented at the Hearing. The Court notes that, together, the parties have submitted nearly 300 facts regarding the background of this case. The facts have been summarized herein with a focus on those facts that appear most pertinent for an evaluation of S.E.'s need for particular educational services. [2] See R.I. Gen. Laws § 14-1-11. [3] The Administrative Record marks the Parent's exhibits as Petitioner's Exhibits (Pet. Ex.) and the School's exhibits as Respondent's Exhibits (Res. Ex.). For clarity's sake, the same naming convention will be continued herein. [4] A 504 Plan is a plan affording certain accommodations pursuant to Section 504 of the Rehabilitation Act of 1973, 29 U.S.C. § 794(a). [5] The School states that it has no record of receiving these evaluations. SSUF ¶ 7. At the Hearing, the Parent testified that, at the beginning of third grade, she provided the reports to the elementary School S.E. was attending. Hr'g Tr. I 57:9-23. The Parent also recalled participating in a meeting at the elementary school with S.E.'s teachers, her guidance counselor, the school psychologist, and the principal and that these individuals had a copy of the reports. Id. 58:5-59:23. [6] GAF scores range from 1-100; a lower score indicates more serious impairment in functioning. At the Hearing, Dr. Wilberger explained that GAF classifies the severity of psychiatric disorders and that a score of 35 usually requires hospitalization or intensive residential care. Hr'g Tr. III, 90:12-18. [7] According to Teacher Jessica Mazo, the Extended Day Program runs from 2:30 to 5:00 p.m. after each regular school day and involves helping students who have difficulties with subjects in which they are enrolled. Hr'g. Tr. IV 12:4-7, 12:25-13:8. [8] At Mt. Hope, a grade below 65 is considered failing. PSUF ¶ 166. [9] Pursuant to Section 1415(j) of IDEA, during the pendency of an appeal, the student is to remain in then-current educational placement, unless the school and parents otherwise agree. 20 U.S.C. § 1414(j). [10] At that time, the Parent had delivered to the School Dr. Picotte's assessment that S.E. was "incapable of making reasonable academic or emotional progress in any setting other than residential placement at this time," Pet. Ex. 55, and the School had held a first "Referral Meeting." See supra. [11] 20 U.S.C. § 1415(i)(3)(B)(i)(I) provides, in pertinent part: In any action or proceeding under this section, the court, in its discretion, may award reasonable attorney's fees as part of the costs... to a prevailing party who is the parent of a child with a disability.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/1737049/	535 F. Supp. 2d 308 (2008) MacDERMID, INCORPORATED, Plaintiff, v. RAYMOND SELLE AND COOKSON GROUP PLC, Defendants. Civil No. 3:07cv1566 (JBA). United States District Court, D. Connecticut. March 4, 2008. 309 Ann H. Rubin, Carmody & Torrance, Waterbury, CT, Fatima Lahnin, Carmody & Torrance, New Haven, CT, for Plaintiff. David S. Monastersky, John J. Bogdanski, Howd & Ludorf, Hartford, CT, James R. Oswald, Kyle M. Zambarano, R. Bart Totten, Adler, Pollock & Sheehan, Providence, RI, for Defendants. RULING ON MOTION FOR PRELIMINARY INJUNCTION AND RELATED MOTIONS JANET BOND ARTERTON, District Judge. Plaintiff MacDermid, Incorporated ("MacDermid") brings this action against Defendants Raymond Selle ("Selle") and Cookson Group plc ("Cookson Group"). In its Amended Verified Complaint [Doc. # 89], MacDermid alleges that Cookson breached its contractual obligations by employing Selle (first count), that Cookson Group intentionally interfered with MacDermid's contractual relations with Selle (second count), that Selle breached his employment agreement with. MacDermid (third count), and that Selle misappropriated MacDermid's trade secrete (fourth count). MacDermid also seeks preliminary injunctive relief against Selle and permanent, injunctive relief against both defendants. (Am. Compl. at 11.) The parties have also filed various other motions: Defendants have moved to dismiss the case for failure to join an indispensable party, Enthone, Inc. ("Enthone") [Docs. # 17, 26]; Plaintiff has, moved to preclude the introduction of or reliance on Brazilian law in the case [Doc. # 72]. The Court held a hearing on Plaintiff's Motion for Preliminary Injunction [Doc. # 4] directed only to Selle, during which MacDermid and Selle offered evidence bearing on whether he should be preliminarily enjoined from breaching the terms of, his employment agreements with MacDermid. For the reasons that follow, MacDermid's Motion for Preliminary Injunction is granted in part. I. Factual Background The following is a brief summary of the relevant facts. According to the Amended Verified Complaint, "MacDermid is, a specialty chemical company engaged in the 310 development, manufacture[,] and sale of a broad range of chemical and printing products and processes." (Am.Compl.¶ 35.) Prior to his resignation in 2007, Defendant Raymond Selle had been employed by MacDermid for nearly thirty years. After initially working at MacDermid's headquarters in Connecticut, Selle was later based in Maryland as a salesperson while selling MacDermid's products domestically on the East, and West Coasts. Selle relocated to Ski Paulo on a permanent, basis in late 2002, where his last position was MacDermid's sales and marketing manager for South America. There, Selle worked at a Brazilian entity called Anion Chemical, a MacDermid licensee, during an acquisition process by MacDermid which was finalized in 2007. During this time, Selle's work gave him access to and knowledge of considerable confidential and proprietary information about MacDermid's advanced surface finishing business, chemical processes and products, customers' needs, product trials and plans, business strategies, and (to a limited extent) research and development undertakings. MacDermid's claims against Selle are based on certain contractual commitments contained in agreements Selle signed in 1996 and 2002. On November 24, 1996, he signed an "Employee's Agreement" with MacDermid in which he agreed (1) that he would not disclose MacDermid's trade secrets, (2) that he would not compete with MacDermid's business during the first twelve months after leaving his employment with MacDermid, and (3) that he would not solicit MacDermid's customers. Specifically, the non-disclosure provision of the agreement provides in relevant part: I recognize that it would be detrimental and damaging to [MacDermid] and its business if any of its Secrets became known to its competitors or customers . . . and accordingly, I agree that I will not at any time during the term of my employment with [MacDermid] or at any time after the termination thereof, use for my personal benefit or, for the benefit of my subsequent employer any of [MacDermid's] Secrets and will keep confidential and will not divulge or disclose any of the Secrets of [MacDermid] to any other person except authorized personnel of [MacDermid] and such other persons as may be so authorized to receive the same by [MacDermid]. (Employee's Agreement at 2, §, 2.) In the next paragraph, the covenant not to compete provides in pertinent part: I agree that during my employment with [MacDermid] and for the twelve (12) months after the termination of my employment I will not directly or indirectly, on my own account or as an employee, . . . engage in any business competitive with that portion of [MacDermid's] business with which I was involved or was exposed to during my employment with it, and it is agreed that this obligation shall not be construed to prevent me, upon termination of my employment with [MacDermid] from accepting any other type of employment and/or engaging in any other type of occupation in which the Secrets of [MacDermid] will not be directly or indirectly involved or at risk. (Id. at 2-3, § 3.) The same paragraph also sets out Selle's non-solicitation obligations: I also agree that during my employment with [MacDermid] and for the twelve (12) months after the termination of my employment I will not induce or attempt to induce any individual or entity which is then or has within the preceding twelve (12) month period been a customer or supplier of [MacDermid] to reduce such customer's or supplier's purchases from or sales to [MacDermid], by direct advertising or solicitation, or otherwise alter such customer's or supplier's contractual or other relationship with [MacDermid], 311 or disclose the name and/or requirements of any customer to any other person or persons, natural or corporate, or solicit any of [MacDermid's] employees to leave the employ of [MacDermid]. (Id.) Selle testified that he signed the agreement knowing that his failure to do so would result in his loss of employment at MacDermid. Subsequently, for the same reason, Selle signed an "Addendum to Employee's Agreement" dated June 25, 2002, after he had been transferred to, São Paulo, in which he agreed to certain additional terms, including: 1. You hereby reaffirm and confirm all of your obligations as set forth in the Employee Agreement. . . . 2. It is agreed that the consideration supporting the Employee Agreement is your present employment and the continuation of such employment hereafter. . . . 3. If is, further agreed that as additional consideration in support of the Employee Agreement, [MacDermid] will, pay you one (1) week severance pay . . . if your employment is terminated by [MacDermid] through no fault of your own. 4. Other than as specifically, addended herein, the Employee Agreement remains unaltered and in full force and effect. (Addendum to Employee's Agreement. at 1.) Although Selle testified he had intended to honor his agreements with MacDermid, he voluntarily resigned his employment with MacDermid on September 10, 2007, and simultaneously commenced employment in Brazil as South American New Business Development Manager with Enthone, indisputably one of MacDermid's direct competitors. II. Defendants' Rule 19 Motions As an initial matter, both Defendants have moved pursuant to Federal Rule of Civil Procedure 19 to dismiss the case for failure to join an indispensable party.[1] Under Rule 19, a party is considered necessary to a litigation if: (A) in that person's absence, the court cannot accord complete relief among existing parties; or (B) that person claims an interest relating to the subject of the action and is so Situated that disposing of the action in the person's absence may: (i) as a practical matter impair or impede the person's ability to protect the interest; or (ii) leave an existing party subject, to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the interest. Fed.R.Civ.P. 19(a)(1). Defendants contend that because Selle is currently employed by Enthone, not Cookson Group, that Enthone is an indispensable party to the litigation, and that because Enthone is based in Connecticut, its joinder destroys the diversity of citizenship that is the premise for the Court's subject matter jurisdiction. As a result, defendants argue, the case should be dismissed. MacDermid's response is twofold: (1) the evidence demonstrates that Selle's current employer is Cookson Group; and (2) even if Selle does work for Enthone rather than Cookson Group, Enthone is not a necessary party to this litigation and its absence does not mandate dismissal. The parties vigorously disagree over the proper characterization of the corporate 312 structure and identity of Selle's current employer. Without question, he works for Enthone, a corporation based in Connecticut with a presence in Brazil. MacDermid presented evidence showing that Enthone is linked to Cookson Group, a multinational holding company organized under United Kingdom law and headquartered in London, which provides "administrative services" to its "affiliated companies" or "direct subsidiaries," such as Enthone. Complicating the relationship is the presence of an ambiguously-described umbrella entity called Cookson Electronics, which is a name prominently featured on Enthone's marketing materials and Selle's employment paperwork, and of which Enthone is a constituent division. At this stage it is not necessary to get to the bottom of this hierarchical confusion, for the preliminary injunctive relief sought from the Court is targeted only at Selle, not his employer. But for the limited purpose of deciding whether Enthone is an absent party necessary to this litigation under Rule 19, the Court will assume without deciding that Enthone and Cookson Group are in fact distinct entities. Looking first at Rule 19(a)(1)(A), that provision "is concerned only with those who are already parties." MasterCard Int'l, Inc. v. Visa Int'l Serv. Ass'n, Inc., 471 F.3d 377, 385 (2d Cir.2006). In other words, as applied to this case, Enthone would qualify as a necessary, party under Rule 19(a)(1)(A) if the Court "cannot accord complete relief" as to the parties already named in the suit, namely MacDermid, Selle, and Cookson Group. But the defendants apparently are not seeking dismissal on this ground, for nowhere have they shown how MacDermid cannot obtain complete relief in Enthone's absence. The two counts alleged against Selle implicate his obligations alone; the two counts alleged against Cookson Group turn on its contractual obligations to MacDermid and whether it tortiously interfered with the MacDermid-Selle agreements. Thus, there is no basis on which to conclude that complete relief cannot be granted to those parties before the Court. In the briefing, the defendants focus more specifically on Rule 19(a)(1)(B), arguing that "since Enthone would be unable to protect its interests in federal court [if absent], it would be left with, no other recourse but to bring a separate action in another court seeking a determination that it lawfully may employ Selle (Selle's Mem. in Supp. Mot. Dismiss, under F.R.C.P. 19(b) at 6.) But this, reasoning misconstrues the principles, underlying Rule 19. According to the Second Circuit, [it] is not enough under Rule [19(a)(1)(B)] for a third party to have an interest, even a very strong interest, in the litigation. Nor is it enough for a third party to be adversely affected by the outcome of the litigation. Rather, necessary parties under Rule [19(A)(1)(B)] are only those parties whose ability to protect their interests would be impaired because of that party's absence from the litigation. MasterCard Int'l, 471 F.3d at 387. In that case, the court held that although the nonparty "may have an interest that would be impaired by the outcome of this litigation, [it] still does not qualify as a necessary party under Rule [19(a)(1)(B)] because the harm [it] may suffer is not caused by [its] absence from this litigation." Id. The defendants further rely on Torrington Co. v. Yost, 139 F.R.D. 91, 93 (D.S.C. 1991) for the proposition that, in a suit brought by a company against its former employee alleging breach of a confidentiality agreement, that employee's current employer is an indispensable party. However, that court found, without elaboration, that the defendant-employee had entered into a contract With his current employer that he would be at risk of breaching, id., 313 which is inapposite here as Selle Is currently an at-will employee with Enthone (Selle's 19(b) Reply at 7). In fact, Selle's "Employee Confidentiality and Non-Solicitation Agreement" and "Employee Patent and Intellectual Property Agreement" with Enthone/Cookson Electronics both contain the following limiting language with respect to his employment status: "This Agreement is not a contract of employment and does not restrict my right or the Company's right to terminate my employment as an at-will employee with or without cause." (Selle's 19(b) Reply, Exs. D, E.) In light of Selle's right to end his current employment at any time a factor which seems to distinguish the conclusion in Torrington Defendants fail to show how enjoining Selle from breaching his non-compete agreement by, working for Enthone could breach any agreement between them or how Enthone would be at any risk of inconsistent obligations if Selle's employment with it were discontinued.[2] As the Second Circuit has explained, "[t]he key issue" in applying Rule 19 is whether the case implicates "rights and interests under [a contract] to which the [absent entity] is a party." Peregrine Myanmar Ltd. v. Segal, 89 F.3d 41, 48 (2d Cir.1996). Contrary to Defendants' urging, there is nothing in the record on which to conclude that the litigation, proceeding in Enthone's absence, will require a determination of any Enthone contractual rights, nor that Enthone holds any "interest relating to the subject of the action" sufficient to invoke Rule 19. Consequently, Defendants have failed to show that Enthone is a necessary party under the first step of the Rule 19 analysis, and their motions to dismiss therefore must be denied. III. Choice of Law A second preliminary issue is to what extent, if at all, Brazilian law, in contrast to Connecticut law, should apply. In Selle's employment agreement with MacDermid, the parties assented to its provisions being "construed and enforced in accordance with the laws of the State of Connecticut, without regard to conflict of law principles." (Employee's Agreement at 4, § 11.) Selle and MacDermid further agreed in both that agreement and the later-executed addendum (which Selle signed after he took up residence in Brazil) that jurisdiction and venue for enforcement purposes is proper in Connecticut courts. (Id.; Addendum at 1, § 1.) The Defendants contend that the Court should apply, at least in part, the law of Brazil, which in their view reflects a fundamental public policy against enforcement of restrictive covenants in employment contracts.[3] According to MacDermid, Connecticut law should govern the present dispute, and it therefore filed a motion in limine asking the Court determine which forum's law should apply and to preclude introduction of Brazilian law. A federal court exercising its diversity jurisdiction must apply the choice-of-law rules of the forum state. Cap Gemini Ernst & Young v. Nackel, 346 F.3d 360, 365 (2d Cir.2003). The parties agree that under Connecticut law, assessment of a choice-of-law provision in a contract is guided by § 187 of the Restatement (Second) 314 of Conflict of Laws. See Elgar v. Elgar, 238 Conn. 839, 679 A.2d 937, 943 (1996). In Elgar, the Connecticut Supreme Court quoted the Restatement and held that parties to a contract generally are allowed to select the law that will govern their contract, unless either: "(a) the chosen state has no substantial relationship to the parties or the transaction and there' is no other reasonable basis for the parties' choice, or (b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of § 188, would be the state of the applicable law in the absence of an effective choice of law by the parties." Id. (quoting Restatement (Second) of Conflict of Laws § 187(2) (1971)). The parties focus their arguments on subsection (b), which the Elgar Court explained as follows: The second requirement is that the application of the law of the chosen state must' not violate a fundamental policy of the state that (1) has a greater material interest in the determination of the issue, and (2) is the state whose law would be applied in the absence of a choice by the parties. Thus, we need consider the relative policy interests only if [the foreign state] has a materially greater interest than [the contractually-selected state] in deciding the validity of the [] agreement. Elgar, 679 A.2d at 944 (emphasis added). In commentary, the Restatement explains § 178(2) as protecting the principle that a state's laws should not automatically be applied without considering which state's laws would normally govern the dispute, but also that "[t]he forum will not refrain from applying the Chosen law merely because this would lead to a different result than would be obtained under the local law of the state of the otherwise applicable law." Restatement (Second) of Conflict of Laws § 178 cmt. g (1971). In their briefing, both parties discuss this Court's decision in United Rentals, Inc. v. Pruett, 296 F. Supp. 2d 220 (D.Conn. 2003), for its application of this Elgar/Restatement framework. In that case, however, in addition to the defendant and his employer both being California residents, the operative contract was executed and performed in California, and its subject matter (the operation of one of the plaintiff's branch locations) was also in California. Id. at 232-33. On those facts, the Court concluded that "California's material interest . . . significantly outweighs Connecticut's interest." Id. at 232. By contrast, the balance of interests in this case tips in Connecticut's favor. Selle began his employment with MacDermid at its Connecticut headquarters, he executed the 1996 employment agreement while living elsewhere in the U.S., and he relocated permanently to Brazil and thereafter executed the addendum agreement in 2002. While living in Brazil between 2002 and 2007, although Selle worked at a Brazilian entity, Anion Chemical, he still reported to, regularly communicated with, and received his salary and employment benefits from MacDermid in Connecticut. According to Michael Siegmund, MacDermid's President of the Americas who testified on behalf of MacDermid, Selle explicitly insisted that he remain a MacDermid employee. Thus, the current record provides insufficient evidence that Brazil's interest in the case is materially greater than Connecticut's.[4] Following Elgar, this conclusion 315 does not "trigger an inquiry into the relative policy interests" of the jurisdictions, and so the parties' discussion of Brazilian labor law, while interesting, is not relevant at this point. See Elgar, 679 A.2d at 944 (concluding that Connecticut did not have a materially greater interest than the chosen state even though "the marriage took place in Connecticut, [] the decedent was a Connecticut resident, and [] his estate is in probate in Connecticut"); see also In re Koreag, Controle et Revision S.A., 961 F.2d 341, 351 (2d Cir.1992) (undertaking a similar choice-of-law analysis and concluding that New York's interest "in defining and protecting the property interests of its citizens" was greater than Switzerland's interest in "fair and organized administration of [a] debtor's estate"). There is also insufficient justification for according deference to Brazilian law or policy for some other reason, such as international comity; as Justice Breyer wrote in Sosa v. Alvarez-Machain, 542 U.S. 692, 761, 124 S. Ct. 2739, 159 L. Ed. 2d 718 (2004) (Breyer, J., concurring), "comity concerns normally do not arise (or at least are mitigated) if the conduct in question takes place in the country that provides the cause of action or if that conduct involves that country's own national." Here, the evidence shows that Selle engaged in a course of communications and meetings in Connecticut including with his former MacDermid supervisor Terrence Copeland, now his supervisor at Enthone/Cookson Electronics as he secretly negotiated his new employment with MacDermid's competitor. MacDermid's Motion in Limine [Doc. # 72] is therefore granted, and the Defendants are precluded from relying on Brazilian law as a basis for denying the preliminary injunctive relief sought by Plaintiff. IV. Motion for Preliminary Injunction A. Standard for Preliminary Injunctive Relief District courts are empowered to grant preliminary injunctive relief when the moving party shows "that [it] will suffer irreparable harm absent injunctive relief," and either "(a) that [it] is likely to succeed on the merits, or (b) that there are sufficiently serious questions going to the merits to make them a fair ground for litigation, and that the balance of hardships tips decidedly in favor of the moving party." Moore v. Gonad. Edison Co. of N.Y., Inc., 409 F.3d 506, 510 (2d Cir.2005) (quotation marks omitted). When applying this standard, a showing of probable irreparable harm is "the single most important prerequisite for the issuance of a preliminary injunction." Bell & Howell: Mamiya Co. v. Masel Co., 719 F.2d 42, 45 (2d Cir.1983). To establish irreparable harm, a plaintiff must demonstrate an injury that is neither remote nor speculative, but actual and imminent. Tucker Anthony Realty Corp. v. Schlesinger, 888 F.2d 969, 974-75 (2d Cir.1989). However, the moving party bears the even higher burden of a "clear or substantial showing" of likelihood of success where, in relevant part, "the injunction sought will alter, rather than maintain, the status quo i.e., is properly characterized as a `mandatory' rather than `prohibitory' injunction." Jolly v. Coughlin, 76 F.3d 468, 473 (2d Cir. 1996) (quotation marks omitted). Under either standard, the Court concludes that MacDermid has met its burden. 316 B. Analysis Contrary to Selle's suggestion (and notwithstanding his citations to nonprecedential and unpublished Connecticut Superior Court authority), there is no basis for doubting the validity and enforceability of his 1996 and 2002 employment agreements with MacDermid. First, the Connecticut Supreme Court has long recognized that continued employment may suffice as adequate consideration to support a covenant in an at-will employment relationship. Dolak v. Sullivan, 145 Conn. 497, 144 A.2d 312, 316 (1958); Roessler v. Burwell, 119 Conn. 289, 176 A. 126, 127 (1934); see also Sartor v. Town of Manchester, 312 F. Supp. 2d 238, 245 (D.Conn. 2004) (collecting cases). Selle's continued employment with and compensation by MacDermid following the execution of these two agreements suffices to make the obligations contractually binding, particularly as both MacDermid and Selle agree that Selle's employment would have been terminated without the agreements in place. Second, under Connecticut law, post-employment covenants are valid if reasonable under the circumstances. Robert S. Weiss & Assocs., Inc. Wiederlight, 208 Conn. 525, 546 A.2d 216, 219 n. 2 (1988) (enumerating the factors to consider in assessing reasonableness, namely temporal and geographic scope, fairness, restraint on trade, and the public interest). There has been no showing, nor any real suggestion, that the covenants at issue here are unreasonable. The non-disclosure provision is narrowly written to achieve the intended objective that is, preservation of MacDermid's valuable trade secrets and is no broader than similar agreements previously upheld as reasonable. E.g., id. at 220-21 (surveying similar cases and finding a two-year covenant reasonable). The covenants not to compete nor solicit are also appropriately limited in scope, terminating after twelve months, and expressly preserve Selle's right to engage in employment which is not "competitive with that portion of [MacDermid's] business with which [he] was involved" and in which MacDermid's trade secrets "will not be directly or indirectly involved or at risk." (Employee's Agreement at 2-3, § 3.) Selle contends that he has not breached these agreements, claiming that although Enthone is a recognized competitor, its products are not directly competitive with MacDermid's and thus he is not competing with MacDermid's business as contemplated by the covenant. Selle further contends that he has not disclosed anything proprietary of MacDermid's and that he has no knowledge of protected trade secrets in the first place because of his limited access to such information while at MacDermid. His first argument is undercut by the fact that he was working for a MacDermid entity in Brazil for five years before he resigned and joined Enthone. Indeed, the record shows that the same day Selle left MacDermid he immediately "engage[d] in [a] business competitive with that portion of [MacDermid's] business with which [he] was involved or was exposed to during [his] employment with it" (Employee's Agreement at 2-3, § 3), by continuing to work in the finite advanced surface finishing field in Brazil,[5] including having contacts with some of MacDermid's, customers and immediate prospects (e.g., Multec and ABN). Although the parties have made much of the relationship between Enthone, Cookson Group, and Cookson Electronics, this issue is ultimately a red herring, for it is clear that Selle's employment, regardless of the corporate title or form of his employer, is one competitive 317 with MacDermid sufficient to plicate the non-compete provision.[6] Furthermore, the Court heard ample evidence during the multi-day hearing regarding the confidential and proprietary information to which Selle was exposed during his long tenure with MacDermid, including customer lists (obtained by Selle in June 2007 while he was negotiating his new employment with Enthone), partial chemical formulations, product data sheets, customer pricing and Sales data, and project development and strategic planning. The testimony established that although Selle was not a high-level executive or engineer, he was in a managerial position and necessarily acquired a depth of this knowledge by way of his substantial exposure to MacDermid's technology and his role in representing MacDermid in its efforts to capture the Brazilian market by development of customer needs and related transfer of MacDermid technology and applications. Under Connecticut law, a protectable "trade secret" is broadly defined as information, including a formula, pattern, compilation, program, device, method, technique, process, drawing, cost data or customer list that: (1) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who" can obtain economic value from its disclosure or use, and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. Conn. Gen.Stat. § 35-51(d); Lydall, Inc. v. Ruschmeyer, 282 Conn. 209, 919 A.2d 421, 430-31 (2007). MacDermid has demonstrated that the confidential and proprietary information to which Selle was exposed and which he utilized during his employment there meets this expansive definition. Considering the extent to which MacDermid and Enthone/Cookson Electronics compete for the business of many of the same customers in the same geographic, market, there is also a sufficient basis on which to conclude that some of MacDermid's trade secrets are likely at risk. Because injunctive relief is available for both "[a]ctual or threatened misappropriation" of a trade secret, Conn. Gen.Stat. § 35-52(a), the Court finds that MacDermid has proven that it is likely to succeed on the merits of its trade secret claims against Selle at trial.[7] The other preliminary injunction considerations further support granting the relief MacDermid seeks. Owing to the demonstrated value of preventing public disclosure of the confidential and proprietary information at issue in this case, MacDermid has shown that it likely will suffer irreparable harm absent relief and that the balance of hardship tips in its favor. See Lampson Lumber Co. v. Caporale, 140 Conn. 679, 102 A.2d 875, 878 (1954) (presuming irreparable harm); accord FMC Corp. v. Taiwan Tainan Giant Indus. Co., 730 F.2d 61, 63 (2d Cir.1984) ("[T]he loss of trade secrets cannot be measured, in money damages."). Consequently, MacDermid has sustained its burden of showing that it is entitled to a preliminary injunction against Selle with respect to the 318 non-disclosure and non-compete provisions in his employment agreements with MacDermid.[8] V. Conclusion For the foregoing reasons, Plaintiff's Motion in Limine [Doc. # 72] is granted, Defendants' Motions to Dismiss [Docs. # 17, 26] are denied, Plaintiff's Motion for Preliminary Injunction [Doc. # 4] is granted in part,[9] and Plaintiff's Motion for Sanctions [Doc. # 92] is denied without prejudice. The Court therefore ORDERS the following: 1. Raymond Selle is enjoined from being employed by any entity including Enthone, Inc., Cookson Electronics, and/or Cookson Group plc engaged in any business competitive with MacDermid's advanced surface finishing business with which Selle was involved during the final three years of his employment with MacDermid in Brazil. This injunction shall remain in effect until the earlier of September 10, 2008 or further order of this Court. 2. Raymond Selle is also enjoined from disclosing, using, or misappropriating any of MacDermid's confidential and/or proprietary information including customer lists, partial chemical formulations, product data sheets, customer pricing and sales data, and project development and strategic planning however acquired during his employment with MacDermid. IT IS SO ORDERED. NOTES [1] Although the two defendants filed separate motions to dismiss on this ground, Cookson Group's papers simply incorporated by reference the factual and legal arguments asserted by Selle. Thus, the grounds for dismissal are the same. [2] As further evidence of his status, a form signed by Selle on August 22, 2007 entitled "Receipt of Handbook" contains this provision: "I understand and recognize . . . that neither this handbook nor the acknowledgment of receipt of the handbook constitutes a contract of employment or promise of continued employment between Cookson and myself." (Def.'s Ex. 529.) [3] Curiously, Selle's employment agreements with Enthone/Cookson Electronics contain substantively similar Connecticut choice-of-law provisions. (See Def.'s Exs. 530-31.) [4] The fact that Selle's living expenses, bonuses, and incentive commissions were paid by Anion does not change this conclusion, nor does the fact that Belle was issued a Brazilian resident's card and work book, entitling him to certain social benefits under Brazilian law. [5] Selle testified that the advanced surface finishing market in Brazil is approximately $65 million, for which MacDermid and three other large companies primarily compete. [6] The Court also notes that Cookson Group, Enthone, and the Cookson Electronics umbrella entity have emphasized their close connection to each other, in a variety of areas, including public websites, marketing materials, business cards, and employment contracts. [7] MacDermid also briefly referred to Selle's non-solicitation obligations during the preliminary injunction hearing. However, because the legal issues and factual record related to this covenant have not yet been developed by the parties, the Court will not consider this additional basis for relief here. [8] Following the hearing, MacDermid moved for sanctions against Selle for his spoilation of evidence [Doc. # 92], seeking to have the Court draw from the suspicious timing of Selle's computer hard drive being wiped clean "an adverse inference with regard to Selle's misappropriation of trade secrets at the preliminary injunction hearing and any subsequent court proceedings." (Pl.'s Mem. Sanctions [Doc. # 92-2] at 2.) In light of the Court's determination that. MacDermid is entitled to relief without relying on such an inference, this motion is denied without prejudice. [9] MacDermid's request for a worldwide injunction and for a period of twelve months going forward, to compensate it for the loss of several months' non-competition during the pendency of this lawsuit, are denied.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2595920/	628 F. Supp. 1457 (1986) CCS COMMUNICATION CONTROL, INC., Plaintiff, v. LAW ENFORCEMENT ASSOCIATES, INC., Defendant. CCS COMMUNICATION CONTROL OF ILLINOIS, INC., Plaintiff, v. LAW ENFORCEMENT ASSOCIATES, INC., Defendant. COMMUNICATION CONTROL SYSTEMS, LTD. OF CALIFORNIA, Plaintiff, v. LAW ENFORCEMENT ASSOCIATES, INC., Defendants. CCS COMMUNICATION CONTROL SYSTEM, INC., Plaintiff, v. LAW ENFORCEMENT ASSOCIATES, INC., Defendant. Nos. 84 Civ. 1274 (RWS), 85 Civ. 6672 (RWS), 85 Civ. 7298 (RWS) and 85 Civ. 8492 (RWS). United States District Court, S.D. New York. February 21, 1986. 1458 Harold Wm. Suckenick, New York City, for plaintiff. Walter B. Udell, Philadelphia, Pa., Anthony J. Casella, Gerald E. Hespos, New York City, for defendants. OPINION SWEET, District Judge. Plaintiff CCS Communication Control, Inc. ("CCS") and defendant Law Enforcement Associates, Inc. ("LEA") have crossmoved for summary judgment pursuant to Rule 56, Fed.R.Civ.P. on the grounds that there are no genuine issues of material fact disputed by the parties, and that each is entitled to judgment as a matter of law. Because there are no disputed facts which require a trial on the merits, and because CCS has failed to establish the validity of its claim of trademark infringement under the Lanham Trademark Act, 15 U.S.C. § 1051 et seq. (hereinafter "Lanham Act"), LEA's motion for summary judgment is granted. Prior Proceedings CCS commenced this action in the Southern District of New York on February 23, 1984 claiming that LEA had engaged in trademark infringement, copyright infringement and unfair competition with respect to its marketing and advertising of an executive telephone system manufactured by CCS. CCS then withdrew its claims of trademark and copyright infringement with prejudice, leaving only the claim of unfair competition described in Counts II and IV of CCS' complaint. Subsequent to this filing, CCS commenced three substantially identical actions against corporations wholly owned or controlled by LEA in California, Illinois, and Texas which were transferred to the Southern District of New York. By order of November 16, 1985, this court consolidated these actions and pleadings. At the second status conference in this action on November 22, 1985, this court enjoined CCS from filing any further actions against LEA based on the same charges, and gave LEA until December 6, 1985 to file a motion for summary judgment. On December 6, 1985 LEA filed its motion for summary judgment, and on December 17, 1985 CCS gave notice and filed its cross-motion. Facts The following facts are undisputed by the parties. In early 1983, LEA received one of CCS' products as a trade-in, an executive telephone with voice-mask and scrambler, labeled Model No. CC-800 (hereinafter the "CC-800") which LEA photographed and placed in its 1983-84 catalog which was compiled by Carl Lande, the former president of LEA. The CC-800 appeared at page 10 of the LEA 1983-84 catalog [Exhibit E] in a photograph too small to reveal any markings of the manufacturer. An examination of a different photograph of the CC-800 reveals that all of CCS' markings, including its name, are still affixed to the product. Larger photographs of other merchandise on page 11 of the catalog display the product manufacturer's name. In September, 1983, Spencer Lawrence ("Lawrence"), current vice-president and chief executive officer of LEA, received a telephone call from Jim Barker of Playboy Magazine, who informed him that the magazine wanted to do a follow-up story on executive security devices which it had published the previous year. Lawrence agreed to lend Barker any products he wished to use for the article and instructed his vice president for U.S. Sales, Philip Rosen ("Rosen"), to ship any items which Playboy 1459 requested. According to Rosen, whose affidavit is uncontroverted, Barker selected eight items from the LEA catalog to be shipped without consulting LEA about the items, one of which was the CC-800. Of the eight items shipped to Playboy, only two were selected for the articlethe CC-800 and a cigar humidor bug detector both of which were photographed by Playboy and returned to LEA. According to the Lawrence affidavit, neither he nor Rosen saw the text of the article before it was published. The article appeared in the March, 1984 issue of the magazine and was entitled "The Executive James Bond," and the CC-800 Executive Communications Security System briefcase appeared on a page with four other security devices. The caption beside the photograph of the CC-800 stated that it was "from LEA," and the two photographs above had captions ending in "by Wilson Jones Company" and "by Research Electronics." Because of the small size of the photograph and the fact that the briefcase lid was hinged over the components, the CCS identification markers were not visible on the item. According to Rosen, the CC-800 generated approximately twelve telephone inquiries, six of which occurred prior to the publication of the Playboy article. Rosen asserts that he never stated that LEA manufactured the Executive Communication System but rather advised inquirers that the component parts of the communication system could be purchased at a much lower cost using equivalent or superior components. Rosen indicated that CCS' price for its CC-800 was $7,800.00, whereas the components integrated into one case by LEA would have sold for approximately $3,500.00. LEA never sold its single CC-800 and the photograph has been marked "discontinued" in LEA's catalog. LEA never sold a comparable assembled unit of its own component parts. The Lawrence affidavit attests that LEA's sales of component parts of an executive communication system for the twelve month period prior to and after publication of the article were substantially as follows: Before After Article Article Telephone Scrambler, Model 3100 115 86 Anti-Spy Telephone, Model 4400 30 24 Voice Mask, Model 3600-001 4 5 The remaining two components of the system, the tape recorder and line control switch, are sold in volume and cannot be correlated to the purchase of executive communications systems. Discussion The remaining elements of CCS' claim are contained in Counts II and IV of the complaint, which allege unfair competition by LEA in violation of section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). Paragraphs 5, 10 and 11 of the complaint allege that LEA falsely described or represented the CC-800 as its own products in its catalog, that LEA caused this misrepresentation to be circulated in the media through the Playboy article, and that LEA copied and sold a unit similar to the CC-800. In addition to these claims, CCS argues in its memorandum of law that LEA used the photograph of the CC-800 in the Playboy article to sell its own competing product, also in contravention of Section 43(a). Section 43 of the Lanham Act created a federal statutory tort of false representation of goods in commerce. It provides in relevant part: (a) Any person who shall affix, apply, or annex, or use in connection with any goods or services, or any container or containers for goods, a false designation of origin, or any false description or representation, including words or symbols tending falsely to describe or represent the same, and shall cause such goods or services to enter into commerce, and any person who shall with knowledge of the falsity of such designation of origin or description or representation cause or procure the same to be transported or used in commerce or deliver the same to any carrier to be transported or used, shall be liable to a civil action by any 1460 person doing business in the locality falsely indicated as that of the origin or in the region in which said locality is situated, or by any person who believes that he is or is likely to be damaged by the use of any such false description or representation. 15 U.S.C. § 1125(a). CCS claims that both the magazine article and the picture of the CC-800 in LEA's catalog establish a "false designation of origin" within the meaning of section 43(a). However, a close examination of CCS' claims shows that LEA has not "palmed-off" its goods as those of CCS, and has not used the picture of the CC-800 in its catalog to sell its own version of the product. "Palming-off" where a trader sells his product as that of another is a classic violation of the Lanham Trademark Act and is actionable per se. Fur Information and Fashion Council, Inc. v. E.F. Timme & Son, Inc., 364 F. Supp. 16 (S.D.N. Y.1973), aff'd, 501 F.2d 1048 (2d Cir.1974); Pic Design Corp. v. Sterling Precision Corp., 231 F. Supp. 106, 113 (S.D.N.Y.1964). The focus of the prohibition is to prevent a manufacturer from deliberately using a competitor's trademark or packaging design to divert business to the sales of his own product. Sutton Cosmetics (P.R.), Inc. v. Lander Co., 455 F.2d 285, 288 (2d Cir.1972). Thus the words of section 43(a) prohibit a competing manufacturer from attempting to identify another producers' goods as his own, for example by affixing the distinctive markings of that product on his own. While CCS has not raised a claim that LEA attempted to sell its own products by "disguising" them as those of CCS, CCS claims can be construed as "reverse palming-off"; that LEA removed CCS' markings from the product and replaced them with its own, reselling them to customers. Pic Design Corporation v. Sterling Precision Corp., supra, 231 F.Supp. at 113. The undisputed facts establish, however, that this claim cannot be substantiated. First, LEA has submitted photographs of the single CC-800 unit in its possession to demonstrate that LEA never removed any of CCS' markings or identifications on the unit. It has also demonstrated that the absence of CCS' name from the picture in the 1983-84 catalog was caused by the need to reduce the photograph and by the small size of the CCS lettering on the unit. In larger photographs of other catalog items, and on items with larger lettering, the manufacturers' name is visible. Nor has CCS demonstrated that LEA replaced CCS' designations with its own. LEA was entitled to possess and sell the CC-800 in its catalog and in no way indicated that LEA was the manufacturer of the product. Indeed, the courts of this district have held that the receipt of an item, manufactured by another producer, the removal of its identifying letters and its resale is not a violation of the Lanham Trademark Act because it "makes actionable the application of `a false designation of origin,' not the removal of a true designation." Id. at 115 (emphasis in original). While CCS claims that LEA applied its name to the CC-800 by causing it to appear without CCS' logo in the magazine article over the caption "from LEA," CCS has not produced any evidence which links LEA to the production of the article. LEA's affidavit evidence shows that the company's sole involvement with the article was its initial cooperation in sending Playboy the items which it selected from the 1983-84 catalog. Playboy took its own photographs of the items and returned them to LEA. Furthermore, the caption "from LEA," when juxtaposed against items on the same page labeled "by company X" indicate that "from LEA" represents "available from LEA," whereas "by company X" designates "manufactured by company X." CCS also contends that LEA used the photograph of the CC-800 to advertise its own products, a tactic also prohibited by the Lanham Act. While the use of a picture of another manufacturers product to advertise your own is a clear violation, L'Aiglon Apparel, Inc. v. Lana Lobell, 1461 Inc., 214 F.2d 649 (3d Cir.1954); American Optical Company v. Rayex Corporation, 266 F. Supp. 342 (S.D.N.Y.1966), aff'd, 394 F.2d 155 (2d Cir.1968), the events surrounding the advertisement of the CC-800 do not establish such a violation. The essence of any claim of such an advertising "bait and switch" is that the manufacturer attempts to capitalize on the appearance of the competitors product in order to aid its own sales effort. The cases cited by CCS which granted injunctions on such claims support this understanding of the nature of the claim. For example, in National Dynamics Corp. v. John Surrey Ltd., 238 F. Supp. 422 (S.D.N.Y.1963), the defendant used a picture of plaintiff's defroster gun and its trademark "Quickee" in its catalog, although it intended to fill all orders resulting from that picture with a product of lesser quality manufactured in Japan. Similarly, in Ideal Toy Corporation v. FAB-LU, Ltd., 261 F. Supp. 238 (S.D.N.Y.1966), a doll manufacturer had deliberately and purposefully had copies of his competitors' successful dolls manufactured in Hong Kong, sending the dolls of his competitor to serve as models for the copies. The defendant authorized photographs of the plaintiff's dolls to be made and placed in trade publications to sell his copies, and the court found that the defendant had used the photograph of his competitors doll to sell his own. Finally, in Matsushita Electric Corp. of America v. Solar Sound Systems, Inc., 381 F. Supp. 64 (S.D.N.Y.1974) the seller of portable radios had removed the plaintiff's name from a competing radio, had affixed its own name to the product and had photographed the misbranded article in order to solicit orders for its own product. In all three cases the defendants exploited the recognized brand name and image of the plaintiffs' product by associating its own trade name with the competing product, by taking the photograph of that product and by filling all requests for the product with its own similar version of the article. These are not the factual circumstances here LEA did not affix any of its own markings to the CC-800 but merely placed the unit in its 1983-84 catalog. CCS has not demonstrated that LEA intended anything more than to sell its single expensive unit to an inquiring customer. Furthermore, there is no evidence that LEA had a competing unit which it intended to sell, and it is undisputed that neither the single CC-800 nor a model constructed from LEA's components was ever sold by LEA. The Rosen affidavit indicates that he advised inquiries that LEA could produce a unit similar to the CC-800 at a cheaper price, but that he never assembled such a unit, and the sales figures for these components declined after the appearance of the article in Playboy. LEA's disparagement of the CC-800 demonstrates that it was not intending to confuse customers into believing that the CC-800 was its own item, and there is no evidence to indicate that LEA ever intended to produce an executive communication security set. Disparagement of a competitor's goods is not actionable under the Lanham Act. As the court stated in Fur Information & Fashion Council, Inc. v. E.F. Timme & Son, Inc., supra, 364 F.Supp. at 21 (emphasis in original): This is not, however, a false representation or description as to defendants goods. The evil sought to be remedied was not the unjustified disparagement of the competitors' goods, but deceit or palming-off with respect to the advertisers own goods. In short, CCS has not demonstrated that LEA attempted to use the catalog advertisement or the magazine article to sell its own competing product, or to sell anything other than the single CC-800 unit in its possession. For the aforementioned reasons, LEA is entitled to summary judgment, and there is no need for this court to rule upon LEA's asserted "unclean hands" defense or to rule on the question of damages. This case is therefore dismissed. IT IS SO ORDERED.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/1895314/	956 F. Supp. 1239 (1997) Lori D. RHOADS, Plaintiff, v. FEDERAL DEPOSIT INSURANCE CORPORATION As Receiver for Standard Federal Savings Bank, et al., Defendants. Civil No. K-94-1548. United States District Court, D. Maryland. February 22, 1997. 1240 1241 1242 Fred Sommer, Rockville, MD, for plaintiff. Robert P. Fletcher, Garrett S. Flynn, Nixon, Hargrave, Devans & Doyle, L.L.P., Washington, D.C., for F.D.I.C. as Receiver for Standard Federal Sav. Ass'n and as Receiver for Standard Federal Sav. Bank. FRANK A. KAUFMAN, Senior District Judge. In this case, Lori D. Rhoads, the plaintiff, asserts several claims against the Federal Deposit Insurance Corporation ("FDIC") as the receiver of her former employer Standard Federal Savings Bank ("SFSB"), and Standard Federal Savings Association ("SFSA"), all of which were triggered by her termination for excessive absences. Plaintiff asserts her absences from work were justified due to severe asthma and migraines, and protected by two federal statutes, the Americans With Disabilities Act, 42 U.S.C. §§ 12101-12117 ("ADA") and the Family and Medical Leave Act of 1993, 29 U.S.C. §§ 2601-2654 ("FMLA"), which establish federal question jurisdiction in this case. In its entirety, Rhoads's suit involves the following: (1) Failure to make reasonable accommodations under the ADA (Counts II and VIII); 1243 (2) Retaliation under the ADA (Counts II and VIII); (3) Interfering with, restraining, and denying plaintiff's exercise of her rights under the FMLA (Count I); (4) Violation of Montgomery County Human Rights Law (Counts III and IX); (5) Violation of a Maryland common-law "duty to provide a safe workplace" (Counts V and X); and (6) Failure to pay accrued vacation pay in breach of an alleged employment agreement and the Maryland Wage and Payment and Collection Law (Counts VI and VII), Counts I to III and V to VII are against the FDIC as Receiver for SFSA, plaintiff's employer from October 21, 1992 through September 15, 1993.[1] Counts VIII to X are against the FDIC as Receiver for SFSB, plaintiff's employer prior to October 21, 1992.[2] Before this Court are the defendants' summary judgment motion with regard to all of plaintiff's claims, and plaintiff's cross-motion for summary judgment with regard to Count I of her complaint (her FMLA claim against the SFSA), her claim for payment of unused vacation pay (Counts VI-VII), and SFSA's defense based on allegedly "after-acquired evidence" For the reasons discussed in this Opinion, defendants' summary judgment motion will be denied in-part and granted in-part, and plaintiff's summary judgment motion will be denied. I. Summary Judgment Standard Summary judgment is appropriate where "there is no genuine issue of material fact and [where] the moving party is entitled to judgment as a matter of law." Fed. R. Civ. Pro. 56(c). While the non-moving party is entitled to have "all reasonable inferences ... drawn in its respective favor," Felty v. Graves-Humphreys Co., 818 F.2d 1126, 1129 (4th Cir.1987), the non-movant, in resisting summary judgment, must "go beyond the pleadings and by [its] own affidavits.... depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial." Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S. Ct. 2548, 2553, 91 L. Ed. 2d 265 (1986). Summary judgment is appropriate, therefore, where there is no genuine issue of material fact that could lead a rational trier of fact to find for the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S. Ct. 2505, 2512, 91 L. Ed. 2d 202 (1986). II. Statement of the Facts Rhoads, a financial analyst, went to work for SFSB in September of 1987. Rhoads continued her work for SFSB and its successor SFSA, with a brief interruption from January, 1990 to February, 1991, until her termination on September 15, 1993. (Rhoads Dep. at 44.) Rhoads suffers from asthma, a chronic respiratory condition, and from severe migraines. (Rhoads Decl. ¶ 2.) Plaintiff's asthma and migraines are triggered by cigarette smoke. (Rhoads Decl. ¶ 5.) While working for the SFSB, and its successor, plaintiff was repeatedly exposed to cigarette smoke due to smoking among co-workers in the office. (Rhoads Dep. at 125-28.) Internal memorandums documented the negative effects plaintiff's exposure to cigarettes was having on her health. (Jones Dep. Ex. 10) ("As recently as February 18th Ms. Rhoads, was in the office and RTC officials were smoking. Ms. Rhoads became extremely ill due to smoke."); Rhoads Dep. Ex. 9 ("The smoking is having a devastating health effect on one of my employees. She is suffering pneumonia, bronchitis and several other adverse illnesses. Please stop smoking immediately."). Apparently, as a result of management's inability to control smoking among 1244 employees in the office, and hence, to aid in the improvement of Rhoads's health, Rhoads was allowed to work at home from May to August of 1993.[3] (Muniz Dep. at 42; Rhoads Dep. at 130.) Contemporaneous with Rhoads's ongoing struggle to achieve a workable accommodation from her employer with regard to her health conditions, SFSB was placed in receivership by the Office of Thrift Supervision ("OTS") on October 21, 1992, and the RTC was appointed as Receiver for SFSB. On the same day, OTS chartered a new federal mutual savings association, SFSA, and the RTC was appointed as Conservator for the new association. Although Rhoads's employment with SFSB was terminated at its receivership, she was hired simultaneously by the RTC/Conservator for SFSA.[4] After the RTC intervention, SFSA began to take a more aggressive stance towards personnel matters, such as those involving the plaintiff, and consequently placed a large premium on the requirement that employees work at SFSA offices. (Jones Dep. at 233; Muniz Dep. at 286.) Rhoads was first apprised of that new emphasis on reporting to work, during a meeting at the SFSA's Fredericksburg Operations Center ("FOC") with R. Emmett Garlock, former president of SFSB, and then executive vice president of SFSA on August 12, 1993. (Rhoads Dep. at 303-05.) W. Marshall Jones, SFSA's Vice President of Human Resources, also participated in the meeting. During that meeting plaintiff was told she must report to work at the FOC on August 18, 1993, or qualify for SFSA's disability policy which required medical certification. (Rhoads Dep. at 305, 315.) Plaintiff said she could not report on that date due to her sensitivity to smoke, and its continued prevalence at the FOC. (Id.) In fact, on the way to the meeting, plaintiff observed employees smoking in the offices adjoining Garlock's office, both exposing her to smoke, and heightening her concerns. (Rhoads Dep. at 309.) To accommodate plaintiff's concerns, SFSA officials moved the date Rhoads was to report to work to September 1, 1993, to coincide with the date the building became smoke-free. (Swenck Dep. at 24.) Rhoads was informed of that accommodation, and the addition of an air-purifier at her desk, in a letter which Jones sent to her on August 25, 1993. (Rhoads Dep. Ex. 18.) After the August 12, 1993 meeting, however, Rhoads maintains that she suffered a significant relapse of her poor health due to her exposure to smoke during her visit to FOC. Thus, by August 21, 1993, Rhoads suffered from migraines so severe that she sought treatment in a hospital emergency room. (Rhoads Decl. ¶ 10.) On September 1, 1993 Rhoads called her supervisor to inform him that she was too sick to return to work. Against the aforementioned background, it is the events of the fifteen days stretching from September 1st to September 15th, which are quite critical to this suit.[5] During that period, Rhoads maintained that she was too sick to return to work, and the RTC maintains she did not follow the institution's sick leave procedures, or appropriately establish her illness or disability with medical documentation. The RTC takes the position that Rhoads's disregard of SFSA policies justified Rhoads's termination for excessive and un-excused absenteeism. In that regard, the question arises as to whether the personnel policies of the SFSA should be the sole source of guidance for evaluating the legitimacy of Rhoads's termination, or whether the facts at hand cause the federal workplace mandates of the ADA or the FMLA to be otherwise applied. 1245 The SFSA sick leave policy, as revealed in this case through witness testimony and exhibits, required employees to notify their supervisors when they could not report to work due to an illness. (Muniz Dep. at 31.) For absences of three to five days, employees were called upon to provide written certification from a doctor stating that the employee is ill and unable to report to work. (Muniz Dep. at 31.) Employees absent for more than ten days were required to ask for disability leave and to back up their request with a note from a doctor stating disability leave was necessary, or face termination, (Rhoads Dep. at 315; Pavlonnis Dep. Ex. 18 at 90062-63.) While Rhoads notified her supervisor that she was ill and unable to report to work on September 1, 1993, and continued to make subsequent calls, she did not provide her employer with a note from a doctor certifying that she was too ill to work until after the close of business of her eleventh day away from work. (Muniz Dep. at 154.) Rhoads failed to provide a timely letter from a physician even though James Pavlonnis, her immediate supervisor, reminded Rhoads, on her eighth day absent, that an appropriate note was necessary to justify her absence, and Jones sent Rhoads a probation letter on her ninth day absent. (Pavlonnis Dep. Ex. 8; Rhoads Dep. Ex. 24.) Although sick leave was handled on a case-by-case basis by SFSA, and at times SFSA allowed its employees to provide documentation of their illness after they returned to work, witness testimony submitted in this case indicates that SFSA literally reached a breaking point with Rhoads. (Muniz Dep. at 256.) SFSA, it appears, as time went on, strictly applied its sick leave policy to Rhoads, as a result of the leniency which she had been afforded with regard to her attendance in the past. (Garlock Dep. at 15.) This court can find no reason, in the absence of a federal law to the contrary, to question SFSA's full implementation of its policies. III. ADA Claim In her complaint, plaintiff sets forth various theories under which she contends the defendants have discriminated against her in violation of the ADA, including SFSA's failure to accommodate her disability, unlawful termination, and retaliation. This Court will treat each of these arguments in turn. a. Failure to Make Reasonable Accommodations The ADA prohibits employment discrimination against "qualified individual[s] with a disability because of the disability of such individual...." 42 U.S.C. § 12112(a). In the context of the ADA, the term discriminate includes: "not making reasonable accommodations to the known physical or mental limitations of an otherwise qualified individual with a disability who is an applicant or employee, unless such covered entity can demonstrate that the accommodation would impose an undue hardship on the operation of the business of such covered entity...." 42 U.S.C. § 12112(b)(5). Plaintiff asserts that prior to her termination, she requested an ADA accommodation, i.e., the right to "take sick leave while her disability prevents her from working." (Rhoads Opp. at 31.) Rhoads argues that had SFSA afforded her that reasonable accommodation, SFSA should not have terminated her under its own sick leave policies. To establish her claim for discrimination based on denial of accommodation, Rhoads must demonstrate: "(1) she is an `otherwise qualified individual with a disability,' i.e., able to perform the essential functions of the job in question with or without reasonable accommodation; and (2) if a reasonable accommodation is necessary, that the denial of the accommodation was made in a discriminatory fashion." Bryant v. Better Bus. Bureau of Greater Maryland, 923 F. Supp. 720, 733 (D.Md.1996) (Davis, J.) (citing Myers v. Hose et al., 50 F.3d 278, 281-82 (4th Cir.1995)). i. Plaintiff's Disability The RTC argues plaintiff's discrimination claim must fail because she cannot establish that she is a disabled individual. Those regarded as having a disability protected by the ADA are persons with "a physical or mental impairment that substantially limits one or more of the major life activities of such individual; a record of such an impairment; 1246 or [who are] regarded as having such an impairment." 42 U.S.C. § 12102(2). Rhoads asserts that she is disabled by reason of two physical impairments, asthma and migraines, which are triggered principally by cigarette smoke, and which substantially limit her major life activities. The Code of Federal Regulations explains "major life activities" as those which an average person can perform with little or no difficulty, such as "caring for oneself, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning, and working." 29 C.F.R. § 1630.2(I). The plaintiff has offered testimony that when she suffers from her asthma and migraines, she is unable to work, do things such as drive and sleep, and, is at times substantially limited in her ability to breathe. (Rhoads Decl. ¶¶ 4, 5.) In employment discrimination suits, the Fourth Circuit requires courts to perform a particularized inquiry into "whether a particular impairment constitutes for the particular person a significant barrier to employment." Forrisi v. Bowen, 794 F.2d 931, 932 (4th Cir.1986) (Wilkinson, J.). The defendants point out that when the major life activity at issue is working, the plaintiff must establish she was not only incapable of performing her particular job but that her disability "foreclosed her generally from obtaining jobs in her field." Gupton v. Commonwealth of Virginia, 14 F.3d 203, 205 (4th Cir.1994) (Russell, J.), cert. denied, 513 U.S. 810, 115 S. Ct. 59, 130 L. Ed. 2d 17 (1994). This "foreclosure" test incorporates the ADA requirement that the major life activity impaired for ADA purposes must be significant and severe as compared to conditions more widely shared by the public. See Forrisi, 794 F.2d at 933-34. Cf. 29 C.F.R. § 1630.2(j)(3) ("With respect to the major life activity of working (i) The term substantially limits means significantly restricted in the ability to perform either a class of jobs or a broad range of jobs in various classes as compared to the average person...."). Accordingly, the Fourth Circuit Forrisi/Gupton foreclosure test appears to serve the useful purpose of narrowing the group of individuals with regard to whom employers should focus their resources, thereby ensuring that only the truly disadvantaged reap the rewards associated with the ADA mandate placed on employers to accommodate the disabled. In this case, plaintiff alleges that she was unable to work in a smoke-filled environment due to the effect smoke had on her breathing and headaches. However, there appears to be no reasonable material or relevant factual dispute concerning the plaintiff's ability to perform her job requirements at a very high level, provided that she is given the opportunity to perform her work in a smoke-free atmosphere, as she did at home from May to August of 1993, or as SFSA offered beginning in September 1, 1993. Thus applying the Forrisi/Gupton foreclosure test, Rhoads cannot argue that a class of jobs free from exposure to smoke has been foreclosed as a result of her impairments, and hence, Rhoads cannot show her ability to work is substantially limited. Consequently, as Rhoads's strongest claim of substantial impairment to a major life activity, i.e., her ability to work, fails, Rhoads's claim that she has a disability is fatally weakened. Cf. Roth v. Lutheran Gen. Hosp., 57 F.3d 1446, 1454-55 (7th Cir. 1995) (doctor's inability to perform medical positions requiring long shifts or 36 hour call duties due to his impaired visual condition did not "necessarily" render him disabled within the meaning of the ADA); Maulding v. Sullivan, 961 F.2d 694, 698 (8th Cir.1992) (chemist unable to establish limitations of "major life activities" sufficient to establish disability simply by showing that her sensitivity to certain chemicals restricted only her ability to do lab work), cert. denied, 507 U.S. 910, 113 S. Ct. 1255, 122 L. Ed. 2d 653 (1993); Wright v. Tisch, 45 FEP 151, 152-53, 1987 WL 109067 (E.D.Va.1987) (Merhige, J.) (plaintiff who "is not precluded from working indoors where a moderate amount of dust is present," and can take part in outdoor employment, is not a handicapped individual where her dust allergy restricted her only from working in the "unusual, if not unique, environmental conditions of [her workplace]"). The plaintiff, however, strenuously argues application of the foreclosure test to her claim is only a starting point for determining whether or not she is a disabled individual 1247 because she alleges additional major life activities, such as breathing, are effected by the asthma and migraines she suffers when exposed to smoke. See Williams v. Channel Master Satellite Systems, Inc., 101 F.3d 346, 349 (4th Cir.1996) (per curiam) ("the general foreclosure test applies only to claims brought under the major life activity of working"). On the surface, plaintiff's argument has merit. Indeed, to find otherwise would allow employers to avoid grappling with their responsibility to accommodate employees with a disability that effects numerous aspects of their lives, in contravention of the ADA. However, where the additional major life activities which the plaintiff claims are substantially limited, such as the ability to "breathe," are all triggered solely by her workplace environment,[6] the traditional approach found in the ADA for determining whether such impairments are sufficiently severe to be classified as a disability appears inadequate. In these limited circumstances, the proper inquiry should remain focussed on the extent to which an ADA claimant is capable of successfully pursuing a given vocation with or without reasonable accommodation. Cf. Mobley v. Bd. of Regents, 924 F. Supp. 1179, 1187 (S.D.Ga.1996) (rejecting claim that asthma presents an "obvious" impairment to breathing when symptoms would arise only in one workplace). On a final note, this Court recognizes that in some instances asthma and/or migraines may serve as the basis for a disability claim. See, e.g,, Carlson v. InaCom Corp., 885 F. Supp. 1314, 1320 (D.Neb.1995) (disability established with regard to plaintiff who suffered migraines over a period of twenty years, on a monthly basis regardless of her environment which left her incapable of caring for her son, driving or working); Dutton v. Johnson County Bd. of County Comm'rs., 859 F. Supp. 498, 506 (D.Kan.1994) (severe migraines that comprise a permanent, intermittent and unpredictable condition over a twenty year period, and which were unconnected to any particular type of work constituted a disability), Harmer v. Virginia Elec. & Power Co., 831 F. Supp. 1300, 1306 (E.D.Va.1993) (in a decision decided prior to Gupton, the court treated severe bronchial asthma as a disability without an extensive discussion of the severity of the plaintiff's asthma outside his particular workplace) This case, however, for the reasons discussed supra, is simply not one of those instances. Finally, this Court rejects Rhoads's alternative approaches for establishing a disability. Rhoads asserts that even if this Court finds she has not established an impairment which substantially limits one or more major life activities, she was "regarded as" an individual with a disability by SFSA, and/or SFSA had a "record of" her disabilities, and therefore her circumstances fall within the definition of an individual with a disability and should be afforded the protection of the ADA. See 42 U.S.C. § 12102. The expansive definition of an individual with a disability which Rhoads seeks to establish was adopted to "combat the effects of erroneous but nevertheless prevalent perceptions about the handicapped." School Bd. of Nassau County v. Arline, 480 U.S. 273, 279, 107 S. Ct. 1123, 1126, 94 L. Ed. 2d 307 (1987) (citation omitted). Plaintiff's approach must fail because to allow plaintiff to utilize either of the alternative definitions for a disabled individual would contort the purpose of those provisions. There is no evidence in this case that the defendants erroneously perceived that Rhoads was substantially limited in her ability to do her job. Rather, the record indisputably reveals SFSA thought the plaintiff was capable of performing her job in a smoke-free environment,[7] and as a result, 1248 moved, at least partially, to create such an environment for her to work. ii. Defendants' Reasonable Accommodation Assuming, arguendo only, that Rhoads is a qualified individual with a disability, she has not sufficiently met her burden of proffering that SFSA failed to provide a reasonable accommodation which would allow her adequately to perform her job.[8]See Tyndall v. National Educ. Centers, 31 F.3d 209, 213 (4th Cir.1994) (Wilkinson, J.); Bryant, 923 F.Supp. at 733. Plaintiff asserts that the ADA accommodation which she sought prior to her termination was the right to take sick leave while her disability prevented her from working. Plaintiff has not established that SFSA failed to accommodate her disability in a discriminatory manner because she has not shown that she made a timely request for her proposed accommodation. Furthermore, the accommodation which Rhoads asks this Court to evaluate is rejected in this case because it is in substance a request not to perform her job, and hence, facially unreasonable. While it is undisputed that the plaintiff notified SFSA that she suffered from asthma and that, as a result, she required a smoke-free workplace, the record reveals that the plaintiff did not adequately inform SFSA of her recurring problem with migraines, or ask for the use of sick leave or to otherwise be allowed unscheduled absences as an accommodation for migraines. Outside of the papers filed in this case, the first time that plaintiff appears to have complained about headaches to SFSA was on September 2, 1993 during a telephone call with Jim Pavlonnis. (Pavlonnis Dep. Ex. 18 at 900055.) Further, notes taken by Pavlonnis regarding his conversations with Rhoads during her September absence indicate that plaintiff first requested the use of accrued sick leave to justify her continued absences on September 8th. (Pavlonnis Dep. Ex. 18 at 900057.) Finally, after receiving a note from Rhoads's doctor reiterating Rhoads's asthma condition and need for a smoke-free environment, Pavlonnis called Rhoads on September 10th and asked her if she was requesting disability leave. Rhoads replied that she did not know, and did not feel that she had to decide because she was using accrued sick leave. (Pavlonnis Dep. Ex. 19 at 90066.) Rhoads asks this Court to allow her to transform her request for the use of accrued sick leave-which request it should be noted did not comply with SFSA's policy that sick leave requests be accompanied by a doctor's note explaining the need for sick leave-into a request for accommodation for a disability, although that latter request was not previously communicated to her employer. This Court declines to stretch the ADA that far, and consequently to require employers to anticipate new disabilities and new accommodations, without adequate information, in order to give absent employees that much benefit of the doubt. SFSA should not be held liable for an accommodation which it was never requested 1249 to make. "The E.E.O.C. regulations provide that `[i]n general ... it is the responsibility of the individual with a disability to inform the employer that an accommodation is needed.'" Bryant, 923 F.Supp. at 737 (citing 29 C.F.R. § 1630.9, at 414 (Appendix: Interpretive Guidance)). See also Beck v. University of Wisconsin Board of Regents, 75 F.3d 1130, 1137 (7th Cir.1996) (reasonable accommodation claim properly subjected to summary judgment against claimant where employer made efforts to accommodate employee on the information it possessed); Carlson, 885 F.Supp. at 1322 (employee, who was terminated for excessive absenteeism, did not make a prima facie showing that employer failed to provide reasonable accommodation, where the employee did not explain to her employer that she suffered from a disability, i.e., migraines, and needed accommodation). Finally, reasonable accommodations under the ADA are those accommodations which allow otherwise qualified disabled individuals to "perform the essential functions" of their job. 42 U.S.C. § 12111(8). Plaintiff asks for an accommodation which defeats her ability to perform a function of her job, namely, attendance. Regular attendance is generally, unless otherwise established, regarded as an essential function of such employment. See Tyndall, 31 F.3d at 213 ("In addition to possessing the skills necessary to perform the job in question, an employee must be willing and able to demonstrate these skills by coming to work on a regular basis."); Walders v. Garrett, 765 F. Supp. 303, 309 (E.D.Va.1991) (Ellis, J.) ("in general, employees cannot perform their jobs successfully without meeting some threshold of both attendance and regularity"), aff'd, 956 F.2d 1163 (4th Cir.1992). Many courts have found open-ended work schedules to fail as a reasonable accommodation. Myers v. Hose, 50 F.3d 278, 282-83 (4th Cir.1995) (Wilkinson, J.) (reasonable accommodation provisions of the ADA do not require employers to "wait indefinitely," providing extended leave, while an employee's health improves); Carr v. Reno, 23 F.3d 525, 531 (D.C.Cir.1994) ("[T]o require an employer to accept an open-ended `work when able' schedule for a time-sensitive job would stretch `reasonable accommodation' to absurd proportions...."); Kimbro v. Atlantic Richfield Co., 889 F.2d 869, 878 n. 8 (9th Cir.1989) (employers legitimate needs rendered it unreasonable to require employer to allow employee to use accrued sick leave intermittently when employee's migraine condition precluded his ability to work), cert. denied, 498 U.S. 814, 111 S. Ct. 53, 112 L. Ed. 2d 28 (1990). This court is mindful that the use of accrued sick leave, part-time or modified work schedules may in some cases be an appropriate accommodation. See 29 C.F.R. § 1630.2(o)(2), § 1630.2(o) (Appendix). However, such accommodation was not required in this case. Rhoads had worked at home for over four months when she allegedly requested the use of sick leave as an accommodation. An employer who demonstrates such flexibility towards an employee should be allowed to set reasonable limits on the time which an employee spends away from the office. That is especially true where the employer's request that the employee return to a regular and reliable in-office work schedule comes after instituting the alternative accommodations requested by the employee as a prerequisite to her return to the office. b. Unlawful Termination Typically, to establish a wrongful discharge claim under the ADA, a plaintiff must prove: "(1) she was in the protected class; (2) she was discharged; (3) at the time of discharge, she was performing her job at a level that met her employer's legitimate expectations; and (4) her discharge occurred under circumstances that raise a reasonable inference of unlawful discrimination." Ennis v. National Assoc. of Bus. and Educational Radio, Inc., 53 F.3d 55, 58 (4th Cir.1995) (Luttig, J.) (citation omitted). Plaintiff's unlawful termination claim fails because she has not proffered evidence with sufficient significance that she was within the class protected by the ADA as explained above, Rhoads is not a disabled individual. Furthermore, as discussed supra, given Rhoads's excessive absence from her job in contravention of her employer's express wishes, Rhoads has not offered sufficient evidence to establish she was meeting her employers legitimate expectations. 1250 c. Retaliatory Discharge The ADA prohibits employers from retaliating against employees who enforce their rights under the act. See 42 U.S.C. § 12203(a). To establish a retaliation claim under the statute, Rhoads must show by a preponderance of the evidence: "(1)[s]he engaged in protected activity; (2)[her] employer took an adverse employment action against [her]; and (3) a causal connection exists between the protected activity and the adverse action." Harmer, 831 F.Supp. at 1308. If the plaintiff satisfies that burden, the burden shifts to SFSA to articulate a legitimate non-retaliatory reason for plaintiff's discharge. See Ennis, 53 F.3d at 58; Harmer, 831 F.Supp. at 1308. If SFSA satisfies that burden, then the presumptions created by plaintiff's prima facie case disappear, and the plaintiff is left with the ultimate burden of showing that SFSA's reasons for her termination are "unworthy of belief" or that she was in fact terminated in retaliation for engaging in protected activity. See Harmer, 831 F.Supp. at 1308. Prior to plaintiff's termination, she engaged in at least one form of protected activity under the ADA. Rhoads requested that her asthma be accommodated on numerous occasions, apparently by urging her employer to implement a smoke-free workplace. Furthermore, Rhoads threatened legal action to enforce her rights under the ADA during the period preceding her termination. On August 20, 1993, and again on September 13, 1993, plaintiff's attorney wrote SFSA concerning SFSA's demands that plaintiff return to work and expressed the belief that SFSA was not complying with the ADA. (Pavlonnis Dep. Ex. 18 at XXXXXX-XX, XXXXXX-XX) Assuming, that based on the attorney's participation, that plaintiff proffered sufficient evidence of protected activity to establish a prima facie case of retaliation, SFSA has a clear and articulated reason for terminating Rhoads unexcused absenteeism. The burden, consequently, returns to Rhoads to establish that she was in fact a victim of discrimination. In Ross v. Communications Satellite Corp., a Title VII retaliation case, the Fourth Circuit explained that, for an employee to "disprove a legitimate nondiscriminatory explanation for adverse action ... he must show that the adverse action would not have occurred `but for' the protected conduct." Ross, 759 F.2d 355, 365 (4th Cir.1985) (Wilkinson, J.).[9] To rebut SFSA's legitimate business reason for her termination, Rhoads testifies that she was told she would regret consulting a lawyer by a SFSA manager and asserts that witness testimony in this case shows that she was treated differently from other employees who requested sick leave without proper medical certification. (Rhoads Decl. ¶ 10; Jones Dep. at 148-150; Muniz Dep. at 256, 285; Garlock Dep. at 15.) Rhoads argues that the testimony she has proffered shows that had she not demanded accommodations and threatened legal action on various instances, SFSA would not have strictly enforced its sick leave policy against her. The evidence upon which Rhoads relies, while perhaps creating a factual question as to whether her availment of legal representation and requests for accommodation were a factor in her termination, does not in any event, in and of itself, satisfy the Fourth Circuit's "but for" test. "[Initiating legal action under anti-discrimination statutes] does not shield employees from normal sanctions for misconduct. `It would be incongruous and certainly not required by law to give any employee, even one engaged in exemplary efforts to vindicate the law of the land, a stranglehold on a job irrespective of that employee's material, work-related flaws.'" Ross, 759 F.2d at 366 (citation omitted). Particularly, when viewed individually, the evidence which Rhoads proffers is obviously insufficient to meet her ultimate burdens. Jones, SFSA's V.P. for Human Resources, whom Rhoads claims threatened adverse action when she told him she wanted to see a lawyer, was in fact, on the committee which considered her termination, and Jones did 1251 not vote in favor of termination. (Muniz Dep. at 27; Jones Dep. at 101.) Furthermore, that alleged threat was communicated during the August 12, 1993, meeting in which Rhoads was asked to report to work, and during which she expressed the desire not to do so.[10] After that meeting Rhoads was further accommodated by Jones who agreed to allow her to delay her report date from August 18, 1993, to September 1, 1993 until the FOC was completely smoke-free. (Rhoads Dep. Ex. 18.) Jones, rather than harassing Rhoads, appears to have tried to accommodated her wishes and to have abstained from voting for her termination. In those circumstances, there is a strong inference that Jones had no discriminatory animus against Rhoads. Finally, Rhoads would have this Court rely on testimony from SFSA managers to conclude that SFSA would not have fired her had she refrained from insisting on accommodation to her disability and pursuing the help of an attorney. Rhoads's arguments, in that regard, may not succeed for two reasons. First, the record shows that her one reasonable request for accommodation, a smoke-free workplace, was met by SFSA, without undue delay, and that her lawyer's letters appear not to have been a factor in the decision to terminate her.[11] Second, each of the SFSA managers who testified that SFSA may have applied its sick leave policy more stringently against Rhoads than other employees, all included the important statement that the disparity in Rhoads's treatment, assuming there was some, was due to her lengthy prior absences a completely adequate rationalization in the view of this Court. Rhoads simply has not proffered sufficient evidence to show given her unique circumstances, i.e., that but for her alleged proffered activity, SFSA would not have chosen to follow its personnel policies. Therefore, Rhoads's retaliatory discharge claim fails. In sum, defendants' summary judgment motion with regard to all plaintiff's ADA claims, both Counts II and VIII, will be granted.[12] IV. FMLA Claim The FMLA prohibits certain employers from discharging or otherwise discriminating against individuals who attempt to exercise a right under the act. 29 U.S.C. § 2615(a). The FMLA provides twelve weeks of unpaid leave for eligible employees suffering from a "serious health condition" which makes them "unable to perform the functions of the position." 29 U.S.C. § 2612(a)(1). A proper FMLA claim requires an employee to show that she had a right to leave under 29 U.S.C. §§ 2611-2612, and that that right was interfered with in violation of 29 U.S.C. § 2615. Defendants have moved for summary judgment with regard to Rhoads's FMLA claim, arguing that Rhoads has not proffered sufficient evidence to resist their assertion that she is not an "eligible employee," and that she does not suffer from a "serious health condition" which resulted in her inability to "perform the functions of her job." Rhoads has cross-moved for summary judgment on that claim. Before proceeding, it Should be clarified that the regulations to the FMLA make clear that an "ADA[ ] `disability' and an FMLA `serious health condition' are different concepts, 1252 and must be analyzed separately." 29 C.F.R. § 825.702(b). For example, an FMLA qualifying health condition may be sufficiently serious without requiring a demonstration that the condition has substantially impaired a significant life activity. Hence, if Rhoads is considered an eligible employee under the FMLA, she may have had a serious health condition for which she was entitled leave, even though she is not disabled under the ADA. a. Eligible Employee This Court concludes that plaintiff is an "eligible employee" within the meaning of the FMLA Act. In order to be an eligible employee under the FMLA, an employee must be employed "for at least 12 months by the employer with respect to whom leave is requested...." 29 U.S.C. § 2611(2). The term employer "includes any successor in interest of an employer...." 29 U.S.C. § 2611(4)(A)(ii)(ll). Whether or not the plaintiff is an eligible employee turns on whether or not the RTC and the institution for which it acted as Conservator, the SFSA, is a "successor in interest" to the plaintiff's former employer, Standard Federal Savings Bank ("SFSB"). Although Rhoads's employment with SFSB was terminated after the RTC intervention, she was hired simultaneously by SFSA. Rhoads's length of service for SFSA was just shy of twelve months when she was terminated on September 15, 1993. Therefore, if SFSA is not a successor in interest to SFSB, Rhoads is not an eligible employee under the plain language of the FMLA. This Court has found no discussion of authority concerning whether or not the RTC is a successor in interest under the FMLA in circumstances such as those present in this case, by any federal court. Therefore, this court looks solely to the federal regulations governing the FMLA. The Department of Labor ("DOL") has issued regulations which address what is meant by "successor in interest." 29 C.F.R. § 825.107.[13] "When an employer is a `successor in interest,' employees' entitlements are the same as if the employment by the predecessor and successor were continuous employment by a single employer." 29 C.F.R. § 825.107(c). In order to determine whether or not an entity qualifies as a successor in interest, the regulations provide eight factors for evaluation: "(1) Substantial continuity of the same business operations; (2) Use of the same plant; (3) Continuity of the work force; (4) Similarity of jobs and working conditions; (5) Similarity of supervisory personnel, (6) Similarity in machinery, equipment, and production methods; (7) Similarity of products or services; and (8) The ability of the predecessor to provide relief." 29 C.F.R. § 825.107(a). Those factors are to be viewed in their totality. See 29 C.F.R. § 825.107(b). In the preamble of the final FMLA regulations effective April 6, 1995, the DOL has stated that "[t]he Resolution Trust Corporation can be a covered employer under Title I of the FMLA as a `successor in interest' of a covered employer when it assumes control over a failing thrift as part of the resolution process." 60 Fed.Reg. 2180, 2181 (Jan. 6, 1995) (Summary of Major Comments). While the DOL's language is not determinative in this case, due to its adoption after the incidents critical to this case, it does, however, at the very least, suggest that the plaintiff's assertion that the RTC/Conservator of SFSA is the successor in interest of SFSB must be examined carefully. i. Successor in Interest Analysis The RTC as Conservator succeeds to "all rights, titles, power, and privileges," 12 U.S.C. § 1821(d)(2)(A), of the failed institution, and may operate the institution "with all the powers of members or shareholders, the directors, and the officers of the institution and conduct all business of the institution." 12 U.S.C. § 1821(d)(2)(B). Further, the RTC as conservator may take such actions "as appropriate to carry on the business of the institution and preserve and conserve the assets and property of the institution." 12 U.S.C. § 1821(d)(2)(D). The plaintiff argues that these provisions indicate Congress' intention 1253 that the RTC as a conservator may "substantially continue" the business of the troubled institutions which it operates to facilitate its preservation. Indeed, there is case law which supports that contention. "[A] conservator operates or disposes of an institution as a going concern...." Hennessy v. F.D.I.C., 58 F.3d 908, 916 (3rd Cir.1995) (quoting from H.R. Conf. Rep. No. 222, 101st Cong, 1st Sess 396 (1989), U.S.C.C.A.N. 1989, pp. 86, 435), cert. denied, ___ U.S. ___, 116 S. Ct. 1318, 134 L. Ed. 2d 471 (1996). To support that argument, it is note-worthy that SFSA continued to operate as a financial institution, until February 25, 1995 when it sold its mortgage servicing operation to First Nationwide Bank. This Court, therefore, is of the view that the RTC substantially continued the business of SFSB, as the conservator of SFSA. However, with regard to the "similarity of products and services" before and after intervention, the record is unclear as to how quickly SFSA began to focus exclusively on selling SFSA's mortgage servicing business and assets, which, according to the RTC, was the principal service which SFSB provided to its clients prior to intervention.[14] With regard to the second factor in the "successor in interest" analysis, "use of the same plant," this Court finds that the RTC as the conservator of SFSA continued the operations of SFSB in substantially the same facilities which SFSB used, and continuously occupied those facilities during the SFSA conservatorship which began in 1992. While the RTC moved the plaintiff's department to SFSA's main office, the Frederick Operations Center in Frederick, Maryland from the Gaithersburg, Maryland office of the SFSA, which it eventually closed while acting as conservator, the relocation of a department between offices hardly constitutes a controlling significant different type of use of facilities. Furthermore, the subsequent consolidation among offices was not immediate (it did not occur until some time after plaintiff's termination), and was perhaps predictable given the need for the institution to trim costs and operations due to its financial condition. Similarly, as to "continuity of the work-force," testimony given in this case suggests that the almost 2,000 member SFSB work-force was hired by SFSA as a result of the RTC's receivership on October 21, 1992 (See, e.g., Pavlonnis Dep. at 17.) While this work-force dwindled during the RTC conservatorship and receivership, it did so due to the natural progression of winding down a failed financial institution. In addition, the "supervisory personnel" at SFSA after the RTC intervention mirrored that of SFSB, with the addition of approximately 20 RTC employees super-imposed over senior management to implement RTC policy. (See, e.g., Swenck Dep. at 14-15.) With regard to the plaintiff, her immediate supervisors, Michael O'Hopp and Jim Pavlonnis, did not change after the intervention. With regard to "similarity of jobs and working conditions," plaintiff's job before intervention consisted largely of financial forecasting, regulatory compliance, market valuations, and contract negotiations. (Rhoads Dep. at 146-47.) After invention, plaintiff worked almost exclusively on the institution's business plan, a document required by the RTC to operate and manage the supervised institution. (Swenck Dep. at 32.) Although the work-product which Rhoads produced after the intervention changed, her contribution to the business plan mainly involved the financial forecasting and analysis for which she had been known prior to intervention. (Pavlonnis Dep. at 46.) Finally, with regard to the "ability of the predecessor to provide relief," and "similarity in machinery, equipment, and production methods," neither factor appears dispositive in this case. The first factor serves to insure that FMLA rights accrued under one employer are compatible with work for a successor employer. Where, as in this case, the plaintiff had no FMLA claim against the former employer,[15] the ability of the predecessor to provide relief is irrelevant. The 1254 factor relating to machinery, equipment and production methods is not addressed in this opinion, as it does not appear significantly to apply in this non-manufacturing context. In sum, the factors which the DOL regulations leave this Court to utilize in order to determine whether the RTC is a successor in interest for the purposes of Rhoads's FMLA claim, when evaluated either individually or as a whole, lead to the conclusion that Rhoads should be allowed to maintain a FMLA claim against the RTC. Just as the RTC was the successor in interest to the assets of SFSB, it should also be required to stand in the shoes of SFSB with regard to employees who continued their work alter the intervention of the RTC. Rhoads's FMLA claim centers on an illness which she suffered in September of 1993, as a result of chronic health conditions a condition which had been aggravated in her workplace both before and after RTC intervention. Under the RTC, the management involved in working with Rhoads to improve her health and her ability to contribute in her job, remained substantially the same, with the addition of another layer of personnel management from Atlanta after the 1993 changes. That additional layer of management was alerted to Rhoads's ongoing complaints as to the effect smoking in the workplace was having on her health, by internal memos written by Michael O'Hopp, Rhoads's supervisor, during 1993. (Jones Dep. Ex. 10; Rhoads Dep. Ex. 9.) Therefore, not only does the test for successor in interest under the federal regulations weigh in favor of allowing Rhoads's claim, but given the notice which the RTC had of Rhoads's medical condition, this Court concludes under circumstances in the within case, that it is regarded proper to allow the claim of plaintiff to precede. Given that Rhoads is an eligible employee, the critical issue is whether, in this case, Rhoads has raised sufficient evidence to establish that during the relevant time period: (1) she suffered from a serious health condition which rendered her unable to perform the functions of her job, and (2) the RTC was properly so notified prior to her termination.[16] If Rhoads has not raised sufficient evidence to establish those two prerequisites for a proper FMLA claim, it at least seems appropriate to allow the RTC's own sick leave policy to prevail, and therefore, dismiss Rhoads FMLA claims on those grounds. b. Serious Health Condition A FMLA qualifying serious health condition involves either "inpatient care" at a hospital or similar institution, or "continuing treatment by a health care provider." 29 U.S.C. § 2611(11). The federal regulations governing the FMLA as to what constitutes a "serious health condition," make it clear that health conditions characterized under "continuing treatment by a health care provider," could very well include both asthma and migraines, as both conditions are specifically mentioned in these regulations. For instance, under the interim FMLA regulations, the qualifying conditions include: an illness ... that involves ... [a]ny period of incapacity requiring absence from work ... of more than three calendar days, that also involves continuing treatment by (or under the supervision of) a health care provider; or continuing treatment by ... a health care provider for a chronic or long-term health condition that is incurable or so serious that, if not treated, would likely result in a period of incapacity of more than three calendar days.... 29 C.F.R. § 825.114 The final regulations clarify: "A chronic serious health condition is one which: ... [m]ay cause episodic rather than a continuing period of incapacity (e.g. asthma, diabetes, epilepsy, etc.)." 29 C.F.R. § 825.114(a)(2)(iii). Those final regulations go on specifically to exclude migraines from a laundry list of ailments too insignificant for FMLA coverage. 29 C.F.R. § 825.114(c). Additionally, the final regulations state: 1255 Absences attributable to incapacity under paragraphs (a)(2)(ii) or (iii) qualify for FMLA leave even though the employee ... does not receive treatment from a health care provider during the absence.... For example, an employee with asthma may be unable to report for work due to onset of an asthma attack or because the employee's health care provider has advised the employee to stay home when the pollen count exceeds a certain level. 29 C.F.R. § 825.114(e). Thus, both the above regulations and the developing case law on this subject suggest that both asthma and migraines may qualify as a serious health condition under the FMLA. See, e.g., McClain v. Southwest Steel, Co., Inc., 940 F. Supp. 295, 298-300 (N.D.Okl. 1996) (summary judgment not appropriate where plaintiff contended absenteeism was the result of chronic nausea, diarrhea, severe headaches and other similar health problems); Hendry v. GTE North, Inc., 896 F. Supp. 816, 827-28 (N.D.Ind.1995) (summary judgment not appropriate where plaintiff's headaches created a genuine issue of fact as to whether plaintiff had a serious health condition which rendered her unable to perform the functions of her job). Rhoads has a well documented chronic health condition, namely asthma, and the record clearly shows she suffered from episodic periods of incapacity involving the inability to breathe freely and involving migraines. Rhoads, in sworn testimony, states that when she had asthma or migraines, she was limited in her ability to perform everyday activities, including her ability to drive, work, and, at the most basic level, breathe. (Rhoads Decl. ¶¶ 3-4.) Doctors involved in Rhoads's treatment confirm that when suffering from asthma she was unable to perform her job. (Chanales Dep. at 114-15.) During the critical period of September 1st to the 15th, Rhoads asserts that she suffered from migraines and lingering respiratory problems, as a result of her exposure to smoke during her meeting at the RTC on August 12, 1993. (Rhoads Dep. at 339.) Prior to September 1st, Rhoads sought medical consultation and treatment from Dr. Captain on August 12th, in particular with respect to treatment of her migraines (Rhoads Dep. at 340), from Dr. Chanales on August 17th and 31 st to treat her asthma (Chanales Dep. at 132, 164), from Shady Grove Adventist Hospital on August 21st, to treat a severe migraine (Rhoads Dep. at 442-43), and from Dr. Gauldi on August 23th, to treat her migraines (Gauldi Dep. at 11). Rhoads was given a variety of medications at varying dosages, by those physicians, and that hospital during August and September, to control her asthma and migraines.[17] Unfortunately, it appears that the medication which Rhoads took for asthma triggered or compounded her migraines. (Chanales at 81-82; Chanales Dep. Ex. 10.) During Rhoads's August 17th office visit to Dr. Chanales, Dr. Chanales recorded that although Rhoads was not suffering acute asthma during her office visits, lie understood her to be suffering from that condition through observation and by taking her patient history. (Chanales Dep. 134-37.) However, after Rhoads's August 31, 1993 office visit, Dr. Chanales noted: "Impression: 1. Asthma somewhat worse due to lack of medications. 2. Migraine headaches quite severe." (Chanales Dep. Ex. 10.) As a result of those office visits, Dr. Chanales wrote two notes for Rhoads, one dated August 18, 1996 and one dated September 2, 1993, both recommending she work in a smoke free environment. (Rhoads Dep. Ex. 16; Rhoads Dep. Ex. 20.) Those items, intended as information for the SFSA, however, did not specifically reference Rhoads's then current medical condition. 1256 Dr. Gauldi, a neurologist, examined Rhoads on August 23rd, following up on her severe migraine episode of August 21st. After that visit, he noted that Rhoads had controlled her recent headaches with Fiorinal, and that he had advised her to discontinue that medication and to pursue a course of medication including Pamelor and Toradol, medications which he noted might take as long as two weeks to take effect. (Gauldi Dep. Ex. 3.) After September 1st, Rhoads was not seen again by a doctor until after her termination by SFSA. However, from September 1st to the 15th, Rhoads insists that her headaches continued and that she did not feel well enough to work.[18] (Rhoads Dep. at 450-53, 488, 514.) Rhoads's testimony, coupled with the inferences raised by the notes taken by Dr. Chanales on August 31, 1993, creates a genuine issue of fact as to whether from September 1st to the 15th, Rhoads suffered from a serious health condition which rendered her unable to perform her job.[19] c. Notice Requirements under the FMLA Finally, defendants may not be penalized under the FMLA, unless Rhoads gave them sufficient notice that she was incapacitated and unable to work. On September 1, 1993,[20] Rhoads was asked to report to work after being allowed to work at home from May, 1993 to August, 1993.20 From September 1st forward, Rhoads notified SFSA, in a potentially FMLA appropriate manner, on numerous occasions that she was too ill to report to work. On September 1st, Rhoads called her supervisor, Pavlonnis, and informed him that she had a headache, did not feel well enough to come to work, and expected to be absent for one week recuperating. (Rhoads Dep. at 451, 463-64.) That conversation is augmented by notes taken that day by Pavlonnis. (Pavlonnis Dep. Ex. 18.) Rhoads gave notice again on September 8th, indicating she still did not feel well enough to work. (Pavlonnis Dep. Ex. 5.) On September 9th, SFSA received a note from Dr. Chanales, dated September 2, 1993, indicating that Rhoads must work in a smoke-free environment or be allowed disability leave. (Muniz Dep. at 129.) On September 13th, Rhoads, having received a probation letter from SFSA, spoke to Dr. Chanales about her condition and secured a further letter from the Chanales stating: [Rhoads] continues to require treatment for her asthmatic disease which has been exacerbated by exposure to smoke on your premises. This treatment has been complicated by the development of severe headaches as a side effect of some of the medications that are being used to treat her asthma. She still is not in good enough shape to return to work, and I certainly continue to maintain that she should not be allowed in your work place 1257 unless it is certifiably free of cigarette smoke. (Chanales Dep. Ex. 2.) It should be noted, however, that Dr. Chanales did not see plaintiff from September 1st to September 13th. (Chanales Dep. at 178-179). In addition, Dr. Chanales letter was not received until after SFSA terminated Rhoads. (Muniz Dep. at 154.) An employee seeking FMLA leave "shall provide at least verbal notice sufficient to make the employer aware that the employee needs FMLA-qualifying leave, and the anticipating timing and duration of the leave." 29 C.F.R. § 825.302(c). However, as the Fifth Circuit stated in Manuel v. Westlake Polymers Corp., "[t]o require the employee to designate her leave as pursuant to the FMLA would render these provisions meaningless, if not directly contradict them." 66 F.3d 758, 762 (5th Cir.1995). Further, the interim regulations provide: In all circumstances, it is the employer's responsibility to designate leave, paid or unpaid, as FMLA-qualifying, based on the information provided by the employee. In any circumstance where the employer does not have sufficient information about the reason for an employee's use of paid leave, the employer should inquire further to ascertain whether the paid leave is potentially FMLA-qualifying. 29 C.F.R. § 825.208(a)(2). The burden on employers is not so onerous as that rule might indicate, as employers, once given notice of the request for potentially FMLA qualifying leave, may require the employee to provide certification from a physician. See 29 U.S.C. § 2613(a). If the employer has reason to doubt the validity of the certification provided by the employee, which no doubt would have been the situation in the within case, the employer may ask for a second opinion from a different physician. See 29 U.S.C. § 2613(c). Where there is a dispute between the medical opinions, the act provides further resolution procedures. See 29 U.S.C. 2613(d)-(e). SFSA, however, chose to terminate Rhoads on her eleventh day away from work, rather than to wait for Dr. Chanales's medical certification of her illness to arrive, and assess its legitimacy.[21] Indeed, the record reveals that had SFSA received Dr. Chanales's letter prior to terminating Rhoads, its termination decision would not have changed, as more than one witness stated Rhoads was fired because SFSA simply did not believe she was sick. (Muniz Dep. at 38, 53-54; Jones Dep. at 131.) SFSA chose not to follow procedures required by the FMLA because it did not consider itself constrained by the FMLA. However, this Court, having determined that Rhoads was an eligible employee counter to the RTC's conclusion is bound to apply the FMLA to these facts. While the Court agrees with the RTC that Dr. Chanales's September 2, 1993 note was insufficient to give the SFSA notice that Rhoads was suffering from a serious health condition,[22] Rhoads has created a genuine issue of disputed fact as to whether the verbal notice which she gave Pavlonnis oil September 1st, 8th, and on successive days, given SFSA's awareness of her chronic health conditions, was sufficient reasonably to apprise SFSA that plaintiff wished to take time off due to a serious health condition. In sum, Rhoads has created a disputed issue of fact with regard to whether she suffered from serious health condition, and as to the adequateness of the notice which she gave SFSA that her leave was within the protection of the FMLA. V. Plaintiff's State Law Claims a. Montgomery County Human Rights Law In her complaint, Rhoads asserts the defendants' violated the Montgomery County 1258 Human Rights Laws ("MCHRL"), and Md. Ann.Code. Art. 4913, § 42 (1957),[23] by "failing to reasonably accommodate Plaintiff's known handicap, by discharging her and by the other actions set forth." (Am. Compl. ¶ 73.) Plaintiff, however, cannot state a claim against SFSA because the place of plaintiff's employment during August and September of 1993 was Frederick County. (Swenck Dep. at 8-9, 28; Muniz Dep. at 84; Pavlonnis Dep. at 100, 106; O'Hopp Dep. at 112; Rhoads Dep. at 267.) Therefore, the events around which Rhoads's MCHRL complaint revolves discipline and termination for excessive absenteeism occurred in Frederick County, and hence, do not provide a basis for a MCHRL claim. In addition, Rhoads's MCHRL claim against either SFSA or SFSB must fail because it is duplicative of her ADA claim. The MCHRL includes an explicit policy statement that prohibits the filing of claims under the MCHRL, where those claims are treated adequately by similar state or federal statutes: The prohibitions in this article are substantially similar, but not necessarily identical, to prohibitions in federal and state law. The intent is to assure that a complaint filed under this article may proceed more promptly than possible under either federal or state law. It is not county policy, however, to create a duplicative or cumulative process to those existing under similar or identical state or federal laws. MCHRL § 27-1(c). While the ADA is not identical to the MCHRL, it is substantially similar. Therefore, this Court will grant the defendants' summary judgment motion with regard to Counts III and IX, plaintiff's MCHRL claims. b. Maryland Common Law "Duty to Provide a Safe Workplace" Rhoads alleges that defendants breached a common-law "duty to provide a safe workplace," by exposing her to cigarette smoke in the workplace, and consequently, causing her severe physical illness. (Am. Compl. ¶¶ 82-87, 111-16.) The defendants argue that plaintiff's tort claims against SFSA and SFSB are barred by the Maryland Worker's Compensation Act ("WCA"), Md. Lab. & Emply. Code Ann. §§ 9-501 to 9-1201 (Supp.1994). Indeed in most instances, the WCA is the exclusive compensation mechanism for employees injured in the course of their employment, i.e., it precludes other claims. See Brady v. Ralph M. Parsons Co., 327 Md. 275, 278, 609 A.2d 297 (1992); Md. Lab. & Employ. Code Ann. § 9-509. The Maryland WCA is applicable to claims for "accidental personal injuries." The WCA defines an "accidental personal injury" as: (1) an accidental injury that arises out of and in the course of employment; (2) an injury caused by a willful or negligent act of a third person directed against a covered employee in the course of employment of the covered employee; or (3) a disease or infection that naturally results from an accidental injury that arises out of and in the course of employment, including: (i) an occupational disease, and (ii) frostbite or sunstroke caused by a weather condition. § 9-101. Applying this definition to the facts of this case, the defendants assert plaintiff's workplace injuries due to cigarette smoke are accidental injuries and therefore, a tort claim based on these injuries may not proceed. An accidental injury, under Maryland law, is "some unusual and extraordinary condition or happening in the employment not usually and naturally incident thereto." Holbrook v. GM Assembly Division, General Motors Corp., 15 Md.App. 425, 430, 291 A.2d 171 (1972). As smoking was banned in the areas in which Rhoads worked, its occurrence in violation of SFSB and SFSA rules, and applicable building codes, could be considered unusual and extraordinary. The fact that the majority of plaintiff's claimed injuries were, in plaintiffs own 1259 words, the result of "prolonged exposure to cigarette smoke at SFSA's offices," (Pl.'s Opp. at 58), does not automatically put these injuries outside the scope of WCA coverage. A WCA covered injury may be caused by conditions "extending over a substantial period of time; it need not be suddenly incurred." Holbrook, 15 Md.App. at 432, 291 A.2d 171. See also Union Mining Co. v. Blank, 181 Md. 62, 78, 28 A.2d 568 (1942). Plaintiff was exposed to smoking at work, and the plaintiff's work environment was the responsibility of her employer. SFSB and SFSA were cognizant of Rhoads's acute sensitivity to secondhand smoke, and allowed the conditions which caused her injury to persist. In these circumstances, this Court concludes that the plaintiff's injuries were the result of conditions she suffered in the "course of her employment," and thus, should be regarded as accidental personal injuries. WCA § 9-101. Though Maryland courts have yet to directly treat the issue presented in this case, this Court believes a finding that plaintiff's injuries are outside the WCA would controvert the principles underlying Maryland law. Therefore, defendants' summary judgment motion in connection with Counts V and X of plaintiff's complaint is granted. c. Failure to Pay Accrued Vacation Pay In Counts VI and VII of plaintiff's amended complaint, Rhoads seeks recovery for $4,504.14 in "accrued unused vacation pay" allegedly accrued as of the date of her termination. (Am. Compl. ¶¶ 93, 98.) In Count VI, she bases her claim on the Maryland Wage Payment and Collection Law. Md. Labor & Code Ann. §§ 3-501 to 3-509 (Supp. 1994). In Count VII, Rhoads alleges a common law breach of an employment agreement. Both of these claims fail as a matter of law. Rhoads's statutory claim fails because her allegedly accrued vacation pay was no "compensation that is due to an employee for employment." MD. LABOR & EMPL.CODE ANN. § 3-501(c). At the time of Rhoads's termination, SFSA's personnel policies clearly stated that employees terminated for cause were not due cash representing accrued vacation pay. (Rhoads Dep. at 1092-93; Jones Dep. at 50; Rhoads Dep. Ex. 2 at 8.) With regard to plaintiff's contract claim, Rhoads's essential argument is that she had accrued vacation pay which ripened as earned, and that therefore, was payable like any other wages on termination under a vacation pay policy represented in SFSA's employee manual dated April 1, 1986. (Rhoads Decl. Ex. B at 2.40 ("Persons who are discharged are not entitled to payments other than earned compensation and earned but unused vacation and are not entitled for rehire.").) In so arguing, plaintiff attempts to put aside SFSA's August 15, 1993 modification to its employee manual which specifically denies accrued vacation pay to those terminated for cause (Rhoads Dep. Ex. 2 at 8 ("If you are terminated for cause by the Association, payment for accrued vacation leave is forfeited").) This Court notes, however, that under either manual the payment of accrued vacation pay was only due at separation. At no time could employees demand the cash value of their accrued vacation pay during their employment. (Jones Dep. at 50.) Given this fact, whether or not Rhoads is entitled to her accrued vacation pay must turn on the personnel policy in effect at the time of her termination. Under Maryland law, provisions added to an employee manual after an employee is hired apply to that employee because it is understood that the employee consents to the policy modification by continuing to work. See Conkwright v. Westinghouse Elec. Corp., 933 F.2d 231, 240 (4th Cir.1991) ("All employees expect to be covered by the personnel policies of the company in existence at the time of their current work, not when they were hired twenty years ago ... Moreover, an employer expects to treat all its employees according to the same basic benefit rules, and not apply a hodge-podge of rules based on the starting date of the employee."); Castiglione v. Johns Hopkins Hosp., 69 Md.App. 325, 334 n. 4, 517 A.2d 786 (1986), cert. denied, 309 Md. 325, 523 A.2d 1013 (1987). Therefore, Rhoads's vacation pay claim must be evaluated with 1260 reference to the August 15, 1993 manual, and under this manual it must be denied. (Rhoads Dep. Ex. 2 at 8.) Whether or not Rhoads had a copy of the policy modification with regard to accrued vacation pay is irrelevant to determining entitlement to benefits. See Gillis v. Hoechst Celanese Corp., 4 F.3d 1137, 1141 (3rd Cir.1993), cert. denied, 511 U.S. 1004, 114 S. Ct. 1369, 128 L. Ed. 2d 46 (1994). Furthermore, the fact that Rhoads did not report to work at SFSA does not negate her consent to the August 15, 1993 modification to the vacation pay policy. Rhoads was ostensibly working at home until September 1, 1993 and after this point she remained at home due to her illness Neither action implies her lack of consent, rather, Rhoads alleges had she not been terminated she would still be working for SFSA's successor today. Consequently, defendants' summary judgment motion in connection with Counts VI and VII of plaintiff's complaint is granted. VI. Damages Assuming Rhoads was unlawfully terminated under the FMLA, the defendants assert three grounds for limiting Rhoads's lost wages: (1) the after-acquired evidence doctrine cuts off Rhoads's damages as she would have been terminated for misconduct; (2) Rhoads's job would have been abolished within three months of her termination; and (3) Rhoads would not have been hired by the company that bought SFSA's assets in February 1995. Rhoads has cross-moved for summary judgment on the defendants' after-acquired evidence defense. Additionally, the defendants argue federal law precludes the recovery of the liquidated damages prescribed by the FMLA against the FDIC as a receiver. This Court will address each of these arguments in turn. a. After-Acquired Evidence Both the defendants and the plaintiff have moved for summary judgment with regard to the defendants' lost wages defense under the after-acquired evidence doctrine. This doctrine, as recognized by the Supreme Court, limits the recovery of plaintiffs if after their unlawful termination, their employer learns of wrongdoing "of such severity that the employee in fact would have been terminated on those grounds alone...." McKennon v. Nashville Banner Publishing Co., 513 U.S. 352, ___ - ___, 115 S. Ct. 879, 886-87, 130 L. Ed. 2d 852 (1995). The defendants assert that the plaintiff secretly taped conversations she had with her supervisors in violation of Maryland's wiretapping statute, MD. CTS. & JUD. PROC. CODE ANN. § 10-402 (Supp. 1994); and that had they been aware of Rhoads's tape recording prior to her termination for excessive absenteeism, Rhoads would have been terminated for this conduct alone. After reviewing the record in this case, this Court concludes that there are relevant and material disputed issues of fact both with regard to whether or not SFSA had knowledge of plaintiff's wrongful conduct prior to her termination, and whether or not SFSA "would" have terminated her for her secret tape recording. b. Plaintiff's Job was Abolished The defendants argue that plaintiffs lost wages, should such an award be proper, must be limited because her job was abolished either by the SFSA or when the RTC sold the remainder of SFSA's assets to First Nationwide. Putting aside the defendants' argument that SFSA eliminated plaintiff's job shortly after she was terminated due to the presence of disputed facts, this Court concludes that tie defendants' back pay liability was severed after February, 1995 when the remainder of SFSA's assets were sold to First Nationwide. The purpose of back pay is to restore a plaintiff in an employment discrimination case "to the position she would have occupied but for the discrimination." Patterson v. Greenwood School Dist. 50, 696 F.2d 293, 295 (4th Cir.1982). Certainly, if the plaintiff's job ceases to exist so must any back pay liability. Plaintiff's job with SFSA assuredly would have been eliminated when what remained of SFSA was sold to First Nationwide in February, 1995. Furthermore, Rhoads's argument that SFSA retained liability for back pay even after its sale to First Nationwide is unavailing. The record in this case sufficiently establishes 1261 that Rhoads would not have been among those SFSA employees offered positions by First Nationwide in 1995. (Pavlonnis Decl. ¶¶ 5-12; Jones Dep. at 36-41.) Rhoads served SFSA as a financial analyst, a function handled almost exclusively by First Nationwide's corporate headquarters in San Francisco, California. (Id.; Swenck Dep. at 37.) Accordingly, Rhoads has proffered insufficient evidence to support any possible theory for recovery of back pay after February of 1995. Cf. Blackburn v. Martin, 982 F.2d 125, 129 (4th Cir.1992) (back pay not recoverable in connection with a position abolished for financial reasons, or tied specifically to a contract or project which subsequently ended); Gaddy v. Abex Corp., 884 F.2d 312, 319 (7th Cir.1989) (employer's back pay liability for the wrongful lay-off of an employee/plaintiff not severed when employer sold plant where plaintiff worked given evidence which revealed employees in plaintiff's former department continued to be employed in the same positions by the new plant owner after the sale); Carter v. Shop Rite Foods, 470 F. Supp. 1150, 1159-61 (N.D.Tex., 1979) (back pay terminates when employer sells and ceases to control division that formerly employed women wrongfully denied promotions). c. Liquidated Damages Under the FMLA, at the discretion of this Court, liquidated damages may be proper. See 29 U.S.C. § 2617(a)(1)(A)(iii). The defendants argue that plaintiff is not entitled to such liquidated damages pursuant to 12 U.S.C. § 1825(b)(3) which provides that the FDIC "shall not be liable for any amounts in the nature of penalties or fines." In order to carry this point, the defendants must establish that the liquidated damages available under the FMLA are similar in nature to a penalty, and that 12 U.S.C. § 1825(b)(3) operates to bar the award of such damages against the FDIC. To answer the threshold question of whether FMLA liquidated damages are penalties, this Court will review the analogous remedial provisions of the Fair Labor Standards Act, 29 U.S.C. § 216 ("FLSA"), and the Age Discrimination in Employment Act, 29 U.S.C. § 626 ("ADEA"). The liquidated damages provided for in the FLSA are deemed compensatory and not a penalty. See Brooklyn Savings Bank v. O'Neil, 324 U.S. 697, 707, 65 S. Ct. 895, 902, 89 L. Ed. 1296 (1945) ("[t]he liquidated damage provision is not penal in its nature but constitutes compensation for the retention of a workman's pay which might result in damages too obscure and difficult in proof for estimate other than by liquidated damages."). In contrast, the Supreme Court has held the liquidated damages provided for in the ADEA are punitive. See Trans World Airlines, Inc. v. Thurston, 469 U.S. 111, 125-26, 105 S. Ct. 613, 624, 83 L. Ed. 2d 523 (1985) ("The legislative history of the ADEA indicates that Congress intended for liquidated damages to be punitive in nature."). After comparing the case law and legislative history available for the three statutes, this Court concludes that the liquidated damages provision of the FMLA operates in a manner most analogous to the liquidated damages provision of the FLSA, and therefore, should not be considered a penalty. Although the wording of the FLSA and the FMLA liquidated damages provisions are not identical, they are substantially similar, particularly given the amendments to the FLSA contained in the Portal-to-Portal Act of 1947, 29 U.S.C. §§ 251-262. Under the FLSA, "[a]ny employer who violates the provisions of section 206 or section 207 of this title shall be liable to the employee ... in the amount of their unpaid ... compensation, as the case may be, and in an additional equal amount as liquidated damages." 29 U.S.C. § 216. This provision was amended by the Portal-to-Portal Act as provided, if an employer shows to the satisfaction of the court that the act or omission giving rise to such action was in good faith and that he had reasonable grounds for believing that his act or omission was not a violation of the Fair Labor Standards Act of 1938, as amended, the court may, in its sound discretion, award no liquidated damages or award any amount thereof not to exceed the amount specified in section 216 of this title. 1262 29 U.S.C. § 260. Similarly, under the FMLA, "[a]ny employer who violates section 2615 of this title shall be liable to any eligible employee affected (A) for damages equal to (I) the amount of (I) any wages ... or other compensation denied or lost ...; and (iii) an additional amount as liquidated damages equal to the sum of the amount described in clause (I) ... except that if an employer ... proves to the satisfaction of the court that the act or omission which violated section 2615 of this title was in good faith...." 29 U.S.C. § 2617. Furthermore, the FLSA serves as a reference for many of the legal standards and principals used in the FMLA, including the enforcement scheme. See Waters v. Baldwin County, 936 F. Supp. 860, 863 (S.D.Ala.1996) (finding the definition and interpretation of the term "employer" is the same under the FMLA and the FLSA); Rich v. Delta Air Lines, Inc., 921 F. Supp. 767, 772 (N.D.Ga.1996) (FMLA expressly directs courts to apply the principles for calculating "hours of service" as established under the FLSA to the FMLA context); Morris v. VCW, Inc., 1996 WL 740544, 2 (W.D.Mo. 1996) (using the case law defining "good faith" for purposes of the FLSA liquidated damages provision to inform the standard for "good faith" under the FMLA's liquidated damages provision); S.Rep. No. 103, at 35 (1993), reprinted in 1993 U.S.C.C.A.N. 3, 37 ("S.5's [the Senate version of the FMLA] enforcement scheme is modeled on the enforcement scheme of the FLSA...."). Indeed, the legislative history directly supports this close relationship. "The Family and Medical Leave Act ... accommodates the important societal interest in assisting families, by establishing a minimum labor standard for leave. The bill is based on the same principle as the ... minimum wage ... and other labor laws that establish minimum standards for employment." S.Rep. No. 103, at 4-5 (1993), reprinted in 1993 U.S.C.C.A.N. 3, 6-7. Additionally, there is an important difference between the liquidated damages provision of the FMLA and the similar ADEA provision the ADEA provision is appropriate only in cases of willful violations, which as defined by the Supreme Court requires a showing that the employer shows "reckless disregard" for determining whether its conduct violated the ADEA. See 29 U.S.C. § 625(b), Thurston, 469 U.S. at 125-26, 105 S. Ct. at 623-24 (finding the ADEA liquidated damages provision should be interpreted in accord with the legislative history which indicated it was adopted in place of a criminal provision borrowed from the FLSA). Whereas, employers under either the FMLA or the FLSA may assert the affirmative defense of good faith to avoid a liquidated damages award. See 29 U.S.C. § 2617(a)(l)(A)(iii); 29 U.S.C. § 260. See also, Walton v. United Consumers Club, Inc., 786 F.2d 303, 311 (7th Cir.1986) ("The Thurston standard does not apply to the doubling of damages under the FLSA ... because the FLSA does not use the word `willful' and puts the burden on the defendant.") Finally, the reasons behind the interpretation that the liquidated damages provision of the FLSA is not penal, translates fairly well to the context of the FMLA. The FLSA liquidated damages provision is considered compensatory, rather than penal both due to the obscure nature of assessing the damage of denying the minimum wage, and out of a "recognition that failure to pay the statutory minimum on time may be so detrimental to maintenance of the minimum standard of living ... that double payment must be made in the event of delay in order to insure restoration of the worker to that minimum standard of well being." Brooklyn Savings Bank, 324 U.S. at 707, 65 S. Ct. at 902. Similarly, FMLA intends to provide a minimum standard of leave, which Congress has also found necessary for the general health and well being of workers and their families, and the value of which could be quite difficult to assess. The deterrent of double damages found in the FMLA operates like those of the FLSA it prevents employers from gambling on their ability to evade providing coverage, and therefore, acts as insurance that employees will not be denied FMLA benefits. Cf. Brooklyn Savings Bank, 324 U.S. at 709, 65 S. Ct. at 903. In sum, though the answer to this question is by no means "clear as a bell" double damages will always combine *1263 some properties of compensation and penalty for those who receive and pay them however, without further direction from the Fourth Circuit, this Court concludes considering the liquidated damages provision of the FMLA non-penal appears to be the wisest course in this case. In light of this Court's conclusion that the liquidated damages provision of the FMLA is not a penalty, this Court need not determine whether 12 U.S.C. § 1825(b)(3) bars the award of liquidated damages in this case. VII. Conclusion This Court grants in part and denies in part the defendants' motion for summary judgment. Defendants' motion for summary judgment with respect to Counts II, III, V to VII, and VIII to X of plaintiff's complaint is granted. Plaintiff's cross-motion for summary judgment is also denied. Defendants' motion for summary judgement with respect to Count I, plaintiff's alleged FMLA claim against the FDIC, is denied. Finally, the defendants' liability for back pay, should such an award be appropriate in the resolution of this suit, ceases after February 1995, when SFSA's assets were sold. ORDER Defendants' summary judgment motion is hereby denied in part and granted in part. Plaintiff's partial summary judgment motion is hereby denied. NOTES [1] During the relevant period in this case, namely October 21, 1992 through September 15, 1993, the Resolution Trust Corporation ("RTC") acted as conservator for the SFSA, however, since that time, effective June 30, 1995, the Office of Thrift Supervision ("OTS") appointed the RTC receiver for SFSA. Following this substitution of the RTC as receiver for SFSA, the RTC was statutorily terminated and succeeded by the FDIC. The parties in this lawsuit have been appropriately converted. (See Order of May 14, 1996.) [2] The RTC was appointed receiver of SFSB on October 21, 1992 by the RTC. Since that time, as discussed supra, the FDIC has replaced the RTC, and the parties in this lawsuit have been appropriately converted. [3] Rhoads's supervisor, Michael O'Hopp, has testified that he in fact allowed Rhoads to work at home, beginning in May of 1993, because of her threats to expose romantic relationships involving O'Hopp and the plaintiff, and O'Hopp and another employee. (O'Hopp Dep. 104.) [4] The RTC/Conservator for SFSA, as Rhoads's employer from October 21, 1992 until her termination, will be referred to in the opinion, wherever possible, simply as the SFSA. [5] Rhoads was afforded lengthy absences from work in the past, absences approved by supervisors. (Pavlonnis Dep. at 93.) Additionally, the record in this case clearly indicates that Rhoads was considered a valuable employee. She was given significant raises, good performance evaluations, and appears to have performed complex financial analysis upon which her supervisors relied. (Jones Dep. Ex. 8.) [6] Outside the episodes of asthma and migraines plaintiff alleges she suffered due to her exposure to smoke at work, plaintiff appears to have led a full life in every respect. For instance, unlike many asthma sufferers, plaintiff is able to bicycle and teach ballet dancing when not exposed to cigarette smoke. (Rhoads Dep. 896-97.) Additionally, Rhoads testified that her migraines are completely correlated to exposure to cigarette smoke. (Rhoads Dep. at 905.) [7] SFSA's impression of Rhoads's workplace needs was appropriately based on the assertions of her doctors in numerous letters to SFSA. (Chanales Dep. Ex. 2, Tab A at unnumbered pages 9-12; Rhoads Dep. Ex. 16; Rhoads Dep. Ex. 20.) [8] Had Rhoads been able to establish such discrimination the burden would have shifted to SFSA to rebut plaintiff's assertion that the accommodation which plaintiff proposed was reasonable or otherwise to establish that plaintiff's accommodation would cause "undue hardship," as defined in 42 U.S.C. § 12111(10), for SFSA. See Champ v. Baltimore County, 884 F. Supp. 991, 999 (D.Md.1995) (Hargrove, J.), aff'd, 91 F.3d 129 (1996). While accommodation and undue hardship have been treated as two sides of the same coin by many courts, undue hardship has been treated by others as the final test against which an employer's responsibilities will be judged. Compare Borkowski v. Valley Cent. Sch., Dist., 63 F.3d 131, 138 (2nd Cir.1995) ("[M]eeting the burden of nonpersuasion on the reasonableness of the accommodation and demonstrating that the accommodation imposes an undue hardship amount to the same thing."), with, Vande Zande v. St. of Wisconsin Dept. of Administration, 44 F.3d 538, 543 (7th Cir.1995) (Posner, C.J.) ("The employee must show that the accommodation is reasonable in the sense both of efficacious and of proportional costs. Even if this prima facie showing is made, the employer has an opportunity to prove that upon more careful consideration the costs are excessive in relation either to the benefits of the accommodation or to the employer's financial survival or health."). See generally, Bryant, 923 F.Supp. at 733-34 (exploring the relationship between reasonable accommodation and undue hardship). Because the plaintiff, in this case, has failed to proffer significant evidence that she was denied a reasonable accommodation, the more strenuous inquiry of undue hardship is not required. [9] The McDonnell Douglas, Ross approach has been incorporated into the review of ADA retaliation claims in this circuit. See Ennis, 53 F.3d at 57-58 (referring to McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S. Ct. 1817, 36 L. Ed. 2d 668 (1973)); Harmer, 831 F.Supp. at 1308. [10] Rhoads's Declaration states this meeting, and alleged threat, took place on August 18, 1993. This is contrary to other testimony proffered in this case. (Jones Dep. at 247.) [11] The first letter sent by Rhoads's attorney, dated August 20, 1993, requested that she not be required to return to work until her workplace was "totally smoke-free, or some other accommodation was identified." (Pavlonnis Dep. Ex. at 900052.) Additionally, the attorney opined that SFSA's smoke-free policy, effective September 1, 1993, might not be a sufficient accommodation for Rhoads. (Pavlonnis Dep. Ex. at 900052.) SFSA met the only reasonable demand in that letter and allowed Rhoads to remain at home until September 1, 1993. (Jones Dep. Ex. 18.) The second letter sent by Rhoads's attorney was dated September 13, 1993, and followed after SFSA's decision to put Rhoads on probation. [12] Plaintiff's claims involving failure to accommodate her disability against SFSB also do not succeed because plaintiff is not a disabled individual under the ADA for the reasons stated, supra, in this opinion. As to plaintiff's retaliation claim against SFSB, plaintiff has proffered insufficient evidence. Therefore, judgment will be entered with regard to Count VIII, in addition to Count II. [13] The Secretary released final regulations effective April 6, 1995. See 60 Fed.Reg. 2181 (Jan. 6, 1995). However, the interim regulations govern the within dispute since Rhoads's termination occurred on September 15, 1993 prior to the effective date of the final regulations. [14] The RTC contends that "SFSA's principal product after intervention was the assets of the institution itself" Mem. in Opp. to Plaintiff's Cross-Mot. for Summ. J. at 27. [15] Rhoads FMLA claim did not arise until after the RTC intervention, and furthermore, the FMLA statute was not effective until after the RTC intervention. [16] Plaintiff argues that the RTC's failure to follow the FMLA certification process, laid out in 29 U.S.C. § 2613, precludes the RTC from questioning the seriousness of her health condition. That argument "puts the cart before the horse" unless the RTC was properly notified of plaintiff's serious health condition, they would have had no reason to call upon her to provide medical certification of her condition. [17] Dr. Captain prescribed Fiorinol with Codeine to control Rhoads's migraines. (Rhoads Dep. at 418; Chanales Dep. Ex. 2.) Dr. Chanales prescribed inhalants and nose spray (Ventolin, Beclovent and Nasacort. (Rhoads at 416; Chanales Dep. Ex. 2.)) Rhoads was administered Imitrex, Demoral and Vistaril by the attending physician at Shady Grove Adventist Hospital to combat her severe migraine on August 21st. (Chanales Dep. Ex. 2.) Dr. Gauldi prescribed Pamelor, Imitrex and Toradol. (Chanales Dep. Ex. 2.) Those medications had complicated effects on Rhoads and were adjusted periodically from late August until the middle of September, in order to minimize their negative side effects. (Chanales Dep. Ex. 2.) [18] It should be noted that Rhoads did work periodically during August. (Rhoads Dep. at 392.) From the perspective of the FMLA analysis in this opinion, however, Rhoads's ability to work does not become critical until after September 1, 1993. The RTC argues that Rhoads demonstrated her ability to work after September 1, 1993, by writing them letters regarding her condition, faxing them documents and making phone calls. At best, that evidence, when weighed in the light of the medical testimony in this case that both migraines and asthma are conditions which often debilitate those who suffer from those conditions on a sporadic, hour by hour basis, creates a significant disputed issue of fact. [19] Rhoads argues that the SFSA sacrificed its ability to challenge the seriousness of her illness by not following the medical certification procedures of the FMLA, and therefore that she is entitled to summary judgment with respect to her FMLA claim. There is simply no authority for that claim in this Circuit or elsewhere. Furthermore, those procedures guide employers at their option under the statute, "[a]n employer may require that a request for leave under paragraph (C) or (D) of section 2612(a)(1) of this title be supported by a certification issued by the health care provider of the eligible employee...." 29 U.S.C. § 2613. While such certification may protect an employer with regard to disputes over the seriousness of a health condition, the lack thereof, in the absence of an otherwise viable FMLA claim, is surely insufficient to establish an FMLA violation. [20] Rhoads was allowed to work at home during that period in order to avoid exposure to smoking in the offices of SFSA. (Muniz Dep. at 42; Rhoads Dep. at 130.) Although, Rhoads worked at home, she performed all her duties, (Rhoads Dep. at 129-31), and was given an excellent performance review as late as July, 1993. (Jones Dep. Ex. 8.) [21] Under the FMLA regulations in effect in 1993, employers requiring medical certification give employees 15 calendar days to provide the requested certification. 29 C.F.R. § 825.305(a). Even assuming Pavlonnis first requested a doctor's note from Rhoads on September 1, 1993, such a letter was provided on September 15, 1993. While the letter arrived after business hours, said medical certification provided outside the regular business day is hardly significantly inadequate. [22] Dr. Chanales September 2, 1993 note, unlike his later September 13, 1993 note, did not reference Rhoads's current medical condition or state she was too ill to report to work. [23] Montgomery County laws prohibit discrimination against disabled persons. Montgomery County Ord. § 27-19 (Repl.Vol.1994). Maryland state law, through Article 49B, gives a plaintiff a cause of action in state court under the MCHRL. Md. Ann.Code Art. 49B, § 42 (1957).	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/1952140/	740 F. Supp. 470 (1990) David HARTZLER, et al., Plaintiffs, v. The LICKING COUNTY HUMANE SOCIETY, et al., Defendants. No. C2-88-884. United States District Court, S.D. Ohio, E.D. June 29, 1990. 471 Angelo F. Lonardo and Leonard W. Yelsky, Yelsky & Lonardo, Cleveland, Ohio, for plaintiffs. Gregory D. Rankin, Lane, Alton & Horst, Columbus, Ohio, for defendants. ORDER GRAHAM, District Judge. This case arises out of a search of the farm of plaintiff David Hartzler, the seizure of his Morgan horses, and his arrest and prosecution on a charge of cruelty to animals. In March and April, 1987 defendant Judith A. Jones, an employee of the Licking County Humane Society, received complaints from two of plaintiff's neighbors that he was neglecting the horses he kept at his farm near Centerburg, Ohio. Defendant Jones was employed by the Licking County Humane Society as a humane agent under the provisions of Ohio Rev.Code § 1717.06. Such agents are appointed "for the purpose of prosecuting any person guilty of an act of cruelty to persons or animals" and they have the power to arrest persons found violating laws "protecting persons or animals or preventing acts of cruelty thereto." Id. Plaintiff is the proprietor of an insurance agency located in Worthington, Ohio. For a number of years he has been active in breeding, raising, and showing Morgan horses, and has received numerous prizes and awards for his horses. He conducts his Morgan horse operation on a fifty acre farm in Knox County where he resides. Plaintiff and his wife separated in 1986. Mrs. Harztler left the family home with one of their three children. Two children, Amy and Jody, remained with plaintiff. The Hartzlers then became embroiled in a divorce proceeding and a custody dispute. On March 30, 1989, one of Hartzler's neighbors, Mrs. Bonnie Pastor, called the Licking County Humane Society and reported that she had noticed a significant change in the condition of plaintiff's horses. She reported that the horses appeared to be undernourished and she asked the Society to investigate. Shortly thereafter, another neighbor, Rhonda Flinn, who lives directly across the road from the Hartzler farm, made a similar report to the Humane Society. Mrs. Flinn reported that she had observed the Hartzler horses becoming thinner and thinner over a period of months and that they appeared to be lethargic and deprived of adequate water and feed. Both Mrs. Pastor and Mrs. Flinn were themselves experienced in owning, breeding, and raising horses. Defendant Jones, who worked in a veterinarian's office for three and a half years and has been around horses all her life, began an investigation in response to the complaints of Mrs. Pastor and Mrs. Flinn 472 which included three visits to plaintiff's farm. She visited Mrs. Flinn and observed the Hartzler horses from Mrs. Flinn's property. She also established contact with plaintiff's estranged wife, who made various allegations about her husband's conduct, not only with respect to the horses, but also with respect to his personal conduct. Sometime in early April, Ms. Jones consulted the assistant law director of the City of Newark, William Rickrich, for his advice regarding a search warrant to search the Hartzler farm. Mr. Rickrich advised her to continue to monitor the situation and to have a veterinarian accompany her to the farm to observe the horses from the neighbor's property. He also advised her to take photographs and prepare a diagram of the premises. Ms. Jones then contacted veterinarian Louis W. Bremer, and on April 9, 1987, Dr. Bremer accompanied Ms. Jones to the Hartzler farm where he observed the horses from the adjoining property. Based upon his observations, Dr. Bremer concluded that the horses were underfed, underwatered and not given adequate shelter. Sometime in late April, Ms. Jones returned to Mr. Rickrich's office and presented him with a two-page statement outlining the results of her investigation, a copy of Dr. Bremer's report, photographs of the horses, a diagram of the premises, and a statement of her subsequent observations on April 25, 1987 which revealed no change in the condition of the horses. Mr. Rickrich was satisfied that probable cause existed for the issuance of a search warrant. He proceeded to prepare the search warrant affidavit and took Ms. Jones to Judge Gregory Frost of the Licking County Municipal Court on the morning of April 27, 1987. Judge Frost reviewed the affidavit and attached documents, had Ms. Jones swear to the affidavit and granted the search warrant. Ms. Jones arrived at the Hartzler farm to execute the warrant at approximately 11:30 A.M. She was accompanied by Mr. Rickrich, Dr. Bremer, and other individuals she had contacted to assist in transporting the horses, if necessary. Mrs. Pastor noticed the activity and stopped out of curiosity. All of the individuals who were present with Ms. Jones at the time of the search testified that the horses were in deplorable condition and that there was no food or water present on the premises. Much of this testimony was quite graphic, for instance Mr. Smith, a local farmer who was hired to move some of the horses, testified that one of them was more thirsty than any animal he had ever seen and that they were so hungry that they ate the straw on the floor of his livestock trailer which was contaminated with pig feces. Ms. Jones testified that upon observing the condition of the horses in their environment, she decided to seize them pursuant to the warrant and to file a criminal complaint against plaintiff for violating Ohio Rev.Code § 959.13(A)(1), Cruelty to Animals, a second degree misdemeanor under Ohio law. Thereafter, Mr. Rickrich requested an arrest warrant based upon the complaint signed by Ms. Jones. Plaintiff was arrested that afternoon and transported to the Licking County Jail, where he was held overnight. Plaintiff's arrest and the seizure of his horses received considerable attention in the local media and local television stations filmed the horses and his arraignment. Plaintiff pled not guilty to the criminal charges and he was acquitted by a jury on October 22, 1987. His horses remained in the custody of the Licking County Humane Society until his acquittal. Plaintiff subsequently brought the present action against the Licking County Humane Society and defendant Jones asserting claims for damages under 42 U.S.C. § 1983, alleging that defendants' actions violated his rights under the Fourth and Fourteenth Amendments to the United States Constitution. Plaintiff also asserted pendent state claims for malicious prosecution and libel. This case proceeded to trial before a jury on February 12, 1990. At the trial, plaintiff testified that he had always provided proper care for his horses, but that he had become concerned about their condition in March, 1987, when he noticed that they had lost weight. Plaintiff testified that he believed the horses had a parasite problem 473 and he consulted his trainer, who advised that he change the "wormer" medication he was using. Plaintiff attributed the condition of his horses to parasite infestation and maintained that they had always received adequate amounts of food and water. Plaintiff's babysitter, Emily Honiker, testified that she had begun working for plaintiff in September, 1986, watching his children after they returned from school in the afternoon. Ms. Honiker testified that there was hay in the barn and that she had never seen the horses deprived of food or water. Ms. Honiker would arrive between 2:30 and 3:00 p.m. and leave between 6:00 and 7:30 p.m. She would sometimes feed the horses in the evening. Plaintiff's trainer, Catherine Swartz, who sometimes co-owned horses with him, testified that she had visited his farm in March, 1987. At this time, she noted that there was feed on the farm and that the horses were being fed, although she did note that there were three horses which appeared to be rather thin and she had a conversation with plaintiff about changing their medication. She said she was somewhat concerned about the condition of these three horses, describing them as "quite thin with some reduction of muscle mass." She recommended immediate worming, but plaintiff's records indicate that this was not done until April 2, 1987. Ms. Swartz testified that at the time of her visit in March, she saw no evidence of starving horses and that her observation of the Hartzler horses on May 2, 1987, shortly after they were seized, revealed that they were in good health. The evidence revealed that the investigation of the Hartzler horses occurred at a time when the Licking County Humane Society was experiencing financial difficulties and was considering eliminating the office of humane agent. Ms. Jones was actively involved in soliciting support from the communities served by the Humane Society and from the law enforcement agencies of those communities and community groups. She had made a presentation to the Licking County Veterinarian Society on March 10, 1987. Dr. Bremer was in attendance at this meeting and the Veterinarian Society made various recommendations to increase community support for the Humane Society, including increased publicity of its activities. Dr. Bremer was one of several veterinarians who provided spaying and neutering services to the Society on a fee-paying basis. In August, 1987, Dr. Bremer became a member of the Board of Directors of the Society. Fanchon Lewis, who was President of the Licking County Humane Society in 1987, testified that when a complaint of cruelty to animals was received it was the Society's policy to notify the animal owner prior to the filing of criminal charges. Ms. Jones testified that she attempted to contact plaintiff by telephone, but was unable to do so because his home phone was disconnected. The evidence revealed, however, that plaintiff's home telephone was operable during the month of April, 1987 and that both his home and office phones were listed in the applicable telephone directories. Plaintiff's theory of the case was that Ms. Jones, motivated by a desire to generate publicity for her position in order to retain her employment, failed to conduct an impartial investigation of the complaints regarding the condition of his horses and made intentional or reckless misrepresentations for the purpose of obtaining a search warrant. On February 16, 1990, the jury returned verdicts as follows: (1) for the plaintiff on his § 1983 claim for unlawful search and seizure, (2) for defendant Jones on plaintiff's § 1983 claims for unlawful arrest and unlawful prosecution, (3) for the defendants on plaintiff's state law claims of malicious prosecution, and (4) for the defendant Licking County Humane Society on plaintiff's claim of libel. The jury awarded plaintiff the sum of $50,000.00 compensatory damages on his § 1983 claim for unlawful search and seizure and made a finding that defendant Jones acted recklessly as opposed to intentionally. The matter is now before the Court on defendant Jones's motion for judgment notwithstanding 474 the verdict and her alternative motions for a new trial and for a remittitur. The motion was filed on March 28, 1990 and the Court held a hearing on the motion on May 23, 1990. I. MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT It is well settled that in considering a motion for judgment notwithstanding the verdict, the Court must view the evidence in the light most favorable to the party who secured the jury verdict. "[E]vidence must be viewed in the light most favorable to the party against whom the motion is made, drawing from that evidence all reasonable inferences in his favor." Morelock v. NCR Corp., 586 F.2d 1096, 1104 (6th Cir.1978), cert. denied, 441 U.S. 906, 99 S. Ct. 1995, 60 L. Ed. 2d 375 (1979). See also Gilham v. Admiral Corp., 523 F.2d 102, 109 (6th Cir.1975), cert. denied, 424 U.S. 913, 96 S. Ct. 1113, 47 L. Ed. 2d 318 (1976); Perry v. Gulf, Mobil & Ohio R.R., 502 F.2d 1144 (6th Cir.1974). A law officer who obtains an invalid search warrant by making material false statements in the warrant affidavit, either knowingly or in reckless disregard for the truth, is liable under 42 U.S.C. § 1983. Donta v. Hooper, 774 F.2d 716, 718 (6th Cir.1985), cert. denied, 483 U.S. 1019, 107 S. Ct. 3261, 97 L. Ed. 2d 760 (1987). This rule has its genesis in Franks v. Delaware, 438 U.S. 154, 98 S. Ct. 2674, 57 L. Ed. 2d 667 (1978), wherein the Supreme Court held that a search issued on the basis of such an affidavit is a constitutional violation under the Fourth Amendment. In Franks, 438 U.S. at 155-156, 98 S. Ct. at 2676-2677, the Court summarized its holding as follows: [W]e hold that, where the defendant makes a substantial preliminary showing that a false statement knowingly and intentionally, or with reckless disregard for the truth, was included by the affiant in the warrant affidavit, ... and that at [a] hearing the allegation of perjury or reckless disregard is established by the defendant by a preponderance of the evidence, and, with the affidavit's false material set to one side, the affidavit's remaining content is insufficient to establish probable cause, the search warrant must be voided and the fruits of the search excluded to the same extent as if probable cause was lacking on the face of the affidavit. However, if sufficient untainted evidence was presented in the affidavit to establish probable cause, the warrant is valid. United States v. Karo, 468 U.S. 705, 719, 104 S. Ct. 3296, 3305, 82 L. Ed. 2d 530 (1984); United States v. Campbell, 878 F.2d 170 (6th Cir.1989). The Franks Court recognized that probable cause may be founded on hearsay and information received from private citizens, even anonymous informants. Franks, 438 U.S. at 164-165, 98 S. Ct. 2680-2681. The Court in Franks also restricted its holding, noting that the "deliberate falsity or reckless disregard whose impeachment is permitted ... is only that of the affiant, not of any nongovernmental informant." Id., 438 U.S. at 171, 98 S. Ct. at 2684. While the Court is the factfinder in a suppression hearing in a criminal case, in a § 1983 action, fact-finding under the Franks standard is the province of the jury. Hill v. McIntyre, 884 F.2d 271, 175 (6th Cir.1989). In general, a determination of whether there was probable cause for a search which gave rise to a § 1983 action is a question to be determined by a jury unless there is only one reasonable determination. Yancey v. Carroll County, Kentucky, 876 F.2d 1238, 1243 (6th Cir.1989). In Ross v. Meyers, 883 F.2d 486, 488 (6th Cir.1989), a diversity action involving claims of false arrest, false imprisonment, and malicious prosecution, the Sixth Circuit said: The inquiry as to the existence of probable cause is fact-specific and great deference is required to be assigned to the jury's findings of fact as to the issue. See Yancey v. Carroll County, Kentucky, 876 F.2d 1238 (6th Cir.1989) (probable cause determination is to be made by jury unless there is only one reasonable outcome). As with other jury verdicts, the evidence must be construed most strongly in favor of the verdict and 475 all credibility decisions must be resolved in favor of the verdict. E.g., Ratliff v. Wellington Exempted Village Schools Bd. of Educ., 820 F.2d 792 (6th Cir.1987). The statement of Judith Jones which was incorporated into the search warrant affidavit contains statements which the jury could legitimately have found were both false and recklessly made. On the second page of her statement, Ms. Jones recited the fact that Mr. and Mrs. Hartzler were in the process of a divorce and Mrs. Hartzler is terrified of this man. He is an alcoholic with an extremely violent temper. Due to this we feel certain that he will not cooperate in any way. She went on to state that Mr. Hartzler is now being investigated by Licking County Children's Services for child abuse. We have postponed requesting this search and seizure warrant because everyone concerned was afraid that if he got wind of the fact that there were any investigation going on by us or by Children's Services that he might take off with the children. All of this information apparently came from Mrs. Hartzler who obviously was a biased informant and whose credibility should have been questioned by Ms. Jones. Ms. Jones's statement, however, makes it fairly clear that Mrs. Hartzler was the source of this information and that the Hartzlers were involved in divorce and child custody litigation. Thus she revealed to Judge Frost the circumstances affecting the credibility of these statements. The first paragraph of Ms. Jones's statement reads as follows: 3-30-87 I received the first of several complaints on horses belonging to David Hartzler at 7284 Lock Road, Centerburg. All the complaints were of the same nature starvation and neglect. The complainants stated that the horses were in extremely bad shape, very thin, very lethargic and some that would just stand in one place for hours because they were too weak to move around much. This paragraph accurately describes the complaints Ms. Jones received from Mrs. Pastor and Mrs. Flinn. Indeed, plaintiff did not challenge the truthfulness of Ms. Jones's recitation of those complaints, but instead she challenged the veracity of the complainants Mrs. Pastor and Mrs. Flinn on the grounds that they were allied with Mrs. Hartzler in her divorce and custody litigation. Plaintiff produced no direct evidence of this. As to Mrs. Pastor, there was no evidence that she had any relationship whatsoever with Mrs. Hartzler. Plaintiff attacked her credibility solely on the grounds that she was a friend of Mrs. Flinn and that Mrs. Flinn was allegedly a friend of Mrs. Hartzler. The only evidence of a relationship between Mrs. Flinn and Mrs. Hartzler was Mrs. Flinn's testimony that they had been neighbors and that their children played together. There was no evidence of collaboration between Mrs. Hartzler and Mrs. Pastor or Mrs. Flinn, nor any evidence that Ms. Jones was aware of any relationship between them which would have caused her to doubt the credibility of the complaints they related to her. Finally, all of the principal witnesses, including plaintiff and his trainer, concede that some of the horses appeared thin and malnourished. The second paragraph of Ms. Jones statement reads as follows: I proceeded to take Dr. Louis Bremer with me and we went to see the horses, due to the circumstances we did not want to enter the property without permission, so we had to make our observations from the road and also from the neighbors property. Several of the horses were so thin that you could count every bone in their bodies. There were others that were in better shape but only marginally. During our observations we did not see any food out nor any residue the water buckets were empty and the horses were nosing them around looking for water. This is an accurate description of the observations made by Ms. Jones and Dr. Bremer on April 9, 1987. Dr. Bremer's report was attached as Exhibit B to the search warrant affidavit and concluded with his opinion that "I feel that the horses on this farm are not being cared for in a manner consistent 476 with good husbandry practice. They are underfed, underwatered, and not given adequate shelter to protect them from the elements." Plaintiff attacked Dr. Bremer's opinion on cross-examination on the grounds that his diagnosis was made without the benefit of a physical examination of the horses and with the use of field glasses from a distance ranging from ten to fifteen feet up to one hundred yards. Dr. Bremer testified that he was able to make a sufficient observation to reach the conclusions stated in his report. The only other evidence offered by plaintiff in an attempt to show that it was not reasonable for Ms. Jones to rely on Dr. Bremer's opinion was the suggestion that Dr. Bremer's opinion was tainted by his relationship with the Humane Society. The evidence showed that the Society did pay Dr. Bremer and a number of other local veterinarians for spaying and neutering small animals. There was no evidence as to the amount of compensation he received for such services. It was further shown that Dr. Bremer was present at a meeting of the Licking County Veterinarian Society when Ms. Jones spoke to the group as part of her efforts to enlist community support for the preservation of the office of Humane Agent, and that the veterinarians suggested various strategies to generate community support, including increased publicity. There is no evidence of Bremer's role, if any, in this meeting. The only other evidence of a special relationship between Bremer and the Humane Society was the fact that Bremer was elected to fill a vacancy on the Board of Directors of the Humane Society in August, 1987, four months after the search of the Hartzler farm. On this basis plaintiff argues that Bremer's opinions were tainted by his business relationship with the Humane Society and his interest in generating additional publicity for its operation. The third paragraph of Ms. Jones' statement reads as follows: Rhonda Flinn who lives across the road from Mr. Hartzler, has told me of one incident in particular where a mare went down in her stall and laid their [sic] thrashing for 24 hours before it died, Mr. Hartzler was aware of this and was asked by one of his daughters to call the vet, but he refused, this incident was verified by Mrs. Hartzler. During the last snow storm we had, the horses were left out, there is not even a tree to act for a windbreak for these animals, if we had had a more severe winter there are five horses that would definitely not have made it. This paragraph is an accurate recitation of information provided by Mrs. Flinn to Ms. Jones. The evidence revealed that part of the information related by Mrs. Flinn about the mare that died was based upon hearsay information Mrs. Flinn received from her daughter, who in turn received it from one of the Hartzler girls. However, the evidence further showed that Mrs. Flinn did have firsthand knowledge of a corroborating fact, namely, that she personally observed plaintiff remove the body of a dead horse from the barn and bury it on his property. As noted above, plaintiff challenged Mrs. Flinn's veracity and the reasonableness of Ms. Jones' reliance upon her statements on the grounds of her alleged collaboration with Mrs. Hartzler. The issue before this Court is whether the jury, based upon the evidence presented at trial, could reasonably find that the information provided to the magistrate by Ms. Jones and indirectly by the various other witnesses who related information to Ms. Jones was false to such an extent as to mandate a finding that there was no probable cause to search plaintiff's farm. Plaintiff relied heavily on the argument that Ms. Jones made no serious effort to contact him concerning the condition of the horses, despite the fact that it was the Society's custom and practice to do so. Even if Ms. Jones's reasons for not doing so are rejected, her failure to do so would not, as a matter of law, defeat a finding of probable cause. Law enforcement officers have never been required under the Fourth Amendment to obtain a suspect's view of the reliability of the information suggesting that the suspect has committed a crime, or to conduct a full-scale investigation of 477 the circumstances prior to obtaining a warrant. Rather, it is the task of the magistrate to weigh and evaluate the quantum and quality of the information which the officer does possess to determine if that information is sufficient for a finding of probable cause. However, if indeed the jury did conclude that Ms. Jones did not follow standard procedure prior to obtaining a warrant, it could consider this in evaluating her credibility and in deciding whether she knowingly or recklessly provided false information to the magistrate. The Court concludes that sufficient evidence was introduced to create a jury question on the issue of Ms. Jones's credibility, including evidence that her position as humane agent was in jeopardy. There was also sufficient evidence to create an issue for the jury regarding the reliability of the statements provided to Ms. Jones by Mrs. Hartzler. In regard to the information provided by Dr. Bremer, Mrs. Pastor and Mrs. Flinn, the Court concludes that plaintiff failed to introduce any evidence which would bring this information into question. Plaintiff argued that Mrs. Pastor was a friend of Mrs. Hartzler, and that Mrs. Flinn was a friend of Mrs. Pastor, and that therefore their information was suspect. However, plaintiff introduced no evidence at trial to support this theory. There was simply no evidence produced at trial from which the jury could reasonably conclude that the information provided by these witnesses was false. Plaintiff also sought to impugn Dr. Bremer's information. However, there was no evidence that Dr. Bremer had any interest in the continuation of the position of humane agent, nor could the fact that some months after the search, he agreed to serve on the Society's board of directors have any impact on the truth of his statements at the time of the warrant. Plaintiff introduced evidence that the horses were being given food and water at the time of the search, but he acknowledged that the horses were thin. Even assuming that plaintiff was feeding the horses at the time, this evidence does not contradict Dr. Bremer's observations. Plaintiff also introduced the testimony of Ms. Swartz that she visited the farm in March of 1987 and that the horses were thin, but that she saw the horses on May 2, 1987, shortly after they were seized, and they appeared to be in good health. Again, this evidence does not conflict with Dr. Bremer's report. The jury could not reasonably find from the evidence that Ms. Jones knowingly or recklessly provided false information to the Magistrate insofar as the statements of Mrs. Pastor, Mrs. Flinn, and Dr. Bremer are concerned. The Court finds that the unrefuted statements of Mrs. Pastor, Mrs. Flinn and Dr. Bremer provided to the magistrate in the affidavit are sufficient in themselves to establish probable cause as a matter of law in this case, even if Ms. Jones's statements concerning her own observations and the information provided by Mrs. Hartzler are assumed to be false and are completely disregarded. Accordingly, the Court finds that there was only one reasonable determination on the issue of probable cause which the jury could have made, and defendant Jones is entitled to judgment notwithstanding the verdict. II. MOTION FOR A NEW TRIAL In the alternative to her motion for judgment notwithstanding the verdict defendant Jones moves the Court for a new trial pursuant to Fed.R.Civ.P. 59. Defendant Jones first argues that the jury's verdict in favor of the plaintiff on his § 1983 action for illegal search and seizure is inconsistent with the jury's verdicts in favor of the defendants on plaintiff's § 1983 claims for unlawful arrest and malicious prosecution and his state law claim for malicious prosecution. Second, defendant argues that the jury's verdict in favor of the plaintiff on his § 1983 claim for illegal search and seizure was against the manifest weight of the evidence. A. INCONSISTENCY OF VERDICTS As a general matter, it has been stated: That a verdict must be consistent appears to be a principle not often squarely decided, at least so far as civil actions 478 are concerned, but rather one that has been generally assumed. But the rule has been laid down that a verdict does not necessarily have to be set aside on appeal because of its inconsistency with another verdict. It is only when a judgment rests on some particular finding for its validity and support that the contradictoriness between two findings treating of the same essential matter will necessitate a reversal. It is of no consequence that an immaterial finding cannot be reconciled with other findings. 76 Am.Jur.2d, Trial, § 1154, pages 122, 123. The issue of consistency of civil verdicts often arises in litigation involving the claims of spouses where one spouse is asserting a solely derivative claim such as a claim for loss of services, consortium, or medical expenses resulting from an injury to the other spouse, and the jury finds in favor of one plaintiff and not the other. See e.g. Annotation, Validity of Verdict in Personal Injury Action Which Awards Damages to Plaintiff Wife, but either Finds Against Plaintiff Husband Seeking to Recover Medical Expenses and the Like, or Awards Nothing to Him, 36 A.L. R.2d 1333 (1954); Annotation, Validity of Verdict or Verdicts by Same Jury in Personal Injury Action Awarding Damages to Injured Spouse but Denying Recovery to Other Spouse Seeking Collateral Damages, or Vice Versa, 66 A.L.R. 3d 472 (1975). The issue can also arise in cases involving vicarious liability as in a situation where a jury finds in favor of the agent but against the principal. See, e.g., Eckleberry v. Kaiser Foundation, Northern Hospitals, 226 Or. 616, 359 P.2d 1090 (1961). The issue also frequently arises in products liability litigation in which various theories of liability are submitted to the jury and they find in favor of the plaintiff on some theories, but in favor of the defendant on others. See, Annotation, Products Liability: Inconsistency of Verdicts on Separate Theories of Negligence, Breach of Warranty, or Strict Liability, 41 A.L. R.4th 10 (1985). Generally, courts strive to harmonize apparently inconsistent verdicts, but when it is impossible to do so will set them aside. See, e.g., Werner v. Upjohn Co., Inc., 628 F.2d 848, 860 (4th Cir.1980). The rule in criminal cases is the opposite, namely, consistency of verdicts is not required. Dunn v. United States, 284 U.S. 390, 52 S. Ct. 189, 76 L. Ed. 356 (1932).[1] Many of the reported cases which discuss inconsistency of verdicts arise out of cases involving special verdicts. In Gallick v. Baltimore & Ohio Railroad Co., 372 U.S. 108, 119, 83 S. Ct. 659, 666, 9 L. Ed. 2d 618 (1963), the Supreme Court said that if there is a fatal inconsistency among the jury's findings, they cancel one another out necessitating a judgment for the defendant or at least a new trial, but it is the duty of the courts to attempt to harmonize the answers if it is possible under a fair reading of them. See also Atlantic & Gulf Stevedores, Inc. v. Ellerman Lines, Ltd., 369 U.S. 355, 364, 82 S. Ct. 780, 786, 7 L. Ed. 2d 798 (1962). The Fifth Circuit has developed a jurisprudence on the subject of inconsistency of jury verdicts in a series of reported cases, the holdings of which are summarized in the following quotation from a decision of the Eleventh Circuit in Witt v. Norfe, Inc., 725 F.2d 1277, 1278 (11th Cir.1984): "A finding by this court that a critical verdict was inconsistent with another would require a remand for a new trial (citation omitted) since we could not speculate which inconsistent finding the jury intended to be controlling." Miller v. Royal Netherlands Steamship Co., 508 F.2d 1103 (5th Cir.1975). In order to qualify as inconsistent, however, there must be "no rational, non-speculative 479 way to reconcile ... two essential jury findings." Higginbotham v. Ford Motor Co., 540 F.2d 762, 773 (5th Cir.1976). "Answers should be considered inconsistent ... only if there is no way to reconcile them.... Even a jury verdict inconsistent on its face is not inconsistent if it can be explained by assuming the jury reasonably misunderstood the instructions." Willard v. Hayward, 577 F.2d 1009, 1011 (5th Cir.1978). In Miller v. Royal Netherlands Steamship Co., 508 F.2d 1103, 1106-1107 (5th Cir.1975), the court said that the test to be applied in reconciling apparent conflicts between jury's answers "is whether the answers may fairly be said to represent a logical and probable decision on the relevant issues as submitted." In Higginbotham v. Ford Motor Co., 540 F.2d 762, 773 (5th Cir.1976), the court reversed because "we can find no rational, non-speculative way to reconcile these two essential jury findings." The Court concludes that there is no rational, non-speculative way to reconcile the essential jury findings which necessarily form the basis for the verdicts rendered in this case. The jury returned a verdict in favor of the plaintiff on his § 1983 action for unlawful search and seizure. In order to return such a verdict, the jury must have found that defendant Jones made false statements in the search warrant affidavit without which Judge Frost would not have found probable cause for the issuance of a warrant. The jury answered an interrogatory finding that the false statements were recklessly made. The jury then found in favor of defendant Jones on plaintiff's § 1983 claims for unlawful arrest and unlawful prosecution, and they found in favor of the defendants on plaintiff's state law claim for malicious prosecution. The inconsistency between these verdicts lies in the fact that the same evidence which was relied upon to support a finding of probable cause for the search and seizure also formed the basis for the arrest and prosecution. The jury could not logically find that this evidence did not support a finding of probable cause for the issuance of the search warrant while at the same time finding that it did support probable cause for the arrest and prosecution. Yet this is precisely what the jury did. This inconsistency is further highlighted by the fact that the jury submitted a question to the Court during its deliberations and in response was specifically instructed that in the event they found that the search was illegal, they could not consider any evidence resulting from the search in determining whether probable cause existed for the arrest and prosecution. The jury's question was as follows: "Hypothetically, if the jury has determined that probable cause to obtain a search warrant did not exit, would an arrest based on probable cause determined from a search conducted with the warrant in hand be valid?" The Court's written response was as follows: Members of the Jury: If the defendant obtained a search warrant by knowingly or recklessly misrepresenting material facts in the affidavit for the search warrant, then she would not be entitled to rely on evidence produced by the search in determining whether or not probable cause existed for the arrest. If probable cause did not exist for the issuance of the search warrant but defendant did not knowingly or recklessly misrepresent material facts contained in the affidavit for the search warrant issued by Judge Frost, then she was entitled to consider the evidence produced by the search in determining whether or not probable cause existed for the arrest. The jury's verdict for the plaintiff which must be based on a determination that the evidence did not support a finding of probable cause for the issuance of the search warrant is inconsistent with its verdicts in favor of the defendants which must rest upon a finding that the same evidence did support probable cause for the arrest and prosecution. There is no rational, non-speculative way to reconcile these verdicts, nor can they be explained on the basis of some reasonable misunderstanding of the 480 Court's instructions. They are inconsistent and must be set aside. B. WEIGHT OF THE EVIDENCE In Duncan v. Duncan, 377 F.2d 49, 52 (6th Cir.1967), the court stated: In ruling upon a motion for a new trial based on the ground that the verdict is against the weight of the evidence, a district judge must compare the opposing proofs and weigh the evidence, and "it is the duty of the judge to set aside the verdict and grant a new trial, if he is of the opinion that the verdict is against the clear weight of the evidence * * ." The power of the trial judge to set aside a verdict as against the weight of the evidence and grant a new trial is thus a check or limitation on the jury's power to render a final and binding verdict, to the end that a miscarriage of justice does not result. However, "[c]ourts are not free to reweigh the evidence and set aside the jury verdict merely because the jury could have drawn different inferences or conclusions or because judges feel that other results are more reasonable." Thus, while the district judge has the duty to intervene in appropriate cases, the jury's verdict should be accepted if it is one which could reasonably have been reached. (Citations omitted). See also TCP Industries, Inc. v. Uniroyal, Inc., 661 F.2d 542, 546 (6th Cir.1981). "On a new trial motion, unlike on a motion for JNOV, the trial court may weigh the evidence." Moran v. Johns-Manville Sales Corp., 691 F.2d 811, 816 (6th Cir.1982). The Court has reviewed the evidence in this case in detail in the first section of this opinion and order. The Court finds that the verdict in favor of the plaintiff on his § 1983 claim for unlawful search and seizure is against the manifest weight of the evidence. While the jury would have been well within its province in determining that the statements contained on page two of Ms. Jones' written statement which was incorporated into the search warrant affidavit was in whole or in part false and recklessly made, nevertheless the evidence does not support a finding that the statements contained on the first page of her statement were false or recklessly made or that the statements and opinions expressed in Dr. Bremer's report which was also incorporated into the search warrant affidavit were false or recklessly made, and those statements standing alone are sufficient to establish probable cause for the issuance of a warrant. The elements of the offense under investigation included depriving an animal of necessary sustenance or confining an animal without supplying it with a sufficient quantity of good wholesome food and water. See Ohio Rev.Code § 959.13. The statements of Mrs. Pastor and Mrs. Flinn and the observations and opinions of Dr. Bremer are sufficient to constitute probable cause for the belief that a search of the Hartzler premises would reveal evidence of the commission of this offense and there was no credible evidence that Ms. Jones acted with reckless disregard for the truthfulness of the information supplied by Mrs. Pastor, Mrs. Flinn, and Dr. Bremer when she included such information in her search warrant affidavit. The jury's verdict in favor of the plaintiff on his § 1983 action for unlawful search and seizure is against the clear weight of the evidence and amounts to a miscarriage of justice. III. REMITTITUR In the alternative to her motions for judgment notwithstanding the verdict and for a new trial, defendant Jones has moved the Court for a remittitur asserting that the jury's award of $50,000.00 in compensatory damages on plaintiff's § 1983 claim for unlawful search and seizure bears no reasonable relationship to the evidence produced at trial regarding plaintiff's damages. It has long been the rule that a federal district court has the power to condition the denial of a motion for a new trial upon consent to a remittitur. Dimick v. Schiedt, 293 U.S. 474, 55 S. Ct. 296, 79 L. Ed. 603 (1935); Smith v. John Swafford Furniture Co., Inc., 614 F.2d 552, 553 (6th Cir.1980). The practice of remittitur is ancillary to the trial court's authority to grant a new trial on the grounds that the verdict is excessive. 481 Mooney v. Henderson Portion Pack Co., Inc., 339 F.2d 64, 66 (6th Cir.1964). The standard for determining the excessiveness of a verdict is the amount which, under the evidence in the case, was the maximum that the jury reasonably could find to be compensatory for the plaintiff's loss. Manning v. Altec, Inc., 488 F.2d 127, 132 (6th Cir.1973); Urseth v. City of Dayton, 680 F. Supp. 1150, 1152 (S.D.Ohio 1987). As explained in detail above, the jury found in favor of the plaintiff on his § 1983 claim for unlawful search and seizure, but found in favor of defendants on plaintiff's § 1983 claims for unlawful arrest and unlawful prosecution and on his state law claims for malicious prosecution. Thus, inexplicably, the jury found that probable cause did not exist for the issuance of the search warrant, but that probable cause did exist for the subsequent arrest and prosecution. Assuming arguendo that there was some way to reconcile these inconsistent verdicts, it would nevertheless be impossible to justify an award of $50,000.00 in compensatory damages for the consequences of the search. The search, standing alone, involved at most a temporary violation of plaintiff's constitutional rights when defendant Jones and others entered upon his premises and searched his barns. His horses were seized for use as evidence in the criminal prosecution which, under the jury's findings, was a lawful prosecution. Plaintiff offered no evidence that any damage occurred to his premises during the search. Plaintiff's evidence of damages centered around the damage to his reputation in general and his reputation as a breeder and shower of Morgan horses, and mental anguish and legal expenses all of which flowed from his arrest and prosecution not the search and seizure. Again, the jury found that his arrest and prosecution were lawful. The evidence simply does not support an award of $50,000.00 in damages for a trespass on plaintiff's property or a temporary seizure of his horses pending the institution of criminal charges which were filed the same day. If the jury's finding of liability on plaintiff's § 1983 claim for unlawful search and seizure were permitted to stand, he would be entitled to recover at most nominal damages for the unconstitutional trespass and temporary interference with his property right in his horses. The Court believes that such an award could not properly exceed $5,000.00. Accordingly, the Court conditionally grants defendants' motion for a remittitur. In the event this Court's Order granting defendants' a new trial on the issue of liability on plaintiff's Section 1983 claims for wrongful search and seizure should be reversed, the Court hereby grants defendant a new trial on the issue of damages unless plaintiff consents to a remittitur reducing the verdict to the sum of Five Thousand Dollars ($5,000.00). CONCLUSION Defendants' motion for judgment notwithstanding the verdict is granted. Defendants' motion for a new trial is conditionally granted and defendants' motion for a remittitur is likewise conditionally granted. The Clerk shall enter final judgment in favor of defendant Jones. The costs of this action are assessed against the plaintiff. It is so ORDERED. NOTES [1] In Borel v. Fibreboard Paper Products Corp., 493 F.2d 1076, 1094 (5th Cir.1973), the court held that there was no need for general verdicts in a civil case to be consistent. The court cited only criminal cases, including Dunn v. United States, and this holding seems to be inconsistent with the vast weight of authority. Indeed, most courts presented with the question seem to assume that inconsistency renders the verdict invalid and spend most of their time determining whether or not there is inconsistency.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/1502451/	366 F. Supp. 522 (1973) In the Matter of the MAY 1972 SAN ANTONIO GRAND JURY. United States District Court, W. D. Texas, San Antonio Division. November 5, 1973. 523 524 Anthony Nicholas, San Antonio, Tex., Nago L. Alaniz, San Diego, Tex., for George B. Parr. Marvin F. Foster, Jr., San Diego, Tex., Charles E. Orr, Houston, Tex., for Eunice E. Powell and Bryan P. Taylor. William S. Sessions, U. S. Atty., John Clark, 1st Asst. U. S. Atty., San Antonio, Tex., for Government. SPEARS, Chief Judge. This matter grew out of indictments returned April 6, 1973, by the May, 1972 San Antonio grand jury, charging George B. Parr, Eunice E. Powell and Bryan P. Taylor, hereinafter referred to as movants, with evasion of income tax, and the filing of false and fraudulent returns, in violation of Title 26 U.S.C. §§ 7201, 7206(1) (Internal Revenue Code). On May 2, 1973, Judge Suttle of this district granted motions dismissing said indictments, noting that they charged the commission of offenses in either the Southern District of Texas or the Austin Division of the Western District of Texas, and saying, in part: "As [the Plan Providing for Random Selection of Grand and Petit Jurors in the Western District of Texas] has been interpreted and implemented . . . , divisional grand juries cannot indict for offenses not committed within their respective divisions." After the dismissal of the indictments, this Court, on May 3, 1973, granted the motion of the United States requesting the transfer of all grand jury exhibits and testimony to the federal grand jury in the Corpus Christi Division of the Southern District of Texas, for disclosure in connection with an investigation of possible violations of the Internal Revenue Code. By motions subsequently filed in this Court, the movants sought to vacate this Court's order of May 3, 1973, and to suppress all testimony and exhibits presented to the San Antonio grand jury. Their contentions rest almost solely upon one sentence contained in the Plan Providing for Random Selection of Grand and Petit Jurors in the Western District of Texas, which provides: "Grand juries shall consider only cases triable in the division or divisions from which the grand jurors are drawn." Movants argue that since the offenses allegedly took place in either the Southern District of Texas, or in the Austin Division of the Western District of Texas, the substantive case could never have been tried in the San Antonio Division, and thus the plan bars any grand jury impaneled solely from the San Antonio Division from investigating any matters 525 surrounding the alleged tax offense. As a consequence, they reason that all subpoenas issued or testimony or evidence received by the San Antonio grand jury are illegal from the inception. In addition, they maintain that they were entitled to notice and hearing prior to the transfer of the grand jury testimony and exhibits to Corpus Christi. For the reasons and to the extent hereinafter set forth, the relief sought by the movants is denied. I. The critical sentence in the local plan was adopted pursuant to the Jury Selection and Service Act of 1968. This Act, for the first time, implemented a nationwide system for the selection of federal juries by random drawings from voter registration lists.[1] Prior to the adoption of the 1968 Act, federal juries were selected by the "key-man" system, under which a jury commission or commissioner would ask "suggestors" to offer the names of those who met the statutory qualifications for jury service, and possessed "good character". Names solicited from the suggestors, from court personnel, and through the commission or commissioner's personal knowledge were placed in the master jury wheel. This system often resulted in racial, ethnic, and socio-economic imbalances, with jury panels far different from the actual make-up of the community from which they were drawn. Federal juries were sometimes completely devoid of religious, racial or ethnic minorities, and were often characterized as "silk-stocking," since they were heavily weighted in favor of the more affluent in the community. In areas with a large black voting population, sometimes few, if any, of that group sat on either grand or petit juries. Clearly, this very personal and subjective selection system was subject to each and every bias and prejudice of the selectors, individually and collectively. Under such a system, the representation of the community was no better than the knowledge, dedication and diligence of the jury commission or commissioner. Some commissions and commissioners simply chose those people familiar to them, and looked no further to the community at large. And yet even where commissions acted diligently and in good faith, abuse often resulted. As noted by the Fifth Circuit in Rabinowitz v. United States, 366 F.2d 34 (1966), when commissioners affirmatively attempted to select responsible and intelligent jurors, their exacting criteria would often lead them to the exclusion of prospective jurors they did not know. White jury commissioners, completely devoid of discriminatory intentions, suggested no blacks simply because of a total lack of contact and familiarity with the blacks in the community.[2] On the other hand, the old key-man system could often operate in an assiduously fair manner, with diligent measures taken to insure that every identifiable racial, economic, geographic and professional group was represented. An extensive and comprehensive review of the selection procedures utilized in the San Antonio Division under the key-man system was made by Judge Henry N. Graven in United States v. Hunt, 265 F. Supp. 178 (W.D.Tex.1967), aff'd 400 F.2d 306 (5th Cir. 1968), cert. denied, 393 U.S. 1021, 89 S. Ct. 629, 21 L. Ed. 2d 566 (1969). In Hunt, Judge Graven described at great length the efforts of the jury commissioner to acquire representation by all groups, including black, 526 whites, and Mexican-Americans, as well as various economic and age groups.[3] However, rather than depend on the vagaries of individual commissioners in each division or district, Congress adopted the 1968 Jury Selection and Service Act, the policy of which, as delineated in 28 U.S.C. § 1861, is "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." The Act eliminated the key-man system, and instead substituted the mandatory requirement that the names for the master jury wheel be drawn at random from voter registration lists or from lists of actual voters, duly amended and supplemented and thus to keep them current, reflect the policy of the Act.[4] The heart of the legislation random selection from voter lists struck at the primary complaints lodged against the key-man system. Use of voter lists and a random selection would eliminate any possibility of discrimination in jury selections; and the jurors in the master wheel would automatically correspond proportionately to the number of qualified voters of various ethnic and racial groups in the community, in addition to insuring the representation of socio-economic groups in accord with their community strength. Fairer and more representational grand juries would be selected with less work, and with less dependence placed upon the vagaries of personal knowledge. Section 1863 also provided significant leeway for local variations in the plans adopted by different districts, with the provision that plans so adopted be approved by the appropriate judicial councils. II. In the Plan for Random Selection of Jurors for the Western District of Texas,[5] approved by the Fifth Circuit Judicial Council, the language, "grand juries shall consider only cases triable in the division or divisions from which the grand jurors are drawn," was included at the insistence of the Council.[6] Presumably, 527 the purpose of the provision was to make it less likely that the cross-sectional representation contemplated by the Act would be undermined by diluting minority groups in a sea of names taken from the voting populace of the district as a whole, or from another division with an entirely different population, economically, ethnically or racially. In any event, the quoted language must be considered in light of the amendments to Rule 18, F.R.Cr.P., promulgated in 1966, some two years prior to the enactment of the Jury Selection and Service Act of 1968. These amendments eliminated the venue provision requiring criminal trials to be held in the appropriate division,[7] and provided that "the prosecution shall be had in a district in which the offense was committed."[8] The notes of the Advisory Committee on Rules set out the reasoning supporting the change back to district-wide venue: The former requirement for venue within the division operated in an irrational fashion. Divisions have been created in only half of the districts, and the differentiation between those districts with and those without divisions often bears no relationship to comparative size or population. In many districts a single judge is required to sit in several divisions and only brief and infrequent terms may be held in particular divisions. As a consequence under the original rule there was often undue delay in the disposition of criminal cases delay which was particularly serious with respect to defendants who had been unable to secure release on bail pending the holding of the next term of court. If the quoted language in this district's plan is construed as a limitation upon Rule 18, as amended, it may well be that it could not stand.[9] However, it would seem that the language referred to would be completely consistent with the rule if it were interpreted to simply require that a defendant indicted in one division must be prosecuted in that same division. The Austin Division is one of the divisions in which the alleged offenses were committed, so there is actually no reason under the law why the movants could not have been both indicted and tried in the San Antonio Division, since both the Austin and the San Antonio Divisions are in the same district. However, inasmuch as the judges of this district understood at 528 the time of the adoption and approval of the plan that the judicial council had interpreted the quoted language to mean that "divisional grand juries cannot indict for offenses not committed within their respective divisions," Judge Suttle, in the exercise of proper Court administration, dismissed the indictments against the movants, undoubtedly hoping that the government would appeal, thereby affording the judicial council, sitting as the Fifth Circuit Court of Appeals, an opportunity to re-examine and clarify its position in the matter. Unfortunately, however, the government chose not to appeal, thus giving rise to the proceedings now before this Court. III. Assuming arguendo that the proper interpretation to be placed on the language of the plan would prohibit the return of indictments against the movants in the San Antonio Division, this Court can find no support whatsoever in the Constitution or case law for their contention that the consideration of their cases by the San Antonio grand jury has somehow abridged their constitutional rights; nor is this Court able to perceive any claim made by the movants which rises to the level of constitutional dimensions. Article 3, Section II of the Constitution provides that: "The Trial of all Crimes, except in Cases of Impeachment, shall be by Jury; and such Trial shall be held in the State where the said Crimes shall have been committed; but when not committed within any State, the Trial shall be at such Place or Places as the Congress may by Law have directed." The Sixth Amendment in more detail provides: "In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the State and district wherein the crime shall have been committed, which district shall have been previously ascertained by law, . . . ." The constitutional provisions for criminal venue provide only for trial in the proper district before a jury drawn from that state and district. Haas v. Henkel, 216 U.S. 462, 473-474, 30 S. Ct. 249, 54 L. Ed. 569 (1910). Even in light of the importance accorded criminal venue by the Constitution and noted numerous times by the Supreme Court,[10] courts have repeatedly held that these constitutional provisions are not jurisdictional,[11] and thus the right to trial in the district of the offense may be waived,[12] if not raised within a reasonably proper time. While Congress has repeatedly expressed its intent, over a period of the last one hundred years, that trials shall be held in the divisions in which crimes are committed,[13] the Supreme Court has 529 held since 1892 that various statutes requiring "prosecution" in the division in which the offense was committed, do not "affect the authority of the grand jury for the district, sitting at any place at which the court is appointed to be held, to present indictments for offences committed anywhere within the district." Logan v. United States, 144 U.S. 263, 297, 12 S. Ct. 617, 628, 36 L. Ed. 429 (1892). The Supreme Court reiterated its opinion that the word "prosecution" did not include the return of the indictment, in Salinger v. Loisel, 265 U.S. 224, 236, 44 S. Ct. 519, 68 L. Ed. 989 (1924), and the Court clearly recognized Congressional power to enact narrower provisions requiring trial and the return of the indictment in the division of the offense. As stated by the Supreme Court in Barrett v. United States, 169 U.S. 218, 221, 18 S. Ct. 327, 329, 42 L. Ed. 723 (1898), "As to where trial shall be had in a judicial district depends entirely on the legislation upon the subject."[14] Even under the old provisions of Rule 18, F.R.Cr.P., providing for trial in the division in which the offense was committed, the Fifth Circuit in Lafoon v. United States, 250 F.2d 958 (1958), while recognizing the "constitutional right to a trial by jury in the state and district where the crime shall have been committed," held that "the right to be tried in the division as well as in the district where the offense was committed is a personal and technical right which can be waived. . . . The constitutional requirement for trial in the state and district of the offense does not apply to divisions within a district." In that case the Court went on to hold a plea of guilty a waiver of the right to trial in the division. It should, therefore, come as no surprise that following the amendment of Rule 18 in 1966, the Fifth Circuit again reaffirmed the lack of significance of the division to the criminal defendant: "The recent amendment [to rule 18] had the effect of eliminating the division as a unit of venue in criminal cases. It remains as an administrative unit in those districts which are subdivided by law into divisions. However, the division has no constitutional significance; the vicinage is the district." Bostick v. United States, 400 F.2d 449, 452 (5th Cir. 1968), cert. denied, 393 U.S. 1068, 89 S. Ct. 725, 21 L. Ed. 2d 712 (1969).[15] And in United States v. Grayson, 416 F.2d 1073 (5th Cir. 1969), cert. denied, 396 U.S. 1059, 90 S. Ct. 754, 24 L. Ed. 2d 753 (1970), where the defendant challenged the right of a divisional grand jury to inquire into offenses committed in another statutory division of the same district, the Court specifically rejected defendant's additional allegation that he had a guaranteed right to be indicted in the division in which the offense occurred, saying, "[t]he right to be tried before a jury from the vicinage is not impinged upon in the slightest by a finding of probable cause by an otherwise duly and legally constituted grand 530 jury in another division of the same judicial district." 416 F.2d at 1076. IV. Nor can movants find any comfort in their claim that under the local plan the consideration of their cases by the San Antonio grand jury falls outside the jurisdiction of that body. Strictly speaking, the jurisdiction of a grand jury is co-extensive with the jurisdiction of the Court of which it is an appendage. Hale v. Henkel, 201 U.S. 43, 55, 26 S. Ct. 370, 50 L. Ed. 652 (1906).[16] It seems especially inappropriate in this case to level an attack upon the jurisdiction of the San Antonio grand jury, in view of the fact that movants have never attacked the jurisdiction of the district court. Rather their attacks have centered solely upon questions of venue. The sentence in the local plan purporting to restrict grand jury consideration to those cases triable in the division from which they are drawn is not a jurisdictional limitation upon the San Antonio grand jury, but if valid, would constitute simply a venue restriction on cases properly brought before a specific grand jury. As has already been indicated in Part II above, when the 1966 rule and the local plan are taken together, this Court is of the opinion that they require only that a defendant cannot be indicted in one division and tried in another, though the use of the word "triable" could be interpreted to allow a grand jury indictment in any division where the case could be tried. Nevertheless, the understanding that the judicial council had interpreted the plan to mean that "divisional grand juries cannot indict for offenses not committed within their respective divisions," was demonstrated by the further provision of the plan authorizing the chief judge of this district to order a grand jury "drawn from the qualified juror wheels of two or more divisions, on a substantially proportionate basis, to serve those divisions from which the grand jurors are drawn." This means of course, that if a grand jury meeting in one division is to consider a case triable in another division, the members must come from both divisions on a substantially proportionate basis; therefore a San Antonio grand jury would be prohibited from indicting for offenses committed outside this division. In such a case, if there was to be a compliance with the plan as interpreted by the council, the proper remedy for presentment of the indictment to the wrong grand jury had to be dismissal of the indictment. This is precisely what Judge Suttle did, and properly so. But the petitioners urge this Court to carry this strict reading of the plan one step further, and vacate the transfer to Corpus Christi of the testimony taken before the San Antonio grand jury. This Court cannot agree that anything in the 1968 Act or the local plan was intended to go that far. First, the policy of the enabling legislation under which the Western District adopted the plan is directed toward the protection of "litigants in federal courts entitled to trial by jury," through the provision of fair and widely representational juries. These rights are specifically directed only to litigants. Given the fact that a potential criminal defendant becomes a litigant only upon the return of an indictment, the 1968 Act and the local plan first focus upon an individual when he is made a defendant by virtue of such action by the grand jury. It may be one thing to contend that the San Antonio grand jury could not have returned a valid indictment against movants, but it is quite another thing to say that every subpoena issued, every witness heard, and every bit of evidence received is also tainted. The 1968 Act, 531 in conjunction with the plan adopted by this district, speaks to the final and indispensable act of the grand jury, to wit, its vote upon presentments. Any suggestion that the evidence and testimony before the San Antonio grand jury is contaminated is entitled to no credence whatever in light of the fact that the only objection lodged against it referred to the specific geographical area from which it was randomly selected. If movants' position were accepted, and carried to its logical extreme, anytime a grand jury had completed all of its work and found that the offense originally thought to have been committed in one division was actually committed in another, then all of the evidence, testimony and exhibits would be barred from any further use by that or any other grand jury.[17] Such a result would seriously pervert the entire grand jury process, which is based upon the critical assumption that the grand jury functions as an investigative body, and in that capacity can receive evidence of acts outside its jurisdiction: "There is no question that when the grand jury is investigating a possible federal offense within its jurisdiction, it is authorized to receive evidence as to any acts related to the offense even though they occurred outside of its jurisdiction." LaRocca v. United States, 337 F.2d 39, 43 (8th Cir. 1964).[18] As the First Circuit has recently noted: "And, even when a grand jury produces evidence but does not return an indictment, that is insufficient to embargo its fruits." United States v. Doe, 455 F.2d 1270, 1274-1275 (1st Cir. 1972). Movants allege that government counsel knew at the time the grand jury was impaneled that no offenses had been committed by them in this division, and contend that as a consequence thereof, all actions taken by the San Antonio grand jury with respect to them were null and void. Actually, in view of this Court's opinion, already expressed in Part II hereof, that there is no legal reason why the movants could not have been indicted and tried in the San Antonio Division, it is immaterial whether or not their allegation is true. But considering the fact that the place in which an offense is committed usually cannot be determined until the grand jury investigation is concluded, it would probably be difficult if not impossible to prove the allegation, even it it did raise a material issue; and keeping in mind the traditional secrecy afforded the proceedings of grand juries, this Court, in the absence of a showing of manifest injustice, would be unwilling either to permit an inquiry into the matter or to assume bad faith on the part of government counsel. While this Court is fully satisfied that the order of May 3, 1973, which transferred the evidence to the grand jury for the Southern District of Texas complies in every respect with the strict technical requirements of the 1968 Jury Selection and Service Act, and the plan adopted pursuant thereto, it is nonetheless also concerned with whether or not any principle of fundamental fairness has been offended by the deliberations 532 of the San Antonio grand jury. In this connection it is significant that movants have neither alleged nor shown that they have been prejudiced in any way. The basic assumption underlying the 1968 Act and the local plan is that a defendant is entitled to be indicted and tried by juries of his peers, drawn from population groups and geographical areas most likely to mirror the community in which the offense was committed. It is interesting to note that it has never been held that defendants have any right to trials in their home communities.[19] Indeed, the provision in the Constitution which provides for trial in the district in which the crime was committed, and not the defendant's home district, shows a primary concern for trial in the area in which the public weal has been offended by the putative criminal act. When a grand jury votes on an indictment, and thereby exercises an essentially judgmental function, geographic or racial exclusion affecting the identity of those who compose its members might very well influence their collective judgment. But when it subpoenas exhibits and questions witnesses, the grand jury is performing a nonjudgmental function in which the geographical area from which the grand jury members are drawn is of minimal importance. It is unreasonable to assume that a grand jury in one division is less likely to pursue its investigative tasks with diligence and ardor than a grand jury sitting in another division. Lastly, it is possible that prejudice might result, if after dismissal of an indictment, the United States Attorney had been allowed to select portions of exhibits and testimony before a grand jury for transfer to another grand jury. A grand jury is capable of evaluating testimony and exhibits received by another grand jury only if it sees the efforts of the prior grand jury in toto. To the extent that movants maintain that the transfer of only part of the material accumulated by a grand jury concerning certain individuals may be prejudicial, this Court agrees. However in the instant case the order of May 3, 1973, provided for the transfer of all relevant material without any deletions or extractions; no portions were selected therefrom. As the government alleged in its motion asking for the transfer, it would have been duplicated and wasteful for a second grand jury to retrace all the steps taken by the San Antonio grand jury over an eleven month period, especially when no prejudice to movants' rights has been shown. Certainly the Corpus Christi grand jury had the power to call all of the witnesses heard by the San Antonio grand jury, and there is no allegation that there was a premeditated intent to use the San Antonio grand jury to achieve subpoena power or process over anyone not subject to the same powers of the Corpus Christi grand jury. It has never been held that a grand jury sitting pursuant to lawful authority is without right to call witnesses from outside the district.[20] VI. Movants further contend that the transfer of evidence and testimony from San Antonio to Corpus Christi should not have been approved by this Court without having given them notice and a hearing. The difficulty with that position, however, lies in their assumption that the subjects of grand jury investigation are entitled as a matter of right to know that a transfer is contemplated, whereas the contrary is true. Both the well developed case law and Rule 6(e), F.R.Cr.P. demonstrate that 533 grand jury proceedings have traditionally been secret.[21] Though a variety of reasons for grand jury secrecy exist, it is imposed as often to protect the rights of potential defendants as it is to protect the developing investigation into criminal activity. The proceedings of the grand jury are considered sacrosanct, and courts seldom explore the thought processes of the grand jurors. Movants have shown no reason why their situation should be treated any differently. Movants' reliance upon In Re Grand Jury Investigation of Banana Industry, 214 F. Supp. 856 (D.Md.1963) is misplaced. In that case the Court did not hold that the subject of the investigation, United Fruit, had any right to submit memorandum or be heard regarding the transfer of testimony and evidence from one grand jury to another. A hearing was granted by Judge Thomsen as a matter of fundamental fairness, since all material was not to be transferred. On the other hand, in the instant case the transfer order carefully emphasized that all testimony and exhibits must be transferred. This Court agrees wholeheartedly with Judge Thomsen that it could have been potentially unfair and prejudicial to allow the United States Attorney to select portions of the grand jury testimony for transfer, or to simply allow summaries of testimony to be transferred.[22] Movants insist that the Corpus Christi grand jury acted with such great speed after the transfer of the material, that it was physically impossible for it to have given proper consideration to the evidence. This issue could not have been determined prior to transfer, and certainly cannot serve retroactively as a basis for this Court to have granted a hearing. Movants also claim that it was improper for the foreman of the San Antonio grand jury to appear before the Corpus Christi grand jury after the transfer was effected. Obviously, this Court could not have foreseen the events transpiring subsequent to the transfer, and thus all allegations attacking actions taken by the Corpus Christi grand jury must be addressed to the judge having supervision over that grand jury. If it is proper for a grand jury to base an indictment upon hearsay evidence, and it is, Costello v. United States, 350 U.S. 359, 76 S. Ct. 406, 100 L. Ed. 397 (1956),[23] then there would seem to be little to differentiate the evidence transferred in this case from hearsay normally considered acceptable. Assuming that the written documents and records fall within the hearsay classification, then they certainly constitute the best kind of hearsay. Similarly, the court reporter's transcript of the grand jury testimony is written hearsay only in the most peripheral sense, as it accurately details exactly what was said by the witnesses. The only procedure not utilized by the grand jury was to avail itself of the opportunity to "eyeball" the witnesses and it could have done this if it had felt it necessary to do so. The assertion by movants that Local Rule 14, which requires that motions be in writing and served upon opposing counsel, is applicable to the instant case must also be rejected. The only extant motion was that of the government for transfer of the evidence, and grand jury proceedings bear no resemblance to the kind of adversary proceedings contemplated by the rule. At the hearing conducted by this Court on August 27, 1973, full opportunity was afforded the movants to demonstrate 534 what evidence they would have offered if a hearing had been held prior to the entry of the May 3rd order transferring the testimony. The only substantive item mentioned by the movants was their contention that the motives, reasons and thought processes of the United States Attorney were suspect. When given the opportunity on August 27th, the movants were unable to offer any relevant and material evidence that would have changed the result, and that could have been appropriately received during a hearing on the government's application for transfer. Having considered all of the above, this Court finds that regardless of what was intended by the local plan with respect to the places of indictment and trial of a defendant in the district, there was no intention whatever to place an embargo upon all exhibits and testimony presented to one grand jury regarding criminal activities alleged to have taken place in a different division of the same district. To so hold would be contrary to well established principles crucial to the grand jury's operations, and would flatly contradict a long and unbroken line of case law. The motions to vacate this Court's order of May 3, 1973, and to suppress the evidence obtained through the process of the May 1972 grand jury in San Antonio are denied. In rejecting said motions, this Court holds that the subpoenas issued and the evidence gathered by the San Antonio grand jury were neither illegal, unconstitutional nor beyond the jurisdiction and authority of said grand jury; and further that the Order of May 3, 1973, entered pursuant to this Court's supervisory authority over the San Antonio grand jury did not violate the rights of any of the movants. No opinion whatever is expressed herein with reference to whether or not the transferred testimony and evidence, or any part thereof, should be disclosed to movants, or either of them; nor is any opinion whatever expressed with reference to whether or not the transferred testimony and evidence, or any part thereof, should be suppressed; it being the opinion of this Court that such matters are more properly left to the sound discretion of the judge before whom the case is now pending in the Corpus Christi Division of the Southern District of Texas. NOTES [1] It has long been established that the essential gravamen of fair jury selection focuses not upon the particular composition of any individual jury, be it fair or not, but upon the representational quality of the venire and panel from which the jury is drawn. Thiel v. Southern Pacific Co., 328 U.S. 217, 225, 66 S. Ct. 984, 90 L. Ed. 1181 (1946); United States v. Bryant, 291 F. Supp. 542, 547 (D.Me. 1968). [2] Smith v. Texas, 311 U.S. 128, 132, 61 S. Ct. 164, 85 L. Ed. 2d 84 (1940). [3] As noted by Judge Graven, the Jury Commissioner devoted great time and diligence to the compilation of a cross-sectional jury list, even inviting leaders of different ethnic, racial, and economic communities to his home in order to solicit a wide variety of names. [4] The 1968 Act required, among other mandatory provisions, that a minimum number of names be placed in the master jury wheel; that the local plan specify those groups that might be excused from service upon request; that those groups barred from jury service be listed; and that juror qualification forms be completed. See generally 1968 U.S.Code Congressional and Administrative News, p. 1792; Hearings on S. 383, 384, 385, 386, 387, 989, 1319, Proposals to Improve Judicial Machinery for the Selection of Federal Juries Before the Subcomm. on Improvements in Judicial Machinery of the Senate Comm. on the Judiciary, 90th Cong., 1st Sess., (1967). [5] Actually, this district had entered an order on April 25, 1967, providing for random jury selection long before the effective date of the the 1968 Act, and the eventual plan adopted pursuant to the Act varied little from the 1967 plan. [6] Formal requests have been made that the Judicial Council delete the quoted language from the plans of this district and the Southern District of Texas. These requests are based primarily upon the fact that it is expensive and inefficient in a large geographical district to conduct grand jury proceedings in each and every division on a regular basis. Usually, in most matters, a single government investigator from the appropriate agency testifies before the grand jury as to the facts of each case, so it would seem more logical for a few agents to travel to the divisions where the volume of cases requires regular grand jury sessions, than for the Court and the United States Attorney, together with supporting staff, to travel to every division in the district. It is no answer to the problem to suggest that a grand jury may be drawn comprised of jurors from two or more divisions to serve those divisions, because in both districts the distances are too great. In the Southern District the heavy criminal caseloads are in Houston, Brownsville and Laredo. Brownsville is 400 miles from Houston, and Laredo is 360 miles away. In this district, the heavy criminal dockets are in San Antonio, Del Rio and El Paso. San Antonio and Del Rio are 160 miles apart, and El Paso is 600 miles from San Antonio. It would be unfair to jurors to ask that they travel these long distances on a regular basis for one or two days' work. Recognizing the clearly expressed intent of Congress to remove any obstacle to speedy trial, as expressed through its amendment of Rule 18, it becomes self-defeating to then reimpose the same delay caused by the old trial venue provision through application of an equally restrictive grand jury venue provision. As noted by the Advisory Committee on Rules, when a single judge must sit in several divisions sporadically throughout the year, criminal trials must await a monthly or quarterly session of the court in a given division. Likewise, the same delay in disposition of criminal cases is caused if the requirement for indictment by a grand jury drawn only from the division in which the crime was committed is applied strictly. The criminal defendant would then have to await different sessions of court for convening of the grand jury, arraignment and trial. Such an interpretation would promote speedier justice through district-wide venue on the one hand, while taking it away with the other through the requirement that a grand jury indict only for crimes committed in the division from which its members are selected. [7] The pre-1966 Rule 18 provided that "if the district consists of two or more divisions the trial shall be had in a division in which the offense was committed." [8] E.g., Dupoint v. United States, 388 F.2d 39 (5th Cir. 1967). [9] ". . . [N]o rule of court can . . . abrogate or modify the substantive law . . . It is true of rules of practice prescribed by this court for inferior tribunals, as it is of those rules which lower courts make for their own guidance under authority conferred." Washington-Southern Navigation Co. v. Baltimore and Philadelphia Steamboat Co., 263 U.S. 629, 635-636, 44 S. Ct. 220, 222, 68 L. Ed. 480 (1924). [10] Referring to Article 3, § 2 and the Sixth Amendment, Justice Frankfurter stated in United States v. Johnson, 323 U.S. 273, 276, 65 S. Ct. 249, 251, 89 L. Ed. 236 (1944): "Questions of venue in criminal cases, therefore, are not merely matters of formal legal procedure. They raise deep issues of public policy in the light of which legislation must be construed." [11] See, e.g., United States v. Bryson, 16 F.R.D. 431, 434 (N.D.Cal.1954), aff'd, 238 F.2d 657 (9th Cir. 1956), reh. den., 243 F.2d 837 (9th Cir. 1957), cert. denied, 355 U.S. 817, 78 S. Ct. 20, 2 L. Ed. 2d 34 (1957). [12] Many cases hold venue waivable: Rivera v. United States, 388 F.2d 545 (2d Cir.), cert. denied, 392 U.S. 937, 88 S. Ct. 2308, 20 L. Ed. 2d 1396 (1968); Harper v. United States, 383 F.2d 795 (5th Cir. 1967); United States v. Costello, 381 F.2d 698 (2d Cir. 1967); Boyes v. United States, 354 F.2d 31 (5th Cir. 1965); Yeloushan v. United States, 339 F.2d 533 (5th Cir. 1964); Thomas v. United States, 267 F.2d 1 (5th Cir. 1959). But see, United States v. Grossman, 400 F.2d 951 (4th Cir. 1968), cert. denied, 393 U.S. 982, 89 S. Ct. 453, 21 L. Ed. 2d 443 (1968). In addition, the Supreme Court has recently held that in a habeas corpus proceeding a petitioner who, three years after his conviction, challenged the composition of the grand jury which indicted him was bound by the waiver provision of Rule 12(b)(2), F.R.Cr.P. Davis v. United States, 411 U.S. 233, 93 S. Ct. 1577, 36 L. Ed. 2d 216 (1973). [13] E. g., "And all prosecutions in either of said districts for offenses against the laws of the United States shall be tried in that division of the district to which process for the county in which said offenses are committed is by said section required to be returned." Act of June 14, 1880, c. 213, 21 Stat. 198. See also Act of August 13, 1888, c. 869, 25 Stat. 438. The Judicial Code of 1911 provided: "All prosecutions for crimes or offenses shall be had within the division of such districts where the same were committed. . . ." Act of March 3, 1911, c. 231, § 53, 36 Stat. 1087. [14] See Rosencrans v. United States, 165 U.S. 257, 17 S. Ct. 302, 41 L. Ed. 708 (1897); Post v. United States, 161 U.S. 583, 16 S. Ct. 611, 40 L. Ed. 816 (1896). [15] See United States v. Cores, 356 U.S. 405, 78 S. Ct. 875, 2 L. Ed. 2d 873 (1958); United States v. Anderson, 328 U.S. 699, 66 S. Ct. 1213, 90 L. Ed. 1529 (1946); United States v. Florence, 456 F.2d 46 (4th Cir. 1972); United States v. Grayson, 416 F.2d 1073 (5th Cir. 1969), cert. denied, 396 U.S. 1059, 90 S. Ct. 754, 24 L. Ed. 2d 753 (1970); Franklin v. United States, 384 F.2d 377, 378 (5th Cir. 1967), cert. denied, 390 U.S. 954, 88 S. Ct. 1048, 19 L. Ed. 2d 1147 (1968); United States v. Partin, 320 F. Supp. 275, 278 (E.D. La.1970). Though the word "vicinage" at common law often meant the county, it more generally refers to neighborhood. 44 Words & Phrases 435 (1962). In the more strictly legal interpretation, it refers to the territorial jurisdiction of the court in which trial is held. United States v. Katz, 78 F. Supp. 21, 23-24 (M.D.Pa.1948). [16] See United States v. Hill, 26 Fed.Cas. 315, 317, No. 15,364; In re Grand Jury Proceedings, 4 F. Supp. 283 (E.D.Pa.1933); United States v. Smyth, 104 F. Supp. 283, 296 (N.D. Cal.1952); Application of United Electrical, Radio and Machine Workers of America, 111 F. Supp. 858, 864 (S.D.N.Y.1953). [17] Noting the changes in perspective toward ultimate criminal liability that take place during the course of a grand jury investigation, the Supreme Court observed in United States v. Procter & Gamble, 356 U.S. 677, 684, 78 S. Ct. 983, 987, 2 L. Ed. 2d 1077 (1958), that "the trails that looked fresh at the start faded along the way." [18] The Supreme Court pointed out more than fifty years ago that "the court and grand jury have authority and jurisdiction to investigate the facts in order to determine the question whether the facts show a case within their jurisdiction." Blair v. United States, 250 U.S. 273, 283, 39 S. Ct. 468, 471, 63 L. Ed. 979 (1919). See also United States v. Thompson. 251 U.S. 407, 40 S. Ct. 289, 64 L. Ed. 333 (1920). This Court cannot accept petitioners' interpretation that this would create grand juries with a roving commission to investigate crimes anywhere in the United States. The grand jury is an appendage of the court by which it is convened, Levine v. United States, 362 U.S. 610, 80 S. Ct. 1038, 4 L. Ed. 2d 989 (1960); Brown v. United States, 359 U.S. 41. 79 S. Ct. 539, 3 L. Ed. 2d 609 (1959), and its jurisdiction is generally restricted to the boundaries of the district in which it sits. [19] Platt v. Minnesota Mining and Manufacturing Co., 376 U.S. 240, 245, 84 S. Ct. 769, 11 L. Ed. 2d 674 (1964). [20] Cf. United States v. Green, 305 F. Supp. 125, 128 (S.D.N.Y.1969); Rule 17(e)(1), F.R.Cr.P. [21] See generally, 1 Wright & Miller, Federal Practice and Procedure: Criminal § 106. [22] See United States v. Garcia, 420 F.2d 309 (2d Cir. 1970); In Appeal of Kitzer, 369 F.2d 677 (7th Cir. 1966); United States v. E. H. Koester Bakery Co., 334 F. Supp. 377 (D.Md.1971). [23] "A grand jury investigation . . . may be triggered by tips, rumors, evidence proffered by the prosecutor, or the personal knowledge of the grand jurors. Branzburg v. Hayes, 408 U.S. 665, 701, 92 S. Ct. 2646, 2666, 33 L. Ed. 2d 626 (1973).	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2710768/	Order Michigan Supreme Court Lansing, Michigan March 28, 2014 Robert P. Young, Jr., Chief Justice 147911 Michael F. Cavanagh Stephen J. Markman Mary Beth Kelly Brian K. Zahra Bridget M. McCormack INDEPENDENT BANK, David F. Viviano, Plaintiff-Appellee, Justices v SC: 147911 COA: 306813 Oakland CC: 2010-113058-CK HAMMEL ASSOCIATES, LLC, ESTATE OF JAMES D. LEE, and NORBERT A. BOES, Defendants, and JAMES D. LEE REVOCABLE LIVING TRUST, Defendant-Appellant. ____________________________________/ On order of the Court, the application for leave to appeal the July 2, 2013 judgment of the Court of Appeals is considered, and it is DENIED, because we are not persuaded that the questions presented should be reviewed by this Court. I, Larry S. Royster, Clerk of the Michigan Supreme Court, certify that the foregoing is a true and complete copy of the order entered at the direction of the Court. March 28, 2014 h0324 Clerk	01-03-2023	08-05-2014
https://www.courtlistener.com/api/rest/v3/opinions/1432413/	952 F.Supp. 1180 (1996) UNITED STATES of America, Plaintiff, v. ONE 1988 PREVOST LIBERTY MOTOR HOME, Measuring 40 Feet in Length, also known by Vehicle Identification Number 2P9M33403J1001532, and Bearing Oregon License Plate H998173, Defendant. Civil Action No. H-93-0980. United States District Court, S.D. Texas, Houston Division. December 3, 1996. 1181 1182 1183 1184 Michael B. Schwartz and William Emerson Yahner, Office of U.S. Attorney, Houston, TX, for the U.S. Arch M. Skelton, Dallas, TX, for LMC Investments Inc. MEMORANDUM AND ORDER ATLAS, District Judge. INTRODUCTION This Memorandum and Order supersedes the Court's Findings of Fact and Conclusions of Law entered on October 21, 1996 [Doc. # 167] in this case.[1] The United States of America (the "United States" or "Government") brought this civil forfeiture action against One 1988 Prevost Liberty Motor Home ("Defendant Property" or the "Motor Coach") pursuant to 18 U.S.C. § 981(a)(1)(A). The Government contends that the Defendant Property is proceeds traceable to a money laundering violation under 18 U.S.C. § 1956(a)(1)(A). The money laundering violation is premised on bankruptcy fraud by Lawrence or Larry Sheehan ("Sheehan") in violation of 18 U.S.C. § 152. LMC Investments Inc. ("LMC" or "Claimant") is a Missouri corporation that has filed a claim in this action contesting the forfeiture and contending that it is the owner of the Motor Coach. Sheehan does not personally make a claim to the Defendant Property. The Government contends that LMC lacks standing to contest this forfeiture since it lacks a genuine interest in the Defendant Property. Claimant LMC asserts eleven defenses in its Third Amended Answer and Claim for Damages and Attorney's Fees [Doc. # 79] ("Answer"), which can be summarized into four categories. First, LMC claims that 1185 there was no bankruptcy fraud or money laundering violation by Sheehan and therefore forfeiture is unlawful since the Defendant Property is not involved in and is not proceeds of any illegal activity. Second, it contends that there is no substantial connection between the fraud allegedly committed in Sheehan's bankruptcy and the Defendant Property or the farm and lake house, the proceeds of which were used to purchase the Defendant Property. Third, Claimant contends that it is an "innocent owner," and is entitled to avoid the forfeiture since the predicate offenses have been shown to have been committed without knowledge of the owner. Fourth and finally, Claimant challenges the procedures used in connection with and the timeliness of this action. See Answer, at 12-16. A five day bench trial was held in this case. The Court holds that LMC has failed to establish that it has standing to contest this forfeiture. Nevertheless, since a substantial trial was held, the Court addresses the merits, in the event of a challenge to its initial ruling. On the merits, the Court holds that many of the LMC defenses are not legally viable, and that Claimant has failed to prove any of the other defenses by a preponderance of the evidence. The Defendant Property therefore is forfeited to the United States for disposition as appropriate under law. FINDINGS OF FACT 1. Procedural Posture of This Forfeiture Action The Defendant Property is a 1988 Prevost Liberty Motor Home, measuring 40 feet in length, also known by vehicle identification number 2P9M33403J1001532, and bearing Oregon license plate H998173. Upon application of Plaintiff United States, on April 2, 1993, Magistrate Judge Mary Milloy issued a Warrant for Arrest in Rem directing the United States Marshal for the Middle District of Florida to seize and maintain the Defendant Property. On that day, the Defendant Property was in the possession of Larry Sheehan and his wife, Loretta Jean Adkinson Sheehan, at Richardson's Fish Camp, 1550 Scotty's Road, Kissimmee, Florida. Testimony of Larry Sheehan ("Sheehan Testimony"). On April 9, 1993, the property not having yet been seized, the United States moved for issuance of an Amended Warrant for Arrest in Rem, alleging as grounds that the Defendant Property had been removed from the Middle District of Florida. On April 9, 1993, Magistrate Judge Marcia Crone issued an Amended Warrant for Arrest in Rem directing the United States Marshal's Service to seize and maintain the Defendant Property. The Defendant Property was seized near Covington, Kentucky by the United States Marshal's Service for the Western District of Kentucky on or about April 14, 1993, after being abandoned by Larry Sheehan and Loretta Jean Adkinson Sheehan. Since its seizure, the Defendant Property has remained in the care and custody of the United States Marshal's Service for the Western District of Kentucky in Louisville, Kentucky. Pursuant to a Stipulation entered into by the United States and LMC, see Doc. # 21, probable cause existed for the seizure of the Defendant Property. Because LMC sought repeatedly to withdraw its agreement to the Stipulation, the Court at trial also made a finding that probable cause existed based on the evidence adduced during the first several days of trial. The only claimant with respect to the Defendant Property is LMC. Sheehan has expressly disclaimed any ownership, lessee or possessory interest in the Defendant Property. 2. Background of LMC and its Shareholders, Officers and Directors LMC has two 50% shareholders, William A. Ross ("Ross") and Michelle T. Sheehan. Ross is president and Michelle Sheehan is secretary of LMC. Ross and Michelle Sheehan also constitute LMC's board of directors. William A. Ross was a fellow pilot of Sheehan's at Continental Airlines (and a farm owner); they met at Continental Airlines in the mid-1980's. Michelle Sheehan, who was born on August 27, 1970, is the daughter of Sheehan. 1186 There is no evidence that Michelle Sheehan's involvement in LMC extended beyond signing documents prepared by others. See Memorandum and Order, dated March 7, 1995 [Doc. # 55], at 2. Michelle Sheehan has never refused to sign any documents prepared and sent to her by others relating to LMC. Ross' involvement was only slightly more substantive on isolated occasions in 1989, and ceased completely after he learned he had cancer. Cully and Ross Testimony; see LMC Ex. 30. LMC apparently was formed in or about April 1986, according to unsigned Minutes of First Meeting of Shareholders and Minutes of First Meeting of Board of Directors and an unsigned stock certificate, each dated April 2, 1986. USA Ex. 6, 7, 8. The evidence of the identity of the initial shareholder(s) is the unexecuted stock certificate and a reference in the Minutes of First Meeting of Shareholders indicating Sheehan was the sole shareholder. USA Ex. 6, 7. The certificate was in the files of LMC's and Sheehan's attorney, Michael Cully ("Cully"). Cully Testimony. Sheehan claims he was never a shareholder of LMC.[2] There is no dispute, however, that he was President of LMC from the time of its formation until sometime in May 1989, when he purportedly resigned. LMC Ex. 9A, 9B. The share certificates evidencing Michelle Sheehan's and Ross' ownership interests in LMC were prepared in 1994, after this litigation was commenced. USA Ex. 9-12. Neither Ross nor Michelle Sheehan could recall when they first received their certificates. Only after this action was filed by the United States did Ross and Michelle Sheehan prepare lost stock certificates. Id. 3. Sheehan's Rationale For Use of Corporate Ownership On March 10, 1986, Sheehan informed United Savings & Loan Association of Lebanon, Missouri ("United Savings") by letter that he had instructed his attorneys to transfer his personal assets to "corporate umbrellas" in order to shield them from potential creditors. USA Ex. 1. He stated that he was in the process of transferring legal title to personal assets into corporate nominees. USA Ex. 1; Sheehan Testimony. Sheehan was in default of a May 1985 personal loan, that already had been extended twice but was due on May 6, 1987. He owed $90,900.00 on this loan to Union National Bank of Colorado ("Union National Bank") as of that time. In May 1987, Union National Bank began collection activities.[3] Sheehan's method of operating was to attempt to conceal his assets. Sheehan was familiar with bankruptcy proceedings at this time since, in 1985 or 1986, a company he owned, Wooden Nickel, Inc., had been forced involuntarily into bankruptcy. Sheehan Testimony; see USA Ex. 323 (Transcript from Sheehan's Section 341 Meeting of Creditors), at 102. Sheehan had represented to United Savings that his net worth in 1985 was $5.7 million. USA Ex. 18.[4] He thus had a significant incentive to hide his assets. He testified at trial that he was afraid he would be sued personally if a plane he was piloting was in an airplane accident, since his employer, Continental Airlines, had changed its indemnity policies. He also stated that he wanted to be sure his former wife, Betty Olson Sheehan, did not get his property.[5] Sheehan thereafter held virtually no assets in his own name. In or about April 1986, shortly after LMC was formed, Sheehan 1187 transferred title in 1514 So. Glenstone ("Glenstone Property") from himself to LMC. USA Ex. 93; Sheehan Testimony. Thereafter, LMC's principal business related to the ownership of two buildings in which restaurants operated.[6] Sheehan's financial problems grew worse with time. On January 24, 1989, Sheehan confessed to a $125,000.00 judgment in a lawsuit brought against him by Union National. USA Ex. 71, 71.1.[7] By March or April 1989, Union National Bank began its attempts to garnish Sheehan's wages as a result of this judgment. USA Ex. 123. Sheehan counseled with Cully concerning the garnishment action and the Bank's efforts to seize certain assets located in Springfield, Missouri. USA Ex. 39; Sheehan Testimony. Sheehan also experienced several heart attacks and other health problems starting in mid 1988. On May 29, 1989, Sheehan filed for bankruptcy protection under Chapter 7 in Houston, Texas. USA Ex. 128, 161. The Government's claim of forfeiture of the Defendant Property arises from fraud in which it contends Sheehan concealed his interest in various corporations and their assets over which he had control and beneficial ownership interests from the Bankruptcy Trustee, the Court and the estate's creditors. 4. Creation of LMC, Inc., Banner Advertising, Inc. and B & B Development, Inc. Sheehan created LMC in April 1986. Michelle Sheehan acquired her interest in LMC in April 1986, when Sheehan gave her 100% of the corporation. Michelle Sheehan was 15 or 16 years old at the time of her "acquisition." M. Sheehan Testimony. She relied entirely on her mother, Carole, to read to her the documents she received on LMC and the other companies. She admits she did not listen or "pay much attention" when her mother discussed these matters with her. She had little recollection of events, although she claimed at trial to have been involved in decision making.[8] Michelle Sheehan had no business experience in general and no experience with restaurants in particular. M. Sheehan Testimony. She was involved in LMC's business to only a minor and purely ministerial extent. Her representations to this Court of material involvement are not credible. In or about 1986 or 1987, Sheehan and his wife at the time, Betty Olson Sheehan, separated. On or about June 6, 1987, in a Legal Separation and Property Settlement Agreement with Betty Olson Sheehan, Sheehan became the owner of all of the stock in various corporations including, but not limited to, all of the stock in both Banner Advertising, Inc. ("Banner") and B & B Development, Inc. ("B & B"). Banner had been incorporated under the laws of the State of Missouri on November 30, 1981. B & B, formerly, Clearwater Development, Inc. ("Clearwater"), had been incorporated under the laws of the State of Missouri on December 30, 1974. Prior to 1188 July 7, 1987, Sheehan owned all of the stock of Banner and B & B. From a time prior to June 6, 1987, until at least early May 1989, Sheehan served as President of LMC, Banner and B & B. As of July 7, 1987, Banner's assets were a lake house in Barry County, Missouri, a house near Rogersville, Missouri, and a Stearman aircraft. Cully, Sheehan, and Ross Testimony. As of July 7, 1987, B & B's assets were a farm in Barry County, Missouri and assorted farm equipment. Id. The B & B farm consisted of approximately 300 acres of land. Ross estimated that at the time of the July 7, 1987 Agreement, the Banner lake house was worth $300,000, and the B & B farm was worth $500 per acre, or $150,000. Sheehan's estimate of the value of the lake house was double Ross' estimates. 5. Sheehan's Purported Transfers of Ownership of Banner and B & B to Ross By an agreement dated July 7, 1987, Ross acquired a 100% interest in Banner and at least a 90% interest in B & B. Each Ross and Sheehan now claim that the transfer was a gift from Sheehan.[9] Ross and Sheehan Testimony; USA Ex. 2, 3. The agreement, as prepared by Cully, stated that the transfer from Sheehan to Ross was in consideration for Ross' release of all claims that he had arising from the loss of his investment of approximately $150,000 in Sheehan's company, Wooden Nickel, Inc., which had been forced into bankruptcy in or about 1986. See USA Ex. 2, 3.[10] Sheehan and Ross have testified inconsistently as to whether or not the transfer agreement was a binding contract. USA Ex. 343, 344. Ross testified that he participated in these transactions as a favor to his friend, Sheehan, and did not receive his interest in Banner and B & B, and later LMC, as consideration for the release by him of a potential claim against Sheehan for a prior failed investment.[11] Ross Testimony. This is contrary to Sheehan's divorce proceeding testimony and his testimony in his own Bankruptcy Case. See Sheehan Testimony. Sheehan testified that in July 1987, he and Ross agreed that Ross would exchange his interests in Banner, B & B and other entities for a 50% interest in LMC. USA Ex. 4, 5; Answer, ¶ 17. Ross and Sheehan testified that they agreed Ross would get involved with these companies on the condition that a lawyer would be involved to do the legal work and handle all communications among officers and shareholders, that Sheehan would stay actively involved for 5 years, and that Ross would not have to deal with Sheehan's former wives. There is no writing that supports this testimony. The parties' agreement reflecting the transfer of 50% of LMC's shares to Ross for 100% of Banner and B & B's stock from Ross seems to have been executed on September 18, 1987. There is 1189 no explanation given as to why Michelle Sheehan, the 100% owner of the LMC stock, according to Sheehan's testimony, would agree to this transfer; she received nothing in return for the loss of 100% control over LMC's assets. There is no evidence that there was any discussion with Michelle Sheehan prior to the execution of the July or September 1987 agreements. Ross and Sheehan agreed that all communications concerning LMC, Banner or B & B would be through their attorney, Cully. The documents establish that this is the course that was in fact followed. Sheehan and Ross testified that Sheehan gave Ross these companies (and their assets) so Sheehan could provide for Michelle Sheehan after he died. Sheehan testified that he wanted to prevent his estranged wife, Betty Olson Sheehan, from getting the property. He had recently been diagnosed with diabetes and testified that he believed he was likely, according to his family's pattern, to suffer heart attacks as a result. Sheehan's explanations lack credibility. While he may have been justifiably concerned about his health, his purported concerns about his former wife are spurious, since he had just reached a formal and final property settlement with her by which he received full ownership of the corporations. The Court is persuaded that Sheehan's true concerns were his deteriorating financial condition, as explained below. If Sheehan truly wanted to provide for his daughter Michelle Sheehan, he easily could have used a traditional method of estate planning, such as creating a trust for her benefit, with an appropriate independent trustee. It is questionable whether Ross would have been asked to serve such a role, since Ross possessed no financial acumen or experience in commercial real estate, which constituted a substantial part of the assets of LMC and its subsidiaries, Banner and B & B. Instead, Sheehan designed the transactions to permit, and even to require, according to the testimony of Ross and Cully, that Sheehan remain in control of the assets while divesting himself of formal ownership. Sheehan never explained why he opted for such a complex arrangement. Therefore, the Court finds that Sheehan transferred the Banner and B & B stock to Ross to prevent Sheehan's creditors from reaching his assets, and to attempt to place the asserts outside his bankruptcy estate, should he decide to file. 6. Sheehan Retained Control of Operations of LMC, Banner and B & B Ross' involvement in LMC, Banner and B & B's business affairs was, like that of Michelle Sheehan, at all times minimal. Neither the LMC Board of Directors nor shareholders ever had a meeting that Ross or Michelle Sheehan attended. Cully, Ross, Michelle Sheehan and Sheehan all testified that Cully (as attorney for Sheehan, LMC, Banner and B & B) ran the businesses, in that he prepared formal documentation when it was needed. Cully would call Ross as needed, and Ross signed virtually all documents Cully sent to him. Ross did not make business policy decisions, and orally approved decisions suggested by others. There is no evidence Ross ever declined to do what he was asked. He was not consulted on certain matters, such as a proposed real estate swap that Sheehan was trying to arrange in October 1988 to divest LMC of certain real estate in exchange for commercial property in Nashville, Tennessee. See USA Ex. 51. The only connection that this proposed property had to LMC was that it was located near the residence of Jean Adkinson, Sheehan's girlfriend and future wife, at the time. It is undisputed that for the years 1987 and 1988, Sheehan was the president of LMC. USA Ex. 28. For the year 1987, Sheehan was a member of LMC's Board of Directors. USA Ex. 28. For the year 1988, Sheehan was the only member of LMC's Board of Directors. USA Ex. 28. For the years 1987 and 1988, Sheehan was also the president of Banner and was the only member of Banner's Board of Directors, and was the president of B & B and the only member of B & B's Board of Directors. USA Ex. 29, 30. Ross testified that he had significant contact with Cully in the process of managing the LMC affairs, since Ross and Sheehan testified that by design they never talked 1190 directly to each other concerning the operation of LMC. They had agreed that all communications related to LMC would go through Cully.[12] Ross' claim of significant involvement was belied by his answers on cross examination and is not borne out by the written record. During the period July 1987 through September 1989, when Sheehan and Ross testified that they were seeking to sell the real property holdings of LMC, Banner and B & B (allegedly in order to liquidate the companies' assets and make them more productive), there is only one written communication between Cully and Ross. In this communication, a September 29, 1988 letter by Cully to Ross, Cully stated "I have not written or called you in many weeks, if not many months." USA Ex. 48. Moreover, before the filing of Sheehan's bankruptcy proceeding on May 26, 1989, Cully's billing records contain no mention of Ross with regard to the operation of LMC, Banner, B & B, or their respective assets. USA Ex. 39. The trial evidence leads the Court to find that, from July 1987 through April 1989, if not longer, Sheehan made all major decisions concerning the use and disposition of assets nominally titled in the names of LMC, Banner and B & B. USA Ex. 334, 337, 338; Yates, Cully, Sheehan, Ross, M. Sheehan Testimony. From July 1987 through at least April 1989, Sheehan personally received the benefits of all assets nominally titled in the names of LMC, Banner and B & B. USA Ex. 109-111; Cully, Ross, M. Sheehan and Sheehan Testimony. Neither Ross nor Michelle Sheehan received any benefit arising out their purported ownership of LMC, Banner and B & B at any time. Ross and M. Sheehan Testimony. 7. Sheehan's Purported Resignation From All Corporate Positions Sheehan claims he resigned as an officer and director of Banner, B & B, and LMC effective May 1, 1989, four weeks before his Chapter 7 bankruptcy filing. LMC introduced in evidence a purported resignation which recites that it is effective May 1, 1989. LMC Ex. 9A. The Court questions this document's authenticity. Unlike all other documents relating to LMC, there is no credible evidence that Cully or an attorney prepared this document, and if it was prepared by Cully or his staff, nothing about it convinces the Court it was prepared prior to May 1, 1989. The signature is undated, and the document recites that it is effective on May 1, 1989, which suited Sheehan's purposes in light of his need to file bankruptcy to try to halt the intrusive collection efforts being made, by Union National Bank particularly, since March 1989. The document is an exceptionally poor copy. In addition, the corresponding Consent by the LMC Board of Directors, signed by Michelle Sheehan and Ross, bore signatures that were not dated, and neither of these witnesses could state with any precision when he or she signed it. See LMC Ex. 9B. In its original interrogatory answers, LMC stated that it had no "specific memory as to the date" when it learned of Sheehan's resignation. USA Ex. 19. Both before and after the stock transfers to Ross, and before and after Sheehan's purported resignation as President of LMC, Banner and B & B, he continually exercised virtually total dominion and control over the assets of these three entities, and the proceeds of these assets. It was his long term strategy to market and sell these companies' real estate assets. Sheehan was a signatory on bank accounts in the name of LMC. USA Ex. 104, 173.3. Ross concurred in this approach since he did not want to be involved in the business of the companies. 8. Sheehan's Use of Corporate Property for His Own Purposes Prior to His Bankruptcy Sheehan used the assets of LMC, Banner and B & B for his benefit and to suit his desires. The lake house (ostensibly owned by Banner) was at one time the personal residence of Sheehan, his then wife Carole Sheehan, and their daughter, Michelle Sheehan. 1191 Prior to its sale in November 1989, the lake house's last known occupant was Sheehan. Neither Michelle Sheehan nor Ross ever lived in it after it was transferred to Banner. On December 15, 1987, Banner conveyed the lake house to Sheehan and his then wife, Betty Olson Sheehan. USA Ex. 24. Three days later, on December 18, 1987, the Sheehan's conveyed the lake house back to Banner. USA Ex. 26. The General Warranty Deed was not filed until almost a year later, on September 13, 1988, within one year of the filing of the bankruptcy petition at issue in this case. Sheehan testified that he conveyed the property because United Savings Bank refused to renew the loan if the property was held in the name of Banner, but the Bank agreed to refinance the existing loan if legal title to the property were placed temporarily in his and his wife's names. Sheehan's testimony was unclear as to whether he considered himself personally liable for the loan thus created. There is no evidence that he or LMC made payments on it until the property was sold in 1989. Other examples of the dominion and control Sheehan exercised over the LMC and its subsidiaries' assets follow. On October 12, 1988, Sheehan authorized Maurice Burlison, a Springfield real estate broker, to "act on my behalf as to all matters regarding my real estate holdings." USA Ex. 53 (emphasis added). Among the properties covered by Sheehan's agreement with Burlison was the lake house, whose record owner was Banner, and the farm purportedly owned by B & B. Id. On December 6, 1988, Sheehan wrote a letter, responding to an offer to purchase the Banner lake house by writing "your offer is not acceptable to me" and further observing that "I dropped my listing price $75,000.00 below what I felt an appraiser would appraise this property for in today's market." USA Ex. 63 (emphasis added). Sheehan now denies he wrote this letter. Sheehan's disclaimer is not credited by this Court. A notation at the bottom of the December 6, 1988 letter states "LAS/nh." The initials "LAS" refer to Larry Allen Sheehan; the initials "nh" refer to Nancy Horton, who was Cully's secretary in 1988. Cully Testimony. Cully denied preparing the December 6, 1988 letter or preparing the letter for Sheehan's signature. Cully's billing records indicate that he had an office conference with Sheehan on December 6, 1988. USA Ex. 39. United Savings posted the lake house (owned ostensibly by Banner) for foreclosure on two occasions on or about September 15, 1988, and on or about April 10, 1989. USA Ex. 45, 89. Sheehan claimed that he did not know about United Savings' threats of foreclosure on the lake house after August 1988 because, as a result of a heart attack he had suffered in August 1988, Jean Adkinson, Tom Johnson (who was hired to manage the day-to-day affairs of LMC, Banner and B & B) and Cully refused to give him his mail. This assertion lacks credibility since, on January 14, 1989, Sheehan forwarded under cover of a handwritten letter two checks to United Savings that he personally signed to bring his loan current. USA Ex. 66. Moreover, Ross had no knowledge of either threat of foreclosure against the lake house and there is no evidence of anyone acting on behalf of a corporation. Ross Testimony. Thus, Sheehan's testimony that he was unaware of United Savings' threats of foreclosure and uninvolved in the affairs of LMC or Banner is not credible. LMC guaranteed the fees for legal services rendered to Sheehan in his personal capacity by Cully's law firm. Legal services rendered to LMC, Sheehan personally, and other business ventures associated with Sheehan were billed to one account at Cully's law firm; no effort was made to separate responsibility for these billing matters.[13] 1192 After July 1987, a building at 1514 So. Glenstone, Springfield, Missouri ("the Glenstone Property"), was owned by LMC. Sheehan's role in the sale of this property is illustrative of the central position he played throughout as to LMC, Banner and B & B. Sheehan testified that he had been trying to sell that property and all the real estate owned by LMC, Banner and B & B, but in the late 1980's there was a very depressed market. Sheehan testified that his role in the sale of the Glenstone Property in April 1989 was limited to depositing the proceeds of the sale into a bank account in a Kansas City suburb and dividing the proceeds pursuant to instructions from others. However, Cully testified that Sheehan was his primary contact concerning the sale of the Glenstone Property. For instance, Cully obtained initial approval of the terms and price of the sale from Sheehan. When Cully received the contract for sale on February 17, 1989, he forwarded it via Federal Express to Sheehan. USA Ex. 79. Cully's billing records for the period February 14, 1989 through April 17, 1989 show contact with Sheehan by letter or telephone on 22 days, including the following entry on April 17, 1989, the day of the closing of the Glenstone Property: "several calls to Larry; to closing on the Glenstone Property." During the same time period, there are no references in Cully's billing records to either Ross, Michelle Sheehan, or Carole Sheehan. USA Ex. 39. Finally, on April 17, 1989, LMC sold the Glenstone Property for a total of $500,000. Answer [Doc. # 79], ¶ 23; USA Ex. 102, 321. The net proceeds of $84,713.58 from the sale of the Glenstone Property were deposited into an LMC account over which Sheehan had check writing authority. USA Ex. 107, 321.[14] On April 19, 1989, Sheehan caused three checks to be cashed against LMC's account that used almost all of the net proceeds: (i) an unnumbered check in the amount of $40,727.77, payable to "Commerce Bank," which references three cashiers checks; (ii) check no. "002" in the amount of $4,477.36, payable to "Commerce Bank/Larry Sheehan," which references four other cashiers checks; and (iii) check no. "003" in the amount of $37,006.00, payable to "Commerce Bank/Larry Sheehan," which references "money orders." USA Ex. 108, 321 (and documents referenced therein). Much of the $40,727 used to purchase cashiers checks from Commerce Bank was for the benefit of Sheehan or those he owed: $10,000.00 was paid to Tom Johnson, manager of LMC, for the sum due under his Agency Agreement with LMC (of which Ross and 1193 Michelle Sheehan knew little if anything);[15] $24,032.15 was paid to Cully for undifferentiated legal fees for LMC, Sheehan and the other corporations; $3,000.00 was paid David Sesserman, an attorney who rendered services to Sheehan in his individual capacity in the lawsuit filed by Union National Bank in Colorado; and $3,687.62 was paid to Michael Godar for work done for Bo James Co. USA Ex. 71.1, 109, 321. The disbursement to Michael Godar was not authorized by Ross, LMC's president, or Michelle Sheehan, neither of whom seemed to know anything about it. Ross and M. Sheehan Testimony. In addition, almost $5,000 in personal obligations of Sheehan, such as bills for medical and legal services, were paid out of the proceeds of the Glenstone Property sale. See USA Ex. 109-111.[16] Sheehan (and/or Jean Adkinson, his girlfriend/wife) received at least three $10,000 checks payable to him from the proceeds.[17] The Court therefore finds that Sheehan's testimony concerning the limited nature of his involvement in the sale of the Glenstone Property is not credible and is not supported by the evidence. Sheehan's total control over LMC, and thus its assets including its subsidiaries, is further evidenced by the fact that Sheehan was a signatory on bank accounts in the name of LMC, including one account that had been opened in late April, 1989 (within a month of his bankruptcy filing) on which he was sole signatory. USA Ex. 104, 173.3. These accounts were not disclosed in Sheehan's bankruptcy. USA Ex. 161. Another mechanism used by Sheehan to benefit those he chose and not the shareholders of LMC was to arrange through Cully for Johnson (LMC's recently hired manager), Jean Adkinson (Sheehan's girlfriend and later wife), and LMC to enter into an "Agency Agreement," effective January 27, 1989, in relation to the sale of the Glenstone Property. USA Ex. 75. According to LMC documents,[18] Adkinson was paid pursuant to the Agency Agreement for suggesting that the Glenstone Property be offered for sale to a neighbor, who at that time already held a right of first refusal on it, and who owned all the surrounding land. Other than this alleged suggestion, Adkinson performed no services in connection with the sale. USA Ex. 348 (J. Adkinson Deposition), at 51-53. Adkinson and Johnson are not now and have never been licensed real estate brokers. USA Ex. 348 (J. Adkinson Deposition), at 51; see USA Ex. 327, 328, 334. Neither are entitled to receive real estate commissions under Missouri law for services rendered as a real estate agent. Cully Testimony. Other than the transaction involving the Glenstone Property, Adkinson has no other experience in real estate.[19] USA Ex. 348. Ross knew 1194 little about the services provided by Adkinson in connection with the sale. Jean Adkinson's receipt of a fee as a result of the Glenstone Property sale thus is further evidence of Sheehan's use of LMC for his personal benefit, rather than for the benefit of the shareholders or for his daughter. The Court therefore finds incredible Sheehan's testimony that he did not control the distribution of the proceeds from the sale of the Glenstone Property.[20] Ross and Michelle Sheehan's testimony support the conclusion that Sheehan orchestrated and then received much of the benefit of the Glenstone Property sale. Ross testified that Sheehan was contacted whenever decisions needed to be made regarding the sale of that Property, including price. Ross never discussed with Michelle Sheehan the adequacy of the price for the Glenstone Property and she could recall no information concerning the transaction. Ross and M. Sheehan Testimony. Significantly, during the time Ross and Michelle Sheehan both owned LMC stock, until in or about 1995, Ross never spoke to or conferred substantively with Michelle Sheehan about LMC, despite the fact that she turned 18 in August 1988. Finally, despite their record ownership of 100% of the LMC stock, neither Ross nor Michelle Sheehan received any of the proceeds from the sale of the Glenstone Property. USA Ex. 102, 103. 9. Sheehan's Bankruptcy On May 26, 1989, Sheehan filed a voluntary petition for bankruptcy under Chapter 7 of Title 11 of the United States Code in the United States Bankruptcy Court for the Southern District of Texas, Case No. 89-03977-H1-7. Answer, ¶ 6; USA Ex. 128. The bankruptcy resulted from Union National Bank's efforts to garnish Sheehan's wages and its other collection efforts, which were commenced after the Bank obtained a judgment in late January 1989. See USA Ex. 39, 123. In his initial filing, Sheehan listed assets of only $10,350.00. USA Ex. 128, 161. This was in stark contrast to the financial statements he had submitted to United Bank in 1985 and 1987 showing $5.7 million and $4.7 million net worth.[21] According to Sheehan's schedules, he owed his secured creditors $163,363.89, and he owed his unsecured creditors $284,477.69. USA Ex. 161. Sheehan's initial filing did not list Banner, B & B, LMC or their respective properties (including the lake house and the farm) as assets. USA Ex. 128, 161. Sheehan's initial filing also did not disclose his indebtedness on the United Savings note which was secured by the lake house. USA Ex. 128, 161. On August 8, 1989, Sheehan filed schedules of assets and liabilities in his bankruptcy proceeding. USA Ex. 161. Despite a direct question concerning business associations during the past six years, Sheehan did not disclose in his schedules or statements of affairs his involvement with Banner, B & B, or LMC. Id. Sheehan did not disclose his ongoing attempts to sell the lake house and the farm. Id. Sheehan did not disclose the disbursements paid to him in April 1989 as a result of the sale of the Glenstone Property or that he was personally holding two of the checks on and after the date he filed his bankruptcy petition. Id. Sheehan did not disclose the fact that certain of his medical expenses and legal fees had recently been paid on his behalf as a result of the sale of the Glenstone Property. Id. Sheehan did not disclose any interest in any real property, including the Banner lake house and the B & B farm. Id., Schedule B-1. Sheehan did not disclose that he was an authorized signer on 1195 the LMC account at Commerce Bank, or on LMC's account at Mercantile Bank. Id. Sheehan did not disclose the pending patent application for the fishing lure he had invented, or his interest in Bo James Co., the nominal owner of the product. Id. Further evidence of Sheehan's intent to hide assets from the Bankruptcy Trustee, Steven Smith, was introduced by the United States. On November 6, 1989, Linda Kearney, a legal assistant to the Trustee, wrote to Ross, as president of LMC, and requested that LMC produce bank records for the period May 24, 1989 through July 26, 1989. USA Ex. 196. On January 4, 1990, Cully drafted a response to Kearney's letter for Ross' signature, which Ross signed. Ross refused to produce the requested bank records, and stated: "After having reviewed these documents, we are at a loss as to why you wish to review these materials. I am curious to know what the bank records of LMC Investments, Inc. has to do with your proceeding." USA Ex. 199, 201; Cully, Ross, Johannes and Smith Testimony. Only Union National Bank, which had a judgment against Sheehan, sought to have its claim exempted from discharge. See generally LMC Ex. 12d. No other creditor sought such relief, and no creditor otherwise protested the granting of the discharge. Eventually the Union National Bank claim was settled and the Bankruptcy Court approved the settlement on August 14, 1991. LMC Ex. 12d and 12j. Sheehan contends that he was carefully and fully examined in pursuant to Bankruptcy Rule 2004 and during the Section 341 Meeting of Creditors (see USA Ex. 323 (transcript of Rule 2004 exam); cf. LMC Ex. 12e), as well as during two separate depositions about his past involvement with LMC and its subsidiaries. The Court cannot fully assess the intensity of these examinations, the degree of detail Sheehan provided, or the forthrightness with which he answered the questions posed, since the deposition transcripts are not in evidence. The Government disputes the characterizations of LMC's counsel and Sheehan on this issue. Sheehan's Bankruptcy Trustee, Steven Smith, conveyed that everyone believed this to be virtually a "no asset" case. He explained that he spent only a few minutes questioning Sheehan at the Section 341 Creditors Meeting (or the Rule 2004 Examination) and did not spend extensive time on the matter generally, because of the statements by Sheehan that there were only approximately $10,000 in assets. Smith filed a "no asset" report on March 8, 1993, believing it to be the end of that bankruptcy case. LMC Ex. 12a. The Court disagrees with Sheehan's characterization of the Rule 2004 Examination, however. See USA Ex. 323. The Court finds that Sheehan's responses were vague, incomplete and confusing. Moreover, Smith apparently did not consider Sheehan's disclosures to be adequate. When the United States Attorney later informed Smith about the matters raised in the case at bar, Smith immediately took action to continue Sheehan's bankruptcy case in an open status. USA Ex. 348, 349. Smith testified during the Government's rebuttal case at trial that he believes that Sheehan was incomplete in his bankruptcy disclosures. He stated also that creditors of the estate will receive the proceeds of this forfeiture if the Government is successful. On April 9, 1993, without knowledge of Sheehan's continuing involvement with the LMC assets, the Bankruptcy Court granted Sheehan his discharge. At that time, there were no objections. LMC Ex. 11. The Court finds, based on the testimony of the Bankruptcy Trustee, that he on behalf of the creditors of the bankruptcy estate was not made aware of the extensive and continuing involvement of Sheehan in the affairs of LMC, Banner and B & B, and the degree of control Sheehan maintained over their assets.[22] 10. Sheehan's Continuing Domination of Corporate Affairs in 1989-90, Subsequent to His Bankruptcy Filing Sheehan remained involved in efforts to market the lake house and the farm after his 1196 bankruptcy filing. Cully, Ross, Sheehan, Yates Testimony. Record title to the lake house was in Banner and record title to the farm was in B & B. On May 26, 1989, a real estate agent representing James and Margaret Bergtold (the "Bergtolds") forwarded to Sheehan a sales contract for "your" lake property. USA Ex. 129. On June 5, 1989, Cully forwarded to Sheehan the proposed contract on the lake house from the Bergtolds and stated that "we need to give some serious thought to what our counter offer should be." USA Ex. 138; Cully Testimony; Answer, ¶ 26. On June 12, 1989, Cully forwarded to Sheehan an "offer" to sell the lake house property to the Army Corps of Engineers. Cully instructed Sheehan to sign the instruments as "president." USA Ex. 143.[23] On August 4, 1989, the Bergtolds' real estate agent wrote to Sheehan as follows: "I know you are busy but I expected some reply from our offer. If you will not make a counter offer, then let me know and we will not take any more of your time." USA Ex. 159. Johnson responded as follows to the note: Right now we have a problem with the Corp. over one boundary line and I can tell you all has been agreed to but we do not have it in hand in writing, and Larry will not counter until a clear title could be presented if all parties were to come to an agreement. USA Ex. 159 (emphasis added). In his capacity as president of Banner, Sheehan executed annual registration reports for the years 1988 and 1989. USA Ex. 130. This was done on May 30, 1989, the day after his bankruptcy filing. On that day Sheehan, denominated president of Banner, also executed a Missouri Department of Revenue Request for Tax Clearance of a Forfeited Corporation. USA Ex. 120, 126.[24] On June 1, 1989, Cully wrote to Sheehan concerning the need to get Banner, B & B, and LMC reinstated as Missouri corporations. He also forwarded to Sheehan a copy of the Petition to Quash Execution and Levy with respect to the seizure action brought by Union National Bank. USA Ex. 135. On June 15, 1989, Cully forwarded to Sheehan two copies of LMC's financial statement and requested that Sheehan provide information regarding LMC's assets. USA Ex. 145. On June 20, 1989, Cully wrote to Sheehan observing that: "I am pretty much dead in the water on Banner and B & B until I get the tax returns from John Yates. If you have not worked these matters out with him, you need to do so." USA Ex. 148. On July 12, 1989, Cully again wrote to Sheehan urging him to contact John Yates so that Banner, B & B, and LMC could be reinstated. USA Ex. 152. On July 19, 1989, Cully forwarded to Sheehan a "Durable Power of Attorney" which recited that Sheehan is president of Banner. USA Ex. 153; Answer, ¶ 26. The weight of the credible evidence establishes that Sheehan continued to concern himself with the finances of LMC. On June 21, 1989, Cully forwarded to Sheehan a past due notice for an LMC loan owed at Mercantile Bank. USA Ex. 149. Nevertheless Sheehan used LMC as his personal financial institution. On June 7, 1989, Sheehan instructed Cully to pay $3,300.00 to Michael Godar (a debt of Bo James Co. or of Sheehan personally) from Cully's firm's account and assured him that reimbursement would be forthcoming from LMC.[25] Cully complied 1197 with this request. USA Ex. 139, 140. In its original interrogatory answers, served on the United States on or about June 26, 1994, LMC stated that it did not authorize the expenditure of $3,300.00 to Godar and that "Mike Godar presumably provided legal services to Larry Sheehan for an unrelated matter." USA Ex. 19. This is borne out by an August 1, 1989 letter from Godar to Sheehan enclosing "your United States patent application." USA Ex. 156. Sheehan denied at trial having opened his correspondence except as given to him by Cully or Jean Adkinson. This representation is not material since the weight of the evidence at trial establishes that Sheehan saw the above-noted correspondence and acted on it. Cully and Sheehan Testimony. The evidence of record both the documents and the witnesses' testimony establishes convincingly that LMC, Banner and B & B minimally followed corporate formalities, kept faulty records of corporate meetings and actions, and were not in good standing with the Secretary of State of Missouri for extended periods. USA Ex. 28-30; 202, 207-209, 330; Cully Testimony. Sheehan and his agents, Cully and Johnson, repeatedly stated that Sheehan personally owned or was personally responsible for assets nominally titled in the names of LMC, Banner and B & B, including the lake house and the farm, the proceeds of which were used to purchase the Defendant Property. USA Ex. 18, 34, 43, 47, 53, 63, 65, 66, 69, 70, 76, 78, 83, 85, 94, 96, 129, 138, 139, 143, 149, 153, 159, 232.1, 249, 250 and 258. 11. Events Subsequent to Sheehan's Bankruptcy Filing A. The Sale of the Lake House and the Farm In October 1989, the Bergtolds executed real estate purchase agreements to pay almost $500,000 for the purchase of the lake house and the farm property. Cully Testimony. The sale of both parcels to the Bergtolds closed on November 22, 1989. Each Michelle Sheehan and Ross was aware of and approved the sales, and signed documents in order for the sales to proceed. LMC Ex. 13a; Ross and M. Sheehan Testimony. Each also approved the purchase of the Defendant Motor Coach. See LMC Ex. 13f; Ross and M. Sheehan Testimony. Neither of LMC's shareholders or directors, Ross and Michelle Sheehan, however, was aware of the details of how the proceeds, other than those used for the purchase of the Defendant Property, were spent or allocated. Id. In fact, of the total $491,639.67 paid by the Bergtolds for the farm and lake house, $152,337.15 was used to pay off the United Savings note executed by Sheehan which encumbered the lake house. USA Ex. 322; Answer, ¶ 30. The net proceeds of the two sales a total of $332,318.52 were deposited into Cully's law firm trust account, USA Ex. 322; Answer, ¶ 31, and were used to purchase the Defendant Property. B. Purchase, Use and Operation of the Motor Coach Exclusively by Sheehan Ross and Michelle Sheehan each testified that they thought it a good idea to sell the real estate of LMC, Banner and B & B. Ross stated that he wanted LMC to buy a motor coach because he believed it would be a good investment that would not depreciate. Nothing in the record indicates where he got this idea. Indeed, the aggressive depreciation to be taken over five (5) years according to CPA Yates, once he was informed that LMC owned the Defendant Property, is directly contrary to Ross' concept. Ross never checked about his investment strategy with Cully, his and the corporation's counselor, or with Michelle Sheehan, the person whose financial situation he and Sheehan purportedly were trying to benefit. There is no dispute that each Ross, Michelle Sheehan and Cully knew about the purchase of the Defendant Property prior to LMC's use of the funds, at least to the extent that each signed documents approving the 1198 purchase using the sales proceeds of the lake house and the farm. Ross stated that he wanted Sheehan to shop for a motor coach because Sheehan had experience in such purchases, having previously owned a motor coach through Clearwater, a predecessor to B & B. Ross and Sheehan Testimony. Sometime in 1989, Sheehan located a motor coach he wanted LMC to purchase, the Defendant Property, and met Glen Patch in Tahoe, Nevada to inspect it.[26] Sheehan testified that he committed to purchase the Defendant Property after consulting with Ross. Prior to purchasing the Defendant Property, neither Ross nor Sheehan consulted with Michelle Sheehan on the matter, despite her 50% ownership in LMC and their use of LMC property to purchase the Defendant Property.[27] Neither Ross nor Michelle Sheehan has ever received any of the proceeds from the sale of the lake house or the farm. M. Sheehan and Ross Testimony; USA Ex. 322. In fact, Sheehan testified that it was not until after this case was filed that he met with Michelle Sheehan and explained details about the purchase of the Defendant Property and the structure, purpose and operations of LMC. M. Sheehan Testimony. Sheehan did the same with Ross after this case was filed. Ross Testimony. Neither Ross nor Michelle Sheehan has received compensation of any type, including dividends or distributions of property, from either LMC, Banner, or B & B. USA Ex. 262-279. On or about November 22, 1989, the day the funds were received from the title company on the real estate sales, Cully signed a check in the amount of $286,075.00 from his firm's account to purchase a wire transfer in the same amount, payable to Marathon Coach in Eugene, Oregon, for the purchase of the Defendant Property. USA Ex. 322; 19; 21. Sheehan oversaw the purchase and refurbishment of the Defendant Property. Sheehan Testimony. Sheehan is the only person who used the Defendant Property from the time LMC acquired it; he used it at his sole option for years, and may have used it as his sole residence during some of that time. Sheehan attempted to conceal his involvement by having the funds flow from Cully's law firm account. He also concealed any connection to the Defendant Property by using Oregon and Colorado addresses for LMC on the purchase paperwork. The purchase order states that LMC's address is 13502 E. Asbury, Aurora, Colorado, which at the time was the home address of Jean Adkinson, and was also a former residence owned by Larry Sheehan. USA Ex. 190.[28] A second purchase order for the Defendant Property states that LMC's address is 1902 N.E. 38th Avenue, Portland, Oregon. USA Ex. 191, at 2. Rather than signing his own name to the work orders at Marathon Coach, Sheehan signed Jean Adkinson's name, purportedly because the work was ordered in her name and therefore it was the only name Marathon would accept. Sheehan Testimony. 1199 Sheehan's explanation is farfetched at best, since he testified that the Marathon representative talked on the phone to Adkinson before allowing him to sign. There is no credible explanation as to why Sheehan could not sign his own name after that call, except that he did not want to be associated in writing with the Defendant Property. Finally, the address used by LMC for the motor vehicle registration of the Defendant Property was and continues to be at an address in Portland, Oregon that has no connection to LMC or its business. USA Ex. 320. LMC never has explained this unorthodox conduct. Sheehan and Jean Adkinson had exclusive possession of the Defendant Property from the time it was purchased in November 1989 until its seizure in April 1993. Sheehan, Ross, and M. Sheehan Testimony. Ross estimated at trial that he has been a guest of Sheehan's on the Motor Coach for three or four days on several occasions, usually when he visited Sheehan. Ross Testimony. Likewise, Michelle Sheehan estimated at trial that she had seen the Motor Coach on only one or two occasions C. Compensation by Sheehan for Use of the Motor Coach: Reimbursement of Expenses LMC's position in this lawsuit is that the Defendant Property was leased to Sheehan in exchange for his paying the insurance, maintenance, and expenses associated with the Defendant Property. LMC therefore maintains that this was an arm's length transaction and it is an "innocent owner" of the Defendant Property. The "lease" to which LMC refers was an oral agreement between LMC and Sheehan concerning use of the Defendant Property. Ross stated that he agreed to allow Sheehan to use the motor coach in exchange for covering all insurance and expenses, since the coach otherwise would lay idle and LMC could not pay the maintenance and storage expenses. The evidence does not bear out the contention that Sheehan was leasing the Defendant Motor Coach in a commercially reasonable arrangement. Sheehan and others testified that he paid an imputed rent for use of the Defendant Property of $1,000 or $1,200 per month. Yates, Ross, Cully and Sheehan Testimony.[29] Ross and Sheehan explained the oral lease by stating that prior to late November 1989, LMC had income in the form of installment payments on one or more promissory notes from BRANSCO, Inc. and its owners Andrew Bray and Ed Wall. However, on January 4, 1990, BRANSCO filed for Chapter 11 bankruptcy. At or about that time, Bray and Wall ceased payments as well. Therefore LMC's sole sources of income terminated, leaving LMC without revenue of any sort. In addition, in mid-December 1989, Ross learned that he had cancer, which caused him to lose all interest in LMC. In or about December 1989, Sheehan took delivery of the Defendant Property from Marathon Coach. LMC introduced no evidence as to why it did not take the obvious step of selling or at least listing the Defendant Property, the Motor Coach, for sale while it was still new and in excellent, indeed mint, condition. Instead, Ross stated that he, as LMC's representative, decided to let Sheehan use the Motor Coach in exchange for payment of all its expenses. The only documentation provided to the Government, or to LMC's accountant for tax preparation, concerning the terms of the so-called "lease" are two handwritten pieces of paper, one of which is labeled "Bus Lease" and one of which is labeled "Expenses," both of which were prepared by Larry Sheehan. USA Ex. 249, 250; Yates and Sheehan Testimony. The "lease payments" allegedly made by Sheehan were exclusively disbursements for expenses associated with the operation of the Defendant Property, the Motor Coach. USA Ex. 249, 250; Sheehan, Ross and Yates Testimony.[30] There is no dispute that Sheehan 1200 (possibly with Jean Adkinson's help) paid expenses associated with the Defendant Property from the time LMC acquired it until it was seized by the Government. Sheehan, Ross and Yates Testimony; USA Ex. 250; see USA Ex. 307, 307.1. The issue is how much in fact was paid by Sheehan and Adkinson. According to the only documentation provided by Sheehan to LMC's tax preparer, Yates, for his proof of payment of rent and expenses, Sheehan made "lease payments" totaling $20,200 at the rate of $1200 per month for several months per year, in the following amounts: $3,600 in 1990; $4,600 in 1991; $8,200 in 1992; and $3,800 in 1993. USA Ex. 249.[31] Sheehan claims that he incurred expenses of $21,410 for the Defendant Property on behalf of LMC. USA Ex. 250. The two documents prepared by Sheehan first were provided to LMC's accountant and tax preparer, Yates, several years after most of the expenses were incurred. Prior to that time, Yates did not know that LMC claimed to own the Defendant Property. LMC failed to file any tax returns for the years 1987 through 1992 until after this lawsuit was commenced. LMC filed its 1987 tax return on November 27, 1994, and returns for 1988 through 1992 were filed on December 22, 1994. USA Ex. 262-267.[32] Yates was not provided with Ex. 249 and 250 until 1994, when he belatedly prepared LMC's, Banner's, and B & B's tax returns. Yates Testimony. These returns were not prepared until after this action was commenced. In addition, there is slim documentary back-up for Sheehan's handwritten notes. USA Ex. 249 and 250. While claiming to have paid $20,000 in expenses over a four year period, LMC (and Sheehan) submitted a mere $7,000 in receipts. Moreover, the veracity of some of these receipts and their connection to this case is questionable. There appear to be duplicates and some have no indication that they pertain to the Defendant Property. The Court also is unpersuaded by LMC's claim that it used Defendant Property for public commercial purposes. The evidence simply does not support this contention. The balance sheets filed by LMC with the Missouri Department of Revenue for the years 1989, 1990 and 1991 do not list the Defendant Property as a corporate asset. USA Ex. 255-257; Yates Testimony. In addition, even assuming that the Defendant Motor Coach was leased to Sheehan at the rate of $1,000 to $1,200 per month, as Sheehan testified, the daily rate of such a rental would be only $35-$40 per day. Sheehan, Yates and Ross Testimony. In contrast, the Government established through its motor coach expert that the fair market rental of Defendant Property during the time period in issue, 1990 through 1992, was approximately $400 to $550 per day. Middaugh Testimony. Thus, there is no basis on which to conclude that there in fact was a rental arrangement between LMC and Sheehan. Rather, the Court finds that there was never any truth or economic substance to the claim that LMC was in the business of leasing the Defendant Property to the public.[33] LMC received no revenue, invited no public use, advertised to no one about the Motor Coach's availability, paid no expenses, and maintained no records in connection with the Motor Coach's use. The Defendant Property never was leased to the public and was not used in pursuit of any trade or business by LMC. Moreover, for the annual periods commencing December 1, 1990, December 1, 1991, and December 1, 1992, the only insured driver with respect to the Defendant Property 1201 was Jean Adkinson, USA Ex. 245-248, and in a "Motor Home Renewal Questionnaire," completed on or about December 3, 1990, Adkinson represented that the Defendant Property was not used for business purposes. USA Ex. 245. In fact, the Motor Coach was used solely for the convenience of Sheehan. The Court finds, based on the foregoing, that LMC and Sheehan concealed Sheehan's links to the Defendant Property in numerous ways. Nothing in the trial record gives rise to the inference that LMC had the right to take commercial business deductions or to depreciate the value of the Defendant Property. Sheehan's use of Defendant Property was further illustration of his attempt to hide his property from his creditors. 12. LMC's Witnesses Lack Credibility or Are Not Disinterested The Court carefully observed the demeanor and testimony of all the witnesses in this trial and the foregoing represents the Court's considered judgment of their credibility. To the extent any witness's testimony is inconsistent with the foregoing findings, the Court has rejected that testimony as lacking credibility or as inconsistent with the documents created at the time of the events in issue. As stated above and indicated throughout the foregoing, the Court finds that Sheehan lacks credibility as to the reasons for his creation of and his involvement in LMC, Banner and B & B. The Court does not credit the timing on his purported May 1, 1989 resignation as an officer of all these companies. The Court finds incredible Sheehan's supposed lack of knowledge as to the use of the proceeds of the sale of the lake house and the farm, as well as the proceeds of the Glenstone Property, which was sold immediately before Sheehan's bankruptcy filing. The Court is entirely unpersuaded by Sheehan's testimony that he did not intend to secret or conceal his assets from the Bankruptcy trustee, the Bankruptcy Court and the estate's creditors. The Court finds that the preponderance of the evidence establishes that Sheehan did intend to hide his assets from these entities. Finally, the Court finds that Sheehan knowingly converted the lake house and the farm, a portion of the concealed assets, to negotiable instruments or funds for the purpose of acquiring the Defendant Property and for maintaining it. The Court also finds some of Ross' testimony to lack credibility as discussed in the foregoing sections of this opinion. The Court notes that at trial, Ross at first represented that he prepared a seven-page document outlining the history of LMC, Banner, and B & B. Upon further questioning, he admitted that the document had in fact been prepared by Sheehan. Ross Testimony; USA Ex. 258. Other evidence reveals that Ross did not know or care to know about the details of the business matters in which Sheehan and LMC were involved. His testimony that he was doing a favor for a friend, Sheehan, by serving as president and shareholder of LMC is consistent with the Court's view that LMC was created as a tool for Sheehan's personal purposes. Ross simply went along, signing whatever Sheehan, through Cully, requested. The Court finds that Michelle Sheehan was basically truthful in her testimony that she was involved only to a limited extent, that she knew little if anything about what LMC did during the years 1986 through 1993, and that she did not care to know at the time. Her willingness to sign whatever she was asked and her basic lack of concern continued after she reached the age of majority. Her testimony on substantive matters evidenced a clear desire to help her ailing father, despite her lack of knowledge of the facts. Her lack of substantive involvement in LMC's affairs and those of its subsidiaries fully supports the Court's conclusion that LMC and its subsidiaries were not created to benefit her, but were designed to satisfy the personal financial goals of her father, Sheehan, vis a vis his own creditors. Cully, counsel for Sheehan, LMC, Banner and B & B, is not a disinterested witness in this case. He (like Jean Adkinson, Sheehan's current wife) is a shareholder in Bo James Co. and possibly other businesses started by Sheehan. Cully's lack of disinterestedness is evident from the fact that he and his firm 1202 represented LMC and Sheehan in connection with many of the transactions involved in this action. Cully's incentive to justify all his clients' conduct is influenced by his concerns regarding the propriety of advice he presumably gave the clients at the time. The Court finds that the testimony of Yates and the other witnesses is largely credible, to the extent not inconsistent with the foregoing findings of fact. CONCLUSIONS OF LAW 1. Jurisdiction. This Court has jurisdiction over this matter by virtue of 28 U.S.C. §§ 1331, 1345, and 1355. Venue is proper in this Court pursuant to 28 U.S.C. §§ 1391(b), 1395(a) and (b), and 1355(b)(1). The United States, through the United States Attorney for the Southern District of Texas, is authorized to bring this action pursuant to 18 U.S.C. § 981. 2. The Law of Forfeiture Generally. The Supreme Court has established that in rem civil forfeiture is a remedial civil sanction, distinct from potentially punitive in personam civil penalties such as fines, and does not constitute a punishment under the Double Jeopardy Clause. United States v. Ursery, ___ U.S. ___, ___, 116 S.Ct. 2135, 2142, 135 L.Ed.2d 549 (1996); Gore v. United States, 357 U.S. 386, 392, 78 S.Ct. 1280, 1284, 2 L.Ed.2d 1405 (1958). In reaching this conclusion, the Supreme Court stated that "[b]oth 21 U.S.C. § 881 and 18 U.S.C. § 981, which is entitled `Civil forfeiture,' provide that the laws `relating to the seizure, summary and judicial forfeiture, and condemnation of property for violation of the customs laws ... shall apply to seizures and forfeitures incurred' under § 881 and § 981." Ursery, ___ U.S. at ___, 116 S.Ct. at 2147(citing 21 U.S.C. § 881(d); 18 U.S.C. § 981(d)). The Court stated that Congress clearly intended that forfeiture under Sections 881 or 981 would be a proceeding in rem, targeting the property itself. "`In contrast to the in personam nature of criminal actions, actions in rem have traditionally been viewed as civil proceedings, with jurisdiction dependent upon seizure of a physical object.'" Id. (quoting United States v. One Assortment of 89 Firearms, 465 U.S. 354, 363, 104 S.Ct. 1099, 1105, 79 L.Ed.2d 361 (1984)). The Ursery Court focused on and reaffirmed the applicable procedures: 19 U.S.C. § 1615, which governs the burden of proof in forfeiture proceedings under § 881 and § 981, provides that once the Government has shown probable cause that the property is subject to forfeiture, then `the burden of proof shall lie upon [the] claimant.' Id. at ___ - ___, 116 S.Ct. at 2147-48 (quoting 89 Firearms, 465 U.S. at 363, 104 S.Ct. at 1105). The purpose of the forfeiture statutes was then described: Most significant is that § 981(a)(1)(A), and §§ 881(a)(6) and (a)(7), while perhaps having certain punitive aspects, serve important nonpunitive goals. Title 21 U.S.C. § 881(a)(7), under which Ursery's property was forfeited, provides for the forfeiture of `all real property ... which is used or intended to be used, in any manner or part, to commit, or to facilitate the commission of' a federal drug felony. Requiring the forfeiture of property used to commit federal narcotics violations encourages property owners to take care in managing their property and ensures that they will not permit that property to be used for illegal purposes. See Bennis v. Michigan, [___ U.S. ___, ___, 116 S.Ct. 994, 1000, 134 L.Ed.2d 68 (1996)] ("Forfeiture of property prevents illegal uses ... by imposing an economic penalty, thereby rendering illegal behavior unprofitable"); 89 Firearms, [465 U.S. at 364, 104 S.Ct. at 1106] (forfeiture "discourages unregulated commerce in firearms"); [Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 687-688, 94 S.Ct. 2080, 2094, 40 L.Ed.2d 452 (1974)]. In many circumstances, the forfeiture may abate a nuisance. Id. at ___, 116 S.Ct. at 2148 (emphasis added). There is no requirement in the statutes reviewed by the Supreme Court in Ursery that the Government demonstrate scienter in order to establish that the property is 1203 subject to forfeiture. Indeed, the Court stated that "the property may be subject to forfeiture even if no party files a claim to it and the Government never shows any connection between the property and a particular person." Id. at ___, 116 S.Ct. at 2149. In this case, LMC contends that no crime occurred, that the showing of probable cause by the Government is insufficient to warrant forfeiture, and that the Government must prove the crime. However, LMC is incorrect that the Government must prove the crimes of bankruptcy fraud or money laundering were committed. In a case involving drug forfeitures under 21 U.S.C. § 881(a)(6) and (a)(7), the Fifth Circuit held that after the Government establishes probable cause, the burden shifts to the Claimant to establish by a preponderance of the evidence that "the property was not used for illegal activity or that the owners were `innocent.'" U.S. v. Land, Property Currently Recorded in Name of Neff, 960 F.2d 561, 563 (5th Cir.1992) (citing United States v. One 1986 Nissan Maxima GL, 895 F.2d 1063, 1065 (5th Cir.1990)). The same procedure should apply in this case brought under § 981(a)(1)(A). See United States v. All Assets of G.P.S. Automotive Corp., 66 F.3d 483, 487 (2d Cir.1995); United States v. Daccarett, 6 F.3d 37, 57 (2d Cir.1993), cert. denied, 510 U.S. 1191, 114 S.Ct. 1294, 127 L.Ed.2d 648 (1994); United States v. 4492 South Livonia Road, 889 F.2d 1258, 1267 (2d Cir. 1989); United States v. Eleven Vehicles, 836 F.Supp. 1147, 1153 (E.D.Pa.1993). 3. LMC Lacks Standing to Contest The Forfeiture of the Defendant Property. Standing to contest a forfeiture is "literally a threshold question for entry into a federal court" and "the Court must consider standing of any party even if the issue has not been raised by the parties to the action." United States v. One 18th Century Colombian Monstrance, 797 F.2d 1370, 1374 (5th Cir.1986), cert. denied, 481 U.S. 1014, 107 S.Ct. 1889, 95 L.Ed.2d 496 (1987). Claimant, in a forfeiture action, bears the burden of showing that he owns or has an interest in the forfeited property. United States v. $20,193.39 U.S. Currency, 16 F.3d 344, 346 (9th Cir.1994). A party seeking to challenge a forfeiture must "`demonstrate an interest in the seized item sufficient to satisfy the Court of its standing to contest the forfeiture.'" United States v. One 1978 Piper Navajo PA-31 Aircraft, 748 F.2d 316, 319 (5th Cir.1984) (quoting United States v. Three Hundred Sixty Four Thousand Nine Hundred Sixty Dollars ($364,960.00) in United States Currency, 661 F.2d 319, 326 (5th Cir.1981)). Bare legal title by one who does not exercise dominion and control has been held insufficient to establish ownership. One 1978 Piper Navajo PA-31 Aircraft, 748 F.2d at 319. See United States v. One 1945 Douglas C-54 (DC-4) Aircraft, 604 F.2d 27, 28 (8th Cir.1979), cert. denied, 454 U.S. 1143, 102 S.Ct. 1002, 71 L.Ed.2d 294 (1982); United States v. One 1982 Porsche 928, 732 F.Supp. 447, 451 (S.D.N.Y.1990) (Connor, J.) (citing numerous cases). The reason for this is that "appearances may be manipulated and deceptive." 1982 Porsche, 732 F.Supp. at 451. Ownership may be proven by actual possession, dominion, control, title and financial stake. Id. Thus, a search for standing in civil forfeiture cases looks beyond the formal title to determine whether the record owner is the "real" owner or merely a "strawman" set up either to conceal illegal dealings or to avoid forfeiture. Id.; United States v. 427 Chestnut St., 731 F.Supp. 183, 191 (E.D.Pa. 1990) (car held to be "owned" by person who expressed most interest at time of purchase, who ordered the optional features, who paid the bulk of the purchase price, who paid for garage space, and who drove the car shortly after its purchase; person with legal title was "no more than a nominal owner"; "real owner" was held to be the person who had the "high financial stake" in the car and who would suffer from its loss); United States v. $280,505 Dollars, 655 F.Supp. 1487, 1495 (S.D.Fla.1986); United States v. One 1981 Datsun 280ZX, 563 F.Supp. 470, 474-476 (E.D.Pa.1983). A claimant's burden to prove standing arises prior to the United States' burden to prove probable cause. One 18th Century Colombian Monstrance, 797 F.2d at 1374. In determining whether the ownership 1204 interest asserted by a claimant is genuine, courts have examined a number of factors, including actual possession, control, title, and financial stake. One 1945 Douglas C-54 (DC-4) Aircraft, 647 F.2d at 866. These indicia are consulted in an effort to discover what party exercised dominion and control over the seized property. United States v. One 1988 Honda Accord, 735 F.Supp. 726, 728 (E.D.Mich.1990); Ramaria Familienstiftung v. United States, 643 F.Supp. 139, 144-45 (S.D.Fla.1986). The Court concludes that LMC lacks standing to assert a justiciable interest in the Defendant Property. The Court bases its finding on the following factors: (a) Sheehan had exclusive possession and control of the Defendant Property for the period November 1989 through April 1993; (b) There was no written lease for Sheehan's use of the Defendant Property and there were no lease payments made to LMC, the putative owner; (c) Sheehan paid for all expenses associated with the Defendant Property without justifying or reporting them to LMC at the time they were incurred;[34] (d) No reports of the expense payments were made to LMC until 1994, when it was necessary to file tax returns for reasons related to this forfeiture action (USA Ex. 249, 250); (e) LMC never billed Sheehan for any rental fee for his use of the Defendant Property; (f) Sheehan supervised the refurbishment and all maintenance of the Defendant Property; (g) Neither Ross nor Michelle Sheehan were carried as insured drivers on the vehicle; (h) Corporate tax returns for the years 1989, 1990, 1991, and 1992, which should reflect a proper accounting for the income, expenses, and depreciation associated with the Defendant Property, were not filed until 1994, well after this lawsuit was initiated; (i) Confusion surrounds Ross' acquisition of the property used to purchase the Defendant Property, as Ross was in the midst of his own bankruptcy proceeding at the time and has admitted that he failed to disclose his interest in the lake house and the farm, which are directly traceable to the Defendant Property. Courts have held that claimants lacked standing under similar circumstances. United States v. One 1981 Datsun 280ZX, 563 F.Supp. 470 (E.D.Pa.1983) (claimant rarely operated vehicle, vehicle referred to as belonging to son, son negotiated purchase, and "considerable confusion" surrounded who paid for vehicle); United States v. One 1982 Porsche 928, 732 F.Supp. 447 (S.D.N.Y.1990) (claimants rarely operated vehicle and never provided funds for expenses); United States v. 427 Chestnut Street, 731 F.Supp. 183 (E.D.Pa.1990) (claimant neither negotiated sale of the car nor operated it). This Court holds under the unusual circumstances presented here that LMC, while record title owner, in fact lacks sufficient interest in the Defendant Property to assert a claim in this proceeding. In an exercise of caution, and since a full trial on the merits was held, the Court hereby also issues rulings on the merits of the forfeiture claim and LMC's defenses. 4. Elements of the Statutes in Issue. Section 981(a)(1)(A) of Title 18 of the United States Code renders forfeitable any property "involved" in a transaction or attempted transaction in violation of federal money-laundering laws embodied in 18 U.S.C. § 1956 "or any property traceable to such property." A person violates § 1956(a)(1)(B)(i) if he or she (i) conducts or attempts to conduct a financial transaction; 1205 (ii) knowing that the property involved is the proceeds of unlawful activity; and (iii) knowing that the transaction was designed "to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of the specified unlawful activity." United States v. Willey, 57 F.3d 1374, 1383 (5th Cir.), cert. denied, ___ U.S. ___, 116 S.Ct. 675, 133 L.Ed.2d 524 (1995). As used in 18 U.S.C. § 1956, the term "financial transaction" is defined in relevant part as "a transaction which in any way or degree affects interstate or foreign commerce (i) involving the movement of funds by wire or other means or (ii) involving one or more monetary instruments, or (iii) involving the transfer of title to any real property, vehicle, vessel, or aircraft ..." 18 U.S.C. § 1956(c)(4) (emphasis added). For purposes of 18 U.S.C. § 1956, only a minimal impact on interstate commerce is required. United States v. Jackson, 935 F.2d 832, 841 (7th Cir.1991) (transaction involving check drawn on a bank implicates interstate commerce); United States v. Kelley, 929 F.2d 582 (10th Cir.) (purchase of car affects interstate commerce), cert. denied, 502 U.S. 926, 112 S.Ct. 341, 116 L.Ed.2d 280 (1991). Bankruptcy fraud in violation of 18 U.S.C. § 152 is a "specified unlawful activity" within the meaning of 18 U.S.C. § 1956. See 18 U.S.C. § 1956(c)(7)(D). A person commits the crime of bankruptcy fraud in violation of Section 152 when he "transfer[s] or conceal[s] property (i) knowingly, (ii) fraudulently, and (iii) in contemplation of a case under title 11 or with intent to defeat the provisions of title 11." United States v. Willey, 57 F.3d 1374, 1380 (5th Cir.), cert. denied, ___ U.S. ___, 116 S.Ct. 675, 133 L.Ed.2d 524 (1995). In the Fifth Circuit, proof of bankruptcy fraud under Section 152 requires a showing (1) that there existed a proceeding in bankruptcy; (2) that certain property or assets belonged to the bankruptcy estate; (3) that the debtor concealed such property from the trustee charged with control or custody of such property; and (4) that the debtor did so knowingly and fraudulently. Fifth Circuit Pattern Jury Instructions, § 2.10 (1990). As used in 18 U.S.C. § 981(a)(1)(A), the term "property involved in" includes the property which was actually laundered as well as any property used to facilitate the laundering offense. United States v. Eleven Vehicles, 836 F.Supp. 1147, 1153 (E.D.Pa. 1993) (citing cases); United States v. Saccoccia, 823 F.Supp. 994 (D.R.I.1993) aff'd, 58 F.3d 754 (1st Cir.1995), cert. denied, ___ U.S. ___, 116 S.Ct. 1322, 134 L.Ed.2d 474 (1996). United States v. All of the Inventories of the Businesses Known as Khalife Bros. Jewelry, 806 F.Supp. 648, 650 (E.D.Mich.1992); United States v. Swank Corp., 797 F.Supp. 497, 500 (E.D.Va.1992); United States v. Certain Accounts, 795 F.Supp. 391, 396 (S.D.Fla. 1992); United States v. All Monies, 754 F.Supp. 1467, 1472-73 (D.Haw.1991). The legislative history also makes it clear that "property involved in" includes property used to facilitate money laundering offenses. Eleven Vehicles, 836 F.Supp. at 1153. The Eleven Vehicles Court held that the nature of money laundering is a mixture of "innocent" funds with "guilty" funds in an attempt to cover up the latter. Id. Thus, the clean money serves as a tool to launder the ill-gotten money. 5. Probable Cause. In reliance upon the stipulation of probable cause entered into by the parties on or about October 3, 1994, the Court found that there was probable cause for the seizure of the Defendant Property. Doc. #21. There was consideration given and the stipulation is binding on LMC, notwithstanding its arguments to the contrary. See Quest Medical, Inc. v. Apprill, 90 F.3d 1080, 1087 (5th Cir.1996). LMC waived, and is estopped from asserting that the United States lacked probable cause to commence or continue to prosecute this action. In an excess of caution, the Court considered the evidence adduced during the first two days of trial and made an independent determination that probable cause existed to seize the Property.[35] The Court hereby 1206 reaffirms this ruling. Ample evidence establishing probable cause for the seizure of Defendant's property was adduced through the Government's cross examination of Claimant LMC's first several witnesses. Because probable cause has been found to exist for the seizure of the Defendant Property, the burden of proof has shifted to claimant LMC to come forward with evidence and to prove the defenses to the forfeiture on which it seeks to rely by a preponderance of the evidence. United States v. 1988 Chevrolet Silverado, 16 F.3d 660, 663 (5th Cir.1994); United States v. Land, Property Currently Recorded in the Name of Neff, 960 F.2d 561, 563 (5th Cir. 1992). There is no requirement that the United States demonstrate the elements of the forfeiture cause of action or the underlying crimes by a preponderance of the credible evidence or otherwise. See Ursery, ___ U.S. at ___ - ___, 116 S.Ct. at 2147-49. There is also no requirement that the Government demonstrate scienter as part of its burden of proving probable cause for forfeiture. Id. at ___, 116 S.Ct. at 2149.[36] LMC presented evidence attempting to prove: (a) that Sheehan did not commit either bankruptcy fraud or money-laundering, the offenses on which this civil forfeiture is predicated, (b) that the property is not involved with the bankruptcy fraud or money laundering, and thus not forfeitable, and (c) the innocent owner defense or the defense that the Defendant Property was not derived from Sheehan's conduct. See 1988 Chevrolet Silverado, 16 F.3d at 663 (5th Cir. 1994); Property Currently Recorded in the Name of Neff, 960 F.2d at 563.[37] The Court holds that LMC failed to meet its burden of persuading this Court of any of its defenses.[38] 6. The Defendant Property is Forfeitable. A. Sheehan Committed the "Unlawful Activity" of Bankruptcy Fraud. LMC failed to meet its burden to show by a preponderance of the credible evidence that Sheehan did not violate 18 U.S.C. § 152. Indeed, the weight of the evidence strongly suggests that he did violate that statute. The Court relies on the foregoing findings of fact as its basis for this conclusion, but summarizes the salient points as follows: As early as March 10, 1986, in a letter to United Savings, Sheehan expressed his intention to shelter his assets in corporations to place them beyond the reach of creditors. At that time, he and his former wife were obligated on a personal loan to Union National Bank of Colorado[39] which had matured 1207 after two six month extensions. Nothing had been paid on the loan, and $90,900 then was due. The evidence establishes that the loan went into default on or about May 8, 1986, and that Union National Bank began collection activities at that time.[40] LMC was formed in or about April 1986, and Sheehan shortly thereafter transferred record title to the Glenstone Property to LMC. USA Ex. 93; Sheehan Testimony. The Court has determined that the only discernable reason for this transfer and the purpose of LMC generally was to shield Sheehan's personal assets from potential creditors and later from the scrutiny of the bankruptcy court and interested parties. In 1986 and 1987, aware that creditors could reach assets held in his name personally, Sheehan knowingly and fraudulently transferred record title to his assets into LMC, to Banner and B & B, and to Ross in order to conceal his continuing interest in those assets from his creditors. As described in detail above, he retained virtually total control and dominion over these assets thereafter. The concealment of his beneficial interest in LMC and its subsidiaries' assets was done in contemplation of a bankruptcy case under Title 11 of the United States Code. The Court thus concludes that at the time of his transfer of these assets, and throughout the pendency of his bankruptcy case, Sheehan had beneficial interests in LMC, in LMC's assets, Banner and B & B, and the assets of Banner and B & B. These corporations' assets therefore were property of the bankruptcy estate. Smith and Askanase Testimony; see also Hensley Testimony. From July 1987 though April 1993, Sheehan made all major decisions concerning the use and disposition of these assets, despite the fact that they were nominally titled in the names of LMC, Banner and B & B. During this same period, Sheehan received personally the benefits of all these assets. See, e.g., USA Ex. 109-111; Cully, Ross, M. Sheehan, and Sheehan Testimony. From July 1987 through April 1993, neither Ross nor Michelle Sheehan received any benefit arising out of their purported ownership of LMC, Banner and B & B. M. Sheehan and Ross Testimony. Only Sheehan lived in the lake house from July 1987 until November 1989, when it was sold. Ross Testimony. Personal obligations of Sheehan, such as bills for medical and legal services were paid out of the proceeds of the sale of the Glenstone Property, even though that property was nominally titled in the name of LMC. USA Ex. 109-111. Sheehan was a signatory, and in some cases the sole signatory, on LMC's various bank accounts. USA Ex. 104, 173.3. Nevertheless, from May 29 when he filed his Chapter 7 bankruptcy petition, through August 1989 when he filed his supporting materials, Sheehan did not disclose in writing any interest or involvement in LMC, Banner or B & B, or their assets. USA Ex. 128, 161; Smith, Hensley and Askanase Testimony. At his Rule 2004 Examination (see Bankruptcy Rule 2004), he was vague in his answers about each of the assets he had listed on his personal financial statements. A review of the transcript reveals numerous inconsistencies between Sheehan's explanations at trial before this Court and the answers to questions posed by his creditors in 1989. See USA Ex. 323. For instance, Sheehan claimed that he "sold" to Ross the interest in Banner (and B & B) through which Ross received his 50% ownership in LMC for the $156,000 that Ross allegedly had paid earlier. This is inconsistent with Ross' testimony in his own bankruptcy and at trial, where he stated that Sheehan had obligation and there was no sale. Ross Testimony; USA Ex. 342, 343, 344. Sheehan fails to explain why the debts on this property remained in his name. He does not demonstrate that the lenders were aware of the transfer of title. Sheehan did not commit during his Section 341 Meeting or the Rule 2004 Examination whether the loans in fact were being paid by the corporations or by him personally, if at all. 1208 Sheehan knowingly and fraudulently concealed from his bankruptcy attorney, Nathan Hensley, and from the Bankruptcy Court and the Bankruptcy Estate Trustee, Steven Smith, the degree of control and his current and past interest in the assets of LMC, Banner and B & B. Sheehan did not disclose his interest in the lake house in Eagle Rock, Missouri and the farm in Barry County, Missouri. Bare legal title to the lake house was in Banner and bare legal title to the farm was in B & B or its predecessor, Clearwater, at relevant times. Thus, Sheehan should have disclosed the existence of these assets in his bankruptcy schedules and statements of affairs. LMC argues that Sheehan did not have the intent to conceal assets, and that he was forthright and answered all questions fully in the Rule 2004 Examination and in depositions taken during the bankruptcy case and adversary proceeding by Union Bank. The latter transcripts were not introduced in evidence in the trial, but the Court's review of the Rule 2004 Examination establishes that, to the contrary, Sheehan was imprecise and vague. He displayed an almost cavalier attitude in his lack of recollection and failure to produce documents to assist his creditors. He created a complex corporate maze, apparently maintained few if any records, and then stated that he could not recall without seeing the necessary paperwork which he had not produced.[41] Despite Sheehan's claim of lack of any interest in these assets, when they were sold in November 1989, he obtained virtually all the benefits from the proceeds. Sheehan exercised exclusive dominion and control over the Defendant Property from its acquisition in November 1989 until April 1993 when it was seized. Ross and Sheehan Testimony. Sheehan and Adkinson paid all expenses in connections with the Defendant Property and had exclusive use of it while it was nominally owned by LMC. See USA Ex. 328; Ross, Yates, and Sheehan Testimony. There was no factual or legal justification for the imputed rental income claimed by LMC. The evidence purporting to support LMC's position that an oral lease existed in connection with Sheehan's use of the Defendant Property was created after this case was filed in April 1993. USA Ex. 249, 250, 257.1, 264-267, 347; Yates, Sheehan, and Geboski Testimony. There is no legitimate accounting or federal income tax basis for the treatment by LMC as to the Defendant Property. There was no effort by LMC to lease the Defendant Property to the public, to advertise to the public, or to maintain records to demonstrate a legitimate business purpose by LMC for the Defendant Property. Ross and Yates Testimony. LMC did not attempt to collect revenue, pay expenses or even maintain contemporaneous records of the use and expenses of the Defendant Property. Id. The handwritten notes that allegedly are the recap of the so-called oral lease revenues and expenses was created by Sheehan in late 1994 (after this case had been pending for over 1½ years) and provided to Yates, the LMC accountant, with no documentary support whatsoever. The true economic substance of the so-called oral lease of the Defendant property is that Sheehan was personally financially responsible, and LMC was not, for all matters pertaining to the Defendant Property, that the expenses related to the Defendant Property were personal expenses of Sheehan and not business expenses of LMC.[42] Each of these failures to disclose or efforts at concealment was material to Sheehan's violation of Section 152. The sales of the lake house and farm were to generate liquid assets and to purchase the Defendant Property. The proceeds 1209 from the sale of the lake house and farm are proceeds of Sheehan's violation of 18 U.S.C. § 152.[43] B. Sheehan Violated the Money Laundering Law. The foregoing findings of fact also lead the Court to conclude that LMC failed to prove that Sheehan did not violate Section 1956(a)(1)(B)(i), the money laundering statute. The Court concludes that the weight of the evidence suggests strongly that Sheehan engaged in a "financial transaction" to convert the assets concealed from the Bankruptcy Court and Trustee to funds and then into the Defendant Property, and that he knew that the funds used to purchase the Defendant Property were proceeds derived from violations of the law, within the meaning of 18 U.S.C. § 1956(a)(1)(B)(i). United States v. Willey, 57 F.3d 1374, 1384, 1387 (5th Cir.), cert. denied ___ U.S. ___, 116 S.Ct. 675, 133 L.Ed.2d 524 (1995); United States v. Lombardi, 5 F.3d 568, 570 (1st Cir.1993) (defendant committed underlying mail fraud, thereby establishing that he knew that laundered funds were criminally derived). Sheehan knew also that the transactions in which LMC, Banner and B & B engaged were designed to "conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds" of the bankruptcy fraud, within the meaning of Section 1956(a)(1)(B)(i). See Willey, 57 F.3d at 1384, 1387.[44] When Banner and B & B's assets, over which Sheehan had exercised domination and control, were sold in November 1989, the proceeds first were deposited with a title company. The net proceeds of $332,318.52 then were deposited into Cully's law firm trust account at Commerce Bank in Springfield, Missouri. Immediately, a check in the amount of $286,075.00 was written and used to purchase a wire transfer in the same amount (less a $10 service charge) to First Interstate Bank in Eugene, Oregon. The wire transfer was credited to the bank account of Marathon Coach, also in Eugene, Oregon, for the purchase price of the Defendant Property. USA Ex. 191, at 21. None of these proceeds or transactions were disclosed to the Bankruptcy Court, the Chapter 7 Trustee, or the estate's creditors. Sheehan's use of others' bank accounts to make the purchase of the Defendant Property is evidence of his knowingly engaging in a financial transaction and concealing the disposition of the proceeds of the assets over which he previously had control. This transaction and its concealment coupled with the fact that Sheehan was, with the most minor exceptions, the only person to use the Defendant Property, establishes his intent to violate § 1956(a)(1)(B)(i). Such intent is further evidenced by the fact that, in 1989 when 1210 these transactions occurred, Sheehan had no permanent residence and had not had one for several years. He had been staying in his former wife's (Betty's) home in Canada and renting in different cities, moving from place to place every six to eight months, while he flew as a pilot for Continental and later was treated for his health problems. See USA Ex. 323, at 15-30. He did not operate or insure a car for his own regular use at the time. Id. at 30-31. The interstate commerce element of § 1956 is satisfied in this case, because there is no dispute that the Defendant Property was purchased with payment by wire from Missouri to Oregon. LMC has failed to prove that Sheehan did not violate the federal money laundering statute, 18 U.S.C. § 1956, through his commission of an "unlawful activity," namely, bankruptcy fraud in violation of 18 U.S.C. § 152. Thus, the Defendant Property represents the proceeds of financial transactions conducted by Sheehan in violation of 18 U.S.C. § 1956. C. The Defendant Property is Forfeitable under 18 U.S.C. § 981 as the Proceeds of Violations of the Money Laundering Laws. Section 981(a)(1)(A) renders forfeitable any property "involved" in a transaction or attempted transaction in violation of federal money-laundering laws embodied in 18 U.S.C. § 1956 "or any property traceable to such property." In a forfeiture proceeding arising under 18 U.S.C. § 981(a)(1)(A), the Fifth Circuit has held that a "substantial connection" must exist between the property to be forfeited and the crime alleged. United States v. 1988 Oldsmobile Cutlass Supreme, 983 F.2d 670, 673-74 (5th Cir.1993). The requirement of a "substantial connection" has traditionally received greater scrutiny by courts in those cases where the property to be forfeited facilitated the criminal violation as opposed to those cases where the property represents the proceeds of the criminal violation. This Court holds that proof of a substantial connection is required. The Court holds that there is a substantial connection between the Defendant Property and Sheehan's violations of Sections 152 and 1956. The Defendant Property is the proceeds of these violations since it is the proceeds of the property Sheehan failed to disclose during his bankruptcy. From 1986-1989, the time frame relevant to this case, Sheehan was in control of LMC and its subsidiaries, Banner and B & B, the entities that nominally owned the real property assets in issue. These nominees held record title to the assets, and later LMC nominally held title to the proceeds, or the Defendant Property. Sheehan wanted to enjoy the benefits of these corporations' property, rather than losing it to the Chapter 7 Trustee to be used for the benefit of his creditors. Indeed, from 1989 through April 1993, when the Defendant Property was seized, Sheehan controlled and benefitted from the property. This Court has no doubt that the Defendant Property is substantially connected to the unlawful activity, as alleged by the United States. Therefore, LMC has not met its burden to demonstrate that no such substantial connection exists in this case. LMC's First and Second Defenses, see Answer, at 12, are hereby dismissed. 7. Rulings on Other Arguments Asserted by LMC. Third and Fourth Defenses. The Court concludes, as stated above, that the Defendant Property constitutes proceeds of financial transactions conducted by Sheehan in violation of 18 U.S.C. § 1956. The property giving rise to the purchase of the Defendant Property, the lake house and the farm, should have been scheduled and disclosed during Sheehan's bankruptcy proceeding. LMC's Third and Fourth Defenses, see Answer, at 12-13, therefore are dismissed. Fifth Defense. The Court rejects the argument asserted by LMC that a settlement agreement agreed to by Bankruptcy Trustee Steven Smith, Banner Advertising, and B & B somehow bars the United States from bringing this action. The release in the settlement is limited to the claims made in the United States District Court for the Western District of Missouri, under a case styled Banner Advertising, Inc., and B & B 1211 Development, Inc. v. Union National Bank of Colorado, Defendant, and W. Steve Smith, Esq., Intervenor-Defendant. LMC Ex. 12(f) et seq. Nothing in the settlement agreement purports to bind the United States. Furthermore, nothing therein bars the United States, which was not a signatory to the agreement, from bringing this action. See Gilbert v. Ben-Asher, 900 F.2d 1407, 1410 (9th Cir.), cert. denied, 498 U.S. 865, 111 S.Ct. 177, 112 L.Ed.2d 141 (1990). The fact that Sheehan was granted a discharge from bankruptcy on or about April 9, 1993 does not preclude the United States from bringing this action. United States v. West, 22 F.3d 586, 590 n. 10 (5th Cir.), cert. denied, ___ U.S. ___, 115 S.Ct. 584, 130 L.Ed.2d 498 (1994); see United States v. Pepper, 51 F.3d 469, 473 (5th Cir.1995). LMC's Fifth Defense, see Answer, at 13-14, is dismissed in its entirety. Sixth Defense. LMC asserts an "innocent owner" defense within the meaning of 18 U.S.C. § 981(a)(2) as its Sixth Defense, see Answer, at 14. To prevail on an "innocent owner" defense, LMC has the burden of proving by a preponderance of the evidence that it was unaware, that (1) that the lake house and farm were sold; (2) that the proceeds from the sale were deposited into Mr. Cully's law firm trust account; and (3) that a portion of the proceeds were used to purchase the Defendant Property. LMC cannot and did not make this showing. Indeed, the uncontroverted evidence of record establishes that LMC had knowledge of all these matters, and its counsel so acknowledged repeatedly during trial. Prior to trial, LMC conceded in its answers to interrogatories that it had actual knowledge that these transactions occurred. During trial, Cully, as attorney and agent for LMC, testified that he knew of and participated in all of the above matters at the time that they occurred. Ross and Michelle Sheehan also testified that they knew of and approved all of the above transactions at or about the time they occurred. The innocent owner defense therefore is inapplicable to this case. See United States v. Real Property 874 Gartel Drive, 79 F.3d 918, 923-24 (9th Cir.1996); 1988 Chevrolet Silverado, 16 F.3d at 664-65. LMC argues that it did not know anything about the Sheehan bankruptcy proceedings, and that Ross and Michelle Sheehan did not even know about the fact that Sheehan had filed, until after the Defendant Property was acquired. The Court rejects LMC's interpretation of the "innocent owner" defense since § 981(a)(2) does not require that the owner of the property at issue have knowledge of the illegality of the conduct giving rise to the forfeiture.[45]United States v. 105,800 Shares of Common Stock, 830 F.Supp. 1101, 1131 (N.D.Ill.1993) (Reinhardt, J.) (lack of subjective awareness of the illegality of one's involvement in a unlawful conduct is not sufficient to establish the innocent owner defense). In United States v. 316 Units of Mun. Securities, 725 F.Supp. 172, 180 (S.D.N.Y.1989), the court held that "innocent owner" within the meaning of § 981(a)(2) refers to lack of knowledge of the illegal transaction, not lack of knowledge of the transaction's illegality. Moreover, the plain language of § 981(a)(2) refers only to acts committed without the knowledge of the owner or lienholder. See id. Accord United States v. Real Property 874 Gartel Drive, 79 F.3d 918, 924 (9th Cir.1996); United States v. 5709 Hillingdon Road, Charlotte, N.C., 919 F.Supp. 863, 869-70 (W.D.N.C.1996). Therefore, LMC's Sixth Defense is dismissed. Seventh Defense. A pre-seizure hearing to determine the existence of probable cause was not required in this case, as the property at issue is not real property, but is instead a motorized vehicle. Furthermore, LMC has stipulated to the existence of probable cause. United States v. James Daniel Good Real Property, 510 U.S. 43, 51-53, 114 S.Ct. 492, 500, 126 L.Ed.2d 490 (1993). Therefore, LMC's Seventh Defense regarding unlawful seizure and due process violations, see Answer, at 14-15, also is dismissed. Eighth Defense. LMC does not assert an Eighth Defense, see Answer, at 14-15. 1212 Ninth Defense. LMC argues as its Ninth Defense, see Answer, at 15, that the Government cannot prove beyond a reasonable doubt that Sheehan violated 18 U.S.C. § 152 as alleged because the United States Attorney did not file criminal charges against Sheehan, because Sheehan was granted a discharge of his debts by the Bankruptcy Court, and because neither the Bankruptcy trustee, the United States Trustee nor any creditor objected to the discharge. Sheehan's criminal conviction is not a prerequisite for this civil forfeiture action. United States v. 1988 Oldsmobile Cutlass Supreme, 983 F.2d 670, 675 (5th Cir.1993); United States v. One 1987 Mercedes 560 SEL, 919 F.2d 327, 331 (5th Cir. 1990). In addition, as noted above, there is no legal foundation for the proposition that a bankruptcy court discharge, with or without objection by trustees or creditors, precludes this forfeiture proceeding. United States v. Pepper, 51 F.3d 469, 473 (5th Cir.1995) (bankruptcy proceedings and criminal prosecutions are fundamentally different in purpose and procedure); United States v. West, 22 F.3d 586, 590 n. 10 (5th Cir.1994) (bankruptcy discharge does not preclude criminal prosecution for bankruptcy fraud). Finally, LMC supplies the Court with the wrong standard and erroneously places the burden on the Government to prove Sheehan's guilt by the standard of proof in a criminal case. LMC's contentions are frivolous. LMC further argues that the action is time-barred since the "applicable Statutes of Limitation have run." LMC supplies no authority for this proposition and it is rejected. Under 18 U.S.C. § 3284, when a debtor conceals assets during the pendency of his bankruptcy, the five-year limitations period does not begin to run after the final discharge or the denial of such discharge. In this case, less than a year passed from the discharge of Sheehan to the commencement of this case, and therefore the statute of limitations has not run, even if not tolled by Section 3284. This argument is frivolous as well. The Court therefore dismisses LMC's Ninth Defense. Moreover, this action was timely filed under 19 U.S.C. § 1621, in that it was filed within five years of the date Sheehan filed for bankruptcy. See United States v. Real Property 874 Gartel Drive, 79 F.3d 918, 922 (9th Cir.1996); see also 18 U.S.C. § 981(d) (provisions of customs laws in Title 19 of the United States Code apply to forfeitures under § 981). Tenth Defense. LMC's Tenth Defense of "excessive fines," see Answer, at 16, is without legal merit. Because a wrongdoer has no legitimate expectation that the law will protect the proceeds of his wrongdoing, forfeiture of criminally derived proceeds can never be "excessive" within the meaning of the Excessive Fines Clause of the Eighth Amendment. United States v. Tilley, 18 F.3d 295, 300 (5th Cir.), cert. denied, 513 U.S. 1015, 115 S.Ct. 574, 130 L.Ed.2d 490 (1994); United States v. Wild, 47 F.3d 669, 676 (4th Cir.), cert. denied, ___ U.S. ___, 116 S.Ct. 128, 133 L.Ed.2d 77 (1995); United States v. $21,282 in United States Currency, 47 F.3d 972, 973 (8th Cir.1995). If for purposes of the Excessive Fines Clause, the United States was required to show a correlation between Sheehan's wrongdoing and the value of the Defendant Property, the Court finds that the appropriate benchmark would be the losses sustained by Sheehan's creditors, not the $5,000.00 fine contemplated by 18 U.S.C. § 152. The Court further finds that the value of the Defendant Property, which Claimant estimates to be $275,000.00, is not excessive in comparison to the $163,363.89 owed to Sheehan's secured creditors and the additional $284,477.69 owed to Sheehan's unsecured creditors. The evidence of record is that the creditors would receive the proceeds of the forfeiture. See Smith Testimony. The Court dismisses LMC's Tenth Defense. Eleventh Defense. LMC appears in its Eleventh Defense to assert that this forfeiture is a violation of the due process "takings" clause of the Fifth Amendment, see Answer, at 16. LMC has filed no legal authorities in support of this contention. This defense is rejected for the reasons stated above. Advice-of-Counsel Defense. LMC, apparently on behalf of Sheehan in defense of the alleged violations of the criminal statutes *1213 in issue, argued during trial that Sheehan's failure to make the required disclosures in his bankruptcy papers was due to his reliance upon the advice of Nelson Hensley, his bankruptcy counsel. The Court is not persuaded. The weight of the evidence is that Sheehan did not make full and complete disclosure to Hensley of his assets, liabilities, employment affiliations, and access (through his signature authority) corporate bank accounts of LMC and others. To the extent advice was given to Sheehan to not disclose his interests in LMC, Banner or B & B it was given on partial information. The evidence does not support LMC's contention that Hensley knowingly advised Sheehan to omit these matters from his bankruptcy petition, statement of affairs, schedules and attachments. When the client makes only partial or incomplete disclosures of the extent of his involvement or association with transactions or assets, the client cannot thereafter rely on an advice-of-counsel defense. United States v. Carr, 740 F.2d 339, 347 (5th Cir.1984), cert. denied, 471 U.S. 1004, 105 S.Ct. 1865, 85 L.Ed.2d 159 (1985). See also United States v. Dunn, 961 F.2d 648, 651 (7th Cir.1992); United States v. Durnin, 632 F.2d 1297, 1301 (5th Cir. Unit A 1980). Therefore, LMC has failed to prove any of its defenses. Counterclaims. LMC also asserts counterclaims for damages and attorneys' fees. These arguments have no legal merit and will not be discussed in any detail since the Court has addressed them in the course of its rulings above. Therefore, LMC shall take nothing on its claims for affirmative relief. CONCLUSION It is therefore ORDERED that the Defendant Property is forfeited to the United States. It shall be disposed of according to law. It is further ORDERED that all costs shall be taxed against LMC. 28 U.S.C. §§ 1918, 1920, 1921. NOTES [1] The Court's prior findings and conclusions are modified in response to the United States' Motion to Amend and Correct Findings of Fact and Conclusions of Law [Doc. # 172]. Claimant LMC Investments, Inc. did not oppose the Motion. Accordingly, the Motion is GRANTED. [2] Sheehan claims he created and named LMC for his three daughters, including Michelle, but that ultimately he eliminated all but Michelle as owners. It is interesting to note, however, that the letters "L," "M," and "C" match the first initials of the first names of the three initial shareholders identified in the First Meeting of Shareholders, Larry Sheehan, Michael Cully and Chris Noble (a pilot and accountant friend of Sheehan's). [3] Union National Bank obtained a stipulated judgment against Sheehan in the amount of $125,000.00 on January 27, 1989. USA Ex. 71, 71.1; Johannes Testimony. [4] There is evidence that Sheehan represented to Union National Bank that as of January 1985, his net worth was $6.185 million. Johannson Testimony. [5] Sheehan's lack of personal assets is evidenced by the documents connected to his bankruptcy. See generally USA Ex. 161, 323. [6] As of September 18, 1987, LMC's assets were a restaurant building located at the Glenstone Property in Springfield, Missouri and a mortgage on a restaurant building located in Notch, Missouri. It appears that, during the times relevant to this case, family members of Sheehan or one of his former wives ran these restaurants (which were held in a different corporation). [7] Sheehan now contends that his attorney acted without his authority. During an evidentiary hearing in March 1995, Judge Lee Rosenthal, the previous presiding judge in this case, ruled that the Stipulation was binding. See Doc. # 55. Given this Court's assessment of Sheehan's trial testimony and his counsel's explanations, this Court finds that Sheehan's claim is not credible. Sheehan similarly contends that the stipulation of probable cause in this case was entered into by a different attorney without authority. He contends that if he failed to make any disclosures, it was his bankruptcy attorney's fault. He contends that his corporate attorney, Cully, is responsible for all corporate affairs. Sheehan's pattern of blaming others or disclaiming all personal responsibility for decisions in which he clearly was involved is not credible and provides no legally valid excuse for his behavior. [8] Michelle Sheehan's earlier comments during her FBI interview in 1993 (while she was assisted by counsel), or in 1995 at a hearing in this case before Judge Lee Rosenthal, or in 1995 at her deposition in this case reveal that in fact she was totally uninvolved with LMC, Banner, or B & B and merely signed whatever Cully asked her to sign. [9] Sheehan never paid gift taxes nor filed a gift tax return. Sheehan Testimony. Indeed, the IRS has no record of, and Sheehan cannot produce, Sheehan's 1987 personal income tax return. USA Ex. 282.1. [10] On May 19, 1987, Ross filed a voluntary Chapter 7 bankruptcy petition in the United States Bankruptcy Court for the Western District of Missouri, Southwestern Division. See USA Ex. 342. After his acquisition of Banner and B & B, Ross did not disclose to the Bankruptcy Court his interest in Banner or B & B, or their respective assets. Ross, both in his explanation as to why he did not disclose his interest in Banner and B & B during his bankruptcy proceeding, and in explaining at trial his involvement in Banner, B & B and LMC, stated that he took the stock as a favor for his friend Sheehan. In his answer to an adversary complaint filed by the Chapter 7 trustee in Ross' bankruptcy proceeding, Ross, through his attorney Arch Skelton, denied that the documents through which he acquired interests in Banner, B & B and LMC were "contracts" and denied "that the Parties ever intended to be legal (sic) obligated." USA Ex. 343. The Bankruptcy Court adopted this theory in Ross' bankruptcy case. See USA Ex. 344. [11] This confusion was caused by the suggestion by Cully that Ross should include the language about his releasing his claims in the July 7, 1987, agreement in order to create the appearance that Ross gave consideration for Sheehan's transfer of the stock of two companies (Banner and B & B) to him. Cully, Ross and Sheehan's testimony are consistent on this point. This does not place Cully in a favorable light. It is not the attorney's place to suggest consideration that does not exist in the clients' minds. Even assuming LMC's witnesses' explanation is accurate that this language was inserted as Cully's idea to protect Ross from potential claims by his wife should they divorce Cully's credibility suffers from the suggestion that he would include a false recitation in an agreement among parties. [12] They each testified that this was because Ross did not want his wife, a good friend of Sheehan's former wife, Betty, to know anything and he did not want to appear to be siding with Sheehan over Betty, with whom he and his wife remained friendly. [13] Another example of Sheehan's lack of credibility is his testimony of his dealings with Bo James Company, Inc. ("Bo James Co."). On April 7, 1988, Sheehan and James filed for the patent as inventors of a fishing lure that Sheehan testified he developed. The patent for the lure was assigned to Bo James Co., and was issued on December 19, 1989. USA Ex. 61, 62. On January 16, 1990, Sheehan and James filed for a patent as inventors of a tackle box holder, which patent was issued on March 19, 1991, and was assigned to Bo James Co. USA Ex. 295. Nevertheless, Sheehan denies any ownership interest in Bo James Co. This denial is belied by the documents. There are two different sets of minutes of "First Meeting of Board of Directors" for Bo James Co., one dated November 1988 (signed by Sheehan) and one undated set. USA Ex. 54, 55. See also USA Ex. 67 (Letter of Cully dated January 19, 1989 and attached minutes); USA Ex. 235.1 (Waiver of Notice of First Meeting of Board of Directors of Bo James Co., signed by Sheehan and James). Both sets allocate 45 shares of Bo James stock to Sheehan, 45 shares to John R. James ("James") and 10 shares to Cully. A signature card for Commerce Bank account number XX-XXX-X, dated January 24, 1989, shows authorized signers for the account are James and Sheehan. USA Ex. 73. A handwritten note from James to Cully states that because "Betty was entitled to claim half of Larry's shares ... we decided it would be better to put Larry's shares in Jean Adkinson's name." USA Ex. 60. Records of Missouri Secretary of State show that Larry Sheehan was the secretary and a director of Bo James Co. for the years 1988 and 1989. USA Ex. 33.1. Legal work to obtain these patents was performed during 1988-90 by Michael Godar, a St. Louis, Missouri patent attorney. Sheehan paid Godar's legal bills out of the proceeds of the sale of LMC property. See infra at 1193. [14] At Sheehan's direction, Tom Johnson took a cashier's check in the amount of $84,713.58 to Commerce Bank of Clay County, near Kansas City, Missouri, where he was met by Michelle Sheehan. USA Ex. 334 (Johnson Depo.), at 61-63. On April 18, 1989, the day after the sale, Michelle Sheehan executed a Certificate of Resolution of Corporate Board of Directors, opening an account at Commerce Bank of Clay County in the name of "LMC Investments, Inc." Although Michelle Sheehan testified that she signed signature cards and blank checks, there is no documentary evidence to support this testimony. Indeed, all tangible and bank record evidence is to the contrary. The only individual designated as an authorized signer on the account was "Larry Sheehan." USA Ex. 104, 105. The signature card for this LMC account bears Sheehan's driver's license number, not Michelle Sheehan's. USA Ex. 104. Finally, there is no evidence of any checks signed by Michelle Sheehan ever being negotiated through the account. The Court finds that even if Michelle Sheehan opened an account, it was not the account into which the Glenstone Property proceeds were deposited. [15] See infra at 15. Tom Johnson, who was also a party to the Agency Agreement, has no knowledge of the services provided by Adkinson and believed that the decision to offer the property to the neighbor originated with Michael Cully. [16] The LMC check no. "002" made payable to "Commerce Bank/Larry Sheehan" was disbursed as follows: $3,483.47 payable to Cox Hospital and $472.68 payable to Ferrell Duncan (for Sheehan's medical treatments), $225.00 payable to Mary Tinor and $288.21 payable to Empire Gas. USA Ex. 110, 321; Sheehan and P. Geboski Testimony. [17] One of the $10,000 checks was negotiated by Sheehan on April 26, 1989 as the initial deposit into an account in the name of Jean Adkinson at Firstbank of Aurora, Colorado. USA Ex. 111. After being endorsed by Sheehan and bearing Sheehan's driver's license number as identification, the check was negotiated by Adkinson at Firstbank on July 10, 1989, some 44 days after Sheehan filed for bankruptcy. USA Ex. 111, 114. Another of Sheehan's $10,000 checks was apparently transferred to Johnson, after being endorsed by Sheehan, on or about September 4, 1989, eleven days after Sheehan had been confronted at his Rule 2004 bankruptcy exam concerning the existence of bank accounts in his name. USA Ex. 111. [18] It does not appear to the Court that Ross was aware of the Agency Agreement at the time it was signed. [19] It appears that Jean Adkinson received a total of $20,000 in 1989 in connection with the sale of the Glenstone Property but these funds were not reported by her as income to the Internal Revenue Service until April 27, 1993, approximately three weeks after this lawsuit was filed. USA Ex. 285. Adkinson used the proceeds of the $20,000 commission to pay Sheehan's bankruptcy counsel's fee. USA Ex. 319; USA Ex. 348 (J. Adkinson Deposition), at 86. It thus appears that her so-called Agency Agreement was a cover for Sheehan to receive funds from the LMC Glenstone Property sale. [20] Aside from the deposit of $84,713.58, representing the proceeds of the sale of the Glenstone Property, and the disbursements described here, there were no other deposits, checks or material charges to the account during this period, except a $58.20 deduction for printed checks. USA Ex. 107. [21] Sheehan testified that he knowingly submitted to United Savings a false financial statement in 1987 and that he did so because the banker asked for it. He states that he told the banker that the statement was false but the banker "needed it for his files." He testified to this story believing that the statement was a copy of what he had submitted in 1985; he was unable to explain the fact that the 1987 one was substantially different from the earlier statement. The Court does not credit Sheehan's explanation of his submission of the 1987 statement, and cannot discern any viable defenses to this conduct. [22] To the extent LMC contends that the Bankruptcy Trustee's intervention and settlement of a dispute over farm equipment owned by B & B constitutes a release of the United States' claim of forfeiture here, the Court rejects the argument as frivolous. LMC Ex. 12d, 12j, 12k, and 12l. [23] Cully took the position that Sheehan had to continue to act as president until the corporate charter of Banner was reinstated, since Sheehan had been the president when the charter was forfeited for non-payment of franchise taxes. There is no evidence that this was ever explained to Sheehan's bankruptcy attorney in connection with his bankruptcy. [24] Cully, on behalf of Sheehan and LMC, asserted at trial that Sheehan's signature as President was required under Missouri law on these reinstatement documents because he was the president of the company at the time of the forfeiture of the corporate charter. He cited no authority to the Court for this proposition. Even if this is a valid explanation, which the Court questions, this ambiguity in Sheehan's role should have been explained to Sheehan's bankruptcy attorney. [25] Sheehan's involvement with Bo James Co. did not end when he filed bankruptcy. On June 15, 1989, despite the fact that Sheehan had not disclosed any interest or connection to Bo James Co. in his bankruptcy petition or schedules, Cully mailed a signature card for Commerce Bank to Sheehan for Sheehan's execution. USA Ex. 147. On June 29, 1989, having received the signature card back from Sheehan, which Sheehan had executed in his capacity as secretary of Bo James Co., Cully forwarded the completed signature card for the account to Commerce Bank. USA Ex. 150. This involvement is not directly material to the forfeiture action because the non-disclosure of this asset did not give rise to proceeds that the Government seeks to forfeit. The evidence about Bo James Co., however, is relevant to Sheehan's credibility. [26] The Government argues that Sheehan attempted to conceal his identity when he was shopping for the motor coach. The seller, Glenn Patch, testified by deposition that Sheehan represented to Patch that his name was "Larry Atkins," that he was a Continental Airlines pilot, that he intended to retire from Continental in the very near future, and that he intended to live in the motor coach afterwards. USA Ex. 338 (Patch Deposition). However, the deposition has been contradicted by other evidence introduced by LMC and the Court gives it little, if any, weight. [27] It appears that when she was interviewed by the Federal Bureau of Investigation ("FBI") in 1993, Michelle Sheehan did not know that the Defendant Property had been purchased with the proceeds of the sale of the Banner lake house and the B & B farm. M. Sheehan Testimony. [28] Further evidence of Sheehan's intent to hide assets from the Bankruptcy Trustee was his purported transfer of this property in Aurora, Colorado to Jean Adkinson. Sheehan stated that he gave it to Adkinson in May 1987, as reflected on quitclaim deed, but the deed was not recorded until January 1989, within 4 months of his bankruptcy filing. USA Ex. 312. The weight of the expert testimony in evidence is that the date of recordation is the relevant date for bankruptcy purposes since it is then that the transferee obtains title with priority over the Bankruptcy Trustee, and that therefore the transfer should have been reported by Sheehan in his bankruptcy schedules. The contrary opinion held by Sheehan's bankruptcy counsel is viewed with great skepticism by this Court. [29] The inability of Ross or Michelle Sheehan to identify with any certainty the market rental rate is just one of many strong indications of the lack of veracity of LMC's explanation. [30] The United States states that LMC did not produce USA Ex. 249 and 250 when LMC made its production in response to the Government's Request for Production of "all documents concerning the Defendant Property as well as all documents concerning the upkeep and operation of the Defendant Property by Larry Sheehan" and were in fact not produced to the United States until March 1996. During Sheehan's deposition, he affirmatively represented that he had no documents related to the Defendant Property. [31] Counsel for LMC stated, and some of the matters filed with the Court reflect, that the monthly lease rate was $1,000. Until trial, the figure of $1,200 was not mentioned. This adds to the Court's skepticism as to the lack of an arm's length basis for this transaction. [32] Tax returns for Banner and B & B for the years 1989 through 1992 were filed on September 21, 1993, approximately five months after this lawsuit was initiated. USA Ex. 268-279. [33] There is no factual basis for LMC to claim the Motor Coach as a business expense with the associated aggressive depreciation schedule it has claimed on its tax returns. See USA Ex. 255-257.1, 264-267, 307.1; Thurmond Testimony. [34] Later, Sheehan (or LMC, in connection with this litigation) produced proof of expenses that Jean Adkinson claimed she paid for insurance, maintenance, and gas for the Defendant Property. These are reported to total approximately $7,000, but appear to contain duplicate charges. USA Ex. 307 (Dec. 1989 expenses), 307.1. [35] The Court's records are unclear as to whether this determination was made on the second day of trial, August 13, or early on the third day, August 14, 1996. No transcript is available at the time of issuance of this opinion. [36] LMC and Sheehan argue strenuously that Sheehan lacked scienter and did not intend to defraud anyone, and therefore that he has not violated either § 152 or § 1956. As noted above and in conclusions hereafter, these contentions are not persuasive in light of the findings made based on the evidence presented at trial. The circumstantial evidence in this case is overwhelming that Sheehan intended to conceal from his creditors and the bankruptcy court a variety of his assets, by placing them in the names of nominee corporations or friends. A fact finder frequently must rely on circumstantial evidence in assessing intent and state of mind in criminal and civil cases. See United States v. Willey, 57 F.3d 1374, 1382 (5th Cir.), cert. denied, ___ U.S. ___, 116 S.Ct. 675, 133 L.Ed.2d 524 (1995); International Shortstop, Inc. v. Rally's, Inc., 939 F.2d 1257, 1265-66 (5th Cir.1991), cert. denied, 502 U.S. 1059, 112 S.Ct. 936, 117 L.Ed.2d 107 (1992). [37] LMC insists on arguing without any legal authority that, in addition to the Government's initial responsibility to show the existence of probable cause for seizure of the Defendant Property, the Government bears the burden of proof on the elements of the bankruptcy, money laundering or forfeiture statutes. This contention is frivolous. [38] The evidence in this case was very strong that Sheehan intended to defraud the bankruptcy court and his creditors, and to engage in the financial transactions necessary to convert the proceeds of the sales of the farm and lake house to the Defendant Property without the knowledge of his creditors or the Bankruptcy Court. Therefore, even if the Government had the burden of proving by a preponderance of the credible evidence that each 18 U.S.C. § 152 and § 1956(a)(1)(A) had been violated, and that the requirements of 18 U.S.C. § 981(a)(1)(C) had been met as to the Defendant Property, the Court would hold that the Government had met these burdens. [39] Specifically, Sheehan and his former wife were obligated on a six month loan originally made in or about May 1985, which had been extended for six months on two occasions. R. Johannes Testimony. [40] On January 27, 1989, Union National Bank obtained a stipulated judgment for $125,000. USA Ex. 71, 71.1; Johannes Testimony. [41] In this context, the refusal by Cully and Ross to produce information on LMC, when requested by the creditors, is suspect. Cully's explanation for this position was weak at best, and Ross had no opinions on the matter and no idea about any facts. [42] This arrangement, at least at the time Sheehan sought to have LMC file tax returns claiming the Defendant Property as an asset in 1994, represented nothing more than an attempt by Sheehan to build a record to establish LMC's purported ownership and to use depreciation and other "business" expenses to generate a tax loss and obtain a cash refund from the IRS. See Thurmond Testimony. [43] The Court notes that Sheehan committed other violations of the bankruptcy fraud statute in failing to disclose his indebtedness to United Savings; failing to disclose that his obligations under the United Savings note were paid by third parties; and failing to disclose that his indebtedness under the United Savings note had been extinguished. [44] To summarize, Sheehan participated in the following financial transactions knowing that the property involved in such financial transactions constituted the proceeds of bankruptcy fraud and knowing that such transactions were designed to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds: (a) the sale of the lake house and the farm on or about November 22, 1989; (b) the deposit of checks from the title company of funds from these real estate sales into the law firm trust account of LMC and Cully at Commerce Bank in Springfield, Missouri, on or about November 22, 1989; (c) the use of a check drawn on that trust account in the amount of $286,075.00 to fund a wire transfer from Commerce Bank in Springfield, Missouri to Marathon Coach in Eugene, Oregon; (d) the actual wiring of the $286,075.00 in funds from Commerce Bank in Springfield, Missouri to Marathon Coach in Eugene, Oregon; and (e) the purchase of the Defendant Property with said wired funds. The foregoing transactions, particularly when considered together, concealed or disguised, within the meaning of 18 U.S.C. § 1956(a)(1)(B)(i), the proceeds of Sheehan's bankruptcy fraud by placing title to valuable property in the name of a third party nominee. Sheehan, despite the fact that record title was held in another's name, held virtually total dominion and control over the disposition of each of the real estate properties, their proceeds, and the Defendant Property (the ultimate proceeds), both before his bankruptcy petition was filed and thereafter. [45] In any event, the evidence does not support the argument as to Ross and Cully, since Ross signed a letter prepared by Cully declining to produce documents about LMC when requested by the Bankruptcy Trustee.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/1432723/	405 F.Supp. 735 (1975) UNITED STATES of America v. Kenneth CONNELLY, Defendant. No. 75 Crim. 342 (WCC). United States District Court, S. D. New York. November 24, 1975. 736 Thomas J. Cahill, U. S. Atty., New York City, for plaintiff; Harry C. Batchelder, Jr., Asst. U. S. Atty., of counsel. Stein, Rosen & Ohrenstein, New York City, for defendant; Douglass A. Wistendahl, New York City, of counsel. MEMORANDUM AND ORDER CONNER, District Judge: Defendant seeks an order, pursuant to Rule 21(b), F.R.Crim.P., transferring this action to the United States District Court for the District of Connecticut. It is defendant's position that such transfer would be "in the interest of justice" within the intent of Rule 21(b). In order to understand the nature of defendant's application, it will be necessary to set forth, in some detail, the factual background of the case. I. In March 1975, a Federal Grand Jury in Hartford, Connecticut returned a two-count indictment against defendant, charging possession with intent to distribute and conspiracy to distribute cocaine hydrochloride (cocaine). On April 18, 1975, defendant pleaded guilty to the conspiracy count. Because his age at that time (25) permitted "Young Adult Offender" treatment, defendant was committed to the Federal Youth Correction Center for study, findings and recommendations as to his final sentence and treatment. He is awaiting final sentencing. On April 3, 1975, defendant was again indicted, this time by a Federal Grand Jury in the Southern District of New York. The New York indictment charges that defendant possessed with intent to distribute and distributed cocaine. Defendant has pleaded not guilty to both counts. Defendant's present age of 26 does not allow for "Young Adult Offender" treatment under the New York indictment. Defendant, although conceding that the two indictments allege separate and distinct offenses, argues that the acts which resulted in the New York indictment are part and parcel of the course of conduct encompassed by the Connecticut indictment's conspiracy charge, with both indictments resulting from a continuing investigation which commenced in July 1974 in New York and culminated with defendant's arrest in Hartford on November 4, 1974. Defendant's principal contention on this motion is that, by reason of his prior indictment in Connecticut, the interest of justice and the policy of fundamental fairness could be 737 served only by the transfer of the New York indictment to Connecticut. In arguing that the two cases are not in fact related, the United States Attorney points out that, with respect to the deliveries of cocaine charged in the New York indictment, defendant had no known co-conspirator; that the Government is not relying upon any possible connection between the wholly New York-based transactions which led to the New York indictment and those encompassed by the Connecticut indictment; that there is no evidence that the narcotics involved in the New York indictment came from a Connecticut source or that defendant was ever in Connecticut in connection with the offenses charged in the New York indictment; and that the mere fact that defendant was arrested in Connecticut with a large quantity of cocaine and also charged with possession of cocaine in New York does not necessarily link the prosecution of these two concededly separate criminal actions. II. Rule 21(b), F.R.Crim.P., upon which defendant relies, provides in pertinent part: "For the convenience of parties and witnesses, and in the interest of justice, the court upon motion of the defendant may transfer the proceeding * * * to another district." A motion to transfer pursuant to Rule 21(b) is essentially one directed to the broad discretion of the court. 2 C. Wright, Federal Practice and Procedure § 344, at 637 (1969); see United States v. McGregor, 503 F.2d 1167, 1169-70 (8th Cir. 1974), cert. denied, 420 U.S. 926, 95 S.Ct. 1122, 43 L.Ed.2d 395 (1975); United States v. Polizzi, 500 F.2d 856, 899 (9th Cir. 1974), cert. denied, 419 U.S. 1120, 95 S.Ct. 802, 42 L.Ed.2d 820 (1975); United States v. Phillips, 433 F.2d 1364, 1368 (8th Cir. 1970), cert. denied, 401 U.S. 917, 91 S.Ct. 900, 27 L.Ed.2d 819 (1971); Jones v. Gasch, 131 U.S.App.D.C. 254, 404 F.2d 1231, 1242 (1967), cert. denied, 390 U.S. 1029, 88 S.Ct. 1414, 20 L.Ed.2d 286 (1968); United States v. Green, 373 F.Supp. 149, 153-54 (E.D.Pa.), aff'd, 505 F.2d 731 (3d Cir. 1974), cert. denied, 420 U.S. 978, 95 S.Ct. 1405, 43 L.Ed.2d 659 (1975); United States v. Jessup, 38 F.R.D. 42, 45 (M.D.Tenn.1965). Moreover, both the 1966 Advisory Committee Notes and the observations of commentators make it clear that transfer pursuant to Rule 21(b) may be ordered even to a district in which no part of the offense was committed. See, e. g., Moores, Federal Practice ¶ 21.02 at 4, 21.04[1] at 12-12.1 (2d ed. 1974). In what has been regarded as the leading case on Rule 21(b), Platt v. Minnesota Mining & Mfg. Co., 376 U.S. 240, 243-44, 84 S.Ct. 769, 11 L.Ed.2d 674 (1963), the Supreme Court listed ten factors which the district court had considered in its determination of whether transfer would be in the interest of justice. Although the Supreme Court did not specifically approve the list noting merely that both parties and the Court of Appeals had agreed that the first nine factors enumerated were appropriate and based its decision on other grounds, many courts, as well as commentators, have construed Platt as having at least tacitly adopted the list, and, citing Platt, have applied the listed factors in deciding particular Rule 21(b) motions. See, e. g., United States v. McGregor, supra at 1170; Jones v. Gasch, supra, 404 F.2d at 1242; United States v. Green, supra at 153-54; United States v. Clark, 360 F.Supp. 936, 941 (S.D.N.Y.1973); United States v. Plott, 345 F.Supp. 1229, 1232-34 (S.D.N.Y.1972). The factors enumerated in Platt include: "`(1) location of corporate defendant; (2) location of possible witnesses; (3) location of events likely to be in issue; (4) location of documents and records likely to be involved; (5) disruption of defendant's business unless the case is transferred; (6) expense to the parties; (7) location of counsel; (8) relative accessibility of place of trial; (9) docket condition of each district or division involved; and (10) any other 738 special elements which might affect the transfer.'" Although Platt predates the 1966 amendment to Rule 21(b), since that amendment "did not * * create an essentially new yardstick by which requests for removal are to be judged", Jones v. Gasch, supra 404 F.2d at 1237, Platt remains the most cited precedent on Rule 12(b). III. Based upon the uncontradicted record before the Court, the first nine factors listed in Platt are either inapplicable here or weigh heavily against transfer. All the witnesses presently projected to be called are located in New York. All the events likely to be in issue occurred in New York. The documents and records, although not voluminous, are located in New York. There is no claim that defendant would suffer greater inconvenience in his legitimate business activities if the case were not transferred. The differences in expense, convenience to counsel, relative accessibility of the place of trial and likelihood of a speedy trial are insubstantial. The only factor listed in Platt which might arguably militate in favor of transfer, although I do not believe that it does, is the tenth, or miscellaneous, category. Defendant apparently has concluded that he would be eligible for "Young Adult Offender" treatment in Connecticut, but not in New York and that for this reason the interest of justice would be served if he were sentenced in Connecticut. When reduced to its essence, this motion is thus clearly motivated by a desire to be sentenced in a district in which defendant believes he will receive a lighter sentence. IV. The possibility of more lenient punishment has never before been ruled to provide a basis for transfer under Rule 21(b), and I decline to be the first so to rule. In fact, to transfer for such a reason would invite venue shopping, a practice which obviously should not be encouraged, either on the part of defendant, by way of motion, or on the part of the Government, through its initial choice of venue. Even assuming arguendo that the multiple statutory violations charged in the two indictments arise out of the same series of transactions, the Government still has the right, within reason, to try each violation separately, in the district of its choice, subject, of course, to applicable venue rules and to the defendant's right to be protected against harassment and double jeopardy. See United States v. Cala, 521 F.2d 605 (2d Cir. 1975); United States v. Nathan, 476 F.2d 456, 459 (2d Cir.), cert. denied, 414 U.S. 823, 94 S.Ct. 171, 38 L.Ed.2d 56 (1973). Defendant's claim that had he contemplated a second indictment he "might" not have agreed to enter a plea in Connecticut is an even less persuasive argument in favor of transfer. Not only is the relevancy of this assertion to a Rule 21(b) motion obscure at best, but in this particular case there is no assertion that defendant has attempted, or intends to attempt, to withdraw the earlier plea. To the contrary, defendant has represented to this Court that "should this Court grant defendant's motion for transfer, defendant will not contest his charges but attempt to cooperate in making whatever disposition of the New York indictment is deemed appropriate by the United States District Court in Connecticut. Therefore, if this matter is transferred, it will be for the limited purpose of entering a plea and sentencing. Accordingly, since the Court in Connecticut has at its disposal a pre-sentencing report, it is respectfully suggested that that Court is best equipped to dispose of this entire case." Thus, in effect, defendant has announced to the Court that the purpose of this motion is to secure a transfer for plea and sentence, an application ordinarily made under Rule 20, F.R.Crim.P. However, by couching his request in the terminology of Rule 21(b), defendant is *739 apparently hoping to avoid Rule 20's requirement of consent by the United States Attorney consent which was withheld in this case. Without ruling on the propriety of such a practice, see Jones v. Gasch, supra, where the D.C. Circuit disapproved of an attempt to splice the standards for transfer contained in Rule 21(a) with those of Rule 21(b), suffice it to say that in this particular case, where every other factor considered weighs against transfer, the motion must be denied. So ordered.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2389076/	708 F.Supp. 473 (1989) Nicholas P. MANOCCHIO v. John MORAN, Director, Department of Corrections. Civ. A. No. 88-0221 B. United States District Court, D. Rhode Island. March 15, 1989. 474 John A. MacFadyen, Providence, R.I., for petitioner. Anne Goldberg, Asst. Atty. Gen., Providence, R.I., for defendant. OPINION FRANCIS J. BOYLE, Chief Judge. Petitioner seeks a Writ of Habeas Corpus under Title 28 U.S.C. § 2254 alleging that his conviction of manslaughter was obtained in violation of his right to confront the witnesses against him as guaranteed by the Sixth Amendment. Petitioner contends that the Medical Examiner's autopsy report should not have been admitted in evidence because the Medical Examiner who performed the autopsy did not testify at trial as he had since moved to Israel. He contends that his inability to cross-examine the doctor denied him his Sixth Amendment right to confrontation, and is subject to remedy under § 2254(d). In this case, the Defendant was tried for the murder of a man who died shortly after being beaten by several men in the parking lot of a North Providence night spot. An eyewitness to the beating testified at trial, positively identifying petitioner as one of the assailants. The state introduced the autopsy report as the only evidence to establish the beating as the cause of death. Dr. Joel Zirkin, the medical examiner who had performed the autopsy, did not testify. Between the time of the autopsy and the time of trial Dr. Zirkin had left the Rhode Island Medical Examiner's Office, moved to Cleveland, Ohio and by the time of trial had moved to Israel. The state attorney general's office apparently was aware that Dr. Zirkin was moving to Israel, and in fact filed a motion to take his deposition, claiming his testimony was "critical to establish the course, cause and manner of death...." However, Dr. Zirkin, who was deposed by the state in two other pending criminal cases, was not deposed in this case before his move to Israel. At trial, a Dr. Charles Arthur Burns testified for the limited purpose of identifying the report and outlining the procedure for its preparation. The report was admitted into evidence over persistent objection including a motion in limine, objections and a motion to strike. A copy of the report was provided to the jury for its use during deliberation. The report in part, states: CONCLUSION: It is our opinion that Richard Fournier, a 24 year old white male, died of multiple injuries, including mandibular and maxillary fractures, contusions and abrasions of the face, subgaleal hemorrhage and abrasions of the chest and extremities. Cerebral edema and subarachnoid hemorrhage resulted from the injuries although no cranial fractures, brain contusion, or subdural hemorrhage were seen. The decedent was beaten by assailants in a parking lot on Mineral Spring Avenue, North Providence, on November 2, 1980 at approximately 1:00 a.m. He was found with shallow respirations and a weak pulse. He was taken by Rescue to Roger Williams General Hospital where he died at 1:47 a.m. .... MANNER OF DEATH: Homicide. Petitioner was convicted of manslaughter. The Rhode Island Supreme Court, in its review of petitioner's conviction states that "The state introduced as evidence the autopsy report of the victim, Fournier, for the purpose of establishing the cause of his death." State v. Manocchio, 497 A.2d 1, 4 (R.I.1985). Petitioner claims that the admission of this report, the only direct evidence 475 showing cause of death, without the opportunity to cross-examine Dr. Zirkin before the jury, denied him his Sixth Amendment right to confrontation. On appeal, the conviction was affirmed by the Supreme Court of Rhode Island. State v. Manocchio, 497 A.2d at 13. The court found that Dr. Zirkin was "unavailable" to testify for the purposes of meeting the requirements of an exception to the hearsay rule, Id. at 5, and that the autopsy report bore sufficient "indicia of reliability" to overcome the confrontation clause problem. Id. at 8: The trial justice concluded, after this hearing, that the "underlying trustworthiness" surrounding the generation of the autopsy report justified its admission. We conclude that the right of confrontation of defendants was not violated. This conclusion is based on the trial justice's finding that the circumstances surrounding the preparation of the autopsy report were trustworthy. We conclude that admission of the autopsy report was not error. The Sixth Amendment provides every criminal defendant the right "to be confronted with the witnesses against him." This right is applicable to the states through the Fourteenth Amendment. Pointer v. Texas, 380 U.S. 400, 403-05, 85 S.Ct. 1065, 1067-68, 13 L.Ed.2d 923 (1965); Davis v. Alaska, 415 U.S. 308, 315, 94 S.Ct. 1105, 1109, 39 L.Ed.2d 347 (1974). While the right to cross-examine witnesses is a paramount interest protected by the confrontation clause, Douglas v. Alabama, 380 U.S. 415, 418, 85 S.Ct. 1074, 1076, 13 L.Ed.2d 934 (1965), competing interests may dictate that it be waived in certain circumstances. See, e.g. Mattox v. United States, 156 U.S. 237, 243, 15 S.Ct. 337, 339, 39 L.Ed. 409 (1895) (rules of law valuable to accused occasionally "give way to considerations of public policy and the necessities of the case"); Chambers v. Mississippi, 410 U.S. 284, 295, 93 S.Ct. 1038, 1045, 35 L.Ed.2d 297 (1973) ("right to confront and to cross-examine is not absolute and may, in appropriate cases, bow to accommodate other legitimate interests"). Under the doctrine of Ohio v. Roberts, 448 U.S. 56, 65, 100 S.Ct. 2531, 2538, 65 L.Ed.2d 597 (1980), the restriction of the confrontation clause on the use of admissible hearsay is two-fold. First is the requirement that use of the hearsay be necessary, usually satisfied by the unavailability of the declarant. Id. Secondly, once the declarant is determined to be unavailable, the hearsay must be sufficiently trustworthy to overcome the inherent need for cross-examination. Id. Courts must determine on a case-by-case basis whether the hearsay statements of an unavailable declarant bear sufficient "indicia of reliability" to satisfy the requirements of the confrontation clause. Dutton v. Evans, 400 U.S. 74, 86, 91 S.Ct. 210, 218, 27 L.Ed.2d 213 (1970).[1] The testimony admitted in this instance without an opportunity for cross examination included the conclusion that "The decedent was beaten by assailants in a parking lot on Mineral Spring Avenue, North Providence, on November 2, 1980 at approximately 1:00 A.M. He was taken to Roger Williams General Hospital where he died at 1:47 A.M. Manner of death: Homicide." Defendant was charged with participation in the beating of the decedent as described in the autopsy report. Testimony was admitted from an eyewitness that Defendant was a participant. Coupled with the autopsy report and the eyewitness identification, the State proved its case. There is no direct evidence, other than the autopsy report, of the cause of death. The only other evidence of cause of death is circumstantial and totally lacking any medical basis. The fact that the victim died shortly after the beating does not create an inference which rises to the level of proof beyond a reasonable doubt that the victim's death was caused by the beating, however vicious. The State has the burden of proving the corpus delicti beyond a reasonable 476 doubt. State v. Halstead, 414 A.2d 1138, 1143 (R.I.1980); State v. Maloney, 111 R.I. 133, 138, 300 A.2d 259, 262 (1973). "In a homicide prosecution, the state must thus show that a person has died and that the death was caused by the criminal agency of another. The requirement of proving corpus delicti reflects a concern that an accused not be convicted when no crime has in fact been committed." State v. Halstead, 414 A.2d at 1143. Voluntary manslaughter is defined as an intentional homicide without malice aforethought in the heat of passion as a result of adequate provocation. State v. Lillibridge, 454 A.2d 237, 240 (R.I.1982); State v. Vargas, 420 A.2d 809, 815 (R.I.1980). The state had the burden to prove beyond a reasonable doubt that defendant caused the victim's death. The only evidence of causation was that contained in the autopsy report. Furthermore, the evidence was hearsay information in a hearsay report which was admitted to prove the truth of the hearsay information. Such evidence has been held by the Rhode Island Supreme Court in cases decided both before and after State v. Manocchio, to be inadmissible hearsay. See State v. Castore, 435 A.2d 321, 326 (R.I.1981); State v. Pina, 455 A.2d 313, 315 (R.I.1983); State v. Carrera, 528 A.2d 331, 335-36 (R.I.1987); State v. Lima, 546 A.2d 770, 774 (R.I.1988). Although recent developments suggest that such information may indeed be admitted in civil actions, at least under the Federal Rules of Evidence, Rule 803(8)(C), since the medical examiner has a duty to investigate by law, R.I.Gen.Laws, § 23-4-1, et seq., Beech Aircraft Corp. v. Rainey, ___ U.S. ___, 109 S.Ct. 439, 102 L.Ed.2d 445 (1988), admission of investigative reports in criminal cases is a different matter. See United States v. Cepeda Penes, 577 F.2d 754, 761 (1978); Weinstein on Evidence, ¶ 803(8)[04].[2] That the Defendant might present evidence contradicting the report is clearly beside the point in a criminal prosecution. In a criminal case the defendant has no duty to prove anything. Whether evidence is admissible under the hearsay rule and whether the evidence satisfies the confrontational requirements of the Sixth Amendment are two different matters. The Rhode Island Supreme Court relied upon Dutton v. Evans, 400 U.S. 74, 91 S.Ct. 210, 27 L.Ed.2d 213 (1970), and Mancusi v. Stubbs, 408 U.S. 204, 92 S.Ct. 2308, 33 L.Ed.2d 293 (1972), for the proposition that the focus of the court's constitutional concerns is indicia of reliability in order to place before a jury a statement admitted without confrontation of the declarant. State v. Manocchio, 497 A.2d at 8. Indeed, this is what both cases hold. However, this is not all that Dutton, at least, stands for. Dutton, as does a long line of authority both before and after it, holds that although the Sixth Amendment's Confrontation Clause and the evidentiary hearsay rule stem from the same roots, "this Court has never equated the two and we decline to do so now." 400 U.S. at 86, 91 S.Ct. at 218. The court then went on to say "This case does not involve evidence in any sense `crucial' or `devastating,' as did all the cases just discussed." Id. at 87, 91 S.Ct. at 219. Dutton involved testimony of a witness to an out of court post conspiracy statement of a non-testifying defendant which was specifically admissible under a State of Georgia statute. The Dutton court described the testimony as "... of peripheral significance at most." Id. Besides, the court pointed out, the witness who gave the testimony could be cross-examined. Id. at 88, 91 S.Ct. at 219. The Dutton court quoted Mr. Justice Cardozo, in Snyder v. Massachusetts, 291 U.S. 97, 122, 54 S.Ct. 330, 338, 78 L.Ed. 674 (1934): There is danger that the criminal law will be brought into contempt that discredit will even touch the great immunities assured by the Fourteenth Amendment if gossamer possibilities of prejudice to a defendant are to nullify a sentence pronounced by a court of competent jurisdiction in obedience to local law and set the guilty free. 400 U.S. at 89-90, 91 S.Ct. at 219-220. This case asks the question whether proof of the corpus delicti, without an 477 opportunity to cross-examine the only witness who testified to it is a gossamer possibility of prejudice or the denial of the right of confrontation by means of cross-examination. The answer seems to be quite obvious. This defendant was convicted on the basis of evidence which he had no opportunity to test for validity. It would seem that he should at least have had the opportunity to inquire of the medical examiner whether or not the victim could have died from some cause other than the beating. The autopsy report which went to the jury room gives no clue of the response that would be made to this question. There is considerable authority that not every extrajudicial declaration admitted at trial violates the Sixth Amendment. Thus, the admission of the overlapping confessions of each of three defendants, with proper limiting instructions, does not violate the Sixth Amendment. Parker v. Randolph, 442 U.S. 62, 99 S.Ct. 2132, 60 L.Ed.2d 713 (1979). However, admission of the prior testimony of an eye witness not subject to effective cross-examination does violate the Sixth Amendment. Pointer v. Texas, 380 U.S. 400, 85 S.Ct. 1065, 13 L.Ed. 2d 923 (1965). The prior testimony of an eye witness at an earlier trial subject to cross-examination, who was in Sweden at the time of the second trial, may be admitted at the second trial even though the second trial was made necessary by the ineffective assistance of counsel at the earlier trial. Mancusi v. Stubbs, 408 U.S. 204, 92 S.Ct. 2308, 33 L.Ed.2d 293 (1972). The opportunity to cross-examine an unavailable witness at a preliminary hearing is sufficient to permit the introduction of a transcript of the witness' preliminary hearing testimony at trial. Ohio v. Roberts, 448 U.S. 56, 100 S.Ct. 2531, 65 L.Ed.2d 597 (1980). This discussion demonstrates that the admissibility of hearsay statements depends at times upon subtle distinctions. In a number of cases the issue is whether the party against whom the evidence was offered had an opportunity to cross-examine the maker of the statement at the time it was made. In other circumstances the admission of a party or peripheral information is admissible without cross-examination. But no case has gone so far as to hold that proof of the corpus delicti can be accomplished by evidence whether or not subject to cross-examination. This would frustrate the historic purpose of the confrontation clause to prevent trial by affidavit. Mattox v. United States, 156 U.S. 237, 242-43, 15 S.Ct. 337, 339-40, 39 L.Ed. 409 (1895). In Bourjaily v. United States, 483 U.S. 171, 107 S.Ct. 2775, 2783, 97 L.Ed.2d 144 (1987), the Supreme Court held that evidence admissible under a "firmly rooted hearsay exception" is evidence not barred by the confrontation clause. It was not until December of 1988 that the Supreme Court resolved the controversy concerning admissibility of opinion evidence in a hearsay document. Beech Aircraft Corp. v. Rainey, ___ U.S. ___, 109 S.Ct. 439, 445-46, 102 L.Ed.2d 445 (1988). As the Court noted, this issue has "divided the federal courts from the beginning." Id. at 446. It can hardly be said to be a firmly rooted exception. In Stevens v. Bordenkircher, 746 F.2d 342 (6th Cir.1984), the Court of Appeals considered circumstances similar to those in this matter. In a homicide trial a death certificate revealing the identity of the body, and the cause of death was admitted. The County Coroner was subpoenaed but was excused "as a favor" to him by the prosecuting attorney. At a later hearing the coroner testified that he recorded gunshot wounds as the cause of death because the police had told him they had a witness who said the victim had been shot. The Court of Appeals rejected the district court's conclusion that admission of the death certificate did not violate the confrontation clause because it was admitted under a firmly established exception to the hearsay rule, and, therefore, its reliability may be inferred from the nature of the document itself. 746 F.2d at 348. Although the court found that the coroner was not "unavailable," it also determined that "Introduction of the death certificate in light of Dr. Begley's absence created a substantial risk that the jury would infer improperly that the information contained in the document resulted from the coroner's 478 independent evaluation of the evidence." Id. In this case, the portion of Dr. Zirkin's report relating to the fight in the parking lot cannot be considered medical opinion. It is a factual conclusion. The report could be and apparently was read by the jury as concluding that the decedent died as a result of the beating in the parking lot, rather than as a result of the subarachnoid hemorrhage. In his grand jury testimony Dr. Zirkin testified that the subarachnoid hemorrhage, swelling and bleeding in the tissue lining the brain, caused the death. He testified that the broken facial bones, primarily in the jaw area, would not have caused the hemorrhage and that while there was bruising to the head there were no fractures of the skull. He further testified that cocaine metabolite was found in the decedent's blood.[3] Since petitioner was found guilty of manslaughter and since the only evidence of the corpus delicti was the opinion of an absent Medical Examiner, the conclusion is inescapable that the jury acted on the information and conclusions stated in the Medical Examiner's Report. This is error of constitutional dimension. Up to this point, the assumption has been made that Dr. Zirkin was indeed unavailable. The fact of the matter is that at the time he left the United States for Israel, he was residing in the State of Ohio. He was brought to Rhode Island and the Rhode Island Attorney General took his deposition in two other criminal cases then pending. The Rhode Island Attorney General served a notice to take Dr. Zirkin's deposition before trial in this case as well. The notice alleged "3. Dr. Zirkin's testimony is critical to establish the cause and manner of death ..." "7. It is necessary to take his deposition in order to prevent a failure of justice on (sic) this matter...." Inexplicitly, the deposition was not taken. Also inexplicable is the failure of the State of Rhode Island to bring Dr. Zirkin back from Israel for the trial. In this present day mode of foreign travel, certainly such an effort would not be unreasonable. Further, there was no effort made by the State to invoke the provisions of 28 U.S.C. § 1783, a statute which had been amended in 1964 to permit a State to obtain a subpoena from a Court of the United States of a national or resident of the United States who is in a foreign country to appear before a state court criminal proceeding. This process has been held constitutional as early as 1932 as applied to citizens. Blackmer v. United States, 284 U.S. 421, 431, 52 S.Ct. 252, 76 L.Ed. 375 (1932). See Mancusi v. Stubbs, 408 U.S. 204, 212, n. 2, 92 S.Ct. 2308, 2312, n. 2, 33 L.Ed.2d 293 (1972). The fact of the matter is that the State made no effort to obtain Dr. Zirkin's testimony. As has been noted, the United States Supreme Court has approved the use of prior recorded testimony of a witness which had been subject to cross-examination to be admissible in spite of the fact that the witness was not present because at the time of a second trial he resided in Sweden. Mancusi v. Stubbs, 408 U.S. 204, 92 S.Ct. 2308, 33 L.Ed.2d 293 (1972). This is a remarkably different situation, in which there was no opportunity whatsoever to cross-examine Dr. Zirkin. Further, at the time of trial, the state was aware of his intended departure prior to trial and his destination. Under Rhode Island Rules, "If it appears that a prospective witness may be unable to attend or prevented from attending a trial or hearing, that his testimony is material and that it is necessary to take his deposition in order to prevent a failure of justice, the court may ... upon motion of a defendant or the State ... order that his testimony be taken by deposition...." R.I.Sup.Ct.R. 479 Crim.P. 15(a). Here, Dr. Zirkin's testimony was beyond material, it was crucial to the case, as it related to the cause of death. He should have been deposed by the state before he left for Israel. The prosecution had a duty to make a good faith effort to produce him at trial. Barber v. Page, 390 U.S. 719, 725, 88 S.Ct. 1318, 1322, 20 L.Ed. 2d 255 (1968). The state's assertion that the defendant should have deposed Dr. Zirkin is without merit. A defendant is never obligated to prove his innocence; rather the state is required to prove his guilt. The state's failure to make Dr. Zirkin available is a further violation of constitutional dimension of petitioner's rights. The fact that the report was hearsay and may have been admissible under a hearsay exception is not the issue in this case. The question is whether its admission denied petitioner the right to confront and cross-examine a material witness against him. The state in its memorandum contends that the report was merely cumulative to the "at least" 15 state witnesses who "clearly proved that the victim died in the parking lot of Gantry's as a result of a cruel and merciless beating." This misstates the facts. While it is true that at least 15 witnesses testified to the beating, only the autopsy report provided evidence of its result. In this case, "the correct inquiry is whether, assuming that the damaging potential of the cross-examination were fully realized, a reviewing court might nonetheless say that the error was harmless beyond a reasonable doubt." Delaware v. Van Arsdall, 475 U.S. 673, 684, 106 S.Ct. 1431, 1438, 89 L.Ed.2d 674 (1986). This court is unable to find this error harmless beyond a reasonable doubt. Given the facts in this case, this Court finds that the state court's admission of Dr. Zirkin's autopsy report, without requiring his testimony in person or by deposition, deprived petitioner of the opportunity to test the doctor's findings through cross-examination. As a result, petitioner was denied a full and fair trial on a crucial matter in the case. Therefore, under 28 U.S.C. § 2254(d)(2) a writ of habeas corpus will issue unless the State of Rhode Island affords to petitioner a new trial within 120 days from the date of this Opinion. SO ORDERED. NOTES [1] The Supreme Court of Rhode Island applied the Dutton test and determined that both the unavailability and trustworthiness criteria were met and the admission of the autopsy report did not violate petitioner's right to confrontation. State v. Manocchio, 497 A.2d at 7-8. [2] In State v. Manocchio, the Rhode Island Supreme Court applied the standards of Rule 803(8)(B) and not Rule 803(8)(C). 497 A.2d at 6. [3] In Beech Aircraft Corp. v. Rainey, the U.S. Supreme Court held that reports containing opinions or conclusions "are not on that account excluded from the scope of [rules of evidence]." 109 S.Ct. at 446. However, a prejudicial impression created by the admission of such a report must be available for adequate and effective cross-examination. Id. at 451. This rule probably does not apply in criminal cases, since such reports are generally not admissible against a defendant in any event. See Fed.R.Evid. 803(8)(B) and (C).	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/3290493/	Judgment was had in this case in the sum of $1,080.41, interest and costs, in favor of plaintiff, *Page 681 and defendant appeals. Through concessions in the briefs the sum in dispute is reduced to $139. It is not thought necessary or useful to detail the original issues of the case, since the only issue for us to decide consists of one point of fact. [1] Appellant relies upon a statement of account rendered to one of his customers. Against this the customer testifies that he believes the account to be incorrect and to show a sum greater than the true amount. He is not asked by either party as to particular items in error. If the trial court accepted the statement as correct, the judgment is for $139 too much. If it rejected the statement as unreliable, the judgment is correct. The judgment must be sustained. The evidence was conflicting, and it is our duty to assume that the trial court gave it that construction which supports the judgment. Judgment affirmed. Works, P.J., and Craig, J., concurred.	01-03-2023	07-05-2016
https://www.courtlistener.com/api/rest/v3/opinions/2664638/	UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA N’SAMBA NDONDJI,1 Plaintiff, v. Civil Action No. 09-02457 (JDB) INTERPARK INC., INTERPARK HOLDINGS, INC. Defendants. MEMORANDUM OPINION Plaintiff N’samba Ndondji brings this action against his former employer, InterPark Incorporated, and its parent company, InterPark Holdings Incorporated2 (“collectively InterPark”), asserting claims of discrimination and retaliation in violation of 42 U.S.C. § 1981, Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq., and the District of Columbia Human Rights Act (“DCHRA”), D.C. Code § 2-1401.01 et seq. Now before the Court is InterPark’s motion to partially dismiss the amended complaint. For the reasons discussed below, the Court will grant in part and deny in part InterPark’s motion. BACKGROUND Ndondji, a black male from Angola, started working on July 28, 1988, as a lobby attendant for InterPark at the Willard Hotel. Am. Compl. ¶¶ 1-2. During his employment, 1 Ndondji’s name was originally misspelled in the complaint but was corrected in the amended complaint. 2 InterPark argues in a footnote to its filings that InterPark Holdings Inc., the parent company of InterPark Inc., is not a proper defendant in this case because (1) the parent company did not employ Ndondji, and (2) the parent company was not properly served with a summons. InterPark Holdings Inc. should file a motion if it seeks to be dismissed on this basis. -1- InterPark transferred him to several different facilities to work as a parking attendant and then later as an assistant manager. Id. He completed courses for customer service and was recognized as “employee of the month” several times. Id. ¶¶ 7-8. As a result of his work, Ndondji claims that he was transferred to assignments “where others would not go” and “where the company was most busy.” Id. ¶ 9. According to Ndondji, he would improve the parking situation at each location but received “little or no [pay] increases” for his efforts. Id. Sometime in 2004, Ndondji was transferred to the 1900 19th Street N.W. location, which he alleges was one of the “busiest” locations and where some parking attendants3 caused accidents. Id. ¶ 10. “No one else was interested in taking this location.” Id. Ndondji alleges that he “immediately improved all areas of operation at this location,” id. ¶ 11, and focused on improving revenue and decreasing the number of accidents, id. ¶ 12. Ndondji attempted to improve the performance of attendants by “testing” each one to determine if they could perform their jobs. Id. ¶ 14. Many employees failed his test, but management insisted that he continue working with them and “resisted” his efforts to improve the location. Id. Although he fails to specify the timing of the alleged discrimination, Ndondji contends that management placed him in the “worst” and “most difficult locations” and continued to impose conditions that prevented him from successfully performing his job. Id. ¶¶ 33-34. He was ordered to “refrain from putting up a ‘Full’ sign even when there were no safe [parking] spaces available,” id. ¶ 13, and was forced to “overpark” to increase revenue, even though overparking could lead to more accidents, id. ¶ 36. 3 Ndondji appears to use “attendants” and “assistants” interchangeably throughout the amended complaint. To be consistent, the Court will use “attendants.” -2- Ndondji also claims that he received “very little support with manpower.” Id. ¶¶ 14-15, 34. Management allegedly failed to provide him with competent attendants and send replacements when attendants failed to show up or called in sick. Id. ¶ 15. Unlike other workers who were “similarly situated” and “not Black or of Angolan descent,” he was forced to work without a reasonable number of attendants and was not allowed to choose the attendants assigned to his area. Id. ¶ 32a. Sometime in the beginning of 2006, Ndondji claims that garage and area managers requested a meeting with corporate human resources department representatives from the Chicago office to complain about the “ongoing discrimination” against “individuals of African descent.” Id. ¶ 17. During the summer of 2006, human resources representatives met with InterPark employees who complained about Melissa Silver-Ward from the human resources department and Richard Rosenberger, the District General Manager. Id. ¶ 18. These employees complained that foreign nationals received different treatment than non-foreign nationals and that Rosenberger had targeted “foreign nationals” for disciplinary action. Id. ¶ 19. Ndondji was “very vocal” at this meeting and claims that the representatives “promised to investigate and respond” to the employees’ complaints but never did. Id. ¶ 21. Ndondji alleges that Silver-Ward then assigned Tony Stevenson, a new manager, to “observe” and “spy” on him in retaliation for his complaints of discriminatory behavior. Id. ¶¶ 40B, 47. Stevenson allegedly made “false statements regarding [his] practices,” id. ¶ 23, and falsely accused him of taking money and of poor performance, id. ¶¶ 40C, 48. Ndondji claims that Stevenson’s accusations were untrue and that he actually improved the conditions at the garage. Id. ¶¶ 24, 42-44. Shortly thereafter, Ndondji was placed on a Performance Improvement -3- Plan (“PIP”) for “failing to reduce the accidents and improve revenue.” Id. ¶ 23. Although he believed he should not have been placed on the PIP, Ndondji maintains that he tried “his hardest” to make even greater improvements and “gave up lunch and times off to drive when attendants were unavailable.” Id. ¶ 25. Ndondji claims he never received periodic PIP evaluations as required and was fired at the end of the PIP and before his scheduled vacation. Id. ¶¶ 26-27, 45. On December 12, 2006, Ndondji was terminated for failing to make improvements, although he maintains that he was never offered any evidence of his poor performance. Id. ¶ 27. Ndondji alleges that he filed a timely charge of discrimination and retaliation with the Equal Employment Opportunity Commission (“EEOC”) on February 27, 2007 and received an EEOC right-to-sue letter that was dated September 30, 2009. Id. ¶¶ 28-29. On December 30, 2009, Ndondji filed his case in this Court. Ndondji’s amended complaint is vague in its allegations and does not distinguish clearly between claims, but the Court discerns the following claims: (1) discrimination and retaliation claims under section 1981, (2) discrimination and retaliation claims under Title VII, and (3) discrimination and retaliation claims under DCHRA. On March 1, 2010, InterPark filed a motion to partially dismiss the complaint and attached as an exhibit Ndondji’s “Charge of Discrimination” (“DCOHR/EEOC charge”) that he filed with the D.C. Office of Human Rights (“DCOHR”) on June 4, 2007. Ndondji’s DCOHR/EEOC charge was cross-filed with the EEOC. On the DCOHR/EEOC charge, Ndondji checked the box that indicated that he had been discriminated against on the account of his national origin. He alleged that (1) he had been “unjustly issued a disciplinary write-up” and (2) “unjustly discharged from employment.” Ndondji filed his opposition to the motion on March -4- 12, 2010.4 On March 15, 2010, Ndondji filed an amended complaint, and on March 29, 2010, prior to any discovery, InterPark filed a second motion to partially dismiss the amended complaint, which is now ripe. STANDARD OF REVIEW All that the Federal Rules of Civil Procedure require of a complaint is that it contain “‘a short and plain statement of the claim showing that the pleader is entitled to relief,’ in order to ‘give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.’” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)); accord Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per curiam). Although “detailed factual allegations” are not necessary to withstand a Rule 12(b)(6) motion to dismiss, to provide the “grounds” of “entitle[ment] to relief,” a plaintiff must furnish “more than labels and conclusions” or “a formulaic recitation of the elements of a cause of action.” Twombly, 550 U.S. at 555-56; see also Papasan v. Allain, 478 U.S. 265, 286 (1986). “To survive a 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.’” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 570); accord Atherton v. District of Columbia Office of the Mayor, 567 F.3d 672, 681 (D.C. Cir. 2009). A complaint is plausible on its face “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable 4 Ndondji attached a copy of his EEOC Intake Questionnaire, dated February 27, 2007. Ndondji’s amended complaint demonstrates that he views the submission of his EEOC Intake Questionnaire as the date when he first filed a complaint with the EEOC. See Plaintiff’s EEOC Intake Questionnaire, Pl.’s Response, Exh. 1. The Court considers this motion under Fed. R. Civ. P. 12(b)(6) rather than Fed. R. Civ. P. 56. As a result, the Court will not consider documents beyond Ndondji’s formal DCOHR/EEOC charge dated June 4, 2007 and will exclude the EEOC Intake Questionnaire in evaluating InterPark’s motion to dismiss. Even if the Court were to consider the EEOC Intake Questionnaire, it only reiterates Ndondji’s allegations in his DCOHR/EEOC charge and would not change the Court’s analysis of this motion. -5- for the misconduct alleged.” Iqbal, 129 S. Ct. at 1949. This amounts to a “two-pronged approach” under which a court first identifies the factual allegations entitled to an assumption of truth and then determines “whether they plausibly give rise to an entitlement to relief.” Id. at 1950-51. The notice pleading rules are not meant to impose a great burden on a plaintiff. Dura Pharm., Inc. v. Broudo, 544 U.S. 336, 347 (2005); see also Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512-13 (2002). When the sufficiency of a complaint is challenged by a motion to dismiss under Rule 12(b)(6), the plaintiff’s factual allegations must be presumed true and should be liberally construed in his or her favor. Leatherman v. Tarrant County Narcotics & Coordination Unit, 507 U.S. 163, 164 (1993); Phillips v. Bureau of Prisons, 591 F.2d 966, 968 (D.C. Cir. 1979); see also Erickson, 551 U.S. at 94 (citing Twombly, 550 U.S. at 555-56). The plaintiff must be given every favorable inference that may be drawn from the allegations of fact. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C. Cir. 2000). However, “the court need not accept inferences drawn by plaintiffs if such inferences are unsupported by the facts set out in the complaint.” Kowal v. MCI Commc'ns Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994). Nor does the court accept “a legal conclusion couched as a factual allegation,” or “naked assertions [of unlawful misconduct] devoid of further factual enhancement.” Iqbal, 129 S. Ct. at 1949-50 (internal quotation marks omitted); see also Aktieselskabet AF 21. November 21 v. Fame Jeans Inc., 525 F.3d 8, 17 n.4 (D.C. Cir. 2008) (explaining that the court has “never accepted legal conclusions cast in the form of factual allegations”). -6- DISCUSSION In considering a motion to dismiss, “a court is limited to considering facts alleged in the complaint, any documents attached to or incorporated by reference in the complaint, matters of which the court may take judicial notice, and matters of public record.” Felder v. Johanns, 595 F. Supp. 2d 46, 58-59 (D.D.C. 2009) (citing EEOC v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 624 (D.C. Cir. 1997)). A court may consider an EEOC complaint and Notice of Charge without converting a motion to dismiss into a motion for summary judgment because such records are “public document[s] of which a court may take judicial notice.” Ahuja v. Detica Inc., No. 09-2246, 2010 WL 3833956, at 4 (D.D.C. September 30, 2010) (citing Wiley v. NEBF Invs., No. 09-CV-223, 2010 WL 114953, at 1 n.1 (D.D.C. January 12, 2010)); see also Williams v. Chu, 641 F. Supp. 2d 31, 35 (D.D.C. 2009) (finding that the court could take judicial notice of EEOC decision denying plaintiff’s request for reconsideration of her discrimination complaints). The Court may therefore consider Ndondji’s Charge of Discrimination that was filed with the DCOHR and cross-filed with the EEOC in evaluating this motion. InterPark now moves to dismiss most of Ndondji’s claims in his amended complaint, except his discrimination claims under Title VII and DCHRA based on his termination. InterPark argues that all of Ndondji’s section 1981 claims should be dismissed because his claims are not based on racial discrimination and that his other Title VII and DCHRA discrimination and retaliation claims should be dismissed because he failed to exhaust his administrative remedies, those claims are barred by the statute of limitations, and Ndondji failed to establish a prima facie case of discrimination. The Court will address each of these arguments in turn. -7- I. Section 1981 Claims A. Failure to State a Claim InterPark moves to dismiss all of Ndondji’s section 1981 claims because he only alleges national origin discrimination and section 1981 provides protection against racial discrimination only. Mem. of Points and Auth. in Supp. of Def. Interpark Inc.’s Mot. to Partially Dismiss Pl.’s Am. Compl. (“Def.’s Mem.”) at 5-8; Def. InterPark Inc.’s Reply to Pl.’s Opp’n to Def.’s Mot. to Partially Dismiss Pl.’s Am. Compl. (“Def.’s Reply”) at 2-4. InterPark argues that the only basis for discrimination that Ndondji identified in his DCOHR/EEOC charge and his amended complaint was national origin. Def.’s Mem. at 5; Def.’s Reply at 3, n.2. Ndondji responds that he sufficiently alleged that he was discriminated against because of his race, adding that discrimination based on ancestry and ethnic characteristics can also be the basis for a section 1981 claim. Pl.’s Response and Opp.’n to Def.’s Mot. to Partially Dismiss Am. Compl. (“Pl.’s Response”) at 3-4. The Supreme Court recognized in St. Francis College v. Al-Khazraji that section 1981 prohibits racial discrimination and protects classes of persons from “intentional discrimination solely because of [] ancestry or ethnic characteristics.” 481 U.S. 604, 613 (1987). Section 1981 does not prohibit national origin discrimination per se, and a plaintiff must demonstrate that the discrimination is based on “ancestry or ethnic characteristics,” not on his country of origin, in order to prevail in a section 1981 suit. See Amiri v. Hilton Washington Hotel, 360 F. Supp. 2d 38, 42-43 (D.D.C. 2003) (dismissing section 1981 claim when plaintiff did not base his complaint on racial or ethnic characteristics but rather based it solely on the fact that he was from Afghanistan); Kidane v. Northwest Airlines, Inc., 41 F. Supp. 2d 12, 12 (D.D.C. 1999) -8- (finding that discrimination claims based on plaintiff’s national origin, Ethiopia, were not cognizable under section 1981); Wesley v. Howard Univ., 3 F. Supp. 2d 1, 3 (D.D.C. 1998) (national origin discrimination claims can be raised under section 1981 only when based on “racial or ethnic characteristics associated with the national origin in question”). Even the most liberal reading of Ndondji’s allegations, with all reasonable inferences drawn in his favor, confirms that he is alleging discrimination based on national origin, not race. Ndondji’s factual allegations are devoted to discriminatory acts based on his national origin. He complains that individuals who were “not foreign nationals” did not receive the same treatment as “foreign nationals”; that complaints by “foreign nationals” were ignored by management; that InterPark supervisors made statements that “illustrated their bias against foreign nationals”; that he was terminated because of his “foreign nationality”; and that a “non-foreign national (‘American’)” took his position. Am. Compl. ¶¶ 17, 19, 20, 38, 59-60. Nearly all of Ndondji’s claims allege that he was discriminated against based on his national origin, Angolan, and the fact that he was a “foreign national,” not based on his race. See Hyman v. First Union Corp., 980 F. Supp. 36, 52 (D.D.C. 1997) (dismissing section 1981 discrimination claims when the “very language” of plaintiff’s complaint demonstrates that her claims were based on national origin). Moreover, Ndondji’s DCOHR/EEOC charge reinforces the fact that he believed that he was discriminated against solely because of his national origin and not his race. Ndondji checked off the “national origin” box as the basis for his discrimination claims, even though a “race” box was available. Ndondji further elaborated in writing that he was replaced by a “non- Angolan individual,” then stated “[he] was discriminated against upon [his] national origin, -9- Angolan.” See DCOHR/EEOC charge; Def.’s Mem, Exh. 1. His complaint that he was replaced by a “non-Angolan” shows that he perceived being “Angolan” as referring to his national origin and not his race. In fact, Ndondji never mentions his race or refers to his race as the basis for any discrimination claims he raises in his DCOHR/EEOC charge. The Court will not recognize Ndondji’s attempt to blur race and national origin in order to make out a section 1981 claim. Race and national origin are “ideologically distinct categories.” Nyunt v. Tomlinson, 543 F. Supp. 2d 25, 35 (D.D.C. 2008); see also Espinoza v. Farah Mfg.Co., 414 U.S. 86, 88 (1973) (defining national origin as “the country where a person was born, or more broadly, the country from which his or her ancestors came”). Ndondji contends that he is a “Black Angolan,” which he argues should be recognized as a protected group under section 1981, and that there are “very distinct ethnic characteristics of Blank[sic] individuals who hail from Angola.” Pl.’s Response at 3. Ndondji, however, never identifies himself as “Black Angolan” in his amended complaint or offers any factual allegations that he was discriminated against because he is a member of this class. He also offers no evidence or arguments as to why identifying oneself as “Angolan” should be considered a “very distinct” ancestral or ethnic characteristic rather than a person’s place of birth or origin. Ndondji also alleges that “individuals of African descent” experienced “ongoing discrimination,” Am. Compl. ¶ 17, but he never alleges that he was discriminated against because of his ancestry or avers any factual allegations that create a reasonable inference of such a claim. Such general, conclusory allegations that Ndondji was a victim of racial discrimination are simply not enough to bring a section 1981 action, particularly when the clear thrust of his allegations is based on national origin discrimination. In short, bare assertions cannot transform Ndondji’s national origin -10- discrimination claims into racial discrimination claims eligible for section 1981 relief. See Nyunt, 543 F. Supp. 2d at 34 (rejecting plaintiff’s argument that his national origin discrimination claims based on his Burmese national origin can be viewed “as like or reasonably related” to race and can be the basis for a racial discrimination claim); Kun v. Finnegan, 949 F. Supp. 13, 16 (D.D.C. 1996) (finding that it would be improper for the court to re-cast plaintiff’s national origin claim as a race discrimination claim); Sisay v. Greyhound Lines, Inc., 34 F. Supp. 2d 59, 64 (D.D.C. 1998) (finding plaintiff’s national origin discrimination claim could not reasonably be expected to grow out of his properly exhausted racial discrimination claim and also noting that allegations of race discrimination may “be wholly unrelated to a claimant’s country of origin”). Ndondji’s occasional reference to his race in his amended complaint is also insufficient to make out a section 1981 action. Am. Compl. Id. ¶ 32a. A plaintiff “cannot merely invoke his race in the course of a claim’s narrative and automatically be entitled to pursue [section 1981] relief. Rather, plaintiff must allege some facts that demonstrate that his race was the reason for [a] defendant’s actions.” Middlebrooks v. Godwin Corp., 722 F. Supp. 2d 82, 88 (D.D.C. 2010) (quoting Bray v. RHT, Inc., 748 F. Supp. 3, 5 (D.D.C. 1990)). Here, Ndondji states that he is black and makes the conclusory allegation that he was discriminated against on the basis of his “national origin/race,” but he fails sufficiently to allege facts to support that claim. He claims that he was placed in the “worst” locations because of his “perceived race,” Am. Compl. ¶ 33, and discriminated against because of race in the “conditions of his employment,” id. ¶ 40A. More specifically, he claims that workers who were “not Black” were allowed to have parking attendants when he did not and “have a say in the workers assigned to them.” Id. ¶ 32A. He also -11- alleges that InterPark discriminated against him on the basis of “race/national origin” when he was falsely accused of stealing, blamed for poor performance, and later terminated. Id. ¶ 40C. Beyond such conclusory statements, however, Ndondji makes no factual allegations demonstrating that his race, ancestry, or ethnic characteristics were the reason for any mistreatment he suffered at InterPark. He never identifies the races of the InterPark employees who allegedly discriminated against him or, more importantly, the races of other similarly situated employees who were allegedly treated more favorably than he was. Ndondji’s claims at their core are based on national origin, and mentioning race, without factual allegations demonstrating that any discrimination was racially-motivated, will not transform those claims into section 1981 claims based on racial discrimination. See Mesumbe v. Howard Univ., 706 F. Supp. 2d 86, 92 (D.D.C. 2010) (dismissing section 1981 claim when plaintiff’s complaint only makes a conclusory allegation of racial discrimination but does not allege “disparate treatment was racially motivated” or the “race, ethnicity, or national origin of those who allegedly received preferential treatment”); Alexander v. Wash. Gas Light Co., 481 F. Supp. 2d 16, 31 (D.D.C. 2006) (dismissing section 1981 claims when plaintiff only stated that he is African-American but failed to “[plead] any facts or [make] any suggestion of racially discriminatory motive”); Kalantar v. Lufthansa German Airlines, 402 F. Supp. 2d 130, 138 (D.D.C. 2005) (dismissing section 1981 claim when plaintiff did not offer any evidence that he was singled out on the basis of “racial or ethnic characteristics” as “opposed to his citizenship”). Where the question is whether vague allegations of race discrimination are sufficient when no other basis for discrimination is alleged, courts may be more lenient in allowing a section 1981 claim to survive. See, e.g., Gray v. Universal Serv. Admin. Co., 581 F. Supp. 2d 47, 55 (D.D.C. 2008) -12- (plaintiff sufficiently pled section 1981 claim based on race and ancestry discrimination to survive motion to dismiss). But when a plaintiff has unambiguously pled national origin as a distinct basis for discrimination, and the only question is whether the plaintiff has also pled racial discrimination, courts should not strain to find that passing references to race are sufficient to state a section 1981 claim. Here, Ndondji’s claims rely on national origin discrimination, a distinct and different type of discrimination than racial discrimination. The few references to race do not change the fact that Ndondji’s claims are fundamentally about discrimination on the basis of national origin. That the focus of Ndondji’s claims is national origin rather than race is even clearer for his retaliation claims. Ndondji’s retaliation claims stem from a meeting where he and others allegedly complained that they were written up when “others that were not foreign nationals did not receive the same treatment,” Am. Compl. ¶ 19, and “[t]he foreign national employees . . . complained” that Silver-Ward did not respond to their complaints,” id. ¶ 20. He does not allege that he was retaliated against for making a complaint of discrimination based on his race. Accordingly, the Court will dismiss all of Ndondji’s claims under section 1981. B. Statute of Limitations Alternatively, InterPark argues that Ndondji’s section 1981 claims should be dismissed because most of those claims are time-barred. Def.’s Mem. at 8; Def.’s Reply at 4-5. Section 1981 claims must be brought within four years after the cause of the action accrues. Jones v. R.R. Donnelley & Sons Co., 541 U.S. 369, 383-84 (2004). Ndondji filed his complaint on December 30, 2009. Thus, any claims based on events arising prior to December 30, 2005 – four years before he filed the complaint – are time-barred. InterPark argues that many of the acts -13- underlying Ndondji’s claims occurred prior to that date. Def.’s Mem. at 8; Def.’s Reply at 4-5. Ndondji responds that InterPark is mistaken as to which events alleged in his complaint are intended to serve as causes of action; he maintains that all of his claims actually fall within the limitations period. Pl.’s Response at 4-5. As discussed above, Ndondji’s section 1981 claims are dismissed for his failure to state a claim, and the Court need not further explore whether any of his claims also are subject to dismissal on statute of limitations grounds. II. Title VII Claims A. Exhaustion of Administrative Remedies InterPark moves to dismiss all of Ndondji’s Title VII discrimination and retaliation claims, except for his discrimination claim based on his termination, for failure to exhaust administrative remedies. Under Title VII, a plaintiff must timely exhaust his administrative remedies before bringing an action in federal court. Payne v. Salazar, 619 F.3d 56, 65 (D.C. Cir. 2010). To be timely, a claimant first must file an administrative charge alleging that the employer has engaged in an unlawful employment practice within a specified period (either 180 or 300 days) after the practice has occurred. Ledbetter v. Goodyear Tire & Rubber Co., Inc., 550 U.S. 618, 623-24 (2007). Only those claims that are contained in the administrative complaint or that are “like or reasonably related” to the allegations of the administrative complaint can be raised in a Title VII lawsuit. Park v. Howard Univ., 71 F.3d 904, 907 (D.C. Cir. 1995); see also Bailey v. Verizon Comm., Inc., 544 F. Supp. 2d 33, 37-38 (D.D.C. 2009) (noting that “[i]f a plaintiff’s EEOC charge makes a class of allegation altogether different from that which she later alleges when seeking relief in federal district court, she will have failed to exhaust administrative remedies”). Such claims “must arise from ‘the administrative investigation that can reasonably -14- be expected to follow the charge of discrimination.’” Park, 71 F.3d at 907 (quoting Chisholm v. U.S. Postal Serv., 665 F.2d 482, 491 (4th Cir. 1981)). The exhaustion requirement provides the EEOC the opportunity to investigate and “serves the important purpose of giving the charged party notice of the claim and ‘narrow[ing] the issue for prompt adjudication and decision.’” Id. (quoting Laffey v. Northwest Airlines, Inc., 567 F.2d 429, 472 n.325 (D.C. Cir. 1976)). The defendant bears the burden of proving by a preponderance of the evidence that the plaintiff has failed to exhaust his administrative remedies. Bowden v. United States, 106 F.3d 433, 437 (D.C. Cir. 1997); Brown v. Marsh, 777 F.2d 8, 14 (D.C. Cir. 1985). “Meager, conclusory allegations” that plaintiff has not exhausted his administrative remedies will not be sufficient. Hudson v. Children’s Nat’l Medical Ctr., 645 F. Supp. 2d 1, 5 n.4 (D.D.C. 2009) (quoting Brown, 777 F.2d at 12). Requiring claimants properly to raise claims before the EEOC should not be construed to place a “heavy technical burden” on individuals, but “it is also true that ‘the requirement of some specificity in a charge is not a mere technicality.’” Park, 71 F.3d at 907 (citing Ostrapowicz v. Johnson Bronze Co., 541 F.2d 394, 398 (3d Cir. 1976)). A claimant is not necessarily limited to the boxes selected in the administrative complaint as the basis for the claim if his written explanation can provide a basis for identifying the nature of his claims. Robinson-Reeder v. Am. Council Educ., 532 F. Supp. 2d 6, 13 (D.D.C. 2008). At the same time, “[a] court cannot allow liberal interpretation of an administrative charge to permit a litigant to bypass the Title VII administrative process.” Id. Dismissal is required when a plaintiff fails to exhaust his administrative remedies with respect to particular claims. Rann v. Chao, 346 F.3d 192, 194-95 (D.C. Cir. 2003) (affirming dismissal of plaintiff’s age discrimination claims for failure to -15- exhaust administrative remedies); Gillet v. King, 931 F. Supp. 9, 12-13 (D.D.C. 1996) (dismissing plaintiff’s Title VII claims for failure to exhaust administrative remedies). 1. Discrimination Based on National Origin InterPark contends that the majority of Ndondji’s discrimination claims under Title VII should be dismissed for failure to exhaust administrative remedies. Def.’s Mot. at 9-10; Def.’s Reply at 6-8. According to InterPark, Ndondji has only alleged one proper claim – that he was terminated because of his national origin. Def.’s Mem. at 2; Def.’s Reply at 11. Ndondji’s “reassignment/transfer allegation” and all remaining discrimination claims, InterPark argues, should be dismissed. Id. In response, Ndondji argues that all of his discrimination claims are “like or reasonably related to the allegations” raised before the EEOC, and a reasonable EEOC investigation would have led to an investigation of all of his claims. Pl.’s Response at 5-6. The Court finds that Ndondji properly exhausted his administration remedies for his discrimination claims based on national origin relating to (1) his disciplinary write-up and (2) his termination. His DCOHR/EEOC charge states: I. On 7/28/88, I was hired by Respondent to work as a Lobby Attendant. I was unjustly issued a disciplinary writeup regarding the disappearance of $209.00 from a company facility. Finally, on 12/12/06, while I was employed by a Respondent as a Facility Manager, I was unjustly discharged from employment. By contrast, I was replaced by a non-Angolan individual. II. I believe that I was discriminated against based upon my national origin, Angolan, in violation of Title VII of the Civil Rights Act of 1964, as amended. Def.’s Mem., Exh. 1. Ndondji also checked the “national origin” box on the DCOHR/EEOC form. The DCOHR and EEOC therefore had timely and sufficient notice of his national origin discrimination claims based on his disciplinary writeup and his termination. -16- However, Ndondji failed to exhaust his administrative remedies for his remaining discrimination claims.5 Ndondji now alleges a host of negative working conditions he allegedly experienced, including transfers to difficult locations, an increased workload, management reprimands, spying by a co-worker, and placement on PIP. Am. Compl. ¶¶ 32-40. But Ndondji does not reference his working conditions or offer any factual allegations to support these claims in his DCOHR/EEOC charge. Such claims do not involve the same factual circumstances or the same types of discriminatory conduct as, and hence are not “like or reasonably related” to, the only two acts raised in his DCOHR/EEOC charge: receiving a disciplinary write-up and being terminated. See Chacko v. Patuxent Inst., 429 F.3d 505, 506 (4th Cir. 2005) (finding plaintiff failed to exhaust administrative remedies when EEOC charge referenced “different time frames, actors, and discriminatory conduct than the central factual allegations”). Ndondji specified two claims in his DCOHR/EECO charge, a particular disciplinary write-up in 2006 and his December 2006 discharge. Those administrative claims do not capture the mix of working condition complaints that he now also pursues. A reasonable investigation of Ndondji’s two specific complaints would not be expected to reveal his claims of negative working conditions that started as far back as 2004. He should not be allowed to bypass the Title VII exhaustion requirement and now litigate claims that he could have but never raised before 5 Some district courts applying the Supreme Court’s decision in National R.R Passenger Corp. v. Morgan, 536 U.S. 101 (2002), have held that a plaintiff must exhaust his administrative remedies with respect to each discrete discriminatory and retaliatory act alleged. See, e.g., Taylor v. Mabus, 685 F. Supp. 2d 94, 99 (D.D.C. 2010); Romero-Ostolaza v. Ridge, 370 F. Supp. 2d 139, 148-50 (D.D.C. 2005); Coleman v. Adebayo v. Leavitt, 326 F. Supp. 2d 132, 137 (D.D.C. 2004). Cf. Thomas v. Vilsack, 718 F. Supp. 2d 106, 121 (D.D.C. 2010); Jones v. Bernanke, 685 F. Supp. 2d 31, 37 (D.D.C. 2010); Lewis v. Dist. of Columbia, 535 F. Supp. 2d 1, 7 (D.D.C. 2008). The D.C. Circuit has not weighed in on whether to adopt this interpretation of Morgan for the exhaustion of remedies requirement. Payne, 619 F.3d at 65 (“We need not decide whether Morgan did in fact overtake [the] line of cases [permitting the litigation of unfiled claims that were ‘like or reasonably related to claims’ filed with the agency].”). This Court need not resolve the question here because Ndondji’s remaining discrimination claims do not satisfy even the more permissive “like or reasonably related to” standard. -17- the EEOC or the DCOHR. To hold otherwise would undermine the purpose of the Title VII exhaustion requirement – to provide sufficient notice to the agency and charged party of the claims. Park, 71 F.3d at 907; Nyunt, 543 F. Supp. 2d at 35. Accordingly, the Court will dismiss Ndondji’s national origin discrimination claims under Title VII, other than those based on his disciplinary write-up and termination, for failure to exhaust his administration remedies. 2. Retaliation The Court also agrees with InterPark that Ndondji failed to exhaust his administrative remedies for his retaliation claims under Title VII. Ndondji is not required to allege facts sufficient to make out a prima facie case of retaliation in his DCOHR/EEOC charge or even in his complaint, see Ellis v. Georgetown Univ. Hosp., 631 F. Supp. 2d 71, 76 (D.D.C. 2009), but at a minimum he must have raised his pre-charge retaliation allegations with the EEOC to exhaust his administrative remedies, see Payne, 619 F.3d at 65 (affirming dismissal of retaliation claim when plaintiff failed to exhaust her administrative remedies on that particular retaliation claim); Maryland v. Sodexho, 474 F. Supp. 2d 160, 162 (D.D.C. 2007) (noting that an employee “must . . . alert the EEOC and the charged employer with the nature of the alleged wrongdoing in the EEOC charge”). Retaliation claims that occurred prior to the filing of a claim must be administratively exhausted. See, e.g., Brown v. Dist. of Columbia, 251 F. Supp. 2d 152, 162 (D.D.C. 2003) (dismissing Title VII retaliation claims for failure to exhaust administrative remedies when plaintiff failed to raise retaliation allegations in EEOC complaint); Pyne v. Dist. of Columbia, 298 F. Supp. 2d 7, 12 (D.D.C. 2002) (finding that to exhaust administrative remedies and seek relief, it is a “prerequisite” to bring a retaliation charge before the EEOC if the retaliation occurred prior to the filing of the EEOC charge); Hunt v. Dist. of Columbia Dep’t -18- of Corrections, 41 F. Supp. 2d 31, 37 (D.D.C. 1999) (finding that plaintiff failed to exhaust administrative remedies when alleging a retaliation claim that occurred prior to filing and was different than that raised in EEOC charge). Here, Ndondji failed to include any factual allegations in his DCOHR/EEOC charge raising a retaliation claim. Although he does not organize his claims into specific counts, the Court identifies four potential retaliation claims in his amended complaint. As a result of his complaints to management sometime in 2006, Ndondji alleges that InterPark retaliated against him by (1) assigning a co-worker to “spy” on him; (2) issuing a disciplinary warning; (3) placing him on a Performance Improvement Plan (“PIP”), and (4) terminating him. Am. Compl. ¶¶ 23; 26; 47-49; 59-60. Each of Ndondji’s alleged retaliation claims occurred prior to his filing of the administrative charge, but he neither checked the “Retaliation” box on the DCOHR/EEOC charge, nor offered factual allegations in the charge to support a retaliation claim. His charge thus lacks any facts alleging that InterPark acted in retaliation or any reference to complaints he allegedly made to InterPark management or human resources. Ndondji was not necessarily limited to the boxes he checked on the DCOHR/EEOC form to indicate the basis for his Title VII claim, see Robinson-Reeder, 532 F. Supp. 2d at 13, but here, he never expressed or described any belief that InterPark retaliated against him, see Maryland, 474 F. Supp. at 162 (finding that plaintiff “need only describe [the nature of the charge] in the text of the [EEOC] charge form” to exhaust his administrative remedies as to that charge). In fact, Ndondji’s written explanation on the DCOHR/EEOC charge only discussed his belief that he was “discriminated against based upon [his] national origin, Angolan.” Def.’s Mem., Exh. 1. Ndondji never gave any indication whatsoever to the DCOHR or the EEOC that InterPark had engaged in retaliatory behavior. -19- Moreover, raising discrimination claims before the EEOC is not sufficient to warrant adding retaliation claims later in a Title VII suit. Discrimination and retaliation claims are considered distinct types of claims that must be raised independently if the retaliation occurred prior to the filing of the administrative charge. See Ponce v. Billington, 652 F. Supp. 2d 71, 73- 74 (D.D.C. 2009) (finding plaintiff failed to exhaust administrative remedies for retaliation when he did not allege retaliation in his EEOC complaint and retaliation was not “like or reasonably related to” his other discrimination claims); Miller v. Rosenker, 578 F. Supp. 2d 107, 112 (D.D.C. 2008) (dismissing age or gender discrimination claims when he only raised retaliation claims in his administrative complaint); Maryland, 474 F. Supp. 2d at 162 (dismissing earlier discrimination claims when plaintiff only raised retaliation claims, failed to check the discrimination box on the EEOC charge or give any indication in the EEOC charge that the claims were based on discrimination). Therefore, because of the absence of any facts or allegations in the DCOHR/EEOC charge indicating that his claims were based on retaliation, Ndondji has failed to exhaust his administrative remedies for his retaliation claims under Title VII. Accordingly, Ndondji’s retaliation claims under Title VII will be dismissed. See Marcelus v. Corrections Corp. of America, 540 F. Supp. 2d 231, 236 (D.D.C. 2008) (dismissing retaliation claims when plaintiff did not raise retaliation claim in EEOC charge and when nothing in EEOC charge referenced retaliation). B. Statute of Limitations InterPark moves to dismiss Ndondji’s Title VII discrimination claims based on events that occurred prior to August 9, 2006, as time-barred. Def.’s Mem. at 11; Def.’s Reply at 8; see 42 U.S.C. § 2000e-5(e)(1). Under Title VII, a plaintiff must file a charge with the EEOC within -20- 300 days of the date of the alleged discriminatory act. Nat’l R.R. Passenger Corp. v. Morgan, 536 U.S. 101, 109-10 (2002); see 42 U.S.C. §20000e-5(e)(l) (2008). InterPark also notes that Ndondji did not challenge its statute of limitations argument. Def.’s Mem. at 8; Def.’s Reply at 8. Ndondji contests InterPark’s statute of limitations arguments regarding his section 1981 claims, but he never addresses Title VII’s statute of limitations specifically. Pl.’s Response at 8.6 Dismissal based on this affirmative defense is appropriate when the facts giving rise to the statute of limitations defense are clear from the face of the complaint. Smith-Haynie v. Dist. of Columbia, 155 F.3d 575, 578 (D.C. Cir. 1998). The Court may dismiss a claim on statute of limitations grounds if “no reasonable person could disagree on the date” on which the cause of action accrued. Smith v. Brown & Williamson Tobacco Corp., 3 F. Supp. 2d 1473, 1475 (D.D.C. 1998) (citing Kuwait Airways Corp. v. Am. Sec. Bank, N.A., 890 F.2d 456, 463 n.11 (D.C. Cir. 1989)). “[B]ecause statute of limitations issues often depend on contested questions of fact, dismissal is appropriate only if the complaint on its face is conclusively time-barred.” Firestone v. Firestone, 76 F.3d 1205, 1209 (D.C. Cir. 1996). By requesting that the Court dismiss the majority of Ndondji’s claims on Title VII statute of limitation grounds, InterPark appears to characterize those claims as having occurred shortly after his 2004 transfer to a different location. Ndondji’s complaint, however, contains vague allegations without precise dates. As InterPark acknowledges, Ndondji “did not provide specific dates” for some alleged discriminatory acts. See Def.’s Mem. at 13, n. 9. Indeed, it is not clear 6 Arguably, the Court could treat this argument as conceded based on Ndondji’s failure to respond directly to InterPark’s Title VII statute of limitations argument in his opposition. See Hopkins v. W omen’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.”) (citations omitted). -21- as to the exact timing of any of the alleged discriminatory acts, except for his 2004 transfer to a different location and his December 2006 termination. Prior to discovery, the Court is not prepared to take a narrow reading of Ndondji’s complaint and hence declines to dismiss his claims on statute of limitations grounds at this time. InterPark has failed to satisfy its burden to demonstrate that Ndondji’s discrimination claims are “conclusively time-barred” on the face of the complaint. C. Adverse Employment Actions The Court agrees with InterPark that Ndondji’s Title VII discrimination claims, excluding his termination claim, are subject to dismissal for a failure to satisfy one element of a prima facie case. InterPark argues that Ndondji’s discrimination allegations do not constitute discrete adverse employment actions as required to bring a Title VII case, including the following alleged actions: (1) InterPark placed him in the “worst” and “most difficult” locations (Am. Compl. ¶¶33-34); (2) InterPark deprived him of “adequate” and satisfactory attendants (¶¶ 34-35); (3) InterPark forced him to over-park the location and then blamed him for the failure to prevent accidents (¶ 36); (4) InterPark overworked him and blamed him for the poor performance of others (¶ 39); (5) InterPark assigned another employee to spy on him (¶ 40B); and (6) InterPark placed him on a performance improvement plan (“PIP”) (¶ 42). See Def.’s Mem. at 13-14; Def.’s Reply at 9. Ndondji largely avoids responding to InterPark’s arguments, except to emphasize that there is a liberal pleading standard at the motion to dismiss stage. See Pl.’s Response at 6-7. A plaintiff does not need to plead each element of his prima facie case to survive a motion to dismiss, Robinson-Reeder, 532 F. Supp. 2d at 14 (quoting Swierkiewicz v. Sorema -22- N.A., 534 U.S. 506, 515 (2002)), but he “must allege facts that, if true would establish the elements of each claim” in his complaint, id. (citing Rattigan v. Gonzales, 503 F. Supp. 2d 56, 75 (D.D.C. 2007)). Thus, “the Court may explore the plaintiff’s prima facie case at the dismissal stage to determine ‘whether the plaintiff can ever meet his initial burden to establish a prima facie case for Title VII discrimination.’” Rattigan, 503 F. Supp. 2d at 72 (citation omitted). To succeed on a Title VII claim, a plaintiff has the initial burden of establishing a prima facie case of discrimination by showing that “‘(1) she is a member of a protected class; (2) she suffered an adverse employment action; and (3) the unfavorable action gives rise to an inference of discrimination.’” Wiley v. Glassman, 511 F.3d 151, 155 (D.C. Cir. 2007). “An ‘adverse employment action’ is ‘a significant change in employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing significant change in benefits.’” Douglas v. Preston, 559 F.3d 549, 549 (D.C. Cir. 2009); Taylor v. Small, 350 F.3d 1286, 1293 (D.C. Cir. 2003) (quoting Burlington Indus., Inc. v. Ellerth, 524 U.S. 742, 760 (1998)). The employee “must experience[] 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, 306 F.3d 1127, 1131 (D.C. Cir. 2002) (citing Brown v. Brody, 199 F.3d 446, 457 (D.C. Cir. 1999)). “A tangible employment action in most cases inflicts direct economic harm.” Douglas, 559 F.3d at 552 (quoting Burlington, 524 U.S. at 762). “[C]ourts cannot be wheeled into action for every workplace slight, even one that was possibly based on protected conduct.” Taylor v. Fed. Deposit Ins. Corp., 132 F.3d 753, 765 (D.C. Cir. 1997). Here, Ndondji fails to allege any factual circumstances that constitute an adverse -23- employment action as required to bring a Title VII claim.7 Generally, his discrimination claims other than his termination claim reflect employment-related grievances amounting to dissatisfaction with his working conditions. These grievances cannot qualify as adverse employment actions. “Not everything that makes an employee unhappy” is an adverse employment action. Broderick v. Donaldson, 437 F.3d 1226, 1234 (D.C. Cir. 2006) (quoting Russell v. Principi, 257 F.3d 815, 818 (D.C. Cir. 2001)). Only “tangible harm[s],” such as a “change in grade, salary, or other benefits, rise to the level of adverse employment actions.” Robinson-Reeder, 532 F. Supp. 2d at 16. “Minor changes in work-related duties or opportunities” do not constitute adverse employment actions without some tangible harm. Stewart v. Evans, 275 F.3d 1126, 1135 (D.C. Cir. 2002). 1. Transfers/Reassignments to Other Locations8 Ndondji claims that his transfers to the “worst” and “most difficult” locations must constitute adverse employment actions. Am. Compl. ¶ 33-34. If his complaint is liberally construed in his favor, Ndondji’s allegations could suggest that he was transferred to additional locations beyond the one transfer to the 1900 19th Street location in 2004 mentioned in his complaint. But Ndondji has not alleged that any undesirable transfer led to “objectively tangible harm” such as a decrease in salary or benefits or that any transfer affected the “terms, conditions, 7 Ndondji’s amended complaint is vague in its allegations and does not clearly set forth all causes of action. Hence, several of his allegations may have been intended to serve as “background information” rather than distinct claims. For purposes of analyzing the viability of his Title VII discrimination claims, however, the Court will consider all allegations that could potentially represent discrimination claims. 8 Ndondji explains that his allegation of a 2004 transfer to one of the busiest locations (Am. Compl. ¶ 10) is not meant to be treated as a “cause of action.” Pl.’s Response at 4. Rather, he claims that this allegation is meant to be read as a “supporting statement” for other discriminatory events that occurred later. Id. Ndondji, however, explains that his allegation that he was “put in the worst locations” is meant to state a cause of action. Id.; Am. Compl. ¶ 33. -24- or privileges” of his employment. See Martin v. Locke, 659 F. Supp. 2d 140, 148 (D.D.C. 2009) (finding plaintiff failed to show that her job transfer constituted an adverse employment action when she did not allege her pay or grade was reduced). Lateral transfers – those transfers where a person does not suffer a decrease in compensation or benefits or a “demotion in form or substance” – are generally not viewed as adverse employment actions. Stewart, 352 F.3d at 426 (citing Brown, 199 F.3d at 457). A lateral transfer must also involve the “withdrawing [of] an employee’s supervisory duties” or “reassignment with significantly different responsibilities” before it will amount to an adverse employment action. Czekalski v. Peters, 475 F.3d 360, 364 (D.C. Cir. 2007) (citations omitted). Ndondji has not alleged that his transfers led to a reduction in pay or benefits or “demotion in form or substance” when compared to his position at other locations. He may have been transferred to “less desirable” locations, but transfers without more do not constitute adverse employment actions. 2. Heavier Workload None of Ndondji’s allegations relating to his work conditions rises to the level of an adverse employment action, including his claims that he was deprived of a reasonable number of attendants compared to other employees and that he was over-worked. “Scarce resources and increased workloads are familiar complaints in virtually every workplace and every industry, but they do not give rise to a discrimination claim under Title VII.” Rattigan, 503 F. Supp. 2d at 73; see also Mack v. Strauss, 134 F. Supp. 2d 103, 113-14 (D.D.C. 2001) (holding that an allegedly increased workload is insufficient to bring a discrimination claim without “some adverse change in the terms, conditions, or privileges of employment”); Brodetski v. Duffey, 141 F. Supp. 2d 35, 45 (D.D.C. 2001) (finding that plaintiff’s heavier workload compared to his peers was not -25- sufficiently adverse action, that “work inequity” is the “level of personnel decision-making in which courts should not meddle,” and that employees should expect to shoulder an “extra load” on occasion or “step in if there [are] unexpected staff shortages”). Ndondji alleges that he worked during “lunch and times off” when he was placed on a PIP, Am. Compl. ¶ 25, but it is not surprising that Ndondji may have put in extra time and effort while on a PIP. Besides his time on a PIP, he fails to allege any other occasion when he was overworked due to the shortage of qualified parking attendants. See Mayers v. Laborer’s Health & Safety Fund, 478 F.3d 364, 369 (D.C. Cir. 2007) (finding that plaintiff failed to allege “adverse action” when she failed to allege that her workload increased “above and beyond what ordinarily was expected of her”). Ndondji’s claims that management demanded that he over-park the garage also cannot, standing alone, amount to an adverse employment action. “Courts are not in a position to review every task that management assigns to employees.” Brodetski, 141 F. Supp. 2d at 45 (citing Mungin v. Katten Muchin & Zavs, 116 F.3d 1549, 1556 (D.C. Cir. 1997)). Courts should hesitate before engaging in “‘judicial micromanagement of business practices’ by second- guessing employers’ decisions.” Baloch v. Kempthorne, 550 F.3d 1191, 1191 (D.C. Cir. 2008) (citation omitted). Ndondji’s allegations that management “forced” him to over-park the cars and issued orders concerning how to carry out his job responsibilities do not reflect a “significant change in [his] employment status.” Taylor, 350 F.3d at 1293; see also Brantley v. Kempthorne, No. 06-1137, 2008 U.S. Dist. LEXIS 38406, at 14 (D.D.C. May 13, 2008) (“To qualify as an adverse action, the incident must be inherently related to plaintiff’s employment status . . . . Events that merely have an effect on plaintiff’s work environment are legally insufficient.). This Court will not second-guess InterPark’s business decisions as to what constitutes a reasonable -26- number of staff members and their appropriate location assignments. Ndondji’s disagreements with InterPark management about the qualifications of other employees, the reasonable number of employees assigned to a location, and its business practices, such as the proper time to put out a “Full” sign for a parking garage, cannot form the basis of a Title VII lawsuit. 3. Management Reprimands Similarly, management reprimands for failing to prevent parking accidents or blame for the poor performance of Ndondji’s parking attendants are not adverse employment actions. “Formal criticisms or poor performance evaluations” are not necessarily adverse employment actions, and “should not be considered such if they did not ‘affect[] the [employee’s] grade or salary.’” Taylor, 350 F.3d at 1293 (quoting Brody, 199 F.3d at 457); see also Douglas, 559 F.3d at 552 (“[P]erformance evaluations ordinarily [are] not actionable under Title VII.”); Stewart, 275 F.3d at 1135 (noting that “formal criticisms or reprimand without additional disciplinary action” are not adverse employment actions); Broderick, 437 F.3d at 1234 n. 2 (finding that “disciplinary memo” does not constitute adverse action when it did not affect plaintiff’s “grade, salary, duties or responsibilities”); Powell v. Castaneda, 390 F. Supp. 2d 1, 23-24 (D.D.C. 2005) (finding that letter of reprimand for being late to a meeting and lower performance review did not constitute adverse employment actions). Ndondji did not suffer any disciplinary action or decrease in salary, benefits, or significant responsibilities as a result of management’s reprimands; thus, his complaints about management reprimands cannot constitute adverse employment actions. 4. “Spying” and Disciplinary Write-up Ndondji’s allegation that InterPark assigned an employee to “spy” on him also does not -27- entail objectively tangible harm and thus does not constitute an adverse employment action. Closely supervising an employee will not automatically subject an employer to Title VII exposure. See, e.g., Zelaya v. Unicco Service Co., No. 07-02311, 2010 WL 3292364, at 8 (D.D.C. 2010) (finding that assigning an employee to monitor plaintiff temporarily constitutes a “petty slight[]” and “minor annoyance[]” and is not a materially adverse action); Nurriddin v. Bolden, 674 F. Supp. 2d 64, 89 n.20 (D.D.C. 2009) (finding that “spying” by co-workers fails to qualify as adverse employment action because there was no allegation of objectively tangible harm). “Being subject to ‘scrupulous monitoring’ does not constitute an adverse action because ‘it is part of the employer’s job to ensure that employees are safely and properly carrying out their jobs.’” Rattigan, 503 F. Supp. 2d at 56 (quoting Runkle v. Gonzales, 391 F. Supp. 2d 210, 225 (D.D.C. 2005) (citation omitted)); see also Lester v. Natsios, 290 F. Supp. 2d 11, 30 (D.D.C. 2003) (“[B]eing closely supervised or ‘watched’ does not constitute an adverse action that can support a claim under Title VII.”). Here, Ndondji maintains that an InterPark employee (Stevenson) was assigned to spy on him and contends that the very act of “spying” itself constituted a discriminatory act. Am. Compl. ¶¶ 23, 40B. Ndondji, however, has not alleged that the spying led to a “reduction in [his] benefits, hours of work or salary, or that he suffered significantly diminished work responsibilities, all of which would show [he] suffered an adverse employment action.” Nurriddin, 674 F. Supp. 2d at 94. Ndondji also claims that Stevenson falsely accused him of “false practices,” including “falsely accusing him of taking money,” Am. Compl. ¶¶ 23, 40C, and although it is not clear in the amended complaint, it appears that Ndondji is alleging that it is Mr. Stevenson’s false statements that led him to be “unjustly issued a disciplinary write-up” as referenced in Ndondji’s -28- DCOHR/EEOC form. Receiving a disciplinary write-up alone, however, is not sufficient to constitute an adverse employment action. Hunter v. Ark Restaurants Corp., 3 F. Supp. 2d 9, 20 (D.D.C. 1998) (finding that supervisors filing disciplinary write-ups against plaintiff is not an adverse employment action when plaintiff did not allege any facts that he suffered a “demonstrably adverse action” that affected his employment position). Ndondji also contends that his disciplinary-write up resulted in his unfair placement on a PIP, Am. Compl. ¶¶ 23, but PIP placement does not constitute an adverse employment action for the reasons discussed below. 5. Performance Improvement Plan (“PIP”) Finally, Ndondji argues that his placement on a PIP constituted a discriminatory act. Am. Compl. ¶ 42; Pl.’s Response at 8. Placement on a PIP, however, cannot rise to the level of an adverse employment action without allegations of “objectively tangible harm” to the “terms, conditions, or privileges” of employment. See Taylor, 350 F.3d at 1293 (finding that placement on a PIP alone does not constitute an adverse employment action); Kelly v. Mills, 677 F. Supp. 2d 206, 221 (D.D.C. 2010) (same). Here, Ndondji has not alleged that his placement on a PIP affected his grade or salary, or led to a material change of benefits or responsibilities such that it rose to the level of an adverse employment action. See Douglas, 559 F.3d at 552 (noting that “performance evaluations ordinarily are not actionable under Title VII; ‘[t]he result of an evaluation is often speculative, making it difficult to remedy’”)(quoting Russell, 275 F.3d at 818). Ndondji’s argument that his PIP was used to “embarrass” and “harass” him is also not enough. “Public humiliation” or “loss of reputation” is not enough to establish an adverse action. Forkkio, 306 F.3d at 1130-31 (quoting Stewart, 275 F.3d at 1136). The fact that Ndondji -29- allegedly never received PIP evaluations did not adversely affect his employment. Taylor, 350 F.3d at 1293 (finding that delay of plaintiff receiving PIP performance evaluations was not an adverse employment action). Although Ndondji was eventually terminated after his PIP placement, he does not allege any objectively tangible harm as a result of the PIP placement itself. See Kelly, 677 F. Supp. 2d at 221 (dismissing plaintiff’s discrimination claim for the PIP placement that led to plaintiff’s termination). * * * * * In sum, beyond his termination claim, each of Ndondji’s remaining discrimination claims must be dismissed because each does not as a matter of law rise to the level of an adverse employment action as required under Title VII to establish a prima facie case of discrimination. See Rattigan, 503 F. Supp. 2d at 74-75; (citing Runkle, 391 F. Supp. 2d at 222) (dismissing claims when allegations did not “amount to legally cognizable adverse actions and therefore would not enable him to ever establish a prima facie case under Title VII.”). III. D.C. Human Rights Act (“DCHRA”) The DCHRA, like Title VII, prohibits certain discriminatory practices “[b]y an employer,” making it unlawful to “fail or refuse to hire, or to discharge, any individual; or otherwise discriminate against any individual, with respect to his compensation, terms, conditions, or privileges of employment” based upon protected categories including, inter alia, an individual’s “race, color, religion, national origin, [or] sex.” D.C. Code § 2-1402.11(a)(1). In the end, Ndondji’s DCHRA claims fare about the same as his Title VII claims. A. Failure to Exhaust Administrative Remedies InterPark argues that Ndondji has failed to exhaust his administrative remedies for his -30- discrimination and retaliation claims under the DCHRA, and thus that this Court must dismiss all of Ndondji’s DCHRA claims except his termination claim. See Def.’s Mem. at 9-10; Def.’s Reply at 6-7. InterPark, however, is incorrect in arguing that Ndondji is required to satisfy such a requirement under the DCHRA. Generally, only District of Columbia government employees are required to exhaust their administrative remedies prior to filing a lawsuit under the DCHRA. See Bowie v. Gonzales, 433 F. Supp. 2d 24, 33 (D.D.C. 2006); Fowler v. Dist. of Columbia, 122 F. Supp. 2d 37, 40 (D.D.C. 2000) (noting that the DCHRA “generally does not require exhaustion of administration remedies, except for employees of the District of Columbia government”) (citing Hunt, 41 F. Supp. 2d 31, 37 (D.D.C. 1999)); Kennedy v. Dist. of Columbia, 654 A.2d 847, 863 (D.C. 1995) (“[W]e [have] clearly stated that D.C. government employees, unlike non-government employees, are required to exhaust the administrative remedies available to them under the D.C. Human Rights Act.”) (citing Williams v. Dist. of Columbia, 467 A.2d 140, 141 (D.C. 1983)). Nothing in the plain language of the DCHRA suggests that an exhaustion requirement applies to non-District of Columbia government employees, and InterPark has not provided the Court with any authority to support its position. Therefore, the Court finds that all of Ndondji’s DCHRA claims survive this challenge. B. Statute of Limitations InterPark also argues that Ndondji’s discrimination claims are time-barred under the DCHRA and requests that the Court exclude from this case all alleged discriminatory acts that occurred prior to June 4, 2006. See Def.’s Mem. at 10-11; Def.’s Reply at 8. InterPark notes that Ndondji has failed to specifically contest its DCHRA statute of limitations arguments. Id. Under the DCHRA, claims must be filed within one year of the occurrence of the alleged -31- discriminatory act. D.C. Code §§ 2-1403.04, 2-1403.16. As discussed earlier, InterPark has not established that any of Ndondji’s discrimination claims are “conclusively time-barred” except his 2004 transfer to a different location, to the extent that it can be considered as a distinct alleged discriminatory act. Prior to discovery, the Court declines to dismiss any of Ndondji’s claims on statute of limitations grounds at this time. C. Failure to State a Prima Facie Case for Discrimination Lastly, InterPark, adopting the same reasoning directed to Ndondji’s Title VII discrimination claims, argues that Ndondji’s DCHRA discrimination claims, excluding his termination claim, should be dismissed for failure to state a prima facie case of discrimination. Discrimination and retaliation claims brought under the DCHRA are analyzed in the same manner as such claims arising under Title VII. Mungin, 116 F.3d at 1553; see also Ali v. Dist. of Columbia, 697 F. Supp. 2d 88, 93 n.6 (D.D.C. 2010) (“The D.C. Court of Appeals has made clear that federal case law addressing questions arising in Title VII cases is applicable to the resolution of analogous issues raised regarding DCHRA claims.”); Wicks v. Am. Transmission Co. LLC, 701 F. Supp. 2d 38, 43-44 (D.D.C. 2010) (applying the same analysis used in evaluating Title VII discrimination claims to evaluate DCHRA discrimination claims); Howard Univ. v. Green, 652 A.2d 41, 45 & n.3 (D.C. 1994). The Court will accordingly apply Title VII analysis to evaluate Ndondji’s DCHRA claims. For the reasons discussed earlier, then, the Court agrees that Ndondji has failed to allege discriminatory acts that constitute “adverse employment actions.” Therefore, his discrimination claims under the DCHRA, other than his claim based on his termination, will be dismissed for failure to establish a prima facie case of discrimination. InterPark has not challenged Ndondji’s retaliation claims under DCHRA on this basis, and hence -32- they survive. CONCLUSION For the reasons stated above, the Court will grant in part and deny in part InterPark’s motion to partially dismiss Ndondji’s amended complaint. As a result, Ndondji’s case may move forward only with respect to the following claims: (1) discrimination under Title VII and the DCHRA based on his termination and (2) retaliation under the DCHRA. A separate Order accompanies this Memorandum Opinion. /s/ JOHN D. BATES United States District Judge Dated: March 9, 2011 -33-	01-03-2023	04-04-2014
https://www.courtlistener.com/api/rest/v3/opinions/2595916/	628 F. Supp. 769 (1986) The FEDERAL LAND BANK OF ST. LOUIS, a corporation, Plaintiff, v. Allen N. KEISER; Carol A. Keiser; the United States of America, acting Through the Farmers Home Administration, United States Department of Agriculture; the First National Bank of Litchfield, a National Banking Association, Trace Petroleum and Unknown Owners, Defendants. No. 84-3427. United States District Court, C.D. Illinois, Springfield Division. February 14, 1986. 770 John E. Evans, Hillsboro, Ill., J. Patrick Joyce, Springfield, Ill., for plaintiff. Allen N. Keiser, Raymond, Ill., Francis L. Ruppert, Clayton, Mo., for defendants. OPINION AND ORDER MILLS, District Judge: Defendants' arguments for federal jurisdiction are specious. The case is remanded to state court. The matter presently before the Court is a motion by the Federal Land Bank for remand to the Circuit Court for the Fourth Judicial Circuit of Illinois at Hillsboro. The bank brought a mortgage foreclosure suit under Ill.Rev.Stat., Ch. 110, par. 15-101 et seq., in the state circuit court, and the Defendants have removed that case here, claiming that there is original federal question jurisdiction under 28 U.S.C. § 1331, which may be removed to the district court under 28 U.S.C. § 1441(b). No other grounds are alleged to exist for original jurisdiction here, such as diversity. I The nonfederal defendant is trying to "boot strap" his way here by the use of the Plaintiff's federal status. The defendant has no standing to do this. The federal Plaintiff could have chosen the federal forum, which was provided for its protection from local prejudice. They have not chosen to avail themselves of this and since they are bringing the action they may choose the forum by "determining the theory of the action, and so long as fraud is not involved, [they] may defeat removal to the federal courts by avoiding allegations which provide a basis for the assertion of federal jurisdiction." Jones v. General Tire & Rubber Co., 541 F.2d 660, 664 (7th Cir.1976). In general, to remove a case from state court to a United States district court the defendant must establish at least two requisites: that "the action was properly commenced in the state court, and that it could have been originally commenced in federal court." Nuclear Engineering Co. v. Scott, 660 F.2d 241, 248 (7th Cir.1981). "Removal is proper where the real nature of the claim asserted in the complaint is federal, whether or not so characterized by the Plaintiff." Jones v. General Tire & Rubber Co., 541 F.2d 660, 664 (7th Cir. 1976). Furthermore, "A federal law, statute, or question, a right or immunity created by the Constitution or ... law of the United States must be an element, and an essential one, of the Plaintiff's cause of action ... i.e. ..., the federal nature of the claim must be a basic issue in the case." Id. These cases are cited with approval in People of the State of Illinois v. Kerr-McGee Chemical Corp., 677 F.2d 571, 575 (7th Cir.1982), where the court went on to say, "a federal question must appear on the face of the complaint ... [and] a defendant's assertion of an issue of federal law in the pleadings or in the petition for removal does not create a federal question. Phillips Petroleum Co. v. Texaco, Inc., 415 U.S. 125, 127-28 [94 S. Ct. 1002, 1003-04, 39 L. Ed. 2d 209] (1974)." Also, "the removal statute should be construed narrowly and against removal, see Shamrock Oil and Gas Corp. v. Sheets, 313 U.S. 100, 108 [61 S. Ct. 868, 872, 85 L. Ed. 1214] (1941)," Kerr-McGee Chemical Corp., 677 F.2d at 576. 771 II More specificallyand most pertinent to the case at handis the case of The Federal Land Bank of Columbia v. Cotton, 410 F. Supp. 169 (N.D.Ga.1975). This case was initiated by the Federal Land Bank against defendant Cotton in the Georgia state court to foreclose upon a mortgage because the defendant Cotton had defaulted on a promissory note. The defendant had attempted to remove the case to the United States District Court, using the same arguments that are found in the case before the court, but to no avail. Cotton argued that the case arose under the laws of the United States because the plaintiff is a federally chartered corporation formed under the Federal Farm Loan Act, 12 U.S.C. § 2011 et seq. [sic]. The court noted that due to 28 U.S.C. § 1349,[1] "corporations organized under federal law as [a] party," "federally-chartered corporations cannot sue or be sued in federal court merely because they are federally chartered, unless the United States government owns 51% of the capital stock." (Emphasis the court's.) Cotton at 170. The only way this case could be removed is for the Plaintiff to allege a "violation of the regulatory guidelines governing such organizations." Id. The court noted in Cotton (and the same is true here) that "plaintiff is merely seeking to enforce a contract right pursuant to the laws of the State." Id. The Defendant before us, and the one in Cotton, argue that the federal land banks were agencies of the federal government and so removal would be proper under 28 U.S.C. § 1345. That section of the Code states: "Except as otherwise provided by Act of Congress, the district courts shall have original jurisdiction of all civil actions, suits or proceedings commenced by the United States, or by any agency or officer thereof expressly authorized to sue by Act of Congress." However, the term Agency is defined at 28 U.S.C. § 451 and states in part: "The term `agency' includes ... any corporation in which the United States has a proprietory interest, unless the context shows that such term was intended to be used in a more limited sense." The court in Cotton read this section in tandem with § 1349, supra, and found that a federally chartered corporation could not be an "agency" "unless the government has a substantial proprietory interest in the corporation or exercised considerable control over operation and policy of the corporation." Cotton at 171. For the purposes of comparison, the defendant in Cotton and the Defendant here wish to compare the Federal Savings and Loan Insurance Corporation (FSLIC) with the federal land banks because FSLICs have been found to be "agencies" of the federal government and so there is original federal jurisdiction in all cases involving them. The court in Cotton found that federal land banks were "obviously meant to be a private, rather than governmental, corporation which" is merely subject to various federal regulations. 12 U.S.C. § 2001(a), et seq.; Cotton, id. 171. Thus, the court in Cotton held that there was no subject matter jurisdiction and allowed the remand. When we look to 12 U.S.C. § 2011 "Establishment; Title; Branches," [of Federal Land Banks] the first sentence declares in part that "Federal land banks ... shall continue as federally chartered instrumentalities of the United States," (emphasis ours). Further, that the Farm Credit Administration may modify their charters consistent with 12 U.S.C. § 2001 et seq. Specifically, at § 2012 in the preamble, it states that Farm Credit Administration shall supervise the Federal Land Banks, and at § 2012(19), the Federal Land Banks shall, "Perform any function delegated to it by the Farm Credit Administration." The Farm Credit Administration is expressly 772 made "an independent agency of the executive branch of the Government," 12 U.S.C. § 2241. It appears, and Defendant relies on the fact, that the Federal Land Bank is an instrumentality of an agency of the U.S. Government. But this has no bearing on jurisdiction. Also, 31 U.S.C. § 9101(2)(F) defines federal land banks as "mixed ownership" corporations, whereas at § 9101(3)(E) FSLICs are listed as a "wholly owned government corporation." Thus, the dichotomy between the two is strengthened, contrary to what Defendant argues. Moreover, this section says nothing about original federal jurisdiction. There are also several differences in wording of the two statutes that form these two corporations (federal land banks and FSLICs). The statute that forms federal land banks, 12 U.S.C. § 1021, does not rule out the applicability of other statutes that may effect its status as a federal instrumentality, such as § 1349. Furthermore, the statute that pertains to the bank's ability to be sued, § 2033(4), only states that it can "sue or be sued," but spells out no specific designation where these suits can be brought. The statute that governs the "jurisdiction and enforcement" of FSLICs, 12 U.S.C. § 1730(k)(1) is very explicit, and it limits and mandates where jurisdiction will be for FSLICs. Section 1730(k)(1)(A) begins, "Notwithstanding any provision of law the corporation shall be deemed to be an agency of the United States within the meaning of section 451 of Title 28 ..." Therefore, § 1349, supra, would not apply to take FSLICs out of the district court. Furthermore, section 1730(k)(1)(B) states that, "any civil action, suit or proceeding to which the corporation shall be party shall be deemed to arise under the laws of the United States and the United States district courts shall have original jurisdiction thereof ..." This section and section 1730(k)(2) continue on in detail to enumerate all of the situations in which there is original federal jurisdiction. (One such clause allows jurisdiction without regard to the amount in controversy.) Thus, there are palatable reasons why any analogy between Federal Land Banks and FSLICs and their amenability to district court jurisdiction is mistaken. FSLICs have expressly been given exclusive jurisdiction whereas the Federal Land Banks are only allowed "to sue or be sued," subject to the normal rules that govern federal jurisdiction. Furthermore, the land bank alleges that its capital stock is not held by the federal government. Thus, section 1349 should make the bank a private corporation. This allegation must be true as the statute that controls the bank's ability to issue stock, 12 U.S.C. § 2013,[2] mandates who may hold that stock. Voting stock is held by federal land bank associates (made up of borrowers from federal land banks, 12 U.S.C. §§ 2031, 2034),[3] agents of borrowers and 773 borrowers. Nonvoting stock may be issued to the governor of the Farm Credit Administration. Dividends can only be paid to voting stockholders. Thus, if the bank is abiding by the statute only the associations of private citizen borrowers hold the stock, and section 28 U.S.C. § 1349 would make the land bank subject to the regular rules governing the jurisdiction of civil cases in the federal courts. III But, even if we assumearguendo that Cotton is wrong, there is still no basis for removal because the subject matter of this cause before us is the validity of the mortgage contract as construed by state law. The district court, due to 28 U.S.C. § 1349, does not have original subject matter jurisdiction over such a suit, nor is there any other ground (such as diversity) that would establish jurisdiction. Section 28 U.S.C. § 1441(a) therefore is inapplicable. Section 1441(b) of 28 U.S.C. allows removal if the district court has original jurisdiction by virtue of the claim or right "arising under" the constitution, treaties or laws of the United States. As stated above, this claim arises under Illinois law, not federal, and the bank is making no constitutional claims. Furthermore, the last sentence of § 1441(b) would preclude the Defendant's removal entirely: "Any other such action shall be removable only if none of the parties in interest and properly joined and served as defendants is a citizen of the state in which such action is brought." (Emphasis ours.) Defendant Keiser and all the other Defendants but oneTrace Petroleum of Hazelwood, Missouri are residents of Illinois. Since there is no claim upon which the original jurisdiction of this Court can rest, the case must be remanded to the Illinois circuit court. IV The Defendant raises other federal issues which are defenses. A fifth amendment due process denial is raised and there is an allegation that the Plaintiff has violated the RICO Act, 18 U.S.C. § 1964(c), for which there seems to be absolutely no basis. These defenses are raised in the hope that they may raise a federal question by which to base removal. There is no question that this is erroneous. As early as 1894 it was established in Tennessee v. Union and Planter's Bank, et al., 152 U.S. 454, 14 S. Ct. 654, 38 L. Ed. 511 (1894), "that the right of the plaintiff to sue cannot depend on the defense which the defendant may choose to set up. His right to sue is anterior to that defense, and must depend on the state of things when the action was brought." Id. at 459, 14 S. Ct. at 655. Furthermore, a cause cannot be removed from a state court simply because, in the progress of the litigation, it may become necessary to give a construction to the Constitution or laws of the United States ..., whether a party claims a right under the Constitution ... is to be ascertained by the legal construction of its own allegations, and not by the effect attributed to those allegations by the adverse party. Id. at 460, 14 S. Ct. at 656. In Franchise Tax Board of the State of California v. Construction Laborers' Vacation Trust for Southern California, 463 U.S. 1, 103 S. Ct. 2841, 2847, 77 L. Ed. 2d 420 (1983), the Court said that this rule, which has become known as the "well pleaded complaint" rule, is still in full force and effect, and further opined that "for better or worse, under the present statutory scheme as it has existed since 1887, a defendant may not remove a case to federal court unless the Plaintiff's complaint establishes 774 that the case `arises under' federal law." Id. 103 S. Ct. 2846. And, "since 1887 it has been settled law that a case may not be removed to federal court on the basis of a federal defense ..., even if the defense is anticipated in the plaintiff's complaint, and even if both parties admit that the defense is the only question truly at issue in the case." 103 S. Ct. 2848. This case emphasizes the impossibility of defendant Keiser's position and the fact that we can only remand this case to the circuit court. Therefore, it is ORDERED that this case be REMANDED to the Circuit Court for the Fourth Judicial Circuit of Illinois in Hillsboro, Montgomery County, Illinois, along with all costs, fees, and disbursements INCURRED, because this court lacks original jurisdiction over the cause, and the Plaintiff has chosen the state court as its forum. NOTES [1] "§ 1349. Corporation organized under federal law as party. The district courts shall not have jurisdiction of any civil action by or against any corporation upon the ground that it was incorporated by or under an Act of Congress, unless the United States is the owner of more than one-half of its capital stock. June 25, 1948, C. 646, 62 Stat. 934." [2] "§ 2013. Land bank stock. (b) Voting stock of each bank shall be held only by the Federal land bank associations and direct borrowers and borrowers through agents who are farmers or ranchers, which stock shall not be transferred, pledged, or hypotheticated except as authorized pursuant to this chapter. * * * * * (d) Nonvoting stock may be issued to the Governor of the Farm Credit Administration, and may also be issued to Federal land bank associations in amounts which will permit the bank to extend financial assistance to eligible persons other than farmers or ranchers. Participation certificates with a face value of $5 each may be issued in lieu of nonvoting stock when the bylaws of the bank so provide. (e) Dividends shall not be payable on any stock held by the Governor of the Farm Credit Administration. Non-cumulative dividends may be payable on other stock and participation certificates of the bank. The rate of dividends may be different between different classes and issues of stock and participation certificates on the basis of the comparative contributions of the holders thereof to the capital or earnings of the bank by such classes and issues, but otherwise dividends shall be without preference." [3] "§ 2031. Organizations; articles; charters; powers of Governor. Each Federal land bank association chartered under section 7 of the Federal Farm Loan Act, as amended, shall continue as a federally chartered instrumentality of the United States. A Federal land bank association may be organized by any group of ten or more persons desiring to borrow money from a Federal land bank, including persons to whom the Federal land bank has made a loan directly or through an agent and has taken as security real estate located in the territory proposed to be served by the association." (emphasis ours) "§ 2034. Association stock; value of shares; voting. (a) The shares of stock in each Federal land bank association shall have a par value of $5 each. No person but borrowers from the bank shall become members and stockholders of the association."	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2664675/	UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA SANDRA MULDROW, : : Plaintiff, : Civil Action No.: 08-1771 (RMU) : v. : Re Document Nos.: 19, 20 : EMC MORTGAGE CORPORATION : et al., : : Defendants. : MEMORANDUM OPINION GRANTING DEFENDANT EMC MORTGAGE CORPORATION’S MOTION FOR SUMMARY JUDGMENT; GRANTING DEFENDANT ROSENBERG AND ASSOCIATES LLC’S MOTION FOR SUMMARY JUDGMENT I. INTRODUCTION This matter comes before the court on the motions for summary judgment of defendants EMC Mortgage Corporation (“EMC”) and Rosenberg and Associates, LLC (“Rosenberg”). The plaintiff alleges that EMC engaged in predatory lending practices, in violation of the District of Columbia Consumer Protection Procedures Act (“DCCPPA”), D.C. CODE §§ 28-3901 et seq. The plaintiff also claims that Rosenberg engaged in unlawful debt collection practices, in violation of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692 et seq. In their motions for summary judgment, both defendants argue that the plaintiff has failed to produce sufficient evidence to raise a genuine dispute as to any material facts with respect to her claims. Because the plaintiff has not demonstrated that there are any material facts in dispute, the court grants EMC’s and Rosenberg’s motions for summary judgment. 1 II. FACTUAL & PROCEDURAL BACKGROUND In October 2006, the plaintiff obtained a loan from Encore Credit Corporation, a California corporation, secured by a residential property at 1746 E Street, N.E., Washington, D.C. Compl. ¶ 5; EMC’s Mot. for Summ. J. (“EMC’s Mot.”), Ex. A at 1. Encore Credit Corporation transferred the servicing of the plaintiff’s loan to EMC on December 4, 2006. EMC’s Mot., Ex. 1 ¶ 4. In the spring of 2008, the plaintiff missed several mortgage payments, which resulted in EMC referring the loan for foreclosure. Compl. ¶¶ 6-7; EMC’s Mot., Ex. 1 ¶¶ 5-6. To initiate foreclosure proceedings, EMC hired Rosenberg as a substitute trustee. See generally Pl.’s Opp’n to Rosenberg’s Mot. to Dismiss, Ex. A (“Notice”). On June 23, 2008, Rosenberg sent the plaintiff a notice informing her that the loan had been referred to it “for legal action based upon a default under the terms of the loan agreement” and that a foreclosure sale was scheduled for July 29, 2008. Notice at 1. The notice stated the total amount owed by the plaintiff and advised her that she could either take no action and assume the validity of the debt or notify Rosenberg within thirty days that she disputed all or part of the debt. Id. If the plaintiff contested the debt within thirty days, the notice stated, Rosenberg would suspend collection activities until it obtained verification of the debt and mailed the verification to the plaintiff. Id. The notice indicated that if the plaintiff did not dispute the debt, she was to send a check to Rosenberg which it would not deposit until after informing the plaintiff of any adjustments in the amount owed. Id. The notice informed the plaintiff that she might be eligible “to enter into a workout to pay [her] delinquency over a period of time” and instructed the plaintiff to contact Rosenberg to determine if she met the program’s qualifications. Id. at 2. Finally, the notice identified one of Rosenberg’s representatives as the “[p]erson to contact to stop foreclosure sale,” and provided that person’s address and telephone number. Id. 2 Following the procedures set forth in the notice, the plaintiff disputed the debt and requested from Rosenberg the amount necessary to bring the mortgage current. Compl. ¶ 12. The plaintiff then contacted EMC to discuss loan mitigation to stop the foreclosure sale. Id. ¶ 13. The plaintiff executed a repayment agreement with EMC on July 28, 2008, after which EMC halted the foreclosure sale. EMC’s Mot., Ex. 1 ¶¶ 27-28; Pl.’s Opp’n to Defs.’ Mots. for Summ. J. (“Pl.’s Opp’n”) at 9. The plaintiff did not make the monthly payments required under the repayment agreement and EMC resumed foreclosure proceedings in September 2008. EMC’s Mot., Ex. 1 ¶ 23; see also Pl.’s Opp’n at 5. On September 15, 2008, the plaintiff filed a civil action against EMC and Rosenberg in the Superior Court for the District of Columbia. See Compl. In counts one and two of her complaint, the plaintiff accuses EMC of violating the DCCPPA by intentionally misrepresenting material facts regarding the repayment agreement and loan mitigation procedures and failing to state a material fact which misled the plaintiff. Compl. ¶¶ 26-39 In counts three, four and five, the plaintiff accuses Rosenberg of violating the FDCPA by failing to cease and desist in collection efforts after the plaintiff disputed the debt, using false, deceptive and misleading representation or means to collect on the debt and using oppressive and abusive debt collection practices. Id. ¶¶ 40-59. Rosenberg removed the action to this court on October 16, 2008. See Notice of Removal. On October 23, 2008, EMC filed its answer to the plaintiff’s complaint, see EMC’s Answer, and Rosenberg moved to dismiss the action against it, alleging that it was not a debt collector as defined by the FDCPA, see generally Rosenberg’s Mot. to Dismiss. On September 28, 2009, the court denied Rosenberg’s motion to dismiss. See generally Mem. Op. (Sept. 28, 2009). 3 Rosenberg and EMC now seek summary judgment arguing that the plaintiff has not produced sufficient evidence to support her claims and, as such, that there is no genuine dispute as to any material fact. See generally Rosenberg’s Mot. for Summ. J. (“Rosenberg’s Mot.”); EMC’s Mot. The plaintiff filed a consolidated opposition to the defendants’ motions on June 18, 2010, see generally Pl.’s Opp’n, to which the defendants separately replied on June 25, 2010, see generally EMC’s Reply; Rosenberg’s Reply. The court turns now to the parties’ arguments and the applicable legal standards. III. ANALYSIS A. Legal Standard for Motions 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); Diamond v. Atwood, 43 F.3d 1538, 1540 (D.C. Cir. 1995). To determine which facts are “material,” a court must look to the substantive law on which each claim rests. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A “genuine dispute” is one whose resolution could establish an element of a claim or defense and, therefore, affect the outcome of the action. 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 4 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. By pointing to the absence of evidence proffered by the nonmoving party, a moving party may succeed on summary judgment. Id. 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 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. The Court Grants EMC’s Motion for Summary Judgment The plaintiff argues that EMC violated the DCCPPA by failing to inform her that the repayment agreement was not negotiable and that she was required to “tender a $2,500 payment before EMC would enter into a loan mitigation program” with her. Compl. ¶ 37. She contends that “[a]s a direct and proximate result of [EMC’s] misrepresentations of facts,” id. ¶ 34, and its “failure to state material facts,” id. ¶ 39, she suffered damages “including but not limited to the threatened loss of her home, late fees, collection costs, interest, and in other manner to be proven at trial,” id. ¶¶ 34, 39. EMC counters that it never represented to the plaintiff that the terms of the repayment agreement were negotiable and that it made it clear throughout its dealings with her that the plaintiff would have to make a $2,500 “good faith down payment” before the repayment agreement became effective. EMC’s Mot. at 9-13. Lastly, EMC maintains that the plaintiff has 5 set forth no facts or evidence indicating that she suffered any damages as a result of EMC’s actions. Id. at 14. “The invasion of a purely legal right . . . [w]ithout a particularized injury” does not create standing to sue in this court. Williams v. Purdue Pharma Co., 297 F. Supp. 2d 171, 178 (D.D.C. 2003). To obtain standing to sue for a violation of the DCCPPA, a plaintiff “must have suffered damage as a result of the use or employment of an unlawful trade practice.” Osbourne v. Capital City Mortgage Corp., 667 A.2d 1321, 1330 (D.C. 1995) (quoting D.C. CODE § 28-3905(k)(1) (internal quotation marks and alterations omitted)); see also Jackson v. ASA Holdings, LLC, 2010 WL 4449367, at 6 (D.D.C. Nov. 8, 2010) (granting the defendants’ motion to dismiss because the plaintiff failed to demonstrate injury and thus standing under the DCCPPA by making the “conclusory assertions” that “as a result of the [d]efendants’ misrepresentations, she ‘suffered damages, including, but not limited to the loss of her property, late fees, collection costs, and interest’”); Hoyte v. Yum! Brands, Inc., 489 F. Supp. 2d 24, 29 (D.D.C. 2007) (holding that the plaintiff had no standing to pursue his DCCPPA claim when he alleged that the defendant failed to disclose a material fact in violation of the DCCPPA, but made no claim of injury); Williams, 297 F. Supp. 2d at 178 (explaining that, despite its broad language, the DCCPPA “[does] not change the requirements for standing under D.C. law”). According to the plaintiff, she suffered damages in the way of fees, costs and interest along with the threatened loss of her home, and she is seeking “actual damages, statutory and treble (3x) damages, substantial punitive damages . . . pre and post judgment interest, attorney’s fees and costs.” Id. ¶ 25; see also id. ¶¶ 34, 39, 49, 54, 59. She reiterates this request in her opposition to the defendants’ motions to dismiss but does not further clarify her damages request. See Pl.’s Opp’n at 6. The plaintiff has not, therefore, set forth any facts demonstrating 6 any correlation between her claimed damages and EMC’s alleged DCCPPA violations. See generally Compl.; Pl.’s Opp’n. For example, the plaintiff has not offered any evidence to indicate that EMC’s actions caused her to miss payments under the repayment agreement thereby leading to late fees, collection costs or interest. See generally Compl.; Pl.’s Opp’n. Accordingly, because the plaintiff has failed to establish damages and thus standing, the court grants EMC’s motion for summary judgment as to counts one and two. See Jackson, 2010 WL 4449367, at 6. C. The Court Grants Rosenberg’s Motion for Summary Judgment 1 The plaintiff alleges that Rosenberg made false, misleading or deceptive representations in its notice in violation of the FDCPA because its notice implied that Rosenberg could continue with the collection of the debt after the plaintiff disputed it. Compl. ¶ 52. The plaintiff further alleges that Rosenberg violated the FDCPA when it failed to “cease and desist in collection efforts” after the plaintiff disputed her debt. 2 Compl. ¶ 47. Rosenberg argues that there is no evidence that it took “any action to ‘continue collection activities’ after the [p]laintiff allegedly sent notification that she was disputing the debt.” Rosenberg’s Mot. at 11. It also claims that the language in the notice comports with the 1 Unlike the DCCPPA, “actual damages are not required for standing under the FDCPA.” Miller v. Wolpoff & Abramson, LLP, 321 F. 3d 292, 307 (2d Cir. 2003). 2 Rosenberg has challenged all of the plaintiff’s claims against it as stated in counts three through five of the plaintiff’s complaint. See generally Rosenberg’s Mot. In count five, the plaintiff alleges that Rosenberg violated the FDCPA by using “oppressive and abusive debt collection practices.” Id. at 13. In her opposition to Rosenberg’s motion for summary judgment, however, the plaintiff does not address this claim. See generally Pl.’s Opp’n. Accordingly, the court grants as conceded Rosenberg’s motion for summary judgment as to count five. See Lytes v. Dist. of Columbia Water & Sewer Auth., 572 F.3d 936, 943 (D.D.C. 2009) (affirming the district court’s decision to treat as conceded the defendant’s motion for summary judgment because, although the plaintiff filed an opposition, he did not “designat[e] and referenc[e] triable facts accompanied by appropriate references to the record” (internal citations omitted)). 7 requirements of the FDCPA. Id. In response, the plaintiff concludes, without explanation, that Rosenberg “did not cease and desist in its collection activities.” Pl.’s Opp’n at 8. The court first notes that, although the notice did contain the phrase “the foreclosure proceeding will continue in the interim,” Notice at 2, when read in context, “the interim” clearly refers to the time it would take to work out a payment agreement if the debtor was not disputing the debt, rather than the time it would take to verify the debt, id. 3 Nothing in the FDCPA requires that a foreclosure sale be halted if a debtor does not seek verification of or otherwise dispute the debt. See 15 U.S.C. §§ 1692 et seq. A debtor may concede the debt and enter into an agreement with the debt collector, but such a concession will not necessarily halt foreclosure proceedings. See generally id. Accordingly, nothing about the notice itself implies that Rosenberg would or did continue collection activities after the plaintiff sought verification of the debt. See generally Notice. Second, although the plaintiff generally alleges that Rosenberg improperly continued with foreclosure proceedings despite the fact that she sought verification of the debt, see Compl. 3 The relevant portion of the Notice reads If you notify this office in writing within the thirty (30) period, that the debt or any portion thereof is disputed or request the name and address of the original creditor, we shall cease collection of the debt until we obtain verification of the debt or ascertain the name and address of the original creditor. A copy of such debt verification and/or name and address of the original creditor will be mailed to you. Your failure to contest the validity of the debt under the Act may not be construed by any Court as an admission of liability. YOU MAY BE ELIGIBLE TO ENTER INTO A WORKOUT TO PAY YOUR DELINQUENCY OVER A PERIOD OF TIME. PLEASE CONTACT THE PARTY LISTED BELOW IMMEDIATELY IF YOU ARE INTERESTED TO SEE IF YOU QUALIFY FOR THIS PROGRAM. THE FORECLOSURE PROCEEDING WILL CONTINUE IN THE INTERIM. Notice at 1-2 (emphasis in original). 8 ¶ 11; Pl.’s Opp’n at 8, she does not provide any evidence to support this allegation, see generally Compl.; Pl.’s Opp’n. Such broad, unsupported allegations are insufficient to survive summary judgment. See Wolkow v. Scottsdale Collection Serv., LLC, 2010 WL 3834598, at 3 (D. Ariz. Sept. 24, 2010) (explaining that an FDCPA plaintiff’s “bare assertions, standing alone, are insufficient to create a material issue of fact and defeat a motion for summary judgment” (citing Anderson, 477 U.S. at 247-48)); see also Thompson v. Ashe, 250 F.3d 399, 405 (6th Cir. 2001) (stating that “[t]he party opposing the [summary judgment] motion may not rely solely on the pleadings”); Wolfe v. GC Servs. Partnership-Delaware, 2009 WL 230637, at 12 (E.D. Mich. Jan. 30, 2009) (“In responding to a motion for summary judgment, the opposing party cannot merely rest upon the allegations contained in his pleadings and, instead, he must submit evidence demonstrating that material issues of fact exist.”). Accordingly, because the plaintiff failed to produce any evidence demonstrating a genuine dispute as to any material fact, the court grants Rosenberg’s motion for summary judgment. See Greene, 164 F. 3d at 675 (holding that because the plaintiff failed to substantiate her claim with “supporting facts,” she could not overcome the defendant’s motion for summary judgment). IV. CONCLUSION For the foregoing reasons, the court grants EMC’s motion for summary judgment and grants Rosenberg’s motion for summary judgment. An Order consistent with this Memorandum Opinion is separately and contemporaneously issued this 2nd day of March 2011. RICARDO M. URBINA United States District Judge 9	01-03-2023	04-04-2014
https://www.courtlistener.com/api/rest/v3/opinions/2664687/	UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ____________________________________ ) BAPTIST MEMORIAL HOSPITAL, ) d/b/a BAPTIST MEMORIAL ) HOSPITAL-MEMPHIS ) ) Plaintiff, ) ) Civil Action No. 07-cv-1938 (RCL) v. ) ) KATHLEEN SEBELIUS, Secretary, ) U.S. Department of Health and Human ) Services, ) ) Defendant. ) ____________________________________) MEMORANDUM OPINION Before the Court is plaintiff’s Motion [28] for Summary Judgment, defendant’s Cross- Motion [32] for Summary Judgment, and defendant’s Motion [44] to Strike Plaintiff’s Surreply. Upon consideration of the summary judgment motions, the memoranda in support thereof, the supplemental authority, the entire record, and the applicable law, the Court will DENY plaintiff’s Motion for Summary Judgment and GRANT defendant’s Cross-Motion for Summary Judgment. Upon consideration of defendant’s Motion to Strike, the opposition thereto, and the applicable law, the Court will GRANT defendant’s motion. The Court’s reasoning is set forth below. I. BACKGROUND In this consolidated action, plaintiff Baptist Memorial Hospital-Memphis (Baptist- Memphis) seeks additional Medicare payments authorized for disproportionate share hospitals (DSH)—i.e., hospitals that treat a disproportionate share of low-income patients. Specifically, Baptist-Memphis seeks the inclusion of what are known as Section 1115 demonstration or expansion waiver days in the DSH payment calculation in connection with two Medicare cost 1 reporting periods—Fiscal Year Ending (FYE) September 30, 1994, and FYE September 30, 1995. The Medicare Provider Reimbursement Review Board (PRRB) entered decisions in favor of Baptist-Memphis as to its appeals for both reporting periods. The Secretary’s Administrator of the Centers for Medicare and Medicaid Services (CMS) reversed both decisions. Baptist- Memphis challenges those reversals here. A. Statutory and Regulatory Background The operating costs of inpatient hospital services are primarily paid through the Prospective Payment System (PPS), 42 U.S.C. § 1395ww(d). Generally, a hospital’s PPS payment is based on prospectively determined rates, rather than on actual operating costs incurred by the hospital. Id. § 1395ww(d)(1)–(4). But the PPS also contains several provisions that adjust payments on the basis of hospital-specific factors. Id. § 1395ww(d)(5). One such provision is known as the disproportionate share hospital or DSH adjustment, under which hospitals that serve a “significantly disproportionate number of low-income patients” receive increased PPS payments. Id. § 1395ww(d)(5)(F)(i)(I). A hospital qualifies for a DSH adjustment in a given cost reporting period if its “disproportionate patient percentage” for that period equals or exceeds specified thresholds. Id. § 1395ww(d)(5)(F)(v). The disproportionate patient percentage consists of two components: the Medicare and Medicaid fractions. Id. § 1395ww(d)(5)(F)(vi). Only the Medicaid fraction is relevant here. This fraction equals “the number of the hospital’s patient days for such period which consist of patients who (for such days) were eligible for medical assistances under a State plan approved under [Title XIX, i.e., the Medicaid statute],” divided by “the total number of the hospital’s patient days for such period.” Id. § 1395ww(d)(5)(F)(vi)(II). 2 Title XIX of the Social Security Act, known as the Medicaid statute, establishes a federal-state program to provide medical assistance to low-income patients. See id. §§ 1396– 1396v. To participate in the Medicaid program, a state must develop a plan that specifies, among other things, the categories of individuals who will receive medical assistance and the kinds of services that will be covered. Id. § 1396a. If the Secretary approves the plan, the state is eligible to be reimbursed by the federal government for a specified percentage of expenditures under the plan. Id. §§ 1396b(a)(1), 1396d(b). Section 1115 of the Social Security Act also authorizes demonstration projects to allow states to explore innovative healthcare initiatives. See id. § 1315. Costs under a Section 1115 demonstration project “shall, to the extent and for the period prescribed by the Secretary, be regarded as expenditures under the State [Medicaid] plan.” Id. § 1315(a)(2)(A). Per the Secretary’s approval, a demonstration project may provide benefits to individuals who do not otherwise qualify under the Medicaid statute. Id. § 1315(a)(1). Individuals who are not eligible for benefits under a Medicaid state plan approved under Title XIX, but who are eligible for benefits under an approved Section 1115 demonstration project, are known as “expansion waiver populations” or simply “expansion populations.” Tennessee’s approved Section 1115 demonstration project, known as TennCare, was instituted on January 1, 1994. A.R. 640–43. TennCare provided coverage for populations eligible for traditional Medicaid, as well as populations eligible for benefits under expanded requirements for the “uninsurable” (i.e., persons unable to meet traditional requirements due to existing or prior existing heath conditions) and “uninsured” (i.e., persons not eligible for an employer-sponsored or government-sponsored health plan). Id. At issue in this case are 3 expansion populations who are not eligible for traditional Medicaid, but who receive benefits through TennCare. From the inception of the Medicare DSH adjustment in 1986, the Secretary’s policy has been to exclude expansion waiver days in calculating DSH payments. Under the Secretary’s regulations, the DSH adjustment would apply only when “benefits are payable under [Title XIX, i.e., the Medicaid statute].” 51 Fed. Reg. 16,777 (1986). There was confusion among hospitals, however, as to which state-only program days qualified as “Medicaid eligible” days that could be included in the DSH calculation. See St. Joseph’s Hosp. v. Leavitt, 425 F. Supp. 2d 94, 96 (D.D.C. 2006) (Robertson, J.). To address this confusion, CMS sent a letter to the Chairman of the Senate Finance Committee on October 15, 1999. See A.R. 755–56. The letter announced that CMS had adopted a “hold harmless” policy under which it would not seek to recoup certain DSH overpayments to hospitals. Id. at 755. Specifically, for cost reporting periods beginning before January 1, 2000, CMS’s fiscal intermediaries would “not disallow the portion of DSH payment claimed . . . where a hospital had previously claimed and received Medicare DSH payments under the incorrect formula.” Id. CMS further stated that it would clarify the policy for both its intermediaries and hospitals. Id.; see United Hosp. v. Thompson, 383 F.3d 728, 740 (8th Cir. 2001) (“The letter explained that [CMS] would not seek to recoup payments to hospitals already made (erroneously) for state-only days, but that in the future hospitals would have to abide by the statutory requirement that only Medicaid days count toward DSH payments.”). On December 1, 1999, CMS issued Program Memorandum A-99-62 (PM A-99-62) to clarify the definition of eligible Medicaid days in its DSH policy and to formalize its hold harmless policy. See A.R. 171–76. PM A-99-62 reiterated that only Title XIX Medicaid days— not, among other things, expansion waiver days—were to be included in the Medicaid fraction of 4 the Medicare DSH formula. Id. at 171–72. It acknowledged, however, that some fiscal intermediaries had made DSH payments “attributable to the erroneous inclusion of general assistance of other State-only health program, charity care, Medicare DSH, and/or ineligible waiver or demonstration population days” in the Medicaid fraction. Id. CMS would thus hold harmless hospitals that had already received payments reflecting the erroneous inclusion of ineligible days. Id. at 173. Likewise, CMS would hold harmless hospitals that had not received such payments, but that had already raised a challenge seeking to include ineligible days in the DSH adjustment. Id. With regard to this second group of hospitals—those that had not received payments reflecting the erroneous inclusion of ineligible days—PM A-99-62 instructs fiscal intermediaries, in relevant part: If a hospital did not receive any payment based on the erroneous inclusion of . . . [among other things] waiver or demonstration population days [i.e., expansion days] for cost reports that were settled before October 15, 1999, and the hospital never filed a jurisdictionally proper appeal to the [PRRB] on this issue, you are not to pay the hospital based on the inclusion of these types of days for any open cost reports for cost reporting periods beginning before January 1, 2000. If, for cost reporting periods beginning before January 1, 2000, a hospital that did not receive payments reflecting the erroneous inclusion of otherwise ineligible days filed a jurisdictionally proper appeal to the PRRB on the issue of the exclusion of these types of days from the Medicare DSH formula before October 15, 1999, reopen the cost report at issue and revise the Medicare DSH payment to reflect the inclusion of these types of days as Medicaid days. . . . Where, for cost reporting periods beginning before January 1, 2000, a hospital filed a jurisdictionally proper appeal to the PRRB on the issue of the exclusion of these types of days from the Medicare DSH formula on or after October 15, 1999, reopen the settled cost report at issue and revise the Medicare DSH payment to reflect the inclusion of these types of days as Medicaid days, but only if the hospital appealed, before October 15, 1999, the denial of payment for the days in question in previous cost reporting periods. . . . 5 Do not reopen a cost report and revise the Medicare DSH payment to reflect the inclusion of these types of days as Medicaid days if, on or after October 15, 1999, a hospital added the issue of the exclusion of these types of days to a jurisdictionally proper appeal already pending before PRRB on other Medicare DSH issues or other unrelated issues. Id. at 173–74 (emphasis added). B. Factual and Procedural Background 1. Audit of FYE 1994 During the time period relevant to this case, plaintiff Baptist-Memphis was owned and operated by Baptist Memorial Healthcare Corporation (BMHCC). As a participant in the Medicare program, Baptist-Memphis filed a cost report for FYE September 30, 1994 (FYE 1994), in which it claimed, among other things, a DSH adjustment of $3,414,608. Id. at 1471. In its initial FYE 1994 cost report, Baptist-Memphis reported a total of 14,097 patient days for inclusion in the DSH calculation. Pl.’s Summary Judgment Motion (Pl.’s SJM) at 12; A.R. 114. This number included Medicaid-eligible TennCare days as well as TennCare expansion waiver days. Pl.’s SJM at 13; A.R. 122. On October 1, 1996, prior to auditing the FYE 1994 cost report, the Intermediary advised Baptist-Memphis that it was inappropriate to include expansion waiver days in the DSH calculation. A.R. 121. The Intermediary thus instructed Baptist-Memphis to exclude expansion waiver days, thereby limiting the number submitted for audit to traditional Medicaid-eligible days. Pl.’s SJM at 13; A.R. 121, 127–28. In response to the Intermediary’s directive, Baptist-Memphis submitted a revised listing of TennCare days that did not include expansion waiver days. Pl.’s SJM at 13; A.R. 121, 127–28. The revised listing reported 9,163 Medicaid-eligible days. 1 Thus, by the time of the audit, 1 Prior to the Intermediary’s audit, the State of Tennessee issued a report on TennCare days. The report indicated that Baptist-Memphis had 9,163 Medicaid-eligible days and 2,020 expansion 6 Baptist-Memphis’s TennCare listing had “been purified to the strictly Title [XIX] eligible days.” A.R. 123. The Intermediary performed an audit of this revised listing. Pl.’s SJM at 13. There is no dispute that the Intermediary audited only Medicaid-eligible days, not expansion waiver days. See Pl.’s SJM at 13; A.R. 123, 128. 2 Upon completing the audit, the Intermediary issued a Notice of Program Reimbursement (NPR) for FYE 1994. See A.R. 1457–75. The NPR included a copy of Audit Adjustment # 49, which reduced Baptist-Memphis’s as-filed DSH payment claim of $3,414,608 to $2,788,776 (thereby resulting in a disallowance of $625,832). Id. at 1471. Audit Adjustment # 49 offers an explanation indicating only that it is a “disproportionate share adjustment . . . per Intermediary.” Id. It refers to Workpaper T-100, which lists only Medicaid-eligible days (including Medicaid- eligible TennCare days). Id. at 231. Workpaper T-100’s listing of Medicaid-eligible TennCare days refers to Workpaper T- 110. Id. Baptist-Memphis concedes that Workpaper T-110 does not reflect an audit of the 14,097 days submitted in its initial cost report, as expansion waiver days were excluded prior to the audit. Pl.’s Reply at 4–5. Rather, Workpaper T-110 reflects exclusions unrelated to the exclusion of expansion waiver days. It documents, for example, the exclusion of patient days in psychiatric units, which are “not counted for DSH purposes;” of “Medicare/Medicaid crossover” days; of duplicative days; and of days “paid by Medicare, not TennCare.” A.R. 234–35. 2. Baptist-Memphis’s Appeals to the PRRB waiver days. A.R. 117. Baptist-Memphis’s revised listing thus reflects the number of Medicaid- eligible days reported by the State of Tennessee. 2 As Baptist-Memphis’s witness testified to the PRRB, all expansion waiver days were “excluded prior to the Intermediary[] performing [its] audits.” A.R. 125. Thus, the Intermediary “did not audit the 14,097 days which [were] on the as-filed report, but audited a lesser number, which was . . . the 9,163 days.” Id. at 128. 7 On March 29, 1998, Baptist-Memphis appealed the Intermediary’s DSH adjustment, among other matters, to the PRRB. See id. at 1453–56. With respect to the DSH adjustment, the appeal stated: The Intermediary incorrectly calculated the Disproportionate Share adjustment. The audit adjustment in question is #49 attached hereto. The reimbursement impact of that adjustment is approximately $75,000. Id. at 1453–54. On April 23, 1998, Baptist-Memphis filed a Joint Statement of Jurisdiction and Issues that used the same language found in its appeal. Id. at 1442. On November 29, 1999— after PM A-99-62’s October 15, 1999 deadline—Baptist-Memphis filed a Preliminary Position Paper (PPP) regarding its appeal. 3 The PPP specifically addressed the Intermediary’s exclusion of expansion waiver days from the DSH adjustment. Id. at 65–66. Additionally, Baptist- Memphis’s estimated reimbursement impact increased to $623,832—that is, the disallowance amount in Audit Adjustment # 49. Id. at 65. According to Baptist-Memphis, the PPP confirms that it specifically identified the exclusion of expansion waiver days in its March 1998 appeal. Pl.’s Reply at 7. The Secretary disagrees, arguing that the PPP represents “an improper attempt to add the issue of the exclusion of expansion days” to the March 1998 appeal. Def.’s Reply at 12. On June 28, 2004, Baptist-Memphis advised the PRRB that it had administratively resolved all but one issue on appeal—that of the exclusion of TennCare expansion waiver days from its DSH adjustment. A.R. 1413. On June 29, 2007, the PRRB issued its decision in the FYE 1994 appeal. See id. at 82–88. The PRRB determined that Baptist-Memphis was entitled to hold 3 The PPP is not part of the administrative record, as such papers are not filed with the PRRB. Rather, parties to PRRB proceedings serve these papers on each other. Therefore, the Court must rely on the record’s explanation of the PPP’s contents. 8 harmless treatment because it had “filed a jurisdictionally proper appeal to the Board before the October 15, 1999 deadline established by PM [A-99-62].” Id. at 88. On August 19, 2005, Baptist-Memphis also appealed the Intermediary’s audit for FYE 1995. See id. at 1776–79. Its appeal letter included the issue of whether the Intermediary had improperly excluded expansion waiver days from its DSH adjustment for FYE 1995. Id. at 1774–75. On August 30, 2007, the PRRB issued its decision in the FYE 1995 appeal. See id. at 246–54. As in the FYE 1994 appeal, the PRRB determined that Baptist-Memphis was entitled to hold harmless treatment because it had “filed a jurisdictionally proper appeal to the Board before the October 15, 1999 deadline established by PM A-99-62.” Id. at 253–54. 3. BMHCC’s Group Appeal While Baptist-Memphis’s appeals were pending, BHMCC was pursuing a group appeal comprising several hospitals and cost years, including those at issue here. Def.’s Summary Judgment Motion (Def.’s SJM) at 23. The issue on appeal was whether the Secretary’s exclusion of expansion waiver days from the DSH calculation violated the Medicare statute. Id. at 24. The group appeal thus involved a statutory challenge, while Baptist-Memphis’s individual appeals sought hold harmless treatment under PM A-99-62. The group and individual appeals sought the same relief—the inclusion of expansion waiver days prior to January 2000 in the DSH calculation. See id. at 22–25. The individual appeals originally included a statutory challenge, but Baptist-Memphis asked the PRRB to transfer that issue to the group appeal. Id. at 22–23. The Intermediary objected to such bifurcation, advising the PRRB that it would be improper to hear the individual FYE 1994 appeal. A.R. 1227–28. The PRRB acknowledged that the individual and group appeals presented “two different arguments for achieving the same end.” Id. at 1221. 9 Nevertheless, the PRRB decided to hear the FYE 1994 appeal because the hold harmless argument in that case was “not common to [the argument] in the group appeal.” Id. Ultimately, BMHCC’s group appeal reached the Court of Appeals for the D.C. Circuit. In a consolidated case, the Court rejected BHMCC’s statutory challenge, holding that “[t]he Deficit Reduction Act [Section 5002, which gives the Secretary discretion to determine whether to include expansion waiver days in the DHS calculation] did not retroactively alter settled law.” Cookeville Reg’l Med. Ctr. v. Leavitt, 531 F.3d 844, 849 (D.C. Cir. 2008). Rather, Congress simply ratified the Secretary’s earlier policies, including her policy regarding expansion waiver days prior to January 2000, by “clarif[ying] an ambiguity in the existing legislation.” Id. 4. CMS’s Decisions in the FYE 1994 and 1995 Appeals On August 29, 2007, CMS vacated the PRRB’s decision in the FYE 1994 appeal. A.R. 2– 15. First, CMS concluded that Baptist-Memphis had not filed a jurisdictionally proper appeal on the specific issue of expansion waiver days prior to October 15, 1999, and thus did not qualify for hold harmless treatment under PM A-99-62. Id. at 2–13. Second, CMS concluded that, in any event, the PRRB had violated res judicata principles by bifurcating alternative legal arguments in pursuit of the same relief. Id. at 13–14. On October 29, 2007, CMS relied on similar reasoning to vacate the PRRB’s decision in the FYE 1995 appeal. See id. at 2–21. CMS’s decisions constitute the Secretary’s two final decisions at issue in this case. II. DISCUSSION A. Standard of Review Review of CMS’s decisions is governed by 42 U.S.C. § 1395oo(f)(1), which incorporates the Administrative Procedure Act (APA), 5 U.S.C. § 706. Accordingly, a court may set aside final agency action only when it is “arbitrary, capricious, an abuse of discretion, or otherwise not 10 in accordance with law” or “unsupported by substantial evidence.” 5 U.S.C. § 706(2)(A),(E). Under both the “arbitrary and capricious” and “substantial evidence” standards, the scope of review is narrow and a court must not substitute its judgment for that of the agency. Motor Veh. Mfrs. Ass’n v. State Farm Mutual Ins. Co., 462 U.S. 29, 43 (1983); Gen. Teamsters Local Union No. 174 v. Nat’l Labor Relations Bd., 723 F.2d 966, 971 (D.C. Cir. 1983). As long as an agency has “examined the relevant data and articulated a satisfactory explanation for its action including a rational connection between the facts found and the choice made,” a reviewing court will not disturb the agency’s action. MD Pharm., Inc. v. Drug Enforcement Admin., 133 F.3d 8, 16 (D.C. Cir. 1998). The burden of showing that an agency’s action violates the APA falls on the provider. Diplomat Lakewood Inc. v. Harris, 613 F.2d 1009, 1018 (D.C. Cir. 1979); St. Anthony’s Health Ctr. v. Leavitt, 579 F. Supp. 2d 115, 119 (D.D.C. 2008). B. Analysis Baptist-Memphis argues that the Secretary’s conclusion that it was not entitled to hold harmless treatment was not supported by substantial evidence and was arbitrary and capricious. Baptist-Memphis further contends that PM A-99-62 set an improper retroactive deadline in violation of the Medicare statute, the APA, and the Supreme Court’s prohibitions on retroactive rulemaking. Finally, Baptist-Memphis argues that the Secretary’s application of res judicata principles was inappropriate and contrary to her regulations regarding PRRB group appeals. 1. PM A-99-62’s October 15, 1999 deadline is not an improper retroactive rule. Baptist-Memphis asserts that PM A-99-62 set an improper retroactive deadline by requiring hospitals to have appealed the exclusion of expansion waiver days before October 15, 1999—two months prior to the PM’s issuance on December 15, 1999. Pl.’s SJM at 32–33. This argument assumes, however, that hospitals were entitled to include expansion waiver days in the 11 DSH calculation prior to the PM’s issuance. Indeed, they were not. The Secretary’s policy prior to January 2000 was to exclude expansion waiver days from the DSH calculation. Cookeville, 531 F.3d 844, 848 (2008). Furthermore, hospitals—including those in Tennessee—were “on notice that the expansion population might not be included.” Id. PM A-99-62 merely clarified the Secretary’s existing policy. See United Hosp. v. Thompson, No. 02-3479, 2003 WL 21356086, *5 (D. Minn. June 9, 2003) (holding that PM A-99-62 was not a policy change requiring notice to hospitals, but a “clarification of existing policy”). PM A-99-62 served a limited purpose—to hold harmless, subject to certain conditions, those hospitals that had an honest misunderstanding regarding the DSH calculation. Such hospitals could gain DSH payments they would not have otherwise received on the basis of antecedent facts—namely, whether they had specifically appealed the exclusion of expansion waiver days before October 15, 1999. As the Supreme Court has repeatedly held, a rule “is not made retroactive merely because it draws upon antecedent facts for its operation.” Regions Hosp. v. Shalala, 522 U.S. 448, 456 (1998) (quoting Landgraf v. USI Film Products, 511 U.S. 244, 269 n.24 (1994)) (quotation marks omitted). 2. The Secretary’s conclusion that Baptist-Memphis did not meet PM A-99- 62’s hold harmless requirements was both reasonable and supported by substantial evidence. The Court finds that the Secretary’s conclusion that Baptist-Memphis failed to specifically appeal the exclusion of expansion waiver days before October 15, 1999 was both reasonable and supported by substantial evidence. Baptist-Memphis’s March 1998 appeal simply states that “[t]he Intermediary incorrectly calculated the Disproportionate Share adjustment.” A.R. 1453–54. On its face, the appeal makes no mention of expansion waiver days. The appeal references Audit Adjustment # 49, which—as the Court found above—simply reduces Baptist- 12 Memphis’s as-filed DSH payment claim of $3,414,608 to $2,788,776. Id. at 1471. It makes no reference to expansion waiver days, indicating only that it is a “disproportionate share adjustment . . . per Intermediary.” Id. Indeed, as Baptist-Memphis concedes, expansion waiver days were excluded prior to the audit, and thus prior to the Intermediary’s calculation of the DSH adjustment. See Pl.’s SJM at 13. The Court thus finds that Audit Adjustment # 49 reflects a calculation based on an audit of Medicaid-eligible days only. See A.R. 125, 128. Workpaper T-100, to which Audit Adjustment # 49 refers, lists Medicaid-eligible days and makes no reference to expansion days. See id. at 231. Similarly, Workpaper T-110, to which Workpaper T-100 refers, reflects exclusions unrelated to the exclusion of expansion waiver days. See id. at 234–35. Indeed, Baptist-Memphis concedes that Workpaper T-110 does not reflect an audit of expansion waiver days. Pl.’s Reply at 4–5. There is nothing—neither on the face of the appeal, nor in Audit Adjustment # 49 or its associated workpapers—to indicate that Baptist-Memphis intended to specifically appeal the exclusion of expansion waiver days in its March 1998 appeal. Baptist-Memphis maintains that the Intermediary “excluded all expansion waiver days, as evidenced by Audit Adjustment 49.” Pl.’s SJM at 29. Specifically, Baptist-Memphis argues that Audit Adjustment # 49 reflects the exclusion of expansion waiver days because it reduces the hospital’s as-filed claim of $3,414,608—a figure that had been based in part on expansion waiver days. But as the record clearly indicates, and as Baptist-Memphis concedes, expansion waiver days were excluded prior to the Intermediary’s audit. See Pl.’s SJM at 13; Pl.’s Reply at 4–5; A.R. 121, 127–28. Audit Adjustment # 49 merely reports Baptist-Memphis’s as-filed claim; there is no indication that this figure had any bearing on the Intermediary’s calculation of the DSH adjustment. As the Court found above, that calculation was based on an audit of Medicaid-eligible days only. Absent any 13 reference to the exclusion of expansion waiver days in Audit Adjustment # 49 or its associated workpapers, this Court finds no indication that Baptist-Memphis intended to specifically appeal that issue in its March 1998 appeal. 4 Baptist-Memphis challenges the Secretary’s inference that the $75,000 identified in its appeal as the “reimbursement impact of [the Intermediary’s] adjustment” was too low a figure to reflect an appeal regarding the exclusion of expansion waiver days. Baptist-Memphis asserts that this figure was merely a “placeholder given the Hospital’s inability to calculate a more accurate figure due to the Intermediary’s refusal to audit the expansion waiver days claimed on its as-filed cost report.” Pl.’s Reply at 15. Baptist-Memphis argues that the Secretary’s inference finds no support in the record and thus fails to meet the substantial evidence standard. Id. The Court finds that the Secretary’s inference was not necessary to her determination that Baptist-Memphis failed to specifically appeal the exclusion of expansion waiver days before October 15, 1999. As discussed above, there was substantial evidence to support this conclusion. The $75,000 figure was just one piece of circumstantial evidence the Secretary considered in reaching her conclusion. Furthermore, the Secretary’s inference was reasonable. Prior to vacating the PRRB’s decisions, CMS estimated that the payment for Baptist-Memphis’s 2,020 expansion waiver days, had they been included in the DSH calculation, would have been $500,000. A.R. 65. Notably, Baptist-Memphis’s estimated reimbursement impact increased to $625,832 in its November 29, 1999 PPP—which, coincidentally, specifically addressed the exclusion of 4 Because Baptist-Memphis filed its FYE 1995 appeal on August 19, 2005, it is entitled to hold harmless treatment “only if the hospital appealed, before October 15, 1999, the denial of payment for the days in question in previous cost reporting periods [in this case, FYE 1994].” A.R. 174 (emphasis added). Substantial evidence supports the Secretary’s conclusion that Baptist-Memphis was not entitled to hold harmless treatment for FYE 1994—and consequently, that it was not entitled to hold harmless treatment for FYE 1995. 14 expansion waiver days. Id. But Baptist-Memphis was well aware of the Intermediary’s $625,832 disallowance when it filed its March 1998 appeal, and thus presumably had no need to use a much lower “placeholder.” Based on this evidence, the Secretary reasonably inferred that the $75,000 figure was too low to reflect an appeal regarding the exclusion of expansion waiver days. Indeed, “substantial evidence ‘need not be overwhelming evidence.’” Mail Order Ass’n of Am. v. U.S. Postal Serv., 2 F.3d 408, 421 (D.C. Cir. 1993) (quoting Japan Air Lines Co. v. Dole, 801 F.2d 483, 489 (D.C. Cir. 1986)). Rather, “an agency must have latitude to draw permissible inferences from and to make findings based on the evidence in the record.” Id. Baptist-Memphis also asserts that its PPP “specifically addressed the Intermediary’s exclusion of expansion waiver days,” thus confirming that it intended to appeal that issue in its March 1998 appeal. Pl.’s Reply at 7. But this argument ignores PM A-99-62’s requirements. A hospital is entitled to hold harmless treatment only if it “filed a jurisdictionally proper appeal to the PRRB on the issue of the exclusion of these types of days from the Medicare DSH formula before October 15, 1999.” A.R. 173 (emphasis added). Baptist-Memphis’s PPP, submitted after PM A-99-62’s deadline, is thus irrelevant to the question of whether Baptist-Memphis is entitled to hold harmless treatment. The Court is unconvinced by Baptist-Memphis’s argument that the PRRB “gave great weight [to the PPP] as confirmation that the issued appealed from Audit Adjustment #49 was in fact the exclusion of TennCare Waiver Days.” Pl.’s Reply at 20. Indeed, in its decision regarding the FYE 1994 appeal, the PRRB stated that it “agrees with the Intermediary that the Provider’s appeal began as a general DSH case. However, the issue was clarified and expanded in its preliminary position paper.” A.R. 88 (emphasis added). This statement simply confirms that 15 Baptist-Memphis first raised the exclusion of expansion waiver days in its PPP—after the deadline set by PM A-99-62. Finally, Baptist-Memphis argues that the Secretary’s decisions were inconsistent with the district court’s holding in St. Joseph’s Hospital v. Leavitt, 425 F. Supp. 2d 94 (D.D.C. 2006) (Robertson, J.). In that case, which raised issues similar to those raised here, the Secretary determined that St. Joseph’s was not entitled to hold harmless treatment because its appeal, filed before October 15, 1999, did not specifically raise the exclusion of “general assistance” (non- Medicaid) days. Id. at 98. The appeal identified the adjustment number at issue, stating that “the DSH reimbursement is significantly understated. The intermediary did not properly recognize all appropriate DSH related days of service.” Id. at 97. The attached adjustment number stated that payment was disallowed “since the provider is including non-Medicaid days in their DSH calculation.” Id. at 99. The attached workpapers, to which the adjustment number referred, indicated that the Intermediary had specifically audited general assistance days and disallowed payment for those days. Id. The court found the Secretary’s decision arbitrary and capricious. Id. at 100. At the time St. Joseph filed its appeal, the PRRB required that a notice of appeal include only a “short explanation of the basis for the dispute” and the audit adjustment numbers at issue. Id. at 99 (emphasis in original). The court thus held that the Secretary could not precondition hold harmless treatment on “magic words” in an appeal without considering other evidence—namely, the adjustment numbers and associated workpapers attached to the appeal. Id. at 99–100. The court concluded that St. Joseph’s “document trail” demonstrated that “the exclusion of general assistance days provided at least one reason for the appeal of the DSH allowance.” Id. at 100 (emphasis in original). 16 This Court finds that the decisions at issue here were consistent with St. Joseph’s. At the time Baptist-Memphis filed its appeal—as in St. Jospeh’s—the PRRB required that a notice of appeal include only a “short explanation of the basis of dispute” and the audit adjustment numbers at issue. A.R. 85. But unlike the appeal in St. Joseph’s, Baptist-Memphis’s appeal provided no document trail demonstrating that it specifically raised the exclusion of expansion waiver days. In St. Joseph’s, the attached adjustment number and workpapers specifically indicated that St. Joseph’s DSH disallowance was based on its erroneous inclusion of non- Medicaid days. See St. Joseph’s, 425 F. Supp. 2d at 99–100. Here, in contrast, the Intermediary did not audit expansion waiver days, nor did Audit Adjustment # 49 or its associated workpapers make any reference to the exclusion of expansion waiver days. Consistent with St. Joseph’s, the Secretary did not merely look for “magic words” in Baptist-Memphis’s appeal. Rather, she considered the appeal’s document trail and other evidence in the record to determine that Baptist- Memphis was not entitled to hold harmless treatment under PM A-99-62. As noted above, the Secretary’s decisions in this case were based on two independent grounds—first, that Baptist-Memphis did not qualify for hold harmless treatment, and second, that the PRRB violated res judicata principles by bifurcating alternative legal arguments in pursuit of the same relief. Because the Court finds that substantial evidence supports the Secretary’s decisions on the first ground, it need not address Baptist-Memphis’s arguments on the second ground. III. DEFENDANT’S MOTION TO STRIKE The Secretary has moved to strike [44] Baptist-Memphis’s surreply [42]. As the Secretary notes, the Local Rules do not authorize surreplies. See LCvR 7(b) (permitting parties to file only a single memorandum in opposition to a motion). Accordingly, “[t]he decision to grant 17 or deny leave to file a surreply is committed to the sound discretion of the court.” Schmidt v. Shah, 696 F. Supp. 2d 44, 59 (D.D.C. 2010). Leave to file is appropriate when the movant’s surreply raises new arguments requiring some additional response. See United States ex rel. Pogue v. Diabetes Treatment Ctrs. Of Am., Inc., 238 F. Supp. 2d 270, 275–75 (D.D.C. 2002) (“A surreply may be filed only by leave of Court, and only to address new matters raised in a reply to which a party would otherwise be unable to respond.”). Baptist-Memphis failed to move for leave to file its surreply. But even had it done so, the Court would not have granted leave because the Secretary’s reply [39] does not raise new matters requiring an additional response. The Secretary’s reply merely expands on previously- made arguments or responds to arguments raised by Baptist-Memphis. Therefore, the Court in its discretion will grant the Secretary’s motion to strike. IV. CONCLUSION For the reasons stated herein, plaintiff’s Motion [28] for Summary Judgment will be DENIED, defendant’s Cross-Motion [32] for Summary Judgment will be GRANTED, and defendant’s Motion [44] to Strike Plaintiff’s Surreply will be GRANTED. A separate order consistent with this memorandum opinion shall issue this date. Signed by Royce C. Lamberth, Chief Judge, on February 28, 2011. 18	01-03-2023	04-04-2014
https://www.courtlistener.com/api/rest/v3/opinions/2664787/	UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA A. MARGARET CARRANZA et al., : : Plaintiffs, : Civil Action No.: 05-0117 (RMU) : v. : Re Document Nos.: 29, 30 : PHILLIP FRAAS, : : Defendant. : MEMORANDUM OPINION DENYING THE PLAINTIFFS’ RENEWED MOTION FOR RELIEF UPON RECONSIDERATION; GRANTING IN PART AND DENYING IN PART THE DEFENDANT’S RENEWED MOTION FOR SUMMARY JUDGMENT WITHOUT PREJUDICE I. INTRODUCTION The plaintiffs are female farmers who hired the defendant, attorney Phillip Fraas, to represent them in a civil rights discrimination claim against the United States Department of Agriculture (“USDA”). After settlement negotiations with the USDA failed, the plaintiffs commenced this action against the defendant for legal malpractice and breach of fiduciary duty, claiming that the defendant failed to exercise reasonable skill, care and diligence while representing them in their civil rights claim. The plaintiffs subsequently filed a motion requesting a court-appointed expert witness, which this court denied. The plaintiffs have now filed a motion for relief upon reconsideration of that ruling, again asking the court to appoint an expert witness on their behalf. The defendant has, in turn, filed a motion for summary judgment, asserting that the plaintiffs cannot succeed on their claims without expert testimony. Because it would be inappropriate for the court to appoint an expert witness in this case, the court denies the plaintiffs’ motion for relief upon reconsideration. Furthermore, because only one of the plaintiffs’ allegations of malpractice falls within the “common knowledge” exception to the expert testimony requirement in legal malpractice cases, the court grants in part the defendant’s motion for summary judgment. With respect to the one surviving allegation that does fall within the “common knowledge” exception, the court cannot determine at this time whether the entry of summary judgment is appropriate, as the evidence offered by the plaintiffs in opposition to the defendant’s motion raises significant questions about the viability of that claim. Accordingly, the court denies this portion of the defendant’s motion for summary judgment without prejudice and grants the parties leave to file supplemental briefing on this remaining issue. Consequently, the court also denies without prejudice the defendant’s motion for summary judgment on the plaintiff’s breach of fiduciary duty claim. II. FACTUAL & PROCEDURAL BACKGROUND A. Factual Background The plaintiffs are female farmers who reside in Richland County, Montana. Compl. ¶ 3. In the early 1990s, the USDA threatened to foreclose on the plaintiffs’ property based on their purported failure to repay loans owed to the Farm Service Agency (“FSA”). Id. ¶¶ 5, 9; Pls.’ 1st Mot. for Relief Upon Recons. (“Pls.’ 1st Mot. for Recons.”) at 1-2. The plaintiffs subsequently commenced a civil rights action against the USDA, alleging that the USDA had discriminated against them during their participation in the USDA’s Farm Loan Programs and during the course of the plaintiffs’ attempts to obtain Chapter 12 bankruptcy protection. Pls.’ Opp’n to Def.’s Renewed Mot. for Summ. J. (“Pls.’ Renewed Opp’n”) at 3. In 1998, the plaintiffs retained the defendant to represent them in their action against the USDA. Compl. ¶ 5. In December 1998, the USDA made a settlement offer to the plaintiffs in the amount of $98,000. Pls.’ Renewed Opp’n, Aff. of A.M. Carranza (“A.M. Carranza Aff.”), 2 Ex. 2 at 1. After consulting with the defendant, the plaintiffs rejected this offer and proposed a counter-offer, which the USDA subsequently rejected. Pls.’ Reply in Support of Mot. for Court- Appointed Expert Witness (“Pls.’ 1st Reply”) at 6. In April 2000, Rosalind Gray, the Director of the USDA Office of Civil Rights (“OCR”), requested information from the defendant concerning the plaintiffs’ damages, presumably to aid in settlement of the plaintiffs’ claim. Id. at 7. The defendant provided the requested information in September 2000. See id. at 7-8. In January 2001, Gray allegedly extended a second settlement offer to the plaintiffs for an amount substantially higher than was offered in the USDA’s initial offer.1 See Pls.’ Renewed Opp’n, Aff. of J. Carranza (“J. Carranza Aff.”) ¶ 11. The plaintiffs allege that the defendant never informed them of this second offer. Id.; A.M. Carranza Aff. ¶ 5. According to the plaintiffs, because the defendant failed to communicate with them about the January 2001 settlement proposal and failed to provide certain paperwork requested by the USDA in connection with the offer, the January 2001 offer eventually expired. Compl. ¶ 7; Pls.’ Renewed Opp’n at 4-7. In January 2002, the plaintiffs traveled to Washington, D.C. to attend the trial of Sharon Mavity, an individual who had asserted discrimination claims against the USDA similar to those asserted by the plaintiffs. Pls.’ Opp’n to Def.’s 1st Mot. for Summ. J. (“Pls.’ 1st Opp’n”) at 6-7. While in Washington, the plaintiffs allegedly met with Gray, who had since left her position as Director of USDA OCR, to discuss their claim against the USDA. Pls.’ Renewed Opp’n at 4-6. During this meeting, the plaintiffs allegedly learned for the first time of the January 2001 1 The amount of Gray’s proposal in January 2001 is unclear. Although the plaintiffs indicate that the January 2001 offer may have been in excess of one million dollars, Pls.’ Opp’n to Def.’s 1st Mot. for Summ. J. at 7, there is nothing in the record confirming that an offer was in fact extended to the plaintiffs in January 2001, much less any evidence confirming the amount of the January 2001 proposal. 3 settlement proposal. Id.; Compl. ¶ 6. On January 29, 2002, the plaintiffs terminated their attorney-client relationship with the defendant. See generally Pls.’ Renewed Opp’n, Ex. 7. B. Procedural History In January 2005, the plaintiffs filed their complaint against the defendant for legal malpractice and breach of fiduciary duty. See generally Compl. The court directed the plaintiffs to designate an expert witness by August 18, 2006. Minute Entry (Sept. 13, 2005). The plaintiffs did not designate an expert witness by that date. Instead, on September 11, 2006, the plaintiffs filed a motion requesting that the court appoint an expert witness on their behalf, citing Federal Rule of Evidence 706(a). See generally Pls.’ Mot. for Court-Appointed Expert Witness. The defendant opposed the plaintiffs’ motion and filed a motion for summary judgment. See generally Def.’s Opp’n to Pls.’ Mot. for Court-Appointed Expert Witness; Def.’s 1st Mot. for Summ. J. (“Def.’s 1st Mot.”). While the defendant’s motion for summary judgment remained pending, the court denied the plaintiffs’ motion for a court-appointed expert witness. See generally Mem. Order (Jan. 3, 2007). In January 2007, the plaintiffs filed a motion for relief upon reconsideration of the court’s ruling on their request for a court-appointed expert witness. See generally Pls.’ 1st Mot. for Recons. The defendant failed to file a response within the allotted deadline presumably because the arguments raised in the plaintiffs’ motion were identical to those in their initial motion for a court-appointed expert witness. Def.’s Opp’n to Pls.’ 1st Mot. for Recons. (“Def.’s 1st Opp’n”) at 1-2. At the court’s prompting, however, the defendant subsequently filed a motion for leave to late-file his opposition together with an opposition to the plaintiffs’ motion for relief upon 4 reconsideration. See generally Def.’s Mot. for Leave to Late-File Opp’n to Pls.’ 1st Mot. for Recons.; Def.’s 1st Opp’n. Before ruling on the plaintiffs’ motion for relief upon reconsideration or the defendant’s motion for summary judgment, the court stayed this case because the Circuit was considering an appeal from the court’s ruling in Mavity v. Fraas, 456 F. Supp. 2d 29 (D.D.C. 2006). Like the plaintiffs in this case, the plaintiff in Mavity, the aforementioned Sharon Mavity, had commenced a legal malpractice action against attorney Fraas based on her dissatisfaction with the defendant’s representation in her case against the USDA. Id. at 31-32. The court granted summary judgment to the defendant because the plaintiff had not designated an expert witness as required. Id. at 34-35. Because the court’s decision in Mavity turned on the necessity of providing expert testimony in an action for legal malpractice, see id. at 33-35, the court stayed this action, noting that the Circuit’s decision in Mavity could affect the outcome of the present case. See Order (Apr. 23, 2007). In February 2009, after the Circuit affirmed this court’s ruling in Mavity and after the Mavity plaintiff’s petition for certiorari was denied, the court lifted the stay and ordered the parties to re-file any dispositive motions. On March 23, 2009, the plaintiffs renewed their motion for relief upon reconsideration of the court’s ruling on their request for a court-appointed expert witness.2 See generally Pls.’ Renewed Mot. for Relief upon Recons. (“Pls.’ Renewed Mot. for Recons.”). The defendant, in turn, filed a renewed motion for summary judgment, arguing that the plaintiffs could not succeed 2 The plaintiffs filed their motion for relief upon reconsideration pursuant to Federal Rule of Civil Procedure 59(e). See Pls.’ 1st Mot. for Recons. at 5-6. Because, however, Rule 59(e) governs altering or amending a final judgment, it is inapplicable in this context, as this court’s ruling on the plaintiffs’ motion for a court-appointed expert witness did not constitute a final judgment. See FED. R. CIV. P. 59(e). Thus, the court treats the plaintiffs’ motion as a motion for relief upon reconsideration of an interlocutory decision pursuant to Rule 54(b). See id. 54(b) (providing that a district court may revise its own interlocutory decisions “at any time before the entry of judgment adjudicating all the claims and the rights and liabilities of all the parties”). 5 on their legal malpractice and breach of fiduciary duty claims without an expert witness, and that their claims were barred by the doctrine of collateral estoppel based on this court’s ruling in Mavity.3 Def.’s Renewed Mot. for Summ. J. (“Def.’s Renewed Mot.”) at 1-3. With both motions ripe for adjudication, the court turns to the applicable legal standards and the parties’ arguments. III. ANALYSIS A. The Court Denies the Plaintiffs’ Renewed Motion for Relief Upon Reconsideration 1. The Plaintiffs Are Not Entitled to a Court-Appointed Expert Witness Under Federal Rule of Evidence 706 In their renewed motion for relief upon reconsideration, the plaintiffs again request that the court appoint an expert witness on their behalf pursuant to Federal Rule of Evidence 706(a). Pls.’ Renewed Mot. for Recons. at 1. The plaintiffs acknowledge that in a legal malpractice action, they have the burden of proving the standard of care through expert testimony. Id. at 2; see infra Part III.B.2. They assert, however, that the court erred in denying their prior motion for an expert witness because the court misapprehended the nature of their claims against the USDA.4 Pls.’ Renewed Mot. for Recons. at 1-2. The defendant opposes the plaintiffs’ motion, 3 The court turns first to the plaintiffs’ claim for legal malpractice because the viability of their claim for breach of fiduciary duty depends on their ability to prove the elements of their legal malpractice claim. See Mawalla v. Hoffman, 569 F. Supp. 2d 253, 257 (D.D.C. 2008) (stating that “[i]n professional malpractice cases, additional claims which are based on the underlying malpractice claim cannot survive if the professional malpractice claim fails”); Macktal v. Garde, 111 F. Supp. 2d 18, 23 (D.D.C. 2000) (stating that contract and tort claims arising out of a plaintiff’s professional malpractice claim will fail if the plaintiff is unable to prove professional negligence); see also infra Part III.B.3. 4 The plaintiffs also contend that impermissible ex parte communication that occurred between one of the undersigned judge’s law clerks and the defendant’s counsel constitutes grounds for granting relief upon reconsideration of their motion for a court-appointed expert witness. This contention is discussed infra Part III.A.2. 6 asserting that the plaintiffs have offered no new justifications for their request. Def.’s Opp’n to Pls.’ Renewed Mot. for Recons. (“Def.’s Renewed Opp’n”) at 3-4. As the court already noted in its prior ruling on this issue, see Mem. Order (Jan. 3, 2007) at 2-6, Federal Rule of Evidence 706 allows courts, in certain limited circumstances, to designate an expert witness, FED. R. EVID. 706; see also Applegate v. Dobrovir, Oakes & Gebhardt, 628 F. Supp. 378, 383 (D.D.C. 1985) (noting that “‘compelling circumstances’ . . . make appointment of an expert by the court appropriate”). The decision to appoint an expert witness lies within the discretion of the court and “is to be informed by such factors as the complexity of the matters to be determined and the fact-finder’s need for a neutral, expert view.” Tangwall v. Robb, 2003 WL 23142190, at 3 (E.D. Mich. Dec. 23, 2003); see also In re McGhan Med. Corp., 2000 WL 1521338, at 1 (Fed. Cir. Sept. 29, 2000); Applegate, 628 F. Supp. at 383. Courts do not, however, appoint expert witnesses for the purpose of assisting a litigating party. See Hannah v. United States, 2006 WL 2583190, at 4 (N.D. Tex. Sept. 1, 2006) (declining to appoint an expert witness for a pro se plaintiff because such appointment would merely assist the plaintiff prove his case rather than provide a neutral expert view for the court); Daker & Kennedy v. Wetherington, 2006 WL 648765, at 5 (N.D. Ga. Mar. 15, 2006) (noting that “[l]itigant assistance is not the purpose of Rule 706”). In their renewed motion for relief upon reconsideration, the plaintiffs assert that the court should appoint an expert witness to clarify matters related to their prior claims against the USDA, including “USDA credit policies, farm loan programs, mandated congressional loan servicing programs, USDA rules and regulations and how civil rights discrimination affects them.” Pls.’ Renewed Mot. for Recons. at 2. The plaintiffs have not explained, however, the relevance of these matters to their claims against the defendant in this case. See id. at 1-2. 7 Indeed, it would appear that the plaintiffs’ request is motivated by their desire for an expert witness to help them prove their case rather than any need for a neutral expert view to assist the court. See id. Although the plaintiffs imply that they cannot secure an expert witness because they are indigent, see id. at 2, 4; Pls.’ 1st Mot. for Recons. at 3, a pro se litigant’s inability to secure an expert witness in a legal malpractice case does not constitute a “compelling circumstance” warranting the court’s appointment of an expert witness, Applegate, 628 F. Supp. at 383. Accordingly, the court again concludes that the plaintiffs are not entitled to a court- appointed expert witness. 2. The Court Did Not Engage in Impermissible Ex Parte Communication Before departing the plaintiffs’ renewed motion for relief upon reconsideration, the court briefly addresses the plaintiffs’ assertion that the court engaged in an impermissible ex parte communication when it requested that the defendant file an opposition to the plaintiffs’ first motion for relief upon reconsideration. See Pls.’ Renewed Mot. for Recons. at 4-7. As previously noted, in January 2007, the plaintiffs filed their first motion for relief upon reconsideration of the court’s order denying their request for a court-appointed expert witness. See generally Pls.’ 1st Mot. for Recons. Because the plaintiffs’ motion for relief upon reconsideration merely rehashed arguments raised in the plaintiffs’ original motion for a court- appointed expert, the defendant chose not to file an opposition. See Def.’s Mot. for Leave at 1. In March 2007, the court contacted the defendant through one of the undersigned judge’s law clerks and requested that the defendant file an opposition to the plaintiffs’ motion for relief upon reconsideration. Id. at 2. The defendant subsequently filed a motion for leave to late-file an opposition to the plaintiffs’ motion, together with a proposed opposition. See generally id; Def.’s 1st Opp’n. 8 The plaintiffs contend that by requesting that the defendant file an opposition to the plaintiffs’ motion, the court engaged in an improper ex parte communication evidencing the court’s bias in favor of the defendant. Pls.’ Renewed Mot. for Recons. at 4-7. The plaintiffs are mistaken. Ex parte communications between a judge, acting through one of his or her law clerks, and counsel or a witness that do not touch upon the merits of the case generally do not warrant relief. See, e.g., Kaufman v. Am. Family Mut. Ins. Co., 601 F.3d 1088, 1095 (10th Cir. 2010) (upholding a district court’s determination that a telephone call from a judge’s law clerk to counsel was harmless and warranted no further investigation or sanctions); Knop v. Johnson, 977 F.2d 996, 1011 (6th Cir. 1992) (concluding that a law clerk’s telephone call requesting that a witness file supplemental documentation did not warrant a new trial); United States v. Helmsley, 760 F. Supp. 338, 345 (S.D.N.Y. 1991) (stating that a phone call between a law clerk and counsel requesting that counsel submit a scheduling proposal was not impermissible and did not suggest bias because it did not involve discussion of the merits or of any issue in the case). During the phone conversation in which the court requested that the defendant file an opposition to the plaintiffs’ motion, the substance of the case was never discussed. See Def.’s. Renewed Opp’n at 4. Additionally, the plaintiffs were not denied any relief to which they were otherwise entitled as a result of the telephone call. Local Civil Rule 7(b) provides that “an opposing party has 14 days to file a memorandum in opposition to the motion, and if such party fails to do so, the Court may treat the motion as conceded.” LCvR 7(b) (emphasis added). Whether to treat a motion as conceded is highly discretionary, Int’l Painters & Allied Trades Indus. Pension Fund v. Benchmark Constr. Servs., Inc., 2010 WL 2521727, at 1 (D.D.C. June 22, 2010), and the 9 decision “lies wholly with the district court,” Fed. Deposit Ins. Co. v. Bender, 127 F.3d 58, 68 (D.C. Cir. 1997). Because the court was not required to grant the plaintiffs’ first motion for relief upon reconsideration as conceded, the plaintiffs were not denied any relief to which they were entitled as a result of the ex parte communication. Finally, any prejudice allegedly suffered by the plaintiffs was mitigated by the fact that they responded to the defendant’s opposition and opposed the defendant’s motion for leave to late-file. See Foster v. United States, 615 A.2d 213, 221 (D.C. 1992) (holding that a judge’s ex parte communication with one party was not impermissible, in “significant” part because the other party “had an opportunity to challenge” a revised sentencing recommendation and make other, more favorable recommendations to the judge on his behalf). For these reasons, the court concludes that its ex parte communication with the defendant’s counsel did not prejudice the plaintiffs and does not warrant granting the plaintiffs’ request for a court-appointed expert. B. The Court Grants in Part and Holds in Abeyance in Part the Defendant’s Renewed Motion for Summary Judgment 1. Legal Standard 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); Diamond v. Atwood, 43 F.3d 1538, 1540 (D.C. Cir. 1995). To determine which facts are “material,” a court must look to the substantive law on which each claim rests. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A “genuine dispute” is one whose resolution could establish an element of a claim or defense and, therefore, affect the outcome of the action. Celotex, 477 U.S. at 322; Anderson, 477 U.S. at 248. 10 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. By pointing to the absence of evidence proffered by the nonmoving party, a moving party may succeed on summary judgment. Id. 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 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. 2. The Defendant’s Alleged Legal Malpractice The plaintiffs allege that the defendant committed legal malpractice by (1) failing to meet USDA-imposed deadlines in pursuing a settlement in their civil rights discrimination claim, (2) failing to disclose a conflict of interest that resulted from his work as a registered lobbyist and (3) failing to inform them of the USDA’s January 2001 settlement offer. See Compl. ¶¶ 7-8. The defendant argues that summary judgment should be granted in his favor because the plaintiffs cannot establish the elements of legal malpractice without the aid of expert testimony. 11 Def.’s Renewed Mot. at 1. More specifically, the defendant argues that the plaintiffs must present expert testimony to establish the applicable standard of care and to prove causation. Id. at 4-5. Because the plaintiffs have not designated an expert witness, the defendant asserts, they cannot establish the elements of their legal malpractice claim. Id. The defendant also contends that the plaintiffs’ claims are barred under the doctrine of collateral estoppel because the issue of whether expert testimony is required in this case was resolved in Mavity v. Fraas. Id. at 5-6. The plaintiffs respond that no expert testimony is necessary because the defendant’s alleged negligence falls within the so-called “common knowledge” exception to the expert testimony requirement. Pls.’ Renewed Opp’n at 9-10. That is, the plaintiffs assert that the defendant’s alleged negligence is so obvious as to obviate the need for expert testimony. Id. To establish legal malpractice under D.C. law,5 the plaintiffs must demonstrate the applicable standard of care, that the attorney violated that standard and that the violation caused a legally cognizable injury. Kaempe v. Myers, 367 F.3d 958, 966 (D.C. Cir. 2004); O’Neil v. Bergan, 452 A.2d 337, 341 (D.C. 1982). In making this showing, the plaintiffs “must present expert testimony establishing the standard of care unless the attorney’s lack of care and skill is so obvious that the trier of fact can find negligence as a matter of common knowledge.” O’Neil, 452 A.2d at 341; see also Kaempe, 367 F.3d at 966. Conduct falling within the “common knowledge” exception includes 5 While neither party provides even a cursory choice of law analysis, both rely on District of Columbia law in their submissions to the court. See generally Def.’s Renewed Mot.; Pls.’ Renewed Opp’n. Because both parties assume that D.C. law applies, D.C. law is appropriately applied in this case. See Davis v. Grant Park Nursing Home LP, 639 F. Supp. 2d 60, 65 (D.D.C. 2009) (stating that where all parties assume D.C. law applies, “[t]he Court need not and does not question the parties’ assumptions on that point”); see also CSX Transp., Inc. v. Commercial Union Ins. Co., 82 F.3d 478, 482-83 (D.C. Cir. 1996) (noting that parties may waive choice-of- law arguments); In re Korean Air Lines Disaster of Sept. 1, 1983, 932 F.2d 1475, 1495 (D.C. Cir. 1991) (stating that “courts need not address choice of law questions sua sponte”). 12 allowing the statute of limitations to run on a client’s claim; permitting entry of default judgment against the client; failing to instruct the client to answer interrogatories; failing to allege affirmative defenses; failing to file tax returns; failing to follow the client’s explicit instructions; and billing a client for time not spent providing services. Kaempe, 367 F.3d at 966 (internal citations omitted). Because the plaintiffs failed to designate an expert witness before the allotted deadline and are not entitled to a court-appointed expert witness, they can satisfy the elements of their legal malpractice claim only if the defendant’s alleged misconduct falls under the common knowledge exception. See, e.g., id. at 966-67 (granting summary judgment to the defendant because the plaintiff provided no expert testimony to support his legal malpractice claim and none of his allegations fell within the common knowledge exception); accord Mavity, 456 F. Supp. 2d at 34-35. The court considers the plaintiffs’ three allegations of misconduct in turn. a. The Defendant’s Alleged Failure to Meet USDA-Imposed Deadlines in Connection With Settlement Negotiations Does Not Fall Within the Common Knowledge Exception The plaintiffs allege that settlement negotiations with the USDA fell through because the defendant negligently failed to meet the deadlines imposed by the USDA and did not submit the paperwork necessary to pursue the January 2001 settlement offer. Compl. ¶ 7; Pls.’ Renewed Opp’n at 4-6. The defendant denies that he failed to meet these deadlines. Answer ¶ 7. Moreover, the defendant contends that expert testimony would be required to establish that such a failure constituted malpractice, and that collateral estoppel bars the plaintiffs’ claim. See Def.’s Renewed Mot. at 4-6. The D.C. Court of Appeals has observed that “generally speaking, an attorney ‘has a duty to pay attention to filing deadlines and not to let one go by in any pending case without doing whatever needs to be done.’” Liu v. Allen, 894 A.2d 453, 460 (D.C. 2006) (quoting Cameron v. Wash. Metro. Area Transit Auth., 649 A.2d 291, 294 (D.C. 1994)). Failing to adhere to filing 13 deadlines is a type of negligence that may fall within the common knowledge exception. See, e.g., Fed. Trade Comm’n v. Hope Now Modifications, LLC, 2010 WL 3001985, at 6 (D.N.J. July 27, 2010) (noting that an attorney’s failure to meet a deadline constitutes a “more obvious legal malpractice case” than the rendering of “faulty legal advice regarding the complex legal requirements governing loan modification businesses”). Not every failure to meet a deadline, however, falls within the common knowledge exception. See, e.g., Liu, 894 A.2d at 460-61 (concluding that an attorney’s failure to meet a deadline to file a motion for relief upon reconsideration in an immigration proceeding did not constitute negligence as a matter of law); Mavity, 456 F. Supp. 2d at 34 (concluding that “a lay jury would not have the expertise or experience to evaluate the ramifications” of the defendant’s failure to file evidence before a court-imposed deadline). Indeed, expert testimony may be required to establish the appropriate standard of care even when the failure to meet a deadline appears to be an obvious case of professional negligence. See Spurlock v. Halprin, 2006 WL 2346003, at 9-10 (M.D. Tenn. Aug. 11, 2006) (noting that although “the Court is unimpressed with [the defendant’s] testimony that he made a strategic decision to file an untimely . . . motion” on a dispositive issue, “litigation strategy . . . is not easily examined by the ordinary, lay fact- finder without the aid of expert legal testimony”). The deadline at issue in this case was not a court-imposed, legally mandatory filing deadline. Rather, the deadline at issue here was an unspecified time during which the USDA expected the defendant to file paperwork in accordance with Gray’s purported January 2001 settlement proposal. See Pls.’ Renewed Opp’n at 4-6. In this court’s view, it is far from clear that a lay jury could determine the significance of the defendant’s alleged failure to comply with such deadlines without the aid of expert testimony. The court therefore concludes that this 14 allegedly negligent act does not fall within the common knowledge exception to the expert testimony requirement. Accordingly, the court grants summary judgment to the defendant with respect to the plaintiffs’ malpractice claim premised on his alleged failure to meet USDA- imposed deadlines during settlement negotiations with the USDA. b. The Defendant’s Alleged Conflict of Interest Does Not Fall Within the Common Knowledge Exception The plaintiffs also allege that the defendant committed legal malpractice by failing to disclose a conflict of interest. Compl. ¶ 8. Specifically, the plaintiffs allege that the defendant had a conflict of interest while representing them in their claims against the USDA because “he is a registered lobbyist that represents special interests who were vying [for] and needed special financial considerations from the [USDA] for their business success to the detriment of the Plaintiffs[’] legal needs.” Id. The defendant admits that he is a registered lobbyist, but denies that any conflict of interest existed. Answer ¶ 8. Moreover, the defendant contends that expert testimony would be required to establish that this purported conflict of interest constituted malpractice, and further asserts that collateral estoppel bars the plaintiffs’ claim. Def.’s Renewed Mot. at 4-6; Def.’s Reply to Pls.’ Opp’n to Def.’s Renewed Mot. for Summ. J. (“Def.’s Reply”) at 4-5. Although some jurisdictions have held that no expert testimony is necessary in cases involving obvious conflicts of interest, see, e.g., Hill v. Okay Constr. Co., 252 N.W.2d 107, 116 (Minn. 1977), this Circuit has held that under D.C. law, assessing an alleged conflict of interest is a task that falls beyond the ken of a lay juror relying on common knowledge and requires expert testimony, see, e.g., Athridge v. Aetna Cas. & Sur. Co., 351 F.3d 1166, 1174 (D.C. Cir. 2003) (applying D.C. law); see also Handy v. Shaw, Bransford, Veilleux & Roth, 2006 WL 3791387, at 4, *6 (D.D.C. Dec. 22, 2006) (applying D.C law). Indeed, the alleged conflict of 15 interest here is far less obvious than that in a case involving, for example, a malpractice claim against an attorney who represented both the plaintiff and defendant in a litigation. See Hill, 252 N.W.2d at 116. The court thus concludes that the plaintiffs cannot establish that the defendant’s alleged conflict of interest amounted to legal malpractice without the benefit of expert testimony. Accordingly, the court grants summary judgment to the defendant on the plaintiffs’ malpractice claim premised on this alleged conflict of interest. c. The Defendant’s Alleged Failure to Inform the Plaintiffs of the January 2001 Settlement Offer Falls Within the Common Knowledge Exception, But Further Evidence is Needed to Conclusively Grant or Deny Summary Judgment on this Issue Finally, the plaintiffs allege that the defendant committed malpractice by failing to inform them of the USDA’s January 2001 settlement proposal. See Compl. ¶ 7; J. Carranza Aff. ¶ 11; A.M. Carranza Aff. ¶ 5. They assert that they first learned of the January 2001 proposal when they spoke with Gray in Washington, D.C. in 2002. Pls.’ Renewed Opp’n at 4-6. The plaintiffs contend that the defendant’s failure to inform them of the January 2001 proposal constitutes an instance of malpractice that falls within the common knowledge exception. Compl. ¶ 7; Pls.’ Renewed Opp’n at 4-7. Although the defendant does not dispute that he had such a duty, he denies that he failed to keep the plaintiffs apprised of any developments in their case and asserts that settlement negotiations simply fell apart. See Answer ¶ 7; Def.’s Renewed Mot. at 1. Moreover, the defendant contends that expert testimony would be required to establish that this failure constituted malpractice, and further asserts that collateral estoppel bars the plaintiffs’ claim. Def.’s Renewed Mot. at 4-6. Without question, an attorney has a duty to inform his client of meaningful settlement offers made in the course of civil litigation. See, e.g., D.C. RULES OF PROF’L CONDUCT R. 1.4(a) 16 cmt. 1 (providing that “[a] lawyer who receives from opposing counsel an offer of settlement in a civil controversy . . . is required to inform the client promptly of its substance”);6 Sommers v. McKinney, 670 A.2d 99, 104 (N.J. App. Super. 1996) (stating that “[o]nce settlement discussions commenced, [the attorney] was obliged to communicate all offers to [the client]”); Rizzo v. Haines, 555 A.2d 58, 66 (Pa. 1989) (stating that “[c]onsistent with ordinary skill and knowledge, it was incumbent upon [the attorney], as a matter of law, to communicate all settlement offers to his client”). The duty to inform clients of all settlement offers “derives from the settled principle that an attorney must have express authority from the client to settle the case.” Rizzo, 555 A.2d at 66 (internal citations omitted). Numerous courts have concluded that a breach of this duty falls within the common knowledge exception to the expert testimony requirement in a legal malpractice action. See, e.g., Joos v. Auto-Owners Ins. Co., 288 N.W.2d 443, 445 (Mich. App. 1979) (explaining that it is “well within the ordinary knowledge and experience of a layman jury to recognize that . . . the failure of an attorney to disclose [settlement offers] is a breach of the professional standard of care”); see also Sommers, 670 A.2d at 105 (concluding that no expert witness testimony was required to establish that an attorney’s failure to brief his client on a settlement offer was a 6 The comment to Rule 1.4(a) of the D.C. Rules of Professional Conduct further states: The client should have sufficient information to participate intelligently in decisions concerning the objectives of the representation and the means by which they are to be pursued, to the extent the client is willing and able to do so. For example, a lawyer negotiating on behalf of a client should provide the client with facts relevant to the matter, inform the client of communications from another party, and take other reasonable steps that permit the client to make a decision regarding a serious offer from another party. A lawyer who receives from opposing counsel an offer of settlement in a civil controversy . . . is required to inform the client promptly of its substance. D.C. RULES OF PROF’L CONDUCT R. 1.4(a) cmt. 1. 17 breach of duty to the client); Rizzo, 555 A.2d at 67 (holding that “breach of the duty to investigate, and to inform one’s client of, settlement offers does not require expert testimony”). This court is satisfied that a lay jury could recognize, based on common knowledge, that an attorney’s failure to inform his or her client of a settlement offer is a breach of duty owed to the client. A lay juror could surely recognize, based on common knowledge and common sense, that an attorney breaches the duty of care to a client when the attorney withholds from the client information about a settlement offer, which is certainly vital to the outcome of the client’s case. Withholding such information precludes a client’s ability to participate in any substantial way in decisions that go to the core of the attorney-client relationship.7 See D.C. RULES OF PROF’L CONDUCT R. 1.4(a) cmt. 1. Thus, the court concludes that an attorney’s failure to inform his or her client of a settlement offer falls under the common knowledge exception and does not require the client to present expert testimony to establish legal malpractice. Accordingly, the plaintiffs’ inability to present expert testimony does not warrant granting summary judgment to the defendant on this claim. The defendant also asserts that the plaintiffs’ malpractice claim is barred by the doctrine of collateral estoppel based on this court’s ruling in Mavity v. Fraas, in which the court held that expert testimony was required for the plaintiff to succeed on her legal malpractice claim. Def.’s 7 Although the plaintiffs assert that violations of the District of Columbia Rules of Professional Conduct are sufficient to demonstrate legal malpractice, Pls.’ Renewed Opp’n at 6-7, the Rules themselves explicitly state that nothing in the Rules “is intended to enlarge or restrict existing law regarding . . . the requirements that the testimony of expert witnesses or other modes of proof must be employed in determining the scope of a lawyer’s duty to others,” D.C. RULES OF PROF’L CONDUCT, SCOPE. Similarly, violations of the American Bar Association’s Code of Professional Responsibility cannot, by themselves, establish the standard of care. Waldman v. Levine, 544 A.2d 683, 690-91 (D.C. 1988). Such violations, however, do provide evidence of the relevant standard of care governing attorney conduct. Id.; accord Williams v. Mordkofsky, 901 F.2d 158, 163 (D.C. Cir. 1990); Shapiro, Lifschitz & Schram, P.C. v. Hazard, 24 F. Supp. 2d 66, 75 (D.D.C. 1998). 18 Renewed Mot. at 5-6. This argument is meritless. Collateral estoppel, or issue preclusion, applies if three criteria are met: (1) if in the prior litigation, the issue was “actually litigated, that is, contested by the parties and submitted for determination by the court;” (2) if the prior litigation was “actually and necessarily determined by a court of competent jurisdiction;” and (3) if “preclusion in the second trial [does] not work an unfairness.” Otherson v. Dep’t of Justice, 711 F.2d 267, 273 (D.C. Cir. 1983) (citations omitted). In Mavity, this court never addressed the issue of an attorney’s failure to inform his client of a settlement offer. See Mavity, 456 F. Supp. 2d at 34-35 (explaining that the plaintiff alleged that the defendant (1) failed to adequately prepare and pursue her case though the administrative process, (2) failed to adequately prepare and present her case in a professional manner at trial and (3) failed to file evidence in a timely manner). Mavity, therefore does not have collateral estoppel effect on the plaintiffs’ claim regarding the defendant’s alleged failure to disclose the January 2001 settlement proposal and the court denies the defendant’s motion for summary judgment with respect to this claim. Nonetheless, the court notes that the evidence submitted by the plaintiffs suggests that they may, in fact, have been informed of the January 2001 settlement proposal. Specifically, in connection with their motion for a court-appointed expert witness, the plaintiffs submitted a letter from the defendant to a third party, dated January 9, 2001, which states that “Rosalind Gray, the Director of USDA’s Office of Civil Rights (OCR) recently developed a proposal to settle the [plaintiffs’] civil rights case.” Pls.’ 1st Reply, Ex. H at 1. Similarly, in their opposition to the defendant’s first motion for summary judgment, the plaintiffs attached another letter from the defendant to a third party, dated February 27, 2001, which states that “in January [2001] . . . the Director of the [OCR] extended to me a proposal to settle the case that would have put on the table an offer of substantial money damages to the Carranzas.” Pls.’ Opp’n to Def.’s 1st Mot. for 19 Summ. J. (“Pls.’ 1st Opp’n”), Ex. 14 at 1. The facsimile notes accompanying both letters, see id.; Pls.’ 1st Reply, Ex. H at 1, indicate that the defendant transmitted these letters to the plaintiffs, a fact that, if true, would significantly undermine the plaintiffs’ assertion that the defendant never informed them of the January 2001 proposal, see J. Carranza Aff. ¶ 11; A.M. Carranza Aff. ¶ 5. Moreover, the court notes that there is a paucity of evidence in the record documenting that the USDA officially made a formal settlement offer to the plaintiffs in January 2001. See generally Pls.’ Renewed Mot.; Pls.’ Renewed Opp’n; Pls.’ Reply. The plaintiffs have not submitted any evidence, such as a declaration from Gray, confirming that the USDA extended an official settlement offer in January 2001. The evidence before the court establishes only that USDA was developing a second proposal and does not clearly establish that a second official settlement offer was formally extended. See Pls.’ 1st Reply, Ex. H at 1, Pls.’ 1st Opp’n, Ex. 14 at 1. Thus, although the plaintiffs need not present expert testimony to support their malpractice claim premised on the defendant’s failure to inform them of the January 2001 settlement offer, the evidence presented thus far raises serious questions about the viability of this claim. Accordingly, although the court denies the defendant’s motion for summary judgment, it does so without prejudice to a renewed motion addressing the plaintiff’s allegation regarding the defendant’s failure to inform them of the January 2001 settlement offer. See In re Breast Implant Cases, 942 F. Supp. 958, 961 (S.D.N.Y. 1996) (“In cases where additional information is required to adequately pass on a motion for summary [judgment], the practice has been to deny the motion, with leave to renew, allowing further discovery and development of evidence.”); 10A FED. PRAC. & PROC. § 2718 (observing that “it is within the trial court’s 20 discretion to deny a motion for summary judgment without prejudice to its being renewed at a later time and the court may grant a renewed motion upon a showing of good cause”); see also Greene, 164 F.3d at 675 (noting that the purpose of summary judgment is to ensure that a case is sufficiently meritorious to warrant the expense of a trial). In granting the defendant leave to renew his motion, the court intends to provide the parties an opportunity to supplement the record with additional evidence and argument so that the court may determine whether there exists a genuine issue of material fact in dispute on this allegation. 3. The Defendant’s Alleged Breach of Fiduciary Duty The plaintiffs assert that the defendant breached the fiduciary duty he owed to them by violating the D.C. Rules of Professional Conduct. See Compl. ¶ 7; Pls.’ Renewed Opp’n at 7. The defendant denies breaching his fiduciary duty to the plaintiffs. Answer ¶ 7. In an action for legal malpractice, an additional claim for breach of fiduciary duty based on the underlying malpractice claim cannot survive if the legal malpractice claim fails. Mawalla v. Hoffman, 569 F. Supp. 2d 253, 257 (D.D.C. 2008); Macktal v. Garde, 111 F. Supp. 2d 18, 23 (D.D.C. 2000). As previously discussed, at this time, the court cannot at this time determine at this time the viability of the plaintiff’s malpractice claim premised on the defendant’s alleged failure to inform them of the January 2001 settlement offer. See supra Part III.B.2. Consequently, the court denies the defendant’s motion for summary judgment on the plaintiff’s fiduciary duty claim without prejudice to the court’s consideration of a renewed motion. 21 IV. CONCLUSION For the foregoing reasons, the court denies the plaintiffs’ renewed motion for relief upon reconsideration of the court’s denial of their motion for a court-appointed expert witness, and grants in part and denies without prejudice in part the defendant’s renewed motion for summary judgment. An Order consistent with this Memorandum Opinion is separately and contemporaneously issued this 7th day of February, 2011. RICARDO M. URBINA United States District Judge 22	01-03-2023	04-04-2014
https://www.courtlistener.com/api/rest/v3/opinions/2665155/	UNITED sTATEs DISTRICT CoURT F 1 L E D FoR THE i)1sTR1cT oF CoLUMBIA ) OCT - 7 2010 ~ - k t UN"ED SWES OF AMERICA» § £::‘:i:z?i.‘it:;i:i;%it;i:,':ii,ia ) v. ) Criminal Action No. 09-359 (RBW) ) MORRIS FAHNBULLEH, ) ) Defendant. ) g MEMORANDUM OPINION Morris Fahnbulleh, one of three co-defendants in this criminal case,’ is charged with, gel La, one count of Conspiracy to Defraud the United States, 18 U.S.C. § 371; one count of Conspiracy to Commit Mail and Wire Fraud, 18 U.S.C. § 1349; four counts of Mail Fraud, 18 U.S.C. § 1341; two counts of Wire Fraud, 18 U.S.C. § 1343; and four counts of submitting False Claims, 18 U.S.C. § 287. Indictment W l-l7. Currently before the Court is the Defense Motion to Dismiss lndictment With Prejudice for Speedy Trial Act Violation (the "Def.’s Mot. to Dismiss lndict.").z After considering the defendant’s motion, the government’s memorandum in opposition to the defendant’s motion to dismiss (the "Gov’t’s 8/27/ 10 Opp’n to Dismiss Indict.")f and all relevant documents and exhibits attached thereto," the Court concludes for the following reasons that it must deny the defendant’s motion to dismiss the indictment. ' The other defendants in this case are Joe Bondo, who is also before the Court in this case, and Thomas Parker, who has been indicted but yet to be arrested. 2 The defendant is now representing himself, and his pr_o §§ motion was filed on August 10, 2010. 3 The defendant, through counsel, initially filed a motion to dismiss the indictment on July l, 2010, to which the government filed a memorandum in opposition (the "Gov’t’s 7/9/ 10 Opp’n to Dismiss lndict"). The defendant, however, moved p_rg se to withdraw the motion to dismiss filed by his former counsel (and current stand-by counsel), and the Court granted his request. Aug. 5, 2010 Order at 1. The defendant then proceeded to file the (continued . . .) I. BACKGROUND The government filed a criminal complaint against the defendant on May l8, 2009, alleging that he committed acts of theft, fraud, and other related crimes, see Compl. at l-5, in connection with an alleged "scheme to steal hundreds of thousands of dollars worth of humanitarian assistance from the" Food Support for Community Resettlement and Rehabilitation Project, i_d_., Ex. 1 (Affidavit of Special Agent Alcides Evora) 11 18, a program in which the United States Agency for lnternational Development "contributes commodities (like surplus U.S. wheat and oil) to targeted communities in exchange for community members’ work on infrastructure projects, such as road rehabilitation, latrine construction, and hand pump construction," i;d. 1[ ll. Specifically, the government alleges that the defendant, along with others, "directed a scheme to divert [these] commodities intended for Liberian beneficiaries, sell those commodities, and keep the profits for their own personal benefit," and also to "divert construction materials intended for numerous community projects [for use at] their own personal residences." I_d. il l8. Based on these allegations, Magistrate Judge Deborah A. Robinson of this Court issued a warrant for the defendant’s arrest. Warrant at l. The defendant was subsequently (. . . continued) motion to dismiss that is currently before the Court, and in its memorandum in opposition to this motion, the govemment explicitly incorporates all of the arguments raised in its original opposition memorandum to the defendant’s initial motion to dismiss the indictment. Gov’t’s 8/27/10 Opp’n to Dismiss Indict. at l. In addressing the current motion to dismiss the indictment, therefore, the Court will also consider the arguments made in the govemment’s earlier filing_ 4 In addition to the defendant’s motion to dismiss, the govemment’s memorandum in opposition to that motion, and the govemment’s memorandum in opposition to the defendant’s July l, 2010 motion to dismiss the indictment, the Court considered the following documents in reaching its decision: (l) the Criminal Complaint (the "Compl."); (2) the July 16, 2009 Letter From the United States District Court for the Southern District of New York to the United States District Court for the District of Columbia (the "July 16, 2009 Letter"); (3) the Arrest Warrant (the "Warrant"); (4) the Govemment’s Motion to Exclude Ceitain Time From Speedy Trial Calculation filed on August 14, 2009 (the "Gov’t’s 8/l4/09 Mot."); (5) the Goverriment’s Motion to Exclude Certain Time From Speedy Trial Act Calculation filed on October 19, 2009 (the "Gov’t’s 10/19/09 Mot."); (6) the Defendant’s Motion to Dismiss Complaint (the "Def.’s l\/lot. to Dismiss Compl."); and (7) the United States’ Response to Defendant’s Motion to Dismiss Complaint (the "Gov’t’s Opp’n to Dismiss Compl."). arrested in the Southern District of New York on July l5, 2009. Def.’s Mot. to Dismiss Indict. at 2; Gov’t’s Opp’n to Dismiss Compl. at l. The defendant waived any rights he had to challenge his transfer to the District of Columbia for prosecution, July 16, 2009 Letter at l, and he arrived in this jurisdiction on August ll, 2009, where he made his initial appearance in this Court before Magistrate Judge Alan Kay, Minute Entry, United States v. Fahnbulleh, Criminal Action No. 09- 359 (RBW) (D.D.C. entered Aug. ll, 2009). After the defendant’s arrival in this jurisdiction, the parties convened for a status hearing on August 14, 2009 before Magistrate Judge Kay. Minute Entry, United States v. Fahnbulleh, Criminal Action No. 09-359 (RBW) (D.D.C. entered Aug. 14, 2009). Immediately prior to that hearing, the government filed a written motion with the Court seeking to exclude twenty-seven days--between July l5, 2009 to August ll, 2009-from the time period in which the government was required under the Speedy Trial Act, 18 U.S.C. § 3161 (2008),5 to obtain an 5 Section 3161 states the following: (a) ln any case involving a defendant charged with an offense, the appropriate judicial officer, at the earliest practicable time, shall, after consultation with the counsel for the defendant and the attorney for the Government, set the case for trial on a day certain, or list it for trial on a weekly or other short-term trial calendar at a place within the judicial district, so as to assure a speedy trial. (b) Any information or indictment charging an individual with the commission of an offense shall be filed within thirty days from the date on which such individual was arrested or served with a summons in connection with such charges. lf an individual has been charged with a felony in a district in which no grand jury has been in session during such thirty-day period, the period of time for filing of the indictment shall be extended an additional thirty days. (h) The following periods of delay shall be excluded in computing the time within which an information or an indictment must be filed, or in computing the time within which the trial of any such offense must commence: (l) Any period of delay resulting from other proceedings conceming the defendant, including but not limited to-- (continued . . .) indictment. Gov’t’s 8/14/09 Mot. at 1. In support of its motion, the government argued that the delay was attributable to "the defendant’s transfer proceedings." l;d. at 2. The government then orally reiterated its request at the status hearing for the exclusion of time from the Speedy Trial Act clock, but arguing this time that it was entitled to an exclusion of the aforementioned twenty- seven days because the delay was attributed to the defendant having been "moved from the Southern District of New York to Washington, D.C." Hr’g Tr. at 65:11-12, Aug. 14, 2009. Based on the govemment’s representations, Magistrate Judge Kay concluded that "the interests of justice" in granting the exclusion, although not "necessarily outweigh[ing] the best interest[s] of the [d]efendant," did "outweigh the best interests of the public . . . in a speedy trial," and, as a result, he granted the govemment’s motion, I;d. at 65:23-66:8. During the same status hearing (and in the written motion submitted prior to the hearing), the government also moved for a separate exclusion of time under 18 U.S.C. § 3161(h)(8) due to delay resulting from the govemment’s efforts to collect evidence located in the Republic of Liberia. g Gov’t’s 8/14/09 Mot. at 2. Specifically, the government requested that the Court exclude time from the Speedy Trial Act clock beginning on August 14, 2009 "until the date on which the Republic of Liberia responds to the govemment’s request for evidence located in (. . . continued) (E) delay resulting from any proceeding relating to the transfer of a case or the removal of any defendant from another district under the Federal Rules of Criminal Procedure; (F) delay resulting from transportation of any defendant from another district, or to and from places of examination or hospitalization, except that any time consumed in excess of ten days from the date an order of removal or an order directing such transportation, and the defendant’s arrival at the destination shall be presumed to be unreasonable; (8) Any period of delay, not to exceed one year, ordered by a district court upon an application of a party and a finding by a preponderance of the evidence that an official request, as defined in section 3292 of this title, has been made for evidence of any such offense and that it reasonably appears, or reasonably appeared at the time the request was made, that such evidence is, or was, in such foreign country. Liberia" because it had made an official request for the evidence from the Liberian govemment for various records, and that it was still awaiting a response. I;d. The defendant, through his counsel, opposed the government’s motion, arguing that because the govemment made the request for foreign evidence in January 2009, "the Court should [not] grant the Govemment’s exclusion for anymore than a year[] dating from the date of their request." Hr’ g Tr. at 62:10-16. Magistrate Judge Kay agreed with the defendant that the continuation should not be "open- ended," yet at the same time acknowledged that "the [g]ovemment does[ not] have any control as to the speed [at] which the Liberian authorities will furnish the requested inforrnation." l;d. at 62:20-63:1. As a result, Magistrate Judge Kay granted the government’s motion, i_d_. at 10-11, but only up until October 16, 2009, § at 64:17-25, at which point the government, if it desired any additional exclusion of time, would have to appear before Magistrate Judge Robinson for a status hearing to provide an update as to its efforts to collect evidence from the Liberian government, § § at 62:17-20 ("[M]y inclination . . . is to grant the [g]ovemment a designated period of time . . . , and then hold a status hearing and find out what the status is."); i_cL at 63:10- 13 ("I’m going to grant an extension to the [g]ovemment . . . under the Speedy Trial Act, and set a status hearing at [which] point . . . the [g]ovemment will make whatever representations it needs to make."). At the October 16, 2009 status conference, the government orally moved for additional relief under Section 3l6l(h)(8) to exclude time beginning October l7, 2009. Hr’ g Tr. at 16:12- 17, Oct. 16, 2009. Magistrate Judge Robinson declined to hear the request because the government had not submitted a written motion asking for such relief. I_d. at 18:5-8. She then directed the government to file a written motion setting forth the basis for its request on or before October 19, 2009. I_d. at 18:8-10. The government complied with Magistrate Judge Robinson’s directive and filed its request for relief on October 19, 2009. Gov’t’s 10/19/09 Mot. at 1. In support of its motion for relief, the government alleged essentially the same facts that were asserted in its previous motion for the same relief that had been granted by Magistrate Judge Kay on August 14, 2009, i.e., that the government had transmitted a "diplomatic note" on January 23, 2009 "to the Republic of Liberia requesting that certain materials be provided to the [United States] Department of Justice," and that "the Republic of Liberia [was] still in the process of responding to the govemment’s request." I_d. at 2. Rather than filing a memorandum in opposition to the govemment’s motion, the defendant, who was still represented by counsel at the time, moved to dismiss the criminal complaint on the grounds that the govemment failed to secure an indictment in this case within thirty non-excludable days from the date of the defendant’s arrest as required under 18 U.S.C. § 3l6l(b). Def.’s Mot. to Dismiss Compl. at l. Specifically, the defendant argued that the time period between July l5, 2009 and August 11, 2009 could not be excluded under 18 U.S.C. § 3161(h)(E) because there had been "[n]o delay . . . attributable to [a] transfer proceeding," § at 2, and that the government was only entitled to an exclusion of ten days under 18 U.S.C. § 316l(h)(1)(F) resulting from the defendant’s transfer to this jurisdiction, § at 3. The defendant further argued that because Magistrate Judge Kay only excluded time under the Speedy Trial Act until October 16, 2009, the govemment only had ten days from that point in which to secure an indictment. § Those ten days having elapsed before an indictment was filed, the defendant argued that he was entitled to a dismissal of the criminal complaint. § The government filed a memorandum in opposition to the defendant’s motion to dismiss on November 13, 2009. Gov’t’s Opp’n to Dismiss Compl. at 8. As to the defendant’s claim that Magistrate Judge Kay erred in excluding the time period between July l5, 2009 and August ll, 2009, the government acknowledged that it should have sought relief under Section 3l6l(h)(l)(F) rather than Section 3161(h)(1)(E). § at 6. Nonetheless, the government argued that even if time was improperly excluded under Section 3161(h)(1)(F), and that it was only entitled to an exclusion of ten days between July l5, 2009 and August ll, 2009 under Section 3161(h)(1)(E), the additional seventeen days within that time period "would still be properly excluded under . . . 18 U.S.C. § 3161(h)(8) because the govemment’s request to Liberia was clearly outstanding between [those] dates." § at 7. Magistrate Judge Robinson issued a memorandum opinion and order on December 16, 2009, denying the govemment’s motion under Section 3161(h)(8) to exclude additional time as of October 17, 2009. United States v. Fahnbulleh, 674 F. Supp. 2d 214, 215 (D.D.C. 2009). ln her opinion, Magistrate Judge Robinson concluded that Section 3161(h)(8) does not allow for the "exclusion of a period of delay of up to one year . . . from the calculation of the time within which an indictment must be filed." § at 218; §§ § at 221 ("[T]he undersigned finds that Section 3161(h)(8) of Title 18 does not provide for the exclusion of time within which an indictment must be filed . . . ."). Furthermore, Magistrate Judge Robinson concluded that the period of exclusion ordered by Magistrate Judge Kay expired on October 16, 2009, and because the government at that point had yet to obtain an indictment, the defendant was entitled to a dismissal of the criminal complaint without prejudice. § at 221. The government then appealed to Chief Judge Royce C. Lamberth of this Court for an emergency stay of Magistrate Judge Robinson’s order and reversal of the findings rendered in her memorandum opinion. Motion for Emergency Stay of Magistrate Judge’s Dismissal Order Pending Hearing and Motion for Review and Appeal of Dismissal Order at 1. Chief Judge Lamberth granted the request for a stay of the order and directed the parties to appear before him on December 22, 2009, for a hearing on the merits of the govemment’s appeal. Order, l States v. Fahnbulleh, No. 09-293 (DAR), at 1 (D.D.C. Dec. 17, 2009) (Lamberth, J.). Before the hearing occurred, the grand jury returned an indictment against the defendant on December 18, 2009, charging him with the aforementioned crimes. See generally Indictment 1111 1-17. The defendant, who is now representing himself, moves to dismiss the indictment on essentially the same grounds relied upon by Magistrate Judge Robinson in her December 16, 2009 memorandum opinion dismissing the criminal complaint. See generally Def.’s Mot. to Dismiss lndict. at 1-33. The defendant also argues that the govemment is only entitled to a five- day exclusion of time under Section 3161(h)(1)(F), § at 7, rather than the ten days he initially conceded to in his motion to dismiss the criminal cornplaint, Def’ s Mot. to Dismiss Compl. at 3. Furtherrnore, the defendant contends that Magistrate Judge Robinson, while correctly dismissing the criminal complaint, erred in doing so without prejudice, as he suffered actual prejudice as a result of the govemment’s delay in obtaining an indictment from the grand jury. See generally Def.’s Mot. to Dismiss lndict. at 20-32. Not surprisingly, the government opposes the defendant’s motion to dismiss the indictment, arguing that Magistrate Judge Robinson erred in dismissing the criminal complaint because ( 1) she lacked the authority under the Federal Magistrate Act to dispose of this matter, Gov’t’s 7/9/ 10 Opp’n to Dismiss Indict. at 7-8; (2) she erroneously concluded that Section 3161(h)(8) cannot be relied upon to exclude time from the thirty-day period in which the government is required under Section 3161(b) to secure an indictment in this case, § at 11; and (3) even putting aside her holding regarding Section 3161(h)(8), the time period that the government had remaining to obtain an indictment had not yet expired, § at 13. II. LEGAL ANALYSIS The sole issue before the Court is whether the indictment filed in this case should be dismissed with prejudice because of the government’s failure to timely secure an indictment under the Speedy Trial Act. To resolve this issue, the Court must first turn to the Act itself, which provides the rubric for calculating the time period in which the government must secure an indictment against a criminal defendant. Specifically, the Act requires that the govemment obtain an indictment or file an information against a criminal defendant within thirty days from the date of arrest. 18 U.S.C. § 3l6l(b). ln calculating this thirty-day period, however, the Act provides that certain periods of delay must be excluded by the Court. S_e§ 18 U.S.C. § 3161(h) (stating that that certain "periods of delay § be excluded in computing the time within which an information or indictment must be filed"). Notwithstanding these provisions for exclusion, should the government fail to secure an indictment within thirty non-excludable days from the date of arrest, the charges brought against the defendant in the criminal complaint must be dismissed either with or without prejudice. 18 U.S.C. § 3162(a)(1) (2008); see also United States v. Bowman, 496 F.3d 685, 688 (D.C. Cir. 2007) (noting that upon a finding that the Speedy Trial Act has been violated, "[t]he [C]ourt may dismiss the complaint with or without prejudice"). And, if the Court concludes that the criminal complaint should be dismissed with prejudice, then the government is barred from filing an indictment charging the defendant with the same crimes alleged in the criminal complaint. Bowman, 496 F.3d at 688. Both parties agree that the defendant was arrested on July l5, 2009. Def.’s Mot. to Dismiss lndict. at 2; Gov’t’s Opp’n to Dismiss Compl. at 1. As noted above, Section 3l61(b) provides that the government must obtain an indictment "within thirty days from the date" the defendant was arrested. Excluding the day of the defendant’s arrest, §§ United States v. Harris, 491 F.3d 440, 443 (D.C. Cir. 2007) (construing the requirement under the Speedy Trial Act that a trial commence "_wi_th_i_r_i seventy days from the filing" of the indictment to mean that the date on which the indictment is filed does not count toward the seventy-day total), the govemment was required to secure an indictment by August 14, 2009. The indictment, however, was filed on December 18, 2009_126 days later_so the Court is obligated to dismiss the criminal complaint unless the record reflects that the delay in filing the indictment can be excluded under the various provisions of 18 U.S.C. § 3161(h). The defendant raises several arguments in support of his motion to dismiss the indictment. First, he argues that Magistrate Judge Kay erroneously excluded the entire time period between July l5, 2009 and October 16, 2009, and that the government, at most, was entitled to an exclusion of only five days within that time frame as a result of his transfer from the Southern District of New York to this District. Def.’s Mot. to Dismiss lndict. at 7. Second, he contends that Magistrate Judge Kay improperly excluded under Section 3161(h)(8) the fifty- eight day period between August 11, 2009 and October 16, 2009, because this exclusionary provision does not apply in the pre-indictment context. § at 25. Third, he asserts that while Magistrate Judge Robinson correctly concluded that Section 3161(h)(8) does not apply to the exclusion of time during the pre-indictment period, she erred in dismissing his case without prejudice.° ee generally § at 20-32. And fina11y, the defendant argues that because he was entitled to have the criminal complaint dismissed with prejudice, the government was barred from securing an indictment alleging the same charges listed in the criminal complaint. § § at 30 (contending that "dismissal was based on [a] violation of the Speedy Trial Act," and 6 To that end, the Court rejects the govemment’s argument that the filing of the indictment renders the defendant’s challenge under the Speedy Trial Act moot, as the filing of the indictment does not extinguish the issue of whether the dismissal of the criminal complaint without prejudice was in error. 10 therefore "[r]eprosecution is barred in this case[] for the same charges"). After a thorough review of the record,7 however, the Court concludes the government secured the indictment within thirty non-excludable days from the defendant’s arrest, and therefore dismissal of the criminal complaint was in error." A. Exclusion of Time Between July l5, 2009 and August ll, 2009 In regards to the exclusion of time between July l5, 2009 and August ll, 2009, the record is unclear as to what provision under Section 3 l61(h) provided the basis for the exclusion of this twenty-seven day period. lnitially, the govemment filed a written motion with the Court on August 14, 2010, asserting that it was entitled to exclude these twenty-seven days under Section 161(h)(1)(E), because the delay "result[ed from] the defendant’s transfer proceedings," Gov’t’s 8/14/09 Mot. at 2, but nowhere in their motion did the government provide any detail regarding any proceeding which caused the delay that it sought to exclude from the Speedy 'l`rial Act calculation. That same day, the government appeared before the Court for a status hearing, at which point it implicitly relied upon 18 U.S.C. § 3161(h)(1)(F) to exclude time because the defendant "was _rn_547 U.S. 489, 507 (holding that "without on- the-record findings, there can be no exclusion under" 18 U.S.C. § 3161(h)(7)(A)). ln fact, the government’s request was granted despite uncertainty as to whether the "interests of justice" in granting the exclusion "necessarily outweigh[ed] the best interest of the [d]efendant," Hr’g Tr., Aug. 14, 2009 65:25-66:2, even though the plain language of Section 3161(h)(7)(A) requires that the interests of justice in granting a continuance must outweigh Lh "the best interests of the public ag_d the defendant in a speedy trial," 18 U.S.C. § 3161(h)(7)(A) (emphasis added); §e_e also United States v. Kellam, 568 F.3d 125, 137 (4th Cir. 2009) ("The purpose of the [Speedy Trial] Act is to protect the interests of § the defendant and the public . . . ," (emphasis added)); United States v. Hall, 181 F.3d 1057, 1062 (9th Cir. 1999) ("[T]he Speedy Trial Act assigns district courts an independent responsibility to protect § the defendant’s and the public’s strong interest in the timely administration of justice." (emphasis added)). The exclusion of the entire period between July l5, 2009 and August ll, 2009, therefore, could not be solely based on Section 3161(h)(l)(E), Section 316l(h)(1)(F), or Section 3161(7)(A). This is not to say that the govemment is precluded from receiving agy exclusion of time between July l5, 2009 and August ll, 2009, as neither party disputes that the defendant was transferred from the Southem District of New York to this District. As a result, the govemment is entitled under Section 316l(h)(1)(F) to an exclusion of time, not to exceed ten days, for the time period in which the defendant was in transit to this jurisdiction. As far as the Court can discern from the entire record, the government has not disclosed at any point in this litigation the amount of time it took to transfer the defendant. On the other hand, the defendant asserts in his 13 motion to dismiss the indictment that he was in transit for five days beginning August 5, 2009, and concluding on August 9, 2009. Def.’s Mot. to Dismiss lndict. at 7. The government does not refute the defendant’s assertion in its opposition memorandum; consequently, the Court will accept the defendant’s contention and exclude only five days from the thirty-day period in which the govemment is required to obtain an indictment in this case. B. Exclusion of Time Between August 1 1, 2009 and December 18, 2009 As for the defendant’s assertion that the exclusion of time under 18 U.S.C. § 3161(h)(8) is not available in the pre-indictment context, the Court finds this argument to be wholly without merit. ln construing the meaning of 18 U.S.C. § 3161(h)(8), several well-settled principles of statutory interpretation must guide the Court’s analysis. The first step in interpreting any statute is to "‘begin with the language employed by Congress and the assumption that the ordinary meaning of that language accurately expresses the legislative purpose."’ United States v. Albertini, 472 U.S. 675, 680 (1985) (quoting Park ‘N Fly, lnc. v. Dollar Park & Flv, Inc., 469 U.S. 189, 194 (1985)). Where the language of the statute is "plain, ‘the sole function of the courts is to enforce it according to its terms."’ United States v. Ron Pair Enters., Inc., 489 U,S. 235, 241 (1989) (quoting Caminetti v. United States, 242 U.S. 470, 485 (1917)). Furthermore, the Court should also interpret the statute so as "to give effect, if possible, to every clause and word of a statute.” Duncan v. Walker, 533 U.S. 167, 174 (2001) (quoting United States v. Menasche, 348 U.S. 528, 538-39 (1955)). And, the Court must be mindful of the object and policy of the entire statutory scheme in interpreting a provision within that scheme. §§ Richards v. United States, 369 U.S. 1, 11 (1962) (holding that courts must not construe statutory provisions "in isolation from the context of the whole Act," but rather courts "must look to the provisions of the whole law, and to its object and policy"). 14 Applying those principles to Section 3161(h)(8), there can be no dispute that this provision applies in the pre-indictment context. Specifically, Section 3161(h)(8) provides the following: (h) The following periods of delay shall be excluded in computing the time within which an information or an indictment must be filed, or in computing the time within which the trial of any such offense must commence: (8) Any period of delay, not to exceed one year, ordered by a district court upon an application of a party and a finding by a preponderance of the evidence that an official request, as defined in section 3292 of this title, has been made for evidence of any such offense and that it reasonably appears, or reasonably appeared at the time the request was made, that such evidence is, or was, in such foreign country. 18 U.S.C. § 3161(h)(8) (emphasis added). Thus, so long as the govemment can establish by a preponderance of the evidence that it made an official request for evidence from a foreign country, and that it is reasonable to conclude that such evidence is located in that country, then the Court is compelled under a plain reading of 18 U.S.C. § 3161(h)(8) to exclude that time from the thirty-day requirement of 18 U.S.C. § 3161(b). Indeed, to adopt the defendant’s interpretation and find that this provision does not apply in the pre-indictment context would require the Court to simply read out the requirement that "[t]he following periods of delay shall be excluded in computing the time within which . . . an indictment must be filed." 18 U.S.C. § 3161(h)(8) (emphasis added). The defendant asserts that Congress’s use of the word "or" within the text of Section 3161(h), rather than "and," suggests that the various exclusion provisions under Section 3l6l(h) are to be applied either exclusively within the pre-indictment context or exclusively within the post-indictment context. Def.’s Mot. to Dismiss lndict. at 14; see also 18 U.S.C. § 3161(h) ("The following periods of delay shall be excluded in computing the time within which an 15 information or indictment must be filed, g in computing the time within which the trial of any such offense must commence . . . ." (emphasis added)). lnterpreting the use of conjunctives and disjunctives in statutes is not so simplistic, however, To be sure, use of the word "‘or’ is [generally] accepted for its disjunctive connotation . . . . [b]ut this canon is not inexorable, for sometimes a strict grammatical construction will frustrate legislative intent." United States v. Moore, 613 F.2d 1029, 1040 (D.C. Cir. 1979). lndeed, as Justice Harlan astutely observed in writing for the majority of the Supreme Court in De Sylva v. Ballentine, 351 U.S. 570, 573 (1956): We start with the proposition that the word "or" is often used as a careless substitute for the word "and"; that is, it is often used in phrases where "and" would express the thought with greater clarity. That trouble with the word has been with us for a long time. Judge Becker, speaking for the Third Circuit, provided further insight in United States v. One 1973 Rolls Rovce, V.I.N. SRH-l6266, 43 F.3d 794, 814-15 (3d Cir. 1994), regarding the interpretation of statutes containing conjunctives or disjunctives: The argument that the existence of the word "or" . . . requires a disjunctive reading . . . arguably overlook[s] the importance of context in determining whether the conditions should be treated as disjunctive or conjunctive. Whether requirements in a statute are to be treated as disjunctive or conjunctive does not always turn on whether the word "or" is used; rather it tums on context. The Court, therefore, cannot simply rely on Congress’s usage of "and" or "or" to reach a definitive determination regarding the application of the various exclusionary provisions of Section 3161(b). Rather, the Court must view all of these provisions in the context of the entire Speedy Trial Act to discem Congress’s intent. ln taking a more holistic approach to interpreting Section 316l(h), rather than focusing solely on Congress’s use of a disjunctive, it is evident to the Court that the statutory structure of Section 3l61(b) precludes the defendant’s proffered construction. In drafting the statute, 16 Congress did not separate and categorize one set of provisions for the pre-indictment context and the remaining provisions for the post-indictment setting; rather, it grouped together all of the exclusionary provisions under one heading. Despite the structure of this statute, if the defendant is correct that Congress’s use of a disjunctive in Section 3 l61(h) reflects an intent to have certain exclusionary periods apply exclusively to the pre-indictment context, while having the remaining periods only apply post-indictment, then a court would have to speculate as to which provisions apply in one context versus the other. Under the defendant’s interpretation of Section 3l6l(h), the Court, for example, would have to assess whether it could exclude time under Section 3161(h)(1)(F) due to the defendant’s transfer from New York, or whether that provision only applies to transfers that take place after an indictment is filed. But there is no limiting principle in Section 3l61(b) (or anywhere else in the Speedy Trial Act, for that matter) from which the Court could conclude that it lacks the authority to exclude pre-indictment time resulting from inter-district transfer delay; indeed, there is no logical reason why the filing of an indictment should serve as the dividing line for when a court may exclude time for the delay resulting from a defendant’s transfer from one district to another. Thus, under the defendant’s proffered construction of Section 3161(h), the Court would be required to engage in a guessing game that is unnecessary based on the more straightforward interpretation as discussed above. The Court also finds the defendant’s reliance on United States v. Kozenv, 541 F.3d 166 (2d Cir. 2008), to be misplaced. In gy, the Second Circuit addressed the issue of whether the govermnent could seek to toll a statute of limitations under 18 U.S.C. § 3292(a)(1) where the limitations period had expired but an indictment had yet been issued. § at 172. But here, the govemment is not seeking to toll the statute of limitations; rather, it is requesting that a period of 17 time be excluded from the limitations period specifically authorized under the Speedy Trial Act. Thus, Kc§y is inapposite. Finally, the defendant argues that applying 18 U.S.C. § 3161(h)(8) in the pre-indictment context "would violate the Fifth, Sixth[,] Eighth[,] and Fourteen[th] Amendments" of the United States Constitution because doing so could result in an individual being imprisoned for up to one year without being indicted, Def.’s Mot. to Dismiss Indict. at 25. While it is true that in construing a statutory provision, the Court when possible is obliged to interpret it in a manner that avoids a constitutional infirrnity, Skilling v. United States, U.S. ___, __, 130 S. Ct. 2896, 2940 (2010) (quoting United States ex rel. Attorney General v. De1aware & Hudson Co., 213 U.S. 366, 407 (1909)) ("[W]hen the constitutionality of a statute is assailed, if the statute be reasonably susceptible of two interpretations, by one of which it would be unconstitutional and by the other valid, it is our plain duty to adopt that construction which will save the statute from constitutional infirmity."), the application of 18 U.S.C. § 3161(h)(8) to the pre-indictment context does not raise any constitutional difficulties because none of the four amendments cited by the defendant proscribe pre-indictment detention of any specific duration as a matter of law. With regards to the Fifth Amendment, the Court is not aware of any case where another court has held that a specific length of pre-indictment detention rises to the level of a §§ g constitutional violation;° indeed, in the Sixth Amendment context, the Supreme Court has explicitly held 9 lf anything, the Supreme Court has held that the determination of whether a due process violation has occurred requires a fact-specific inquiry into the circumstances of a particular case. §e_e United States v. l\/larion, 404 U.S. 307, 324 (1971) (concluding that dismissal for pre-indictment delay is appropriate only where "it [is] shown at trial that the pre-indictment delay in [the] case caused substantial prejudice to [the accused’s] rights to a fair trial and that the delay was an intentional device to gain tactical advantage over the accused"); Kennedv v. Mendoza-Martinez, 372 U.S. 144, 168-169 (1963) (holding that whether a pre-trial sanction constitutes a due process violation will depend on a multitude of factors). Given the individualized nature of a due process analysis, the Court cannot find that applying 18 U.S.C. § 3161(h)(8) in the pre-indictment context would violate the Fifth Amendment as a matter of law. 18 otherwise.‘° § Barker v. Wingo, 407 U.S. 514, 523 ("We find no constitutional basis for holding that the speedy trial right can be quantified into a specified number of days or months."). The Eighth Amendment also does not pose any interpretive difficulties here, as the Speedy Trial Act is concerned with the right to o_btai_n a "speedy" adjudication of the charges being brought against a defendant, while concerns about the constitutionality of a punishment under the Eighth Amendment" do not arise "until a_ft_e_r . . . a formal adjudication of guilt in accordance with due process of law" is secured. ingraham v. Wright, 430 U.S. 651, 671 n.40 (1977) (emphasis added). The Fourteenth Amendment is likewise inapplicable because the present case involves a federal prosecution, while the prohibitions prescribed in the Fourteenth Amendment are directed only to the states. § U.S. Const. amend. XlV ("No St§ate_ shall . . . abridge the privileges or immunities of citizens of the United States; nor shall any § deprive any person . . . due process of law[,] nor deny an person . . . the equal protection of the laws." (emphasis added)). Under these well-settled principles of constitutional law, the Court finds that the defendant’s arguments are without merit. m While the defendant’s motion is one to "[d]ismiss [the] [i]ndictment [w]ith [p]rejudice for [a] Speedy Trial Act [v]iolation," Def.’s Mot. to Dismiss lndict. at l, he is also now proceeding in this matter §§ Y, and thus the Court has an obligation to construe his filings liberally, see, e.,514 F.3d 1279, 1283 (D.C. Cir. 2008). ln doing so, it is appears to the Court that the defendant, whether knowingly or unknowingly, could be found to have alleged a due process violation resulting from undue pre-indictment delay. §§g Def.’s Mot. to Dismiss lndict. at 4 (allegation by the defendant that the govemment’s arguments regarding the applicability of 18 U.S.C. § 3161(h)(8) in the pre-indictment context are "intentionally erroneous, prejudicial, misapplied[,] and [were] certainly [made] to gain [a] tactical advantage over [the] defendant") . But even assuming that the defendant has raised such a claim, the Court does not find any evidence in the record that would support the defendant’s request for relief. Under Marion, the defendant must establish, i§r _a_l§ that the government "purposefully" caused delay "to gain [a] tactical advantage over the [defendant]." 404 U.S. at 324. Here, the defendant does not allege a single fact in support of his allegation that the govemment engaged in any dilatory tactics, except to say that it erroneously sought to exclude time under 18 U.S.C. § 3161(h)(8) As the Court concludes, however, the govemment’s claim is hardly misguided, as it is plainly entitled to such relief under the Speedy Trial Act. The defendant also asserts that his due process rights were violated because he was denied an opportunity "to respond to [the g]ovemment’s August 14, 2009 written motion" to exclude time under 18 U.S.C. §§ 3 l61(h)(l)(E) and 3161(h)(8) Even assuming, without deciding, that Magistrate Judge Kay committed error as the defendant suggests, such error was harmless, as the defendant’s objections to the exclusion of time under these provisions have been fully considered by this Court in resolving his motion to dismiss the indictment. 19 Having resolved the issue of whether Section 3161(h)(8) applies in the pre-indictment context, and having concluded that it does apply in this case, the Court must now tum to the facts of this case and determine whether the government is entitled under that provision to exclude the 129 days between August 11, 2009 and December 18, 2009. For the Court to grant an exclusion under this provision, the government must show by a preponderance of the evidence that (l) "an official request, as defined [by S]ection 3292[(d)], has been made for [foreign] evidence,"" and (2) "it reasonably appears, or reasonably appeared at the time the request was made, that such evidence is, or was, in such foreign country." 18 U.S.C. § 3161(h)(8) Here, the record reflects that the government submitted an official request to the Liberian government pursuant to Article 18 of the United Nations Convention Against Transnational Organized Crime, § Gov’t’s Speedy Trial Mot., Ex. A (January 9, 2009 Letter from the United States Department of Justice to The Competent Authority of the Republic of Liberia) at 1, and in the letter the government requested, ing §, public or official records that unquestionably would be located in Liberia, 35 €L se_e § at 5-6 (seeking "[i]ncome tax records, property and deed records," and various business documents for numerous Liberian entities). Furtherrnore, the Court has no reason to doubt the government’s assertion in its October 19, 2009 motion to exclude time from the Speedy Trial Act clock that as of that date, "Liberia [was] in the process of responding to the request, [but] the [United States] govemment ha[d] yet to receive any response." Gov’t’s 10/19/09 Mot. at 3. Thus, the Court concludes that the govemment has more than met its burden of proving its entitlement to exclude those 129 days between August 11, 2009 and December 18, 2009 under 18 U.S.C. § 316l(h)(8). ll Section 3292(d) defines "official request" as "a letter rogatory, a request under a treaty or convention, or any other request for evidence made by a court of the United States or an authority of the United States having criminal law enforcement responsibility, to a court or other authority of a foreign country." 20 C. Total Sum of Davs Excluded From The Speedy Trial Act Calculation As noted above, the Court would be required to dismiss the indictment in this case unless the govemment can demonstrate that it is entitled under the various provisions of 18 U.S.C. § 3 l61(h) to exclude at least 126 days from the thirty days in which it was required to secure an indictment under 18 U.S.C. § 3161(b). _S_	01-03-2023	04-04-2014
https://www.courtlistener.com/api/rest/v3/opinions/2664954/	UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA OBAYDULLAH, ) ) Petitioner, ) ) v. ) Civil Case No. 08-1173 (RJL) ) BARACK H. OBAMA, et al., ) ) Respondents. ) ~ FINAL JUDGMENT (November~, 2010) For the reasons set forth in this Court's public Memorandum Order of October 19, 2010 and for the reasons set forth in this Court's Classified Memorandum Opinion of November 24, 2010, it is hereby ORDERED that Petitioner Obaydullah's petition for a writ of habeas corpus is DENIED. SO ORDERED.	01-03-2023	04-04-2014
https://www.courtlistener.com/api/rest/v3/opinions/2389447/	708 F.Supp. 964 (1989) UNITED STATES of America, Plaintiff, v. Thomas JIMENEZ, Defendant. No. TH 88-14-CR. United States District Court, S.D. Indiana, Terre Haute Division. March 8, 1989. Jessie A. Cook, Trueblood Harmon Carter & Cook, Terre Haute, Ind., for plaintiff. Timothy M. Morrison, First Asst. U.S. Atty., Indianapolis, Ind., for defendant. ENTRY TINDER, District Judge. This matter comes before the court on defendant's Motion to Determine Constitutionality of Federal Sentencing Guidelines. Defendant Thomas Jimenez, who is charged with the offense of escape from a penal institution pursuant to 18 U.S.C. § 751(a) (1982), moves this court to determine the constitutionality of the sentencing guidelines promulgated by the United States Sentencing Commission pursuant to the Sentencing Reform Act of 1984 (codified as amended at 18 U.S.C. §§ 3551-3742 (Supp. IV 1986) and 28 U.S.C. §§ 991-998 (Supp. IV 1986). This court has jurisdiction of this cause pursuant to 18 U.S.C. § 3231 (1982).[1] 965 I. BACKGROUND Defendant Jimenez was serving a sentence of five years in custody with a three year special parole term due to his conviction for possession with intent to distribute cocaine when he escaped from the Federal Prison Camp in Terre Haute, Indiana, on June 5, 1988. He was subsequently arrested and charged, by indictment, with escape pursuant to 18 U.S.C. § 751(a) (1982), which provides in pertinent part: Whoever escapes or attempts to escape from the custody of the Attorney General or his authorized representative, or from any institution or facility in which he is confined by direction of the Attorney General, or from any custody under or by virtue of any process issued under the laws of the United States by any court, judge, or commissioner, or from the custody of any officer or employee of the United States pursuant to lawful arrest, shall, if the custody or confinement is by virtue of an arrest on a charge of felony, or conviction of any offense, be fined not more than $5,000 or imprisoned not more than five years, or both.... The defendant, who, if convicted, is to be sentenced under the federal sentencing guidelines, challenges the guidelines on several constitutional grounds. II. DISCUSSION The Sentencing Reform Act of 1984 and the United States Sentencing Commission's binding guidelines for use in sentencing federal defendants have been discussed extensively in many cases.[2] Thus, this court will dispense with a detailed explanation of the Act and the guidelines that were promulgated by the Commission. It should be noted that ruling on the constitutionality of a congressional act is "the gravest and most delicate duty" that a court is called upon to perform. Blodgett v. Holden, 275 U.S. 142, 148, 48 S.Ct. 105, 107, 72 L.Ed. 206 (1927). There is a strong presumption of constitutionality toward a law that has been produced by congressional enactment and presidential approval. Rostker v. Goldberg, 453 U.S. 57, 64, 101 S.Ct. 2646, 2651, 69 L.Ed.2d 478 (1981); Fullilove v. Klutznick, 448 U.S. 448, 472-73, 100 S.Ct. 2758, 2771-72, 65 L.Ed.2d 902 (1980). While this court has a duty to declare unconstitutional any statute or portion of a statute that conflicts with the United States Constitution, I also have a duty to weigh the presumption when reaching a decision. A. Delegation and Separation of Powers Defendant argues that the Sentencing Reform Act impermissibly delegates a legislative function to the judiciary. Defendant further asserts that the Act violates the doctrine of separation of powers for two reasons. First, the placement of the Sentencing Commission within the judicial branch violates the Constitution because the Commission does not function in a judicial capacity. Second, the doctrine of separation of powers is violated by the retention of power over members of the judiciary by the executive branch. Eleven days after defendant made these arguments in its motion, which was filed on January 9, 1988, the United States Supreme Court issued its opinion in Mistretta v. United States, ___ U.S. ___, 109 S.Ct. 647, 102 L.Ed.2d 714 (1989). In Mistretta, the Supreme Court discussed the precise issues cited above and held that the sentencing guidelines were constitutional since Congress neither delegated excessive legislative power to the Commission nor violated the separation of powers principle by placing the Commission in the judicial branch, by requiring federal judges to serve on the Commission and to share their authority with nonjudges, or by empowering the President to appoint Commission members and to remove them for cause. 966 Justice Blackmun, delivering the opinion of the Court in an eight to one decision, wrote: "We conclude that in creating the Sentencing Commission an unusual hybrid in structure and authority Congress neither delegated excessive legislative power nor upset the constitutionally mandated balance of powers among the coordinate Branches. The Constitution's structural protections do not prohibit Congress from delegating to an expert body located within the Judicial Branch the intricate task of formulating sentencing guidelines consistent with such significant statutory directions as is present here. Nor does our system of checked and balanced authority prohibit Congress from calling upon the accumulated wisdom and experience of the Judicial Branch in creating policy on a matter uniquely within the ken of judges." Mistretta, 109 S.Ct. at 675. Defendant's arguments regarding the delegation and separation of powers issues do not present any novel angles that were not considered by the Supreme Court. Thus, while this court is not in the habit of giving short shrift to constitutional arguments, I see no need to rehash areas recently and fully addressed by the Supreme Court. Accordingly, this court finds that the Sentencing Reform Act of 1984 does not impermissibly delegate a legislative function to the judiciary and that the doctrine of separation of powers is not violated by the placement of the Sentencing Commission within the judicial branch or by the executive branch's retention of power over Commission members. B. Due Process The rest of defendant's arguments require more discussion because they present issues that have not been addressed by the Supreme Court, but only by a myriad of lower federal courts that have reached varying decisions. First, defendant argues that the application of the sentencing guidelines violates a defendant's due process right to an individualized sentencing decision. He asserts that the guidelines severely restrict judicial discretion and opposes what he perceives to be a mechanical application of the guidelines that were promulgated by Commissioners who are invisible to him and to the general public. He also argues that due process, which guarantees a defendant a fair opportunity to be heard, is violated because a criminal defendant has no opportunity to affect the court's assessment of the appropriate sentence by challenging the facts relied upon by the court or by pointing out circumstances peculiar to the case that are not considered adequately in the guidelines. Defendant cites several decisions by lower federal courts that struck down the guidelines based, at least in part, on a violation of the due process clause.[3] This court agrees with Judge Burns's observation in United States v. Belgard, 694 F.Supp. 1488 (D.Or.1988) that the analyses in many of these opinions seem to blur the distinction between substantive and procedural due process. The two central themes that are emphasized in these cases that find a due process violation are as follows: 1. Defendants have a due process right to have individual consideration of all relevant circumstances of the offense. A defendant "is constitutionally entitled 967 to an articulated exercise of discretion by the judge before whom he [or she] appears rather than to the mechanical application of formulae adopted by non-constitutional commissioners invisible to him and to the general public." Bolding, 683 F.Supp. at 1005. 2. Defendants have a procedural due process right to challenge the information on which their sentence is based. Defendant has standing to challenge the constitutionality of the sentencing guidelines only insofar as they have an adverse impact on his own rights. See United States v. Palma, 760 F.2d 475, 477 (3rd Cir.1985) (citing County Court of Ulster County v. Allen, 442 U.S. 140, 99 S.Ct. 2213, 60 L.Ed.2d 777 (1979)). This court will not sustain a blanket due process objection to the guidelines. See United States v. Rodriguez, 691 F.Supp. 1252 (W.D.Mo.1988). Thus, I will scrutinize only the guidelines' impact on this defendant's due process rights. Defendant argues that the application of the guidelines violate his right to an individualized sentencing decision. The Supreme Court has never recognized a due process right to individualized sentences in noncapital cases. In Lockett v. Ohio, 438 U.S. 586, 604-05, 98 S.Ct. 2954, 2964-65, 57 L.Ed.2d 973 (1978), a capital case, the plurality opinion stated, "We recognize that, in noncapital cases, the established practice of individualized sentences rests not on constitutional commands, but on public policy enacted into statutes." The Seventh Circuit has held expressly in cases that were decided before the promulgation of the guidelines that no such right exists. United States v. McCoy, 770 F.2d 647 (7th Cir. 1985); United States v. Oxford, 735 F.2d 276 (7th Cir.1984); accord United States v. Weidner, 692 F.Supp. 968, 971-72 (N.D. Ind.1988); United States v. Kerr, 686 F.Supp. 1174 (W.D.Penn.1988). In fact, lower federal courts have upheld mandatory sentences that eliminate judicial discretion. See, e.g., United States v. Goodface, 835 F.2d 1233 (8th Cir.1987); United States v. Smith, 818 F.2d 687 (9th Cir.1987). Accordingly, this court holds that defendant has no due process right to an individualized, discretionary sentence. The sentencing guidelines do afford some sentencing discretion. The guidelines, for example, devise categories for offenses and offenders and define a sentencing range for each category of offender and offense. 28 U.S.C. § 994(b) (Supp. IV 1986). The ranges cannot be inconsistent with existing statutory sentence provisions for offenses, and the ranges cannot vary by more than the greater of six months or twenty-five percent from the minimum to the maximum sentence. 28 U.S.C. § 994(b)(2) (Supp. IV 1986). Thus, as long as the prescribed sentence for an offense affords some discretion, due process concerns remain. Defendant argues that he has no opportunity to effect this court's determination of the appropriate sentence by challenging the facts relied upon by the court or by pointing out circumstances peculiar to the case that are not considered adequately in the guidelines. While there are cases to support defendant's position[4], this court finds that the Act and the guidelines preserve defendant's right in this case. This court may consider factors that are unique to defendant's case or that received insufficient weight in the guidelines and accordingly, deviate from the sentencing range. The Act provides: [T]he court shall impose a sentence of the kind, and within the range, referred to in subsection (a)(4) unless the court finds that an aggravating or mitigating circumstance exists that was not adequately taken into consideration by the Sentencing Commission in formulating the guidelines and that should result in a sentence different from that described. 18 U.S.C. § 3553(b) (Supp. IV 1986); see e.g., United States v. Ryan, 866 F.2d 604 (3d Cir.1989) (holding that factors not considered in setting base offense level for offense of conviction may be considered for departure). 968 It is clear that the guidelines do not abolish judicial sentencing discretion. Furthermore the Commission also recognized the authority of courts to depart from the guidelines on the basis of unusual circumstances.[5] In fact, defendant is arguably given more procedural protection under guideline sentencing because the judge must provide a statement of reasons for a sentence that is imposed within the range, and any departure from the sentencing range must be supported by a written statement of reasons. Under the prior federal sentencing system, the judge generally had no obligation to explain or to justify his or her sentence. See Franz, 693 F.Supp. at 690-91; Weidner, 692 F.Supp. at 972-73; Landers, 690 F.Supp. at 623-24; Kerr, 686 F.Supp. at 1181-84; United States v. Alves, 688 F.Supp. 70, 79-80 (D.Mass.1988). Furthermore, defendant maintains the right to participate in all phases of the pre-judgment process, the sentencing hearing, and any available post-conviction remedies. Those rights include the right to present objections to the pre-sentence report and to present evidence. See Fed.R. Crim.P. 32. In fact, disclosure of the presentence report is required and opportunities to contest the pre-sentence report determinations are mandated by the guidelines. Sentencing Guidelines, § 6A1.3. In this action, defendant has not been sentenced yet. He does argue that the judge's discretion is impermissibly constrained in this action because the judge cannot independently weigh the offender and offense characteristics that are considered in the guidelines. Defendant has two prior juvenile adjudications for which he received probation. Defendant contends that under the guidelines, his offender characteristics would be increased as a result of those juvenile adjudications to the same extent as if he had two prior adult convictions for serious drug offenses or violent crimes (provided that those convictions resulted in sentences of probation). It should be noted that the pre-sentence report has not been prepared, and I have made no finding of prior convictions. Consequently, the defendant's conclusion as to how these adjudications will be treated may not be correct. As explained, however, this court may depart from the guidelines in unusual cases. Thus, defendant's argument that the sentencing guidelines severely restrict judicial discretion in violation of his due process rights is untenable. Defendant further argues that the application of the guidelines results in an inequitable result for an additional reason. Section 2P1.1(a) provides that the base offense level for the crime of escape is thirteen "if from lawful custody resulting from a conviction or as result of a lawful arrest for a felony." In the criminal history category, section (d) provides that the total points within the category are enhanced "if the Defendant committed the instant offense while under any criminal justice sentence" and are further enhanced "if the Defendant committed the instant offense less than two years after release from a sentence of imprisonment exceeding one year and one month." In this case, the aggravation of defendant's criminal history category points by the addition of three points for facts that comprise elements of the crime of escape may result in a potential sentencing range of eighteen to twenty-four months as opposed to twelve to eighteen months. This court, however, disagrees with defendant that this is an inequitable result. While there is no indication in the comments to the sentencing guidelines that the Commission considered this occurrence, there are valid reasons for enhancing defendant's sentencing range due to the addition of three points. Correctional officers have obviously legitimate reasons to keep control of and to encourage good behavior from prisoners such as defendant. The threat of an additional three points being added to the base offense level for the crime of escape may help correctional officers maintain a safe environment for themselves, as well as for the public and the prisoners. Therefore, this court finds that the application of the sentencing *969 guidelines to defendant has not caused an inequitable or constitutionally deficient result. III. CONCLUSION For the abovementioned reasons, this court rejects defendant's constitutional challenge to the sentencing guidelines that were promulgated by the United States Sentencing Commission pursuant to the Sentencing Reform Act of 1984. NOTES [1] The defendant's plea to this point is not guilty, but neither party has questioned the ripeness of this issue. Correspondence from defendant's counsel to the clerk indicates that guilty plea negotiations are underway. Regardless of the outcome of this case, this challenge could reoccur in similar cases. [2] For a discussion of the background of the Sentencing Reform Act of 1984 and the specifics of the guidelines see, e.g., Mistretta v. United States, ___ U.S. ___, 109 S.Ct. 647, 102 L.Ed.2d 714 (1989); United States v. Franz, 693 F.Supp. 687 (N.D.Ill.1988); United States v. Landers, 690 F.Supp. 615, 616-18 (W.D.Tenn.1988); United States v. Brodie, 686 F.Supp. 941, 942-43 (D.D.C. 1988); United States v. Ortega Lopez, 684 F.Supp. 1506, 1509-10 (C.D.Cal.1988). [3] See, e.g., United States v. Brittman, 687 F.Supp. 1329, 1354 (E.D.Ark.1988) (holding that the guidelines violate a defendant's right to individualized sentencing); Brodie, 686 F.Supp. 941, 952 (D.D.C.1988) (holding that the method of sentencing "offends that principle of fair procedures and denies due process of law to defendants in criminal cases"); Ortega Lopez, 684 F.Supp. at 1513 ("[T]he mechanical formulas and resulting narrow ranges of sentences prescribed by the Guidelines violate defendants' right to due process of law under the Fifth Amendment by divesting the Court of its traditional and fundamental function of exercising its discretion in imposing individualized sentences according to the particular facts of each case."); United States v. Bolding, 683 F.Supp. 1003, 1005 (D.Md.1988) ("The essence of due process is accountability, reason and a fair opportunity to be heard. These cannot be replaced by any administrative code, however extensively considered or precisely drawn."); United States v. Frank, 682 F.Supp. 815 (W.D.Pa. 1988) (holding that the guideline procedures do not adequately protect the right of defendant to present evidence and to challenge the basis of his sentence). [4] See, e.g., Frank, 682 F.Supp. at 818-819; United States v. Martinez-Ortega, 684 F.Supp. 634, 636 (D.Idaho 1988); United States v. Elliott, 684 F.Supp. 1535, 1541 (D.Colo.1988). [5] See the introductory section of the sentencing guidelines, Ch. 1, Part A, Introduction 4(b), which discusses the Commission's departure policy.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/4555487/	In The Court of Appeals Ninth District of Texas at Beaumont __________________ NO. 09-19-00333-CR __________________ VIRNA CATHERINE FENDER, Appellant V. THE STATE OF TEXAS, Appellee __________________________________________________________________ On Appeal from the County Court at Law No. 5 Montgomery County, Texas Trial Cause No. 19-338600 __________________________________________________________________ ORDER In a series of motions and notices filed after the parties filed their briefs for the appeal, the appellant, Virna Catherine Fender, asked this Court: (1) to strike the State’s brief as a fraud upon the court because the brief incorrectly stated that the case was heard before a jury; (2) to allow her to “Amend the appeal”, which we interpret to be a request to correct briefing deficiencies; (3) to take judicial notice of her appeal from an administrative license suspension; and (4) to direct the trial court to issue findings of fact and conclusions of law regarding her motion to suppress 1 evidence. The State amended its brief but did not file a response to Fender’s other motions. In the interest of justice, we abate the appeal and remand the case to the trial court for entry of written findings of fact and conclusions of law on the trial court’s essential findings on Fender’s motion to suppress evidence. See State v. Cullen, 195 S.W.3d 696, 698-99 (Tex. Crim. App. 2006). A supplemental clerk’s record containing the trial court’s findings of fact and conclusions of law shall be filed with the Court of Appeals on or before September 10, 2020. The appeal will be reinstated without further order of this Court when the supplemental clerk’s record is filed. The parties may file supplemental briefs that address the trial court’s findings of fact and conclusions of law. See Tex. R. App. P. 38.7. The appellant’s supplemental brief is due thirty days after the supplemental clerk’s record is filed. The State’s supplemental brief is due thirty days after the appellant files her supplemental brief. This Court will take judicial notice of Appeal Number 09-19-00338-CV, but the clerk’s record filed in that appeal is not a part of and will not be considered as the record of this appeal. See State v. Clammer, 999 S.W.2d 903, 906 (Tex. App.— Amarillo 1999, pet. ref’d) (the appellate court reviews the trial court’s judgment based upon the evidence before the trial court at the time it made the decision complained of.). All other requested pre-submission relief is denied. ORDER ENTERED August 11, 2020. 2 PER CURIAM Before McKeithen, C.J., Kreger and Johnson, JJ. 3	01-03-2023	08-14-2020
https://www.courtlistener.com/api/rest/v3/opinions/1524922/	909 F. Supp. 863 (1995) Larry ROCKEFELLER; Holace Moranci; Neil Moranci; Donna Moranci; Mary Parrish; Lugenia Gordon; Helen Dalley; Betsy Webster; Betsy M. Blattmachr; Nancy Burner and Cornelius P. Dugan, Plaintiffs, v. William POWERS, Chairman, New York Republican State Committee; New York Republican State Committee; New York State Board of Elections; Owen T. Smith, Carol Berman, Evelyn J. Aquila, and Helena Moses Donohue, Commissioners, New York State Board of Elections; New York City Board of Elections; Douglas Kellner, Vincent Cuttita, Paul Mejias, Vincent J. Velella, Weyman A. Carey, Ronald J. D'Angelo, Seymour Sheldon, Kathleen Wagner, Gertrude Strohm and Ferdinand Marchi, Commissioners, New York City Board of Elections; Erie County Board of Elections; Roger Blackwell and Ralph Mohr, Commissioners, Erie County Board of Elections; Nassau County Board of Elections; Stephen Sabbeth, Commissioner, Nassau County Board of Elections; Suffolk County Board of Elections; Gerald Edelstein and Gerald Berger, Commissioners, Suffolk County Board of Elections; Monroe County Board of Elections; M. Betsey Relin and Ronald J. Starkweather, Commissioners, Monroe County Board of Elections; National Republican Committee, Defendants. No. 95 CV 4478 (ERK). United States District Court, E.D. New York. December 13, 1995. 864 Richard D. Emery, New York City, Burt Neuborne, Democracy Project, Brennan Center for Justice, New York University School of Law, New York City, for plaintiffs. Lawrence A. Mandelker, Kantor, Davidoff, Wolfe, Rabbino, Mandelker & Kass, P.C., New York City, Joel Graber, Office of Attorney General, State of New York, New York City, Peter S. Kosinski, New York State Board of Elections, Albany, New York, Kevin C. Reilly, Attorney General State of N.Y., New York City, Robert J. Cimino, Suffolk County Attorney by Robert J. Cabble, Ass't. County Attorney, Hauppauge, New York, Nancy Ledy-Gurren, Ledy-Gurren & Blumenstock, L.L.P., New York City, for defendants. MEMORANDUM KORMAN, District Judge. The purpose of this memorandum is to set out in somewhat more detail the reasons I stated on the record on November 27, 1995, for granting a preliminary injunction in this civil rights action brought pursuant to 42 U.S.C. § 1983. Plaintiffs are registered Republican voters residing in the 1st, 3rd, 4th, 10th, 11th, 12th, 14th, 28th, and 29th congressional districts, all of whom intend to vote in the Republican Primary on March 7, 1996, at which ninety-three delegates to the Republican National Convention will be selected. Although their complaint has a broader scope, by order to show cause plaintiffs sought injunctive relief with respect to the "petitioning phase" of the Republican presidential primary in New York. The process involves the circulation of petitions containing the names of delegates committed to a particular presidential candidate whose name appears on the petition and on the ballot. Plaintiffs contend that the process mandated by New York law and Republican Party rules violates the Equal Protection Clause of the Fourteenth Amendment and the First Amendment of the United States Constitution. The general framework for the New York Republican primary was decided on at the 1992 National Convention. At that time, the Convention determined that for the 1996 Convention the delegates would be allocated nationwide as follows: three delegates per congressional district, six additional delegates per state, and some number of "bonus" delegates for each state based on the state's success in supporting and/or electing Republicans. On August 8, 1995, the Governor of New York signed into law a statute providing two alternative means by which a delegate candidate could have his or her name placed on the primary ballot. See 1995 N.Y.Laws Ch. 586. Under one alternative, delegates are required to obtain signatures from 5% or 1250 of the enrolled party members in their districts, whichever is less. See id. Ch. 586(2). Under the other alternative, the requirements are substantially less burdensome: 0.5% or 1000, whichever is less. See id. Ch. 586(3). While the legislation offers each political party the option of which alternative to choose, it has been the practice in recent presidential election years for the Legislature to pass an authorizing statute that merely codifies each party's preferred method of organizing its primary. What appear to be the options from which the parties may choose are in fact the choices they have already made. The option requiring 0.5% or 1000 is the one requested by the Democratic Party and the option requiring 5% or 1250 is the one requested by the Republican Party. On October 31, 1995, the last day on which to exercise its option, the Republican State Committee formally notified the New York Board of Elections that it had chosen the alternative that would impose the 5% or 1250 requirements on candidates for delegate. Because of the uneven distribution of Republicans in New York State, the 5% or 1250 requirement imposes very different burdens on different districts. Of the State's thirty-one congressional districts, only six contain fewer than 25,000 Republicans and are therefore forced to comply with the full 5% requirement. The other twenty-five districts 865 receive the benefit of the 1250 cap, which corresponds to a percentage substantially below 5%. Indeed, the uncontested data submitted by plaintiffs reveal that in twenty of the thirty-one districts, the operative percentage is 1.54% or less and in sixteen it is 1.41% or less. In eight districts it is less than 1% and in the district with the most Republicans it is 0.79%. The following chart shows the number of enrolled Republicans in each congressional district ("CD") and the percentage actually required. The asterisks indicate districts that are too small to benefit at all from the 1250 cap. CD #/Republicans #/Signatures % 3 158,097 1250 .79 22 153,824 1250 .81 27 148,319 1250 .84 4 148,013 1250 .84 23 143,555 1250 .87 31 137,952 1250 .91 24 136,788 1250 .91 1 129,111 1250 .97 25 124,260 1250 1.01 26 116,360 1250 1.07 19 114,008 1250 1.10 29 113,561 1250 1.10 28 112,797 1250 1.11 2 112,442 1250 1.11 20 102,232 1250 1.22 13 88,350 1250 1.41 21 86,470 1250 1.45 5 85,213 1250 1.47 18 85,062 1250 1.47 30 80,970 1250 1.54 14 52,555 1250 2.38 9 52,511 1250 2.38 7 46,303 1250 2.70 8 33,247 1250 3.76 6 26,457 1250 4.72 17 23,090 1155 5.00* 12 20,215 1011 5.00* 10 17,114 856 5.00* 15 15,561 778 5.00* 16 14,852 743 5.00* 11 11,814 591 5.00* When viewed against these figures, the option chosen by the Republican Party can be more accurately described as requiring 1.54% or less in two-thirds of the congressional districts and a far greater percentage in most of the remaining congressional districts, including six where the percentage increases to 5% as the number of enrolled Republicans decreases. The highest percentage, which means the greatest burden, applies to districts with the fewest enrolled Republican voters. The burden of obtaining the requisite number of signatures is made even more difficult by the rule precluding an enrolled Republican from signing more than one petition and by a host of arcane technical requirements. Cf. Jenness v. Fortson, 403 U.S. 431, 442, 91 S. Ct. 1970, 1976, 29 L. Ed. 2d 554 (1971) ("The 5% figure is ... apparently somewhat higher than the percentage of support required to be shown in many States as a condition for ballot position, but this is balanced by the fact that Georgia has imposed no arbitrary restrictions whatever upon the eligibility of any registered voter to sign as many nominating petitions as he wishes."). Plaintiffs' attack on the constitutionality of imposing such different burdens implicates two distinct lines of analysis. First, the burden imposed on plaintiffs in a particular district can be examined under the Due Process Clause to determine whether it places too great a restriction on ballot access, regardless of the burdens imposed in other districts. Second, the difference between the burdens placed on plaintiffs and voters in other districts must be analyzed under the Equal Protection Clause.[1] Regulations that impose burdens that are generally applicable to all voters are usually treated deferentially under a balancing test. As the Supreme Court held when reviewing a Hawaii law that prohibited voting for write-in candidates at primary and general elections: the rigorousness of our inquiry into the propriety of a state election law depends upon the extent to which a challenged regulation burdens First and Fourteenth Amendment rights. Thus, as we have recognized when those rights are subjected to "severe" restrictions, the regulations must be "narrowly drawn to advance a state interest of compelling importance." But 866 when a state election law provision imposes only "reasonable, nondiscriminatory restrictions" upon the First and Fourteenth Amendment rights of voters, "the State's important regulatory interests are generally sufficient to justify" the restrictions. Burdick v. Takushi, 504 U.S. 428, 434, 112 S. Ct. 2059, 2063, 119 L. Ed. 2d 245 (1992) (internal citations omitted); see also Unity Party v. Wallace, 707 F.2d 59, 61-62 (2d Cir. 1983). In contrast, the cases dealing with requirements that treat similarly situated voters differently have imposed a more probing, less deferential level of scrutiny under the Equal Protection Clause. The analysis in these cases may assume that, if the restrictions in question were evenly applied, they would meet the balancing test articulated in Burdick. The critical inquiry in these cases is whether the difference in the burdens imposed can be justified. Where the difference is de minimis, only a rational basis is required. Where it "impairs the voters' ability to express their political preferences," heightened scrutiny is required. Illinois State Bd. of Elec. v. Socialist Workers Party, 440 U.S. 173, 184-85, 99 S. Ct. 983, 990-91, 59 L. Ed. 2d 230 (1979); see also Unity Party, 707 F.2d at 63. A simple hypothetical illustrates the distinction between the two lines of analysis. If New York, which now opens the polls for sixteen hours in a general election, reduced the number to one hour, that would clearly constitute an undue burden on the right to vote, even if applied uniformly across New York State. If the number of hours was ten, that figure could arguably survive a Due Process/First Amendment challenge under the balancing test articulated in Burdick and other cases. The ten-hour voting day would, however, be subject to further scrutiny if it applied in New York City while the sixteen-hour day applied in the rest of New York State. The scrutiny would be heightened if it could be shown that the distinction was deliberately drawn to advantage one party or another. Simply stated, a restriction that would withstand a Due Process/First Amendment challenge, could nonetheless fail to survive a challenge made under the Equal Protection Clause, if not applied uniformly.[2] The issue presented here is whether the scheme the Legislature has put in place can survive the scrutiny mandated by the Equal Protection Clause. The Legislature has essentially said that any independent state interest in regulating ballot access could be satisfied by the 0.5% requirement contained in the alternative option it gave the Democratic and Republican parties and which the Democratic Party has adopted. I assume for present purposes that New York State may defer to the judgment of the Republican Party that more than 0.5% should be required as minimal support for a delegate candidate. Nonetheless, because the state "collaborates in the conduct of the primary, and puts its power behind the rules of the party," Gray v. Sanders, 372 U.S. 368, 374, 83 S. Ct. 801, 805, 9 L. Ed. 2d 821 (1963), the Republican Party is a state actor when it selects ballot access rules and it cannot promulgate rules that offend the Equal Protection Clause. The leading case analyzing ballot access signature requirements under the Equal Protection Clause is Illinois State Bd. of Elec. v. Socialist Workers Party, 440 U.S. 173, 99 S. Ct. 983, 59 L. Ed. 2d 230 (1979), in which Justice Marshall examined a state ballot access law requiring candidates for statewide office to obtain 25,000 signatures but requiring candidates for citywide office to obtain signatures from 5% of the number of voters who voted at the previous election. As applied, the law required candidates for citywide office in Chicago to obtain nearly 36,000 signatures. In approaching this incongruous result, Justice Marshall noted that ballot access restrictions implicate the right to vote because "`voters can assert their preferences only through candidates or parties or both.' By limiting the choices available to voters, the State impairs the voters' ability to express their political preferences." Id. at 184, 99 S.Ct. at 990 (quoting Lubin v. Panish, 415 U.S. 709, 716, 94 S. Ct. 1315, 1320, 39 L.Ed.2d 867 702 (1974)). "When such vital individual rights are at stake," Justice Marshall continued, "a State must establish that its classification is necessary to serve a compelling interest." Id. Justice Marshall acknowledged that candidates seeking a place on the ballot could be required to make "a preliminary showing of a `significant modicum of support'" in order to obtain a place on the ballot. Id. 440 U.S. at 185, 99 S.Ct. at 990 (quoting Jenness, 403 U.S. at 442, 91 S.Ct. at 1976). These requirements serve, at the very least, the state's interest "in avoiding confusion, deception, and even frustration of the democratic process in the general election." Jenness, 403 U.S. at 442, 91 S.Ct. at 1976. States may, therefore, seek "to assure that the winner of an election is `the choice of a majority, or at least a strong plurality, of those voting, without the expense and burden of runoff elections.'" Socialist Workers Party, 440 U.S. at 185, 99 S.Ct. at 990 (quoting Bullock v. Carter, 405 U.S. 134, 145, 92 S. Ct. 849, 857, 31 L. Ed. 2d 92 (1972)). Nonetheless, in setting the modicum of support necessary to obtain a place on the ballot, "a State may not choose means that unnecessarily restrict constitutionally protected liberty." Id. 440 U.S. at 185, 99 S.Ct. at 990 (quoting Kusper v. Pontikes, 414 U.S. 51, 58-59, 94 S. Ct. 303, 308-09, 38 L. Ed. 2d 260 (1973)). States must instead choose "the least drastic means to achieve their ends." Id. Justice Marshall reasoned that requiring 36,000 signatures from candidates seeking office in Chicago was "plainly not the least restrictive means of protecting the State's objectives" because "[t]he Illinois Legislature has determined that its interest in avoiding overloaded ballots in statewide elections is served by the 25,000 signature requirement." Id., 440 U.S. at 186, 99 S.Ct. at 991. Given the lower requirement placed on candidates in a statewide election, where a far greater number of voters were eligible to sign petitions, Justice Marshall found "no reason, much less a compelling one, why the State needs a more stringent requirement for Chicago." Id. at 186, 99 S.Ct. at 991; see also Norman v. Reed, 502 U.S. 279, 293-94, 112 S. Ct. 698, 707-08, 116 L. Ed. 2d 711 (1992) (striking down Illinois law for same "constitutional flaw" at issue in Socialist Workers); cf. Bullock v. Carter, 405 U.S. 134, 148, 92 S. Ct. 849, 858, 31 L. Ed. 2d 92 (1972) (finding no justification for filing fees in party primary where "candidates for offices requiring statewide primaries are generally assessed at a lower rate than candidates for local offices"). The same equal protection analysis led the Seventh Circuit to strike down unequal ballot access requirements in Gjersten v. Board of Elec. Comm'rs, 791 F.2d 472, 474 (7th Cir. 1986). At issue there was a state law regulating the internal structure and election procedures of political parties. The law required candidates for the Cook County central committee from the city's "wards" to collect signatures from 10% of the party's primary electors in the ward, but required candidates from the suburban "townships" to obtain signatures from only 5% of their electors. See id. at 474. In striking down the added burden on the wards, the Seventh Circuit recognized that the ballot access law manifested the explicit legislative judgment that a five-percent signature requirement was sufficient to protect the state's interest in an election for the same office in suburban Cook county. Although provided ample opportunity, the defendants presented no justification for the ten-percent requirement. In the absence of such a justification, the equal protection analysis developed in Socialist Workers Party does not require the court to further balance interests of the state against the rights of the candidates and voters. Id. at 477. The holding in Gjersten makes it plain that whether the number of signatures is expressed as a percentage or as a raw number makes no difference in the analysis. The relevant comparisons are between the actual burdens imposed in different districts. The Second Circuit has not yet had the occasion to apply the equal protection analysis developed by the Supreme Court in Socialist Workers Party and applied by the Seventh Circuit in Gjersten. It has, however, recognized that the analysis of ballot access restrictions under the Equal Protection 868 Clause must carefully examine the impact of those restrictions as applied: An analysis of statutory language alone will not reveal the true dimension of a claimed denial of [voting] rights. We must also examine the nature, extent and likely effect of the law on the interest of those claiming to be fenced out by it. Only then can it be determined whether there exists a significant burden on fundamental rights or on a protected class such that heightened scrutiny is mandated. When the full scope of the obstacle to the exercise of these rights and the burden on the class is revealed, then the inquiry turns to the State's interests that purport to justify it. Unity Party, 707 F.2d at 61-62 (internal citations omitted). Under this approach, the ballot access requirements adopted by New York State and the Republican State Committee cannot be sustained because, as applied, they unreasonably discriminate based on the number of Republicans enrolled in a congressional district. In those districts in which it is easier to find a needle in haystack than an enrolled Republican, they require signatures from a percentage of enrolled Republicans three times greater than is required in the large majority of congressional districts, where the number of enrolled Republicans approaches or substantially exceeds 100,000 and the difficulty of finding them is greatly reduced. The different burdens the requirements impose raise exactly the same question for the defendants here as in Socialist Workers Party and Gjersten: If the Republican Party, as a state actor, is willing to accept a relatively low burdenrepresented by a low percentage in most districts, then what is the justification for imposing a much higher burden represented by a 5% requirementin other districts where it is already more difficult to find potential petition signers? The only justification appears to be a desire to increase the advantage already enjoyed by the presidential candidate favored by the Party organization. The favored candidate has the benefit of an in-place organization that can gather the required signatures for delegates with relative ease. Differences in the burdens imposed in different districts are unlikely to have any significant practical effect on the ability of delegates pledged to the favored candidate to obtain the requisite number of signatures. In contrast, such differences may have a substantial impact on candidates who are independent of the Party organization. Because of shortages of time and resources, these candidates, engaging in national campaigns, may be forced to forego petitioning in many small districts and focus only on districts, or other states, where ballot access is relatively easy. In the congressional districts in New York with the fewest Republicans, the Party's candidate will be locked in and voters who would have voted for other candidates will be locked out. The harm caused by this scheme is not limited to the particular voters whose right to vote in a particular election is rendered meaningless. Overly restrictive ballot access laws have the more generalized effect of stifling political expression because they tend to deprive candidates of a significant vehicle for disseminating ideas as well as attaining elective office. As Justice Marshall observed in Socialist Workers Party: The State's interest in screening out frivolous candidates must be considered in light of the significant role that third parties have played in the political development of the Nation. Abolitionists, Progressives, and Populists have undeniably had influence, if not always electoral success. As the records of such parties demonstrate, an election campaign is a means of disseminating ideas as well as attaining political office. Overbroad restrictions on ballot access jeopardize this form of political expression. Socialist Workers Party, 440 U.S. at 185-86, 99 S.Ct. at 990-91 (internal citations omitted). In the context of a major party's primary, candidates who are independent of the party organization are, in many ways, analogous to third parties at a general election. Although at the primary all candidates are members of the same party, they represent different political ideas and have different qualifications for national and party leadership. Such candidates, like third parties, have "undeniably had influence, if not always electoral success." Id. at 185-86, 99 S.Ct. at 869 990-91.[3] Primaries in which they can meaningfully participate often provide the only means for changing the direction and assuming the leadership of the major political parties. As Theodore White observed in his history of the 1968 presidential election: In hindsight one can see that [Nelson] Rockefeller was challenging the entire structure of his Partyas were [Eugene] McCarthy and [Robert] Kennedy on the other side; his resources were greater than those of the two Democrats, certainly in statehouse support if not in troops. But structures do not yield except under pressure. In politics, one challenges establishments in primaries, not elections. John F. Kennedy had done so in 1960, McCarthy was doing so in 1968, Rockefeller himself had made a near thing of it in 1964. Theodore H. White, The Making of the President 1968, at 230 (1969) (emphasis added). If discriminatory requirements prevent "independent" candidates from obtaining the requisite number of signatures to place on the ballot delegates pledged to them, then the primary becomes little more than a statesponsored endorsement of the candidate of the party leadership. While the New York State Republican Party may choose an alternative method of delegate selection that would effectively permit its leadership to select delegates to the Republican National Convention, that objective cannot justify discriminatory ballot access requirements when the Party has chosen to have its delegates selected in a primary election conducted under the auspices of the State. As Professor Tribe has summarized the applicable law: [W]hile the Supreme Court has never required a state to hold elections for any particular office, "once the franchise is granted to the electorate, lines may not be drawn that are inconsistent with the Equal Protection Clause of the Fourteenth Amendment." Such "inconsistent lines" may be found in state laws effecting unequal absolute deprivations on the right to vote, or in the state laws responsible for only marginal, relative inequalities in the distribution of the right to vote. Laurence H. Tribe, American Constitutional Law § 16-11, at 1461-61 (2d ed. 1988) (foot-notes omitted) (quoting Harper v. Virginia Bd. of Elec., 383 U.S. 663, 665, 86 S. Ct. 1079, 1080, 16 L. Ed. 2d 169 (1966)). Under any teststrict scrutiny, balancing of interests, or rational basisthe rules at issue here, which have the practical effect of limiting voters' choices and curtailing political expression, cannot be sustained. The only legitimate objective that they further requiring a minimum modicum of support could be achieved in a far more rational and less restrictive way by a scheme that did not unjustifiably impose such different burdens in different districts. While uniform burdens could result in higher access requirements rather than lower ones, the more uniform the burden the less likely it is to be overly burdensome. Those in the majority are rarely willing to achieve equality by submitting themselves to the burdens they readily place on small minorities. Accordingly, it is unlikely that the Republican State Committee would impose a burden as high as 5% if it affected more than a small minority of districts in which Republicans constitute a small percentage of the voting population. This reality reflects the full dimension of the equal protection guarantee. Because challenges to ballot access restrictions often occur at the eleventh hour, the Court of Appeals for the Second Circuit has not addressed the possible justifications that a state may have for adopting signature requirements that, when applied, do not fall uniformly on all voters and candidates. There are, however, four thoughtful opinions, relied upon by defendants here, that address this issue in related contexts. See Hewes v. Abrams, 718 F. Supp. 163 (S.D.N.Y.) (Haight, J.), summarily aff'd, 884 F.2d 74 (2d Cir. 1989); Mahon v. Abrams, No. 88 Civ. 1745 (S.D.N.Y. Mar. 21, 1988) (Sand, J.), aff'd without op., 847 F.2d 835 (2d Cir.1988); 870 McGee v. Board of Elec. of New York, 669 F. Supp. 73 (S.D.N.Y.1987) (Weinfeld, J.); Meyerson v. Board of Elec. of New York, No. 87 Civ. 6168 (S.D.N.Y. Sept. 3, 1987) (Leisure, J.). While each of these cases is distinguishable from the present case, they warrant some discussion here. Both McGee and Meyerson rejected challenges to the portion of New York's ballot access scheme that required candidates for county offices in Bronx County to obtain signatures from 5000 enrolled voters but required candidates for county offices in Nassau and Suffolk Counties to obtain only 2000 signatures.[4] Even though the population of all three counties was roughly the same, the disparity was considered to be rational because the higher population density in the Bronx made it easier to obtain 5000 signatures in the Bronx than in Nassau and Suffolk Counties. The requirement of 2000 signatures in the two less densely populated counties simply equalized the ballot access burdens. As Judge Leisure observed in Meyerson: "In light of this difference in population density, it is wholly rational for the New York Legislature to conclude that two thousand signatures in Nassau County represents approximately the same degree of support for a candidate as five thousand signatures in Bronx County due to the greater ease with which signatures may be gathered in the Bronx because of greater population density." Meyerson, No. 87 Civ. 6168, at 14. Both Meyerson and McGee recognize that, in comparing different burdens, the most important consideration is not the absolute number or the percentage of signatures required, but the extent of the actual, practical burden placed on candidates and voters. Under certain circumstances, raising or lowering the total number of signatures and/or the percentage of signatures required in certain districts equalizes rather than amplifies differences among districts. This rationale would not, however, explain the system reflected by the record here because it deliberately places a heavier burden on districts where the fewest number of enrolled Republicans reside. In Mahon, Judge Sand rejected a challenge to the 1988 equivalent of the New York Session Law challenged by plaintiffs here. He found that plaintiffs had raised a fair basis for litigation but denied the motion for a preliminary injunction. To the extent the denial rested primarily on the untimeliness of the plaintiffs' lawsuit, which was instituted after the petitioning phase and sought access to the ballot for candidates in districts where they had gathered no signatures, the case is clearly distinguishable. To the extent Judge Sand preliminarily addressed the case on its merits, his opinion reflects my first impression that a numerical cap of 1250 that eases the requirements in the districts that would be most heavily burdened by a 5% signature requirement is not unconstitutional on its face. I also agree with Judge Weinfeld that a state can decide that, although a certain number of signatures "is the general requirement for showing the modicum of support to be placed on the ballot, a lesser showing will be allowed in specific contests." McGee, 669 F.Supp. at 80. In practice, however, the 1250 cap applies not only to the largest districts, but to nearly all of the districts. The generally applicable modicum of support required is, therefore, not 5%, but some percentage based on the 1250 requirement. In two-thirds of the districts the percentage is 1.54 or less. Under the circumstances, the cap has created an exception that swallows almost all of the rule and renders irrational what remains of it. Judge Haight's opinion in Hewes is more troubling. In that case, the Right to Life Party's candidate for mayor of New York City objected to a ballot access law requiring candidates to obtain signatures from 5% of the enrolled members of their respective parties or 10,000, whichever was less. In New York City, the law in practice required Democrats to obtain signatures from 0.5% of their party, Republicans to obtain signatures from 2.4% of their party, and Right to Lifers to obtain the full 5% because their party had 871 only 6,000 members. See Hewes, 718 F.Supp. at 164. The plaintiff sought an injunction requiring that the signature requirement for all parties be reduced to 0.5%, the lowest percentage required of any party. Judge Haight denied the injunction and dismissed the complaint. He held that the statute needed only to survive rational basis review and that it did so in part because the cap was a legitimate means of avoiding requiring large parties to gather an unreasonably high number of signatures. See id. at 167. I agree that once a state has selected a percentage that represents the appropriate modicum of support it may institute a cap to liberalize ballot access. What I do not agree with is the inference, accepted by Judge Haight in Hewes, that 5% was the modicum of support actually required by the ballot access scheme at issue. The scheme in Hewes required only primary candidates from the established minor parties to obtain the signatures of 5% of the enrolled party members, while it required less than half that percentage from the Republican Party and one tenth of that from the Democratic Party.[5] Moreover, if no Right to Life candidate met the disproportionately high burden and the Right to Life Party was left without a nominee, the effect would be to eliminate an independent party from the ballot. In any event, Hewes is distinguishable because it addressed signature requirements that differed as between political parties. These parties were of vastly different sizes. A major party's candidate for mayor in New York City, despite the low percentage requirement, would still be required to gather more signatures than there were voters in the Right to Life Party. Given the advantage that such a candidate would enjoy over candidates from smaller parties at the general election, a state might rationally require small party candidates to show stronger intra-party support than candidates from larger parties in order to be placed on the primary ballot. I need not now consider whether this reasoning permissibly protects the ballot from unnecessary clutter or impermissibly limits voters' choices. I need only note that the same rationale would not explain requirements that are the same for everyone within a district but vary so significantly from district to district for the same party position. The foregoing discussion reflects my conclusion that plaintiffs have established a likelihood of success on the merits. Nonetheless, I decline to foist on the Republican Party the relief requested by plaintiffs, namely, an order requiring no more than 0.79% of the enrolled Republicans to place a delegate candidate on the ballot. This is the percentage required under the current scheme in the congressional district with the largest number of enrolled Republicans. The underlying purpose of the Legislature was to grant the Republican Party latitude in fixing the minimum modicum of support it deemed appropriate. According the same deference to the desire of the Republican Party to fix whatever number it deems appropriate, any relief should permit the Party to define a "modicum of support" at the highest percentage consistent with the Equal Protection Clause. Consistent with the analysis in Socialist Workers Party, I determined that level based on the minimum percentage of signatures required in a majority of congressional districts. The data furnished to me by the plaintiffs, which no one has disputed, demonstrate that if the requirement was 1.41% or 1250, 16 of 31 districts would have to meet the percentage requirement and 15 of 31 would benefit from the cap. The 1.41% requirement could then rationally be characterized as a generally applicable rule and the 1250 cap as an exception that liberalizes ballot access. The scope of my order is necessarily limited. Because this case was not brought as a class action I have only the specific plaintiffs before me. The plaintiffs include voters in four districts that would benefit from a 1.41% requirement: the 10th, 11th, 12th, and 14th districts. Voters from the other districts *872 that would benefit are not represented here and plaintiffs here have no standing to object to their potential lack of choices on primary day. I, therefore, ordered the defendants not to require otherwise valid signatures of more than 1.41% of enrolled Republicans from delegates seeking access to the ballot in the Republican primary in the 10th, 11th, 12th, or 14th districts. I have granted relief because plaintiffs have shown a likelihood of success on the merits and of irreparable harm on the day of the primary, but I have also considered the public interest, which is always "a factor to be considered in the granting of a preliminary injunction." Carey v. Klutznick, 637 F.2d 834, 839 (2d Cir.1980). The relief I have granted threatens no harm to the public interest because, if I am correct that the ballot access restrictions chosen by the Republican Party have the effect of reducing the choices available to voters in many districts, the only possible effect of my order may be to increase the choices available to voters in the affected districts. These choices will still be limited to candidates who have shown the level of support that the party itself considers sufficient to justify ballot access in most other districts and who are able to overcome other burdens that are not at issue here. Indeed, for this reason, even if this were a class action, the preliminary injunction would have either little or no effect in two-thirds of the congressional districts. Because there is not even a rational basis for requiring a far greater level of support in the minority of congressional districts with the fewest enrolled Republicans, the public interest is not disserved by granting injunctive relief. NOTES [1] By distinguishing these two analytical inquiries, I do not mean to obscure the fact that the categories can overlap and are often intertwined or left undistinguished in the relevant case law. See Norman v. Reed, 502 U.S. 279, 288 n. 8, 112 S. Ct. 698, 705 n. 8, 116 L. Ed. 2d 711 (1992). [2] The reverse is also true. A uniformly applied ballot access restriction could survive an equal protection challenge and nonetheless fail to withstand a due process challenge. [3] Senator Eugene McCarthy's near victory in the 1968 New Hampshire primary and his anticipated victory in the Wisconsin primary played a major role in bringing down a sitting President of his own party over an issue of national policy. This story is chronicled in Theodore H. White, The Making of the President 1968, at Chs. 3-4 (1969). [4] The overall scheme imposed a signature requirement of 5% of enrolled voters for all county offices. The law then capped the number of signatures required at 5000 for counties in New York City but at only 2000 for all other counties with more than 250,000 inhabitants. [5] Even if the different requirements at issue in Hewes violated the Equal Protection Clause, I would not have granted the remedy he sought. Under the reasoning I discuss below, I would have set the percentage as high, but no higher, than would be needed to subject a majority of parties to the same general rule.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2349283/	140 F. Supp. 260 (1956) In the Matter of TRILLING AND MONTAGUE, a Partnership, and David M. Trilling, Individually and as surviving partner therein, Bankrupts. No. 24194. United States District Court E. D. Pennsylvania. February 29, 1956. Richard V. Zug, David F. Maxwell, Philadelphia, Pa., for Maurice A. Kendall, Trustee. Edmonds, Obermayer & Rebmann, Philadelphia, Pa., of counsel. Wexler, Mulder & Weisman, Harold Cramer, Shapiro, Rosenfeld, Stalbert & Cook, Philadelphia, Pa., Petition for Review. KIRKPATRICK, Chief Judge. In view of the thoroughly considered review of authorities contained in the opinion of the learned Referee, a detailed discussion of them here would be superfluous. I fully agree that the weight of authority decidedly supports the Referee's conclusion that the trustee in bankruptcy is not bound by the restrictive stock agreement and that he had the right and obligation to sell the stock for the best price obtainable. Whatever the implications of the decision of the Superior Court of Pennsylvania in Garrett v. Philadelphia Lawn Mower Co., 39 Pa.Super. 78, may be, all that was expressly decided was that a contract having restrictive features like *261 those in the present case is not invalidated by any public policy and that such contract prevents an executor from selling the stock without first offering it to other stockholders. The Court, so far as appears from the opinion, gave no consideration to the question of the interpretation of the contract but simply started with the assumption that it was intended to apply to sales by the representatives of a stockholder after his death as well as to sales by him during his lifetime. However, while it is true that such contracts are not generally invalidated by considerations of public policy, it is also true that public policy does enter very definitely into the treatment given them by the courts. Any number of authorities hold that such restrictive agreements are regarded with disfavor and, though not necessarily invalid, must be construed strictly and, unless the contrary conclusion is inescapable, apply "only to voluntary sales and do not apply to judicial sales or other transfers by operation of law." 13 Am.Juris., Corporations, Sec. 339.5, 1954 Cumulative Supplement. Not only does the contract in the present case contain nothing to indicate that it was intended to apply to an involuntary transfer by operation of law in the bankruptcy court, but the fact that the provisions for successive options with notices to be given of a price offered by a bona fide purchaser and acceptable to an "offering stockholder" would be almost unworkable in the case of a trustee's sale like the present one indicates rather strongly that what the parties to the agreement had in mind were voluntary transfers. After all, as pointed out by the Court in Barrows v. National Rubber Co., 12 R.I. 173, the whole thing comes down to a mere matter of price, no secret sale without notice being possible in bankruptcy and the stockholders being fully able to protect themselves from an unwelcome member by becoming the highest bidder at the receiver's sale. The order of the Referee is affirmed.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/1952047/	740 F. Supp. 1092 (1989) Mary A. HOHE, et al., Plaintiffs, v. Robert P. CASEY, Governor, et al., Defendants. Civ. A. No. 88-1348. United States District Court, M.D. Pennsylvania, August 10, 1989. Thomas A. Beckley, Harrisburg, Pa., Charles O. Beckley, Harrisburg, Pa., Milton L. Chappell, Raymond J. LaJeunesse, Glenn M. Taubman, National Right to Work Legal Defense Found., Inc., Springfield, Va., John G. Milakovic, Beckley & Madden, Harrisburg, Pa., for plaintiffs. Joseph S. Sabadish, Thomas Brian York, Office of the Atty. Gen., Chief, Litigation Section, Harrisburg, Pa. Elaine Williams, Kirschner, Walters & Willig, Philadelphia, Pa., John J. Sullivan, Richard Kirschner, Kirschner, Weinberg & Dempsey, Washington, D.C., for defendants. Peter D. Walther, Regina C. Reardon, A. Taylor Williams, Bray, Walther & Reardon, Philadelphia, Pa., for Robert J. Bray. 1093 MEMORANDUM CALDWELL, District Judge. Introduction In this class action, the plaintiffs challenge the constitutionality of Section 2 of Pennsylvania Act No. 84 of 1988, which amended the Pennsylvania Administrative Code of 1929, 71 P.S. §§ 51 to 732-506 (Purdon 1962 and Supp.1989), the collective bargaining agreement executed pursuant thereto, and the procedure implemented by AFSCME Council 13 under the agreement. Now before the court and ripe for disposition are the plaintiffs' motion for partial summary judgment, the union's motion for summary judgment, and the Commonwealth defendants' motion for judgment on the pleadings. Because they contain many of the same issues, we will consider and discuss them together. Background Since July 13, 1988, Act 84 has authorized labor unions to bargain for and collect a "fair share fee" from certain non-union commonwealth employees. 71 P.S. § 575(b). The purpose of the fee is to offset the cost of collective bargaining on behalf of the nonmembers. The Act defines "fair share fee" as the regular membership dues required of members less the cost for the previous fiscal year of the union's non-collective-bargaining-related activities. 71 P.S. § 575(a). It requires as a precondition to fee collection that the union "establish and maintain a full and fair procedure, consistent with constitutional requirements, that provides nonmembers ... with sufficient information to judge the propriety of the fee and that responds to challenges by nonmembers to the amount of the fee." 71 P.S. § 575(d). The union must establish arbitration procedures to resolve the challenges, id., which arbitration is final and binding. 71 P.S. § 575(g). When a challenge is made, the union is required to place 50% of the fee into an interest-bearing escrow account until the challenge is resolved by the arbitrator. 71 P.S. § 575(i). On July 28, 1988, AFSCME Council 13 and the Commonwealth amended their collective bargaining agreement to provide for the withholding of fair share fees from the earnings of non-union employees represented by Council 13 for collective bargaining purposes. Council 13 identified some 18,000 such workers from Commonwealth payroll records and determined the amount of their fees to be 88.55% of its members' regular dues or 1.33% of their base salaries. The union then informed the Commonwealth of the names and amounts to be withheld. Between August 8 and 12, 1988, Council 13 sent to the potential fee payers a notice explaining how the fair share fee was calculated. The notice lists the union's expenses, broken down by major expense category, for the fiscal year that ended on June 30, 1987. Each category contains an allocation of chargeable and nonchargeable expenses. Also included is a description of what expenses the union considers to be chargeable and nonchargeable. The notice advises the fee payers of their rights to challenge the fee within 45 days, and informs them that 100% of the disputed fee will be placed into escrow pending the outcome of arbitration. On August 16, 1988, the Commonwealth began deducting the fees. Pursuant to the collective bargaining agreement, the Commonwealth is to remit to Council 13 dues and fair share fees withheld in one month by the end of the following month. On August 26, 1988, the 15 named plaintiffs, nonunion Commonwealth employees who work in bargaining units represented by AFSCME Council 13, filed this lawsuit on behalf of themselves and all others similarly situated. Their complaint alleges that the union and the Commonwealth have violated and continue to violate their first and fourteenth amendment rights by exacting the fair share fees. They claim that Act 84 is unconstitutional, both on its face and as applied in this case, and that the defendants' scheme for collecting compulsory fees from nonconsenting nonmembers fails to meet the constitutional requirements enunciated in Chicago Teachers Union v. Hudson, 475 U.S. 292, 106 S. Ct. 1066, 89 L. Ed. 2d 232 (1986). Pending resolution 1094 of this matter, Council 13 has escrowed all of the fees withheld from all fair share fees payers, whether they have objected or not. Approximately 500 nonmembers have submitted challenges to the fees by following the statutorily prescribed procedures. On January 18, 1989, an arbitrator appointed by the American Arbitration Association upheld the union's determination of chargeable expenses and its calculation of the fees. Discussion It is beyond doubt that agency shop fair share fees, accompanied by appropriate procedural safeguards, are constitutional. Hudson; Ellis v. Railway Clerks, 466 U.S. 435, 104 S. Ct. 1883, 80 L. Ed. 2d 428 (1984); Abood v. Detroit Board of Education, 431 U.S. 209, 97 S. Ct. 1782, 52 L. Ed. 2d 261 (1977). In this case, the court simply must examine the safeguards mandated by Act 84 and implemented by the defendants, and determine whether they satisfy the constitutional requirements set forth in Hudson. As explained below, we conclude that the defendants have complied with all aspects of Hudson except its verification requirement. With respect to that question, the existence of a factual issue precludes a decision at this time. Many of the issues raised in the plaintiffs' request for a preliminary injunction, have been reargued in the current motions. Therefore much of what we write now reiterates what was said in denying that motion. See Hohe v. Casey, 695 F. Supp. 814 (3d Cir.1988), aff'd 868 F.2d 69 (3d Cir. 1989). We again emphasize that the questions to be decided are narrow, and, for the most part, technical. Though we are aware of and understand the plaintiffs' philosophical objections to fair share fee programs, those matters are not before the court. We shall not, as the plaintiffs would like, indulge in an analysis of the advisability of such programs on social or political grounds. The General Assembly, rightly or wrongly, has spoken, and the union has availed itself of the benefits of the law. Absent a constitutional infirmity, we are without the authority to satisfy the plaintiffs. They must turn, instead, to the legislature for relief. We preface our discussion of the several motions under consideration with these remarks because a significant number of the plaintiffs' arguments appear to be directed not at whether the Hudson requirements have been met, but rather at whether fair share fee programs should be subject to more stringent requirements. We will neither consider nor discuss those arguments. In addition, the plaintiffs continually emphasize only the first amendment component of the Hudson decision. Though we agree that the plaintiffs' first amendment rights are indeed worthy of protection, we must weigh those rights against the union's rights, as did the Supreme Court in Hudson.[1] The Hudson Court held that fair share fee programs must "minimize the risk that nonunion employee's contributions might be used for impermissible purposes." Hudson, 475 U.S. at 309, 106 S. Ct. at 1077, 89 L.Ed.2d at 248. "[T]he objective must be to devise a way of preventing compulsory subsidization of ideological activity by employees who object thereto without restricting the Union's ability to require every employee to contribute to the cost of collective-bargaining activities." Abood, 431 U.S., at 237, 97 S. Ct. at 1800. Procedural safeguards are necessary to achieve this objective for two reasons. First, although the government interest in labor peace is strong enough to support an "agency shop" notwithstanding its limited infringement on nonunion employees' constitutional rights, the fact that those rights are protected by the First Amendment requires that the procedure be carefully tailored to minimize the infringement. Second, the nonunion 1095 employee the individual whose First Amendment rights are being affected must have a fair opportunity to identify the impact of the governmental action on his interests and to assert a meritorious First Amendment claim. Id. at 302-03, 106 S. Ct. at 1074, 89 L.Ed.2d at 244-45 (footnotes omitted). The required safeguards include "an adequate explanation of the basis for the fee, a reasonably prompt opportunity to challenge the amount of the fee before an impartial decisionmaker, and an escrow for the amounts reasonably in dispute while such challenges are pending." Id. at 310, 106 S. Ct. at 1078, 89 L.Ed.2d at 249. With those principles in mind, we turn to the plaintiffs' claims that because it does not minimize the risk of excessive collections or the burden of objection, the fair share scheme at issue here fails to satisfy the constitutional requirements of Hudson. A. Timeliness of the Notice Citing Damiano v. Matish, 830 F.2d 1363 (6th Cir.1987), Tierney v. City of Toledo, 824 F.2d 1497 (6th Cir.1987), Gilpin v. AFSCME, 643 F. Supp. 733 (C.D.Ill.1986), and Lehnert v. Ferris Faculty Ass'n, 643 F. Supp. 1306 (W.D.Mich.1986), the plaintiffs assert that notice of the fee deductions was untimely. They claim that Hudson requires notice to all potential fee payers before any fees may be collected. Under the facts of this case, the timeliness of the notice is not genuinely at issue. It is undisputed that it was mailed four to eight days before deductions began. Furthermore, the plaintiffs concede that the union did not obtain any fees until after the deadline for filing challenges had passed. See Plaintiffs' Brief in Opposition to AFSCME's Motion for Summary Judgment at 32. Once a challenge was filed, the disputed fee was escrowed. Thus, the union did not have the use of the dissenters' funds for objectionable purposes, even temporarily. Nevertheless, the plaintiffs argue that in future years the union could receive and spend fees before challenges are filed and it is obligated to escrow the challengers' fees. We will not consider that argument, which is founded purely on speculation. We decline to establish an arbitrary length for either the notice period or the objection period. We do hold, however, that the 45 day period that existed in this case between the notice and the union's receipt of the fees satisfied Hudson. See Lehnert (two week period for objections sufficient).[2] B. Local Union Presumption The plaintiffs continue to challenge the use in the notice of the presumption that the chargeable expenditures of Council 13's more than 300 affiliated local unions are at least as great, on a percentage basis, as Council 13's expenditures. Though a difficult question, we continue to believe that the use of the presumption is permissible in this case, and we have little more to add to what was said in our September 15, 1988, opinion. The parties' dispute can be reduced to their fundamental disagreement as to the purpose of the notice. The plaintiffs contend that it must serve as predeprivation justification for the collection of the fees and as proof that the fee amounts are correct. The defendants posit that its purpose merely is to disclose how the fee was calculated, thereby allowing nonmembers to object to the calculation, including the use of the presumption. We believe the defendants are correct. So long as the calculation of the fee is explained in the notice, and the fee payer is able to make a general challenge to the fee, the Hudson, requirements are satisfied. We see no reason to force the union to provide, and potential fee payers to examine, over 300 additional disclosure statements, each as 1096 detailed as the original notice. We think that as a practical matter Council 13's notice provides more meaningful data than would the substantially longer and more complicated notice advocated by the plaintiffs. Finally, the plaintiffs challenge the factual reliability of the presumption and claim that its inaccuracy renders the notice defective. We reject that argument. The salient factor is that the union's reliance on the presumption is disclosed and is subject to review by the arbitrator. Any defect in the presumption can be cured at that time. If the presumption is not grounded in fact, Council 13 will be unable to carry its burden of justifying the fee, and the challengers will not be charged for any portion of its local union expenditures.[3] C. Verification of the Notice Hudson requires that a fair share fee notice "include the major categories of expenses, as well as verification by an independent auditor." Hudson, 475 U.S. at 307 n. 18, 106 S. Ct. at 1076, 89 L.Ed.2d at 247 n. 18. The plaintiffs challenge Council 13's notice on the grounds that on its face it includes no independent verification and that an independent auditor did not verify the union's calculation of the fee. On its face, the notice purports to be verified and thus we reject the first ground. The second ground gives us reason to pause, however. The plaintiffs argue that according to the deposition of Harvey Nuland, a CPA whose accounting firm was responsible for the audit, the accuracy of AFSCME International's expense figures were not verified. We have read Nuland's deposition and do in fact find testimony to that effect. See Nuland deposition at 42-43. However, we do not find his testimony, read in its entirety, to be clear enough to reach the conclusion urged by the plaintiffs. From his answers in other parts, it appears that those figures may have been examined, but the extent of the examination is unclear. We think the deposition is confusing enough to warrant the denial of both the union's and the plaintiffs' motions for summary judgment on this point. To further muddy the waters, in an affidavit filed one month after his deposition, Nuland avers that his firm conducted the annual audit of AFSCME International's financial statements. We are uncertain whether that statement contradicts or merely explains his earlier testimony. D. Standard for Chargeable Costs/Advance Reduction The plaintiffs argue that Act 84 and Council 13's notice and procedures incorporate a constitutionally overbroad standard for chargeable costs. In denying the plaintiffs' request for a preliminary injunction, we refused to consider those objections because they raise substantive challenges to the amounts of the fees. Likewise, we will not do so here. Under Hudson, the fact that the amount of a fee may be excessive does not amount to a first amendment violation so long as the fee is reviewable by an arbitrator. Now, the plaintiffs have approached this question from a different angle. They do not claim that the issue here is whether the union has correctly allocated expenses as a matter of fact. Rather they challenge on legal grounds the standards established by Act 84 and the union procedure implementing those standards. First, the plaintiffs assert that the standard for calculating fair share fees under Act 84 does not properly define chargeable expenses. The Act authorizes a fee equal to "the regular membership dues required of members of the exclusive representative less the cost for the previous fiscal year of its activities or undertakings which were not reasonably employed to implement or effectuate the duties of the employe organization as exclusive representative." 71 P.S. § 575(a). The plaintiffs claim that this method of determining fees is contrary to that required by Hudson. They contend that rather than subtracting nonchargeable expenses from total expenses, with the remainder being chargeable, the union must 1097 add all chargeable expenses. The plaintiffs' argument is frivolous and illogical. Regardless of the method used, the amount of chargeable expenses will be the same. The plaintiffs incorrectly rely upon the following language in Hudson as supportive of their argument: "An acknowledgment that nonmembers would not be required to pay any part of 5% of the Union's total annual expenditures was not an adequate disclosure of the reasons why they were required to pay their share of 95%." Hudson, 475 U.S. at 307, 106 S.Ct. at 1076, 89 L. Ed. 2d at 247. At that point in the opinion, the Court was not discussing the method used to calculate the fee, but rather the method used to explain the fee. The Court simply held that it was not sufficient for a union notice to explain the advance reduction of dues only by identifying nonchargeable expenses and leaving the nonmembers to speculate as to what constituted chargeable expenses. In this case, the notice lists both chargeable and nonchargeable costs. Thus the issue that was before the Hudson court does not arise. Next, the plaintiffs claim that the amount of each individual nonmember's fees is unconstitutionally arbitrary since it is based on a percentage of gross income. They argue that such uneven apportionment gives an employee who pays a lower fee a partial free ride at the expense of those who pay higher fees. We reject that argument. The assessment of dues and fees on the basis of an employee's salary is a long-standing practice. In Aluminum Workers Council, 185 N.L.R.B. 69 (1970), the National Labor Relations Board, in deciding a case under the National Labor Relations Act,[4] wrote: [A] labor organization ... may lawfully charge, as a condition of acquiring or retaining membership, different rates for initiation fees and dues provided that they are based on a reasonable general classification; that is, one that is not discriminatory. Thus dues based on the employees' earnings have been held to be not discriminatory. Id. at 70, quoted in Bagnall v. Airline Pilots Assn., 626 F.2d 336, 339 (4th Cir. 1980), cert. denied, 449 U.S. 1125, 101 S. Ct. 943, 67 L. Ed. 2d 112 (1981). In Klemens v. Airline Pilots Ass'n, 736 F.2d 491 (9th Cir.1984), cert. denied, 469 U.S. 1019, 105 S. Ct. 435, 83 L. Ed. 2d 362 (1984), and Bagnall, cases brought under the Railway Labor Act, the courts rejected similar claims. The Bagnall court wrote: The assessment of dues based upon a percentage of earnings is, we think, a reasonable classification. Considering either his economic ability to pay or the benefits he realizes from effective representation, a pilot earning greater income has an advantage over a pilot earning less; there are reasons why he should or could pay more. There is uniformity in the basis of computing dues and there is lack of any indication of discrimination. Bagnall, 626 F.2d at 339-40. We agree with that reasoning. Because the Council 13 fair share fee is based upon a reasonable, nondiscriminatory classification, it is not unconstitutionally arbitrary. E. Facial Challenges to Act 84 The plaintiffs contend that Act 84 is unconstitutional on its face in four regards: 1) its definition of fair share fees is overbroad; 2) it requires fee deductions regardless of whether the necessary procedural safeguards are established; 3) it authorizes an escrow of only 50% of the challenged fees; and 4) it purports to deny nonmembers access to the courts. We have already considered the adequacy of the Act's definition of fair share fees and have concluded that it is not constitutionally deficient. We will say no more on that issue. In considering the remaining arguments, we are guided by the Third Circuit's opinion in Robinson v. State of New Jersey, 806 F.2d 442 (3d Cir.1986), cert. denied, 481 U.S. 1070, 107 S. Ct. 2463, 95 L. Ed. 2d 872 (1987). In reviewing the New Jersey agency 1098 shop law for facial invalidity, the court wrote: It is well established that the courts will not invalidate a statute on its face simply because it may be applied unconstitutionally, but only if it cannot be applied consistently with the Constitution. Thus in Members of the City Council of Los Angeles v. Taxpayers for Vincent, 466 U.S. 789, 104 S. Ct. 2118, 80 L. Ed. 2d 772 (1984), the Supreme Court explained that there are two different contexts in which a statute may be declared facially invalid: "either because it is unconstitutional in every conceivable application, or because it seeks to prohibit such a broad range of protected conduct that it is unconstitutionally `overbroad.'" Id. at 796, 104 S. Ct. at 2124. A holding that invalidates a statute in the first situation "expresses the conclusion that the statute could never be applied in a valid manner." Id. at 797-98, 104 S. Ct. at 2125. The New Jersey Act clearly does not fall into this category. It does not mandate procedures that result in a union enjoying temporary use of funds to which it is not entitled; it does not forbid a union to provide nonmembers with a justification of its fee assessments; and it does not prevent the establishment of an adequate appeal procedure. Id. at 446-47. We can say the same of the Pennsylvania Act. The plaintiffs claim, however, that their facial attacks are aimed not at the Act as a whole, but at specific severable provisions. A reading of those provisions reveals that our rulings on their constitutionality would have no bearing on the outcome of this case. Thus to invalidate those provisions would be improvident. As the Supreme Court wrote in Brockett v. Spokane Arcades Inc., 472 U.S. 491, 501-02, 105 S. Ct. 2794, 2800-01, 86 L. Ed. 2d 394, 404-05 (1985): We call to mind two of the cardinal rules governing the federal courts: "`[o]ne, never to anticipate a question of constitutional law in advance of the necessity of deciding it; the other never to formulate a rule of constitutional law broader than is required by the precise facts to which it is to be applied.'" United States v. Raines, 362 U.S. 17, 21, 4 L. Ed. 2d 524, 80 S. Ct. 519 (1960), quoting Liverpool, New York & Philadelphia S.S. Co. v. Commissioners of Emigration, 113 U.S. 33, 39, 28 L. Ed. 899, 5 S. Ct. 352 (1885). Citing a long line of cases, Raines also held that "[k]indred to these rules is the rule that one to whom application of a statute is constitutional will not be heard to attack the statute on the ground that impliedly it might also be taken as applying to other persons or other situations in which its application might be unconstitutional." These guideposts are at the bottom of the "elementary principle that the same statute may be in part constitutional and in part unconstitutional, and that if the parts are wholly independent of each other, that which is constitutional may stand while that which is unconstitutional will be rejected." Allen v. Louisiana, 103 U.S. 80, 83-84, 26 L. Ed. 318 (1881), quoted with approval in Field v. Clark, 143 U.S. 649, 695-696, 36 L. Ed. 294, 12 S. Ct. 495 [505] (1892). . . . . . Nor does the First Amendment involvement in this case render inapplicable the rule that a federal court should not extend its invalidation of a statute further than necessary to dispose of the case before it. We will explain briefly why we need not invalidate the challenged provisions in order to dispose of this case. As the plaintiffs argue, it appears that 71 P.S. § 575(d) requires the Commonwealth to withhold fees from the plaintiffs and remit them to the union, even if the necessary procedural safeguards have not been implemented. They claim that that provision violates Hudson which they contend requires the Commonwealth to examine the union procedure and satisfy itself that it is constitutionally sound before it deducts fees from its employees' paychecks. The soundness of the union's procedure is the central issue in this case. With the exception of the verification requirement *1099 yet to be determined, we have already found that the required safeguards have been implemented. If it is later determined that the audit was proper, the plan passes muster and the fact that the Commonwealth may not have ensured its constitutionality is irrelevant. If the audit is found to have been improper, the union's procedure was constitutionally defective and the plaintiffs will prevail. The fact that the Commonwealth might not have earlier barred fee collection would not make the plaintiffs more victorious. Thus, under the facts of this case it is unnecessary to consider the plaintiffs' challenge to section 575(d).[5] Similarly, the plaintiffs' challenge to the Act's escrow provision is rendered moot by the facts of this case and need not be considered. 71 P.S. § 575(i) provides that when a challenge is made to the propriety of the fair share fee, the union shall escrow 50% of the challenged fee until the challenge is resolved by arbitration. The plaintiffs appear to attack that section on two grounds: first, that Hudson requires a 100% escrow; and second, that 50% is arbitrary. Here, the union has escrowed 100% of all challenged fees, which clearly complies with any such condition Hudson might mandate.[6] Therefore the striking down of section 575(i) gains the plaintiffs nothing. Furthermore, as we noted above, a statute may be found to be unconstitutional on its face only if it cannot be applied consistently with the constitution. In this case, the escrow provision has been so applied, apparently by construing section 575(i) as requiring at least a 50% escrow. Finally, the plaintiffs attack, as facially defective, 71 P.S. § 575(g), which provides that when the propriety of a fair share fee is challenged, the "decision of the impartial arbitrator shall be final and binding." They claim that that language unconstitutionally hinders "the access of nonmembers to the courts for the vindication of the first amendment right not to subsidize more than the costs of statutory exclusive representation" by discouraging suits. Plaintiffs' brief in support of motion for partial summary judgment at 34. Clearly, section 575(g) did not deter the plaintiffs from filing this action. A finding that it might impede some future plaintiff's access to the courts would have no bearing on the outcome of this litigation. Conclusion As indicated in the foregoing discussion, we believe that Act 84 can be applied constitutionally, and that for the most part, the fair share fee deduction program implemented by AFSCME Council 13 comports with the requirements of Hudson. Accordingly, the plaintiffs' motion for partial summary judgment will be denied. We must also deny the Commonwealth's motion for judgment on the pleadings and the union's motion for summary judgment because of the existence of a genuine issue of material fact: whether the financial data concerning AFSCME International has been properly verified. The resolution of that question is the sole issue remaining in this matter. NOTES [1] We will confine our discussion to the plaintiffs' first amendment concerns because "in this context, the procedures required by the First Amendment also provide the protections necessary for any deprivation of property." Hudson, 475 U.S. at 304 n. 13, 106 S. Ct. at 1075 n. 13, 89 L. Ed. 2d at 245 n. 13. [2] We emphasize to the plaintiffs that our decision is made strictly on the basis of constitutional requirements. We do not wish to be interpreted as approving the apparently hasty fashion in which the union and Commonwealth amended their collective bargaining agreement and instituted the fair share fee program. We are aware of the beliefs of some that the program was instituted in return for organized labor's support of certain political candidates. We express no opinion as to that view and such concerns can play no role in our consideration of the issues before us. [3] We note that, in this case, the arbitrator recently has upheld the presumption. The review of that decision is not a matter now before the court. [4] The National Labor Relations Act prescribes a test of "uniformity" with respect to the assessment of union dues. [5] For the same reasons we also reach that conclusion with respect to the indemnification clause in the collective bargaining agreement. [6] The Hudson Court wrote that it "need not hold that a 100% escrow is constitutionally required. Such a remedy has the serious defect of depriving the Union of access to some escrowed funds that it is unquestionably entitled to retain." Hudson, 475 U.S. at 310, 106 S. Ct. at 1079, 89 L.Ed.2d at 249. All that is required is an "escrow for the amounts reasonably in dispute," with the proviso that if less than 100% is escrowed, the union must justify the limited escrow. Id.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2322818/	462 F. Supp. 2d 561 (2006) In re: TERRORIST ATTACKS ON SEPTEMBER 11, 2001. This document relates to: Federal Insurance Company et al. v. Al Qaida, et al., 03 Civ. 6978 No. 03 MDL 1570 RCC. United States District Court, S.D. New York. November 20, 2006. 562 MEMORANDUM & ORDER CASEY, District Judge. The Court presumes familiarity with the factual background giving rise to this multi-district litigation. See In re: Terrorist Attacks of September 11, 2001, 349 F. Supp. 2d 765 (S.D.N.Y.2005) ("Terrorist Attacks I"). Defendant Saudi American Bank moves to dismiss, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, all claims against it in Federal Insurance v. al Qaida, 03 Civ. 6978, a class action brought on behalf of insurance companies ("Plaintiffs") that insured individual and corporate victims of the September 11, 2001 terrorist attacks. The Court previously dismissed similar claims against Saudi American Bank in two related actions. See Terrorist Attacks I, 349 F.Supp.2d at 833-34. For the following reasons, Saudi American Bank's motion to dismiss is GRANTED in its entirety and Plaintiffs' request for leave to amend the complaint is DENIED. I. FAILURE TO STATE A CLAIM In considering Saudi American Bank's motion to dismiss for failure to state a claim under Rule 12(b)(6), the Court must "accept all of Plaintiffs' factual allegations in the complaint as true and draw inferences from those allegations in the light most favorable to the Plaintiffs." Desiderio v. Nat'l Ass'n of Sec. Dealers, Inc., 191 F.3d 198, 202 (2d Cir.1999). "[L]egal conclusions, deductions or opinions couched as factual allegations," however, "are not given a presumption of truthfulness." Mason v. Am. Tobacco Co., 346 F.3d 36, 39 (2d Cir.2003). Dismissal is appropriate under Rule 12(b)(6) only if it appears beyond doubt, "even when the complaint is liberally construed, that the plaintiff can prove no set of facts which would entitle him to relief." Desiderio, 191 F.3d at 202; Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 2 L. Ed. 2d 80 (1957). Furthermore, Rule 8(a) of the Federal Rules of Civil Procedure requires only that a complaint contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). The Supreme Court recently reinforced this liberal pleading standard, observing that the "short and plain statement" required by Rule 8 "must simply `give the defendant fair notice of what the plaintiffs claim is and the grounds upon which it rests.'" Swierkiewicz v. Sorema 563 N.A., 534 U.S. 506, 512, 122 S. Ct. 992, 152 L. Ed. 2d 1 (2002) (quoting Conley, 355 U.S. at 47, 78 S. Ct. 99). This Court is mindful, however, that in light of "the extreme nature of the charge of terrorism, fairness requires extra-careful scrutiny of Plaintiffs' allegations as to any particular defendant, to ensure that he or it does indeed have fair notice of [the claims]." Burnett v. Al Baraka & Dev. Corp., 274 F. Supp. 2d 86, 103-04 (D.D.C.2003). Plaintiffs in this case claim that Saudi American Bank provided material support to the al Qaeda terrorists who perpetrated the attacks on September 11, 2001. (FAC ¶¶ 368, 372.) Under the Anti-Terrorism Act ("ATA"), material support includes money, financial services, lodging, training, safehouses, and false documentation or identification. 18 U.S.C. §§ 2339A(b), 2339B(g). Assuming such support is alleged, Plaintiffs will have to present a sufficient causal connection between that support and the injuries suffered by Plaintiffs. See Burnett, 274 F.Supp.2d at 104. Proximate cause will support this connection. See Terrorist Attacks I, 349 F.Supp.2d at 826 (citing First Nationwide Bank v. Gelt Funding Corp., 27 F.3d 763, 769 (2d Cir.1994)). As the Court has previously explained, "[i]n light of al Qaeda's public acknowledgments of its war against the United States, the September 11 attacks may be the natural and probable consequence of knowingly and intentionally providing material support to al Qaeda." Id. (citing Burnett I, 274 F.Supp.2d at 104). Plaintiffs proffer theories of concerted action liability conspiracy and aiding and abetting in support of this causal link. (See, e.g., FAC ¶¶ 601, 615-16, 621, 624-25, 628, 631-32, 638, 640-41, 645.) To be liable under either conspiracy or aiding and abetting, however, the defendant must, among other things, "know the wrongful nature of the primary actor's conduct," Pittman v. Grayson, 149 F.3d 111, 123 (2d Cir.1998), and the conduct must be tied to a substantive cause of action, Chrysler Capital Corp. v. Century Power Corp., 778 F. Supp. 1260, 1267 (S.D.N.Y.1991). Plaintiffs' First Amended Complaint ("FAC" or "Complaint") lists three federal and nine common law causes of action. Plaintiffs' federal claims are brought under the ATA, the Racketeer Influenced Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(a), (c) (d), and the Torture Victim Protection Act ("TVPA"), 28 U.S.C. § 1350, respectively.[1] Plaintiffs' common law claims are delineated as trespass, wrongful death, survival, assault and battery, intentional and/or negligent infliction of emotional distress, conspiracy, aiding and abetting, negligence, and punitive damages. All of Plaintiffs' claims rest upon the central assertion that Saudi American Bank, through its relationships with other banks, Islamic charities, and its support of construction projects in Sudan, provided material support to al Qaeda. (See FAC ¶¶ 367, 369.) As with similar allegations against Saudi American Bank in related actions, Plaintiffs allegations in this case fail to satisfy Rule 8(a) pleading requirements. See Terrorist Attacks I, 349 F.Supp.2d at 834. Specifically, Plaintiffs allege that all of the banking defendants named in the Complaint "operated as fully integrated components of the al Qaida's [sic] financial and logistical structure," which included, inter alia, "knowingly maintain[ing] accounts for 564 individuals and organizations operating within al Qaida's infrastructure" and, in some instances, "directly fund[ing] al Qaida's global operations." (FAC ¶ 258.) Plaintiffs' particular allegations against Saudi American Bank say little more. Indeed, Plaintiffs allege that Saudi American Bank "financed many of the projects undertaken by Osama bin Laden and al Qaida in the Sudan," and conclude that Saudi American Bank "knowingly provided material support and resources to al Qaida," without alleging any facts to support an inference that Saudi American Bank provided funds to Osama bin Ladin or to al Qaeda directly. (FAC ¶¶ 367, 368.) Plaintiffs likewise fail to allege any facts to support an inference that Saudi American Bank knew or should have known that funds they purportedly provided for construction projects in Sudan would aid al Qaeda. Plaintiffs' allegations in this regard are nothing more than legal conclusions couched as fact.[2] Furthermore, Plaintiffs allegations that Saudi American Bank "maintained accounts for many of the ostensible charities that operate within al Qaida's infrastructure," and did so knowingly, fail to state a claim. (FAC ¶¶ 369, 372.) "As the Court has stated before, there can be no bank liability for injuries caused by money routinely passing through the bank." Terrorist Attacks I, 349 F.Supp.2d at 834. Plaintiffs' additional allegations that Saudi American Bank "serves as the Saudi Arabia correspondent for many other banks within al Qaida's infrastructure," (FAC ¶ 373) and also "funneled money to and/or from the Spanish al Qaida cell" (RICO Statement Applicable to Saudi American Bank, 03 MD 1570 Docket # 393, at Exhibit A) both fail for the same reason. Finally, Plaintiffs' allegation that Saudi American Bank "advertises the existence and. numerical designation of the accounts it maintains for [al Qaida-related] charities . . . to allow al Qaida supporters to deposit funds directly into those accounts" (FAC ¶ 370) fails to support an inference that Saudi American Bank knew or should have known that such charities were really fronts for al Qaeda, see Terrorist Attacks I, 349 F.Supp.2d at 834. Accordingly, the Complaint does not provide Saudi American Bank with notice of the claims against it, and certainly does not indicate the grounds upon which such claims rest. Fed.R.Civ.P. 8(a); see Swierkiewicz, 534 U.S. at 512, 122 S. Ct. 992. "[A] complaint which consists of conclusory allegations unsupported by factual assertions fails even on the liberal pleading standard of Rule 12(b)(6)." De Jesus v. Sears, Roebuck & Co., 87 F.3d 65, 70 (2d Cir.1996). II. LEAVE TO AMEND In their opposition brief to Saudi American Bank's motion to dismiss, Plaintiffs request that "[t]o the extent that this Court finds the . . . allegations to be insufficient, the Federal Plaintiffs should be granted leave to amend." (Pl.'s Opp. at 16.) Presumably, Plaintiffs base this request on the materials submitted as exhibits to their opposition brief, which Plaintiffs claim establish that "the construction 565 projects that the [Saudi American Bank] financed were essentially al Qaida's payment to Sudan for safe harbor." (Pl.'s Opp. at 9.) Rule 15(a) of the Federal Rules of Civil Procedure grants district courts discretion over such requests for leave to amend, but demands that leave be granted "freely . . . when justice so requires." Where a court determines that "it appears that granting leave to amend is unlikely to be productive, however, it is not an abuse of discretion to deny leave to amend." Ruffolo v. Oppenheimer & Co., 987 F.2d 129, 131 (2d Cir.1993). Having reviewed the voluminous materials submitted as exhibits to Plaintiffs' opposition brief, the Court finds that further amendments to the Complaint would be unproductive. Not one of Plaintiffs' exhibits mentions Saudi American Bank. Instead, they primarily outline the history of Osama bin Laden and al Qaeda. Moreover, the exhibits that Plaintiffs specially refer to in their brief are reports produced by government offices or agencies after Osama bin Laden and al Qaeda were expelled from Sudan, and therefore provide no support for Plaintiffs' allegation that Saudi American Bank was aware of Osama bin Laden's purported quid pro quo with the Sudanese government at the time. Accordingly, the Court denies Plaintiffs' request for leave to amend the First Amended Complaint. III. CONCLUSION For the foregoing reasons, defendant Saudi American Bank's motion to dismiss the claims against it in Federal Ins. Co. v. Al Qaida, 03 Civ. 6978, is GRANTED, and Plaintiffs' request for leave to amend the First Amended Complaint is DENIED. So Ordered. NOTES [1] Plaintiffs have since abandoned their claim against Saudi American Bank under the TVPA. (Pl.'s Opp. at 14.) [2] Plaintiffs attempt to remedy this insufficiency with supplemental material submitted in connection with their opposition brief. When presented with a 12(b)(6) motion, however, the district court may not consider matters outside of the pleadings without converting the motion into a motion for summary judgment. Courtenay Communications Corp. v. Hall, 334 F.3d 210, 213 (2d Cir.2003); Friedl v. City of New York, 210 F.3d 79, 83-84 (2d Cir.2000). While the Court will not convert the instant motion into one for summary judgment, the Court does address Plaintiffs' supplemental materials below. For present purposes, it is sufficient to note that inclusion of such materials for purposes of this motion to dismiss would not change the result.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2664949/	UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ) UNITED STATES OF AMERICA, ) ) Plaintiff, ) ) v. ) No. 05-CR-411 (ESH) ) MICHAEL P.S. SCANLON, ) ) Defendant. ) ) MEMORANDUM OPINION AND ORDER In November 2005, defendant Michael Scanlon (“Scanlon” or “defendant”) pled guilty to a one-count information charging conspiracy with three objects: bribery in violation of 18 U.S.C. § 201; property mail and wire fraud in violation of 18 U.S.C. §§ 1341 and 1343; and honest-services mail and wire fraud in violation of 18 U.S.C. §§ 1341, 1343, and 1346. Before the Court is defendant’s motion to modify or amend his plea agreement based on United States v. Skilling, 130 S. Ct. 2896 (2010). Specifically, Scanlon argues that the honest- services charges to which he plead guilty can no longer be constitutionally maintained against his conduct. If correct, this conclusion would have material consequences for Scanlon’s sentencing offense level and restitution. Based on the arguments of counsel at a hearing on November 23, and for the reasons set forth below, the Court denies his motion. FACTS Scanlon pled guilty to conspiring with Jack Abramoff to defraud certain of Abramoff’s Native American Indian Tribe clients (“Tribes”) of their right to Abramoff’s honest services. (Plea Agreement ¶ 3.) The scheme involved Abramoff taking advantage of his relationship of trust and confidence with his clients in order to convince them to hire Scanlon. (Factual Basis ¶ 6.) Scanlon would then secretly kick back to Abramoff approximately fifty percent of his company’s net profits gained from these clients. (Id.) With respect to one of the clients, Abramoff misrepresented to the tribe that he would perform lobbying work “pro bono,” when in fact he received the fifty-percent kickback from Scanlon under their arrangement. (Id.) Under the government’s theory of fiduciary duty, tribal clients who had hired Abramoff more than once were, by virtue of such repeat hiring, relying upon an ongoing relationship of trust and loyalty with Abramoff, giving rise to his fiduciary duty to provide them with his honest services.1 Throughout this scheme, “Scanlon believed that [Abramoff] had a duty to act in the best interest of his clients in these matters and that [Abramoff]’s clients did in fact trust and rely upon [Abramoff].” (Id.) He also “knew that [Abramoff] promoted himself as having knowledge superior to his clients regarding lobbyist and grass roots activity and [Abramoff] encouraged his clients to trust his judgment in these matters.” (Id.) ANALYSIS In United States v. Skilling, the Supreme Court addressed a challenge to the constitutionality of the honest-services fraud statute, 18 U.S.C. § 1346, on the grounds that the statute was impermissibly vague. Declining Skilling’s invitation to void the statute in its entirety, the majority instead held that the statute could only be constitutionally applied to those cases that formed the “core” of honest-services fraud prior to the Supreme Court’s ruling in McNally v. United States, 483 U.S. 350 (1987), namely bribery or kickback schemes. In doing so, the Court rejected both the government’s argument that § 1346 could also permissibly 1 Scanlon’s Information, Plea, and Factual Basis were carefully calibrated to deliberately identify only certain fees paid to Abramoff in connection with tribal clients who had hired Abramoff more than once and only the fees paid in connection with those successive hirings (and not the initial ones) as the basis for the honest-services fraud charges. (See, e.g., Information ¶¶ 8-18; Factual Basis ¶¶ 6-8; Plea Agreement ¶ 5.) 2 proscribe “undisclosed self-dealing” cases as well as the opinion of Justice Scalia that the statute be struck down in its entirety. The question before the Court is what effect, if any, Skilling has on Scanlon’s plea. The government contends that defendant’s plea is unaffected by Skilling because it sets forth a classic kickback scheme. Scanlon, however, argues that Skilling reached a narrower holding, approving only “the prosecution of certain types of kickback cases,” of which he claims his case is not one. (Defendant’s Motion [“Def.’s Mot.”] at 2-3.) As explained below, Scanlon’s interpretation of Skilling is erroneous. Scanlon’s primary argument depends on his interpretation of scattered passages from the majority’s opinion in Skilling. Seizing on this language, Scanlon argues that Skilling divided kickback cases into two heretofore unknown categories: “kickback cases within the ‘core’ of ‘pre-McNally case law’” (id. at 10 (emphasis omitted)), which according to Scanlon are still encompassed by § 1346, and kickback cases that fall outside this “core,” which according to Scanlon were invalidated under Skilling. Scanlon appears to define the scope of so-called “non-core” kickback schemes under two alternative theories. First, Scanlon seizes on language from a single footnote in Skilling to argue for the existence of what he terms the “literal core of pre-McNally case law,” which involved fraud relating only to public official-public, employee-employer, and union official-union member relationships. (Id. at 3.) “Beyond these three examples,” Scanlon argues, “the Skilling Court provided no further elucidation of this ‘core’ concept.” (Id.) Scanlon reads too much into this footnote. Skilling made clear (and the parties agree) that bribery and kickback schemes under § 1346 must involve a breach of fiduciary duty, as this duty establishes the right to one’s honest services out of which the victim of § 1346 is defrauded. 3 See, e.g., Skilling, 130 S. Ct. at 2930 (“The ‘vast majority’ of the honest-services cases involved offenders who, in violation of a fiduciary duty, participated in bribery or kickback schemes.” (emphasis added)). In addressing Justice Scalia’s concern that the Courts of Appeals pre- McNally did not uniformly agree as to the source and scope of fiduciary duties, the Skilling majority argued that this fact would have little impact on bribery and kickback cases. Id. at 2390 n.41. The Skilling majority cited several pre-McNally bribery and kickback cases involving public official-public, employee-employer, and union official-union member relationships as examples in support of its argument that the existence of a fiduciary relationship was “usually beyond dispute” in such cases. Id. This is altogether different, however, from stating that the application of § 1346 is limited to only those cases where the scope and source of the fiduciary duty was beyond dispute. Moreover, even if, as Scanlon claims, the majority of pre-McNally bribery or kickbacks cases involved one of these three relationships, this does not mean that these examples represent an exhaustive list of the fiduciary relationships that can support an honest-services fraud prosecution, to the exclusion of other fiduciary relationships such as attorney-client, doctor- patient, or stockbroker-customer. Indeed, the Second Circuit acknowledged this point explicitly in United States v. Rybicki, 354 F.3d 124 (2d Cir. 2003), a decision cited approvingly by the Skilling Court. See 130 S. Ct. at 2929. After taking stock of the pre-McNally case law, the Rybicki court noted that “[a]lthough the bulk of the [private-sector] pre-McNally honest-services cases involved employees, we see no reason the principle they establish would not apply to other persons who assume a legal duty of loyalty comparable to that owed by an officer or employee to a private entity.” 354 F.3d at 142 n.17. See also United States v. Drury, 687 F.2d 63 (5th Cir. 4 1982) (affirming pre-McNally honest-services fraud conviction of attorney who engaged in kickback scheme with physician). Simply because defendant has found a set of common traits among the pre-McNally cases does not mean that this is the only way to conceptualize this body of case law, and at no point did Skilling hold that these three fiduciary relationships marked the outer boundaries of § 1346. See, e.g., United States v. Lupton, 620 F.3d 790 (7th Cir. 2010) (affirming post-Skilling conviction under § 1346 of real-estate broker who defrauded client of right of honest services). Perhaps cognizant of this fact, defendant proposes a an alternative, even more novel definition of so-called “core” kickback cases, which he terms the “analytical core.” (Def.’s Mot. at 6.) Extrapolating from the three examples that he claims form the “literal core” of kickback cases, Scanlon argues that a kickback scheme falls outside the “analytic core” if an individual’s duty to provide another with his honest services “depended upon the circumstances,” or was “not constant, but variable.” (Id.) Under this theory, honest-services fraud can be charged under § 1346 only where the fiduciary duties in question were “fixed and constant.” (Id.) Unfortunately for Scanlon, at no point does Skilling draw such a distinction between “fixed and constant” fiduciary duties and those that are “variable” or “depend upon the circumstances,” let alone hold that only the former fall within the ambit of § 1346. But Scanlon misinterprets Skilling at an even more fundamental level. Scanlon’s argument hinges on his interpretation of a single line from the majority’s opinion in Skilling: “To preserve the statute without transgressing constitutional limitations, we now hold that § 1346 criminalizes only the bribe-and-kickback core of the pre-McNally case law.” Skilling, 130 S. Ct. at 2931. Scanlon’s interpretation of this sentence is flawed, and this flaw dooms his entire analysis. 5 Scanlon erroneously interprets the phrase “only the bribe-and-kickback core of the pre- McNally case law” as if it instead reads: “only bribe-and-kickback cases within the core of pre- McNally case law.” Indeed, his motion rewords the language from Skilling in precisely this manner. (See Def.’s Mot. at 10.) If Skilling had in fact used such language throughout its opinion, then perhaps Scanlon’s argument would be meritorious, as it would suggest that some kickback cases fall “within the core of pre-McNally case law” whereas others do not. The Skilling majority, however, did not use this wording. It used the term “core” not, as Scanlon would have it, to distinguish “core bribe-and-kickback” cases from “non-core bribe-and- kickback cases,” but rather to distinguish bribery and kickback cases (which themselves constitute the “core” of pre-McNally case law) from cases involving mere undisclosed self- dealing.2 See, e.g., Skilling, 130 S. Ct. at 2905 (“In the main, the pre-McNally cases involved fraudulent schemes to deprive another of honest services through bribes or kickbacks supplied by a third party who had not been deceived.”); id. at 2929 (“While the honest-services cases preceding McNally dominantly and consistently applied the fraud statute to bribery and kickback schemes -- schemes that were the basis of most honest-services prosecutions -- there was considerable disarray over the statute's application to conduct outside that core category.” (emphasis added)); id. at 2930 (“Although some applications of the pre-McNally honest-services doctrine occasioned disagreement among the Courts of Appeals, these cases do not cloud the doctrine's solid core: The ‘vast majority’ of the honest-services cases involved offenders who, in violation of a fiduciary duty, participated in bribery or kickback schemes.”); id. at 2931 n.44 (“Given that the Courts of Appeals uniformly recognized bribery and kickback schemes as 2 As defendant conceded at oral argument, this conclusion is fatal to his argument. (See 11/23/10 Tr. (“MR. BRAGA: If you analyze it that way, we lose, I must concede we lose if that's the analysis.”).) 6 honest-services fraud before McNally, and that these schemes composed the lion's share of honest-services cases, limiting § 1346 to these heartland applications is surely ‘fairly possible.’” (citations omitted) (emphasis added)); id at 2931 (“[T]here is no doubt that Congress intended § 1346 to reach at least bribes and kickbacks.” (emphasis in original)). Even if the precise passage quoted by Scanlon might, in a vacuum, support more than one interpretation, the decision as a whole simply does not support the argument that Skilling intended for § 1346 to reach some kickback schemes but not others. Finally, Scanlon argues that the facts of this case implicate constitutional questions similar to those at issue in Skilling. Because the fiduciary duties that Abramoff breached were “ill-defined,” “elastic,” and “innovative” rather than “fixed,” Scanlon argues that constitutional “fair notice” concerns are implicated. (See Def.’s Mot. at 6-8.) In this regard, Scanlon’s arguments mirror those of Justice Scalia, who repeatedly expressed similar concerns regarding the “indeterminate” source and scope of the fiduciary obligation requirement and argued that the majority’s pruning of the § 1346 to encompass only bribery and kickback schemes did not solve this indeterminacy. See Skilling, 130 S. Ct. at 2937 n.1 (Scalia, J., dissenting) (arguing that while the Courts of Appeals pre-McNally “may have consistently found unlawful the acceptance of a bribe or kickback by one or another sort of fiduciary . . . they have not consistently described (as the statute does not) any test for who is a fiduciary”). Justice Scalia’s position, however, did not carry the day. While the Court in Skilling could have chosen to limit the application of § 1346 to those bribery and kickback cases where the source and scope of the fiduciary duty was “fixed and definite,” it did not do so, “perceive[ing] no significant risk” that vagueness concerns would “stretch[] [the honest-services statute] out of shape.” Skilling, 130 S. Ct. at 2933. 7 In any event, even if this Court were to impose limitations on the scope of § 1346 beyond those described in Skilling, such a rule would little effect in this case, as it is abundantly clear, as Scanlon admitted as part of his plea, that Abramoff had a fiduciary duty to provide his clients with his honest services. The existence of a fiduciary duty depends on the relationship between the parties, and requires that the parties have “extended their relationship beyond the limits of . . . contractual obligations to a relationship founded upon trust and confidence.” Paul v. Judicial Watch, Inc., 543 F. Supp. 2d 1, 6 (D.D.C. 2008) (citation omitted); Church of Scientology Int’l v. Eli Lilly & Co., 848 F. Supp. 1018, 1028 (D.D.C. 1994) (“The Restatement (Second) of Torts notes that a fiduciary relation exists when one party ‘is under a duty to act for or give advice for the benefit of another upon matters within the scope of the relation.’” (citation omitted)). Here, it is undisputed both that Abramoff had just such a duty to his clients and that Scanlon was aware of this fact: Scanlon knew that [Abramoff] promoted himself has having knowledge superior to his clients regarding lobbyist and grass roots activity and [Abramoff] encouraged his clients to trust his judgement in these matters. Scanlon believed that [Abramoff] had a duty to act in the best interest of his clients in these matters. Scanlon believed that [Abramoff]’s clients did in fact trust and rely upon [Abramoff]. (Factual Basis ¶ 6.) Looking beyond this admission, the Court finds support for the existence of a fiduciary relationship between Abramoff and his clients in both the facts and the law. The District of Columbia Rules of Professional Conduct in effect at the time prohibited representation if the “lawyer’s professional judgment on behalf of the client will be or reasonably may be adversely affected by the lawyer’s responsibilities to or interests in a third party or the lawyer’s own financial, business, property, or personal interests.” D.C. Rules of Prof’l Conduct R. 1.7(b)(4). Although Abramoff was not himself a licensed attorney, he informed his clients that he worked 8 for the law firm Greenberg Traurig LLP, and his written agreements with the Tribes appeared on firm stationary. In one of these letter agreements, Abramoff explicitly stated that the D.C. Rules of Professional Conduct would apply to the representation of the Tribes, and at no point did Abramoff disclaim applicability of the Rules. (Opp. Exs. A-C.) In addition, the D.C. Circuit has held that an attorney in the District of Columbia who accepted funds under a lobbying contract had fiduciary duties as an agent of his client. Rwanda v. Johnson, 409 F.3d 368, 370-73 (D.C. Cir. 2005). Although the lobbyist discussed in Rwanda was an attorney, the Court there located his fiduciary duty to his client not in the attorney-client relationship, but rather under the more general notion that agents owe a fiduciary duty to deal in their principle’s interest and put the principle’s interest above their own. Id. at 372. In sum, the Court finds no merit in the argument that Abramoff’s fiduciary duty to his clients was so far removed from the paradigmatic examples of fiduciary duties that somehow defendant did not have “fair notice” that his conduct was criminal. Indeed, Scanlon’s kickback scheme relied upon the trust and confidence placed in Abramoff by his clients, as it allowed Abramoff to use his role as “professional advisor” to discourage his clients “from seeking competitive pricing and proposals from grass roots and public relations vendors other than [Scanlon’s company.]” (Factual Basis ¶ 7.) Having depended upon a relationship of trust and confidence in order to defraud Abramoff’s clients, Scanlon cannot now claim surprise when that relationship forms the basis of the government’s charges against him. See Skilling, 130 S. Ct. at 2933 (“As to fair notice, . . . it has always been as plain as a pikestaff that bribes and kickbacks constitute honest-services fraud, and the statute’s mens rea requirement further blunts any notice concern.” (internal citations and quotation marks omitted)). “A criminal defendant who 9 participated in a bribery or kickback scheme, in short, cannot tenably complain about prosecution under § 1346 on vagueness grounds.” Id. at 2934. CONCLUSION For the foregoing reasons, defendant’s motion to modify or amend his plea agreement [Dkt. #47] is DENIED. SO ORDERED. /s/ ELLEN SEGAL HUVELLE United States District Judge Date: November 30, 2010 10	01-03-2023	04-04-2014
https://www.courtlistener.com/api/rest/v3/opinions/2668338/	UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ESTHER WACHSMAN ex rel. : NACHSHON WACHSMAN et al., : : Plaintiffs, : Civil Action No.: 06-0351 (RMU) : v. : Document No.: 21 : ISLAMIC REPUBLIC OF IRAN et al., : : Defendants. : FINDINGS OF FACT AND CONCLUSIONS OF LAW GRANTING THE PLAINTIFFS’ MOTION FOR DEFAULT JUDGMENT I. INTRODUCTION In October 1994, members of the terrorist group Hamas abducted and executed Nachshon Wachsman, a 19-year-old U.S. citizen residing in Israel. Esther Wachsman, the mother of Nachshon, individually and as personal representative of his estate, along with her sons Menashe Yechezkel Wachsman, Yitzchak “Tzachi” Wachsman, Uriel Wachsman, Raphael Wachsman, Eliahou Wachsman and Chaim “Hayim” Zvi Wachsman, bring suit against the Islamic Republic of Iran and the Iranian Ministry of Information and Security for the death of Nachshon. The plaintiffs allege that the defendants are responsible for Nachshon’s death because they provided training and support to Hamas. Pursuant to the Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. §§ 1602 et seq., and the common and statutory law of the District of Columbia and Israel, the plaintiffs request that the court award them compensatory damages, prejudgment interest and costs incurred in bringing the action. Because the defendants failed to appear or respond to the plaintiff’s complaint, the Clerk of the Court entered default against them. The plaintiffs then filed a motion for default judgment, and the court ordered them to submit evidence supporting their claims. Based on a review of this initial proffer of evidence, the court denied without prejudice the plaintiffs’ motion for default judgment because the plaintiffs failed to provide (1) sworn statements describing the emotional distress endured as a result of Nachshon’s death; (2) the elements of a wrongful death claim under the law of Israel; and (3) a clear description of the injuries sustained before Nachshon’s death for which they seek to recover damages under D.C.’s Survival Act. Mem. Op. (Feb. 28, 2008) at 18-20. The plaintiffs filed a renewed motion for default judgment on August 1, 2008 with additional support for their claims. The following findings of fact and conclusions of law recount relevant portions of the court’s previous memorandum opinion and analyze the plaintiffs’ claims anew in light of the additional support provided in their renewed motion for default judgment. II. FINDINGS OF FACT A. Procedural History 1. The plaintiffs filed suit against the defendants on February 28, 2006. Despite being properly served with process pursuant to 28 U.S.C. § 1608, the defendants failed to respond or appear in the case. 2. The Clerk of the Court entered default against the defendants on July 6, 2007. 3. The court must undertake a review of the evidence before it can enter a judgment by default against the defendants. See 28 U.S.C. § 1608(e) (requiring a claimant to “establish[] his claim or right to relief by evidence satisfactory to the court”); see also Int’l Road Fed’n v. Dem. Rep. Congo, 131 F. Supp. 2d 248, 252 n.4 (D.D.C. 2001) (“accept[ing] as true plaintiffs’ uncontroverted factual allegations, which are supported 2 by the documentary and affidavit evidence” (internal quotations and citations omitted)). Accordingly, the court ordered the plaintiffs, “in support of their motion for default judgment, to submit evidence through prior sworn testimony and affidavits.” Minute Order (Aug. 27, 2007). 4. After the court granted a five-week extension of time, Minute Order (Oct. 19, 2007), the plaintiffs submitted their proposed findings of fact and conclusions of law with accompanying evidentiary support on November 30, 2007, Pls.’ Proposed Findings of Fact and Conclusions of Law (“Pls.’ Proposed Findings”). 5. The court issued a memorandum opinion on February 28, 2008 denying without prejudice the plaintiffs’ motion for default judgment. Mem. Op. (Feb. 28, 2008). The court determined that it had jurisdiction to resolve the plaintiffs’ claims; that Israel’s wrongful death statute applied; and that D.C. law applied for the plaintiffs’ Intentional Infliction of Emotional Distress (“IIED”) and Survivor Act claims. See generally id. 6. Nevertheless, the court denied without prejudice the plaintiffs’ motion because they failed to sufficiently develop the record for the court to determine whether they were entitled to relief. Id. at 18-20. 7. On March 28, 2008, the plaintiffs requested leave to amend their complaint pursuant to the National Defense Authorization Act for Fiscal Year 2008, Pub. L. No. 11-181, 1083. The court denied this motion on July 7, 2008 because the plaintiffs’ complaint does not rely upon, as the Act requires, either 28 U.S.C. § 1605(a)(7) or § 589 of the Foreign Operations, Export Financing and Related Programs Appropriation Act, 1997 for a cause of action. Min. Order (July 7, 2008). 3 8. The plaintiffs filed a renewed motion for default judgment on August 1, 2008, supplementing the evidentiary record. Pls.’ Am. Proposed Findings of Fact and Conclusions of Law (“Pls.’ Am. Proposed Findings”). B. The Abduction and Execution 9. On October 9, 1994, as Nachshon waited on the side of the road for a ride to visit a friend, four members of Hamas, Salah A-Din Hassan Salem Jadallah, Hassan Natshe, Abd El Karim Yassin Bader and Jihad Ya’amur, abducted the decedent from a public street near Lod, Israel. Pls.’ Proposed Findings, Ex. 3(a) (“Shay Aff.”) at 4-5. 1 10. Three of the abductors – Jadallah, Natshe and Bader – were already wanted by Israeli security forces for prior acts of terrorism. Shay Aff. at 5-6. These three individuals recruited Ya’amur, who was not previously known to Israeli security, to provide logistical support, which included securing black hats and yarmulkes to wear as disguises and renting video equipment, a van with Israeli license plates and a safe house where Nachshon would be held. Id.; Pls.’ Proposed Findings, Ex. 7(b). 11. The abductors spotted Nachshon on the side of the road and with the disguises were able to lure him into the van. Shay Aff. at 6. Once in the van, the abductors overpowered, blindfolded and handcuffed Nachshon and drove him to a safe house in Bir Naballah. Id. 12. Shortly thereafter, the abductors made a videotape on which they displayed Nachshon’s identification card and M-16 rifle, issued by the Israeli army. Id. at 7. The abductors also listed their demands – release of members of Hamas, the Palestinian Liberation 1 The facts surrounding the abduction and execution to which Dr. Shaul Shay attests are based on “the documents of the trials of Jihad Ya’amur and Zacaria Lutfi abd al Magid.” Pls.’ Proposed Findings of Fact and Conclusions of Law (“Pls.’ Proposed Findings”), Ex. 3(a) (“Shay Aff.”) at 4 n.5. Given his extensive experience in the Military Intelligence Branch of the Israeli Defense Forces and his numerous books and articles discussing terrorism, the court recognizes Shay as an expert on Islamic terrorism. Shay Aff. at 1-3; FED. R. EVID. 702-04. 4 Organization, the Islamic Jihad, the Popular Front for the Liberation of Palestine and all female Palestinian prisoners – and stated that these demands must be met before October 14, 1994 at 9:00 pm or they would execute Nachshon. Id. at 6-7, 10. These demands indicate collaboration between Hamas, Hizbollah and Iran to achieve common goals. Shay Aff. at 26. 13. On October 10, 1994, Hamas took responsibility for the abduction and delivered copies of their demands to the media. Id. at 7 & Exs. 5(c), 4 at 4. 14. Three days later Israeli security forces arrested Ya’amur. Id. at 9. During his interrogation, Ya’amur provided Israeli security forces with the location of the safe house where Nachshon was being held. Id. 15. The following day, on October 14, 1994, shortly before the 9:00 pm deadline the abductors had set for compliance with their demands, an Israeli commando unit raided the safe house. Id. at 9. A gun battle ensued during which one Israeli soldier and the three other abductors were killed. Id. 16. When the dust settled, the Israeli commandos found Nachshon dead in a back room with his hands and legs bound. Id. The abductors had shot him several times at close range as the Israeli soldiers were raiding the house. Id. 17. Pictures of Nachshon’s body 2 and medical doctors’ affidavits indicate that his abductors bit him at least four times (on his back and arm) prior to his execution. Id. at 9; Pls.’ Proposed Findings, Exs. 7(k)-(s); Pls.’ Am. Proposed Findings, Exs. 20A ¶ 6 & 21 ¶ 13. Bullet wounds, or other traumatic injury, appear on his upper abdomen, arm, neck, 2 Roland Roth, an attorney for the Wachshon family, attests to the authenticity of these photographs based on his work with the main military prosecutor in Israel in charge of the Ya’amur criminal case. Pls.’ Proposed Findings, Ex. 12. The Israeli government authorized Roth “to copy every document from all the official files” in that case. Id. 5 shoulder, back and head; the “soot marks” on his abdomen are “characteristic to the burning dust of a shooting at very close range.” Pls. Proposed Findings, Exs. 6(b), 7(k)- (s); Pls.’ Am. Proposed Findings, Ex. 21 ¶ 11. C. The Relationship Between Iran and Hamas 18. Hamas, an Islamic militant terrorist organization, has a close relationship with Iran. Stern v. Islamic Republic of Iran, 271 F. Supp. 2d 286, 291 (D.D.C. 2003); Campuzano v. Islamic Republic of Iran, 281 F. Supp. 2d 258, 262 (D.D.C. 2003). Iran’s official policy is to support terrorism; in furtherance of that mission, Iran provides both economic assistance and terrorist training to Hamas. Stern, 271 F. Supp. 2d at 292; Campuzano, 281 F. Supp. 2d at 262; Shaw Aff. at 12 (stating that “[s]ince the beginning of 1980, Iran has appeared on the list of states that support terror, compiled by the U.S. State Department”). Iran funnels its financial support through its Ministry of Information and Security and provides professional military and terrorist training through its Revolutionary Guard. Stern, 271 F. Supp. 2d at 292; Campuzano, 281 F. Supp. 2d at 262. 19. Dr. Shay reports that in 1992, Israel deported approximately 400 Hamas operatives living in the Gaza Strip. Shay Aff. at 11, 20. Israel deported these operatives to Lebanon where Iran, through its Revolutionary Guard, provided them with military and terrorist training. Id. After receiving this training, Hamas began targeting Israelis in suicide bombings and other organized acts of terrorism. Id. at 18, 21; Stern, 271 F. Supp. 2d at 291. 20. Indeed, upon returning to Gaza at the end of 1993, several of these former deportees were instrumental in Nachshon’s abduction and execution. Id. at 20. These individuals included Muhammed Dif, the commander of the Hamas military branch in Gaza, who led 6 the hostage negotiations with Israel, and Nur a din Salah a din Rada Darawza, one of the commanders of the abduction team. Id. at 8, 10. 21. Another former deportee, Imam Jadallah Jadallah, had two sons who were involved in the kidnapping. They were Salah Jadallah, who was killed during the raid on the safe house, and Ahmad Jadallah, who helped prepare the video of Nachshon. Id. at 5, 9-11. 22. The financial support, tactical training and political direction that Iran provided to Hamas proximately caused the abduction and execution of Nachshon. D. The Plaintiffs 23. Esther Wachsman is the mother of the decedent, Nachshon. She is, and was at the time of Nachshon’s abduction and execution, a citizen of the United States. Pls.’ Proposed Findings, Ex. 1(a). She is also the representative of the decedent’s estate and the mother of the co-plaintiffs. Id., Ex. 2. 24. These co-plaintiffs – Menashe Yechezkel Wachsman, Yitzchak “Tzachi” Wachsman, Uriel Wachsman, Raphael Wachsman, Eliahou Wachsman and Chaim “Hayim” Zvi Wachsman – are, and were at the time of Nachshon’s abduction and execution, brothers of the decedent and dual citizens of the United States and Israel. Id. at 3, Exs. 1(b)-(g). 25. Nachshon Wachsman was born on April 3, 1975 in Jerusalem, Israel, but was a citizen of the United States. Id., Ex. 1(h). At 18 years old, Nachshon began a three-year commitment to the Israeli Defense Forces. Pls.’ Am. Proposed Findings at 4. He was assigned to the Golani Brigade and was a Corporal at the time of his death. Id. 7 III. CONCLUSIONS OF LAW A. Legal Standard for a Default Judgment A court shall not enter a default judgment against a foreign state “unless the claimant establishes his claim or rights to relief by evidence satisfactory to the court.” 28 U.S.C. § 1608(e); Roeder v. Islamic Republic of Iran, 333 F.3d 228, 232 (D.C. Cir. 2003). This “satisfactory to the court” standard is identical to the standard for entry of default judgments against the United States in Federal Rule of Civil Procedure 55(e).3 Hill v. Republic of Iraq, 328 F.3d 680, 684 (D.C. Cir. 2003). In evaluating the plaintiffs’ proof, the court may “accept as true the plaintiffs’ uncontroverted evidence,” Elahi v. Islamic Republic of Iran, 124 F. Supp. 2d 97, 100 (D.D.C. 2000), including proof by affidavit, Weinstein v. Islamic Republic of Iran, 184 F. Supp. 2d 13, 19 (D.D.C. 2002). B. Summary of the Court’s Prior Holdings 1. Jurisdiction Applying the Rule 55(e) standard, the court has subject matter jurisdiction over the plaintiffs’ claims because the plaintiffs demonstrated that (1) the abduction and execution of Nachshon fall within the FSIA’s definition of “extrajudicial killing” and “hostage taking”; (2) Iran’s material support to Hamas proximately caused Nachshon’s kidnapping and execution; (3) this support was provided through the Iran’s Ministry of Information and Security and the Revolutionary Guard; (4) Iran has been a state sponsor of terrorism since 1984; (5) the actions giving rise to the claims did not take place in Iran; (6) both the plaintiffs and the victim were U.S. citizens at the time of the incident; and (7) “similar conduct by United States agents, officials, or employees within the United States would be actionable.” Mem. Op. (Feb. 28, 3 Rule 55(e) states that no “default [judgment] shall be entered against the United States or an officer or agency thereof unless the claimant establishes his claim or right to relief by evidence satisfactory to the court.” FED. R. CIV. P. 55(e). 8 2008) at 7-11. The court further notes that the plaintiffs’ claims were brought within the ten year statute of limitations provided in 28 U.S.C. § 1605A(b)(1) and that the FSIA establishes personal jurisdiction over a foreign-state defendant once the plaintiffs demonstrate that an exception to immunity applies and effect service of process. Id. at 11. 2. Applicable Law D.C.’s choice of law rules lead the court to apply the law of Israel to the plaintiffs’ wrongful death claim because the decedent was domiciled there at the time of his death and the injuries leading to his death occurred there. Id. at 15. And, literally construing the D.C. wrongful death statute limits recovery to injuries resulting in death within the limits of D.C., which would run counter to the purpose of the FSIA – to “give American citizens a financial weapon . . . against outlaw states.” Id. at 14, 15-16 (quoting H.R. Rep. No. 104-383, at 62). With respect to the IIED claim, which appears to be barred in Israel, and the Survival Act claim, the court concludes that applying D.C. law is appropriate to guarantee redress. Id. at 16-17. C. Liability 1. Vicarious Liability The defendants’ liability rests on their material support of Hamas, whose members abducted and executed Nachshon. “One may be liable for acts of another under theories of vicarious liability, such as conspiracy, aiding and abetting and inducement.” Valore v. Islamic Republic of Iran, 478 F. Supp. 2d 101, 108 (D.D.C. 2007). Because the court concludes that civil conspiracy provides a basis for liability, the court declines to address the other bases for liability. In D.C., the four elements of civil conspiracy are: (1) an agreement between two or more persons; (2) to participate in an unlawful act, or in a lawful act in an unlawful manner; and (3) an injury caused by an 9 unlawful overt act performed by one of the parties to the agreement (4) pursuant to, and in furtherance of, the common scheme.” Youming Jin v. Ministry of State Sec., 335 F. Supp. 2d 72, 79 (D.D.C. 2004) (quoting Weishapl v. Sowers, 771 A.3d 1014, 1023 (D.C. 2001)). “[S]ponsorship of terrorist activities inherently involves a conspiracy to commit terrorist attacks.” Flatow v. Islamic Republic of Iran, 999 F. Supp. 1, 27 (D.D.C. 1998). The court has already determined that the defendants provided material support to fund the terrorist activities of Hamas and that this support was the proximate cause of the decedent’s abduction and execution. See supra Part II.C. This support included training those involved in the abduction and execution, financing terrorist activities, coordinating objectives – such as requesting the release of prisoners – and encouraging politically subversive goals. Id. Through this collaboration the defendants were involved in a conspiracy and are, therefore, vicariously liable for the death of Nachshon and any resulting injury to his immediate family members. 2. Intentional Infliction of Emotional Distress To establish IIED, the plaintiffs must show “(1) extreme and outrageous conduct on the part of the defendants, which (2) intentionally or recklessly (3) causes the plaintiff severe emotional distress.” Turner v. District of Columbia, 383 F. Supp. 2d 157, 180 (D.D.C. 2005) (quoting Futrell v. Dep’t of Labor Fed. Credit Union, 816 A.2d 793, 808 (D.C. 2003)). D.C.’s highest court has not determined whether, in a terrorist attack, presence is required for a victim to recover on an IIED claim. Therefore, the court will not infer such a requirement. Heiser v. Islamic Republic of Iran, 466 F. Supp. 2d 229, 305 (D.D.C. 2006). “[T]he act of engaging in terrorism by means of material support and civil conspiracy is extreme, and goes beyond all possible bounds of decency. Terrorists seek to cause extreme suffering in order to achieve political ends; accordingly, they perpetrate acts that are deliberately 10 outrageous.” Greenbaum v. Islamic Republic of Iran, 451 F. Supp. 2d 90, 104 (D.D.C. 2006); accord Reed v. Islamic Republic of Iran, 439 F. Supp. 2d 53, 67 (D.D.C. 2006); see also RESTATEMENT (SECOND) OF TORTS § 46 cmt. d (1965) (stating that the acts must be “so outrageous in character, and so extreme in degree, as to go beyond all possible grounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community”). Furthermore, “[c]ourts have uniformly held that a terrorist attack – by its nature – is directed not only at the victims but also at the victims’ families.” Salazar v. Islamic Republic of Iran, 370 F. Supp. 2d 105, 115 n.12 (D.D.C. 2005). Thus, the plaintiffs have established the first two elements. The final element is whether the abduction and execution of the decedent caused the plaintiffs severe emotional distress. Proximate cause is easily established given the foreseeability that the family members would suffer emotional harm from the abductors’ heinous acts. See Sutherland v. Islamic Republic of Iran, 151 F. Supp. 2d 27, 50 (D.D.C. 2001) (concluding that “when an organization takes someone hostage, it is implicitly intending to cause emotional distress among the members of that hostage’s immediate family”). Having satisfied the causation prong, the plaintiffs must still prove that they suffered severe emotional distress. In this effort, the plaintiffs provide declarations as to the emotional trauma they have endured and also declarations of psychologists that at least two of the plaintiffs have contacted for treatment. Pls.’ Am. Proposed Findings, Exs. 14-21. Plaintiff Esther Wachsman, in her declaration, indicates that she saw the videotape made by the abductors, showing her son “bound hand and foot with a gun aimed at his temple.” Id., Ex. 14 (“Esther Decl.”) ¶ 7. This tape included the abductors’ threat that they would kill Nachshon if their demands were not met. Id. This, plaintiff Esther describes, was “emotionally 11 devastating”; she was “horrified, terrified, [and] dysfunctional.” Esther Decl. ¶ 8. When an Israeli General came to tell her that Nachshon had, in fact, been killed by the abductors, plaintiff Esther reports that “our house had ceased to be one of laughter and joy.” Id. ¶ 13. Dr. Gary Quinn has been a psychiatrist in Jerusalem for 29 years and has been treating plaintiff Esther since December 2003. Pls.’ Am. Proposed Findings, Ex. 9 (“Quinn Decl.”) at 1-2. Dr. Quinn declares that plaintiff Esther suffers “extreme emotional distress” as a result of her son’s murder. Quinn Decl. at 2. Specifically, he has diagnosed her with Post Traumatic Stress Disorder and depression. Id. Dr. Quinn notes that the recurrence of her son’s story and image in the Israeli press “aggravate[s] her depression.” Id. He has prescribed plaintiff Esther several medications to assuage her maladies. Id. Dr. Avshalom Baumann, a clinical psychologist in private practice in Jerusalem, attests to working with plaintiff Yitzchak “Tzachi” Wachsman, one of Nachshon’s brothers, since 2001. Pls.’ Am. Proposed Findings, Ex. 10 (“Baumann Decl.”) ¶¶ 2, 5. Dr. Baumann indicates that plaintiff Tzachi has had “deep posttraumatic depression” resulting in “suicidal gestures.” Baumann Decl. ¶ 5. According to Dr. Baumann, plaintiff Tzachi cannot “function in a normal manner” and requires psychiatric medication. Id. ¶ 6. The “main cause” or “critical trigger” for these problems, Dr. Baumann concludes, was the “kidnapping and murder of [] his brother.” Id. ¶ 5. Plaintiff Tzachi adds that he was Nachshon’s “closest brother in age and friendship” and that since Nachshon’s death, he has attempted suicide three times due to the loss of friendship and depression. Pls.’ Am. Proposed Findings, Ex. 15. Plaintiff Menashe Wachsman reminisces that he was also very close to Nachshon. Id., Ex. 17 ¶ 2. The two were close in age, and plaintiff Menashe had difficulty accepting the fact that Nachshon was dead. Id. ¶ 3. In fact, although he “insisted on identifying [Nachshon’s] 12 body,” he continued to live in “total denial.” Id. Even after all these years, plaintiff Menashe states that he “live[s] in constant fear” and “yearn[s] for the peace and quiet and tranquility and calm that [he] lost in that crazy week 13 years ago.” Id. ¶ 5. He reports that after his brother’s death, he “felt confused, [] had no self-confidence, a feeling of emptiness, distress, [and] lack of meaning of life.” Id. ¶ 7. He asserts that it took years to “pull [him]self together and feel human.” Id. There are “hours of each day,” he declares, that he is “overwhelmed with grief” and with the thoughts of the week of Nachshon’s abduction. Id. Plaintiff Hayim Wachsman states in his declaration that his self-confidence and sense of security have been negatively impacted by the death of Nachshon. Id., Ex. 16 ¶ 2. Specifically, he states that he could not sleep, eat or function the week of the kidnapping and that since he learned that Nachshon was killed, his “easy-going spirit, [] joy of life, as well as [his] sense of optimism[] have disappeared.” Id. ¶¶ 3-4. Now, plaintiff Hayim indicates that he suffers from depression and nervousness, referring to himself as a “great worrier.” Id. ¶ 5. Plaintiff Eliahou Wachsman recalls in his declaration that his brother was killed when he was twelve years old, and that year he “could not concentrate on [his] studies, and [his] grades were low.” Id., Ex. 19 ¶ 2. In addition, while his brother was being held in the safe house, plaintiff Eliahou states that he “felt as if everything that was happening was unreal” and after he was told his brother had been killed, he “was in shock” and felt “the world [is] a great unjust place.” Id. ¶ 3. To this day, he is paranoid that people are lying to him and “feel[s] very bad to the depths of [his] soul.” Id. ¶ 5. Plaintiffs Uriel and Raphael Wachsman are twins and were eight years old when Nachshon was kidnapped and killed. Esther Decl. ¶ 4. Plaintiff Uriel recalls in his declaration that although he was young, he “felt great shock, confusion, [and] anxiety.” Pls.’ Am. Proposed 13 Findings, Ex. 18 ¶ 2. He further states that “with all those people in the house, it all made me feel alone, lonely and unstable.” Id. In addition, he remembers feeling “broken and crying” and because of that he gets “nervous [and] angry” and has “self-confidence, and trust problems and insecurities.” Id. The greatest influence has been the depression and withdrawal of his mother on whom he depended. Id. ¶ 3. This left him “unstable with no one to turn to,” a feeling that continues “even today.” Id. Likewise, plaintiff Raphael, who has Down’s Syndrome, was eight years old when Nachshon was kidnapped and killed. Esther Decl. ¶ 4. When he learned that he was no longer going to see Nachshon, according to his mother, he suffered “great emotional distress,” which he manifested when he returned home from Nachshon’s funeral and took a framed picture of Nachshon off the wall and smashed it on the ground. Id. ¶ 15. He “began to regress as a result of this tragedy” and, at the age of eighteen, began attending a school for mentally challenged children where he is “progressing very nicely.” Id. ¶ 4. Clearly, the plaintiffs have suffered a great deal of distress in the aftermath of Nachshon’s kidnapping and murder. Plaintiffs Esther and Tzachi have had their lives drastically altered, requiring therapy and medication. Nikbin v. Islamic Republic of Iran, 517 F. Supp. 2d 416, 429 (D.D.C. 2007) (allowing recovery for IIED for a plaintiff diagnosed with depression and post traumatic stress disorder). All the plaintiffs were caught in “agonizing limbo” while Nachshon was held captive; and, to varying degrees, each has been unable to cope with Nachshon’s death. Levin v. Islamic Republic of Iran, 529 F. Supp. 2d 1, 18 (D.D.C. 2007) (holding that the wife of a hostage was allowed to recover for IIED). Even children, who only have vague recollections of their loved ones, are able to recover for IIED. Ben-Rafael v. Islamic Republic of Iran, 540 F. Supp. 2d 39, 57 (D.D.C. 2008) (allowing recovery for IIED to a three- 14 year-old who lost her father in a terrorist attack). Furthermore, although the extent of Raphael’s emotional harm may be unclear, the law permits recovery for aggravation of preexisting conditions. Id. Consequently, the court concludes that all the plaintiffs may recover for their IIED claims. Heiser, 466 F. Supp. 2d at 298 (reasoning that a terrorist victim’s brother is entitled to recover for IIED because of the pain and suffering caused by the decedent being “taken away . . . in such a tragic and horrific manner”). 3. Survival Act The D.C. Survival Act allows the decedent’s estate to pursue any cause of action that accrued prior to the decedent’s death. D.C. CODE § 12-101. Prior to the decedent’s death, the plaintiffs contend that he could have sued for assault, battery, IIED and false arrest and imprisonment. Pls.’ Am. Proposed Findings at 31-34. As discussed in the previous section, IIED requires a showing of “(1) extreme and outrageous conduct on the part of the defendants, which (2) intentionally or recklessly (3) causes the plaintiff severe emotional distress.” Turner, 383 F. Supp. 2d at 180 (quoting Futrell, 816 A.2d at 808). For the same reasons provided in the previous section, the defendants’ conduct satisfies the first two elements. Additionally, the court has little difficulty concluding that being taken hostage for several days would cause severe emotional distress. See Massie v. Democratic People’s Republic of Korea, 592 F. Supp. 2d 57, 76 (D.D.C. 2008). Assault is “an intentional and unlawful attempt or threat, either by word or by acts to do physical harm.” Haim v. Islamic Republic of Iran, 425 F. Supp. 2d 56, 70 (D.D.C. 2006) (quoting District of Columbia v. Chinn, 839 A.2d 701, 705 (D.C. 2004)). And battery is “an intentional unpermitted, harmful or offensive contact with [the victim’s] person or something attached to it.” Id. (quoting Marshall v. District of Columbia, 391 A.2d 1374, 1380 (D.C. 15 1978)). Plainly, the uncontroverted facts in this case – that the abductors beat and threatened to execute Nachshon – qualify as assault and battery. Shay Aff. at 6, 9. Furthermore, the kidnapping and chaining of Nachshon satisfy the elements of false arrest and imprisonment, which is defined as the “unlawful detention of a person . . . for any length of time whereby he is deprived of his personal liberty . . . by actual force, or by fear of force, or even by words.” Levin, 529 F. Supp. 2d at 16 (quoting Dent v. May Dep’t Stores Co., 459 A.2d 1042, 1044 (D.C. 1982)). 4. Wrongful Death Israel’s wrongful death statute provides: Where the death of any person is caused by any civil wrong and such person would, if death had not ensued, have been entitled at the time of his death under the provisions of this Ordinance to compensation in respect of bodily injury caused to him by such civil wrong, the spouse, parent and child of such deceased person will be entitled to compensation from the person responsible for such civil wrong. Pls.’ Am. Proposed Findings, Ex. 23 (“Israel Tort Ordinance”) § 78. A wrongful death claim may be lodged by “the executor, administrator or heirs of the deceased person for the benefit of the spouse, parent and child.” Israel Tort Ordinance § 79. The compensatory aim of the statute is to account for the “pecuniary loss suffered by [the plaintiffs] owing to the death of the deceased person; and compensation will be awarded in respect of the pecuniary loss which has been or will be actually suffered by them, including the burial expenses of the deceased person.” Id. § 80. Plaintiff Esther, the personal representative of the decedent’s estate, Pls.’ Proposed Findings, Ex. 2, brings this claim seeking recovery for her benefit and the benefit of her six remaining sons, see generally Compl. In light of the record in this case, the plaintiffs have made out a valid claim of wrongful death under Israeli law for which the defendants are liable. Cf. 16 Peterson v. Islamic Republic of Iran, 515 F. Supp. 2d 25, 38-40 (D.D.C. 2007) (concluding that “[b]ased upon the evidence presented to the special masters and the Court, each of the deceased servicemen has made out a valid claim for wrongful death under North Carolina law”). IV. DAMAGES A. Compensatory Damages 1. Legal Standard for Compensatory Damages To recover damages, “a FSIA default winner must prove damages ‘in the same manner and to the same extent’ as any other default winner.” Hill, 328 F.3d at 684-85 (citing Alameda v. Sec’y of Health, Educ. & Welfare, 622 F.2d 1044, 1048 (1st Cir. 1980)); 28 U.S.C. § 1606 (stating that a “foreign state shall be liable in the same manner and to the same extent as a private individual under like circumstances”). The plaintiffs must prove future damages to a “reasonable certainty,” in other words, a preponderance of the evidence, and must prove the amount of damages by a reasonable estimate. Id. To be awarded damages for past economic losses, the plaintiffs need only “reasonably prove” the amount of damages they request and the court should consider any “special problems of proof arising from the defendant’s absence.” Id. Using this framework, the court considers whether the following types of compensatory damages are available: severe emotional distress, pain and suffering and loss of prospective income. 2. Severe Emotional Distress Courts in this district have reached a degree of consistency in awarding family members of terrorist victims damages for emotional distress. Ben-Rafael, 540 F. Supp. 2d at 59 (awarding damages for emotional distress: $10 million to decedent’s widow, $10 million to his father, $5 million to his daughter and $2.5 million to each of decedent’s two sisters); Bodoff v. Islamic 17 Republic of Iran, 424 F. Supp. 2d 74, 86 (D.D.C. 2006) (noting that damages for emotional distress are typically $5 million to each parent and $2.5 million to each sibling); Heiser, 466 F. Supp. 2d at 271-356 (awarding parents and children of a terrorist attack victim $5 million for emotional distress and awarding siblings $2.5 million); Peterson, 515 F. Supp. 2d at 52 (same); Bennett v. Islamic Replublic of Iran, 507 F. Supp. 2d 117, 130 (D.D.C. 2007) (same). Accordingly, the court awards plaintiff Esther $5 million and each of Nachshon’s brothers $2.5 million for the emotional distress caused by Nachshon’s death. 3. Survival Act This Circuit has held that “it is proper for the estate of the deceased to recover an amount based on probable net future earnings, discounted to present worth.” Runyon v. District of Columbia, 463 F.2d 1319, 1321 (D.C. Cir. 1972). Thus, the recovery provided under the Wrongful Death statute, discussed infra, is equally recoverable under the Survivor Act. Id. Additional recovery under the Survivor Act is available for the decedent’s pain and suffering. Dickens v. District of Columbia, 502 F. Supp. 2d 90, 93 (D.D.C. 2007) (citing Graves v. United States, 517 F. Supp. 95, 99 (D.D.C. 1981)). The amount recoverable depends on the circumstances of the case, but the award typically increases the longer a victim experiences pain and suffering before death. See, e.g., Haim, 425 F. Supp. 2d at 71-72 (observing that “[w]hen the period of the victim’s pain was longer than a few hours, the awards are increased”). In fashioning the appropriate amount for the circumstances of this case, the court analyzes “the length of time that the victim endured physical suffering [and] the victim’s mental anguish from the knowledge that death was imminent.” Id. at 72. Two analogous cases also aid the court in calculating an appropriate award. 18 In Peterson, a case arising out of the bombing of U.S. Marine barracks in Lebanon, the court awarded $7 million and $7.5 million in pain and suffering damages for victims who were alive and conscious for seven days and nearly eight days after the bombing, respectively. Peterson, 515 F. Supp. 2d at 53. Additionally, the court awarded $1 million for a victim who was alive six hours after the attack and $500,000 for a victim alive for “a short but unknown amount of time” after the attack. Id. at 53-54. In Stethem, terrorists hijacked an airplane, executed one U.S. citizen after repeatedly beating him and held six other U.S. citizens hostage for sixteen days. Stethem v. Islamic Republic of Iran, 201 F. Supp. 2d 78, 80 (D.D.C. 2002). The court awarded $500,000 to the estate of the executed victim for the beatings and an additional $1 million for “the several minutes of anguish and pain [the victim] endured as and immediately after being shot by [a terrorist] and thrown from the airplane.” Id. at 89. The court determined that, of the six other hostages who survived the ordeal, two were entitled to $1.5 million and four were entitled to $1 million for their pain and suffering. Id. at 92. In this case, Nachshon was held captive, shackled, bitten and likely blindfolded for six days under constant threat and fear of death. See supra Part II.B. Furthermore, he was most likely aware of the raiding Israeli forces which prompted the abductors to conduct a brutal and hasty execution. See Shay Aff. at 9; Pls.’ Proposed Findings, Ex. 8 at 30 (noting that the abductors “announced [Nachshon’s death] to the soldiers of the force that broke into the room”). The plaintiffs request that the court award the decedent’s estate $2 million for the pain and suffering he endured before his death. The court agrees that this is the appropriate amount where, as here, the plaintiff suffered mental and physical harm for six days as a hostage and 19 surely knew moments before his death that he was going to be executed. See Stethem, 201 F. Supp. 2d at 89, 92. 4. Wrongful Death Under the law of Israel, “[t]he tortfeasor must compensate the dependants of the deceased for the loss of the economic support to which they had an expectation, had the deceased remained alive.” Pls.’ Proposed Findings, Ex. 13 (“Ettinger Decision”) at 18. To do this the court must determine the decedent’s earning capacity and calculate the amount of support his dependents would have received. Ettinger Decision at 19. In calculating earning capacity, courts in Israel subtract “the expenses that the injured part[y] would have incurred had he remained alive during the ‘lost years.’” Id. at 25. The plaintiffs submitted a report from Dov Weinstein, a certified CPA and partner of Dov Weinstein & Co. who has extensive experience in economic evaluation. Pls.’ Proposed Findings, Ex. 11 (“Weinstein Report”) at 1. Based on Nachshon’s interests and reported goals, Weinstein reasonably assumed that Nachshon would study medicine and become a doctor. Weinstein Report at 5; Esther Decl. ¶ 5 (stating that “Nachshon excelled in high school in subjects of math and biology [and] was a certified medic by the Israel Red Magen David Emergency Service [where] [h]e volunteered [] faithfully for years with another friend. They both intended to become medical doctors; indeed, his friend fulfilled that intention and is a doctor today”). In making his calculations, he reviewed “[i]nformation concerning educational and employment history for medical doctors in Israel, including income and benefits, as well as personal data (i.e., date of birth, level of education) necessary to form reasonable assumptions regarding Nachshon Wachsman’s earning growth rate, work life expectancy, and retirement plan” and “Israeli Central Bureau of Statistics statistical reports concerning employment studies, 20 life expectancies, and retirement studies.” Weinstein Report at 5. Weinstein estimates that Nachshon’s total work life expectancy would be 35.5 years as a medical doctor and calculates the present value of wages Nachshon would have earned during that period based on documents from the Israeli Central Bureau of Statistics and the Israel Medical Association. Weinstein Report at 5-9. As a result, Weinstein determined, and the court agrees, that Nachshon’s total economic loss is $3,040,289. Id. at 9; Ben-Rafael, 540 F. Supp. 2d at 59 (awarding $3,731,839 to decedent’s widow for lost income based on the prediction that he would have become an attorney at a large law firm); Bennett, 507 F. Supp. 2d at 128 (relying on expert testimony in determining that the financial loss to the decedent’s estate was $404,548); Heiser, 466 F. Supp. 2d at 273 (awarding $1,598,688 for net economic loss based on testimony from an economic consultant). B. Prejudgment Interest The plaintiffs request that the court award prejudgment interest for their IIED claims. “Prejudgment interest is an element of complete compensation,” West Virginia v. United States, 479 U.S. 305, 310 (1987), because it “compensates for the time value of money,” Oldham v. Korean Air Lines Co., 127 F.3d 43, 54 (D.C. Cir. 1997) (quoting Motion Picture Ass’n of Am., 969 F.2d at 1157). “It is within this court’s discretion to award plaintiffs prejudgment interest from the date of the [incident] . . . until the date of final judgment.” Pugh v. Socialist People’s Libyan Arab Jamahiriya, 530 F. Supp. 2d 216, 263 (D.D.C. 2008). Several “courts in this Circuit have awarded prejudgment interest in cases where plaintiffs were delayed in recovering compensation for their injuries-including, specifically, where such injuries were the result of targeted attacks perpetrated by foreign defendants.” See, e.g., id.; Ben-Rafael, 540 F. Supp. 2d at 59. The plaintiff requests, and the court agrees, that a simple interest basis at a six percent per 21 annum is reasonable from the date of Nachshon’s death, October 14, 1994, to the judgment date, March 27, 2009 – 14.45 years. Ben-Rafael, 540 F. Supp. 2d at 59. 4 V. CONCLUSION For the foregoing reasons, the court finds and concludes that the plaintiffs have established their right to relief and entry of default judgment against the defendants. An Order and Judgment consistent with this Findings of Facts and Conclusions of Law is separately and contemporaneously issued this 27th day of March, 2009. RICARDO M. URBINA United States District Judge 4 The plaintiffs voluntarily withdraw the remaining counts in their complaint. Pls.’ Am. Proposed Findings at 42. 22	01-03-2023	04-04-2014
https://www.courtlistener.com/api/rest/v3/opinions/2668343/	UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA __________________________________________ ) LINE VREVEN, ) ) Plaintiff, ) ) v. ) Civil Action No. 08-1099 (PLF) ) AMERICAN ASSOCIATION OF RETIRED ) PERSONS, ) ) Defendant. ) __________________________________________) OPINION This matter, which stems from defendant’s termination of plaintiff Line Vreven’s employment, is before the Court on plaintiff’s motion to amend her complaint, and on defendant’s two motions to dismiss for failure to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure. The Court heard oral argument on March 18, 2009. After carefully considering the papers filed by the parties, the relevant case law, and the arguments of counsel, the Court grants plaintiff’s motion to amend, and grants defendant’s motion to dismiss in part and denies it in part.1 1 The Court considered the following papers: plaintiff’s First Amended Complaint (“Compl.”); plaintiff’s Amended Motion for Leave to File First Amended Complaint; defendant’s Opposition to Plaintiff’s Motion for Leave to File First Amended Complaint; plaintiff’s Reply in Support of Amended Motion for Leave to File First Amended Complaint; defendant’s Motion to Dismiss Count I of Complaint; plaintiff’s Opposition to Defendant’s Motion to Dismiss Count I of the Complaint; defendant’s Reply Brief in Support of Motion to Dismiss Count I of Complaint; defendant’s Motion to Dismiss Count III of First Amended Complaint; plaintiff’s Opposition to Defendant AARP’s Motion to Dismiss Count III of First Amended Complaint; and defendant’s Reply Brief in Support of Defendant AARP’s Motion to Dismiss Count III of First Amended Complaint. I. BACKGROUND Plaintiff alleges that she worked for defendant, the American Association of Retired Persons (“AARP”), in various capacities in the International Affairs department from May 17, 2006 until her discharge on May 15, 2008. See Compl. ¶¶ 5, 7, 8, 13.2 During her employment by AARP, plaintiff alleges that she expressed concerns to her supervisors about AARP’s relationship with AARP Global Network, LLC (“AGN”), a limited liability company founded and wholly owned and operated by AARP. See id. ¶¶ 9, 10. Plaintiff alleges that she was concerned that AARP’s relationship with AGN jeopardized AARP’s tax exempt status (pursuant to Section 501(c)(4) of the Internal Revenue Code). See id. ¶¶ 6, 10. Plaintiff also alleges that during her employment she expressed concerns to her supervisors about AARP employees’ mishandling and improper spending of AARP funds as well as their use of inadequate audit procedures. See id. ¶ 11. She alleges that she was terminated because she had objected to AARP’s “abuse and its structure and tax-exempt status resulting in AARP’s evasion and avoidance of taxes pursuant to the Internal Revenue Code.” Id. ¶ 15. Plaintiff further alleges that defendant’s chief executive officer, William Novelli, told others at AARP that plaintiff’s employment was terminated because she engaged in misconduct, bore responsibility for missing money or assets, did not manage her AARP subordinates appropriately, and allowed them to steal from AARP, and that she personally stole money from AARP. See Compl. ¶ 29. She also alleges “upon information and belief” that Mr. Novelli repeated these comments to unnamed people outside of AARP. See id. Plaintiff alleges 2 All references to the “Complaint” in this Opinion are to the First Amended Complaint. 2 that Mr. Novelli’s statements about the reason for her discharge were false and defamatory. See Compl. ¶ 30. Plaintiff filed suit in this Court on June 25, 2008.3 Her original complaint asserted two counts — wrongful discharge (Count I) and unlawful discrimination based on her national origin (Belgian) (Count II). On December 22, 2008, plaintiff moved to amend her complaint to add a claim for defamation (Count III). II. STANDARD OF REVIEW Rule 12(b)(6) of the Federal Rules of Civil Procedure allows dismissal of a complaint if a plaintiff fails “to state a claim upon which relief can be granted.” FED . R. CIV . P. 12(b)(6). In Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), the Supreme Court clarified the standard of pleading that a plaintiff must meet in order to survive a motion to dismiss under Rule 12(b)(6). The Court noted that “Federal Rule of Civil Procedure 8(a)(2) requires only ‘a short and plain statement of the claim showing that the pleader is entitled to relief,’ in order to ‘give the defendant fair notice of what the . . . claim is and the grounds upon which it rests[.]’” Id. at 544 (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)); see also Erickson v. Pardus, 127 S. Ct. 2197 (2007); Aktieselskabet AF 21 v. Fame Jeans Inc., 525 F.3d 8, 15 (D.C. Cir. 2008). Although “detailed factual allegations” are not necessary to withstand a Rule 12(b)(6) motion to dismiss, to provide the “grounds” of “entitle[ment] to relief,” a plaintiff must furnish “more than labels and conclusions” or “a formulaic recitation of the elements of a cause of action.” Bell 3 Plaintiff, a resident of Maryland, alleges jurisdiction based on diversity of citizenship pursuant to 28 U.S.C. 1332(a). See Compl. ¶¶ 1, 3. Defendant, a District of Columbia nonprofit corporation with its principal place of business in the District of Columbia, does not challenge diversity jurisdiction. See Compl. ¶ 2. 3 Atlantic Corp. v. Twombly, 550 U.S. at 555; see also Papasan v. Allain, 478 U.S. 265, 286 (1986). The Court stated that there was no “probability requirement at the pleading stage,” Bell Atlantic Corp. v. Twombly, 550 U.S. at 556, but “something beyond . . . mere possibility . . . must be alleged[.]” Id. at 557 The facts alleged in the complaint “must be enough to raise a right to relief above the speculative level,” id. at 555, because Rule 8(a)(2) requires a “showing,” rather than a “blanket assertion,” of entitlement to relief, id. at 555 n.3. The complaint must be sufficient “to state a claim for relief that is plausible on its face.” Id. at 570. The Court referred to this newly clarified standard as “the plausibility standard.” Id. at 560 (abandoning the “no set of facts” language from Conley v. Gibson). The D.C. Circuit has noted that Twombly “leaves the long-standing fundamentals of notice pleading intact.” Aktieselskabet AF 21 v. Fame Jeans Inc., 525 F.3d at 15. On a motion to dismiss under Rule 12(b)(6), the Court “must accept as true all of the factual allegations contained in the complaint.” Erickson v. Pardus, 127 S. Ct. at 2200; see also Bell Atlantic Corp. v. Twombly, 550 U.S. at 555. The complaint “is construed liberally in the [plaintiff’s] favor, and [the Court should] grant [the plaintiff] the benefit of all inferences that can be derived from the facts alleged.” Kowal v. MCI Communications Corp., 16 F.3d at 1276. Nevertheless, the Court need not accept inferences drawn by the plaintiff if those inferences are unsupported by facts alleged in the complaint; nor must the Court accept plaintiff’s legal conclusions. See Kowal v. MCI Communications Corp., 16 F.3d at 1276; Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). 4 III. DISCUSSION A. Motion to Amend Complaint Plaintiff moves to amend her complaint to add a new count (Count III) for defamation related to her discharge by AARP. Rule 15(a) of the Federal Rules of Civil Procedure allows for liberal amendment of pleadings, “when justice so requires.” FED . R. CIV . P. 15(a); see, e.g., Howard v. Gutierrez, 237 F.R.D. 310, 312 (D.D.C. 2006) (quoting Davis v. Liberty Mutual Insurace Co., 871 F.2d 1134, 1136-37 (D.C. Cir. 1989) (“It is common ground that Rule 15 embodies a generally favorable policy toward amendments.”) (citations omitted)). The presumption runs in the plaintiff’s favor that she may amend her complaint “[i]n the absence of any apparent or declared reason — such as undue delay, bad faith or dilatory motive on the part of the [plaintiff], repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of the amendment, etc.” Foman v. Davis, 371 U.S. 178, 182 (1962). The decision whether to grant or deny leave to amend is within the district court’s discretion. See Firestone v. Firestone, 76 F.3d 1205, 1209 (D.C. Cir. 1996). Defendant opposes plaintiff’s motion to amend on the ground of futility, making virtually the same arguments as those contained in its subsequent motion to dismiss Count III. Since the defendant has moved to dismiss the complaint as amended, and the Court heard oral argument on that motion, the Court will grant plaintiff’s motion to amend and consider the motion to dismiss Count III on its merits.4 4 Because the allegations in the amended complaint as to Counts I and II appear identical to those in the original complaint, the Court will treat defendant’s motion to dismiss Count I of the original complaint as applying to the amended complaint. 5 B. Plaintiff Has Stated a Claim for Wrongful Discharge Defendant moves to dismiss Count I of plaintiff’s complaint, alleging wrongful discharge, for failure to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure. Under District of Columbia law, “[a]n employee who serves at the will of his or her employer may be discharged ‘at any time and for any reason, or for no reason at all.’” Liberatore v. Melville Corp., 168 F.3d 1326, 1329 (D.C. Cir. 1999) (quoting Adams v. George W. Cochran & Co., 597 A.2d 28, 30 (D.C. 1991)). District of Columbia law thus presumptively bars wrongful termination claims brought by at-will employees. See Holman v. Williams, 436 F. Supp. 2d 68, 76 (D.D.C. 2006). District of Columbia courts recognize limited exceptions to this presumptive bar. In Adams v. George W. Cochran & Co., the District of Columbia Court of Appeals recognized a “very narrow” policy exception to this rule — a discharged employee may bring a wrongful termination claim when “the sole reason for the discharge is the employee’s refusal to violate the law.” Adams v. George W. Cochron & Co., 597 A.2d at 34. Despite plaintiff’s argument to the contrary, she has not alleged any facts to support the conclusion that defendant discharged her because she refused to assist in the commission of unlawful acts. The conclusory assertion to this effect, see Compl. ¶ 16, is not sufficient under Bell Atlantic Corp. v. Twombly, 550 U.S. at 555 (to survive dismissal, plaintiff must furnish “more than labels and conclusions”). The District of Columbia Court of Appeals expanded the Adams exception slightly in Carl v. Children’s Hospital, 702 A.2d 159 (D.C. 1997), in which it stated that circumstances other than an employee’s outright refusal to violate a law may constitute grounds for a public policy exception if the employee acted in furtherance of a public policy “solidly 6 based on a statute or regulation that reflects the particular public policy to be applied or (if appropriate) on a constitutional provision concretely applicable to the defendant’s conduct.” Id. at 163 (Terry, J., concurring).5 The court in Carl considered the claims of plaintiff, a nurse, that she had been discharged because she advocated for patients’ rights and against her employer’s interests both before the Council of the District of Columbia and in court as an expert witness for plaintiffs in medical malpractice cases. See Carl v. Children’s Hospital, 702 A.2d at 160. Relying on a provision of the District of Columbia Code that prohibited threatening behavior against witnesses before the Council of the District of Columbia, the court determined that the Code constituted “a declaration of policy by the Council seeking to ensure the availability of information essential to its legislative function by imposing criminal penalties on anyone who seeks to impede Council access to such information.” Id. at 165. The court further explained that plaintiff had alleged an adequately “close fit” between this public policy and her termination: “the most severe and most effective [method of influencing the employee’s testimony before the Council] — the one that would inflict the greatest injury on the person or property of the employee — is the termination of employment.” Id. The Court finds that plaintiff has stated a claim under the exception articulated in Carl v. Children’s Hospital based on her allegations that she was terminated because “she objected to AARP’s abuse of its structure and tax-exempt status.” Compl. ¶ 15. As Judge 5 Relying on Carl v. Children’s Hospital, the courts have treated Judge Terry’s concurring opinion as the relevant standard. See, e.g., Riggs v. Home Builders Inst., 203 F. Supp. 2d 1, 8 n.5 (D.D.C. 2002) (“While a majority of judges on the en banc court . . . did not explicitly articulate the precise confines of the public policy exception to the at-will doctrine, Judge Terry’s concurrence appears to at least implicitly represent the broadest demarcation of its boundaries acceptable to a majority of the court.”). 7 Hogan explained in Riggs, a case involving Section 501(c)(3) of the Internal Revenue Code, “the policy of protecting against abuse of the public treasury by utilizing its funds for partisan activity is a sufficiently clear mandate of public policy for the purposes of Carl.” Riggs v. Home Builders Institute, 203 F. Supp. 1, 21 (D.D.C. 2002). While plaintiff has not specified the manner in which AARP allegedly violated its tax exempt status under Section 501(c)(4) and evaded or avoided taxes, other than through its relationship with AGN, Compl. ¶¶ 9-10, the Court finds her allegations sufficient under Rule 8(a) and Twombly to invoke the Carl exception. See Holman v. Williams, 436 F. Supp. 2d at 78; Riggs v. Homebuilders Institute, 203 F. Supp. 2d at 21-22. They make plausible the conclusion that defendant discharged plaintiff as a result of her objections to alleged violations of defendant’s tax exempt status. Defandant’s motion to dismiss Count I will be denied. C. Plaintiff Has Not Stated a Claim for Defamation In order to make out a prima facie case of defamation under District of Columbia law, a plaintiff must allege facts showing: (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. See Marsh v. Hollander, 339 F. Supp. 2d 1, 5 (D.D.C. 2004) (citing Crowley v. North Am. Telcoms. Ass’n, 691 A.2d 1169, 1173 (D.C. 1997)); see also Restatement (Second) of Torts § 558 (1977). 8 Defendant argues that the defamation claim should be dismissed because the complaint is insufficiently specific as to the second element — defendant’s publication of the statement to a third party. Defendant asserts that the description in plaintiff’s complaint of the alleged third parties is too vague to state a claim adequately. Plaintiff has alleged that Mr. Novelli made defamatory statements about her to “others at AARP and, upon information and belief, [to people] outside of AARP . . .” Compl. ¶ 29. While there is no heightened pleading standard for defamation claims in the District of Columbia, see Croixland Props. Ltd. Partnership v. Corcoran, 174 F.3d 213, 215 n. 2 (D.C. Cir. 1999), such claims must be pleaded with particularity and specify the person or persons to whom the statements were made or published. Coates v. Law School Admission Council, Civil Action No. 05-0641, 2005 U.S. Dist. LEXIS 35217 at *6 (D.D.C. October 25, 2005) (citing Wiggins v. Dist. Cablevision, Inc., 853 F.Supp. 484, 494 (D.D.C. 1994)). In addition, all plaintiffs, of course, are bound by the pleading requirements of Rule 8(a) of the Federal Rules of Civil Procedure, and the Supreme Court’s recent explication of that Rule in Twombly. The Court therefore must determine whether Count III of plaintiff’s complaint adequately identifies third parties, or “listeners,” with sufficient specificity to enable the defendant to answer the complaint and thereby withstand defendant’s motion to dismiss. See Oparaugo v. Watts, 884 A.2d 63, 77 (D.C. 2005) (“we consider whether the factual allegations are sufficient to respond to appellant’s claim of defamation”). In Oparaugo v. Watts, the District of Columbia Court of Appeals concluded that the allegation that a defamatory letter was published to “various persons, both private and public, in Nigeria” was insufficient to state the third parties to whom the letter was published and thus too broad to provide sufficient notice to enable the opposing party to prepare an answer. 9 Oparaugo v. Watts, 884 A.2d at 78. The court contrasted the breadth of that alleged publication with a separate allegation that the letter was published to “the Nigerian authorities in [plaintiff’s] court case,” and found that the latter was sufficiently specific to state a claim for defamation, while the former was not. Id. Here, plaintiff’s allegation “on information and belief” that Mr. Novelli defamed her to unnamed people outside of AARP is as vague and amorphous as the allegation rejected by the court in Oparaugo. The Court also concludes that plaintiff’s allegation that Mr. Novelli defamed her to unnamed AARP employees also fails to clear the Oparaugo threshold. The court in Oparaugo relied on the fact that plaintiff specified the particular Nigerian court employees involved in the plaintiff’s case, namely, those “Nigerian authorities who were considering appellant’s complaint against Mrs. Oparaugo’s family in Nigeria.” See Oparaugo v. Watts, 884 A.2d at 78. “These allegations,” the court held, were “sufficient to apprise appellees of the persons to whom the letter was published, at least by category.” Id. In this case, plaintiff alleges that AARP’s CEO, Mr. Novelli, who oversees the entire organization, “has told [unnamed] others at AARP” various allegedly defamatory things about plaintiff. See Compl. ¶ 29. Plaintiff fails to narrow this allegation any further by identifying anyone to whom Mr. Novelli spoke or wrote by name, by department, or by any other identifying feature. At oral argument, counsel for defendant represented that AARP employs about 2,200 people, most of whom work in the same building as did plaintiff. Plaintiff’s complaint, taken at face value, makes possible the conclusion that Mr. Novelli may have defamed her to any one of these employees. Absent any factual allegations that narrow this field, defendant would have to conduct thousands of interviews in order to answer the complaint. The Court finds that plaintiff’s complaint thus does not give defendant “fair notice” of the nature of 10 the claims and the “grounds” on which the claim rests, both of which are necessary in order for defendant to respond properly. See Bell Atlantic v. Twombly, 550 U.S. at 555 n.3; see also Oparaugo v. Watts, 884 A.2d at 77-78. Plaintiff is not helped by Crowley v. North Am. Telcoms. Ass’n, 691 A.2d 1169 (D.C. 1997). The plaintiff in that case alleged that a former supervisor defamed him to unnamed “employees and former co-workers[.]” Id. at 1171. While the court in Crowley did not quote from plaintiff’s complaint, it found the complaint sufficient to withstand a motion to dismiss because it allowed for “identification by employment” of the third party audience for the defamatory comments. Id. at 1172. It provided no explanation for that finding, and the Court is unwilling to conclude that this characterization was shorthand for an allegation as broad and unrefined as plaintiff’s allegation that she was defamed to unnamed AARP employees anywhere in the building in which she worked. Interpreting Crowley this broadly would compel the Court to reach the conclusion that an allegation that defamatory statements made, for example, to “employees at General Motors,” would be sufficient to state a claim simply because the plaintiff had identified a category of employees. Such a conclusion flies in the face of the requirement that defamation cases be pled with particularity, as well as the pleading requirements of Rule 8(a) of the Federal Rules of Civil Procedure. The Court therefore grants defendant’s motion to dismiss with respect to Count III of plaintiff’s complaint.6 6 Plaintiff’s counsel suggested at oral argument that the Court could “infer” from paragraph 31 of the complaint that Mr. Novelli at least told members of AARP’s Board those things which plaintiff says are defamatory. But that is not what paragraph 31 asserts. “Without some factual allegation in the complaint” that Mr. Novelli made these statements to the Board of Directors, “it is hard to see how [plaintiff] could satisfy the requirement of providing . . . ‘fair notice’” to defendant. Bell Atlantic Corp. v. Twombly, 550 U.S. at 555 n. 3. 11 IV. CONCLUSION For these reasons, the Court will grant plaintiff’s motion for leave to file her first amended complaint and will deny in part and grant in part defendant’s motions to dismiss. Count III of the Amended Complaint is dismissed. Counts I and II remain pending. A separate Order consistent with this Opinion will issue this same day. _/s/_______________________ PAUL L. FRIEDMAN United States District Judge DATE: March 25, 2009 12	01-03-2023	04-04-2014
https://www.courtlistener.com/api/rest/v3/opinions/1588158/	752 F.Supp. 1419 (1990) Hector SANCHEZ, Petitioner, v. Warden T.R. KINDT, Respondent. No. TH 90-105-C. United States District Court, S.D. Indiana, Terre Haute Division. December 4, 1990. 1420 1421 Hector Sanchez, pro se. Jill E. Zengler, Asst. U.S. Atty., Office of U.S. Atty., Indianapolis, Ind., for respondent. ENTRY DENYING PETITION FOR WRIT OF HABEAS CORPUS AND DIRECTING ENTRY OF JUDGMENT McKINNEY, District Judge. This cause is before the Court on the petition of Hector Sanchez for a writ of habeas corpus, on the petitioner's amended petition, on the respondent's answer and return and on the respondent's memorandum opposing habeas corpus petition. Whereupon the Court, having read and examined such petitions, answer and return and memorandum, having considered the petitioner's claim and the arguments of the parties and being duly advised, now finds that the petitioner is not entitled to the relief he seeks in this action and that his petition for habeas corpus relief should accordingly be denied and this cause of action dismissed with prejudice. I. Introduction In this and companion cases this Court enters the fray engendered by the complex and longlasting fallout from the Cuban Mariel Boatlift of over a decade ago. In resolving the issues presented here the 1422 Court does not break new ground, but draws on the analyses and conclusions of many other courts. Background Petitioner is confined at the United States Penitentiary at Terre Haute, Indiana. He is an excludable alien who arrived in this Country during the 1980 Mariel Boatlift.[1] Cuba has not agreed to take him back.[2] He was initially released on immigration parole.[3] While in that status he was convicted of one or more felonies. His prison sentences have now been fully served. He presents three claims in this action: 1) the Attorney General does not have the authority to detain him indefinitely; 2) he has a liberty interest in freedom from detention and the denial and revocation of parole are effected without due process of law; and 3) his prolonged detention violates customary international law and is therefore illegal. II. A. Jurisdictional Basis for this Action The petitioner brings this action for habeas corpus relief. The specific provision through which we may review the petitioner's claims in this action, however, is found at 8 U.S.C. § 1329: The district courts of the United States shall have jurisdiction of all causes, civil and criminal, arising under any of the provisions of this title [Title 8]. The specific terms of this statute supplement, rather than supplant, the general language of the federal habeas corpus statute and the respondent has not challenged the form in which the petitioner's claims have been presented.[4] B. Authority of Attorney General to Detain Indefinitely It is every nation's prerogative "to determine whether, and in what numbers, outsiders without any cognizable connection to this society shall be permitted to join it." Garcia-Mir v. Smith, 766 F.2d 1478, 1484 (11th Cir.1985). This power is an inherent attribute of national sovereignty. Fong Yue Ting v. United States, 149 U.S. 698, 707-11, 13 S.Ct. 1016, 1019-21, 37 L.Ed. 905 (1893); Nishimura Ekiu v. United States, 142 U.S. 651, 659, 12 S.Ct. 336, 338, 35 L.Ed. 1146 (1892). Congress has plenary power to admit aliens to the United States or, conversely, to bar them. Kleindienst v. Mandel, 408 U.S. 753, 766, 92 S.Ct. 2576, 2583, 1423 33 L.Ed.2d 683 (1972). The power to expel or exclude aliens is a fundamental sovereign attribute exercised by the government's political departments. Shaughnessy v. United States ex rel. Mezei, 345 U.S. 206, 210, 73 S.Ct. 625, 628, 97 L.Ed. 956 (1953). By statutory enactment, Congress has delegated broad powers in the immigration field to the Attorney General. See 8 U.S.C. § 1103. Congress has also identified a number of classes of persons who are deemed excludable. 8 U.S.C. § 1182(a)(1)-(33).[5] A portion of the Immigration and Nationality Act (INA), 8 U.S.C. § 1182(a), provides as follows: Except as otherwise provided in this chapter, the following classes of aliens shall be ineligible to receive visas and shall be excluded from admission into the United States. .... (9) Aliens who have been convicted of a crime involving moral turpitude.... (20) [A]ny immigrant who at the time of application for admission is not in possession of a valid unexpired immigrant visa, reentry permit, border crossing identification card, or other valid entry document required by this chapter.... (23) Any alien who (A) has been convicted of a violation of, or a conspiracy to violate, any law or regulation of a State, the United States, or a foreign country relating to a controlled substance.... The INA directs the immediate deportation of excluded aliens, unless the Attorney General determines that immediate deportation is not practicable or proper, in which event the excluded alien can be either released to immigration parole or detained. 8 U.S.C. § 1227. With respect to the treatment of excludable aliens, Congress has delegated the following authority to the Attorney General: The Attorney General may, except as provided in subparagraph (B), in his discretion parole into the United States temporarily under such conditions as he may prescribe for emergent reasons or for reasons deemed strictly in the public interest any alien applying for admission to the United States, but such parole of such alien shall not be regarded as an admission of the alien and when the purposes of such parole shall, in the opinion of the Attorney General, have been served the alien shall forthwith return or be returned to the custody from which he was paroled and thereafter his case shall continue to be dealt with in the same manner as that of any other applicant for admission to the United States. 8 U.S.C. § 1182(d)(5)(A). "[A]s originally conceived by the enacting Congress, parole was meant to be the exception rather than the rule. It was to be catalyzed only by the existence of an emergency (whether a personal emergency, such as an alien's medical needs, or a public emergency, such as a national need to have the alien present within the country). This view, though rigid, was well within the legislature's choice of prerogatives." Amanullah v. Nelson, 811 F.2d 1, 6 (1st Cir.1987). The mere granting of parole "shall not be regarded as an admission of the alien ...," 8 U.S.C. § 1182(d)(5)(A), and in the event of revocation of parole, the alien shall "be dealt with in the same manner as that of any other applicant for admission to the United States." Id. This statutory scheme is not at issue in this action, nor is the petitioner's status as 1424 "an excludable or potentially excludable alien."[6] There is no explicit statutory limit to the length of time which such a person can be detained. What is at issue, with respect to the first claim, is the Attorney General's authority to detain excludable aliens indefinitely. The Seventh Circuit Court of Appeals has addressed this issue only obliquely. In Ramos v. Haig, 716 F.2d 471 (7th Cir.1983), the Court reviewed the denial of attorney fees under the Equal Access to Justice Act of counsel who had prevailed in the district court in securing habeas corpus relief for two juveniles who had been detained without hearing for 15 months following their arrival in this Country as part of the Mariel Boatlift. The Court found that "the sole question before this court is whether the government's long-term confinement of petitioners is "substantially justified," id., 716 F.2d at 473 n. 3, which exists when the government demonstrates that its action had a reasonable basis in law and fact. The Court reviewed the applicable law in the following terms: Pursuant to 8 U.S.C. Sec. 1225(b), an examining immigration officer must detain, for further inquiry, all aliens "who may not appear to the examining officer to be clearly and beyond a doubt entitled to land." Generally, examining immigration officers detain aliens whom they believe to be "excludable", as defined by 8 U.S.C. Sec. 1182. These aliens are processed and assigned to various detention centers while INS conducts an investigation. Thereafter, a special inquiry officer conducts a hearing and decides whether aliens "shall be allowed to enter or shall be excluded and deported." 8 U.S.C. Sec. 1226. Thousands of aliens arrived in our country as part of the "Cuban flotilla", approximately 2,000 of these aliens had backgrounds which warranted detention pending further inquiries. Consequently, INS assumed the responsibility of processing, detaining, and investigating a large number of aliens. These responsibilities were necessarily time consuming. Information concerning an alien's past criminal background in a foreign land is often difficult to obtain. Still, INS was able to parole a majority of these detainees within one year. Thus, we must accept the district court's findings that INS's general confinement of aliens for further inquiry was reasonable. With regard to INS's long-term detention of petitioners, we note that the circumstances which justify such detention are uncertain. The Immigration and Naturalization Act does not expressly limit the time in which INS must complete its investigations, thus, INS's legal position that it may indefinitely detain aliens awaiting exclusion hearings is not foreclosed by the Act. Id., 716 F.2d at 474. It then found, in conformity with its limited review under the EAJA, that the district court's finding that the government's legal position was substantially justified, i.e., reasonable, was not clearly erroneous. In Santos v. Kolb, 880 F.2d 941 (7th Cir.1989), the Court considered the habeas corpus claim of a state prisoner whose attorney had failed to advise the petitioner of the collateral consequences of a felony conviction (i.e., deportation) constituted ineffective assistance of counsel. The Court described the procedure which is at issue in this action: Under 8 U.S.C. § 1182(a)(9), an alien may be deported or excluded if convicted of a crime of "moral turpitude" ... Both deportation and exclusion generally result in the involuntary removal of the alien to his or her country of origin. If the country of origin will not accept the alien, he or she may be released on immigration parole or subjected to indefinite confinement in federal custody as a result of a final deportation (or exclusion) order. Id., 880 F.2d at 942 n. 3. Our Court of Appeals cannot be said to have squarely decided this issue. In Ramos, 1425 supra, it concluded only that the government's position had a reasonable basis in law. It specifically "express[ed] no opinion regarding the correctness of the government's legal interpretations." 716 F.2d at 474. A stronger and seemingly unqualified statement was made in Santos v. Kolb, 880 F.2d 941, 942 n. 3 (7th Cir. 1989): Both deportation and exclusion generally result in the involuntary removal of the alien to his or her country of origin. If the country of origin will not accept the alien, he or she may be released on immigration parole or subjected to indefinite confinement in federal custody as a result of a final deportation (or exclusion) order. Nonetheless, the habeas petitioner in Santos did not challenge an immigration determination or process, he was not in INS custody and the Court of Appeals did not undertake any analysis of the applicable statutes in stating that an excludable alien who could not be deported could be subjected to indefinite confinement. Therefore, although this Court perceives some support for the respondent's position in this action from the Court of Appeals, it is appropriate to consider other authorities in addressing this issue. The petitioner relies on the decision of the Tenth Circuit in Rodriguez-Fernandez v. Wilkinson, 654 F.2d 1382 (10th Cir. 1981), for the proposition that "the [INA] does not implicitly authorize indefinite detention of excludable aliens." Habeas Petition at p. 15. According to the petitioner, in Rodriguez-Fernandez the Court determined that "Section 1227 contemplates only temporary detention of excludable aliens, during admission proceedings and for a reasonable period of time thereafter to allow negotiations for return to the country of origin or to the initial transporter. After that, the aliens are entitled to be released." Id., at pp. 15-16. Just as the petitioner relies on and the respondent eschews the Tenth Circuit's decision in Rodriguez-Fernandez, the parties' positions are reversed with respect to the decisions of the Fourth and Eleventh Circuits in Palma v. Verdeyen, 676 F.2d 100 (4th Cir.1982), and Jean v. Nelson, 727 F.2d 957, 968 (11th Cir.1984) (en banc), affirmed on other grounds, 472 U.S. 846, 105 S.Ct. 2992, 86 L.Ed.2d 664 (1985). In resolving the argument concerning these arguably conflicting decisions, the Court has examined the authorities cited by the parties and given due consideration to the statutory scheme which must be construed, to the policies underlying the statute and to the interests which can be asserted in support of both the petitioner's and the government's positions. The Court finds that District Judge Hill's decision in Alvarez-Mendez v. Stock, 746 F.Supp. 1006 (C.D.Cal.1990), adopting a magistrate's revised report and recommendation, is both correct and completely persuasive on this point. The petitioner in Alvarez-Mendez had a background similar to the petitioner's here: he arrived in Florida by boat from Mariel, Cuba in May 1980; he was granted immigration parole pursuant to 8 U.S.C. § 1182(d)(5); he remained at liberty until convicted of criminal offenses in the United States; and after completing service of his criminal sentence his immigration parole was revoked by the INS and he was detained pending exclusion and deportation proceedings. The Court's discussion of this point was the following: Petitioner's challenge to his continued detention is not unique. In Palma v. Verdeyen, 676 F.2d 100 (4th Cir.1982), an excluded alien subject to deportation who was also part of the Mariel boatlift, or "Freedom Flotilla", contended that the Attorney General had no authority under the immigration laws to continue to detain him indefinitely. The Fourth Circuit Court of Appeals, relying on the Supreme Court's decision in [Shaughnessy v. United States ex rel. Mezei, 345 U.S. 206, 210, 73 S.Ct. 625, 628, 97 L.Ed. 956 (1953)], concluded that "indefinite detention of a permanently excluded alien deemed to be a security risk, who is refused entry to other countries, is not unlawful." Id., at 103. Relying on its analysis of the Attorney General's broad powers regarding parole, the Court reasoned that the Attorney General had implicit 1426 authority to detain rather than parole an excluded alien who cannot be returned to his own country. Id., at 104. The Court also noted that review procedures instituted by the Attorney General complied with 8 U.S.C. § 1227(a) which required the immediate return of an alien unless the Attorney General found, in his discretion, that immediate deportation was not practicable or proper. Id., at 104. Not only did the Court find that the Attorney General had the power to detain excludable aliens not fit for parole but also that the review procedures established by the Attorney General distinguished Palma's case from the alien in Rodriguez-Fernandez v. Wilkinson, 654 F.2d 1382 (10th Cir.1981). Alvarez-Mendez v. Stock, 746 F.Supp. 1006, 1011 (C.D.Cal.1990). The Court then discussed and distinguished Rodriguez-Fernandez: In that case, the Tenth Circuit Court of Appeals had affirmed, with modifications, the grant of a writ of habeas corpus to a detainee, who, like Mayet Palma and petitioner in the instant case, had been imprisoned in Cuba for theft when he was allowed to join the flotilla to the United States. The Court in Palma found it unnecessary to address the government's argument that Rodriguez-Fernandez was incorrectly decided. The Court found it sufficient to note that the Attorney General had determined, unlike Rodriguez-Fernandez, that Mayet Palma's immediate deportation was proper, though impracticable, and that he was not suitable for parole. Palma, 676 F.2d at 105. Petitioner in this case also relies extensively on the Court's decision in Rodriguez-Fernandez. In the instant case, the Attorney General has determined that petitioner, like Palma and unlike Rodriguez-Fernandez, is subject to immediate deportation and unsuitable for parole. The instant case also provides another stark difference between petitioner here and Rodriguez-Fernandez. Upon his arrival in the United States, Rodriguez-Fernandez was immediately detained pending an exclusion hearing. After a hearing, he was found excludable and deportable to Cuba. Cuba had refused all requests to accept him and other members of the flotilla. Pending deportation, Rodriguez-Fernandez was detained first at Leavenworth penitentiary and then transferred to the penitentiary in Atlanta, Georgia. The Tenth Circuit noted that Rodriguez-Fernandez had committed no offenses against the United States. Rodriguez-Fernandez, 654 F.2d at 1385. Thus, the Tenth Circuit found that "[w]hen an excludable alien in custody tests the detention by writ of habeas corpus pursuant to 8 U.S.C. § 1105a(9) or 28 U.S.C. § 2241, we hold that the burden is upon the government to show that the detention is still temporary pending expulsion, and not simply incarceration as an alternative to departure." Id., at 1390. In the instant case, petitioner had been on parole when his criminal acts required that his parole be revoked and that he be detained. The Attorney General made findings concerning petitioner's continued detention. In addition, the government has met its burden of showing that petitioner's detention is not simply incarceration as an alternative to departure. Petitioner's case is reviewed annually by the Cuban Review Plan to determine his eligibility for parole. As previously noted, the regulatory procedures governing review by the Cuban Review Panel are set forth at 8 C.F.R. §§ 212.12 through 212.13 (1989). Petitioner had not challenged the determination of the panel regarding any possible due process violations arising from the structure of the review procedures or the implementation of such procedures in his case in his present petition.... Thus, the Magistrate concludes that the Attorney General has the authority to detain petitioner, denying him parole, until his deportation can be effected. In addition, the Magistrate finds that the government has met its burden of showing that petitioner's detention is not indefinite. Rather, petitioner's case is reviewed annually to determine whether 1427 his conduct merits reparole into the United States pending his deportation. The Court then found further support for its conclusion in Gallego v. INS, 663 F.Supp. 517 (W.D.Wis.1987), and its sequel. Gallego v. INS, 674 F.Supp. 280 (W.D.Wis. 1987). In these actions the district court, relying on the decision in Rodriguez-Fernandez, found that the INA permits only temporary detention of excludable aliens, 663 F.Supp. at 527, but subsequently determined that the annual review of the alien's status (as detained) under the Cuban Review Plan actually rendered the detention temporary and not indefinite. 674 F.Supp. at 288. Because the detention was temporary rather than permanent it did not support the petitioner's contention that it was violative of the Constitution or laws of the United States. The Cuban Review Plan, 8 C.F.R. §§ 212.12-212.13 (1989), is attached to this Entry as Appendix I. The conclusion of this Court is in accord with Alvarez-Mendez. Specifically, we find the following: (1) the INA does authorize the indefinite detention of excludable aliens; (2) the decision of the Tenth Circuit in Rodriguez-Fernandez is contrary to the better authority in cases such as Jean v. Nelson, 727 F.2d 957, 968 (11th Cir.1984) (en banc), affirmed on other grounds, 472 U.S. 846, 105 S.Ct. 2992, 86 L.Ed.2d 664 (1985), and Palma v. Verdeyen, 676 F.2d 100 (4th Cir.1982); (3) the decision of the Tenth Circuit in Rodriguez-Fernandez is distinguishable on its facts from the instant case because the petitioner will receive at least annual reviews of his status. Thus, wholly apart from the legal conclusion which is reached with respect to the duration of detention pursuant to 8 U.S.C. § 1182(d)(5)(A), the petitioner's detention is not indefinite. C. Due Process Claim The petitioner alleges in Count II of his petition that he has a liberty interest "in freedom from detention" based on each and all of the following: a) his unextinguished right to bodily freedom; b) promises extended by the United States as it received members of the Freedom Flotilla, including especially President Carter's welcome with "open heart and open arms"; c) the INS policy of "paroling" Freedom Flotilla arrivals and others into this country despite their formal excludable status, embodied in regulations at 8 C.F.R. § 212.5; d) international law guaranteeing freedom from unreasonable restraint; e) claims to political asylum; and f) "other sources of an interest in freedom from restraint." The petitioner's claims in Count II are without merit and his arguments in support of them, which hinge the inapplicability of the entry fiction, are based either on misconceptions or distortions. The Fifth Amendment Guarantee of Due Process. In relation to the due process guarantee of the Fifth Amendment, the petitioner states in his brief that "[p]rovisions of the Constitution `are universal in their application, to all persons within the territorial jurisdiction, without regard to any differences of race, of color, or of nationality.'" Habeas Petition at p. 17, citing Yick Wo v. Hopkins, 118 U.S. 356, 367, 6 S.Ct. 1064, 30 L.Ed. 220 (1886). This statement must be reconciled with the Supreme Court's holdings that "an alien seeking initial admission to the United States requests a privilege and has no constitutional rights regarding his application, for the power to admit or exclude aliens is a sovereign prerogative." Landon v. Plasencia, 459 U.S. 21, 32, 103 S.Ct. 321, 329, 74 L.Ed.2d 21 (1982). The authority relied on by the petitioner, which is not well-developed or applied to the particular claim which he makes, was found persuasive by the Second Circuit Court of Appeals in United States ex rel. Mezei v. Shaughnessy, 195 F.2d 964, 967 (2d Cir.1952), rev'd, 345 U.S. 206, 73 S.Ct. 625, 97 L.Ed. 956 (1953). It rests on the refusal to apply the entry fiction to decisions when determining the rights of an excludable alien challenging the denial of immigration parole pursuant to Section 212(d)(5) of the INA. 1428 In Mezei, an alien was refused entry into the United States. No other country agreed to accept him. He had been denied parole and confined on Ellis Island for twenty-one months when he petitioned for a writ of habeas corpus. The gravamen of Mezei's complaint was clearly not the government's right to exclude hima permanent exclusion order had already been entered in his case, and he did not contest it in his habeas petitionbut the power of the government to continue to detain him without a hearing pending his deportation. See Mezei, 345 U.S. at 207, 73 S.Ct. at 627. The Supreme Court, however, found the entry doctrine fiction applicable under these circumstances: Neither respondent's harborage on Ellis Island nor his prior residence here transforms this into something other than an exclusion proceeding. Concededly, his movements are restrained by authority of the United States, and he may by habeas corpus test the validity of his exclusion. But that is true whether he enjoys temporary refuge on land ... or remains continuously aboard ship.... In sum, harborage at Ellis Island is not an entry into the United States.... [and] such temporary harborage, an act of legislative grace, bestows no additional rights.... And this Court has long considered such temporary arrangements as not affecting an alien's status; he is treated as if stopped at the border. Id., 345 U.S. at 213, 215, 73 S.Ct. at 629, 631 (citations and footnotes omitted). The Eleventh Circuit applied this in Fernandez-Roque v. Smith, 734 F.2d 576, 581 (11th Cir.1984): Based on Jean and Mezei, we are compelled to conclude that parole is part of the admissions process. As such, its denial or revocation does not rise to the level of a constitutional infringement. See also Pierre v. United States, 547 F.2d 1281, 1283, 1289-90 (5th Cir.) (entry doctrine fiction applied to aliens seeking parole pending decision on petition for asylum), vacated and remanded to consider mootness, 434 U.S. 962, 98 S.Ct. 498, 54 L.Ed.2d 447 (1977); Ahrens v. Rojas, 292 F.2d at 408-11 (entry doctrine bars excludable alien from claiming fifth amendment rights to a hearing on the revocation of his parole). This Court therefore concludes that there is no viable basis in the due process clause of the Fifth Amendment itself which provides the petitioner the right to freedom from detention which he asserts. A protected liberty interest may also arise from a nonconstitutional source, i.e., federal statutes or binding regulations. The Supreme Court has recently reviewed the circumstances such an interest is created: Stated simply, "a State creates a protected liberty interest by placing substantive limitations on official discretion." Olim v. Wakinekona, [461 U.S. 238, 249, 103 S.Ct. 1741, 1747, 75 L.Ed.2d 813 (1983).] A State may do this in a number of ways. Neither the drafting of regulations nor their interpretation can be reduced to an exact science. Our past decisions suggest, however, that the most common manner in which a State creates a liberty interest is by establishing "substantive predicates" to govern official decision-making, Hewitt v. Helms, [459 U.S. 460, 472, 103 S.Ct. 864, 871, 74 L.Ed.2d 675 (1983)], and, further, by mandating the outcome to be reached upon a finding that the relevant criteria have been met. Kentucky Department of Corrections v. Thompson, 490 U.S. 454, 109 S.Ct. 1904, 1909, 104 L.Ed.2d 506 (1989). The petitioner has identified seven sources of a right to freedom from detention: a) his unextinguished right to bodily freedom; b) promises extended by the United States as it received members of the Freedom Flotilla, including especially President Carter's welcome with "open heart and open arms"; c) the INS policy of "paroling" Freedom Flotilla arrivals and others into this country despite their formal excludable status, embodied in regulations at 8 C.F.R. § 212.5; d) international law guaranteeing freedom from unreasonable restraint; e) claims to political asylum; and f) "other sources of an interest in freedom from restraint." These asserted sources will be considered separately. The phrase 1429 "unextinguished right to bodily freedom" is more of a conclusion or principle than a purported source of any cognizable interest. If this is based on the Constitution, it fails for the reasons already discussed. The second asserted source, promises extended "by the United States" and including the "open heart and open arms" welcome of President Carter, was considered and rejected as a nonconstitutional source of liberty from detention in Garcia-Mir v. Meese, 788 F.2d 1446 (11th Cir.), cert. denied, 479 U.S. 889, 107 S.Ct. 289, 93 L.Ed.2d 263 (1986). The Eleventh Circuit disposed of this argument in emphatic and practical language: Appellees provide us with no precedent or logical basis for the proposition that the President or one of his subordinates can, through written or oral public statements alone, create actionable liberty interests. The long-range implications of such a holding would be both profound and dangerous. It is a hallmark of our system of government that certain rights and liberties are enshrined in the social compact. These guarantees may be expanded or contracted through any of several constitutionally provided-for processes. But to give countenance to the notion that one of the political branches can simply wave a magic wand and "create" (and by implication extinguish) constitutional rights would be to undo completely the notion of limited government through separated, checked and balanced powers. This is a step we decline to take. Garcia-Mir v. Meese, 788 F.2d at 1451 (footnote omitted). Additionally, other than the mere reference to this category the petitioner provides no specific statement of the content or substance of promises or how they should or could affect his status. The third asserted source for the petitioner's liberty from detention is "the INS policy of `paroling' Freedom Flotilla arrivals and others into this country despite their formal excludable status, embodied in regulations at 8 C.F.R. § 212.5." This Court does not construe the Cuban Review Plan as compelling the parole of all or of particular excludable aliens. Nor do the factors identified in 8 C.F.R. § 212.5 constitute binding criteria, the application of which mandate that a specific outcome be reached. This regulation provides: (a) In determining whether or not aliens who have been or are detained in accordance with § 235.3(b) or (c) will be paroled out of detention, the district director should consider the following: (1) The parole of aliens who have serious medical conditions in which continued detention would not be appropriate would generally be justified by "emergent reasons"; (2) The parole of aliens within the following groups would generally come within the category of aliens for whom the granting of the parole exception would be "strictly in the public interest", provided that the aliens present neither a security risk nor a risk of absconding: (i) Women who have been medically certified as pregnant; (ii) Aliens who are defined as juveniles [in some circumstances] (iii) Aliens who have close family relatives in the United States (parent, spouse, children, or siblings who are United States citizens or lawful permanent resident aliens) who are eligible to file, and have filed, a visa petition on behalf of the detainee; (iv) Aliens who will be witnesses in proceedings being, or to be, conducted by judicial, administrative, or legislative bodies in the United States; (v) Aliens whose continued detention is not in the public interest as determined by the district director. (3) Aliens subject to prosecution in the United States who are needed for the purposes of such prosecution may be paroled to the custody of the appropriate responsible agency or prosecuting authority. 8 C.F.R. § 212.5(a) (1986). The petitioner does not argue that any of these factors could be found applicable to his case. Immigration parole for excludable aliens, even in light of the Cuban Review Plan, continues 1430 to be a highly discretionary program which does not entitle the petitioner to his freedom. The petitioner's fourth claim, that international law guarantees freedom from unreasonable restraint, is asserted as a separate basis for relief in this action and is considered in a separate portion of this opinion. The petitioner's fifth claim, that a liberty interest exists through "claims to political asylum," makes no sense either factually or legally in this action. First, the petitioner has not alleged that he has sought political asylum or that any of the procedures for attaining refuge through that path have not been made available to him. Thus, there is no occasion for even exploring whether there is a protected interest in either seeking or obtaining political asylum under these circumstances. Second, there is no suggestion of how an application for political asylum would entitle an alien to immigration parole rather than detention while his exclusion is considered or carried out. And third, few decisions could be further removed from the spectrum of judicial inquiry than the operation of this Nation's willingness or ability to grant political asylum. We find it entirely beyond review and entirely beyond the legal claims even arguable supported by the present petition. The last asserted source of a right to be free from detention is "other sources of an interest in freedom from restraint." As a catch-all phrase this is perfectly suitable. As a basis for a nonconstitutional source of a liberty interest in the context of the petitioner's situation it is nothing but empty rhetoric. There is no way for this or any court to make any meaningful assessment of this factor because its meaning is impossible to discern and it need not be considered further. The petitioner also alleges that denials and revocations of immigration parole by the INS are effected without due process of law with respect to the following: a) notice of all relevant charges; b) opportunity to face and cross-examine accusers; c) opportunity to call witnesses in opposition to factual claims of the government; d) allocation of the burden of proof to the government; e) hearing by impartial decision-maker(s); f) right to counsel; g) other guarantees required by procedural due process. It would have been useful for the petitioner to provide some content in relation to these claims. However, this defect is not so severe as to prevent resolution of this claim. The procedures and rights which the petitioner identifies in this list are available only if the Constitution, Congress or the executive (through its binding regulations) have mandated them. As has been seen, the only arguable requirement (in the context of parole/detention decisions) for some of these procedures is in the Cuban Review Plan. The petitioner does not claim that his immigration parole was revoked in the absence of any procedure which that Plan prescribes. He is entitled to no greater protection and thus there is no basis for relief from this laundry list of procedural due process protections which he claims. The Protections of the Sixth Amendment. The petitioner also refers to the Sixth Amendment in Count II of his petition. Petitioner contends that his continued detention violates the Sixth Amendment of the United States Constitution. Specifically, petitioner argues that he has been imprisoned without a trial and has not been afforded, generally, those Sixth Amendment rights provided to persons accused of criminal activity. Petitioner confuses those Sixth Amendment and other constitutional rights afforded under circumstances other than immigration matters. While it is clear that excludable aliens cannot challenge the admissions process or parole decisions under a claim of constitutional right, Jean, 727 F.2d at 972, petitioner is afforded the same constitutional rights as resident aliens or 1431 citizens of the United States under other circumstances. This makes the many procedural protections applicable in other contexts, including where there is a criminal prosecution, "beside the point." Amanullah v. Nelson, 811 F.2d 1, 9 (1st Cir.1987). A related prong claim is whether the petitioner is being subjected to "punishment" in a constitutional sense without the benefits of charge, trial and associated criminal rights. The statutory authority under which an excluded alien is detained does not, of course, refer to that detention as punishment and no design to punish can be discerned from either the INA or the regulations adopted to implement the broad authority given to the Attorney General. Nor is there any suggestion in the petition or materials in this action that there is a specific intent to punish the petitioner as an individual or to treat him in any fashion separate from detained excludable aliens generally. The petitioner's detention is simply incidental to the government's lawful authority to prevent his unauthorized and uncontrolled entry in this Country. While it is significant to the petitioner, the personal loss suffered through confinement does not render confinement "punishment." The petitioner's loss, moreover, having been shown to be temporary because of the annual review of his eligibility for immigration parole, is even less "punishment" than indefinite detention would be. The petitioner's detention is not punishment and thus does not offend or trigger any due process interest. D. Due Process in the Petitioner's Case The petition, while long on suggestive principles which can be and have been explored in the context of a detained, excludable alien for whom immediate deportation is not practicable or proper, suggests at heart that the petitioner is detained but should not be. The Court has already determined, in essence, that United States' law permits the detention to which he is subject. The only challenge left to him, therefore, is that the discretion of the Attorney General's designees regarding the decision to detain him is subject to judicial review and that such review in this case warrants relief in the form of release. A decision to detain an excludable alien or grant immigration parole is reviewable by a court under a narrow standard. The standard which we find persuasive is that stated in Garcia-Mir v. Smith, 766 F.2d 1478, 1485 (11th Cir.1985), quoting Jean v. Nelson, 727 F.2d at 977: "a federal court's scope of review in such instances is not the traditional abuse of discretion standard, but rather is limited to ascertaining whether [the attorney general or his designee] has advanced `a facially legitimate and bona fide reason' for his decision." The authority for adopting this standard was adeptly expressed by the First Circuit Court of Appeals in Amanullah v. Nelson, 811 F.2d 1, 9-10 (1st Cir.1987): inasmuch as the decisions which we are called upon to consider were discretionary parole decisions made incident to exclusion proceedings, the applicable standard of review is not "abuse of discretion" at all, but is that limited by Kleindienst v. Mandel, [408 U.S. 753, 92 S.Ct. 2576, 33 L.Ed.2d 683 (1972)]. In Kleindienst, the Supreme Court noted the plenary sweep of Congress's power to make policies and rules for the exclusion of aliens. 408 U.S. at 765-67 [92 S.Ct. at 2583-84]. The Court held that when "the Executive exercises this power negatively on the basis of a facially legitimate and bona fide reason, the courts will neither look behind the exercise of that discretion, nor test it...." Id. at 770, 92 S.Ct. at 2585. Other courts of appeal have likewise applied the "facially legitimate and bona fide reason" benchmark when reviewing exercises of the Attorney General's discretion to grant or deny parole. See Perez-Perez v. Hanberry, 781 F.2d 1477, 1482 (11th Cir.1986); Sidney v. Howerton, 777 F.2d 1490, 1491 (11th Cir.1985); Jean v. Nelson, 727 F.2d at 977; Bertrand v. Sava, 684 F.2d 204, 212-13 (2nd Cir.1982). The unchallenged documentation submitted by the respondent shows that the petitioner is excludable on the basis of 8 1432 U.S.C. § 1182(a)(9) and (20), that his parole status was reviewed in accordance with the Cuban Review Plan and that on June 8, 1990 a "final notice of parole denial" was issued denying him immigration parole. That notice recited that the decision was made after a review of his record, a personal interview before a Cuban Review Panel and consideration of any additional information which he submitted to the panel. The notice further recited the reasons which were found to weigh against release of the petitioner on parole: You have been convicted of kidnapping, sexual battery, aggravated assault, and assault on a federal as well as correctional officer. While in prison, you have a long list of infractions for various charges such as sexual misconduct, refusing orders, fighting and general inconsistent behavior. It is not clearly evidence that you are likely to remain nonviolent and unlikely to violate the conditions of parole following your release from custody. The notice also informed the petitioner that his parole status would be reconsidered within one year, pursuant to 8 C.F.R. § 212.12. The facts that this notice was issued and that there was an interview with the Cuban Review Panel are not disputed by the petitioner. The factual content of the notice is not disputed by him. There is no claim that the procedures of the Cuban Review Plan have not been followed in his case. Finally, the petitioner's serious criminal convictions, his misconduct while in prison and a legitimate concern for whether he would remain nonviolent following release from custody clearly constitute a facially legitimate and bona fide reason for the decision to deny him immigration parole. That is the extent of the inquiry into the specific decision which this Court is permitted to make and the petitioner has shown no error which compels or justifies any other decision. E. International Law Claim In Garcia-Mir v. Meese, 788 F.2d 1446, 1453 (11th Cir.), cert. denied, 479 U.S. 889, 107 S.Ct. 289, 93 L.Ed.2d 263 (1986), the Eleventh Circuit Court of Appeals expressly considered the applicability of international law in cases involving the Mariel Cubans and found it to be inapplicable. Quoting The Paquete Habana, 175 U.S. 677, 700, 20 S.Ct. 290, 299, 44 L.Ed. 320 (1900), the Court stated: "The public law of nations was long incorporated into the common law of the United States.... But public international law is controlling only `where there is no treaty and no controlling executive or legislative act or judicial decision ...'." Garcia-Mir, 788 F.2d at 1453. After rejecting similar arguments and interpretations of decisions and treatises as those submitted by petitioner in this case, the Eleventh Circuit Court of Appeals concluded that the executive acts of the Attorney General to terminate the status review plan (a precursor to the Cuban Review Plan) and to incarcerate indefinitely pending efforts to deport, constituted a sufficient basis for affirming the trial court's finding that international law does not control. Garcia-Mir, 788 F.2d at 1454-55. Furthermore, the Eleventh Circuit noted that in its prior decision in Jean v. Nelson, 727 F.2d 957, 974-75 (11th Cir. 1984), affirmed on other grounds, 472 U.S. 846, 105 S.Ct. 2992, 86 L.Ed.2d 664 (1983), it found that the Supreme Court's decision in Mezei held that even an indefinitely incarcerated alien "could not challenge his continued detention without a hearing." Thus, the Garcia-Mir Court relied on its prior decision as a sufficient controlling judicial basis to meet the test of The Paquete Habana, finding international law to be inapplicable to the controversy. Garcia-Mir, 788 F.2d at 1455. In reliance on the Eleventh Circuit's decision in Garcia-Mir v. Meese, supra, this Court determines that there are ample controlling executive authorities, legislative directions and judicial decisions regarding the issue of detention in lieu of immigration parole. Those authorities need not again be capsulized to observe that their existence makes resort to international law unnecessary and inappropriate in this instance. The petitioner therefore cannot prevail on the basis of this argument. 1433 Conclusion The proliferation of these actions throughout the Nation and the underlying legal, social and political issues which they represent have consumed nearly incalculable effort and resources. It has been held that "the obverse of the grant of discretionary authority in § 1182(d)(5) to parole an excluded alien is a grant of authority to deny parole." Jean v. Nelson, 727 F.2d 957, 977 (11th Cir.1984) (en banc), affirmed on other grounds, 472 U.S. 846, 105 S.Ct. 2992, 86 L.Ed.2d 664 (1985) (quoting Palma v. Verdeyen, 676 F.2d 100, 104 (4th Cir. 1982)). The petitioner in this action has been denied parole for facially legitimate reasons in a statutory scheme that permits such decisions. The petitioner may also claim the benefit of annual review of his status pursuant to the Cuban Review Plan. His petition is an unexceptional variation of a now-familiar theme, the points of which have been rejected by the courts again and again. No constitutional guarantee or statutory right has been violated through the petitioner's detention. Therefore, the Court now finds that the petitioner has not shown in this action that he is held in custody in violation of the Constitution or laws or treaties of the United States, that his petition for a writ of habeas corpus should accordingly be DENIED and this cause of action DISMISSED WITH PREJUDICE. IT IS SO ORDERED. APPENDIX I Title 8Aliens and Nationality; Revised as of January 1, 1990 CHAPTER IIMMIGRATION AND NATURALIZATION SERVICE, DEPARTMENT OF JUSTICE SUBCHAPTER B IMMIGRATION REGULATIONS PART 212DOCUMENTARY REQUIREMENTS: NONIMMIGRANTS; WAIVERS; ADMISSION OF CERTAIN INADMISSIBLE ALIENS; PAROLE § 212.12 Parole determinations and revocations respecting Mariel Cubans. (a) Scope. This section applies to any native of Cuba who last came to the United States between April 15, 1980, and October 20, 1980 (hereinafter referred to as "Mariel Cuban") and who is being detained by the Immigration and Naturalization Service (hereinafter referred to as the "Service") pending his or her exclusion hearing, or pending his or her return to Cuba or to another country. It covers Mariel Cubans who have never been paroled as well as those Mariel Cubans whose previous parole has been revoked by the Service. It also applies to any Mariel Cuban, detained under the authority of the Immigration and Nationality Act in any facility, who has not been approved for release or who is currently awaiting movement to a Service or Bureau Of Prisons (BOP) facility. In addition, it covers the revocation of parole for those Mariel Cubans who have been released on parole at any time. (b) Parole authority and decision. Except as provided in § 212.13, the authority to grant parole under section 212(d)(5) of the Act to a detained Mariel Cuban shall be exercised by the Commissioner, acting through the Associate Commissioner for Enforcement, as follows: (1) Parole decisions. The Associate Commissioner for Enforcement may, in the exercise of discretion, grant parole to a detained Mariel Cuban for emergent reasons or for reasons deemed strictly in the public interest. A decision to retain in custody shall briefly set forth the reasons for the continued detention. A decision to release on parole may contain such special conditions as are considered appropriate. A copy of any decision to parole or to detain, with an attached copy translated into Spanish, shall be provided to the detainee. Parole documentation for Mariel Cubans shall be issued by the district director having jurisdiction over the alien, in accordance with the parole determination made by the Associate Commissioner for Enforcement. (2) Additional delegation of authority. All references to the Commissioner and Associate Commissioner for Enforcement in this section shall be deemed to include any person or persons (including a committee) designated in writing by the Commissioner 1434 or Associate Commissioner for Enforcement to exercise powers under this section. (c) Review Plan Director. The Associate Commissioner for Enforcement shall appoint a Director of the Cuban Review Plan. The Director shall have authority to establish and maintain appropriate files respecting each Mariel Cuban to be reviewed for possible parole, to determine the order in which the cases shall be reviewed, and to coordinate activities associated with these reviews. (d) Recommendations to the Associate Commissioner for Enforcement. Parole recommendations for detained Mariel Cubans shall be developed in accordance with the following procedures. (1) Review Panels. The Director shall designate a panel or panels to make parole recommendations to the Associate Commissioner for Enforcement. A Cuban Review Panel shall, except as otherwise provided consist of two persons. Members of a Review Panel shall be selected from the professional staff of the Service. All recommendations by a two-member Panel shall be unanimous. If the vote of a two-member Panel is split, it shall adjourn its deliberations concerning that particular detainee until a third Panel member is added. A recommendation by a three-member Panel shall be by majority vote. The third member of any Panel shall be the Director of the Cuban Review Plan or his designee. (2) Criteria for Review. Before making any recommendation that a detainee be granted parole, a majority of the Cuban Review Panel members, or the Director in case of a record review, must conclude that: (i) The detainee is presently a nonviolent person; (ii) The detainee is likely to remain nonviolent; (iii) The detainee is not likely to pose a threat to the community following his release; and (iv) The detainee is not likely to violate the conditions of his parole. (3) Factors for consideration. The following factors should be weighed in considering whether to recommend further detention or release on parole of a detainee: (i) The nature and number of disciplinary infractions or incident reports received while in custody; (ii) The detainee's past history of criminal behavior; (iii) Any psychiatric and psychological reports pertaining to the detainee's mental health; (iv) Institutional progress relating to participation in work, educational and vocational programs; (v) His ties to the United States, such as the number of close relatives residing lawfully here; (vi) The likelihood that he may abscond, such as from any sponsorship program; and (vii) Any other information which is probative of whether the detainee is likely to adjust to life in a community, is likely to engage in future acts of violence, is likely to engage in future criminal activity, or is likely to violate the conditions of his parole. (4) Procedure for review. The following procedures will govern the review process: (i) Record review. Initially, the Director or a Panel shall review the detainee's file. Upon completion of this record review, the Director or the Panel shall issue a written recommendation that the detainee be released on parole or scheduled for a personal interview. (ii) Personal interview. If a recommendation to grant parole after only a record review is not accepted or if the detainee is not recommended for release, a Panel shall personally interview the detainee. The scheduling of such interviews shall be at the discretion of the Director. The detainee may be accompanied during the interview by a person of his choice, who is able to attend at the time of the scheduled interview, to assist in answering any questions. The detainee may submit to the Panel any information, either orally or in writing, 1435 which he believes presents a basis for release on parole. (iii) Panel recommendation. Following completion of the interview and its deliberations, the Panel shall issue a written recommendation that the detainee be released on parole or remain in custody pending deportation or pending further observation and subsequent review. This written recommendation shall include a brief statement of the factors which the Panel deems material to its recommendation. The recommendation and appropriate file material shall be forwarded to the Associate Commissioner for Enforcement, to be considered in the exercise of discretion pursuant to § 212.12(b). (e) Withdrawal of parole approval. If a detainee approved for parole fails to maintain proper behavior while he is awaiting suitable sponsorship or placement, his parole approval may be revoked by the Associate Commissioner for Enforcement. (f) Sponsorship. No detainee may be released on parole until suitable sponsorship or placement has been found for the detainee. The paroled detainee must abide by the parole conditions specified by the Service in relation to his sponsorship or placement. The following sponsorships and placements are suitable: (1) Placement by the Public Health Service in an approved halfway house or mental health project; (2) Placement by the Community Relations Service in an approved half-way house or community project; and (3) Placement with a close relative such as a parent, spouse, child, or sibling who is a lawful permanent resident or a citizen of the United States. (g) Timing of reviews. The timing of review shall be in accordance with the following guidelines. (1) Parole revocation cases. The Director shall schedule the review process in the case of a new or returning detainee whose previous immigration parole has been revoked. The review process will commence with a scheduling of a file review, which will ordinarily be expected to occur within approximately three months after parole is revoked. (2) Continued detention cases. A subsequent review shall be commenced for any detainee within one year of a refusal to grant parole under either § 212.12(b) or § 212.13, whichever is later, unless a shorter interval is specified by the Director. (3) Discretionary reviews. The Cuban Review Plan Director, in his discretion, may schedule a review of a detainee at any time when the Director deems such a review to be warranted. (h) Revocation of parole. The Associate Commissioner for Enforcement shall have authority, in the exercise of discretion, to revoke parole in respect to Mariel Cubans. A district director may also revoke parole when, in the district director's opinion, revocation is in the public interest and circumstances do not reasonably permit referral of the case to the Associate Commissioner. Parole may be revoked in the exercise of discretion when, in the opinion of the revoking official: (1) The purposes of parole have been served; (2) The Mariel Cuban violates any condition of parole; (3) It is appropriate to enforce an order of exclusion or to commence proceedings against a Mariel Cuban; or (4) The period of parole has expired without being renewed. § 212.13 Departmental parole determinations respecting certain Mariel Cubans. (a) Scope. This section, establishing a Departmental Release Review Program, applies to all excludable Mariel Cubans who on the effective date of this regulation are detained by virtue of the Attorney General's authority under the Immigration and Nationality Act and whose parole has been denied after the exhaustion of the procedures set forth in § 212.12. This Departmental Release Review Program shall be under the general supervision of the Associate Attorney General, who shall administer the Program and establish such additional procedures as may be required. *1436 (b) Single review. Each detainee described in paragraph (a) above shall be entitled to only one review before a Departmental Panel. Should a detainee denied parole under this section subsequently receive further review pursuant to § 212.12 or any successor parole review plan of the Service, such detainee shall not be entitled to a second review before a Departmental Panel. (c) Departmental panels. The Associate Attorney General shall establish panels which will be comprised of three persons from within the Department of Justice, one of whom must be an attorney, and one of whom must be a representative of the Community Relations Service. The Immigration and Naturalization Service shall not be represented on the panels. These panels shall consider the cases of those Mariel Cubans whose parole has previously been denied pursuant to the provisions set forth in § 212.12. (d) Parole authority. Each Departmental Panel shall be vested with the full discretion of the Attorney General under section 212(d)(5) of the Act to grant parole for emergent reasons or for reasons deemed strictly in the public interest. (e) Notification and submission. Prior to the submission by the Service of a case to a Departmental Panel, the detainee shall receive notification from the Service that he is about to receive Departmental Panel consideration. Such notification shall inform the detainee that he may submit a written statement to a Departmental Panel, within 30 days from the date of service of the notification, setting forth any factors he deems relevant to the parole consideration and he may, at no expense to the government, have his representative or counsel assist in the preparation of this written statement. (f) Interviews. A Departmental Panel may designate one of its members to interview the detainee and report in writing to the full Panel whenever in its sole discretion it deems such action appropriate. (g) Panel decisions. The written decision of a Departmental Panel will be based on a review of the record created during the review by the Service pursuant to § 212.12, the written submission, if any, from the detainee, and the information obtained from any Panel interview of the detainee. Except as provided in paragraph (i) of this section, all written decisions of a Departmental Panel will be final and subject to no further review. (h) Sponsorship. No detainee may be released on parole until suitable sponsorship or placement has been found for the detainee. The paroled detainee must abide by the parole conditions specified by the Service in relation to his sponsorship or placement. The following sponsorships and placements are suitable: (1) Placement by the Public Health Service in an approved halfway house or mental health project; (2) Placement by the Community Relations Service in an approved halfway house or community project; and (3) Placement with a close relative such as a parent, spouse, child, or sibling who is a lawful permanent resident or a citizen of the United States. (i) Withdrawal of parole approval. A Departmental Panel may, in its discretion, withdraw its approval for parole of any detainee prior to release when, in its opinion, the conduct of the detainee, or any other circumstance, indicates that parole would no longer be appropriate. (j) Parole revocations. Parole granted under this section may be revoked pursuant to § 212.12. NOTES [1] "In early April 1980, some 10,800 Cuban citizens claiming status as political refugees sought sanctuary in the Peruvian Embassy in Havana. On April 14, 1980, President Carter declared that, pursuant to the Refugee Act of 1980, up to 3,500 of these refugees would be admitted into the United States. He allocated up to $4.25 million for their resettlement. 45 Fed.Reg. 28079 (April 28, 1980). An airlift was started but within three days Castro stopped the flights, announcing that anyone who wanted to leave could do so through the harbor at Mariel. Almost immediately, small boats, funded by members of the Cuban-American community, began leaving Key West." United States v. Frade, 709 F.2d 1387, 1389 (11th Cir.1983). In the Mariel Boatlift, or "Freedom Flotilla," by which some 114,000 Cuban refugees, in nearly 1,800 boats, crossed the ninety miles of ocean between Cuba and the United States. See Alonso Martinez v. Meissner, 697 F.2d 1160, 1161 n. 4 (D.C.Cir. 1983). [2] "The government of Cuba has not refused to accept the Mariel excludables as a group. However, the government of Cuba is currently accepting for repatriation only those Mariel excludables who appear on a list of 2,746 named individuals which INS identified in December of 1984 as warranting efforts to enforce their departure from the United States because of their serious criminal activities or serious mental infirmities." Alvarez-Mendez v. Stock, 746 F.Supp. 1006, 1010 (C.D.Ca.1990). [3] Section 212(d)(5) of the Immigration and Nationality Act, 8 U.S.C. § 1182(d)(5), provides that the Attorney General may in his discretion temporarily parole an alien applying for admission to the United States. [4] 28 U.S.C. § 2241 provides that: (a) Writs of habeas corpus may be granted by the Supreme Court, any justice thereof, the district courts and any circuit judge within their respective jurisdictions. .... (c) The writ of habeas corpus shall not extend to a prisoner unless .... (3) He is in custody in violation of the Constitution or laws or treaties of the United States.... [5] Excludable aliens are those who seek admission but have not been granted entry into the United States. Even if physically present in this country, they are legally considered detained at the border. This is known as the "entry fiction." A necessary part of this statutory scheme is that neither parole nor detention of excludable aliens, nor the duration of their physical presence in the country, can have any effect on their status. Leng May Ma v. Barber, 357 U.S. 185, 188, 78 S.Ct. 1072, 1074, 2 L.Ed.2d 1246 (1985). They continue to "have no constitutional rights with regard to their applications, and must be content to accept whatever statutory rights and privileges they are granted by Congress." Jean v. Nelson, 727 F.2d 957, 968 (11th Cir.1984) (en banc), affirmed on other grounds, 472 U.S. 846, 105 S.Ct. 2992, 86 L.Ed.2d 664 (1985). See generally Garcia-Mir v. Smith, 766 F.2d 1478, 1483-84 (11th Cir.1985). [6] Pursuant to 8 U.S.C. § 1182(d)(5), petitioner was paroled into the United States. That parole was revoked following the expiration of his criminal sentence. He states in the affidavit attached to his petition that he is "not certain if a final order of exclusion has been entered against [him] but the government considers [him] to be an excludable alien."	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2593891/	743 F. Supp. 631 (1990) Thomas NAYDIHOR SSN: XXX-XX-XXXX, Plaintiff, v. Louis W. SULLIVAN, Secretary of Health and Human Services, Defendant. Civ. A. No. 89-C-0063. United States District Court, E.D. Wisconsin. August 2, 1990. 632 Lisa Clay Foley, Legal Action of Wisconsin, Inc., Milwaukee, Wis., for plaintiff. John E. Fryatt and Donna Morros, U.S. Attys. by Stephen J. Liccione, Asst. U.S. Atty., Milwaukee, Wis., Weinstein, Chief Counsel, Reg. V, Donna Calvert, Asst. Reg. Counsel, DH & HS, Chicago, Ill., for defendant. DECISION AND ORDER REYNOLDS, Senior District Judge. BACKGROUND Plaintiff Thomas Naydihor ("Naydihor") has appealed from a decision of the Secretary of Health and Human Services ("the Secretary") denying his application for disability insurance benefits under the Social Security Act ("the Act"), 42 U.S.C. § 405(g). The parties filed cross-motions for summary judgment, and the case was referred to a United States Magistrate pursuant to Title 28 U.S.C. § 636(b)(1)(B) & (C) and Local Rule 13.03(a)(4) for his recommendation. Naydihor's motion for summary judgment requests this court to either reverse the Secretary's decision that he is not disabled or to remand his claim to the Secretary for reconsideration. The Secretary opposed Naydihor's motion and requested this court to grant summary judgment in his favor affirming the Administrative Law Judge's ("ALJ") August 8, 1988 decision that Naydihor is not disabled. The magistrate reviewed Naydihor's and the Secretary's briefs in support of their cross-motions for summary judgment and on September 22, 1989, recommended that this court grant the Secretary's motion for summary judgment of affirmance. In addition, the magistrate informed the parties that, pursuant to 28 U.S.C. § 636(b)(1)(B) & (C) and Local Rule 13.03, they had ten (10) days to file objections to his recommendation. On October 2, 1989, Naydihor objected to the magistrate's recommendation, and on October 16, 1989, the Secretary filed a brief in opposition to Naydihor's objections. This court has reviewed the file and numerous briefs filed by the parties and does not adopt the magistrate's recommendation, but instead remands the case to the Secretary for further consideration. FACTS Naydihor is a right-handed, 5'10" tall bachelor who weighed 310 pounds and was sixty (60) years old at the time of his administrative hearing (May 16, 1988 Hear. Tr. at 3-4). He has a tenth-grade education, a general high school equivalency diploma, and used to work as a maintenance and construction electrician with American Motors and Chrysler Corporation in Kenosha, Wisconsin (Id. at 4-5). He ceased work on June 10, 1987, because of a ganglion cyst (a sac of fluid attached to a tendon sheath) on his left wrist which caused his entire hand to swell and prevented him from lifting (Id.). He had surgery on his wrist on June 16, 1987, but he still claims to experience swelling in the wrist (Id. at 7-8; Feb. 21, 1989 Case Record at 96). The pain in the left wrist, however, is not why Naydihor claims he cannot work. Naydihor claims that he currently is unable to work because of an injury to his left knee and a variety of other physical impairments, and his doctor claims Naydihor is unable to work because of a back injury (Feb. 21, 1989 Case Record at 112-15). He tore ligaments in his left knee on September 11, 1987, and an operation was performed 633 on his knee on January 6, 1988 (Id. at 112). In regard to the condition of Naydihor's left wrist and knee, the ALJ found that: By January 1988 he was full weight bearing and there was no evidence of swelling. He apparently had good results from both surgeries. Accordingly, the undersigned finds that the claimant has musculoskeletal impairments involving his left wrist and knee which have imposed limitations upon his ability to stand or walk more than six hours of a normal workday or lift in excess of 20 pounds. (Aug. 8, 1988 ALJ Dec. at 3-4). Naydihor, however, testified that: his left knee continues to swell and ache; his left leg is bigger than his right; both his legs become numb after he walks more than three (3) city blocks; he cannot stand in one place for more than one and one-half hours; he might be able to stand for three (3) hours spread out over an eight (8) hour period; he has trouble getting up from the toilet or a stool; and his legs are unable to support him because of his weight (May 16, 1988 Hear. Tr. at 9-10, 14-15, 19). In addition, Naydihor's doctor, Dr. A. Patel, prepared a medical report, which the ALJ did not see or consider in making his determination, which stated that: This patient was treated by me for a painful knee and he has made satisfactory recovery but his osteoarthritis of the knee will prevent him from returning to the type of work at Chrysler. More important, this patient's ankylosing spondylitis [stiffening inflammation of spinal vertebrae] is quite a serious condition and I do not believe that he will be able to return to work. (Jul. 8, 1988 Patel Rept. at 2). Other than Naydihor's left knee and inflammation of his spinal vertebrae, he also claims that he is obese, has hypertension, a difficult time breathing, and is depressed. The ALJ found: that Naydihor's obesity did not prevent him from working; that the record indicated his hypertension was well controlled; that he did not have any respiratory difficulty; and that he did not have a medically determinable mental impairment (Aug. 8, 1988 ALJ Dec. at 4).[1] The ALJ also found that Naydihor's testimony regarding pain was credible to the extent it precluded him from doing light work and concluded that he did not have an impairment or combination of impairments which would classify him as disabled (Aug. 8, 1988 ALJ Dec. at 4-5). The vocational expert who testified at Naydihor's hearing, Lawrence Blum, Ph.D. ("Blum"), stated that there were a variety of light and sedentary level jobs near Naydihor's residence which matched his skills (May 16, 1988 Hear. Tr. at 23-26). Specifically, Blum testified that he believed there were 500 inspector, 200 testing, and 400 bench assembly jobs which Naydihor's skills were transferrable to in the Racine, Wisconsin area (Id. at 25-26).[2] In addition, Blum testified that if the region were expanded to include the Milwaukee area, there would be an additional 4,000 inspector, 1,800 testing, and 3,000 electrical assembly jobs (Id. at 27). Finally, Blum testified that the number of jobs would be reduced by twenty-five percent (25%) if one assumed that Naydihor could stand for a 634 total of only three (3) hours during the work day and that he had no limitations on his sitting (Id. at 28). On August 8, 1988, the ALJ signed a decision which concluded that Naydihor was not entitled to "a period of disability or to disability insurance benefits under sections 216(i) and 223, respectively, of the Social Security Act." (Aug. 8, 1988 ALJ Dec. at 6). On August 12, 1988, Naydihor requested the Social Security Administration's Appeals Council to review his claim (Feb. 21, 1989 Case Record at 114-15). Naydihor claimed that a new review of his claim was appropriate because the ALJ did not have Dr. Patel's medical report which documented his breathing and back problems (Id. at 112-13). On November 22, 1988, the Appeals Council denied Naydihor's request for review on the grounds that "[t]he information in Dr. Patel's report is essentially the same as that contained in other evidence already of record." (Nov. 22, 1988 Appeals Council Letter at 1). On January 13, 1989, Naydihor commenced this action in this court. ANALYSIS I. Standard of Review The Seventh Circuit has set forth the standard which a district court must use when reviewing the Secretary's findings as to whether or not an individual is disabled: The Act itself gives us the standard of review to be applied in this case: "The findings of the Secretary as to any fact, if supported by substantial evidence, shall be conclusive." 42 U.S.C. § 405(g). The ALJ's finding that Stuckey (claimant) was not disabled must be upheld if it is supported by substantial evidence on the record. We will not reweigh the evidence presented at the administrative hearing, and we will not determine whether Stuckey was actually disabled. Absent an error of law by the Secretary, we must affirm if substantial evidence is present. Stuckey v. Sullivan, 881 F.2d 506, 508 (7th Cir.1989) (citations omitted). In addition, the United States Supreme Court has held that the statutory standard for "substantial evidence" in a reviewing a decision made by the Secretary under the Act is: "more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Richardson v. Perales, 402 U.S. 389, 401, 91 S. Ct. 1420, 1427, 28 L. Ed. 2d 842 (1971) (quoting Consolidated Edison Co. v. Nat'l Labor Relations Bd., 305 U.S. 197, 229, 59 S. Ct. 206, 217, 83 L. Ed. 126 (1938); see also Schmoll v. Harris, 636 F.2d 1146, 1150 (7th Cir.1980). Thus, this court must affirm the ALJ's decision regarding Naydihor not being disabled as long as there is substantial evidence which adequately supports this conclusion. II. Test for Disability The magistrate correctly noted that there is a five-step test for determining if a claimant is disabled which the Seventh Circuit has enunciated as follows: Social Security regulations prescribe a sequential inquiry to be followed in determining whether a claimant is disabled. The following steps are addressed in order: (1) Is the claimant presently unemployed? (2) Is the claimant's impairment "severe"? (3) Does the impairment meet or exceed one of the list of specific impairments? (4) Is the claimant unable to perform his or her former occupation? (5) Is the claimant unable to perform any other work within the economy? An affirmative answer leads either to the next step or, on steps 3 and 5, to a finding that the claimant is disabled. A negative answer at any point, other than step 3, stops [the] inquiry and leads to a determination that the claimant is not disabled. Nelson v. Bowen, 855 F.2d 503, 504 n. 2 (7th Cir.1988) (quoting Bauzo v. Bowen, 803 F.2d 917, 920 n. 1 (7th Cir.1986) and referring to 20 C.F.R. § 404.1520). In the present case, the ALJ found that Naydihor was unemployed and that his impairment was severe (Aug. 8, 1988 ALJ 635 Dec. at 5). The ALJ, however, found that Naydihor's impairment did not meet or exceed one of the listings of specific impairments (Id.). Finally, the ALJ determined that although Naydihor was unable to perform his former job, his skills were highly marketable permitting him to perform other work within the economy (Id.). Thus, the ALJ concluded that Naydihor was not disabled as defined by the Act (Id.). Naydihor has objected to the ALJ findings and the magistrate's recommendation affirming these findings on essentially two separate grounds: (1) the ALJ breached his duty to question Naydihor thoroughly, regarding the extent of his depression and physical pain; and (2) the ALJ's finding that Naydihor's impairments do not meet or equal any impairment in the "Listing of Impairments," and his finding that Naydihor's skills are highly marketable, are not supported by substantial evidence. A. Administrative Law Judge's Duty to Develop a Thorough Record The Seventh Circuit has held that Administrative proceedings are not adversary hearings, and that the ALJ has an affirmative duty to thoroughly develop the record: It is firmly established that hearings to determine whether claimants are entitled to disability insurance benefits are not adversary proceedings. The ALJ has a basic obligation at such hearings to develop a full and fair record. Especially where the claimant is unassisted by counsel, the ALJ has a duty to "scrupulously and conscientiously probe into, inquire of, and explore for all relevant facts...." His failure to do so has been consistently held to constitute good cause sufficient to remand to the Secretary under 42 U.S.C. § 405(g) for the taking of additional evidence. Cannon v. Harris, 651 F.2d 513, 519 (7th Cir.1981) (citations omitted) (quoting Gold v. Sec'y of Health, Ed. and Welfare, 463 F.2d 38, 43 (2d Cir.1972). In the present case, Naydihor argues that the ALJ breached his duty to develop the record regarding Naydihor's depression and the physical limitations caused by the pain he was experiencing. Specifically, Naydihor claims that the ALJ should have asked him more questions to determine the severity of his depression and his pain. This court agrees. The issue of Naydihor's depression arose after the ALJ asked Naydihor if he had any other mental or physical conditions the ALJ should know about. Naydihor told the ALJ about his depression and the following exchange between the two took place: Q: You say you're coming out of the depression now? A: Yes, I'm coming out of the depression more-or-less because I but there is still something wrong with me, I justI just can't seem to to navigate like. I mean, I'm not a lazy man, you can look at my my fee and finances and what how much money I made in total, you'd see how I work, if I could I put a lot of overtime and everything. And I I I don't know what's the matter with me. (May 16, 1988 Hear. Tr. at 12). The ALJ then asked Naydihor if his doctor had referred him to counseling or psychotherapy or if he was put on medication. After Naydihor responded negatively to both questions, the ALJ did not ask any further questions about the extent or nature of Naydihor's depression. The magistrate determined that the ALJ failed to develop the record as to Naydihor's depression, but concluded that this development was not required because the depression (1) was not documented by the medical record, (2) did not prevent Naydihor from working when it initially began, and (3) Naydihor testified that his condition was improving (Sep. 22, 1989 Mag. Rec. at 11-12). This court disagrees with the magistrate's conclusion that the development of the record was not required. Once Naydihor told the ALJ that he was depressed, the ALJ, at a minimum, was required to ask Naydihor if he had spoken to his doctor about this problem. Although Naydihor stated that his doctor never referred him to counseling or prescribed drugs for the depression, Naydihor was never directly asked or stated that his doctor was aware 636 of the problem. In addition, although Naydihor testified that he was more or less coming out of the problem, he stated that there was still something wrong with him. Although Naydihor's testimony as to his depression was insufficient to support a finding of disability solely on the basis of a mental impairment, it was sufficient to warrant further inquiry by the ALJ because it may have altered the ALJ's finding that Naydihor did not "have an impairment or combination of impairments which meets or equals the requirements of the Listing of Impairments." (August 8, 1988 ALJ Dec. at 5). Naydihor's depression may convince the ALJ that Naydihor has a combination of impairments which meet or equal the impairment requirements for obesity. The nature and extent of Naydihor's depression is important because Naydihor just missed being classified as disabled due to his weight at the time of the administrative hearing. If Naydihor had been one (1) inch shorter or eight (8) pounds heavier, then he would have been disabled due to obesity pursuant to 20 C.F.R. Part 404, Subpt. P, App. 1 § 10.10.[3] The magistrate has correctly stated that in order for an ALJ to determine that Naydihor's combination of impairments equaled the listed impairment of obesity he would have had to find that Naydihor's impairments were "medically equal" to obesity. 20 C.F.R. § 416.926. In addition, the Social Security Administration regulations state that: We will always base our decision about whether your impairment(s) is medically equal to a listed impairment on medical evidence only. Any medical findings in the evidence must be supported by medically acceptable clinical and laboratory diagnostic techniques. We will also consider the medical opinion given by one or more medical or psychological consultants designated by the Secretary in deciding medical equivalence. 20 C.F.R. § 416.926(b). This regulation at first glance would appear to prohibit the ALJ from considering Naydihor's depression in determining equivalency because there is no medical evidence of his depression in the record. This reasoning, however, ignores the possibility that Naydihor may have never told his doctors about his depression or that his depression has become more severe since he last saw his doctor. Without inquiring into the nature and severity of the depression and the specific remedies Naydihor has sought for the depression, there is no way to ascertain why there is no medical evidence of the depression. This uncertainty renders the nonexistence of medical evidence of Naydihor's depression meaningless as to whether or not his depression would be a factor for determining if his impairments equaled the listed impairment of obesity. More importantly, Naydihor has argued that that his depression is not the only impairment which the ALJ needed to consider when determining equivalency. Naydihor correctly points out that in addition to his weight problem, there is medical evidence that he has impairments involving his blood pressure, his left knee, his spine, 637 and his breathing (Feb. 21, 1989 Case Record at 109-10, 112-13). In fact, the most comprehensive evidence of Naydihor's spine and breathing impairments are contained in the July 8, 1988 medical report prepared by Dr. A. Patel which the ALJ did not have when considering whether or not Naydihor was disabled. This court notes that Naydihor's appeal of the ALJ decision to the Social Security Administration Appeals Council was based on the fact that the ALJ did not have Dr. Patel's report. In denying Naydihor's request for review, the Appeals Council stated that "[t]he information in Dr. Patel's report is essentially the same as that contained in other evidence already of record." (Nov. 22, 1988 Action of Appeals Council on Request for Review). This court, however, was unable to locate any other doctor report which stated that Naydihor had spinal or breathing problems. In fact, as noted earlier, Dr. Patel's July 8, 1988 report stated: This patient was treated by me for a painful knee and he has made satisfactory recovery but his osteoarthritis of the knee will prevent him from returning to the type of work at Chrysler. More important, this patient's ankylosing spondylitis [spine problem] is quite a serious condition and I do not believe that he will be able to return to work. (Jul. 8, 1988 Patel Rept. at 2). The fact that the ALJ did not have this report when making its determination, combined with the ALJ's failure to ascertain the extent of Naydihor's depression, renders questionable the ALJ's finding that Naydihor's combination of impairments were not equal to obesity. The magistrate also states that two (2) physicians filled out and signed Form SSA-831-U5 stating that Naydihor's condition was not equal to any listing of a disability which is proof that his combined impairments are not equal in severity to obesity (Sep. 22, 1989 Mag. Rec. at 15; see Feb. 21, 1989 Case Record at 55, 60). There is no evidence, however, that the physicians who completed this form had any knowledge of Naydihor's depression. In addition, both of these reports were completed prior to Dr. Patel's report which indicated that Naydihor was still having problems with his left knee, in addition to back and breathing problems. In other words, the ALJ's finding can not rely on the forms these doctors filled out because the doctors were not aware of Naydihor's depression or the severity of his other impairments when they completed the forms. Naydihor also argues that the ALJ breached his duty to develop the entire record as to the severity of Naydihor's pain and the type of activities he was capable of performing. Specifically, Naydihor claims that the ALJ made a finding that there were no limitations on his ability to sit, even though the ALJ never thoroughly investigated the pain Naydihor experienced from sitting. Although this court agrees with Naydihor, it notes that the ALJ's failure to delve into the extent of Naydihor's pain may have been a result of the ALJ not having Dr. Patel's report. Dr. Patel's report is medical evidence of Naydihor's back pain and breathing problems and has greatly enhanced this court's inquisitiveness as to Naydihor's ability to sit, or to alternate sitting and standing, for long periods of time. The ALJ did question Naydihor on whether or not he had difficulties sitting: Q: Do you have any difficulties sitting? A: Sitting? Q: Yes. A: Not that so I can stretch my legs or move I have a little bit of problems. If I'm, you know, compelled to stay in one place I have to switch around. Q: Can you bend over at the waist? A: I can bend over but I I can't kneel down, and when I try to get up when I kneel down I got to have my hands to help me. I have a problem with on a low stool or the toilet, when I get down there or something lower I have problems to get up. I don't know, sometimes I have to have hit the wall to get up. (May 16, 1988 Hear. Tr. at 14-15). The ALJ, however, did not ask Naydihor any further questions concerning the pain he experienced when sitting or what limitations 638 on sitting Naydihor had. The record does not indicate how long Naydihor could sit in one place, nor the extent of pain Naydihor experienced when sitting. In fact, Naydihor's statement that he has problems getting up from the toilet raises numerous questions regarding his ability to work in a job where he has to repeatedly sit down and stand up. The problem with this lack of inquiry is that the ALJ asked a hypothetical question to the vocational expert, Blum, to determine whether or not Naydihor's skills were highly marketable in light of his physical limitations, and in this question the ALJ assumed that there were no limitations on Naydihor's ability to sit:[4] Q: So, I guess the question I was trying to ask is if we assume his testimony to be true [regarding Naydihor's inability to stand more than three hours for the entire day] would that rule out any of those jobs? A: Yes, it seems to me that if he did have this hard and fast limitation on the ability to to stand and sit, you said sit/stand three hours, didn't you? Q: No, he said he could be on his feet a total of three hours. A: Three hours. Q: But no limitation in sitting except that he needs to move around occasionally. So, we're assuming that he can get through an eight hour day walking and sitting, standing. But the total time he could be on his feet, according to his testimony, was three hours out of eight. I know some of the jobs you said were sit/stand, so I assume if he could sit or stand that that would not rule out of those jobs. But I thought it might rule out some of the light jobs, which would require more prolonged walking and standing. A: Yeah, I was thinking along the same lines. That it would be my opinion that some of them [jobs] would be ruled out, and again maybe a reduction 25 percent because of the limitation on being on his feet. (May 16, 1988 Hear. Tr. at 28). The vocational expert then went on to conclude that based on the then current unemployment rate in southeastern Wisconsin, a person with Naydihor's skills and standing limitations was employable and marketable (Id.). The expert, however, never stated that Naydihor was highly marketable, and his opinion on general marketability may have been different had he been aware that there were limitations on Naydihor's ability to sit or to alternate standing and sitting. Thus, the ALJ's failure to ascertain Naydihor's limitations on sitting, and sitting and standing, is important and requires this court to remand. B. Substantial Evidence Supporting the Secretary's Findings Naydihor has argued that the ALJ's finding (1) that his impairments did not meet or equal the Listing of Impairments for obesity and (2) that his skills are highly marketable are not supported by substantial evidence. This court already has discussed in length why the ALJ's failure to develop the record regarding Naydihor's depression and ability to alternate sitting and standing require this court to remand Naydihor's claim to the Secretary for the purpose of conducting a new administrative hearing. One of the critical reasons why the ALJ's failure to develop the record fully requires remand, is that this failure prevented this court from determining whether or not there is substantial evidence to support the ALJ's findings that Naydihor's impairments are not equal to obesity or that his skills are highly marketable. In addition, this incompleteness prevents this court from finding, de novo, that Naydihor is disabled. 639 IT IS THEREFORE ORDERED that the United States Magistrate's recommendation of September 22, 1989 is NOT ADOPTED as the decision of this court. IT IS FURTHER ORDERED that the Secretary of Health and Human Services' motion for summary judgment affirming the Administrative Law Judge's decision that Thomas Naydihor is not entitled to benefits is DENIED. IT IS FURTHER ORDERED that Thomas Naydihor's motion for summary judgment reversing the Secretary of Health and Human Services' decision that he is not entitled to disability insurance benefits is DENIED. IT IS FURTHER ORDERED that Thomas Naydihor's motion for summary judgment remanding his case to the Secretary of Health and Human Services for a new administrative hearing is GRANTED and this case is REMANDED to the Secretary for the purpose of conducting a new administrative hearing consistent with this decision. NOTES [1] This court notes that although the ALJ found Naydihor had no difficulty breathing, Dr. Patel's report, which the ALJ did not have, identifies Naydihor as having difficulty breathing (Jul. 7, 1988 Patel Rep. at 1). [2] This court notes that in the ALJ's decision he states that: His [Naydihor's] skills are transferable to the following jobs in his local area: 5,000 light inspector; 200 tester; 400 bench assembler of electrical components. (Aug. 8, 1988 ALJ Dec. at 4). The transcript of the hearing, however, indicates that Dr. Blum testified that there were only 500, not 5,000, light inspector jobs (May 16, 1988 Tr. at 25). This discrepancy is important because the ALJ was required to, and did, make a finding that Naydihor's skills were highly marketable. The ALJ based this finding on the fact that there were a significant number of jobs to which Naydihor's skills were transferrable (Id. at 5). If the transcript is correct and the ALJ incorrectly considered 5,000 light inspector jobs, rather than 500, then his finding as to the marketability of Naydihor's skills may have been different because the number of jobs near Naydihor's residence would be reduced by eighty percent (80%). [3] This court notes that the magistrate correctly noted in his recommendation that § 10.10 requires the plaintiff to meet or exceed a given height-weight table and exhibit any one (1) of five (5) secondary conditions. Naydihor is 70" tall and claimed he weighed 310 pounds at the time of his ALJ hearing. The table in the regulations, however, required a weight of 318 pounds for a 70" tall male or 310 pounds for a 69" tall male. Thus, Naydihor missed the first test by either eight (8) pounds or one (1) inch. The magistrate, however, went on to state that Naydihor did not have any of the five (5) secondary impairments. This court disagrees. Section 10.10(A) states: History of pain and limitation of motion in any weight bearing joint or spine (on physical examination) associated with X-ray evidence of arthritis in a weight bearing joint or spine; The magistrate concluded that "although the record contains some x-ray evidence of arthritis in the plaintiff's left knee, ... there is no indication of limitation of motion." (Sep. 22, 1989 Rec. at 14). A review of the record, however, indicates that Naydihor had a history of pain in his left knee (May 16, 1988 Tr. at 9), and that his doctor, A. Patel, M.D., in a medical report prepared after the ALJ decision, wrote that Naydihor had "limitation of motion in left knee." (Jul. 8, 1988 Patel Rept. at 1). In addition, there was x-ray evidence of Naydihor having problems associated with arthritis in his left knee (Feb. 21, 1989 ALJ Records at 89-97). Thus, the requirements of § 10.10(A) are fulfilled. [4] Section 404.1563(d) of the Social Security Administration regulations required the ALJ and Secretary to find that Naydihor's skills were highly marketable in order to classify him as not disabled. This section states: If you are close to retirement age (60-64) and have a severe impairment, we will not consider you able to adjust to sedentary or light work unless you have skills which are highly marketable. and is controlling because Naydihor was sixty (60) years old at the time of the hearing and the ALJ found that he had a severe impairment (Aug. 8, 1988 ALJ Dec. at 3, 5).	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/1951912/	740 F.Supp. 399 (1990) Chris Ann MARTINEZ, Plaintiff, v. UNITED STATES of America, Defendant. Civ. A. No. D:87-3067-8. United States District Court, D. South Carolina, Beaufort Division. July 3, 1990. 400 F. Mikell Harper, Beaufort, S.C., for plaintiff. Heidi M. Solomon, Asst. U.S. Atty., Charleston, S.C., for defendant. ORDER BLATT, Senior District Judge. On May 14, 1986, plaintiff was struck by a white pick-up truck while jogging on the shoulder of Yorktown Boulevard, Marine Corps Depot, Parris Island, South Carolina. The truck was driven by Michael R. Fenn, Jr., a United States Marine. Fenn was arrested by military authorities and court martialed on August 5-6, 1988. At this court martial, Fenn pleaded guilty to two offenses: leaving the scene of the accident and aggravated assault. As there was no plea bargain, Fenn was also tried and convicted by the court of assault with intent to commit murder. Plaintiff brought this action against the United States, pursuant to the Federal Tort Claims Act, 28 U.S.C. § 1346(b) et seq., requesting recovery for damages sustained as a result of Fenn's hitting her with his truck.[1] In her complaint, plaintiff characterizes Fenn's action as "negligent", and, additionally, asserts that the United States negligently failed to supervise Fenn. The United States asserts several defenses to plaintiff's complaint. It denies that Fenn was under any supervision at the time he struck plaintiff, and it further denies that Fenn was acting within the scope of his government employment at the time of the incident. Finally, the United States asserts that Fenn's conduct was done intentionally and, therefore, is barred by the "assault" exception to the FTCA, 28 U.S.C. § 2680(h). Defendant United States had previously filed a motion to dismiss, or in the alternative for summary judgment, asserting that this suit was barred by the assault exception, that Fenn was not within the scope of his employment, and that this action was barred by collateral estoppel. This motion was denied by the court on December 28, 1988. Martinez v. Fenn, 702 F.Supp. 126 (D.S.C.1988). In denying defendant's motion to dismiss, the court focused on the "assault exception" defense. Finding that under federal common law assault does not necessarily include the element of intent, the court held that Fenn's plea in the military court did not rise to the level of an "assault" for purposes of 28 U.S.C. § 2680(h). At the time the court decided the motion to dismiss, however, the court had not been apprised by the parties, nor was this issue raised by the United States, of the fact that Fenn was also tried and convicted in the charge of "assault with intent to commit murder". Transcript of Court Martial, at 251. 401 The Government brought to the court's attention Fenn's conviction of assault with intent to commit murder in a motion for summary judgment filed March 13, 1989. At the trial of this matter, the court denied defendant's motion for summary judgment based on collateral estoppel or judicial estoppel grounds. The Government asserted that it was entitled to summary judgment on the ground of collateral estoppel because Fenn had been convicted of assault with intent to commit murder thereby the issue of Fenn's intent had already been litigated. However, the plaintiff, although a witness in the court martial proceedings, was not a party to those proceedings. As noted by the plaintiff, the general rule in the Fourth Circuit and elsewhere is that judgments in criminal cases in these circumstances are not admissible in civil cases. New York Life Ins. Co. v. Murdaugh, 94 F.2d 104, 107-08 (4th Cir. 1938); Chamberlain v. Pierson, 87 F. 420, 424 (4th Cir.1898). Finding that Fenn's conviction did not operate as collateral estoppel here against plaintiff, the court denied summary judgment on that ground. The Government also asserts that the doctrine of judicial estoppel should operate to preclude Ms. Martinez from bringing this action. Under that doctrine, a party may be precluded from adopting a position different from one taken in a prior proceeding. See, Allen v. Zurich Ins. Co., 667 F.2d 1162, 1166 (4th Cir.1982). The Government contends that plaintiff's testimony at the Court Martial was instrumental in having Fenn convicted of intentional assault, and, therefore, completely inconsistent with her position in this court that his striking her was an unintentional act. While it is true that plaintiff did testify at the Court Martial, comparing her testimony at that proceeding with her testimony at the trial in this matter, this court finds that such testimony was not materially different. In her testimony at the court martial, plaintiff never actually stated that Fenn intentionally struck her; therefore, this court finds the doctrine of judicial estoppel inapplicable in this case. Having determined that the Government was not entitled to summary judgment, the court proceeded to take evidence on the threshold factual issues before the court: whether Fenn was acting within the scope of employment when the incident occurred, and whether Fenn intentionally struck the plaintiff. Once the plaintiff has established a prima facie case of applicability of the FTCA, the burden shifts to the government to prove that an act is excepted by 28 U.S.C. § 2680. Carlyle v. United States, Dept. of the Army, 674 F.2d 554 (6th Cir.1982). Technically, the issue of whether Fenn was acting "in the scope of his employment" must first be addressed. See, Sheridan v. United States, 487 U.S. 392, 108 S.Ct. 2449, 101 L.Ed.2d 352 (1988). In order for the Government to be held liable under the FTCA, the complained-of commission or omission must be caused by a government employee "while acting within the scope of his office or employment". 28 U.S.C. § 1346(b). In making this determination, the court looks to the principles of master-servant law of the jurisdiction in which the court sits. Kennedy v. United States, 585 F.Supp. 1119, 1122 (D.S.C.1984). The testimony is undisputed that Fenn was traveling from one duty station to another at the time of the incident. Fenn had left his duty at the Mars Station and had been directed to proceed to further duty at the Depot Communications Center, located approximately two miles away. Defendant United States asserts that Fenn took a circuitous route to reach his second duty station, thereby traveling "outside the scope of his employment."[2] While Fenn admittedly did not take a direct route from his duty at the Mars Station to his duty at the Communications Center, he never left the military base. The court finds that the fact that Fenn stopped at a convenience store on the way to his second duty station 402 did not operate to take him out of the scope of his employment. In a similar case, Sola v. Sunny Slope Farms, 244 S.C. 6, 135 S.E.2d 321, 326 (1964), the South Carolina Supreme Court upheld the finding by the Workmen's Compensation Commission that a worker who was fatally injured while traveling between his job at a peach-picking shed and the company-provided labor camp was injured "within the scope of his employment" because of the "regularity of the work at the two places and the necessary travel between such". Id. The fact that Fenn was expected to report to both locations as part of his duty in the Marine Corps, and the fact that Fenn never left the military enclave, convince this court that Fenn's conduct meets the preliminary requisite of the FTCA that a government agent be "within the scope of his employment".[3] Having determined that Fenn was acting in the course and scope of his employment, the court now turns to the Government's argument that Fenn's action was intentional and, consequently, barred by the "assault exception" to the FTCA, 28 U.S.C. § 2680(c). As previously noted, this court has decided that the finding by the Court Martial that Fenn acted intentionally is not dispositive of this civil action brought by Ms. Martinez; therefore, the court took evidence on the issue of whether Fenn's striking of Ms. Martinez was intentional. While there is conflicting evidence in the record concerning the issue of intent, the court is convinced that the Government has met its burden of proving that Fenn intentionally struck the plaintiff, thereby absolving the Government from any liability to plaintiff under 28 U.S.C. § 2680(c). The Government called Gunnery Sergeant Jeffery Lovejoy, an expert in accident reconstruction, who had investigated the incident involving Fenn and Ms. Martinez. His testimony, replete with photographs of the incident scene, was that Fenn's truck entered the shoulder of the road on which plaintiff was jogging and drove in a straight line along that shoulder for 312 feet before striking plaintiff from behind. Trial Record, at 324. After striking plaintiff, Fenn kept his vehicle on the shoulder, according to Lovejoy, for another 65 feet before re-entering the highway. Trial Record, at 328. Fenn testified at the trial that he must have fallen asleep at the wheel, lost control of the vehicle, and struck plaintiff. Trial Record, at 175. The evidence presented and the testimony of Gunnery Sergeant Lovejoy controverts that possibility. The investigation performed by Lovejoy indicates that Fenn had to travel parallel to a ditch for over 312 feet in order to strike plaintiff. Additionally, Lovejoy testified that he conducted an experiment with Fenn's truck, driving the same route that Fenn's truck took before striking plaintiff. After having the truck checked to determine that there were no front-end problems, he reconstructed Fenn's route and found that, with the road being as bumpy as it was, no one could drive on that path for 300 feet without veering into the ditch unless such driver deliberately held the steering wheel with both hands. Trial Record, at 334-335. In addition to Lovejoy's report, in which the court places much credibility, the Government offered several witnesses to establish a motive for Fenn's conduct. Jay Hackbarth, who lived across the street from plaintiff on Parris Island, worked with Fenn in the summer of 1985. He testified that Fenn came to his house on several occasions and played with his dog, which plaintiff accidentally ran over with her car. Hackbarth testified that when he told Fenn the next day that his neighbor ran over the dog, Fenn became upset and questioned, "Well, how would they like it if someone hit them?" Trial Record, at 134. Hackbarth also testified that Fenn had observed that the plaintiff was the neighbor who struck the dog. Trial Record, at 131. Thomas Clary, an inmate with Fenn at Parris Island on two separate occasions, 403 also testified on the issue of Fenn's intent. Clary testified that Fenn told him that a Staff Sergeant's wife, who often jogged around the "loop" on Parris Island, had run over a dog that he had given a friend. Clary also testified that Fenn told him that Ms. Martinez had reported him on an unrelated charge for which he served a sentence under a special Court Martial. According to Clary, Fenn stated that he intended to "get even" with her, Trial Record, at 52-56, and Fenn questioned him as to what penalties were imposed when someone ran over another person. Additionally, Clary swore that Fenn told him that he, Fenn, intended to hit plaintiff with his truck. Trial Record, at 56. Clary further testified that when Fenn returned to the "brig", while awaiting court martial for the incident involving Martinez, he asked Fenn if he had hit Ms. Martinez. In response, Fenn "didn't really say anything, and he gave [Clary] a slight nod...." Trial Record, at 225. Fenn's conduct after hitting Ms. Martinez with his car is further evidence of his intention to strike her. Fenn left the scene of the accident without assisting plaintiff, went immediately to the Base Exchange in an attempt to replace his damaged headlight, and continued to the Base Exchange Annex to purchase silver spray paint. He then drove to the Communications Center and sprayed the dent in his truck with this paint. When questioned at the trial of this case as to the use of the spray paint, Fenn answered that he "panic[ked]" and was afraid of "someone finding out." Trial Record, at 158. Further bolstering the conclusion of this court that Fenn intentionally struck plaintiff, Fenn made various admissions to that effect. First, he told government investigators that he may have hit a woman jogger. Trial Record, at 300. Second, after his Court Martial, he signed a statement saying, "I deeply regret the pain and suffering that my impulsive act has caused Mrs. Martinez and her family." Government's Exhibit 36 (emphasis supplied). Finally, on February 2, 1989, he signed a statement concerning the events of May 14, 1986, which included this sentence: "As I was driving down the road, on impulse, I was pissed off with the world, I saw the jogger, and just let my left elbow drop off the window sill so that my left hand left the steering wheel so that my truck hit the jogger, Mrs. Martinez." Government's Exhibit 35. While plaintiff did present witnesses, most significantly Fenn himself, who testified that the striking of plaintiff was unintentional, this court finds, based on the entire record, and the credibility and demeanor of the witnesses, specifically the passages mentioned in this order, that the United States has met its burden of proving by the greater weight of the evidence that Fenn's striking of the plaintiff was an intentional act; consequently, 28 U.S.C. § 2680(h) operates to bar plaintiff from recovering from the Government as the complained-of injury arose "out of an assault. ..." Plaintiff also brought a cause of action against the Government for negligent supervision of Fenn, resulting in injury to the plaintiff. This attempt to recast claims excepted from the Federal Tort Claims Act as "negligent supervision" has consistently been eschewed by the courts. See United States v. Shearer, 473 U.S. 52, 105 S.Ct. 3039, 3042, 87 L.Ed.2d 38 (1985); Doe v. United States, 618 F.Supp. 71 (D.S.C.1984). Concluding, the court finds that Fenn was acting within the course and scope of his employment at the time he hit plaintiff, but that Fenn intentionally struck plaintiff, and, thus, the court reluctantly must find that plaintiff is precluded by the "assault exception" of the FTCA from recovery from defendant, United States. IT IS SO ORDERED. NOTES [1] In her complaint, plaintiff named both Fenn and the Government as defendants. However, Fenn was never served as a defendant, and plaintiff's counsel informed the court that the complaint against Fenn individually had been withdrawn. [2] Fenn testified that he took a route to his second duty station that allowed him to go by a convenience store. See Transcript at 167. [3] Of course, commission of an intentional tort can operate to take an actor outside the scope of his employment. That principle is codified in 28 U.S.C. § 2680(c) (the "assault exception") and is reviewed in this order, infra.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/8569583/	212TEXTO COMPLETO DE LA RESOLUCIÓN I La parte recurrente, Richard Rivera h/n/c Global Development y la corporación Paso Seco Country Club, Corp. (“Paso Seco”) solicita la revisión de una resolución emitida el 2 de diciembre de 2003 por el Departamento de Asuntos del Consumidor (“D.A.C.O.”). Mediante el dictamen en cuestión, el D.A.C.O. declaró con lugar una querella presentada contra los recurrentes por la parte recurrida Dolly Colón Maldonado. El procedimiento ante la agencia está relacionado a un proyecto para el desarrollo de una urbanización en el Barrio Paso Seco de Santa Isabel. Paso Seco es la promotora de dicho proyecto, llamado Paso Seco Country Club. Paso Seco vendía los solares de la urbanización. La venta era llevada a cabo por Property World, Inc. (“Property World’), una compañía de bienes raíces. Por su parte, el Sr. Rivera contrataba la .construcción de viviendas en los solares, ofreciendo a compradores la selección entre varios modelos de viviendas. los La recurrida fue al lugar en junio de 2001. En ese momento, los solares se hallaban marcados, pero todavía no se habían colocado los postes del alumbrado eléctrico. Luego de tener la oportunidad de observar los solares de la urbanización, la recurrida otorgó una opción sobre el solar número 3. Este era un solar de 1000 metros con frente a la calle. La recurrida pagó un pronto de $3,000.00. El precio acordado de venta fue de $37,500.00. Posteriormente, el 31 de agosto de 2001, la recurrida compró el solar por el precio acordado. La transacción fue financiada por RG Mortgage. La recurrida tampoco fue apercibida en este momento de que su propiedad pudiera estar afecta a alguna servidumbre. La recurrida contrató con el Sr. Rivera para la construcción de una residencia Miliangie modelo Reina, la que tenía un acceso vehicular en semicírculo. El 16 de noviembre de 2001, la recurrida acudió al solar en compañía de un familiar a quien quería enseñarle la propiedad. En ese momento, la recurrida se percató que frente a su solar se había colocado un poste de energía eléctrica con un tensor que ocupaba 22 pies del frente de la propiedad. Dicho poste imposibilitaba que se construyera el acceso vehicular deseado por la recurrida. Ésta reclamó al Sr. Rivera, quien le señaló que la ubicación del poste era una determinación de la Autoridad de Energía Eléctrica. El 19 de diciembre de 2001, la recurrida reclamó al Sr. Rivera la remoción del poste o el intercambio de su solar. El recurrente no contestó dicha comunicación. En vista de lo anterior, la recurrida procedió a instar la presente querella ante el. D.A.C.O. contra el recurrente Rivera, quejándose de que nunca se le había informado que el solar adquirido por ella estaba gravado con una servidumbre a favor de la Autoridad de Energía Eléctrica que impedía la construcción del modelo de 213casa que la recurrida había contratado. La recurrida enmendó posteriormente su querella para incluir como partes querelladas a Palo Seco, Property World y a RG Mortgage. Luego de otros incidentes, el D.A.C.O. celebró una vista evidenciaría. Las partes tuvieron la oportunidad de presentar evidencia testifical y documental en apoyo de sus respectivas posiciones. El 2 de diciembre de 2003, el D.A.C.Q. emitió la resolución recurrida declarando con lugar la querella. En su resolución, el D.A.C.O. determinó que la recurrida en ningún momento había sido informada que la propiedad que ella estaba adquiriendo habría de estar gravada con una servidumbre y que habría de contener en su frente un poste de alumbrado con tensores. El D.A.C.O. observó que, de haber conocido lo anterior, la recurrida no hubiese adquirido la propiedad. La agencia expresó que: “La carga o servidumbre existía desde antes de la venta del terreno. No obstante, el mismo no era aparente, pues el terreno no contaba con el poste de luz instalado y mucho menos el tensor que se extiende a 22 pies del mismo. ” [E]l inconveniente no es el poste, sino el tensor de 22 pies, el cual nunca se menciona en ningún documento ni escritura ni estaba aparente al momento del otorgamiento de las escrituras ni tampoco se le comunicó a la querellante. El hecho de que el poste del tenido eléctrico tiene un tensor que se extiende a 22 pies y nunca se le notificó a la querellante con antelación, le ha causado daños a ésta, ya que se ha visto imposibilitada de construir la casa que tenía planificada. En adición, no se le dio la opción de escoger otro terreno que estaban disponibles para aquel momento. Paso Seco Country Club Corp. conocía que el terreno #3 escogido por la querellante estaba gravado con una servidumbre de la Autoridad de Energía Eléctrica, el cual consistiría de un poste en frente con un tensor, dato que nunca le informaron a la querellante. El D.A.C.O. concluyó que Palo Seco era responsable ante la recurrida por la situación y ordenó a dicha parte hacer las gestiones y asumir los costos para sustituir el poste colocado por la Autoridad de Energía Eléctrica por otro de tipo “self-standing” que no tuviera tensores. En su defecto, el D.A.C.O. ordenó a Paso Seco a comprar el terreno de la recurrida por el valor pagado por ésta, asumiendo el costo de las escrituras. En su resolución, el D.A.C.O. también determinó que tanto Paso Seco como el Sr. Rivera habían incumplido los requisitos de la Ley de la Oficina del Oficial de la Construcción, Ley Núm. 130 de 13 de junio de 1967, 17 L.P.R.A. sees. 501 y ss., al omitir registrarse como urbanizador y constructor y obtener la licencia correspondiente, 17 L.P.R.A. see. 505. El D.A.C.O. refirió a dichas partes a la división de fiscalización a los efectos de considerar la imposición de multas por el incumplimiento mencionado. El D.A.C.O. desestimó, de otro modo, la querella contra Property World, RG Mortgage y el Sr. Rivera. Las partes recurrentes solicitaron reconsideración de dicho dictamen, la que fue denegada por el D.A.C.O. el 8 de marzo de 2004. 214Insatisfechas, las partes recurrentes acudieron ante este Tribunal. II En su recurso, los recurrentes plantean la comisión de numerosos errores por el D.A.C.O., dirigidos más bien a cuestionar las determinaciones de hechos de la agencia. Nuestra facultad de revisión en el campo administrativo, sin embargo, es limitada. Según la doctrina establecida por el Tribunal Supremo de Puerto Rico, las decisiones de los organismos administrativos especializados han de recibir deferencia por los tribunales, presumiéndose su corrección. La revisión judicial de las mismas se circunscribe a determinar si la agencia en el caso particular actuó arbitraria, ilegalmente, o de manera tan irrazonable que su actuación constituyó un abuso de discreción. Rivera Concepción v. A.R.P.E., 152 D.P.R._(2000), 2000 J.T.S. 155, a la pág. 160; Mun. de San Juan v. J.C.A., 149 D.P.R. 263, 280 (1999); Franco v. Depto. de Educación, 148 D.P.R. 703, 709 (1999); Misión Ind. P.R. v. J.P., 146 D.P.R. 64, 134 (1998); Henríquez v. Consejo de Educación Superior, 120 D.P.R. 194, 210 (1987); Murphy Bernabe v. Tribunal Superior, 103 D.P.R. 692, 699 (1975). Por el contrario, si las interpretaciones de la agencia especializada son razonables y consistentes con el propósito legislativo que inspiran los estatutos directivos, el tribunal debe abstenerse de intervenir con las mismas. Costa, Piovanetti v. Caguas Expressway, 149 D.P.R. 881, 889 (1999); Misión Ind. P.R. v. J.P., 146 D. P.R. a la pág. 133 (1998); Com. Seg. P.R. v. Antilles Ins. Co., 145 D.P.R. 226, 234 (1998); Rivera Rentas v. A & C Development Corp., 144 D.P.R. 450,461 (1997). La intervención judicial con las actuaciones administrativas, de este modo, ha de centrarse en tres aspectos principales: (1) si el remedio concedido fue apropiado, (2) si las determinaciones de hechos están razonablemente sostenidas por la prueba y (3) si las conclusiones de derecho del organismo administrativo son correctas. 3 L.P.R.A. see. 2175; P.R.T.C. v. J. Reg. Tel. de P.R., 151 D.P.R._(2000), 2000 J.T.S. 98, a la pág. 1,266; Misión Ind. P.R. v. J.P., 146 D.P.R. a la pág. 129 (1998); Mun. de San Juan v. J.C.A., 149 D.P.R. a la pág. 279, 280; Rivera v. A & C Development Corp., 144 D.P.R. a las págs. 460-461. En cuanto a las determinaciones de hecho formuladas por una agencia, la norma reiterada es que los tribunales no deben intervenir con las mismas si están sostenidas por evidencia sustancial que surja del expediente administrativo considerado en su totalidad. Asoc. Vec. H. San Jorge v. U. Med. Corp., 150 D.P.R. 70, 75 (2000); Domínguez v. Caguas Expressway Motors, 148 D.P.R. 387, 397-398 (1999); T-JAC, Inc. v. Caguas Centrum Limited, 148 D.P.R. 70, 80-81 (1999); Assoc. Ins. Agencies, Inc. v. Com. Seg. P.R., 144 D.P.R. 425, 437 (1997); véase, además, 3 L.P.R.A. see. 2175. La evidencia sustancial para sostener la actuación administrativa es aquélla que una mente razonable puede aceptar como adecuada para sostener una conclusión. La intervención del Tribunal está limitada a evaluar si la decisión de la agencia es razonable y no si hizo una determinación correcta de los hechos ante su consideración. Si existe más de una interpretación razonable de los hechos, los tribunales sostendrán la decisión de la agencia y no sustituirán su criterio por el de ésta. Al revisar las determinaciones de hechos, la evidencia debe ser considerada en su totalidad. Asoc. Vec. H. San Jorge v. U. Med. Corp., 150 D.P.R. a la pág. 75; Assoc. Ins. Agencies, Inc. v. Com. Seg. P.R., 144 D.P.R. a la pag. 437; Hilton Hotels International v. Junta de Salario Mínimo, 74 D.P.R. 670, 687 (1953). En el caso de autos, hemos examinado la decisión recurrida, a la luz de los argumentos levantados en el recurso y los documentos sometidos por las partes recurrentes y no hallamos que el D.A.C.O. hubiera errado en su decisión. En el presente caso, según hemos visto, el D.A.C.O. determinó que la recurrida no había sido informada de 215la ubicación del poste en el frente de su propiedad, el cual impedía a la recurrida construir el modelo de residencia interesado por ella. El D.A.C.O. determinó que, de haber conocido esta situación, la recurrida no hubiera comprado el solar. El Art. 1372 del Código Civil de Puerto Rico dispone que si una finca vendida “estuviese gravada, sin mencionarlo la escritura con alguna carga o servidumbre no aparente, de tal naturaleza que deba presumirse que no la habría adquirido el comprador si la hubiera conocido, podrá pedir la rescisión del contrato, a no ser que prefiera la indemnización correspondiente”. 31 L.P.R.A. see. 3840. Los recurrentes sostienen que el solar adquirido por la recurrida no estaba gravado por servidumbre alguna, por lo que ellos no venían obligados a informar a la recurrida de lo anterior. Nuestro ordenamiento reconoce la existencia de servidumbres legales de paso, entre otras, aquéllas dedicadas a permitir el mantenimiento de líneas eléctricas. 27 L.P.R.A. see. 2151. Los recurrentes señalan que en el presente caso la servidumbre en cuestión nunca fue reclamada por la Autoridad de Energía Eléctrica. Lo cierto es que la existencia del poste constituye una carga sobre la propiedad y una alteración en las circunstancias principales del bien adquirido. De haber conocido la recurrida de lo anterior, no habría adquirido la propiedad. El Art. 1217 del Código Civil establece que el consentimiento para un negocio es nulo cuando el mismo se ha producido por error, violencia, intimidación o dolo. 31 L.P.R.A. see. 3404; véase, e.g., Colón v. Promo Motor Imports, 144 D.P.R. 659, 666 (1997). En tales casos, la parte afectada cuenta con una acción para solicitar la nulidad del contrato, la cual puede ser ejercitada en un período de cuatro (4) años a partir de la celebración del negocio o desde que ha cesado la violencia o intimidación contra dicha parte. 31 L.P.R.A. see 3512. Existe dolo cuando una parte es inducida a celebrar el contrato mediante maquinaciones insidiosas, 31 L.P. R.A. see. 3408; por ejemplo, cuando se le oculta a la parte compradora la existencia de una circunstancia que pudiese constituir un defecto oculto en el objeto vendido y entregado. Márquez v. Torres Campos, 111 D.P.R. 854, 871 (1982); véanse, además, Colón v. Promo Motor Imports, Inc., 144 D.P.R. a la pág. 667; Acosta & Rodas, Inc. v. PRAICO, 112 D.P.R. 583, 617 (1982); Canales v. Pan American, 112 D.P.R. 329, 338-342 (1982); Miranda Soto v. Mena Eró, 109 D.P.R. 473, 478 (1980). El dolo puede inferirse de las circunstancias presentes en el caso en particular. Colón v. Promo Motor Imports, Inc., 144 D.P.R. a la pág. 669; Canales v. Pan American, 112 D.P.R. a la pág. 340. Cuando es meramente incidental, el dolo sólo da lugar a la indemnización de los daños y perjuicios ocasionados, 31 L.P.R.A. see. 3409. No obstante, si afecta la formulación del consentimiento por la parte, el dolo se considera grave y da lugar a la nulidad de la obligación; Colón v. Promo Motor Imports, Inc., 144 D.P. R. a la págs. 667-668. Por otro lado, un error tiene el efecto de invalidar el consentimiento cuando recae “sobre la sustancia de la cosa que fuere objeto del contrato, o sobre aquellas condiciones de la misma que principalmente hubiesen dado motivo a celebrarlo”. 31 L.P.R.A. see. 3405; véanse, Girod Lube v. Ortiz Rolón, 94 D.P.R. 406, 414-415 (1967); Capó Caballero v. Ramos, 83 D.P.R. 650, 671 (1961); cf. Unisys v. Ramallo Brothers, 128 D.P.R. 842, 853 (1991). *216En la situación de autos, la existencia del poste constituía una carga sobre la propiedad que impide a la recurrida la construcción del modelo de casa interesado por esta. No estimamos que el D.A.C.O. hubiera errado al concluir que la parte recurrente venía obligada a eliminar dicha carga, sustituyendo el poste por uno que no tuviera los tensores o, en la alternativa, decretándose la resolución del negocio. Los recurrentes plantean que el D.A.C.Q. erró al descansar en el testimonio de la recurrida, la que mintió en su versión de los hechos. No estamos, sin embargo, en posición de sustituir la apreciación de la agencia sobre la veracidad del testimonio de las partes. El D.A.C.O. fue quien tuvo ante sí a los testigos y estaba en una mejor posición que este Tribunal para adjudicar la credibilidad que le merecía cada uno. Véanse, Colón y otros v. K-Mart y otros, 154 D.P.R._(2001), 2001 J.T.S. 98, a la pág. 1,484; Orta v. Padilla, 137 D.P.R. 927, 937 (1995); Rodríguez Oyola v. Machado Díaz, 136 D.P.R. 250, 258 (1994); La parte recurrente plantea que el D.A.C.O. erró al concluir que a dichas partes les era de aplicación la Ley de la Oficina del Oficial de la Construcción, 17 L.P.R.A. sees. 501 y ss. Alegan que su participación en el proyecto fue más bien casual, ya que no se dedican consuetudinariamente a la venta o desarrollo de terrenos y que tampoco han vendido el número de lotes contemplado por la Ley para su aplicación. 17 L.P.R.A. see. 502. No está claro que el D.A.C.O. hubiera errado en su apreciación sobre el alcance de las actividades de los recurrentes. En cualquier caso, este asunto no afectaría el remedio dispuesto a favor de la recurrida, sino más bien la actuación de la agencia de ordenar que las recurrentes fuesen referidos a la división de fiscalización para la posible imposición de multas. No vemos motivo para intervenir con la resolución recurrida por este fundamento, sin perjuicio de que los recurrentes puedan renovar su planteamiento posteriormente, de resultar sancionadas por la agencia, por su omisión de obtener una licencia bajo la citada Ley de la Oficina del Oficial de la Construcción. Por los fundamentos expresados, se deniega el auto solicitado. Lo pronunció el Tribunal y lo certifica la señora Secretaria General. Aida Ileana Oquendo Graulau Secretaria General	01-03-2023	11-23-2022
https://www.courtlistener.com/api/rest/v3/opinions/2842142/	Opinion issued October 23, 2009 In The Court of Appeals For The First District of Texas ____________ NO. 01-09-00821-CR ____________ IN RE CARLOS A. ARMENTA, Relator Original Proceeding on Petition for Writ of Mandamus MEMORANDUM OPINION Relator has filed a petition for writ of mandamus, requesting that this Court to compel respondent to rule on a post-conviction motion that he claims to have filed in trial court cause number 9402665 on June 17, 2009. Relator pleaded guilty to the offense of murder. After a presentence investigation hearing, the trial court sentenced relator to confinement for 40 years and signed a final judgment in this case on December 8, 1995. No direct appeal was taken. Therefore, the deadline for filing a notice of appeal was January 7, 1996. The trial court's judgment of conviction is final. Relator contends in his petition that the conviction in cause number is void because he was 16 years of age at the time of the commission of the offense and that he was never certified to stand trial as an adult. (1) Jurisdiction to grant post-conviction habeas corpus relief in felony cases rests exclusively with the Texas Court of Criminal Appeals. Tex. Code Crim. Proc. Ann. art. 11.07, § 3 (Vernon Supp. 2008); Board of Pardons & Paroles ex rel. Keene v. Court of Appeals for the Eighth District, 910 S.W.2d 481, 483 (Tex. Crim. App. 1995). The exclusive post-conviction remedy in final felony convictions in Texas courts is through a writ of habeas corpus. Tex. Code Crim. Proc. Ann. art. 11.07 (Vernon Supp. 2008); Tex. Code Crim. Proc. Ann. art. 11.59 (Vernon Supp. 2008). Ater v. Eighth Court of Appeals, 802 S.W.2d 241, 243 (Tex. Crim. App. 1991). Therefore, we dismiss the petition for writ of mandamus for want of jurisdiction. We deny all pending motions as moot.PER CURIAM Panel consists of Justices Jennings, Higley and Sharp. Do not publish. Tex. R. App. P. 47.2(b). 1. See Tex. Pen. Code Ann. § 8.07 (Vernon 2008); Tex. Code Crim. Proc. Ann. art. 11.59 (Vernon Supp. 2008). Ex Parte Billy Joe Waggoner, 61 S.W.3d 429 (Tex. Crim. App. 2001).	01-03-2023	09-03-2015
https://www.courtlistener.com/api/rest/v3/opinions/1525219/	909 F. Supp. 47 (1995) MANCHESTER MANUFACTURING ACQUISITIONS, INC., et al. v. SEARS, ROEBUCK & CO., et al. Civ. No. 91-752-SD. United States District Court, D. New Hampshire. September 26, 1995. 48 49 Randall F. Cooper, North Conway, NH, for plaintiffs. Steven J. Kantor, Burlington, VT, John L. Putnam, Hanover, NH, Kenneth H. Merritt, Burlington, VT, for other defendants. Eugene J. Kelley, Jr., Chicago, IL, James P. Bassett, Concord, NH, for Sears. ORDER DEVINE, Senior District Judge. In this diversity action, plaintiffs Manchester Manufacturing Acquisitions, Inc., Gary A. Dinco, and Felix J. Weingart, Jr., allege that defendants[1] violated federal and state securities laws and made negligent misrepresentations in connection with the 1988 sale of the distribution warehouse business known as Manchester Manufacturing, Inc. (MMI).[2] Presently before the court is defendants' motion for summary judgment and plaintiffs' cross-motion for summary judgment, along with respective objections thereto. In addition, defendants have filed, over objection, motions to strike the affidavits of Randall Cooper and John Georges, as well as a motion to strike plaintiffs' cross-motion for summary judgment. Discussion Defendants have moved for summary judgment based on a variety of theories. The court will thus proceed through the remaining counts[3] in seriatim. 1. Summary Judgment Standard Summary judgment shall be ordered when "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Rule 56(c), Fed.R.Civ.P. "In general ... a party seeking summary judgment [is required to] make a preliminary showing that no genuine issue of material fact exists. Once the movant has made this showing, the nonmovant must contradict the showing by pointing to specific facts demonstrating that there is, indeed, a trialworthy issue." National Amusements, Inc. v. Town of Dedham, 43 F.3d 731, 735 (1st Cir.1995) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S. Ct. 2548, 2553, 91 L. Ed. 2d 265 (1986)), cert. denied, ___ U.S. ___, 115 S. Ct. 2247, 132 L. Ed. 2d 255 (1995). "[T]rialworthiness[, however,] necessitates `more than simply show[ing] that there is some metaphysical doubt as to the material facts.'" Id. (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538 (1986)) (second alteration in National Amusements). Thus, "`[t]he evidence illustrating the factual controversy cannot be conjectural or problematic; it must have substance in the sense that it limns differing versions of the truth which a factfinder must resolve....'" Id. (quoting Mack v. Great Atl. & Pac. Tea Co., 871 F.2d 179, 181 (1st Cir.1989)). 50 The record on summary judgment is reviewed "in the light most favorable to the nonmoving party, and [the court shall] indulge all reasonable inferences in that party's favor." Colonial Courts Apartment Co. v. Proc Assocs., Inc., 57 F.3d 119, 122 (1st Cir.1995) (citing Inn Foods, Inc. v. Equitable Coop. Bank, 45 F.3d 594, 596 (1st Cir.1995)). 2. Defendants' Motion for Summary Judgment (document 69) a. Securities Exchange Act of 1934, 15 U.S.C. § 78j(b) Defendants contend that any entitlement plaintiffs may have for relief under 15 U.S.C. § 78j(b) is foreclosed by the running of the limitations period.[4] As dictated by the Supreme court, "[l]itigation instituted pursuant to [15 U.S.C. § 78j(b)] and [Securities and Exchange Commission] Rule 10b-5 ... must be commenced within one year after the discovery of the facts constituting the violation and within three years after such violation." Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 501 U.S. 350, 364, 111 S. Ct. 2773, 2782, 115 L. Ed. 2d 321 (1991) (footnote omitted). For the purposes of ruling on the motion sub judice, the court is satisfied that plaintiffs brought their claim within the three-year period of repose. Accordingly, the balance of the court's analysis will be directed to determining "whether plaintiffs filed their complaint within one year of discovery of the facts constituting the violation, as Lampf requires." Manchester Mfg., supra note 2, 802 F.Supp. at 599. (1) Inquiry or Actual Notice? Whether plaintiffs will be permitted to maintain their claim under the Securities Exchange Act depends upon what type of notice the Supreme Court intended when it limited such litigation to being commenced "within one year after the discovery of the facts constituting the violation...." Lampf, supra, 501 U.S. at 364, 111 S.Ct. at 2782. Plaintiffs argue that actual notice is the standard, whereas defendants contend that inquiry notice is all that is required to initiate the limitations clock. Although the First Circuit has not directly addressed this question since the Supreme Court issued its ruling in Lampf, panel decisions from the other circuits have uniformly interpreted Lampf as requiring inquiry notice rather than actual notice. See, e.g., Tregenza v. Great Am. Communications Co., 12 F.3d 717, 722 (7th Cir.1993) (doctrine of inquiry notice applicable in Rule 10b-5 suits), cert. denied, ___ U.S. ___, 114 S. Ct. 1837, 128 L. Ed. 2d 465 (1994); Menowitz v. Brown, 991 F.2d 36, 41 (2d Cir.1993) ("`discovery' under the 1934 Act limitation provisions includes constructive or inquiry notice, as well as actual notice" (citation omitted)); Howard v. Haddad, 962 F.2d 328, 330 (4th Cir.1992) ("one-year discovery limitations period begins to run either upon notice of fraud or when, in exercise of reasonable diligence, plaintiff would have discovered them") (emphasis added) (citing Davis v. A.G. Edwards & Sons, Inc., 823 F.2d 105, 107 (5th Cir. 1987)). Accord Allied Inv. Corp. v. KPMG Peat Marwick, 872 F. Supp. 1076, 1081 (D.Me.1995) ("inquiry notice is the proper standard to be applied in the wake of the Lampf decision and its progeny"). The court herewith finds and rules that the level of notice mandated by the Supreme Court in Lampf is inquiry, or constructive, notice. (2) What Constitutes "Inquiry" Notice? The logical consequence of finding that inquiry notice commences the one-year limitations period is whether plaintiffs can appropriately be charged with same. In this regard, the court must decide if: (1) sufficient facts were available to put a reasonable investor in plaintiff[s'] position 51 on inquiry notice of the possibility of fraud, and (2) plaintiff[s] exercised due diligence in attempting to uncover the factual basis underlying this alleged fraudulent conduct. Maggio v. Gerard Freezer & Ice Co., 824 F.2d 123, 128 (1st Cir.1987) (citation omitted). Moreover, and in contrast to their assertion otherwise, plaintiffs "did not have to fully discover `the nature and extent of the fraud before they were on notice that something may have been amiss. Inquiry notice is triggered by evidence of the possibility of fraud, not full exposition of the scam itself.'" Allied Inv. Corp., supra, 872 F.Supp. at 1081 (quoting Kennedy v. Josephthal & Co., 814 F.2d 798, 802 (1st Cir.1987)) (citations omitted in Allied); accord Cooke v. Manufactured Homes, Inc., 998 F.2d 1256, 1263 (4th Cir.1993) (same). "In the First Circuit, `"storm warnings" of the possibility of fraud trigger a plaintiff's duty to investigate in a reasonably diligent manner[.]'" Allied Inv. Corp., supra, 872 F.Supp. at 1081 (quoting Maggio, supra, 824 F.2d at 128 (quoting Cook v. Avien, Inc., 573 F.2d 685, 697 (1st Cir.1978))) (alteration in Allied). See also Cooke, supra, 998 F.2d at 1263 ("A securities plaintiff must exercise due diligence in the investigation of misconduct. The exercise of due diligence is measured by an objective standard, and whether due diligence was exercised must be judged `solely under the peculiar circumstances of each case.'") (quoting deHaas v. Empire Petroleum Co., 435 F.2d 1223, 1226 (10th Cir. 1970)) (other citations omitted). Plaintiffs acquired ownership control of MMI on December 29, 1988. The evidence before the court reveals the following course of significant events in the nearly three years subsequent to said sale and the filing of the instant lawsuit on December 26, 1991: 40. Within weeks of the sale of MMI to plaintiffs, Sears' distribution business with Acquisitions began to decrease. Within one year, Sears' distribution business with plaintiff Acquisitions was down by seventy percent (70%). 41. On December 24, 1989, plaintiffs were notified by Sears that it would not renew its distribution contract with Acquisitions for the year commencing January 1, 1990. .... 43. Repeated attempts to re-negotiate with Sears were to no avail, as were plaintiffs['] many attempts to secure replacement business, to cut costs, by, for example, reducing their work force from 60 employees to 3 employees, or to sell the assets of the business. 43A. The plaintiffs contacted Sears regarding the termination and lack of business. By letter dated August 16, 1990, Edward A. Brennan, Chairman of the Board of Sears, informed the plaintiffs that the termination of the distribution business with MMI was a result of a study of the distribution system that had been under review for several years. This study was subsequently determined to be the RDOF [Replenishment and Distribution of the Future]. Second Amended Complaint at 14. In the opinion of the court, the December 24, 1989, notice from Sears that it would not be renewing the distribution contract constitutes a sufficient "storm warning" that the financial and business picture defendants have allegedly presented prior to the sale was not, in fact, as it would seem. Further, the court finds and rules that the August 16, 1990, letter from Sears Chairman Edward Brennan specifically informing plaintiffs that the termination of business was as a result of multi-year feasibility study is further evidence of troubled and precarious "weather". Despite these prominent and foreboding winds, plaintiffs chose to wait an additional sixteen months before filing the suit under section 10(b). Such delay was unreasonable. Consequently, defendants' motion for summary judgment as to the alleged violation of 15 U.S.C. § 78j(b) (Count II) must be and herewith is granted. b. Applicability of New Hampshire Blue Sky Law (RSA) 421-B:3 Although conceding that stock did change hands, defendants contend that this circumstance "was a mere formality to which 52 the securities laws should not apply." Defendants' Memorandum of Law at 30. Defendants further submit that, "[i]n economic reality, [the transaction herein at issue] was the sale of the assets in a closely held corporation to its own management [and therefore] not the type of investment transaction to which the New Hampshire Blue Sky Law was intended to apply." Id. This argument is fatally hampered by the court's reading of Landreth Timber Co. v. Landreth, 471 U.S. 681, 105 S. Ct. 2297, 85 L. Ed. 2d 692 (1985), and is not resuscitated by virtue of the holding in Anderson v. Heck, 554 So. 2d 695 (La.Ct.App.1989), writ denied, 558 So. 2d 605 (La.), cert. denied, 498 U.S. 846, 111 S. Ct. 132, 112 L. Ed. 2d 100 (1990). For the reasons that follow, defendants' motion for summary judgment as to the claim brought under RSA 421-B:3 (Count III) is herewith denied. (1) Definition of "Security" Under the state securities statute, "Security" means any note; stock, treasury stock; bond, debenture; evidence of indebtedness; certificate of interest or participation in any profit sharing agreement; collateral trust certificate; preorganization certificate or subscription; transferable shares; investment contract; investment metal contract or investment gem contract; voting trust certificate; certificate of deposit for a security; certificate of interest or participation in an oil, gas or mining right, title or lease or in payments out of production under such a right, title or lease; or, in general, any interest or instrument commonly known as a security, or any certificate of interest or participation in, temporary or interim certificate for, receipt for guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing. "Security" does not include any insurance or endowment policy or annuity contract under which an insurance company promises to pay money either in a lump sum or periodically for life or for some other specified period. RSA 421-B:2, XX (1991).[5] Facially, therefore, the transaction at issue falls within the statutory definition. (2) The Effect of Landreth In United Housing Found., Inc. v. Forman, 421 U.S. 837, 95 S. Ct. 2051, 44 L. Ed. 2d 621 (1975), the Supreme Court held that shares of "stock" are traditionally evidenced by the following features: (1) the right to receive dividends contingent upon an apportionment of profits; (2) negotiability; (3) subjection to pledge or hypothecation; (4) voting rights proportional to number of shares owned; and (5) possibility of appreciation in value. Id. at 851, 95 S.Ct. at 2060; see also II Louis Loss & JOEL SELIGMAN, SECURITIES REGULATION 987, 989-95 (3d ed.1989) (discussing Forman and Landreth in context of stock transfer as a sale of business means). Because the shares of stock at issue in Forman merely entitled the purchaser to lease an apartment in a housing cooperative, and bore none of the aforementioned characteristics, the court ruled that such instruments did not qualify as "securities". Forman, supra, 421 U.S. at 851, 95 S.Ct. at 2060. Landreth, however, presented an entirely different transaction; one that is more closely analogous to the situation presented herein. Pursuant to a negotiated stock purchase agreement, an investor acquired all of the common stock of a lumber company and assigned same to a corporation formed for the sole purpose of acquiring the stock, which then merged with the original lumber company to form the Landreth Timber Company. Landreth, supra, 471 U.S. at 683-84, 105 S.Ct. at 2300. Eventually, the stock was divided into two classes, A and B, and ultimately split among eight investorstwo individuals owning all of the Class A stock and six individuals acquiring all of the Class B stock. The two classes represented 85% and 15% of equity, respectively. Id. at 684, 105 S.Ct. at 2300. Business eventually soured, the mill was sold at a loss and placed into receivership, and a suit based on violations of the federal securities laws and intentional/negligent 53 misrepresentation soon followed. Id. Although the district court "ruled that the stock could not be considered a `security' unless the purchaser had entered into the transaction with the anticipation of earning profits derived from the efforts of others," id. at 684-85, 105 S.Ct. at 2301, and the Ninth Circuit affirmed on the grounds that the federal securities laws do not apply to the sale of 100% of the stock of a closely held corporation,[6]id., the Supreme Court reversed. Id. at 697, 105 S.Ct. at 2307. Whereas the definition of "security" in the federal statutes "is quite broad" and "most instruments bearing such a traditional title are likely to be covered by the definition," id. at 686, 105 S.Ct. at 2301-02, "the fact that instruments bear the label `stock' is not itself sufficient to invoke the coverage of the [Securities Acts of 1933 & 1934]," id. Further analysis must be undertaken to determine "whether those instruments possess `some of the significant characteristics typically associated with' stock...." Id. (quoting Forman, supra, 421 U.S. at 851, 95 S.Ct. at 2060). Not only did the stock at issue in Landreth satisfy the criteria identified in Forman, "the context of the transaction involved herethe sale of stock in a corporationis typical of the kind of context to which the Acts normally apply." Id. at 687, 105 S.Ct. at 2302. Accordingly, "the plain meaning of the statutory definition mandates that the stock be treated as `securities' subject to the coverage of the Acts." Id. This case seems to fall foursquare within the parameters of Landreth.[7] Anderson v. Heck, 554 So. 2d 695 (La.Ct. App.1989), cited with approval in defendants' memorandum of law, while facially relevant in that it involved a 100 percent sale of a business as a going concern, specifically refuses to conform to the Landreth holding. See id. at 700 ("Although the definition of `security' in the Federal statute is almost identical to the definition adopted by Louisiana, we decline to follow the literalist approach taken by the court."). As between the United States Supreme Court and a state intermediate appellate court, this district court is not only bound to follow the former, but finds same to be the more persuasive.[8] Among the numerous documents associated with plaintiff's purchase of MMI is an instrument entitled "Stock Purchase Agreement." Exhibit A to Defendants' Motion for Summary Judgment. For the sum of $345,000, "each [defendant] shall sell, transfer, assign and deliver to the [plaintiff] and the [plaintiff] shall purchase from each [defendant] ... shares of capital stock of the Company. ..." Stock Purchase Agreement ¶ 1.1.[9] The court finds this designation sufficient to meet the first prong of the Landreth "security" test. See Landreth, supra, 471 U.S. at 686, 105 S.Ct. at 2301. Reference to the October 31, 1974, "Stockholders Agreement," executed by the defendants and MMI, further satisfies the court that the "stock" purchased by plaintiffs possesses 54 those "traditional features" delineated by the Landreth court. See id,; see also Stockholders Agreement (attached to Plaintiff's Statement of Facts as Exhibit 3). Since "`a purchaser justifiably [may] assume that the federal securities laws apply," Landreth, supra, 471 U.S. at 686, 105 S.Ct. at 2302 (quoting Forman, supra, 421 U.S. at 850, 95 S.Ct. at 2059-60), "when an instrument is both called `stock' and bears stock's usual characteristics," id., the court finds and rules that the stock herein at issue constitutes a "security" as defined in the federal securities laws. Accord id. at 687-88, 105 S.Ct. at 2302; Gould, supra, 471 U.S. at 704, 105 S.Ct. at 2310. The court further finds and rules that since the definition of "security" is substantially similar under both federal and state law, and no principled reason exists for drawing a distinction between the two given their collective protective purpose, said stock falls within the definition of "security" as that term is intended in RSA 421-B:3. Accord RSA 421-B:32 ("This chapter shall be so construed as to effectuate its general purpose to make uniform the law of those states which enact it and to coordinate the interpretation of this chapter with the related federal regulation."). In consequence thereof, defendants' motion for summary judgment as to the asserted violation of the New Hampshire Blue Sky Law, RSA 421-B:3, must be and herewith is denied. c. Standards Applicable to Fraudulent and Negligent Misrepresentation Claims (Counts IV and V) Defendants assert an entitlement to summary judgment on the common law misrepresentation claims because "Plaintiffs continue to fail to allege and demonstrate each Defendant's role and how each Defendant furthered the alleged fraudulent scheme." Defendants' Memorandum of Law at 32. Plaintiffs' argument in opposition essentially maintains that the course of discovery has produced "a record replete with evidence from which a reasonable jury could find that all defendants, either directly or through their authorized representatives, misrepresented, or omitted to disclose, material information. ..." Plaintiffs' Memorandum of Law at 38-39, making summary judgment inappropriate and unwarranted. "With respect to the plaintiffs' count[s] based on negligent or fraudulent misrepresentation, `[o]ne who fraudulently makes a misrepresentation . . . for the purpose of inducing another to act or to refrain from action in reliance upon it, is subject to liability to the other in deceit for pecuniary loss caused to him by his justifiable reliance upon the misrepresentation.'" Gray v. First NH Banks, 138 N.H. 279, 283, 640 A.2d 276, 279 (1994) (quoting RESTATEMENT (SECOND) OF TORTS § 525 (1976)); see also Hydraform Prods. Corp. v. American Steel & Aluminum Corp., 127 N.H. 187, 200, 498 A.2d 339, 347 (1985) (basic elements of tort of negligent misrepresentation is "the defendant's negligent misrepresentation of a material fact and the plaintiff's justifiable reliance on that misrepresentation"). Additionally, "optimistic predictions about the future that prove to be off the mark likewise are immunized unless plaintiffs meet their burden of demonstrating intentional deception." Serabian v. Amoskeag Bank Shares, Inc., 24 F.3d 357, 361 (1st Cir.1994) (citations omitted). In this regard, general averments of the defendants' knowledge of material falsity will not suffice. Greenstone [v. Cambex Corp.], 975 F.2d [22,] 25 [(1st Cir.1992)]. Consistent with Fed.R.Civ.P. 9(b), the complaint must set forth "specific facts that make it reasonable to believe that defendant[s] knew that a statement was materially false or misleading." Id. The rule requires that the particular "`times, dates, places or other details of [the] alleged fraudulent involvement'" of the actors be alleged. In re Glenfed [GlenFed Inc. Securities Litigation], 11 F.3d [843] at 847-48 [ (9th Cir. 1993) ] (citation omitted). See also Romani v. Shearson Lehman Hutton, 929 F.2d 875, 878 (1st Cir.1991); New England Data Services v. Becher, 829 F.2d 286, 288 (1st Cir.1987) ("[I]n the securities context, 55 and in general, this circuit has strictly applied Rule 9(b)"). Id. Reviewing the Second Amended Complaint, and with specific attention drawn to paragraphs 21 and 24,[10] the court is satisfied that plaintiffs have sustained both the particularity burden imposed by Rule 9(b) and the production burden imposed by Rule 56(c), Fed.R.Civ.P. Moreover, because the relief here sought would require the court to find, as a matter of law, that no material facts were misrepresented or, if so, that plaintiffs' reliance thereon was not justified, such sanction flies in the face of the preferred procedure in this circuit that disposition of litigation should be on the merits. See, e.g., Richman v. General Motors Corp., 437 F.2d 196 (1st Cir.1971). Accordingly, defendants' motion for summary judgment as to fraudulent and negligent misrepresentation (Counts IV and V) is herewith denied. 3. Defendants' Motion to Strike Plaintiffs' Cross-Motion for Summary Judgment (document 95) Defendants move the court to "strike" plaintiffs' cross-motion for summary judgment as untimely. For the reasons that follow, said motion is herewith denied. As an initial matter, motions are not generally subject to being stricken. See, e.g., Resolution Trust Corp. v. Blasdell, 154 F.R.D. 675, 683 (D.Ariz.1993) ("Rule 12(f), [Fed.R.Civ.P.,] does not authorize this court to strike documents other than pleadings."); Weiss v. PPG Indus., Inc., 148 F.R.D. 289, 291-92 (M.D.Fla.1993) ("A motion is not a pleading, and thus a motion to strike a motion is not proper under [Rule] 12(f)."). Moreover, to the extent that plaintiffs' motion was untimely, such reason, standing alone, does not warrant defendant's suggested relief. E.g., 28 FEDERAL PROCEDURE, L.ED., § 62:574 (1984) ("court-imposed time limitation for filing motions for summary judgment contained in a pretrial order is not a bar to a later filing"). Defendants' motion to strike is accordingly denied. 4. Plaintiffs' Cross-Motion for Summary Judgment (document 79) Plaintiffs have filed a document captioned "Cross Motion for Summary Judgment" which essentially seeks affirmative rulings on points they similarly raise in opposition to defendants' summary judgment motion, namely whether Count II is barred by the statute of limitations and the applicability of the state Blue Sky Laws. Cross-Motion for Summary Judgment ¶¶ 3, 4. As previously addressed herein, supra section 2, plaintiffs' federal securities claim is barred as untimely, but the claim under RSA 421-B:3 is actionable. The two remaining paragraphs raise issues more properly addressed by medium of motion in limine. Succinctly, plaintiffs seek to bar any evidence pertaining to the integration clause of the Stock Purchase Agreement, paragraph 4, as well as a ruling on defendants' vicarious liability for the actions of their authorized representatives, paragraph 5. Plaintiffs draw the court's attention to Astor Chauffeured Limousine Co. v. Runnfeldt Inv. Corp., 910 F.2d 1540 (7th Cir.1990), and its holding regarding integration clauses and silent contract terms. Noting that "[a] silent contract does not prevent action based on an antecedent lie," id. at 1545 (citation omitted), the Seventh Circuit panel went on to discuss the effect of this principle in relation to a contractual integration clause: 56 Paragraph 10 of the contract reads (in full): Entire Agreement. This Agreement constitutes the entire agreement between the parties, and may not be amended or supplemented except by written instrument executed by an authorized agent or officer of each of the parties hereto. As integration clauses go, this is wimpy. It makes no reference to prior "representations" and does not purport to modify ¶ 8 of the contract, which says that "[a]ll representations and warranties of the parties shall survive the closing of the transactions contemplated hereby." Paragraph 8 is not limited to written representations. Paragraph 10 implements the parol evidence rule, saying that the agreement is no more than what the contract says, adding that it may be modified only in writing. Astor does not seek to recover on an agreement at variance with the terms of the contract. It says, rather, that there was fraud in the inducement. Claims of fraud in the inducement are not blocked by the parol evidence rule.... We conclude that the contract does not affect Astor's ability to recover for antecedent oral fraud. Astor, supra, 910 F.2d at 1545-46. The Stock Purchase Agreement in issue here is similar to that in Astor, and, more importantly, dissimilar to the one defendants cite in One-O-One Enters., Inc. v. Caruso, 848 F.2d 1283 (D.C.Cir.1988).[11] As in Astor, this court finds that the integration clause at issue[12] "implements the parol evidence rule, saying that the agreement is no more than what the contract says...." Astor, supra, 910 F.2d at 1546. Plaintiffs' do not seek to recover on an agreement at odds with the terms of the stock purchase. Rather, they submit that certain fraudulent misrepresentations were made as part of the inducement to enter into the agreement.[13] Accordingly, paragraph 6.9 of the Stock Purchase Agreement does not impede plaintiffs' ability to recover for whatever antecedent oral fraud they may prove at trial, and defendants are hereby precluded from using said paragraph to argue otherwise. The relief sought in paragraph 4 is herewith granted. To the extent that plaintiffs seek, via paragraph 5, a ruling establishing both liability and agency status of the individual defendants, said motion is denied as a matter properly reserved for the jury. Plaintiffs are, however, entitled to put on such evidence as may substantiate a jury finding in their favor. 5. Motion to Strike Affidavit of John A. Georges (document 96) Defendants move to strike the affidavit of John A. Georges "because Mr. Georges was not previously disclosed in discovery and, therefore, his proffered testimony is inadmissible." Motion to Strike at 1. After numerous extensions, discovery formally and finally closed in this action on March 1, 1995, with final pretrial statements due April 1, 1995. Mr. Georges is identified by plaintiffs in their Final Pretrial Statement as an individual who may be called as a witness. Defendants seek to exclude both his affidavit and any trial testimony due to an alleged failure on the part of plaintiffs to accurately respond to propounded interrogatories and properly identify Mr. Georges or his proffered testimony. The interrogatory herein at issue sought information regarding the identity of all persons to whom an alleged September 1991 admission on the part of Harold Levy 57 was made or known to.[14] Plaintiffs facially complied with said request, but did not identify Mr. Georges because his knowledge pertained to an alleged October 1991 "confirmatory admission," rather than the alleged original admission of September. Although narrowly drawn, almost to the point of hypertechnicality, plaintiffs' interrogatory answer is a satisfactory response to the question presented. Moreover, defendants' suggested reliefpreclusion of Mr. Georges' testimony"is a grave step, and `"by no means an automatic response ... where failure to make discovery [is] not willful."'" Poulin v. Greer, 18 F.3d 979, 985 (1st Cir.1994) (quoting Jackson v. Harvard Univ., 900 F.2d 464, 469 (1st Cir.), cert. denied, 498 U.S. 848, 111 S. Ct. 137, 112 L. Ed. 2d 104 (1990) (quoting Freeman v. Package Mach. Co., 865 F.2d 1331, 1341 (1st Cir.1988))). No finding of willfulness can be sustained on the basis of the evidence presently before the court. That being said, "the court is empowered to take whatever action it deems appropriate after considering all of the circumstances surrounding the violation." Id. at 984 (citing Thibeault v. Square D. Co., 960 F.2d 239, 245 (1st Cir.1992)). "The presence of surprise and prejudice play a central role" in determining what sanction, if any, is appropriate. Id. As this court has herein barred plaintiffs' section 10(b) claim under the Securities Exchange Act of 1934, Mr. Georges' testimony is accordingly relevant only as to the alleged misrepresentations. Defendants admittedly possess ample evidence which operates to contravene such testimony and have, in fact, argued that plaintiffs' reliance on any such statements is not justifiable. The strengths and merits of these respective positions are matters best reserved for resolution by the jury at trial. Defendants' motion to strike is accordingly denied. 6. Motion to Strike Affidavit of Randall F. Cooper, Esq. (document 93) Defendants move to strike the affidavit submitted by Attorney Cooper in opposition to Defendants' Motion for Summary Judgment "on the basis that it is ethically improper for Mr. Cooper to be both a witness and attorney for Plaintiffs." Motion to Strike at 1. Plaintiffs submit that the facts affirmed to in the affidavit only pertain to (1) whether plaintiffs had inquiry knowledge sufficient to trigger the one-year limitations bar of the federal securities statute and (2) the Levy admission of 1991 regarding Sears' intent to terminate the MMI contract. Plaintiffs further submit that Attorney Cooper's testimony is unnecessary in light of the Georges testimony regarding same, see supra section 5, and accordingly have no plans to call Attorney Cooper as a witness. Objection to Motion to Strike ¶ 4. Additionally, insofar as such testimony would pertain to the degree or extent of plaintiffs' knowledge of any alleged fraud in violation of the federal securities laws, certain rulings made herein renders "moot the need of the undersigned to testify before the trier of fact." Id. ¶ 5. As the testimony of Attorney Cooper is no longer relevant to the claims still in issue, defendants' motion to strike same is herewith denied as moot. Conclusion For the reasons set forth herein, the following rulings shall herewith issue: 1. Defendants' Motion for Summary Judgment (document 69) is granted in part and denied in part. Plaintiffs' claim under section 10(b) of the Securities Exchange Act of 1934 is barred as untimely raised. All other claims shall go forward to trial. 2. Defendants' Motion to Strike Plaintiffs' Cross-Motion for Summary Judgment (document 95) is denied. *58 3. Plaintiffs' Cross-Motion for Summary Judgment (document 79) is granted in part and denied in part. Plaintiffs' federal securities claim is barred as untimely, but their state securities claim shall go forward. Plaintiffs are entitled to introduce parol evidence to establish antecedent oral fraud. The liability of the individual defendants, and whether such liability, if so proved, is imputed to the corporate defendants, shall be resolved on the merits by the jury. 4. Defendants' Motion to Strike Affidavit of John A. Georges (document 94) is denied. 5. Defendants' Motion to Strike Affidavit of Randall F. Cooper, Esq. (document 93) is denied as moot. SO ORDERED. NOTES [1] As of the date of this order, there is presently pending before the court a settlement agreement executed between the plaintiffs and Sears. By the terms of said agreement, all claims against Sears are intended to be dismissed with prejudice. Accordingly, the term "defendants" as employed herein includes all of the captioned defendants except Sears. [2] For a more complete discussion of the underlying facts in this action, see generally Manchester Mfg. Acquisitions, Inc. v. Sears, Roebuck & Co., 802 F. Supp. 595, 597-98 (D.N.H.1992). [3] At the outset of this litigation, defendants moved to dismiss. By written order dated September 30, 1992, the court dismissed, with prejudice, the claim brought under the Securities Act of 1933, 15 U.S.C. § 77q(a). See Manchester Mfg., supra note 2, 802 F.Supp. at 598-99. Counts II-IValleging violations of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b); New Hampshire's Blue Sky Law, New Hampshire Revised Statutes Annotated (RSA) 421-B; and common-law fraudulent misrepresentation, respectivelywere dismissed without prejudice for failure to plead with sufficient particularity. See id. at 601-03. Count Vcommon-law negligent misrepresentationsurvived the Rule 12(b)(6), Fed.R.Civ.P., motion and is herein attacked on summary judgment. [4] The court notes that this argument was previously raised in defendants' motion to dismiss, discussed supra note 3. However, in ruling on said issue, the court indicated "on the record before it, while the court is unwilling to say that plaintiff can prove no set of facts in support of this claim which would entitle them to relief, it is also unable to resolve the limitations period issue." Manchester Mfg., supra note 2, 802 F.Supp. at 600. Nearly three years of discovery have elapsed since that time, and the record is now sufficiently developed for the court to make a ruling thereon. [5] The court notes that this definition of security is substantially similar to that incorporated into the federal securities laws. See 15 U.S.C. § 78c(a)(10) (1981 & Supp.1995). [6] This is known as the "sale of business" doctrine. [7] This court's prior ruling in Manchester Bank v. Connecticut Bank & Trust Co., 497 F. Supp. 1304, 1305 (D.N.H.1980) is inapposite not only because it predates Landreth but moreover because the alleged security at issue was a participation agreement rather than literal stock shares. [8] Defendants' attempt to distinguish Anderson from Landreth on the basis of the amount of control transferred in the transaction is similarly unpersuasive. In a companion case to Landreth, Gould v. Ruefenacht, 471 U.S. 701, 105 S. Ct. 2308, 85 L. Ed. 2d 708 (1985), the Court restated Landreth's primary holding"where an instrument bears the label `stock' and possesses all of the characteristics typically associated with stock, a court will not be required to look beyond the character of the instrument to the economic substance of the transaction to determine whether the stock is a `security' within the meaning of the Acts." Id. at 704 (emphasis added) (citation omitted). It then went on to note that distinctions as to the amount of control transferred or when less than 100 percent of a company's stock is sold "make little sense in view of the Acts' purpose to protect investors." Id. at 706. [9] The instrument further indicates that defendant Dylex B.V. sold 420 shares of Capital Stock for the sum of $144,900 and defendant Dylex Limited sold 300 shares for $103,500. The remaining 280 shares were owned by Sears, who sold same for $96,600. Stock Purchase Agreement ¶¶ 1.1, 1.2. [10] These paragraphs aver as follows: 21. Weingart and Dinco were further advised, during the January 21, 1988[,] conversation, by defendants Levy, Gunner and Axelrod that the sale of MMI would not affect MMI's distribution business with Sears. At the time of that representation, those defendants either knew otherwise, or had no actual basis for that representation. 24. On or about May[] 19, 1988, Dinco and Weingart met in Montreal, Quebec, Canada, with Gunner, Levy, and Axelrod, who were acting on behalf of all defendants. During that meeting, Dinco and Weingart expressed an interest in purchasing MMI, but inquired directly about the continued business of Sears. Dinco and Weingart were reassured that the Sears business would continue as before. Second Amended Complaint ¶¶ 21, 24. [11] The parties in One-O-One expressly indicated that their "Agreement `supersede[d] any and all previous understandings and agreements.'" One-O-One, supra, 848 F.2d at 1286. [12] Said clause provides, in sum, "Integration. This Agreement embodies the entire understanding of the parties with respect to the subject matter hereof." Stock Purchase Agreement ¶ 6.9. [13] The court notes that the Stock Purchase Agreement specifically states, "All representations and warranties of each party shall survive the Closing hereof," Stock Purchase Agreement ¶ 3.4, a statement the integration clause does not explicitly modify. [14] The substance of the alleged admission is that "all of the defendants knew at the time of the sale that Sears was intending to terminate the distribution business with MMI in the then near future." Second Amended Complaint ¶ 47.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2593719/	743 F. Supp. 1228 (1990) Primmel WALLACE, Plaintiff, v. CHRYSLER CREDIT CORPORATION and Ralph King, Defendants. No. 89-0069-B. United States District Court, W.D. Virginia, Big Stone Gap Division. June 18, 1990. On Motion to Alter or Amend July 27, 1990. 1229 Henry S. Keuling-Stout, Big Stone Gap, Va., for plaintiff. Mark L. Esposito, Bristol, Va., for Chrysler Credit. Stephen J. Kalista, Big Stone Gap, Va., for King. MEMORANDUM OPINION GLEN M. WILLIAMS, Senior District Judge. The plaintiff filed a complaint seeking damages arising from the defendants' actions in repossessing his Dodge truck, in which Chrysler had a security interest. The case is before the court on defendants' motion to dismiss pursuant to Fed.R.Civ. Proc. 8 and 12(b)(6). The complaint states that the plaintiff is a resident of Virginia; that the defendant King is a resident of Tennessee; and that the defendant Chrysler Credit Corporation is organized and exists under the laws of Delaware; and that the amount in controversy exceeds $10,000. The complaint alleges that on April 13, 1988 the defendant Ralph King,[1] a deputy sheriff 1230 for Sullivan County, Tennessee, followed plaintiff Primmel Wallace to Big Stone Gap, Virginia, where Wallace was staying with his daughter, and, at approximately 2 o'clock in the morning, "breached the peace by entering the truck owned by the plaintiff, starting the truck, racing the motor of the truck, [and] barrelling out of the lot and down the street." Wallace and his daughter did not know what was happening and were in fear. When Wallace and his daughter approached King "to discuss what [he] had done,"[2] King "very hatefully and gritting his teeth pointed his finger at Wallace and his daughter and said, `Listen here, don't start with me, I will throw you in jail so fast it will make your head spin.'" He stated that he was a deputy sheriff "and had full authority to back up his threat." The complaint alleges that King acted willfully, intentionally and wantonly, and deprived Wallace of his property without due process. Jurisdiction was claimed under 18 U.S.C. § 1332, 42 U.S.C. § 1983, and 28 U.S.C. § 1434.[3] Count I of the complaint recites the plaintiff's allegations, but seeks no specific relief. Count II alleges that the defendants breached the peace in violation of Va.Code Ann. § 8.9-503[4] "which damaged plaintiff's property and caused plaintiff personal injury." Count III alleges that King's actions were "intentional, wilful and wanton and in reckless disregard of the rights of the plaintiff," and that as a result of these actions Wallace "was injured and suffered emotional distress and deprivation of personal property and rights." Defendant Chrysler Credit Corporation has filed a motion for dismissal under Fed. R.Civ.P. 8 and 12(b)(6), for failure to state a claim upon which relief may be granted, and because the complaint is so vague and ambiguous as to the relief sought against Chrysler that it cannot frame a responsive pleading. Defendant Ralph King has moved to dismiss on the grounds that the court lacks subject matter jurisdiction, pursuant to Fed.R.Civ.P. 12(b)(1); that venue is improper under Fed.R.Civ.P. 12(b)(3); and that the complaint fails to state a claim upon which relief can be granted under 12(b)(6). The court believes that it has proper jurisdiction over the subject matter: there is complete diversity of citizenship between the parties, and, as will be developed further, Count III of the complaint essentially alleges a violation of 42 U.S.C. § 1983. Venue is correct under 28 U.S.C. § 1391, which provides that venue is proper in the judicial district in which the claim arose. Although it is true that defendant King is not a resident of the Western District of Virginia, the claim arose from his alleged actions in this district. In support of its motion to dismiss under Rule 8, Chrysler states that the plaintiff is 1231 seeking damages only from King and the relief sought from it is "indiscernible." In the alternative, Chrysler asks that the plaintiff be required to clarify the basis of its claim and specify the relief it is seeking. The relief the plaintiff has asked for is set out under the heading of "Damages" at the end of his complaint. They are: 1. Loss of personal property (vehicle and personal property in it); 2. Loss of wages; 3. Emotional injury and distress; 4. Legal fees and expenses. The complaint goes on to ask that the court "enjoin and invalidate" the sale of Wallace's Dodge truck "as being a breach of the peace and a violation of due process," or in the alternative award to him the fair market value as damages; award $50,000 in damages against King; "and other and further relief as this Court may deem appropriate." At oral argument, plaintiff's counsel explained that he was making the due process claim only against the deputy, while the breach of the peace claim, with emotional distress resulting, sounded against both defendants. With that understanding, the court does not believe that a dismissal under Rule 8 is warranted. The issues for the court to decide on the remaining 12(b)(6) motions, then, are (1) whether defendants breached the peace in repossessing plaintiff's truck; and (2) whether King's actions violated any of plaintiff's due process rights. I. BREACH OF PEACE The plaintiff admits in his complaint that he had missed two payments on the truck. The Virginia Uniform Commercial Code, Va.Code Ann. § 8.9-503, states that upon default a secured party may repossess the collateral without judicial process "if this can be done without breach of the peace." A. Origins The origins of the self-help remedy for creditors as embodied in today's law go back to the Dark Ages. Self-help was tolerated because legal institutions were too weak to prevent it. Mikolajczyk, Breach of Peace and Section 9-503 of the Uniform Commercial Code, 82 Dick.L.Rev. 351, 351 (1977-78) (citing 2 F. Pollock & F. Maitland, The History of English Law, 547 (2d. ed. 1909)). The remedy had been totally abolished by the time of the Norman Conquest, but the practical considerations involved in creditors' needs to protect their property caused its revival; as Blackstone put it: "[I]t may frequently happen that the owner may have this only opportunity of doing himself justice: his goods may be afterwards conveyed away or destroyed ... if he had no speedier remedy than the ordinary process of law." Id. at 353, n. 13 (quoting 3 W. Blackstone, Commentaries of the Laws of England 4.) Then as now the creditor had to exercise restraint, according to Blackstone, because "public peace is a superior consideration of any man's private property; and ... this natural right of recaption shall never be exerted where such exertion must occasion strife and bodily contention, or endanger the peace of society." Id. Self-help was recognized in the United States first in court decisions, and then was codified in § 16 of the Uniform Sales Act of 1918. § 9-503 of the U.C.C. was intended to continue the previous law and "not to create any new rights or obligations." See id. at 354 and cases cited therein. Breach of the peace has been generally defined as a violation of public order, a disturbance of the public tranquility, by an act or conduct inciting to violence or tending to provoke or incite others to break the peace.... It includes any violation of any law enacted to preserve peace and good order. 2 R. Anderson, Wharton's Criminal Law and Procedure § 802 (1957) (footnotes omitted), quoted in Mikolyczyk, 82 Dick. L.Rev. at 355. Therefore, it has been held that urinating against a wall is not a breach of the 1232 peace;[5] nor was questioning a speaker at a public meeting and interrupting him to make "observations on his statements;"[6] nor was "willfully and wantonly" ringing a doorbell.[7] On the other hand, a customer who abused a shopkeeper over a bill, and continued to do so in the street outside, causing "a large concourse and mob of persons ... to assemble" and obstruct the street, was guilty of a breach of the peace.[8] However, the mere use of loud words in the street, though it may be disorderly, is not a breach of the peace.[9] B. Breach of Peace in Virginia Virginia recognizes a distinction between disorderly conduct and abusive and insulting language reasonably calculated to provoke a breach of the peace. Compare Va. Code Ann. § 18.2-415 with § 18.2-416 (1988). The latter section states that If any person shall, in the presence or hearing of another, curse or abuse such other person, or use any violent abusive language to such person concerning himself or any of his relations, or otherwise use such language, under circumstances reasonably calculated to provoke a breach of the peace, he shall be guilty of a class 3 misdemeanor. In Mercer v. Winston, 214 Va. 281, 199 S.E.2d 724 (1973), the Virginia Supreme Court upheld this statute from a challenge to its facial constitutionality. It ruled that as long as the statute was limited to words having a direct tendency to cause acts of violence by the person to whom, individually, the remark is addressed, it is not vague or overbroad. Id. at 285, 199 S.E.2d at 726.[10] C. Breach of Peace and the UCC A limitation of the meaning of the term "breach of the peace" as it is contained in Article 9 of the Uniform Commercial Code to the circumstances set out in the statute would, however, be too restrictive. Most courts have held that the peace has been breached within the meaning of § 9-503, not only if there has been violence or the threat of violence, but if the creditor has broken and entered the debtor's residence; see, e.g., General Electric Credit Corp. v. Timbrook, 291 S.E.2d 383, 385-6 (W.Va. 1982) or broken into other buildings such as garages and stables (but not if they are open). C.I.T. Corp. v. Short, 273 Ky. 190, 115 S.W.2d 899, 900 (1938). Creditors may, however, enter on to the debtor's land to repossess the collateral because the vindication of the creditor's security interest is considered more important than a trespass. Oaklawn Bank v. Baldwin, 289 Ark. 79, 709 S.W.2d 91, 92 (1986). If, however, the debtor is present and makes an objection, the breach of the peace analysis comes to the fore: the creditor's agent must then desist. Although there are no Virginia cases precisely delineating these rules, they are consistent with the broad outline of the most recent Virginia authority on repossessions. In Universal Credit Co. v. Taylor, 164 Va. 624, 630-1, 180 S.E. 277, 280 (1935), the Virginia Supreme Court noted that 1233 The right to possession of chattels may be exercised without recourse to the courts, provided this can be done peaceably. It is only when a right of one is denied or resisted by another, that such party must resort to appropriate legal proceedings to enforce that right. It is evident from the facts alleged in the complaint that the plaintiff did not resist or interpose any objection before his truck was taken; indeed, he had no opportunity to do so, since the truck was gone before he could determine what had happened. It appears to the court that the stealthy manner in which the repossession was effected was calculated to avoid a breach of the peace because the prospect of a confrontation with the plaintiff was less at 2 a.m. than it would have been in the daylight hours or in the early evening. It has been held in almost all jurisdictions that the use of stealth in a self-help repossession is not a breach of the peace. See, e.g., Ford Motor Credit Co. v. Cole, 503 S.W.2d 853, 855 (Tex.Ct.App.1973). The complaint alleges that King breached the peace by "starting the truck, [and] barrelling out of the lot and down the street." But starting a vehicle, racing its engine, and zooming down a street hardly fits Wharton's definition of "a disturbance of the public tranquility, by ... conduct inciting to violence ... or tending to ... provoke or incite others to break the peace...." Even assuming, though there is no such allegation in the complaint, that some traffic regulation may have been violated, the act of doing so was not an incitement to violence or to break the peace. See also Jordan v. Citizens & Southern Nat. Bank of South Carolina, 278 S.C. 449, 298 S.E.2d 213, 214 (1982), in which the debtor gave chase when an agent of the creditor repossessed his truck, and the agent was "speeding, failed to observe traffic signals, and drove recklessly." The South Carolina Supreme Court said that it doubted that violations of the traffic laws amounted to a breach of the peace, but "even if it be assumed that they did the conduct was not incident to seizing the truck at the residence of the [debtors].... [B]reach of the peace ... refers to conduct at or near and/or incident to the seizure of the property." Id. Before any traffic regulation could have been violated in this case the repossession was a completed act. Furthermore, there is authority that the repossession of movable collateral such as cars from property owned by a third party or from a public place cannot amount to a breach of the peace (unless there is opposition to the removal). This is because the debtor's real property interest is not invaded. 82 Dick.L.Rev. at 326 citing, inter alia, Harris Truck & Trailer Sales v. Foote, 58 Tenn.App. 710, 436 S.W.2d 460 (1968); McWaters v. Gardner, 37 Ala.App. 418, 69 So. 2d 724 (1954). Since the plaintiff's truck was located on his daughter's property at the time of its repossession, and no objection was interposed before King had driven it away, there are further grounds for concluding that King did not breach the peace at that time. The complaint also alleges that King breached the peace by threatening to throw the plaintiff and his daughter in jail when they remonstrated with him about the repossession. Although the complaint does not state exactly when this incident occurred, it is clear from the context that it did not take place until after the repossession had been effected. See footnote 2, supra. Once a creditor has gained sufficient dominion over his collateral, objection by the debtor will be of no avail. See First and Farmers Bank of Somerset v. Henderson, 763 S.W.2d 137, 139, fn. 3 (Ky. App.1988) (bank employees who had removed debtor's boat from his open garage but who were stopped by debtor before they could get out of his driveway had not obtained sufficient dominion to preclude objection); LaPorte Motor Co. v. Firemen's Ins. Co., 209 Wis. 397, 245 N.W. 105, 106 (1932) ("there must be a legal taking including adequate assertion of possession by the seller precluding the buyer from interposing objection and placing upon the one seeking to repossess the duty of resorting to legal proceedings"). The court believes that, whatever else they may have been, the threats, or statements, attributed to King were made after he, and by extension, 1234 Chrysler, had obtained dominion over the truck, and that therefore they could not be the basis for finding that breach of peace occurred during the repossession. "Once the secured party has gained repossession of his collateral," remarks Mikolyczyk, "he has the same right to defend his possession as any other property owner including the right to use reasonable force." 82 Dick.L.Rev. at 370 (citations omitted). It should be noted, finally, that several courts have held that the full-color presence of a law enforcement officer at a self-help repossession, even though intended to prevent a breach of the peace, establishes an actual breach of peace within the ambit of § 9-503, because, as one court put it, "the net effect [is to] override the debtor's right to object." First and Farmers Bank, 763 S.W.2d at 141; Waisner v. Jones, 107 N.M. 260, 755 P.2d 598 (1988) (military policeman); Walker v. Walthall, 121 Ariz. 121, 588 P.2d 863 (1978). Dissents in both First and Farmers and Walker argued that the mere presence of a law enforcement officer who does not participate in the repossession does not constitute a breach of the peace. Be that as it may, the present case is not one in which repossession was, in any sense, aided by the force majeure of defendant King's office. It was only after repossession that plaintiff was even aware that King was a deputy. The court can detect no theory under which the repossession of plaintiff's Dodge truck was a breach of the peace under the facts alleged. Accordingly, the motions to dismiss for failure to state a claim will be granted. II. § 1983 42 U.S.C. § 1983 provides civil liability for one who, under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws.... Two elements must be proven before a plaintiff can recover under this section: First, the plaintiff must prove that the defendant has deprived him of a right secured by the `Constitution and laws' of the United States. Second, the plaintiff must show that the defendant deprived him of this constitutional right `under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory.' This second element requires that the plaintiff show the defendant acted `under color of law.' Adickes v. S.H. Kress & Co., 398 U.S. 144, 150, 90 S. Ct. 1598, 1604, 26 L. Ed. 2d 142 (1970). The first question that must therefore be answered is whether any of the actions of Deputy King deprived the plaintiff of any of the rights secured to him under the Constitution and laws of the United States. The complaint alleges that King deprived the plaintiff of his property without due process "which is prohibited by the Fourteenth Amendment." A number of cases have considered the question of whether a law enforcement officer's presence at or participation in a creditor's repossession constitutes action under color of state law. See, e.g., Menchaca v. Chrysler Credit Corp., 613 F.2d 507, 512-13 (5th Cir.1980); Torres v. First State Bank of Sierra County, 588 F.2d 1322, 1327 (10th Cir.1978). In such cases, of course, the officers are participating in the removal of the debtor's property while cloaked in the mantle of their authority as agents of the state. Therefore, it is at least arguable that they were depriving him of property without due process. In the present case, however, Deputy King acted as a private citizen, and it does not appear that his status as an off-duty deputy had any bearing on the repossession. It is not enough that a police officer is off duty to establish that he did not act under color of state law; it is necessary to scrutinize the nature of the act. Monroe v. Pape, 365 U.S. 167, 184-6, 81 S. Ct. 473, 482-84, 5 L. Ed. 2d 492 (1961), overruled on other grounds, Monell v. Dept. of Social Services, 436 U.S. 658, 98 S. Ct. 2018, 56 1235 L.Ed.2d 611 (1978). "Misuse of power, possessed by virtue of state law and made possible only because the wrongdoer is clothed with the authority of state law, is action taken `under color of' state law." United States v. Classic, 313 U.S. 299, 326, 61 S. Ct. 1031, 1043, 85 L. Ed. 1368 (1941). But the allegations in the complaint make no suggestion or even hint that Deputy King was using his power as an agent of the state in effecting the actual repossession;[11] rather, he acted as any private individual undertaking the same action would have done. See, e.g., United States v. Coleman, 628 F.2d 961, 962-3 (6th Cir. 1980). His status as a deputy was completely irrelevant. Cf. Revene v. Charles County Com'rs., 882 F.2d 870, 872-3 (4th Cir.1989) (it was error to dismiss under Rule 12(b)(6) plaintiff's § 1983 action against off-duty deputy who killed plaintiff's decedent where state law said deputies were on duty 24 hours a day and expected to take action as policemen on matters coming to their attention); Layne v. Sampley, 627 F.2d 12, 13 (6th Cir.1980) (off-duty officer who shot plaintiff could properly have been found to have been acting under color of state law where he had authority to carry weapon only because he was an officer; where argument that led to shooting had its genesis in his performance of police duties; and where threat to officer was received through the police department); Stengel v. Belcher, 522 F.2d 438, 441 (6th Cir.1975). See also Screws v. United States, 325 U.S. 91, 111, 65 S. Ct. 1031, 1040, 89 L. Ed. 1495 (1945) (plurality opinion) ("It is clear that under `color' of law means under `pretense' of law. Thus acts of officers in the ambit of their personal pursuits are plainly excluded.") As for the alleged threat to throw the plaintiff in jail,[12] the complaint is clear enough that it occurred only after the repossession had been completed: as Paragraph 8 of the complaint says, King made the threat only when "Wallace, with his daughter, approached the defendant ... to discuss what [he] had done ..." (emphasis added). As pointed out in part I of this opinion, once a creditor has gained dominion over the collateral, he has the same right to defend its possession as an owner in fee simple, including the right to use force. Whether or not King was on duty at the time he issued the threat to jail the plaintiff if he interfered with him, there can be no question that his actions were under color of state law, since he was using his position as a deputy sheriff. But plaintiff has not shown how the alleged threat deprived him of any rights under the Constitution or laws of the United States. The Fourteenth Amendment prohibits the deprivation of life, liberty, or property without due process of law. The plaintiff was not deprived of his life, and, as we have seen, his property was taken according to Virginia law. Nor was he deprived of any detectable liberty interest: once the truck was in the possession of his creditor it was incumbent upon him to resort to judicial means to recover it, or work out arrangements with the creditor. An order by a deputy sheriff to not, in effect, interfere with his possession of a vehicle which he was authorized and entitled to be in possession of, whatever else it may be, is not a violation of the Constitution. Therefore the plaintiff has no cognizable § 1983 claim. See Baker v. McCollan, 443 U.S. 137, 99 S. Ct. 2689, 61 L. Ed. 2d 433 (1978), in which the Supreme Court pointed out: Section 1983 imposes liability for violations of rights protected by the Constitution, 1236 not for violations of duties of care arising out of tort law. Remedy for the latter type of injury must be sought in state court under traditional tort law principles. Just as `[m]edical malpractice does not become a constitutional violation merely because the victim is a prisoner,' Estelle v. Gamble, 429 U.S. 97, 106, [97 S. Ct. 285, 292, 50 L. Ed. 2d 251] (1976), false imprisonment does not become a violation of the Fourteenth Amendment merely because the defendant is a state official. Id. at 146, 99 S. Ct. at 2695-96. See also Fisher v. Washington Metropolitan Area Transit Authority, 690 F.2d 1133, 1139 (4th Cir.1982). The plaintiff's § 1983 complaint must also be dismissed. III. CONCLUSION The complaint fails to state a claim upon which relief can be granted. Therefore, an Order will enter dismissing the plaintiff's claims. ON MOTION TO ALTER OR AMEND The plaintiff has filed a motion to alter or amend the court's judgment of dismissal of his claims against the defendants, and a motion to amend his complaint to allege additional grounds for relief. The defendants oppose both motions. Fed.R.Civ.Proc. 15(a) "literally gives the plaintiff an unlimited right to amend once as of course before a responsive pleading is filed." 3 J. Moore, Moore's Federal Practice, ¶ 15.07(02) (1989). In response to plaintiff's original complaint, the defendants filed only motions to dismiss, which are not considered responsive pleadings for the purposes of Rule 15. Sachs v. Snider, 631 F.2d 350, 351 (4th Cir.1980). However, once the complaint has been dismissed (or disposed of on summary judgment) whether to grant leave to amend is in the discretion of the trial court. Id. Accord Moore, supra, ¶ 15.07(2); 27 Fed.Proc., L.Ed. Pleadings and Motions, § 62:271 (1984). The two new counts (Counts IV and V) really only make one new allegation. Count V is an attempt to restate and expand the § 1983 violation alleged in the original complaint. The court noted no violation of the plaintiff's Fourteenth Amendment rights had been made out, because he had not shown how defendant King, a deputy sheriff, had deprived him of any life, liberty, or property without due process of law: the repossession of plaintiff's Dodge truck had taken place according to law. The plaintiff now alleges that the truck contained personal property valued at $1,000 at the time it was repossessed; that this property has not been returned; and that King "acted under the color of Tennessee state law to take and/or keep personal property belonging to the plaintiff and to keep the plaintiff from pursuing inquiry as to the whereabouts of the property." As the court pointed out in its opinion, the Supreme Court has made it clear that § 1983 is not intended to be used as a substitute for state tort law remedies. Baker v. McCollan, 443 U.S. 137, 146, 99 S. Ct. 2689, 2695-96. Count V is nothing more or less than an allegation that King converted the plaintiff's property. The suggestion that King's statement prevented the plaintiff "from pursuing inquiries" about the property is frivolous on its face: there were obviously other avenues officials at Chrysler Credit, King's supervisors not foreclosed to the plaintiff. Count IV, in essence, alleges that the plaintiff was having difficulties with the front suspension of his truck and had come to an agreement with an official at Chrysler Credit to suspend payments until the suspension was replaced under warranty. It alleges that Chrysler broke the agreement and had the truck repossessed anyway. As a result, plaintiff lost the truck, the $1,000 worth of personal property mentioned earlier, and caused him to lose his job as the manager of a convenience store in Pompano Beach, Florida, to which he was unable to return and would have been unable to perform without a vehicle. The loss of his job has cost him "in excess of $56,000." *1237 Regardless of the merits or demerits of this claim, the court notes that the purpose of Fed.R.Civ.Proc. is to "provide parties an opportunity to assert new matters that may not have been known to them at the time they filed their original pleadings." Johnson v. Helicopter & Airplane Service Corp., 389 F. Supp. 509, 513 (D.Md.1974), citing 6 C. Wright & A. Miller, Federal Practice and Procedure, Civil ¶ 1473 (1971). The original complaint in this case was filed April 11, 1989. The plaintiff has offered no explanation or justification for failing to allege this count in his original complaint, or for failing to amend the complaint to include it, which he could freely have done at any time before the court entered its judgment and order on June 18, 1990. Courts have not generally allowed attorneys to have two bites at the apple by this practice. Littlefield v. City of Afton, 785 F.2d 596, 609-10 (8th Cir.1986); Freeman v. Continental Gin Co., 381 F.2d 459, 469-70 (5th Cir.1967). Judicial economy would not be well served by allowing unsuccessful litigants to reframe their complaints every time the original was dismissed for failure to state a claim. In the absence of a showing of some legitimate reason for not alleging Count IV in the original complaint, the court will deny the motion to amend. An appropriate Judgment and Order will enter this day. NOTES [1] The original complaint identified defendant King as "Deputy Sheriff James Buddy King." In answer to interrogatories submitted by the plaintiff, Chrysler Credit Corporation identified the individual who repossessed the plaintiff's truck as Ralph King. Thereupon, the defendant James Buddy King was dismissed from the suit by order of the court, and Ralph King substituted in his place. [2] Counsel for the plaintiff stated at oral argument that this incident occurred hours after the truck was repossessed, on the premises of a Dodge dealer in Kingsport, Tennessee. Since this is not stated in the pleadings, and since the court has no desire to turn the Rule 12(b)(6) motion into a Rule 56 summary judgment motion, the court will make its decision based solely on matters appearing in the pleadings. [3] Under the heading "Parties and Jurisdiction" in the complaint, counsel states that: "This suit is brought under 42 U.S.C. § 1983." § 1983 provides redress for deprivation of rights under color of state law, but does not in and of itself bestow jurisdiction of the action on federal courts. Blue v. Craig, 505 F.2d 830, 836 (4th Cir.1974). 28 U.S.C. § 1332 (not Title 18 as stated in the complaint) at the time the cause was filed gave federal district courts jurisdiction in all civil actions where the amount in controversy exceeded $10,000 and was between citizens of different states. 28 U.S.C. § 1434 does not exist, but the court assumes that plaintiff was referring to 28 U.S.C. § 1443, which allows removal of state court actions to federal court "for any act under color of authority derived from any law providing for equal rights." This action, however, was not originally commenced in state court. [4] Va.Code Ann. 8.9-503 (1965) states: Unless otherwise agreed a secured party has on default a right to take possession of the collateral. In taking possession a secured party may proceed without judicial process if this can be done without breach of the peace or may proceed by action.... [5] Booth v. Hanley, 2 Car. & P. 288, 172 Eng.Rep. 129, 130 (1826). [6] Wooding v. Oxley, 9 Car. & P. 1, 5-6, 173 Eng.Rep. 714, 716 (1838). The plaintiff attended a meeting of a temperance society, and when the speaker stated that "if a person drank water, his nerves would be hard as iron, and he would be as strong as an elephant, the plaintiff merely said, `Yes, as a dead elephant,' which caused some laughter, and also made other observations [presumably of a similarly sidesplitting nature] which had the effect of interrupting the speaker and diverting the attention of the meeting from his speech." Id. at 2, 173 Eng.Rep. at 715. [7] Grant v. Moser, 5 Man. & G. 123, 134 Eng.Rep. 507 (1843). [8] Cohen v. Huskisson, 2 M. & W. 477, 483, 150 Eng.Rep. 845, 848 (Exch. of Pleas 1837). [9] Hardy v. Murphy, 1 Esp. 293, 170 Eng.Rep. 362 (1795). [10] The defendant had been convicted of breach of the peace after participating in "a disturbance which had racial overtones and approached near riot proportions" at which he had addressed several remarks to a Richmond policeman along the lines of "you white son of a bitch," "you honky pig," "you white mother fucker," "white bastard," and "pig." 214 Va. at 282, n. 1, 199 S.E.2d at 725, n. 1. [11] The actual repossession took place in Virginia while the defendant King is alleged to have been a deputy in Tennessee. A law enforcement officer who has neither actual nor apparent authority to act in another state cannot be acting under color of state law when outside his jurisdiction because he has no colorable authority there. Firman v. Abreau, 691 F. Supp. 811, 813 (S.D.N.Y.1988). Such persons are no different from any private citizen. Id. Therefore, even if King's status as a deputy were somehow implicated in the repossession, since he was not clothed with any authority of state law in Virginia he could not have deprived Wallace of any rights within the ambit of § 1983. [12] Assuming that the threat was made within King's jurisdiction in Tennessee. See footnote 2, supra.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/102359/	293 U.S. 498 (1935) UNITED STATES v. SPAULDING. No. 161. Supreme Court of United States. Argued November 15, 1934. Decided January 7, 1935. CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE FIFTH CIRCUIT. 499 Mr. Will G. Beardslee, with whom Solicitor General Biggs and Messrs. Wilbur C. Pickett, Randolph C. Shaw, and W. Marvin Smith were on the brief, for the United States. Mr. Warren E. Miller argued the cause and filed a brief, and Mr. Philip D. Beall also filed a brief, for respondent. MR. JUSTICE BUTLER delivered the opinion of the Courts. In September, 1917, respondent, then 24 years old, enlisted in the United States Navy. He was successively commissioned ensign and lieutenant, and became an air pilot. He was honorably discharged June 30, 1922. While in the service he obtained a policy of war risk insurance which lapsed November 30, 1923. He brought this suit March 15, 1932, in the federal district court for northern Florida to recover the amounts payable under 500 the policy for total permanent disability alleged to have resulted from kidney disease and injuries received in an air plane crash occurring while the policy was in force. At the close of all the evidence the United States moved for a direct verdict. The motion was denied, the jury found for respondent, and the court gave him judgment which was affirmed by the Circuit Court of Appeals. 68 F. (2d) 656. The policy covers total permanent disability, whatever its cause, occurring before the lapse. The evidence was not confined to that period, for respondent's subsequent condition is pertinent to the extent that it tends to show whether he became totally and permanently disabled before the lapse. Lumbra v. United States, 290 U.S. 551, 560. The United States maintains that the evidence was not sufficient to sustain the verdict. And that is the sole question presented for our consideration. The material substance of the evidence follows. In the latter part of 1919, respondent first had kidney trouble. According to the naval medical records, he was sick four times from what was finally diagnosed as a kidney stone. These illnesses were in June and September, 1920, and in January and August, 1921; their duration in all was about six weeks; while they lasted urinalyses sometimes disclosed albumin, casts and corpuscles in varying quantities. Some time after the last attack, the stone was removed. November 14, 1921, respondent's upper and lower jaws were fractured in the airplane crash. He was in the naval hospital until February, 1922. He testified that he continuously had kidney trouble and severed pains in the head and back. When discharged the only defect noted was that his teeth did not occlude properly. Due to that he had gastritis February 28. Urinalysis then disclosed very few blood cells, occasional pus cells but no albumin or casts. The gastritis disappeared. In May following, his teeth were treated for the malocclusion 501 Respondent testified that he was then suffering kidney pains and that his left antrum was much swollen. A civilian, Dr. Quina, treated the antrum. May 31 respondent went against to the hospital. He then stated that two years earlier he had suffered acute illness following exposure in wet and cold, had not felt well since and for the last month had been treated for kidney trouble. The diagnosis then made was "nephritis chronic parenchymatous." June 26, 1922, he was examined for discharge from the service. The medical officers noted their opinion that the nephritis was due to toxic materials absorbed from the antrum and that infection of the antrum resulted from injuries sustained in the airplane crash. He was found "not physically qualified for active duty in the Navy by reason of the following physical defects which are of a more or less temporary nature: Infection of left antrum and malocclusion of the teeth." And on that day he certified that he had the following disabilities entitling him to compensation under the War Risk Insurance Act: Infection of the left antrum, malocclusion of the teeth, stomach trouble and heart murmur. He made no claim that he had become totally and permanently disabled or that he was entitled to the amounts that under the policy are payable therefor. Respondent did nothing from the time he was discharged until February, 1923. He testified that during that period he was ill and under the care of doctors, who forbade work. When he finally did work, it was against their orders and to support his family. From February, 1923, until April, 1924, he took vocational training. During that time his policy lapsed. He quit before completion of the course because, as he says, he was no better and thought outdoor work would be good for him. Then for more than a year he was employed as an automobile salesman. Much riding over rough roads aggravated his condition and prevented continuous work. He was paid 502 a salary of $125 per month for a part of the time and commissions for the remainder. Commencing about September 1, 1925, respondent for seven months was employed as superintendent of construction of roads and ditches at a salary of $300 per month. He next worked for an electric company during four years and two months until September, 1930. For the first five or six months he was a salesman and earned commissions amounting to about $500. He then became superintendent of electrical work at a salary of $200 per month. Except for six or seven weeks in another year and three months in 1930, he received salary for every month though not able to work full time. He was discharged because he could not put in full time. Two fellow employees testified that he was ill and at home three or four days a month. That was his last employment. An official record put in evidence by him shows that in July, 1924, he was given a special physical examination to test his qualifications for flying. It indicates recovery from the airplane crash, heart and blood pressure normal, no recurrence of kidney trouble. As a result of the examination he was officially certified to have no defects and to be qualified for flying duty as a pilot. Commencing in 1923 while the policy was still in force, respondent was treated by Dr. Quina, to whom he went daily during the first year and three or four times weekly during the next two. His condition did not improve and, because of inability to pay the doctor, he discontinued. For a few years prior to the trial he has been going to doctors for sinus treatment as often as every other day. October 31, 1928, the Veterans' Bureau examined him, apparently in connection with his application to reinstate his insurance. He was classified as a poor risk: "This man has a chronic nephritis. Hypertension. Urine shows occasional hyaline casts and a few red blood cells." In March, 1930, he entered a veterans hospital at Washington 503 where he remained about six weeks. The diagnoses were albuminaria, nephritis diffuse mild, moderate hypertension. It was found that no hospitalization was necessary. Dr. Fowler, a consultant in urology, found the right kidney out of position and suggested surgery. June 1, 1931, respondent went to a naval hospital for treatment of the infected antrum and remained there until July 7. It was found that his blood pressure and heart were normal. He had moderate hydro-nephrosis of the right kidney and a kink in the upper half of the right ureter. Urinalysis was negative. Respondent called Dr. Quina, Dr. Bryan and Dr. Pierpont: Dr. Quina had treated respondent for the antrum infection for several years after the latter's discharge from the navy. He testified that the antrum infection was incurable and that during the period of treatment respondent had nephritis caused by the infection; that it did not improve, that respondent had impaired his health by working and that "In my opinion at the time I first examined him and since that time he has not been capable of continuously carrying on a substantially gainful occupation without injury to his health." The doctor thought that under proper treatment respondent could live a long time. "I would put him in bed and keep him there. If he engages in any work it will make him die a little bit sooner." Although the witness did not testify to any change in respondent's condition, he said: "If a man had mild nephritis in 1923 and in 1932 has diagnosis of mild nephritis . . . his condition is much worse now than it was then because he still has a breaking down of the kidneys." Dr. Bryan commenced to treat respondent in July, 1929, and at that time found chronic nephritis. He expressed the opinion that the disease existed in 1923. An examination a year before the trial indicated respondent had not improved. Absolute rest was the treatment for his condition, 504 any work physical or mental would impair his health and "If he continuously engages in any kind of work he is going to limit his days on this earth. . . . If a man has mild nephritis in 1923 and actually works for seven years and quits work in 1930 and then in 1932 still has a diagnosis of only mild nephritis I would say that he had injured himself, for a man with that type of disease would injure his health by doing any kind of work. By working he has made it worse; he might have recovered. I would . . . say he was totally and permanently disabled. I don't know about his disability from an occupational standpoint." Dr. Pierpont never treated respondent but examined him three times shortly before the trial. He found chronic nephritis, a bad heart and high blood pressure. On the history of the case he expressed opinion that respondent's ailments dated back to 1922 or 1923. He said: "I would prescribe absolute rest . . . If plaintiff engaged in work it . . . would impair his health. From my examination I would say that the plaintiff is not able to continuously engage in any substantially gainful occupation without impairment to his health . . . If I had a patient who had an inception or beginning of that disease in 1923 and . . . had actually worked for a period of seven years continuously and then quit work for two years and then in 1932 still had virtually the same condition he had in the beginning, I would say that the disease is progressive, that the work would make his condition worse." The terms of the contract of insurance are in accordance with § 400, Art. IV, Act of October 6, 1917, 40 Stat. 409, and extend only to death and total permanent disability occurring while it is in force whether during or after termination of the service of the insured. The policy does not cover total temporary disability or partial permanent disability and does not authorize or permit any payment for physical or mental impairment that is less than "total 505 permanent disability." Periods of total temporary disability, though likely to recur at intervals, do not constitute the disability covered by the policy, for "permanent" means that which is continuing as contrasted with that which is "temporary." The fact that one has done some work after the lapse of his policy is not of itself sufficient to defeat his claim of total permanent disability. He may have worked when really unable and at the risk of endangering his health or life. It may not be assumed that occasional work for short periods by one generally disabled because of impairment of mind or body does as a matter of law negative total permanent disability. But it is plain that work done may be such as conclusively to negative total permanent disability at an earlier time. Lumbra v. United States, supra, 558 et seq. After considerate examination of the record we are of opinion that the evidence and all inferences that justifiably may be drawn from it do not constitute sufficient basis for a verdict for respondent, and that therefore the trial judge should have directed the jury to find for the United States. Gunning v. Cooley, 281 U.S. 90, 93. Stevens v. The White City, 285 U.S. 195, 203-4. It is shown that since a time prior to the lapse of the policy respondent had incurable infection of an antrum, malocclusion of teeth and chronic nephritis that caused illness and impaired his physical and mental powers to such an extent that generally he was partially disabled and, at times and during periods of substantial duration, totally disabled. In 1924 he was found fit for service as an air pilot. During the larger part of more than eight years between the lapse of his policy and the commencement of this suit he was able to and actually did work and earn substantial compensation. In view of these facts his testimony that under stress of need he worked when not able cannot be given weight, for he is not entitled to recover on the policy unless he became totally disabled 506 before its lapse and thereafter remained in that condition. If not totally disabled when found fit for air service and while performing work admittedly done, total disability occurring while the policy was in force was temporary and not permanent. The fact that, notwithstanding his need of money for the support of his family and himself, he failed for nearly nine years to sue for the insurance money now claimed, strongly suggests that he had not suffered total permanent disability covered by the policy. Lumbra v. United States, supra, 560. And that suggestion is emphasized by the fact that in 1928 he procured examination for reinstatement of his insurance. The opinions of respondent's medical witnesses that work impaired his health and tended to shorten his life had no substantial bearing upon the question whether total disability while the policy was in force continued during the subsequent years. As against the facts directly and conclusively established, this opinion evidence furnishes no basis for opposing inferences. The medical opinions that respondent became totally and permanently disabled before his policy lapsed are without weight. Clearly the experts failed to give proper weight to his fitness for naval air service or to the work he performed, and misinterpreted "total permanent disability" as used in the policy and statute authorizing the insurance. However, that question is not to be resolved by opinion evidence. It was the ultimate issue to be decided by the jury upon all the evidence in obedience to the judge's instructions as to the meaning of the crucial phrase, and other questions of law. The experts ought not to have been asked or allowed to state their conclusions on the whole case. Milwaukee & St. Paul Ry. Co. v. Kellogg, 94 U.S. 469, 472. Schmieder v. Barney, 113 U.S. 645, 648. Fireman's Ins. Co. v. J.H. Mohlman Co., 91 Fed. 85, 88. Mullins Lumber Co. v. Williamson & 507 Brown Co., 255 Fed. 645, 646. Germantown Trust Co. v. Lederer, 263 Fed. 672, 676. There is nothing in the record that at all impairs the significance of the finding that in 1924 respondent was fit for service as an air pilot, or of the work he performed after the lapse of the policy. These facts conclusively establish that he did not become totally and permanently disabled before his policy lapsed. Lumbra v. United State, supra. Falbo v. United States, 291 U.S. 646.[] Reversed. NOTES [*] Cf. United States v. Pollock, 68 F. (2d) 633, 634. United States v. Timmons, 68 F. (2d) 654, 655. Tracy v. United States, 68 F. (2d) 834, 837. United States v. Burns, 69 F. (2d) 636, 638. United States v. Sumner, 69 F. (2d) 770, 772. United States v. Green, 69 F. (2d) 921. United States v. Legg, 70 F. (2d) 106. United States v. Derrick, 70 F. (2d) 162. Huffman v. United States, 70 F. (2d) 266. United States v. Johnson, 70 F. (2d) 399, United States v. Lancaster, 70 F. (2d) 515. Atkins v. United States, 63 App. D.C. 164; 70 F. (2d) 768. Harris v. United States, 70 F. (2d) 889, 891.	01-03-2023	04-28-2010
https://www.courtlistener.com/api/rest/v3/opinions/2395488/	622 F. Supp. 25 (1985) In the Matter of the Arbitration between TRANSATLANTIC BULK SHIPPING LTD., Petitioner, and SAUDI CHARTERING S.A., Respondent. No. 84 Civ. 3054 (PNL). United States District Court, S.D. New York. April 16, 1985. Poles, Tublin, Patestides & Stratakis, New York City, for petitioner. 26 Burlingham, Underwood & Lord, New York City, for respondent. MEMORANDUM AND ORDER LEVAL, District Judge. Petitioner, Transatlantic Bulk Shipping Ltd., moves, pursuant to 9 U.S.C. § 207, for confirmation of an arbitration award rendered in London against respondent, Saudi Chartering S.A. Background Transatlantic is a corporation organized in Liberia engaged in ocean carriage. Saudi, a Panamanian corporation with its principal place of business in Greece, made a time charter party on January 27, 1984, with Transatlantic for transport of Saudi's cargo from the Gulf of Mexico to the Middle East on Transatlantic's vessel. Clauses 17 and 72 of the charter party provided for arbitration of disputes in London. On May 30, 1984, Transatlantic notified Saudi of its intention to arbitrate for Saudi's failure to pay the charter hire. Saudi sent a telex to the arbitration panel admitting liability for the claim. On August 1, 1984, the London arbitrators made a written award in favor of Transatlantic of $476,218.04 plus 12% interest and costs. Saudi has not paid any part of this award. Transatlantic moves to confirm the arbitration award under the provisions of the U.N. Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 9 U.S.C. § 201 et seq. Saudi argues in opposition on three grounds: 1) the court lacks personal jurisdiction over Saudi; 2) Transatlantic is not the proper party to enforce the award; and 3) the imposition of attorneys fees and the rate of prejudgment interest under the award was improper. Discussion Transatlantic contends that jurisdiction is conferred by the Convention on Recognition and Enforcement of Foreign Arbitral Awards and the implementing legislation, 9 U.S.C. §§ 201 et seq. It is not disputed that this arbitration agreement falls under the Convention. Concerning actions to enforce or recognize arbitral awards arising from such agreements, Section 203 provides: "An action or proceeding falling under the Convention shall be deemed to arise under the laws and treaties of the United States. The district courts of the United States ... shall have original jurisdiction over such an action or proceeding, regardless of the amount in controversy." Section 207 provides: "Within three years after an arbitral award falling under the Convention is made, any party to the arbitration may apply to any court having jurisdiction under this chapter for an order confirming the award as against any other party to the arbitration. The court shall confirm the award unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the said Convention." Although not disputing that the district court is empowered by the statutes quoted above to hear such actions affecting parties that are before the court, Saudi argues that the court has no personal jurisdiction over it. It acknowledges that process was served on it in Greece pursuant to Rule 4(e), F.R.Civ.P., but argues that its conduct furnishes no basis for a federal court in New York to exert power over it. It has no office, bank account, employee, agent or person authorized to receive process in New York. It does not transact business in New York, nor has it committed tortious acts in New York. The vessel did not call in New York. The charter party was not negotiated or made in New York nor does it consent to New York jurisdiction or adopt New York law. I find that Transatlantic's reliance on the statutes implementing the Convention is misplaced and confuses two distinct issues of the court's power, both confusingly described by the word "jurisdiction." The Act adopting and enforcing the Convention, in particular §§ 203 and 207, gives the district courts "original jurisdiction over such an action or proceeding." In this respect it is comparable to 28 U.S.C. 27 §§ 1330, 1331 and 1332 which authorize federal courts to act in certain suits against a foreign state, in "actions arising under the Constitution, laws or treaties of the United States," and in actions between "citizens of different States ... etc." When a plaintiff seeks to invoke the court's power in such a case, a separate question arises whether the defendant, as a person, is properly subject to the court's power. The fact that the court can hear suits between "citizens of different states" does not mean that the court may issue judgments against any defendant in any suit between citizens of different states. The defendant must either reside within the court's power or have acted in such fashion as to bring himself within the court's power before it may issue judgments over him. See International Shoe Co. v. State of Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945). Similarly, as to the Act implementing the Convention, it authorizes the court to hear a new category of action not previously within its subject matter jurisdiction. It does not, however, give the court power over all persons throughout the world who have entered into an arbitration agreement covered by the Convention. Some basis must be shown, whether arising from the respondent's residence, his conduct, his consent, the location of his property or otherwise, to justify his being subject to the court's power. Bergesen v. Joseph Muller Corp., 548 F. Supp. 650 (S.D.N.Y.1982) (Haight, J.), aff'd, 710 F.2d 928 (2d Cir.1983) (Cardamone, J.) and Sumitomo Corp. v. Parakopi Compania Maritima, 477 F. Supp. 737 (S.D.N.Y.1979) (Werker, J.), aff'd, 620 F.2d 286 (2d Cir.1980) are not to the contrary for in those cases the parties had agreed to arbitrate in New York, supporting an inference of consent to the New York court's enforcement of the award. See also Reed & Martin, Inc. v. Westinghouse Electric Corp., 439 F.2d 1268 (2d Cir.1971) (Clarie, J.); Chicago Bridge & Iron Co. v. Islamic Republic of Iran, 506 F. Supp. 981 (N.D.Ill. 1980). Since I conclude that the petition must be dismissed for lack of jurisdiction over the person of the respondent, it is unnecessary to deal with Saudi's other contentions. Petition dismissed. SO ORDERED.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2393379/	423 F. Supp. 679 (1976) ILLINOIS CENTRAL GULF RAILROAD COMPANY, Plaintiff, v. GOLDEN TRIANGLE WHOLESALE GAS COMPANY, Defendant. No. EC 73-102-K. United States District Court, N. D. Mississippi, E. D. November 10, 1976. 680 Joseph P. Wise, Jackson, Miss., for plaintiff. Gary L. Geeslin, Columbus, Miss., for defendant. MEMORANDUM OPINION KEADY, Chief Judge. In this action, plaintiff, Illinois Central Gulf Railroad Company (ICG), seeks to recover from defendant, Golden Triangle Wholesale Gas Company (Golden Triangle), charges allegedly due plaintiff under Freight Tariff 4-I (I.C.C. H-36) (hereinafter Maurer Tariff) for storage of hazardous material and charges allegedly due under Freight Tariff 19527-K (I.C.C. A-12154) (hereinafter Pace Tariff) for stopping materials in transit. Cross-motions of the plaintiff and defendant for summary judgment are now before the court. The undisputed facts material to this action are as follows: ICG is a railroad corporation incorporated under the laws of Delaware 681 with its corporate domicile and principal office at Chicago, Illinois, and is duly authorized to engage in the transportation of freight and passengers for hire in interstate travel. The Columbus and Greenville Railway Company (C & G) was merged into ICG on September 29, 1972. Under the merger agreement, ICG became the surviving corporation of C & G and succeeded to the powers and rights of C & G and became liable for all its debts and liabilities. Golden Triangle is a Mississippi corporation with its corporate domicile and principal office at North Columbus, Mississippi. Golden Triangle is the corporate successor of Columbus Butane Gas Company (Columbus Butane). Defendant operates a low pressure gas plant at North Columbus where it receives railroad tank car shipments of liquified petroleum gas (LP gas). Defendant owns a private railroad track at its plant, but this track can accommodate only three tank cars at a time. At the times pertinent to this action, the destination for all tank cars bound for defendant's plant was North Columbus. North Columbus is a local railroad station located north of plaintiff's Columbus yard. Because defendant's private track at North Columbus was inadequate to store the number of cars that might be received at any given time, on September 1, 1969, C & G and Columbus Butane entered into a lease agreement whereby Columbus Butane, for $36 per month, leased 600 feet of track in C & G's Columbus yard for the purpose of storing tank cars loaded with gas until such time as the North Columbus plant was ready to receive them. The track leased was track No. 6; it has three switches, one at each end and one that leads off the middle into the main line. On September 22, 1971, Columbus Butane, with the consent of C & G, assigned its rights and obligations under the lease to Golden Triangle. The Maurer Tariff has been in effect since June 1, 1968; the Pace Tariff became effective November 19, 1971. The question of law dispositive of this action is whether the Maurer and Pace Tariffs were applicable to the tank car shipments to defendant at its North Columbus station which were held for storage on defendant's leased track in plaintiff's Columbus yard. The parties have stipulated that if the tariffs were applicable, the amount due under the Maurer Tariff from June 12, 1970 to April 12, 1973, the period for which payment is sought by the original complaint, is $27,402.63, and the amount due under the Maurer Tariff from December 26, 1972 to March 11, 1973, also the period for which payment is sought by the original complaint, is $5,041.71. After the parties stipulated to these figures, plaintiff was granted leave to amend its complaint to include claims arising under the tariffs subsequent to the filing of the original complaint, resulting in a total claim of $28,257.89 under the Maurer Tariff, and a total claim of $5,419.11 under the Pace Tariff. In support of its motion for summary judgment, plaintiff has submitted the affidavit of Roy Garner, ICG's freight agent in Columbus, that the additional amounts claims are properly calculated. Defendant has not challenged the correctness of the amended totals. It is undisputed that all shipments which are the subject of the dispute involve interstate shipments of LP gas and that all tank cars involved were leased to the consignee, Golden Triangle or Columbus Butane, and were stored upon track leased by the consignee from C & G. Also, it is undisputed that there was complete compliance with all provisions of the tariffs requiring designations on the cars indicating that they were leased private cars. Rule 6 of § 2 of the Maurer Tariff provides: Storage will be charged ... on Explosives and other dangerous articles, held in or on railroad premises in excess of free time allowed, or without free time allowance when none is provided: Note 1 The term "Railroad Premises" as used in this rule, when applicable to shipments held in cars, shall embrace all tracks which this railroad provides for its own uses and purposes or for 682 general public use; also all other tracks located inside of its right-of-way, yard and terminals, except tracks located on, or within the confines of, property owned or leased by an industry. ICG contends that the track leased by defendant is included within the first leg of the above definition of "Railroad Premises" tracks which this railroad provides for its own uses and purposes ...." The question thus presented is whether the subject track is brought within the above definition by the railroad's reservation in the lease agreement of the right to use said track in connection with any extensions of or tracks leading from or connected with the same now or hereafter constructed, for the purpose of reaching business and industries of others than LESSEE, and RAILWAY COMPANY may handle and transport the business of RAILWAY COMPANY and others either upon or along said track, as well as any extensions thereof or tracks leading therefrom or connected therewith. In other words, is the above tariff definition of "Railroad Premises" limited to tracks which the railroad provides solely for its own uses, or does the definition embrace tracks which the railroad provides for its own uses and the use of a private party? By letter of R. D. Pfahler, Director of the Bureau of Operations of the ICC, to J. C. Humbert, ICG's Vice President-Operations, the ICC takes the position that the subject tracks are "Railroad Premises" since the lessees did not have exclusive use of the tracks. The ICG's position is based on the rulings in Malloy and Dickerson v. M-K-T RR Co., 140 ICC 576 (1928), and Skelly Oil Co. v. M-K-T RR Co., 123 ICC 517 (1927). Both cases involved the question of whether hazardous material storage charges applied to private cars on private siding tracks located on manufacturing plant property. Two definitions of "Railroad Premises" were considered, an original definition and its amended counterpart. The original provided: The term "Railroad Premises" as used in this rule when applicable to carload shipments, shall embrace all tracks which this railroad provides for its own uses and purposes; and also private tracks constructed, maintained or operated under a written agreement by which this railroad reserves the right to use the whole or any part of them for itself or others than the party with whom the agreement is executed. The amended definition provided: The term "Railroad Premises" as used in this rule, when applicable to shipments held in cars, shall embrace all tracks which this railroad provides for its own uses and purposes or provides for general public use; but shall not embrace tracks that are owned or leased by an industry and located upon property owned or leased by it unless such track is located inside of carrier's right-of-way, yard and terminals. The cases hold that under the amended definition, the tracks under consideration private sidings located on industry property clearly were excepted from the definition; under the original definition, the terms of the contract regarding private tracks usually would control, but in no case could private tracks be considered Railroad Premises where, due to restrictive conditions of the contract reservation of the railroad's right to use of the tracks, or due to their location and construction, they could not be used by the railroad in the operation of its business as a common carrier. Although the Malloy and Skelly cases involved different tariff definitions of railroad premises, they do establish as a general proposition that private tracks in certain circumstances properly may be considered railroad premises for purposes of applying tariffs on storage of hazardous materials. The purpose of such tariffs is to promote safety by encouraging prompt shipment and unloading of dangerous materials whose storage in railroad cars produces a risk of serious accidents. See Western Petroleum Refiners Ass'n. v. Aberdeen & Rockfish RR Co., 66 ICC 58 (1922). The purpose of the Maurer Tariff clearly would 683 be stultified if imposition of fees under the tariff could be avoided by a consignee of hazardous materials through the leasing, for a nominal amount, of storage tracks located in a railroad yard in an urban area. Furthermore, the retention by the railroad of the right to use the leased tracks for switching purposes is, in the court's opinion, obviously the provision by the railroad of tracks for its own uses and purposes in the operation of its business as a carrier, as there are no restrictions whatsoever in the lease agreement limiting the railroad's right to use the tracks. We conclude the leased tracks in question are "Railroad Premises" for purposes of application of the Maurer Tariff. The Pace Tariff, "TRANSIT TARIFF COVERING TRACK STORAGE," establishes "RULES AND CHARGES GOVERNING STOPPING IN TRANSIT FOR TRACK STORAGE OF ... LIQUIFIED PETROLEUM GAS ..." Under the "Rules and Other Governing Provisions" section of the tariff, Item 125, covering "Rates Applicable," provides that tariff charges are to be billed in addition to the through rate to the stop-off point, plus the balance of the through rate to final destination "when cars are reforwarded to a new destination." We believe that juxtaposition of the provisions of the Pace Tariff with those of the Maurer Tariff dictates the conclusion that only the Maurer Tariff is applicable on the facts of this case. Section 1, Rule 1, Section B, Paragraph 4 of the Maurer Tariff exempts from demurrage charges "[p]rivate cars on private tracks when the ownership of the car and track is the same (See Notes 1 and 2)." This rule includes leased cars and leased track within the terms "private cars and private tracks." Clearly then, the Golden Triangle shipments are not subject to Maurer Tariff demurrage charges. Note 1 referred to above, however, provides that "[p]rivate cars while held under constructive placement for delivery upon the tracks of their owners are subject to demurrage charges after expiration of forty-eight (48) hours free time. (See Rule 5, page 62 ....)" Section A, Paragraph 1 of Rule 5 states that: When delivery of a car consigned or ordered to ... other-than-a-public-delivery track cannot be made on account of the inability of the consignee to receive it ... such car will be held at destination, or, if it cannot reasonably be accommodated there, at an available hold point, notice shall be sent or given the consignee in writing or, in lieu thereof, as otherwise agreed to in writing, that the car is held and that this railroad is unable to make delivery. This will be considered constructive placement. (Emphasis added) It appears to the court that the shipments in question here would "be considered [under] constructive placement" while held in the Columbus yard. It further appears as a matter of logic that railroad shipments cannot be considered stopped in transit if they have been placed for unloading, even though such placement is constructive. In other words, the court is of the opinion that the Pace Tariff applies when a consignor or consignee, by choice, orders a railroad to stop-off a shipment in transit at some station other than the originally-designated destination point. Where a shipment is constructively placed held by the railroad due to a consignee's inability to accept shipment only the Maurer Tariff is applicable, and in the absence of a private car-private track situation where constructively placed cars are held by a railroad, the constructively placed cars would be subject to Maurer Tariff demurrage charges. The Maurer Tariff demurrage rules recognize that cars stopped in transit and cars constructively placed are in two distinct situations. Under Rule 3 of Section 1, dealing with computation of time under the demurrage rules, Section D provides "on cars to be delivered on other-than-public-delivery tracks, time will be computed from the first 7:00 A.M. after actual or constructive placement on such tracks." Section G of the same rule provides "[o]n cars subject to Rule 2, Section B, Paragraph 4, page 57 [cars held in transit because of any condition solely attributable *684 to consignor, consignee or owner, not otherwise specifically provided for in these rules], time will be computed from the first 7:00 A.M. after notice that the car has been stopped in transit and is being held, has been sent or given the consignor, consignee or party entitled to receive same." The notice of arrival of shipments provisions of Demurrage Rule 4 also provides differing requirements in the two situations. Section B of that rule states that "[w]hen cars are ordered stopped in transit, notice shall be sent or given the party ordering the cars stopped upon arrival of cars at point of stoppage." (Emphasis added). Section C of the same rule provides "[d]elivery of cars upon other than public delivery tracks ... or notice sent or given to consignee or party entitled to receive same, of readiness to so deliver, will constitute notification to consignee. (See Rule 5, Section A, Paragraph 1 [defining constructive placement] ...)." Golden Triangle's argument that the hazardous material storage charges imposed under Section 2, Rule 6 of the Maurer Tariff are no more than demurrage charges, from which Golden Triangle is exempted under Section 1, Rule 1 of the Maurer Tariff does not withstand analysis. Section 1 of the Maurer Tariff covers "GENERAL CAR DEMURRAGE RULES AND CHARGES;" Section 2 covers "STORAGE RULES AND CHARGES." Note 2 to Section 2, Rule 6 expressly provides "[t]he charges provided in this rule on shipments held in cars are in addition to the regular demurrage and track storage charges ...." Furthermore, Section 2, Rule 6, Section B, entitled "FREIGHT SUBJECT TO THE RULES; ALSO EXEMPTIONS THEREFROM," provides: "Carload shipments of explosives or other dangerous articles are subject to both demurrage rules and Storage Rule 6 while held in cars ...." Exemption from demurrage rules of the Maurer Tariff clearly is not exemption from the storage rules. Golden Triangle's argument that ICG should be estopped from collecting charges due under the Maurer Tariff is also without merit. Filed tariffs have the force of law, Southern Pacific Co. v. Brown, Alcantor & Maun, Inc., 409 F.2d 1331, n. 1 (5 Cir. 1969), and they cannot be avoided by private contract, Illinois Steel Co. v. Baltimore & Ohio RR Co., 320 U.S. 508, 511, 64 S. Ct. 322, 324, 88 L. Ed. 259, 264, n. 3 (1943). Equitable considerations cannot justify a carrier's failure to collect authorized tariff charges, Chicago & North Western RR v. Union Packing Co., 514 F.2d 30, n. 1 (8 Cir. 1975); thus the principle of estoppel cannot be invoked against the right of a carrier to enforce legally applicable tariffs, Pittsburgh, C.C. & S.L. Ry. Co. v. Fink, 250 U.S. 577, 582, 40 S. Ct. 27, 63 L. Ed. 1151, 1153, n. 3 (1919). It has long been the law that where carriers charge a rate for shipment less than the tariffs as approved by the Interstate Commerce Commission they may be penalized therefor, and where a less rate has been charged and collected it becomes the duty of the carrier to call upon the shipper to pay the promulgated and approved tariff rate. Tex-O-Kan Flour Mills Co. v. Texas & P. Ry. Co., 178 F.2d 89, 90 (5 Cir. 1949). ICG, then, not only has the right to collect the hazardous material storage charges under the Maurer Tariff, it has an affirmative duty to do so, and this duty cannot be modified by the principle of estoppel. For the foregoing reasons, ICG is entitled to summary judgment on its claim under the Maurer Tariff in the amount of $28,257.89, plus prejudgment interest from the due date of the freight charges, Louisiana & Ark. R. Co. v. Export Drum Co., 359 F.2d 311 (5 Cir. 1966). Prejudgment interest is to be computed at a rate of 6%, Miss.Code Ann. § 75-17-1 (Supp.1976). Interest on the total judgment, that is the freight charges due plus prejudgment interest, shall accrue at the statutory rate of 8% per annum from this date, § 75-17-7. Golden Triangle is entitled to summary judgment on the claim asserted under the Pace Tariff. Costs are taxed to defendant. Let an order be entered accordingly.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2397349/	374 F. Supp. 2d 372 (2005) ORANGE COUNTY CHOPPERS, INC., Plaintiff, v. GOEN TECHNOLOGIES CORPORATION, Defendant. No. 04 CV 7193(JGK). United States District Court, S.D. New York. June 27, 2005. Michael A. Cornman, Schweitzer Cornman Gross & Bondell LLP, New York City, for Plaintiff. Scott Christopher Carroll, Driscoll & Redlich, New York City, for Defendant. OPINION & ORDER KOELTL, Judge. Orange County Choppers, Inc. ("the plaintiff" or "OCC") brings this action against Goen Technologies Corporation ("the defendant"). The plaintiff seeks injunctive 373 relief and damages for trademark infringement and unfair competition arising from the defendant's alleged unauthorized manufacturing and distribution of merchandise bearing the plaintiff's trademark. The defendant moves for dismissal pursuant to Federal Rules of Civil Procedure 12(b)(1), 12(b)(3), and 12(b)(6), primarily on the grounds that the plaintiff entered into an agreement to arbitrate disputes between the parties. The parties agreed at oral argument that the defendant's 12(b)(1) motion should be construed as a motion to compel arbitration pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 3-4. I. In January 2003, the plaintiff and the defendant entered into an agreement whereby the plaintiff was to build a motorcycle for the promotion of the defendant's Trim Spa Brand. (Orange County Choppers Purchase and Media Promotion Agreement, dated Jan. 16, 2003 ("the agreement" or "OCC Agreement"), attached as Ex. B to Certification of Scott C. Carroll in Supp. of Def.'s Mot. to Dismiss the Compl.) The agreement includes a clause giving the defendant "the right to reproduce, copy, publish, broadcast, or otherwise use the name, picture or likeness heretofore or hereafter made of the OCC or any material based upon or derived therefrom...." (Id. ¶ 3.3.) It also contains an arbitration clause: [a]ny disputes arising from this Agreement shall be subject to arbitration in New Jersey under the Rules and auspices of the American Arbitration Association or other mutually agreeable arbitrator. This agreement is governed by New Jersey Law, and the Courts of New Jersey shall have jurisdiction to enforce it.... (Id. ¶ 12.) Since 2001, the plaintiff has designed, promoted, and sold OCC licensed merchandise to the public (Complaint, ¶¶ 13), and the plaintiff's marks and trade name are known to the public as identifying goods of OCC alone (Id. ¶¶ 16-19). OCC alleges that the defendant, without authority or license to do so, has been selling and distributing products with the plaintiff's marks and trade name, creating "a likelihood of confusion, mistake, and deception among the trade and consumers." (Id. ¶¶ 20, 26.) The plaintiff brings this action for injunctive relief against the promotion and sale by the defendant of goods bearing OCC's marks and for damages resulting from the defendant's unauthorized acts. (Id. at 7.) II. The FAA requires a district court to stay an action to resolve a dispute subject to an arbitration agreement if a party requests so. 9 U.S.C. § 3; see Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218, 105 S. Ct. 1238, 84 L. Ed. 2d 158 (1985); see also Milgrim v. Backroads, Inc., 142 F. Supp. 2d 471, 476 (S.D.N.Y.2001) (quoting Berger v. Cantor Fitzgerald Sec., 967 F. Supp. 91, 93 (S.D.N.Y.1997)). The parties agreed at oral argument that any question regarding the arbitrability of the dispute is governed by the FAA, and that, if the dispute were subject to arbitration, the Court should stay the proceedings. The FAA provides that written agreements to arbitrate disputes "shall be valid, irrevocable, and enforceable." 9 U.S.C. § 2; see also In re Home Ins. Co., 908 F. Supp. 180, 183 (S.D.N.Y.1995). Unless the parties explicitly provide otherwise, this Court, rather than an arbitrator, determines whether the parties did in fact agree to arbitration. See First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943, 115 S. Ct. 1920, 131 L. Ed. 2d 985 (1995); PaineWebber Inc. v. Bybyk, 81 F.3d 1193, 1198 (2d Cir.1996); see also Marcus v. 374 Frome, 275 F. Supp. 2d 496, 504 (S.D.N.Y.2003). Whether an agreement to arbitrate governs a particular dispute is essentially a matter of contract interpretation. See Collins & Aikman Products Co. v. Building Sys., Inc., 58 F.3d 16, 19 (2d Cir.1995) ("Federal arbitration policy respects arbitration agreements as contracts that are enforceable in the same was as any other contract."); see also Home Ins. Co., 908 F.Supp. at 183. Any doubts about the scope of arbitrable issues should be resolved in favor of arbitration. Collins, 58 F.3d at 19 (citing Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103 S. Ct. 927, 74 L. Ed. 2d 765 (1983)); see also United States Fire Ins. Co. v. Nat'l Gypsum Co., 101 F.3d 813, 816 (2d Cir.1996). The existence of a broad arbitration clause creates a presumption of arbitrability which can be overcome only if it may be said "with positive assurance" that the arbitration clause is not susceptible to the interpretation that it covers the asserted dispute. Oldroyd v. Elmira Sav. Bank, FSB, 134 F.3d 72, 76 (2d Cir.1998); see also Lewis Tree Service, Inc. v. Lucent Technologies Inc., 239 F. Supp. 2d 332, 336 (S.D.N.Y.2002). The arbitration clause in this case, covering "[a]ny disputes arising from this [a]greement," is a broad arbitration clause. (OCC Agreement, at ¶ 12.); see, e.g., ACE Capital Re Overseas Ltd. v. Cent. United Life Ins. Co., 307 F.3d 24, 26 (2d Cir.2002) ("[A]ny dispute [that] shall arise between the parties ... with reference to the interpretation of this Agreement or their rights with respect to any transaction involved" held to be a broad arbitration clause); Oldroyd, 134 F.3d at 76 ("Any dispute, controversy or claim arising under or in connection with [the agreement]" is a broad arbitration clause.); Collins, 58 F.3d at 19 ("Any claim or controversy arising out of or relating to th[e] agreement is a broad arbitration clause."); Marcus, 275 F.Supp.2d at 504 ("[A]ny dispute, controversy or claim arising out of or relating to this Agreement" is a broad arbitration clause.); Vera v. Saks & Co., 218 F. Supp. 2d 490, 494 (S.D.N.Y.2002) ("Any dispute ... arising out of or relating to this Agreement" found to be a broad arbitration clause.) aff'd, 335 F.3d 109 (2d Cir.2003); cf. U.S. Titan, Inc. v. Guangzhou Zhen Hua Shipping Co., Ltd., 182 F.R.D. 97, (S.D.N.Y.1998) ("[A]ny dispute arising out of this charter" is a broad arbitration clause.) aff'd, 241 F.3d 135 (2d Cir.2001). Nevertheless, the plaintiff argues that this dispute is not covered by the arbitration clause because the agreement between the parties does not cover the manufacture and sale of items of clothing bearing the plaintiff's marks and is irrelevant to the dispute. (Pl.'s Mem. in Opp'n to Def.'s Mot. to Dismiss, dated Oct. 14, 2004, at 7-9.) However, it is impossible to say "with positive assurance" that the plaintiff's claim is not within the scope of the arbitration clause. Oldroyd, 134 F.3d at 76. In part, this dispute concerns whether the agreement gave the defendant the right to use the OCC marks. Resolving this dispute requires interpreting the agreement to ascertain whether the defendant's use of the plaintiff's marks fall within the rights given the defendant to "reproduce, copy, publish, broadcast, or otherwise use the name, picture or likeness heretofore or hereafter made of the OCC or any material based upon or derived therefrom...." (OCC Agreement, at ¶ 3.3.) This determination is critical to the plaintiff's claims; indeed, where a claim "implicates issues of contract construction or the parties' rights and obligations under it" and the arbitration clause is broad, the dispute should proceed to arbitration. Collins, 58 F.3d at 23. Accordingly, *375 the presumption in favor of arbitration has not been overcome. III. Because the arbitration clause applies to this dispute, it is unnecessary to reach the defendant's additional motions that this is not the proper forum under Rule 12(b)(3) and that the complaint fails to state a claim upon which relief can be granted under Rule 12(b)(6). The dispute should be submitted to arbitration. CONCLUSION The Court has carefully considered all the arguments presented by the parties. Any argument not expressly discussed above is either moot or without merit. For the reasons explained above, the defendant's motion to compel arbitration and stay the proceedings is granted. SO ORDERED.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2432842/	655 F. Supp. 2d 274 (2009) Abdul SHARIFF, Mark Bartley, Jamal Stephenson, David Gobern, Lewis Purcell, Sam Johnson, Terence Stevens, Stephen Gowins, and Abdul Suluk, Plaintiffs, v. Philip COOMBE, Commissioner of New York State Department of Correctional Services; Glen Goord, Acting Commissioner of New York State Department of Correctional Services; Cristopher Artuz, Superintendent of Green Haven Correctional Facility; Gail Haponic, Acting Deputy of Administration of Green Haven Correctional Facility; Roger Maines, Supervisor of Green Haven Correctional Facility; M. Muller, Maintenance Supervisor of Green Haven Correctional Facility, individually and in their official capacities, and the State of New York, Defendants. No. 96 Civ. 3001(BSJ). United States District Court, S.D. New York. August 7, 2009. 280 Abdul Shariff, Stormville, NY, pro se. James I. Meyerson, New York, NY, for Plaintiffs. Bruce A. Brown, Assistant Attorney General, New York, NY, for Defendants. Opinion & Order BARBARA S. JONES, District Judge. Plaintiffs, eight[1] disabled inmates who depend on wheelchairs for mobility, bring 281 this action against the State of New York and six individuals employed by the New York State Department of Correctional Services in an administrative capacity. Plaintiffs seek both injunctive and monetary relief for conditions affecting disabled inmates at the Green Haven Correctional Facility and have asserted claims pursuant to: (1) Title II of the Americans with Disabilities Act ("ADA"), 42 U.S.C. § 12131 et seq.; (2) Title V of the Rehabilitation Act of 1973 ("Rehabilitation Act"), 29 U.S.C. § 794 et seq.; (3) § 70 of the New York State Correction Law; and (4) the First, Eighth, and Fourteenth Amendments to the United States Constitution pursuant to 42 U.S.C. § 1983. Before the Court is Defendants' Renewed Motion for Partial Summary Judgment pursuant to Federal Rule of Civil Procedure 56. For the reasons set forth below, Defendants' Motion is GRANTED in part and DENIED in part. BACKGROUND Plaintiffs' Fourth Amended Complaint, dated September 29, 1998,[2] alleges that Plaintiffs Abdul Shariff ("Shariff"), Mark Bartley ("Bartley"), Jamal Stephenson ("Stephenson"), David Gobern ("Gobern"), Lewis Purcell ("Purcell"), Terence Stevens ("Stevens"), Stephen Gowins ("Gowins"), and Abdul Suluk ("Suluk") are all inmates who are or have been incarcerated at Green Haven Correctional Facility ("Green Haven"), a prison operated by the New York State Department of Correctional Services ("DOCS"). (Fourth Am. Compl. ¶ 11.) Due to disability or other impairment, Plaintiffs are all wheelchair-bound individuals. (Fourth Am. Compl. ¶ 12-13.) The individual Defendants are or were high-level officials of DOCS or supervisory officials with responsibilities at Green Haven. (Fourth Am. Compl. ¶¶ 17-20.) Plaintiffs allege that a variety of conditions at Green Haven interfere with their desire to be "independent functioning human being[s]" as well as "productive citizen[s] and resident[s] of the Greenhaven community." (Fourth Am. Compl. ¶ 23.) Included among the conditions Plaintiffs complain of are: (1) the potholes and broken concrete in the A & B, C & D, E & F, G & H, and visiting-room yards; (2) the inaccessibility of the basketball courts; (3) the inaccessibility of certain common bathrooms throughout Green Haven; (4) the lack of accessible weights or equipment in the gym; (5) the inaccessibility of certain telephones; (6) the inaccessibility of water fountains throughout Green Haven; (7) the height of the food service counter in the Unit for the Physically Disabled ("UPD"); (8) the existence of impediments to meaningful library access; (9) hazardous conditions in the guardhouse/shacks in the recreation yards; (10) the inaccessibility of the family reunion site; (11) the inaccessibility of the tier-hearing room; (12) the frequently out of service elevator in Building-12; and (13) the pavement in the gate corridor. (Fourth Am. Compl. 282 ¶¶ 25-30, 33, 35-37, 39-40, 42-43, 56, 59, 65, 73.) Plaintiffs also allege that several of these conditions have caused them to suffer physical injuries, either due to alleged falls from wheelchairs because of broken concrete or potholes at various locations within Green Haven (Fourth Am. Compl. ¶¶ 47, 49, 50, 62, 70, 74, 76), from an alleged fall in a bathroom that was not wheelchair accessible (Fourth Am. Compl. ¶ 54), or from a spill from a food-serving counter that was too high for wheelchairbound individuals (Fourth Am. Compl. ¶ 31). On the basis of these factual allegations, Plaintiffs' Fourth Amended Complaint sets forth the following claims: (1) Defendants' conduct violates Plaintiffs' rights under the Civil Rights Act of 1871, 42 U.S.C. § 1983, and the First, Eighth, and Fourteenth Amendments to the United States Constitution; (2) Defendants' conduct violates Plaintiffs' rights under the Rehabilitation Act of 1973 and the ADA, 29 U.S.C. § 794, et seq.; and (3) Defendants' conduct violates Plaintiffs' rights under § 70 of the Correction Law of the State of New York. (Fourth Am. Compl. ¶¶ 83-91.) Plaintiffs assert their claims against the individual Defendants in both their individual and official capacities. On June 20, 2002, the Court issued a Memorandum and Order (the "Order of June 20, 2002") addressing Defendants' First Motion for Partial Summary Judgment. In that Order, the Court dismissed, with prejudice: (1) all claims by Plaintiffs Bartley, Gobern, Johnson, Purcell, Stevens, and Suluk for injunctive relief; (2) all claims for injunctive relief as to the condition of the A & B yard; (3) all claims against the State of New York and the six individual Defendants in their official capacities for monetary relief pursuant to § 1983; (4) all claims against the six individual Defendants in their individual capacities pursuant to the ADA and the Rehabilitation Act; and (5) all claims against all Defendants under § 70 of the New York State Correction Law. The Court denied the remainder of Defendants' Motion without prejudice to renewal. With respect to portions of Defendants' Motion, the Court explicitly reserved decision and identified issues for additional briefing by the parties in a second round of dispositive motions. Now before the Court is this requested second round of dispositive motions, in which Defendants seek dismissal of Plaintiffs' claims pursuant to Federal Rule of Civil Procedure 56. As set forth below, Defendants' Motion is GRANTED in part and DENIED in part.[3] LEGAL STANDARD Rule 56 of the Federal Rules of Civil Procedure provides that a court shall grant a motion for summary judgment "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." 283 Fed.R.Civ.P. 56(c). "The party seeking summary judgment bears the burden of establishing that no genuine issue of material fact exists and that the undisputed facts establish her right to judgment as a matter of law." Rodriguez v. City of New York, 72 F.3d 1051, 1060-61 (2d Cir.1995). The substantive law governing the case will identify those facts that are material and "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). In determining whether a genuine issue of material fact exists, a court must resolve all ambiguities and draw all reasonable inferences against the moving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986). "If, as to the issue on which summary judgment is sought, there is any evidence in the record from any source from which a reasonable inference could be drawn in favor of the nonmoving party, summary judgment is improper." Chambers v. TRM Copy Centers Corp., 43 F.3d 29, 37 (2d Cir.1994). DISCUSSION I. Exhaustion of Administrative Remedies A. Relation Back Defendants assert that certain of Plaintiffs' claims must be dismissed due to Plaintiffs' failure to exhaust their administrative remedies. As amended by the Prison Litigation Reform Act of 1996 ("PLRA"), 42 U.S.C. § 1997e(a) provides that "[n]o action shall be brought with respect to prison conditions under section 1983 . . . or any other Federal law, by a prisoner . . . until such administrative remedies as are available are exhausted." Courts have interpreted this "exhaustion requirement" not to apply retroactively, but rather to pertain only to actions filed after the enactment of the PLRA, which was signed into law on April 26, 1996. See Salahuddin v. Mead, 174 F.3d 271 (2d Cir.1999). In this case, Plaintiff Shariff filed his initial pro se complaint before April 26, 1996.[4] In that Complaint, Shariff asserted claims against Defendants Coombe and Artuz based on the "unsafe and discriminatory situations . . . wheelchair bound inmates had to endure" at Green Haven. (Compl. ¶ 2.) Shariff particularly complained that the A & B yards, the visitingroom yard, and the bathrooms, telephones, and water fountains throughout the facility were hazardous or inadequate to address the needs of wheelchair-bound inmates. (Compl. ¶ 3.) All subsequent amended complaintsadding Plaintiffs Bartley, Stephenson, Gobern, Purcell, Johnson, Stevens, Gowins, and Suluk and additional allegations regarding the adequacy of the Green Haven facility[5]were filed after April 26, 1996. Thus, the question is whether Plaintiffs are required by the 284 PLRA to exhaust their administrative remedies with respect to the allegations added after the filing of Shariffs initial Complaint. To determine whether Plaintiffs' addition of allegations and parties relates back to Shariff's earlier pleading for the purposes of applying the PLRA's exhaustion requirement, the Court looks to Federal Rule of Civil Procedure 15(c). See Jones v. Goord, No. 95 Civ. 8026(WHP), 2000 WL 290290, at 2-3, 2000 U.S. Dist. LEXIS 3377, at 7 (S.D.N.Y. Mar. 15, 2000). Rule 15(c) provides, in relevant part, that: (1) An amendment to a pleading relates back to the date of the original pleading when: . . . (B) the amendment asserts a claim or defense that arose out of the conduct, transaction, or occurrence set outor attempted to be set outin the original pleading; or (C) the amendment changes the party or the naming of the party against whom a claim is asserted, if Rule 15(c)(1)(B) is satisfied and if, within the period provided by Rule 4(m) for serving the summons and complaint, the party to be brought in by amendment: (i) received such notice of the action that it will not be prejudiced in defending on the merits; and (ii) knew or should have known that the action would have been brought against it, but for a mistake concerning the proper party's identity. Fed.R.Civ.P. 15(c). "Although Rule 15(c) speaks only to naming additional defendants and does not expressly address the relation back of amendments changing or adding plaintiffs . . . courts have nonetheless relied on the traditional factors of notice and unfair prejudice embodied in the rule." Jones, 2000 WL 290290, at 3, 2000 U.S. Dist. LEXIS 3377, at 7-8; see Advanced Magnetics, Inc. v. Bayfront Partners, Inc., 106 F.3d 11, 19 (2d Cir. 1997) (stating that Rule 15(c) is also applicable to a proposed change of plaintiffs). Applying the Rule 15(c) factors to the instant action, the Court finds that the Fourth Amended Complaint relates back to Shariff's initial filing only to the extent that it asserts claims regarding the specific conditions Shariff alleged were hazardous or inadequate in his initial pleadingthe A & B yards, the visiting-room yard, and the bathrooms, telephones, and water fountains throughout the facility. With respect to these conditions, the fact that additional Plaintiffs have joined Shariff in asserting these claims does not prejudice Defendants; Shariff's initial Complaint provided Defendants with notice that these conditions were subject to challenge under the ADA, the Rehabilitation Act, and the Constitution. With respect to conditions not covered by Shariffs original filing, any later-added claimsincluding those added by Shariff himselfdo not arise out of the same "conduct, transaction, or occurrence" set forth in the initial Complaint and thus do not relate back under Rule 15(c). Accordingly, it follows that: (1) all Plaintiffs' claims regarding the condition of the A & B yards, the visitingroom yard, and the accessibility of bathrooms, telephones, and water fountains throughout Green Haven are not subject to the PLRA's exhaustion requirement and, (2) all Plaintiffs' claims regarding all other conditions are subject to the PLRA's exhaustion requirement. B. The Exhaustion Requirement "[T]he PLRA's exhaustion requirement applies to all inmate suits about prison life, whether they involve general circumstances or particular episodes, and whether they allege excessive force or 285 some other wrong." Porter v. Nussle, 534 U.S. 516, 532, 122 S. Ct. 983, 152 L. Ed. 2d 12 (2002). It is the "prison's requirements, and not the PLRA, that define the boundaries of proper exhaustion." Jones v. Bock, 549 U.S. 199, 218, 127 S. Ct. 910, 166 L. Ed. 2d 798 (2007). Thus, compliance with a prison's grievance procedures is all that is required to exhaust. Id. The New York State Department of Correctional Services "has a well-established administrative grievance procedure for prisoners called the Inmate Grievance Program" ("IGP"). Abney v. McGinnis, 380 F.3d 663, 668 (2d Cir.2004). The IGP is a "three-tiered grievance system, all levels of which must be exhausted" before an action may be brought in federal court. Davis v. New York, 492 F. Supp. 2d 331, 334 (S.D.N.Y.2007). First, an inmate must file a grievance with the Inmate Grievance Resolution Committee ("IGRC"). The IGRC's determination may then be appealed to the superintendent. Finally, an inmate may appeal the superintendent's decision to the Central Office Review Committee ("CORC") in Albany, New York.[6]See id.; Schwartz v. Dennison, 518 F. Supp. 2d 560, 568-69 (S.D.N.Y.2007); see also Schwartz Decl. Ex. L. At any point in this process, an inmate who receives a favorable decision on a grievancemeaning that the facility agrees to take actionneed not appeal that decision in order to exhaust, even if the promised action is not thereafter taken by the facility. Abney, 380 F.3d at 669. "Under the Hemphill line of cases, a court must make a three-step inquiry before it dismisses a prisoner's complaint for failure to exhaust his remedies."[7]Harrison v. Goord, No. 07 Civ. 1806(HB), 2009 WL 1605770, at 6 (S.D.N.Y. June 9, 2009). First, a court must consider whether administrative remedies were "available" to the inmate. See Hemphill v. New York, 380 F.3d 680, 686 (2d Cir.2004). Next the court examines whether the defendant should be estopped from asserting the defense of failure to exhaust for inhibiting the ability of the inmate to pursue administrative remedies or for failing to raise or preserve the defense. See id. Finally, "if administrative remedies were available and the defendant[] did not forfeit the defense of failure to exhaust, a court must consider whether `special circumstances' excuse the plaintiff's failure to pursue or exhaust administrative remedies." Vogelfang, ___ Fed.Appx. at ___, 2009 WL 230132, at 2, 2009 U.S.App. 286 LEXIS 1914, at 5 (citing Hemphill, 380 F.3d at 689-91). In this case, Plaintiffs first assert that administrative remedies were "unavailable" to them under Hemphill, excusing any failure to exhaust. Plaintiffs set forth two related reasons why this is the case: (1) Defendants failed to make changes to the Green Haven facility despite favorable grievance determinations, and (2) as early as 1995 Defendants informed Plaintiffs that a renovation plan would be created to address inaccessibility issues, but Defendants then failed to implement this plan in a timely manner. Thus Plaintiffs assert, in essence, that administrative remedies were unavailable to them because the filing of grievances was a futile endeavor. The Court disagrees. The record is clear that at all times relevant to this action Green Haven had in place the three-tiered Inmate Grievance Program described above. (See Schwartz Decl. Ex. L.) Although Plaintiffs assert that this grievance program was not effective, they do not seem to contend that the IGP lacked the power to take action in response to Plaintiffs' complaints. See Booth v. Churner, 532 U.S. 731, 736 n. 4, 121 S. Ct. 1819, 149 L. Ed. 2d 958 (2001). Indeed, it is clear that the IGP did order changes to be made to the Green Haven facility in response to Plaintiffs' grievances (even if Plaintiffs contend that those orders were never or not timely implemented). (See Schwartz Decl. Ex. M; Stephenson Dep. 15:17-18; Shariff Dep. 22:19-21, 33:5-34:3; Gobern Dep. 19:13-14, 20:6-14; 31:12-20, 32:1-11; Gowins Dep. 10:24-11:2.) Additionally, Plaintiffs' perception that the Green Haven grievance program was ineffective or that the filing of grievances was futile is insufficient to negate the PLRA's exhaustion requirement. See Harrison, 2009 WL 1605770, at 4 (stating that inmates are required to exhaust their remedies "even if they believe that administrative remedies would be ineffective or futile"); see also Booth, 532 U.S. at 741 n. 6, 121 S. Ct. 1819 (explaining that the Court would not "read futility or other exceptions into statutory exhaustion requirements where Congress has provided otherwise"). Given the existence of the IGP and its clear ability to take action to address Plaintiffs' grievances, the Court finds Plaintiffs' argument that administrative remedies were unavailable to them to be without merit. Plaintiffs' related argument that a grievance filed by one inmate that receives a favorable determination should suffice for all inmates is similarly unavailing. In support of this position, Plaintiffs cite to Abney v. McGinnis, 380 F.3d 663 (2d Cir.2004), a case involving an inmate who filed multiple formal grievances that were resolved in his favor but never actually implemented by his facility. Abney, 380 F.3d at 669. Although Abney stands for the proposition that prisoners who receive a favorable disposition of a grievance that then goes unimplemented have fully exhausted because no administrative remedies remain available, it does not extend to Plaintiffs' position that one inmate can rely upon a favorable decision and action promised in response to a grievance filed by another inmate to excuse his own failure to file. Indeed, the Supreme Court has made clear that in order to exhaust inmates must follow the procedural requirements of their state's inmate grievance program. Woodford, 548 U.S. at 83-103, 126 S. Ct. 2378. In light of the provision of New York's IGP that "[a]ll grievances must be filed in an individual capacity" and that "[a]lthough there are issues which affect a class of people, they are not grievable as class actions," adopting Plaintiffs' position would contravene the clear holding of the Supreme Court. (Schwartz Decl. Ex. L, at III.B & III.D.) 287 With respect to the second Hemphill inquiry, Plaintiffs contend that Defendants should be estopped from asserting the defense of failure to exhaust because of Defendants' promised ADA renovation plan. More specificallyand similar to their argument with respect to unavailabilityPlaintiffs assert that they relied to their detriment on Defendants' statements that "[t]here was a comprehensive summary work scheduled [sic] drafted which represented that each condition challenged by plaintiff [sic] in this action would be addressed." (Pls.' Mem. L. in Opp'n to Defs.' Renewed Motion for Partial Summary Judgment, at 55.) In support of this argument, Plaintiffs cite to cases in which courts have indicated that officials' misrepresentations regarding proper procedures for filing grievances bars those officials from claiming non-exhaustion with respect to an inmate who then follows those incorrect procedures. See Heath v. Saddlemire, No. 9:96-CV-1998 (FJS/RF), 2002 WL 31242204, at 5 (N.D.N.Y. Oct. 7, 2002); Hall v. Sheahan, No.2000 C 1649, 2001 WL 111019, at 2 (N.D.Ill. Feb. 2, 2001). In this case, however, Plaintiffs have not alleged that Defendants misrepresented to Plaintiffs how to properly grieve the conditions at issue. Indeed, the numerous grievances filed by Plaintiffs indicate that Plaintiffs were fully aware of grievance procedures at Green Haven. (See Schwartz Decl. Ex. M.) Moreover, given that most if not all of the conditions at issue existed before the drafting of the renovation workplan, the Court fails to see how the existence of the workplan prevented Plaintiffs from exhausting their administrative remedies.[8] (See Schwartz Decl. Ex. M.) Plaintiffs additionally contend that Defendants waived the exhaustion defense by failing to raise it in a timely fashion. The Court disagrees. Although it is not entirely clear to the Court why Defendants' Answer was filed so long after this action was commenced,[9] in that Answer Defendants did list as a defense "plaintiffs' failures to satisfy jurisdictional or administrative prerequisites and/or failure to exhaust administrative remedies." (Answer to Fourth Am. Compl. ¶ 23.) Furthermore, it is apparent to the Court that the parties have produced discovery on the exhaustion issue. (See, e.g., Schwartz Decl. Ex. M.) The instant case is thus distinguishable from the cases cited by Plaintiffs in which exhaustion was not included in Defendants' answer, was raised after the close of discovery, or was not raised in any pre-trial motions. See, e.g., Leybinsky v. Millich, No. 98-CV-0387A, 2004 WL 2202577, at 2 (W.D.N.Y. Sept. 29, 2004); Hightower v. Nassau County Sheriff's Dep't, 325 F. Supp. 2d 199, 205 (E.D.N.Y.2004). Accordingly, the Court sees no reason why Defendants should be estopped from asserting the defense of failure to exhaust. With respect to the third inquiry under Hemphill, the Court finds that no "special circumstances" existand Plaintiffs have suggested noneto excuse any failure to exhaust. Accordingly, the Court finds that with the exception of the conditions addressed by Shariff's initial Complaint, in order to maintain a claim in this action each Plaintiff 288 must have individually exhausted his administrative remedies with respect to that claim. The Court will now address what claims have been administratively exhausted by each individual Plaintiff.[10] 1. Shariff Plaintiffs assert that "Shariff filed grievances related to every inaccessible condition at Greenhaven challenged in this lawsuit." (Pls.' Mem. L. in Opp'n to Defs.' Renewed Motion for Partial Summary Judgment, at 58.) As discussed above, Shariff's claims regarding the condition of the A & B yards, the visitingroom yard, and the accessibility of bathrooms, telephones, and water fountains throughout Green Haven are viable because they are not subject to the PLRA's exhaustion requirement. Additionally, Defendants concede that Shariff has exhausted his administrative remedieseither because of a favorable disposition or because he appealed through the three levels of the New York's inmate grievance programwith respect to the requested repairs of the J-Block (school) elevator and the condition of the C & D yards.[11] (See Defs.' Letter Dated Sept. 22, 2008, at 3-4.) The question that remains is whether Shariff has exhausted his administrative remedies with respect to all other claims contained in the Fourth Amended Complaint, including: (1) the height of the food service counter in the Unit for the Physically Disabled; (2) the condition[12] of the E & F and G & H yards; (3) the accessibility/hazardous condition of the basketball courts; (4) the hazardous guardhouses/shacks in the recreation yards; (5) the lack of accessible weights or equipment in the gym; (6) the width of the tier-hearing room doorway; (7) the accessibility of the library; (8) the accessibility of the family reunion site (Fay Field); and (9) the collapse of the pavement in the "gate corridor." Defendants have demonstrated that Shariff did not appeal any of these alleged grievances to CORC before the filing of the Fourth Amended Complaint. (See Bellamy Decl. Ex. A, at 1-4.) Thus, Shariff has viable claims regarding these specific issues only if the grievance he filed was resolved in his favor, a disposition that relieves Shariff of his obligation to appeal the grievance before bringing suit. 289 With respect to Shariff's claim regarding the height of the UPD food service counter, there is some indication in the record that this condition may have been the subject of a grievance filed by Shariff. Specifically, during his deposition testimony, Shariff explicitly stated that he filed a grievance related to the height of the UPD counter. (Shariff Dep. 22:13-14.) Although Shariff also stated that the height of the UPD counter was not lowered in response, he acknowledged that Green Haven had attempted to remedy the situation by changing the way in which hot food is served from the counter, conceivably a "favorable disposition" of the grievance. (Shariff Dep. 22:15-23:8.) Given these statements, the Court finds that Defendants have not met their burden with respect to Shariff's claim regarding the height of the UPD counter. There is also evidence that Shariff filed a grievance (GH 33093-95) that was resolved favorably with respect to the guardhouse/shack in the C & D yard. (See Schwartz Decl. Ex. M.) Accordingly, the Court finds that Shariff has a viable claim regarding this condition. With respect to all other remaining conditions, however, there is no indication in the record that Shariff ever filed grievances addressing them.[13] There is no record of these alleged grievances in the copies of grievances produced by Plaintiffs (see Schwartz Decl. Ex. M.), there is no specific mention of these grievances in the Fourth Amended Complaint, the chart of grievances attached to the Complaint, or Shariffs affirmations[14] and deposition testimony, these grievances are not included in the list of alleged grievances Plaintiffs provided to the Court in their opposition brief (see Pls.' Mem. L. in Opp'n to Defs.' Renewed Motion for Partial Summary Judgment, Addendum B), and these grievances are not mentioned in either Plaintiffs' current or former Rule 56.1 statements (see Defs.' Rule 56.1 Stmt. ¶ 21; Pls.' Rule 56.1 Stmt. ¶ 21; Meyerson Aff. Ex. E ¶¶ 152-187). Accordingly, given that there is no indication in the record that these grievances were actually filedother than blanket assertions that "all of Shariffs claims are viable" (Pls.' Mem. L. in Opp'n to Defs.' Renewed Motion for Partial Summary Judgment, at 58) or that Shariff grieved "virtually all" of the conditions at issue (Shariff Aff. ¶ 23, Dec. 26, 2005)the Court finds that Defendants have met their burden on the issue of exhaustion. Thus, the Court finds that Shariff has viable claims with respect to: (1) the conditions alleged in his original Complaint the condition of the A & B yards, the visiting-room yard, and the accessibility of bathrooms, telephones, and water fountains throughout the facility; (2) the functioning of the J-Block (school) elevator; (3) the condition of the C & D yards; (4) the height of the UPD counter; and (5) the guardhouse/shack in the C & D yards. To the extent Shariff asserts claims related 290 to any other conditions at Green Haven, those claims are DISMISSED. 2. Bartley Defendants concede that Bartley has exhausted his administrative remedies with respect to the accessibility of the library and the functioning of the J-School elevator. (Defs.' Mem. L. in Support of Defs.' Renewed Motion for Partial Summary Judgment App'x A, at 3; Defs.' Rule 56.1 Stmt. ¶ 22; Pls.' Rule 56.1 Stmt. ¶ 22.) Plaintiffs assert that Bartley also filed grievances regarding the potholes and cracks in the yard areas, the booths in walkways preventing wheelchair access to sidewalks,[15] and the condition of the E & F yard.[16] (See Pls.' Mem. L. in Opp'n to Defs.' Renewed Motion for Partial Summary Judgment, Addendum B; Fourth Am. Compl. Ex. A.) It is clear that Bartley never made any appeals to CORC regarding these conditions. (See Bellamy Decl. Ex. A, at 5-6.) It is unclear, however, whether these grievances were resolved in Bartley's favor at some point during the grievance process, thus extinguishing his obligation to appeal to CORC to "properly exhaust." Accordingly, the Court finds that Defendants have not met their burden with respect to these alleged grievances, and Bartley has viable claims regarding (1) the condition of all the Green Haven yards complained of in the Fourth Amended Complaint, (2) the existence of booths in walkways preventing wheelchair access to sidewalks in the yards, (3) the accessibility of the law library, (4) the functioning of the J-School elevator, and (5) the conditions alleged in Shariff's original Complaint. All other claims as to Bartley in the Fourth Amended Complaint are DISMISSED. 3. Stephenson Stephenson contends that he filed administrative grievances related to: (1) his exposure to his own human waste; (2) the accessibility of toilets in his work area and the A & B yards; (3) the condition of the A & B yards; (4) the condition of the C & D yards; and (5) the lack of telephone accessibility in the gymnasium.[17] (See Fourth Am. Compl. ¶ 61, Ex A; Pls.' Mem. L. in Opp'n to Defs.' Renewed Motion for Partial Summary Judgment, at 56, Addendum B.) The Court reads Stephenson's claim that he filed a grievance related to his exposure to his own human waste as a complaint regarding the inaccessibility 291 of bathrooms throughout Green Haven. Given the Court's above findings regarding exhaustion, Stephenson did not need to exhaust his claims with respect to the restrooms throughout Green Haven, the condition of the A & B yards, or the gym telephones because those claims relate back to Shariff's original pro se complaint. To maintain a claim regarding the condition of the C & D yards, however, Stephenson did need to exhaust his administrative remedies. Plaintiffs claim that Stephenson filed such a grievance on August 26, 1996 and that it was assigned grievance number 33093-96.[18] (See Pls.' Mem. L. in Opp'n to Defs.' Renewed Motion for Partial Summary Judgment, Addendum B; Fourth Am. Compl. Ex. A.) Defendants respond that because "this grievance was purportedly filed eleven years ago, defendants are unable to ascertain whether such a grievance was filed at Green Haven." (Defs.' Reply Mem. L. in Support of Defs.' Renewed Motion for Partial Summary Judgment, at 43 n. 14.) Although it is clear that no such grievance filed by Stephenson was appealed to CORC[19] (see Bellamy Decl. Ex. A, at 7), it is unclear whether this alleged grievance ever needed to be appealed to CORC for "proper exhaustion"if Stephenson received a favorable disposition of the grievance, no appeal was necessary. Given Defendants' inability to demonstrate that this grievance was never filed or was filed and not appealed as necessary, the Court finds that Defendants have not met their burden and Stephenson has a viable claim regarding the condition of the C & D yards. Additionally, although not discussed by Plaintiffs, it appears that Stephenson filed a grievance with respect to the accessibility of the family reunion site, Fay Field. (See Schwartz Reply Decl. Ex. F.) This grievance received a favorable determination and thus appeal was not required for proper exhaustion. (See Schwartz Reply Decl. at Ex. F.) Defendants argue, however, that this grievance does not provide Stephenson with a basis for a viable claim because the grievance was filed in November of 1996, over four months after Stephenson joined the case. (Defs.' Letter Dated Sept. 22, 2008, at 5.) Although it is true that the grievance was filed after Stephenson joined the case, it was filed before any claims regarding Fay Field were asserted. The condition of Fay Field only became part of this action with the filing of the Second Amended Complaint on December 12, 1996, after Stephenson's grievance regarding Fay Field was filed and resolved. (See Schwartz Reply Decl. Ex. F; Second Am. Compl. ¶ 38.) Accordingly, the Court finds that Stephenson has viable claims with respect to the condition of the C & D yards, the condition of Fay Field, and the 292 conditions alleged in Shariff's original Complaintthe condition of the A & B yards, the visiting-room yard, and the accessibility of bathrooms, telephones, and water fountains throughout Green Haven. To the extent Stephenson asserts claims related to any other conditions at Green Haven, those claims are DISMISSED. 4. Gobern Defendants have demonstrated that Gobern appealed only two grievances to CORCone related to the installation of an emergency call button, and the other related to the use of a van for medical trips. (See Bellamy Decl. Ex. A, at 8.) Neither of these grievances appears relevant to the claims stated in the Fourth Amended Complaint.[20] Plaintiffs allege that Gobern filed additional grievances relevant to this actionseveral related to bathroom accessibility and one regarding the "west side yard."[21] (See Pls.' Mem. L. in Opp'n to Defs.' Renewed Motion for Partial Summary Judgment, Addendum B; Fourth Am. Compl. ¶¶ 34, 55.) Because Shariffs initial Complaint covers the accessibility of bathrooms throughout Green Haven, the Court need not address whether Gobern exhausted his administrative remedies with respect to these alleged grievances. With respect to the "west side yard" grievance, it is unclear to the Court what particular condition in the west side yard Gobern asserts he grieved. Additionally, Plaintiffs indicate that Gobern's grievance was denied (because Gobern was no longer in DOCS custody), and Defendants have demonstrated that it was never appealed to CORC. (See Pls.' Mem. L. in Opp'n to Defs.' Renewed Motion for Partial Summary Judgment, Addendum B; Bellamy Decl. Ex. A, at 8.) Accordingly, the Court finds that Defendants have sufficiently demonstrated that Gobern has not exhausted his administrative remedies with respect to any of the claims asserted in the Fourth Amended Complaint. Thus, Gobern has viable claims only with respect to the conditions alleged in Shariffs original Complaintthe condition of the A & B yards, the visiting-room yard, and the accessibility of bathrooms, telephones, and water fountains; all other claims asserted by Gobern are DISMISSED. 5. Purcell Defendants have demonstrated that Purcell did not appeal any grievances to CORC that are relevant to this action. (See Bellamy Decl. Ex. A, at 9.) Additionally, Plaintiffs essentially concede that Purcell did not file any grievances with respect to the condition of Fay Field, the height of the UPD counter, and various bathrooms. (See Pls.' Mem. L. in Opp'n to Defs.' Renewed Motion for Partial Summary Judgment, at 57; see also Defs.' Rule 56.1 Stmt. ¶ 17; Pls.' Rule 56.1 Stmt. ¶ 17.) Indeed, the only grievance Plaintiffs contend Purcell filed is one related to access to water fountains in Building 12, a claim that is already covered by Shariffs initial Complaint. (See Pls.' Mem. L. in Opp'n to Defs.' Renewed Motion for Partial Summary Judgment, Addendum B; 293 Fourth Am. Compl. ¶ 60, Ex. A.) Accordingly, the Court finds that Purcell has viable claims with respect to the conditions alleged in Shariffs original Complaint the condition of the A & B yards, the visiting-room yard, and the accessibility of bathrooms, telephones, and water fountains; all other claims asserted by Purcell are DISMISSED. 6. Stevens Defendants concede that Stevens has exhausted his administrative remedies with respect to his claim regarding the condition of the C & D yards.[22] (Defs.' Rule 56.1 Stmt. ¶ 24; Pls.' Rule 56.1 Stmt. ¶ 24.) Plaintiffs assert that Stevens also filed grievances addressing the accessibility of bathrooms throughout Green Haven.[23] (See Pls.' Mem. L. in Opp'n to Defs.' Renewed Motion for Partial Summary Judgment, Addendum B; Meyerson Aff. Ex. E ¶¶ 188-207; Schwartz Decl. Ex. M.) Given that Shariff's initial Complaint includes the condition of bathrooms throughout Green Haven, the Court need not address whether Stevens exhausted his administrative remedies with respect to these alleged grievances. Accordingly, the Court finds that Stevens has viable claims with respect to the condition of the C & D yards as well as the conditions alleged in Shariff's original Complaint; all other claims asserted by Stevens are DISMISSED. 7. Suluk Suluk has viable claims with respect to the conditions alleged in Shariff's original Complaint. Plaintiffs additionally assert that Suluk filed a grievance (grievance number 33053-95) on August 1, 1995 regarding the installation of an apron around the Green Haven yards.[24] (See Pls.' Mem. L. in Opp'n to Defs.' Renewed Motion for Partial Summary Judgment, Addendum B.) The Court interprets the content of this grievance to be one addressing the condition/accessibility of the facility yards. No copy of this purported grievance was produced during discovery, 294 and there is no record that Suluk appealed this grievance to CORC. (See Schwartz Decl. Ex. M; Bellamy Decl. Ex. A, at 12.) Plaintiffs contend, however, that Green Haven informed Suluk that repairs would be made with respect to his claim "as soon as other projects that are in progress are completed", arguably a favorable determination of the grievance. (Pls.' Mem. L. in Opp'n to Defs.' Renewed Motion for Partial Summary Judgment, Addendum B.) Thus, Suluk did not need to appeal the disposition of this grievance in order to properly exhaust. Because Defendants have not demonstrated that this grievance was never filed or that Suluk was required to appeal its disposition to CORC, the Court finds that Suluk has viable claims regarding the condition of all of the yards at issue in the Fourth Amended Complaint as well as the conditions set forth in Shariff's initial Complaint. All other claims asserted by Suluk are DISMISSED. 8. Gowins Defendants have demonstrated that Gowins did not appeal any grievances to CORC that are relevant to this action. (See Bellamy Decl. Ex. A, at 11.) Additionally, Plaintiffs essentially concede that Gowins did not file any grievances with respect to the condition of Fay Field, the height of the UPD counter, and various bathrooms. (See Pls.' Mem. L. in Opp'n to Defs.' Renewed Motion for Partial Summary Judgment, at 57.) Plaintiffs assert, however, that Gowins filed a number of grievances concerning the accessibility of Green Haven bathrooms.[25] (See Fourth Am. Compl. Ex. A; Meyerson Aff. Ex. E ¶ 239-242.) Given that Shariffs initial Complaint addresses the condition of bathrooms throughout Green Haven, the Court need not address whether Gowins exhausted these grievances. Furthermore, in his deposition testimony, Gowins asserted that he filed a grievance regarding the C & D yards. (Gowins Dep. 23:21-24:1.) Although not appealed to CORC, there is no indication that this grievance was not resolved in Gowins's favor. Accordingly, the Court finds that Gowins has viable claims with respect to the condition of the C & D yards as well as the conditions alleged in Shariffs original Complaintthe condition of the A & B yards, the visiting-room yard, and the accessibility of bathrooms, telephones, and water fountains; all other claims asserted by Gowins are DISMISSED. C. Summary of Claims In summary, the following claims remain part of this action with respect to each Plaintiff. All Plaintiffs have claims regarding the condition of the A & B yards, the visiting-room yard, and the accessibility of bathrooms, telephones, and water fountains throughout Green Haven. Additionally, Shariff has claims pertaining to the functioning of the J-Block (school) elevator, the condition of the C & D yards, the height of the UPD counter, and the guardhouse/shack in the C & D yards. Bartley has claims regarding the condition of all the Green Haven yards complained of in the Fourth Amended Complaint, the existence of booths in walkways preventing wheelchair access to sidewalks in the yards, the accessibility of the law library, and the functioning of the J-School elevator. Stephenson has claims regarding the condition of the C & D yards and the condition of Fay Field. Stevens and Gowins have viable claims with respect to the 295 condition of the C & D yards. Suluk has viable claims regarding the condition of all the Green Haven yards at issue in the Fourth Amended Complaint. Plaintiffs Gobern and Purcell have no additional claims beyond those asserted by Shariff in his original filing. II. Claims for Injunctive Relief A. Shariff and Gowins In its Order of June 20, 2002, the Court dismissed all claims for injunctive relief asserted by Plaintiffs Bartley, Gobern, Johnson, Purcell, Stevens, and Suluk. The Court dismissed these claims because these Plaintiffs are no longer incarcerated at Green Haven and "[i]t is settled in this Circuit that a transfer from a prison facility moots an action for injunctive relief against the transferring facility." Prins v. Coughlin, 76 F.3d 504, 506 (2d Cir.1996). Since June 20, 2002, Plaintiffs Gowins and Shariff have also left Green Haven. (Defs.' Rule 56.1 Stmt. ¶¶ 2, 3; Pls.' Rule 56.1 Stmt. ¶¶ 2, 3.) Although Plaintiffs do not argue that Gowins's claims for injunctive relief are viable despite the fact that he is no longer at Green Haven, they do make such an argument with respect to Shariff's claims. Specifically, Plaintiffs argue that Shariff's claims for injunctive relief should not be dismissed because (1) he was transferred from Green Haven in retaliation for voicing objections to prison conditions and (2) it is likely that he will be transferred back to the facility. (Pls.' Mem. L. in Opp'n to Defs.' Renewed Motion for Partial Summary Judgment, at 63.) The Court disagrees. Although Shariff may separately pursue a claim for retaliation, the Court is aware of no authority that supports Plaintiffs' contention that an allegation of retaliatory motive is sufficient to resurrect his claims for injunctive relief. See, e.g., Bennett v. Goord, 343 F.3d 133 (2d Cir.2003). Similarly, Plaintiffs' speculations that Shariff may be returned to Green Haven do not suffice to rescue his claims.[26]See Armstrong v. Ward, 529 F.2d 1132, 1136 (2d Cir.1976) (stating that "while there is always the possibility . . . that the State will change its mind [and return an inmate to the facility his claims are directed towards], `such speculative contingencies afford no basis for our passing on the substantive issues'"); Courts v. Coombe, No. 95 Civ. 2350(DC), 1996 WL 312357, at 2 (S.D.N.Y. June 11, 1996) (holding that "[t]he mere possibility that [the Plaintiff] may be returned to [the prison against which he filed suit] at some point in the future does not present a sufficient case or controversy that the Court can presently adjudicate"). Accordingly, the Court finds that Gowins's and Shariff's claims for injunctive relief are moot; they are, therefore, DISMISSED. B. Stephenson All parties agree that Plaintiff Stephenson is the only Plaintiff who is currently incarcerated at Green Haven. (Defs.' Rule 56.1 Stmt. ¶ 3; Pls.' Rule 56.1 Stmt. ¶ 3.) Despite Stephenson's continued presence at the facility, Defendants argue that his claims for injunctive relief should be dismissed due to a failure to exhaust administrative remedies. The Court disagrees. As is discussed above, despite the PLRA's exhaustion requirement, Stephenson has viable claims with respect to the condition of the C & D yards, the condition of Fay Field, and the conditions alleged in Shariff's original Complaintthe condition of the A & B yards, the visiting-room yard, 296 and the accessibility of bathrooms, telephones, and water fountains throughout Green Haven. Accordingly, Stephenson is entitled to seek injunctive relief with respect to these claims. Defendants' Motion for Summary Judgment on this issue is, therefore, DENIED. C. Present Conditions at Green Haven Some of the conditions for which Stephenson retains viable claims for injunctive relief have, however, been repaired since the commencement of this litigation. Stephenson's claims for injunctive relief with respect to these conditions must be dismissed as moot. It appears to the Court that there is no longer any dispute that accessibility issues regarding the telephones and water fountains throughout the facility, as well as the accessibility of the C & D yard, have been addressed. Defendants have set forth evidence that: (1) several handicap accessible telephones have been installed in different locations around Green Haven; (2) six wheelchair accessible water fountains have been installed in various areas of Green Haven, and that Green Haven has instituted a policy that any inmate confined to a wheelchair may carry a cup to use at any water fountain; and (3) the walkways in the C & D yard have been repaired and widened to allow passage around the officer's station. (Richards Aff. ¶¶ 10, 15, Ex. B. ¶¶ 9, 50-51, 58, 64, 71, 77, 81, 93, 99, Jan. 19, 1999.) Plaintiffs have given the Court no reason to believe that these alleged renovations have not occurred or are insufficient to meet Plaintiffs' accessibility needs. Indeed, neither in their brief opposing summary judgment, nor in their letter to the Court dated October 6, 2008, nor in their Rule 56.1 Statement do Plaintiffs mention that the accessibility of telephones, water fountains, and the C & D yard remain at issue. (See Pls.' Mem. L. in Opp'n to Defs.' Renewed Motion for Partial Summary Judgment, at 64-66; Pls.' Letter Dated Oct. 6, 2008, at 11; Defs.' Rule 56.1 Stmt. ¶ 28; Pls.' Rule 56.1 Stmt. ¶ 28.) Accordingly, Stephenson's claims for injunctive relief with respect to these conditions are DISMISSED. It also is clear that injunctive relief is no longer appropriate with respect to the accessibility of the auditorium bathrooms. Defendants have submitted evidencethat Plaintiffs do not appear to disputethat Green Haven installed a wheelchair lift from the floor to the auditorium stage, added ramps at the rear of the stage to provide access to a bathroom and dressing room, and constructed two fully accessible unisex toilets, one for the stage area and one for the audience area. (Richards Supplemental Decl., at 5.) Accordingly, any claim for injunctive relief regarding the accessibility of the auditorium bathrooms is DISMISSED. With respect to all other conditions relevant to Stephenson, the Court is unable to determine if injunctive relief is still appropriate based on the current record. In particular, which restrooms within Green Haven are now accessible and whether Fay Field is or should be made accessible appear to be issues about which Plaintiffs and Defendants have vastly different views. (See Defs.' Rule 56.1 Stmt. ¶ 28; Pls.' Rule 56.1 Stmt. ¶ 28; Pls.' Letter Dated Oct. 6, 2008, at 11.) Additionally, the Court does not have a clear picture of whether the visiting-room yard has been made wheelchair accessible. Accordingly, the Court finds it inappropriate to dismiss any additional claims for injunctive relief at this time. Should it become clear to the Court at a later point in this litigation that some of the conditions for which Stephenson retains claims for injunctive relief have been addressed by Green Haven, those conditions will be dismissed from the litigation. 297 D. Summary In summary, the only Plaintiff eligible to seek injunctive relief is Stephenson. In light of the Court's exhaustion analysis, Stephenson's remaining claims address the condition of the C & D yards, the condition of Fay Field, and the conditions alleged in Shariff's original Complaintthe condition of the A & B yards, the visiting-room yard, and the accessibility of bathrooms, telephones, and water fountains throughout Green Haven. However, the Court has determined that the condition of the A & B and C & D yards, the accessibility of telephones and water fountains throughout the facility, and the accessibility of the auditorium restrooms are no longer appropriate for injunctive relief. Accordingly, the only remaining claims for injunctive relief in this action are Stephenson's claims regarding: (1) the condition of Fay Field; (2) the condition of the visiting-room yard; and (3) the accessibility of bathrooms (with the exception of the auditorium bathrooms) throughout Green Haven.[27] III. 42 U.S.C. § 1983 In its Order dated June 20, 2002, the Court dismissed Plaintiffs' claims for monetary relief pursuant to 42 U.S.C. § 1983 against the State of New York and the other six defendants in their official capacities. Defendants now argue that all of Plaintiffs' remaining claims pursuant § 1983under the Eighth, Fourteenth, and First Amendmentsagainst the individual defendants in their personal capacities must be dismissed because those claims do not rise to the level of constitutional violations. While the Court finds that most of Plaintiffs' § 1983 claims cannot withstand summary judgment, the Court declines presently to dismiss all of Plaintiffs' § 1983 claims. A. The Eighth Amendment The conditions of a prisoner's confinement can give rise to a violation of the Eighth Amendment's prohibition on cruel and unusual punishment. See Phelps v. Kapnolas, 308 F.3d 180, 185 (2d Cir. 2002). In such "conditions of confinement" cases, "a prisoner may prevail only where he proves both an objective elementthat the prison officials' transgression was 'sufficiently serious'and a subjective elementthat the officials acted, or omitted to act, with a `sufficiently culpable state of mind,' i.e., with `deliberate indifference to inmate health or safety.'" Id. (quoting Farmer v. Brennan, 511 U.S. 825, 834, 114 S. Ct. 1970, 128 L. Ed. 2d 811 (1994)). With respect to the "objective" element, prisoners may not be denied "the minimal civilized measure of life's necessities." Rhodes v. Chapman, 452 U.S. 337, 347, 101 S. Ct. 2392, 69 L. Ed. 2d 59 (1981). States must not deprive prisoners of their "basic human needse.g., food, clothing, shelter, medical care, and reasonable safety," and prison officials may not expose inmates to conditions that "pose an unreasonable risk of serious damage to [their] future health." Phelps, 308 F.3d at 185 (quoting Helling v. McKinney, 509 U.S. 25, 32, 35, 113 S. Ct. 2475, 125 L. Ed. 2d 22 (1993)) (internal quotation marks omitted). In terms of the subjective component, "the Supreme Court has explained that `a prison official cannot 298 be found liable under the Eighth Amendment for denying an inmate humane conditions of confinement unless the official knows of and disregards an excessive risk to inmate health or safety; the official must both be aware of facts from which the inference could be drawn that a substantial risk of serious harm exists, and he must also draw the inference.'" Id. at 185-86 (quoting Farmer, 511 U.S. at 837, 114 S. Ct. 1970). "This `deliberate indifference' element is equivalent to the familiar standard of `recklessness' as used in criminal law." Id. at 186. In this case, the following conditions remain part of the litigation subsequent to the Court's exhaustion analysis: (1) the inaccessibility of water fountains throughout Green Haven; (2) the inaccessibility of telephones throughout Green Haven; (3) the inaccessibility of bathrooms throughout Green Haven; (4) the condition and accessibility[28] of all prison yards mentioned in the Fourth Amended Complaint; (5) the accessibility of Fay Field; (6) the accessibility of the law library; (7) the height of the UPD food service counter; and (8) the functioning of the J-Block (school) elevator. For the reasons set forth below, the Court finds that with the exception of the accessibility of Green Haven's bathrooms, none of these conditions give rise to an Eighth Amendment violation because none satisfy the "objective element" of the Eighth Amendment test that the conditions denied Plaintiffs "the minimal civilized measure of life's necessities" or "pose an unreasonable risk of serious damage" to their future health. 1. The Green Haven Restrooms In their Fourth Amended Complaint, Plaintiffs allege that the inaccessibility of Green Haven's common restrooms[29] has caused them harm and detail three specific instances in which they have been injured as a result of the condition of these restrooms: (1) on March 30, 1996 Plaintiff Gobern defecated on himself while in the gymnasium because the gymnasium restroom is not wheelchair accessible; (2) Plaintiff Gowins fell while attempting to use an inaccessible bathroom in the J-School area; and (3) Plaintiff Stevens "suffered injuries" because of the lack of accessibility of the gymnasium area bathroom. (Fourth Am. Compl. ¶¶ 53, 54, 72.) In his deposition testimony, Plaintiff Gowins provided further detail regarding his fall in the J-School bathroom, explaining that he "got stuck in-between the radiator and the toilet trying to use it" and "had to stay and wait for somebody to come in and ask himwhen the inmate came in, a prisoner, he notified the officers . . . and they had to dress [him] because [he] busted his head." (Gowins Dep. 10:2-7.) Gowins also described another incident in which he spent two days locked in his cell with soiled clothes after failing to reach an accessible restroom in time. (Gowins Dep. 12:14-13:2.) Similarly, during their deposition testimony Plaintiffs Shariff, Stephenson, Gobern, and Suluk, explained that as a result of inaccessible restrooms within Green Haven's common areas they regularly urinated or defecated on themselves because they were not escorted quickly enough back to the accessible toilets in the Unit for the Physically Disabled or because they were denied the ability to return to the UPD. (See Shariff Dep. 6:12-7:12; Stephenson Dep. 10:13-20; Gobern Dep. 14:17-15:6; Suluk Dep. 7:24-8:12). 299 Although Plaintiffs' estimates of how frequently such incidents occurred vary, the record is clear that at least some Plaintiffs suffered such an episode up to several times per week. (See, e.g., Shariff Dep. 6:12-7:12; Stephenson Dep. 10:10-25; Stevens Dep. 17:12-25; Suluk Dep. 13:17-14:4; Gowins Dep. 16:6-11.) Although Defendants assert that the restroom accessibility issues throughout Green Haven do not rise to the level of an Eighth Amendment violation, the Court cannot agree. In support of their argument, Defendants cite to cases within this Circuit holding that that the temporary deprivation of the ability to use restroom facilities does not constitute a violation of the Eighth Amendment. The cases cited by Defendants, however, are inapposite. In those cases, inmates were merely denied the ability to use a restroom for a period of several hours on a one-time or infrequent basis. See Whitted v. Lazerson, No. 96 Civ. 2746(AGS), 1998 WL 259929, at 2, 1998 U.S. Dist. LEXIS 7437, at 7 (S.D.N.Y. May 21, 1998) (holding that an inmate's Eighth Amendment rights were not violated when he was occasionally prevented from using the restroom and thus urinated or defecated on his clothing); Odom v. Keane, No. 95 Civ. 9941(SS), 1997 WL 576088, at 4, 1997 U.S. Dist. LEXIS 14077, at 4-5 (S.D.N.Y. Sept. 15, 1997) (finding that the absence of a working toilet in an inmate's cell for several hours, "does not rise to the level of cruel and unusual punishment"); Rogers v. Laird, No. 07-CV-668 (LEK/RFT), 2008 WL 619167, at 3, 2008 U.S. Dist. LEXIS 20317, at 9-10 (N.D.N.Y. Feb. 8, 2008) (noting that "[t]he temporary deprivation of restroom privileges for a three hour period does not constitute an extreme deprivation of life's necessities"). In this case, however, Plaintiffs have testified that they soil themselves up to several times per week. The sheer frequency with which these incidents occurnot to mention the physical injuries that at least some Plaintiffs have suffered in attempting to use an inaccessible restroomindicates that Plaintiffs have been denied "the minimal civilized measure of life's necessities" in violation of the Eighth Amendment. With respect to the subjective prong of the Eighth Amendment test, the Court finds that Plaintiffs have at least raised a disputable issue of fact as to whether Defendants were deliberately indifferent to Plaintiffs' restroom needs. Although it is clear that Defendants made improvements to Green Haven's bathroom facilities over time, the sheer frequency with which these soiling incidents seem to have occurred perhaps indicates that Defendants should have taken greater action or moved more quickly to address Plaintiffs' needs. The Court simply cannot assess whether Defendants acted with sufficient urgency on the current record. Additionally, given the number of grievances Plaintiffs appear to have filed regarding the condition of restroom facilities, the Court finds that there is a disputed issue of fact as to whether the Defendants were aware of Plaintiffs' difficulties. Accordingly, because the Court finds that there are disputed issues of fact with respect to the subjective prong of the test, Defendants' request for summary judgment is DENIED.[30] 300 2. The Accessibility of Water Fountains & The Height of the UPD Food Service Counter The height of the UPD food service counter and the absence of accessible water fountains throughout Green Haven are not conditions that deprive Plaintiffs of "the minimal civilized measure of life's necessities" or "pose an unreasonable risk of serious damage" to their future health. Although Plaintiff Shariff alleges that he was injuredin the form of a burn on his handby food or liquid falling from the food service counter, the Court simply cannot find that falling or spilled food creates an unreasonable risk of serious damage to Plaintiffs' health. (See Shariff Dep. 21:3-22:7.) Similarly, although Plaintiff Purcell alleges that as a result of the lack of accessible water fountains he was, at times, unable to take his heart medication, such a temporary deprivation of access to a water fountain does not amount to a deprivation of "the minimal civilized measure of life's necessities." During his deposition testimony, Plaintiff Purcell was unable to identify any specific physical injury other than stressand an accompanying dry mouth, increased heart beat, and feeling of faintnessthat occasionally resulted from his inability to access the water fountains throughout Green Haven. (See Purcell Dep. 9:17-11:5.) Accordingly, to the extent Plaintiffs assert an Eighth Amendment claim based on the height of the UPD counter and the accessibility of Green Haven's water fountains, those claims are DISMISSED. 3. The Green Haven Yards The Court also finds that the condition of the Green Haven yardsincluding the existence of potholes, broken concrete, guardhouses or other conditions that create accessibility issuesdoes not constitute a violation of the Eighth Amendment. Although Plaintiffs allegeboth in their Fourth Amended Complaint and in their deposition testimonythat they have fallen and suffered injuries as a result of the presence of potholes and broken concrete in the yards,[31] a potholed yard falls short of the type of condition that is proscribed by the Eighth Amendment. Just as courts have found that wet or slippery floors or a prison's failure to equip showers with non-slip mats are not the types of conditions warranting relief under the Eighth Amendment, it appears to the Court that a potholed recreation yard similarly does not run afoul of the Constitution. See, e.g., Adams v. Perez, No. 08 Civ. 4834(BSJ)(MHD), 2009 WL 513036, at 3 (S.D.N.Y. Feb. 27, 2009) (stating that courts have repeatedly held that "a failure on the part of prison officials to provide shower mats does not rise to the level of a 301 constitutional violation"); Sylla v. City of New York, No. 04-cv-5692 (ILG), 2005 WL 3336460, at 3 (E.D.N.Y. Dec. 8, 2005) (explaining that "[c]ourts have regularly held that a wet or slippery floor does not pose an objectively excessive risk to prisoners"); Williams v. Dillon, No. 93-3127-DES, 1993 WL 455442, at 1 (D.Kan. Oct. 28, 1993) (observing that "[e]ven if the absence of a shower mat contributed to plaintiff's fall, it would still fail to evidence the kind of condition proscribed under the eighth amendment"). Indeed, Plaintiffs have presented no case lawand the Court has independently uncovered none indicating that subjecting inmates to a potholed prison yard contravenes the Eighth Amendment. Accordingly, Plaintiffs' Eighth Amendment claims based on the condition of the Green Haven yards must be DISMISSED. 4. Remaining Conditions All remaining conditionsthe inaccessibility of telephones throughout Green Haven, the accessibility of Fay Field, the accessibility of the law library, and the functioning of the J-Block (school) elevatorare not the kind of deprivations that have denied Plaintiffs a basic human need. Nor have Plaintiffs alleged that these conditions have caused any physical harm or pain. Accordingly, the Court cannot find that these conditions contravene the Eighth Amendment and any such claims by Plaintiffs are DISMISSED. 5. Summary In summary, Defendants' request for summary judgment on Plaintiffs' Eighth Amendment claims is GRANTED with respect to all conditions at Green Haven except the existence of accessible restrooms. With respect to Plaintiffs' Eighth Amendment claim regarding the accessibility of restrooms throughout Green Haven, Defendants' request for summary judgment is DENIED. Accordingly all of Plaintiffs' claims pursuant to 42 U.S.C. § 1983 based on the Eighth Amendment are DISMISSED except for Plaintiffs' claim regarding the accessibility of Green Haven's restrooms. B. The Fourteenth Amendment Defendants maintain that to the extent Plaintiffs have asserted claims under the Due Process and Equal Protection clauses of the Fourteenth Amendment, those claims must be dismissed. The Court agrees. Plaintiffs first argue that their conditions of confinement are disproportionately harsh and thus amount to a violation of the Due Process Clause of the Fourteenth Amendment. In support of this argument, Plaintiffs cite to the Supreme Court's decision in Wilkinson v. Austin, 545 U.S. 209, 224, 125 S. Ct. 2384, 162 L. Ed. 2d 174 (2005), which affirmed that inmates may have a liberty interest in not being subjected to "atypical and significant hardship" in relation to the ordinary incidents of prison life. Applying this principle, the Court held that inmates have a "protected liberty interest in avoiding assignment" to Ohio's "supermax" prison facility, and thus must be provided with appropriate process before being placed there. Id. at 220, 125 S. Ct. 2384. Before reaching its decision, the Court described the conditions at issue within Ohio's supermax facility as follows: "almost all human contact is prohibited, even to the point that conversation is not permitted from cell to cell; the light, though it may be dimmed, is on for 24 hours; exercise is for 1 hour per day, but only in a small indoor room." Id. at 223-24, 125 S. Ct. 2384. The Court further observed that an inmate's placement at the OSP is "indefinite," is "reviewed just annually," and disqualifies an otherwise eligible inmate for parole consideration. Id. at 302 224, 125 S. Ct. 2384. Though the Court acknowledged that "[w]hile any of these conditions standing alone might not be sufficient to create a liberty interest, taken together they impose an atypical and significant hardship within the correctional context." Id. Unlike the conditions at issue in Wilkinson, the conditions at issue in this case broken concrete, some inaccessible bathrooms, telephones and water fountains, a food service counter that is too high, and the fact that there are obstacles to accessing certain areas of the facilitydo not impose the requisite level of atypical and significant hardship necessary to give rise to a protected liberty interest. Accordingly, Plaintiffs' claim pursuant to the Due Process Clause is without merit and hereby DISMISSED. Plaintiffs next assert that their conditions of confinement violate the Equal Protection Clause of the Fourteenth Amendment. The Equal Protection Clause provides that no state shall "deny to any person within its jurisdiction the equal protection of the laws." U.S. CONST, amend. XIV § 1. "To prove a violation of the Equal Protection Clause. . . a plaintiff must demonstrate that he was treated differently than others similarly situated as a result of intentional or purposeful discrimination." Phillips v. Girdich, 408 F.3d 124, 129 (2d Cir.2005). A plaintiff also must demonstrate that any disparity in treatment cannot withstand the appropriate level of scrutiny. Because the disabled are not a suspect or quasisuspect class, rational basis scrutinythat the disparity be rationally related to a legitimate governmental purposeis the appropriate level of review in such cases. See City of Cleburne v. Cleburne Living Ctr., 473 U.S. 432, 442, 446, 105 S. Ct. 3249, 87 L. Ed. 2d 313 (1985); Phillips, 408 F.3d at 129 (stating that in the prison setting, a Plaintiff must demonstrate that "his treatment was not `reasonably related to [any] legitimate penological interests'"). In this case, no differential treatment has been imposed upon Plaintiffs; instead, Plaintiffs complain that the physical plant of Green Haven has not been sufficiently altered to accommodate their needs. The Supreme Court has made clear, however, that "States are not required by the Fourteenth Amendment to make special accommodations for the disabled, so long as their actions toward such individuals are rational. . . . If special accommodations for the disabled are to be required, they have to come from positive law and not through the Equal Protection Clause." Bd. of Trustees of the Univ. of Alabama v. Garrett, 531 U.S. 356, 367-68, 121 S. Ct. 955, 148 L. Ed. 2d 866 (2001) (discussing Cleburne). Accordingly, although Plaintiffs' claims regarding accessibility issues at Green Haven may be viable under the ADA or Rehabilitation Act, they do not fall within the ambit of the Equal Protection Clause. Therefore, the Court finds Plaintiffs' claim pursuant to the Equal Protection Clause to be without merit; it is DISMISSED. In summary, Defendants' request for summary judgment on Plaintiffs' Fourteenth Amendment claims is GRANTED and Plaintiffs' claims pursuant to 42 U.S.C. § 1983 based on the Fourteenth Amendment are DISMISSED. C. First Amendment Claims In addition to violations of the Eighth and Fourteenth Amendments, Plaintiffs' Fourth Amended Complaint alleges that Defendants' actions have violated the First Amendment. The Complaint fails, however, to provide any additional detail regarding alleged actions by Defendants that have infringed on Plaintiffs' First Amendment rights. Not surprisingly, Defendants' Memorandum of Law in Support of 303 Their Renewed Motion for Partial Summary Judgment does not raise any arguments related to the First Amendment in its section addressing Plaintiffs' § 1983 claims. Plaintiffs' Memorandum of Law in Opposition to Defendants' Renewed Motion for Partial Summary Judgment, however, again asserts that Plaintiffs have stated claims under the First Amendment, though Plaintiffs again fail to set forth with any precision what conduct by Defendants they allege has violated their First Amendment rights and cite to no evidence in the record to support their claim. (Pls.' Mem. L. in Opp'n to Defs.' Renewed Motion for Partial Summary Judgment, at 29, 31, 34-35.) In their Reply, Defendants presume that the basis for Plaintiffs' First Amendment claim is the alleged difficulties at least some Plaintiffs have encountered using Green Haven's restroom facilities when attending religious services. (Defs.' Reply Mem. L. in Support of Defs.' Renewed Motion for Partial Summary Judgment, at 25.) The Court has reviewed the arguments raised in Defendants' Reply and has independently searched the record for any evidence related to a free exercise claim. In that search, the Court uncovered facts that might support a claim that the inaccessible restrooms at Green Haven have substantially burdened Plaintiffs' right to freely exercise their religion. Although the Court has serious doubts about whether Plaintiffs' alleged First Amendment claim should ultimately survive summary judgment, given Defendants' failure to argue for summary judgment on the claim in their Memorandum of Law, and Plaintiffs' subsequent failure to argue with any specificity that they retain a viable First Amendment claim, the Court is unable to assess whether Plaintiffs' asserted First Amendment claim has merit. Accordingly, the Court directs Plaintiffs to submit a letter-briefincluding citation to admissible evidenceregarding the nature and viability of their First Amendment claim within ten days of the date of issuance of this Order. Defendants are directed to respond within ten days of Plaintiffs' submission. Upon reviewing these submissions, the Court will determine whether Plaintiffs' First Amendment claim survives summary judgment. IV. The ADA and the Rehabilitation Act Title II of the ADA states that "no qualified individual with a disability shall, by reason of such disability, be excluded from participation in or be denied the benefits of the services, programs, or activities of a public entity, or be subjected to discrimination by any such entity." 42 U.S.C. § 12132. Similarly, § 504 of the Rehabilitation Act provides that: [n]o otherwise qualified individual with a disability . . . shall, solely by reason of her or his disability, be excluded from the participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance or under any program or activity conducted by any Executive agency or by the United States Postal Service. 29 U.S.C. § 794(a). In its Order dated June 20, 2002, the Court dismissed Plaintiffs' claims under the Title II of the ADA and § 504 of the Rehabilitation Act against the six individual Defendants in their individual capacities. Defendants now argue that Plaintiffs' remaining claims for monetary relief under the ADA and Rehabilitation Act should be dismissed; the Court agrees. A. The ADA Defendants argue that Plaintiffs' remaining claims for monetary relief under Title II of the ADA against the State of New York and the individual Defendants in their official capacities should be dismissed 304 because they are barred by the sovereign immunity provided by the Eleventh Amendment[32] to the United States Constitution. In response, Plaintiffs assert that the Eleventh Amendment does not serve as a bar to their claims because Congress validly abrogated the states' sovereign immunity with respect to Title II suits. (Pls.' Mem. L. in Opp'n to Defs.' Renewed Motion for Partial Summary Judgment, at 21.) Although the Supreme Court has held that Title II validly abrogates a state's sovereign immunity "insofar as [it] creates a private cause of action for damages against the States for conduct that actually violates the Fourteenth Amendment," the Court has not explicitly defined the extent to which Title II validly abrogates sovereign immunity for conduct that violates Title II but does not violate the Constitution. United States v. Georgia, 546 U.S. 151, 159, 126 S. Ct. 877, 163 L. Ed. 2d 650 (2006) (leaving the lower courts to determine whether Congress's purported abrogation of sovereign immunity is valid as to the class of conduct that violates Title II but not the Fourteenth Amendment). In this case, even assuming that Title II validly abrogates sovereign immunity, the Court finds that Plaintiffs' claims for money damages fail on the merits. The Second Circuit has made clear that to recover money damages under Title II of the ADA, Plaintiffs "must demonstrate that the challenged actions were `motivated by discriminatory animus or ill will based on plaintiff's disability.'" Hinton v. The City College of New York, No. 05 Civ. 8951(GEL), 2008 WL 591802, at 22, 2008 U.S. Dist. LEXIS 16058, at 73 (S.D.N.Y. Feb. 29, 2008) (quoting Garcia v. State Univ. of New York Health Scis. Ctr., 280 F.3d 98, 111 (2d Cir.2001)).[33] Government actions motivated by discriminatory animus or ill will are those "based on irrational prejudice or wholly lacking a legitimate government interest." Garcia, 280 F.3d at 111. In order to establish discriminatory animus, "a plaintiff may rely on a burden-shifting technique similar to that adopted in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802-05, 93 S. Ct. 1817, 36 L. Ed. 2d 668 (1973), or a motivating-factor analysis similar to that set out in Price Waterhouse v. Hopkins, 490 U.S. 228, 252-258, 109 S. Ct. 1775, 104 L. Ed. 2d 268 (1989)." Garcia, 280 F.3d at 112. The Court finds that Plaintiffs in this case have not sufficiently demonstrated that Defendants' alleged failure to alleviate inaccessibility conditions at Green Haven was motivated by irrational discriminatory animus or ill will. As an initial matter, it is clear that Plaintiffs do not allege that Defendants' actionsor failures to act were motivated by animus anywhere within 305 the Fourth Amended Complaint.[34] Additionally, the Court has searched the record and found no evidence that Defendants or any other decision-making officials at Green Haventhose responsible for addressing accessibility concernsharbor any ill will toward Plaintiffs because of their disabilities.[35] Indeed, the record clearly demonstrates that Defendants have made efforts to meet the special needs of disabled inmates. The Unit for the Physically Disabled at Green Haven has been described by Plaintiff Shariff as "the only such Unit in the entire system to address [his] needs and the needs of other permanently wheelchair bound individuals." (Shariff Aff. ¶ 55.) Evidencing the degree to which the UPD successfully addresses Plaintiffs' needs, Plaintiff Shariff has stated that he "endeavor[s] to be returned to the Green Haven Correctional Facility so that [he] can be provided the opportunities [] associated [with] being housed" in that unit. (Shariff Aff. ¶ 54.) Although Plaintiffs complain that ADA renovations have not been made to Green Haven as swiftly or thoroughly as they would like, the record is clear that Defendants have made efforts to improve accessibility throughout the prison. (See Stephenson Dep. 15:17-18; Shariff Dep. 22:19-21, 33:5-34:3; Gobern Dep. 19:13-14, 20:6-14; 31:12-20, 32:1-11; Gowins Dep. 10:24-11:2.) Indeed, Plaintiffs concede that over time "improvements have been made [to] the accessibility of facilities in Green Haven to permanent wheelchair bound individuals." (Defs.' Supplemental Rule 56.1 Stmt. ¶ 41; Pls.' Rule 56.1 Stmt. ¶ 41.) As even Plaintiff Stevens admits, "[t]hey [Correctional authorities] do the best they can. Jails weren't built with people like me in mind." (Stevens Aff. ¶ 44, Jan. 15, 2006.) Providing special housing for disabled inmates and making accessibility improvements to Green Haven's facility over time is not behavior consistent with a harboring of animus or ill will toward disabled inmates. Accordingly, the Court finds that neither have Plaintiffs alleged nor does the record demonstrate that Defendants' actionsor failures to actwere motivated by discriminatory animus or ill will.[36] Thus, Plaintiffs' claims for money damages under the ADA are DISMISSED. 306 B. The Rehabilitation Act Although not argued in their Renewed Motion for Partial Summary Judgment, Defendants assert in their letter dated September 22, 2008 that Plaintiffs' remaining claims for monetary damages under the Rehabilitation Actthose against the State of New York and the individual Defendants in their official capacitatesare barred by the Eleventh Amendment. The Court agrees. In Garcia v. State Univ. of New York Health Scis. Ctr., 280 F.3d 98 (2d Cir.2001), the Second Circuit found that although the enactment of § 504 exceeded Congress's powers under § 5 of the Fourteenth Amendment, it was validly enacted pursuant to Congress's power under the Spending Clause of Article I.[37]See Garcia, 280 F.3d at 113. When enacting legislation pursuant to the Spending Clause, Congress may require that as a condition of accepting federal funds a state agree to waive its sovereign immunity in federal court. Id. at 113. With respect to § 504 of the Rehabilitation Act, Congress has imposed just such a condition. See 42 U.S.C. § 2000d-7 (providing, in relevant part, that a "State shall not be immune under the Eleventh Amendment of the Constitution of the United States from suit in Federal court for a violation of section 504 of the Rehabilitation Act of 1973"). Before a state may be considered to have waived sovereign immunity, however, the state must knowingly and intentionally relinquish its Eleventh Amendment rights. See id. at 114. The Second Circuit explained in Garcia that although Congress had evinced a clear intention to condition the acceptance of federal funds on a state's waiver of its Eleventh Amendment immunity in § 504 suits, that was "not sufficient . . . to find that New York [had] actually waived its sovereign immunity in accepting federal funds." Id. at 113-14. The Circuit elaborated that at the time New York had accepted the funds relevant to that case, § 504 was reasonably understood to abrogate New York's sovereign immunity under Congress's Commerce Clause authority, as opposed to its Spending Clause authority. Id. at 114. Thus, during the time period relevant to the Garcia action, "a state accepting conditioned federal funds could not have understood that in so doing it was actually abandoning its sovereign immunity from private damages suits . . . since by all reasonable appearances state sovereign immunity had already been lost." Id. As a result, the Garcia Court concluded that New York had not knowingly waived its sovereign immunity in that case and dismissed Plaintiff's claims under § 504 as barred by the Eleventh Amendment. Id. at 114-15. The question before the Court in this case is whether Plaintiffs' claims for monetary relief under § 504 arose before or after New York can be said to have knowingly waived its sovereign immunity by accepting federal funds.[38] Plaintiffs' Fourth Amended Complaint is dated September 29, 1998 and was filed on October 15, 1998, and thus all claims for relief in 307 this actionincluding Plaintiffs' claims under the Rehabilitation Actarose before that date. In their letter of September 22, 2008, Defendants state that as a matter of policy New York has not argued Eleventh Amendment immunity with respect to Rehabilitation claims arising after Garcia which was decided on September 25, 2001on the theory that the Second Circuit's decision put the state on notice that the continued acceptance of federal funds would constitute a waiver of sovereign immunity. (Defs.' Letter Dated Sept. 22, 2008, at 6.) This Court has previously found, however, that New York knowingly waived its sovereign immunity several months earlieras of February 21, 2001 the date on which New York should have suspected that § 504 was not properly enacted pursuant to § 5 of the Fourteenth Amendment based on Supreme Court decisions. See Cardew v. New York State Dep't of Corr. Servs., No. 01 Civ. 3669(BSJ), 2004 WL 943575, at 8 (S.D.N.Y. Apr. 30, 2004). Regardless of whether New York knowingly waived its sovereign immunity on February 21, 2001 or September 25, 2001, it is clear that New York had not knowingly waived its immunity at the time Plaintiffs filed their Fourth Amended Complaint on October 15, 1998. Accordingly, Plaintiffs' claims for monetary relief under § 504 are barred by the Eleventh Amendment and are, thus, DISMISSED. C. Summary In summary, Plaintiffs' claims for money damages under Title II of the ADA and § 504 of the Rehabilitation Act are DISMISSED.[39] The Court notes, however, that this holding in no way impacts Plaintiffs' prayer for injunctive relief under both Title II and § 504. CONCLUSION[40] For the reasons set forth above, Defendants' Motion for Partial Summary Judgment is GRANTED in part and DENIED in part. Plaintiffs' claims pursuant to 42 U.S.C. § 1983 based on the Eighth Amendment are DISMISSED with the exception of Plaintiffs' claim regarding the accessibility of the Green Haven restrooms. Plaintiffs' claims based on the Fourteenth Amendment are DISMISSED in their entirety. The Court reserves decision on Defendants' request for summary judgment on Plaintiffs' First Amendment claim until the Court receives the above-directed briefing on this issue. Plaintiffs' claims for money damages under Title II of the ADA and § 504 of the Rehabilitation Act are DISMISSED. All claims for injunctive relief asserted by Plaintiffs Shariff and Gowins are DISMISSED. Plaintiffs' claims for injunctive relief with respect to the condition of the C & D yards, the accessibility of telephones and water fountains throughout the facility, and the accessibility of the auditorium restrooms are DISMISSED. Thus, the only claims that remain part of this litigation are: (1) all Plaintiffs' claims under the Eighth Amendment for money damages 308 based on the accessibility of the Green Haven restrooms; (2) Plaintiffs' claims under the First Amendment; and (3) Plaintiff Stephenson's claims for injunctive relief under the ADA and Rehabilitation Act with respect to the following conditions: (a) the condition of Fay Field; (b) the condition of the visiting-room yard; and (c) the accessibility of bathrooms (with the exception of the auditorium bathrooms) throughout Green Haven. The Parties are additionally directed to submit a Joint Pre-Trial Order to the Court for trial as to Plaintiffs' remaining claims for injunctive relief and damages within thirty days of the date of issuance of the Court's decision on Plaintiffs' First Amendment Claim. SO ORDERED. NOTES [1] Plaintiff Sam Johnson is no longer part of this litigation. (Defs.' Rule 56.1 Stmt. ¶ 1; Pls.' Rule 56.1 Stmt. ¶ 1.) Additionally, the Court has received notice of the death of Plaintiff Gowins. If Gowins's estate wishes to pursue this litigation, a Motion for Substitution must be submitted to the Court within ninety days after service of the statement noting the death. Fed.R.Civ.P. 25(a). To date, the Court has received no such motion. However, because the ninety-day period has not yet elapsed, the Court has continued to include Gowins as a party in this Opinion and Order. [2] Unless otherwise noted, "Fourth Amended Complaint" refers to the Complaint dated September 29, 1998. An earlier complaint, dated February 24, 1998, is also designated the "Fourth Amended Complaint." The Court presumes that this earlier Complaint has been superseded by the more recent September 29, 1998 version. [3] At the outset, the Court notes that the papers submitted with respect to this Motion particularly those submitted by Plaintiffs were woefully lacking. Plaintiffs' Rule 56.1 statement is rambling and cites to almost no admissible evidence. Additionally, arguments in Plaintiffs' papers were frequently made without comprehensiveor, indeed, anycitation to supporting evidence. In such circumstances, the Court undertook to search the record before it. In so doing, the Court examined only those papers specifically submitted on this Motion (as well as the requested deposition testimony of Plaintiffs Bartley and Gowins). The Court did not return to evidence not cited in Plaintiffs' (or Defendants') briefs on the instant Motion that was submitted with respect to Defendants' First (1999) Motion for Partial Summary Judgment. [4] Shariff's Complaint was signed by Shariff on February 27, 1996, received by the Court's Pro Se Office on March 6, 1996, and filed on April 25, 1996. [5] It appears that Defendants Goord, Haponic, Muller, Maines, and the State of New York were also added to the litigation after the filing of Shariff's initial Complaint. The Court, however, does not address their addition to the action given that Defendants have raised no such objection in their papers. Indeed, Defendants have withdrawn any argument made in their Memorandum of Law in Support of their Renewed Motion for Partial Summary Judgment that Shariff was required to exhaust his administrative remedies with respect to each Defendant ultimately named in the action. (See Defs.' Letter Dated Sept. 22, 2008, at 3.) [6] Plaintiffs assert that there is a disputed issue of fact as to whether the Green Haven IGP requires each grievance to be appealed to the CORC before it is considered fully exhausted. The Court disagrees. DOCS Directive 4040 in effect at the time of the filing of the grievances in this matter clearly indicates that when an inmate received an unfavorable decision on a grievance, an appeal through CORC was the end of the inmate's possible administrative remedies. Thus, an appeal through CORC was required for "proper exhaustion." (See Schwartz Decl. Ex. L.) [7] There appears to be some debate as to whether the Hemphill three-part test survives the Supreme Court's decision in Woodford v. Ngo, 548 U.S. 81, 126 S. Ct. 2378, 165 L. Ed. 2d 368 (2006). See, e.g., Toomer v. County of Nassau, No. 07-CV-01495 (JFB)(ETB), 2009 WL 1269946, at 7 n. 8, 2009 U.S. Dist. LEXIS 38160, at 25 n. 8 (E.D.N.Y. May 5, 2009) (collecting cases). Although the Second Circuit has not explicitly held that Hemphill remains good law, it has applied the three-part inquiry in recent cases. See Vogelfang v. Riverhead County Jail Officers, No. 07-1268-cv, ___ Fed.Appx. ___, ___, 2009 WL 230132, at 2, 2009 U.S.App. LEXIS 1914, at 5 (2d Cir. Feb. 2, 2009) (summary order). In any event, the Court need not reach this issue because Plaintiffs' failure to exhaust is not excused under Hemphill. [8] Indeed, many of the grievances filed by Plaintiffs regarding conditions at issue in this case were filed before the workplan was allegedly created in May of 1995. (See Schwartz Decl. Ex. M; Pls.' Mem. L. in Opp'n to Defs.' Renewed Motion for Partial Summary Judgment, at 8.) [9] Shariff's Complaint was signed on February 27, 1996, received by the Court's Pro Se Office on March 6, 1996, and filed on April 25, 1996. Defendants filed their Answer on January 11, 1999. [10] In assessing which claims have been exhausted by each individual Plaintiff, the Court has searched the following documents: (1) the Fourth Amended Complaint; (2) the Plaintiff's deposition testimony; (3) Plaintiffs' Memorandum of Law in Opposition to Defendants' Renewed Motion for Partial Summary Judgment, including the chart of grievances included in Addendum B; (4) Plaintiffs' Rule 56.1 statement submitted in opposition to Defendants' current Motion for Partial Summary Judgment; (5) Plaintiffs' Rule 56.1 statement submitted in opposition to Defendants' previous Motion for Partial Summary Judgment; (6) the copies of grievances submitted by Defendants as Exhibit M to the Schwartz Declaration; (7) the CORC records contained in the Declaration of Karen Bellamy; and (8) the affidavits of Plaintiffs Shariff, Stevens, and Stephenson. With respect to any specific grievance a Plaintiff alleges he submitted in any of these documents, the Court has allowed the Plaintiff to proceed on claims related to that grievance unless Defendants have demonstrated that the grievance was never filed or that the grievance was denied and not appealed to CORC. [11] Defendants also concede that Shariff has exhausted his administrative remedies with respect to the condition of the A & B yards, the inaccessibility of certain water fountains, and the inaccessibility of certain telephones throughout Green Haven. (See Defs.' Letter Dated Sept. 22, 2008, at 3-4.) As explained above, however, Shariff need not have exhausted with respect to these conditions to have viable claims. [12] Throughout this opinion, the term "condition" of the yards encompasses the accessibility of the yards as well as the existence of hazardous conditions like potholes, broken concrete, or ditches. [13] Indeed, with respect to the pavement in the "gate corridor," Plaintiffs seem to concede that no notice was ever provided to Defendants. (See Fourth Am. Compl. Ex. A.) [14] Shariff does, however, generically assert in his 1999 Affirmationas Plaintiffs Stevens and Stephenson do in their 1999 Affirmationsthat he "notified the Defendants'" and "filed grievances" regarding the condition of the A & B and C & D yards, the visiting-room yard, the visiting-room bathrooms, as well as (presumably the restrooms in) the gymnasium, auditorium, clinic, building-12, J-school area, administration corridor, Fay Field and the church. (Shariff Aff. ¶ 5, Feb. 4, 1999.) Shariff also contends that he grieved the condition of bathrooms, water fountains, and telephones throughout the facility. (Shariff Aff. ¶ 5, Feb. 4, 1999.) The Court need not consider these statements, however, because, as explained above, Shariff retains claims regarding the condition of the A & B and C & D yards, the throughout Green Haven. [15] The Court presumes this grievance refers to the presence of guard houses/shacks in the yard walkways. [16] Plaintiffs also indicate that Bartley filed grievances regarding a number of conditions/issues that are not addressed by the Fourth Amended Complaint and thus are not part of this litigation, including: the accessibility of certain windows; the accessibility of the commissary, the stateshop, and certain showers (particularly in H-Block); the height of bulletin boards throughout the facility; Bartley's placement in H-Block instead of the UPD; and emergency call buttons in the bathrooms. (See Fourth Am. Compl. Ex A; Pls.' Mem. L. in Opp'n to Defs.' Renewed Motion for Partial Summary Judgment, Addendum B.) [17] Stephenson also asserts he filed a grievance regarding the condition of the Green Haven showers. (See Defs.' Renewed Motion for Partial Summary Judgment, Addendum B.) The condition of the showers, however, is not addressed in the Fourth Amended Complaint and thus is not part of this litigation. Additionally, in his 1999 Affirmation, Stephenson generically assertedas did Plaintiffs Shariff and Stevens in their 1999 Affirmationsthat he filed grievances with respect to the A & B yard, the visiting-room yard, bathrooms in specific locations within Green Haven, as well as bathrooms, water fountains, and telephones throughout the facility. (Stephenson Aff. ¶ 5, Feb. 4, 1999.) The Court need not address these generic allegations, however, because these conditions are covered by Shariff's initial Compliant. [18] Plaintiffs list two different numbers for this grievance, 33093-95 is listed in Addendum B to their Memorandum of Law in Opposition to Defendants' Renewed Motion for Summary Judgment and 33093-96 is listed in Exhibit A to the Fourth Amended Complaint. Because grievance 33093-95 was actually filed by Plaintiff Shariff, not Plaintiff Stephenson, the Court presumes that Plaintiffs allege grievance 33093-96 is the grievance at issue. (See Schwartz Decl. Ex. M.) [19] CORC records reveal that Stephenson filed one appeal, GH-40182-98, regarding the condition of the C & D yards. GH-40182-98, however, was filed with CORC on July 2, 1998, over two years after Stephenson joined the litigation with the filing of the Amended Complaint and over a year and a half after claims regarding the C & D yards were added to the litigation with the filing of the Second Amended Complaint. (See Bellamy Decl. Ex. A at 7; Second Am. Compl. ¶ 25.) Thus, grievance GH-40182-98 cannot suffice to satisfy the exhaustion requirement because Stephenson did not exhaust his administrative remedies prior to the commencement of his suit. See Neal v. Goord, 267 F.3d 116, 117-118 (2d Cir.2001). [20] It appears that the "emergency call button" grievance addresses the presence of emergency call buttons in the Green Haven bathrooms. (See Meyerson Aff. Ex. E ¶¶ 256-258.) Although the Fourth Amended Complaint addresses the accessibility of restrooms, it does not discuss the emergency call button issue. Accordingly, the Court finds that this issue is not part of the litigation. [21] In his deposition testimony Gobern also stated that he field a grievance about a "patch in the hallway, a steep incline." (Gobern Dep. 34:7-12.) The Court has no further details about this alleged condition and finds that it is not part of the litigation given that the Fourth Amended Complaint does not mention patches in hallways or steep inclines. [22] Defendants also concede that Stevens has exhausted with respect to his claims regarding the condition of the A & B yards and the gym bathroom. (Defs.' Rule 56.1 Stmt. ¶ 24; Pls.' Rule 56.1 Stmt. ¶ 24.) As explained above, however, Stevens need not have exhausted with respect to these conditions to retain viable claims. Defendants further admit that Stevens exhausted his remedies with respect to a claim described as "repair walkway/wheelchair," which was appealed to CORC and disposed of on 3/15/95. (Defs.' Letter Dated Sept. 22, 2008, at 4.) Based on CORC records, it appears to the Court that this is grievance number GH-31187-94, a copy of which is included in Exhibit M to the Declaration of John M. Schwarz. (See Bellamy Decl. at 10.) A review of this grievance reveals that it concerned the potholes and broken concrete in the A & B and C & D yards. (Schwartz Decl. Ex. M.) [23] Plaintiffs' additional assertions that Stevens filed a grievance regarding officer B. Mitchell's conduct with respect to the J-School bathroom and the fact that he was denied the right to participate in the family reunion program by Dr. Manion are not issues contained in the Fourth Amended Complaint and thus not relevant to this litigation. (See Pls.' Mem. L. in Opp'n to Defs.' Renewed Motion for Partial Summary Judgment, Addendum B.) Furthermore, in his 1999 Affidavit, Stevenslike Plaintiffs Shariff and Stephensongenerically asserted that he grieved the condition of the A & B and visiting-room yards, certain bathrooms within Green Haven, and the accessibility of bathrooms, telephones, and water fountains throughout Green Haven. (Stevens Aff. ¶ 5, Feb. 4, 1999.) These claims, however, are either addressed above or covered by Shariff's initial Complaint. [24] Plaintiffs also assert that Suluk filed grievances with respect to the accessibility of several Green Haven bathrooms. (See Pls.' Mem. L. in Opp'n to Defs.' Renewed Motion for Partial Summary Judgment, Addendum B.) The Court need not address this contention, however, because those claims are encompassed by Shariff's initial Complaint. [25] Plaintiffs also assert that Gowins filed a grievance regarding wheelchair inaccessible tables in the J-School area. (See Meyerson Aff. Ex. E ¶ 238.) The tables in the J-School area, however, are not mentioned in the Fourth Amended Complaint and, thus, are not part of this action. [26] The fact that Shariff was transferred away from Green Haven in 2003 and, after approximately six years, has not been transferred back evidences that Plaintiffs' assertions that Shariff will be returned to Green Haven are purely speculative. (Shariff Aff. ¶ 6.) [27] Plaintiffs' reliance on the Declaratory Judgment Act, 28 U.S.C. §§ 2201-2202, as "an additional source of relief" is misplaced. (Pls.' Letter Dated Oct. 6, 2008, at 12.) The Declaratory Judgment Act cannot resurrect substantive claims that are defeated by jurisdictional, exhaustion, mootness, or other defenses. See, e.g., Golden v. Zwickler, 394 U.S. 103, 110, 89 S. Ct. 956, 22 L. Ed. 2d 113 (1969) (denying a request for a declaratory judgment where an immediate, live controversy did not exist between parties having adverse legal interests at the time of the hearing). [28] Including the existence of guardhouses/shacks/booths impeding access to and within the yards. [29] There is no dispute that the restrooms within Plaintiffs' housing unit, the UPD, are wheelchair accessible. [30] The Court need not examine whether Plaintiffs have met the PLRA's injury requirement, 42 U.S.C. § 1997e(e), with respect to this claim because, as discussed above in the Court's exhaustion analysis, Shariff asserted claims regarding the accessibility of restroom facilities throughout Green Haven before the enactment of the PLRA and all of Plaintiffs' claims regarding the accessibility of Green Haven's bathrooms relate back to the date on which Shariff filed his original Complaint. Just as the PLRA's "exhaustion requirement" does not apply retroactively, courts have found that the "physical injury requirement" does not so apply. See Bolton v. Goord, 992 F. Supp. 604, 625 (S.D.N.Y. 1998). Thus, with respect to the accessibility of Green Haven's restrooms, no Plaintiff need meet the PLRA's physical injury requirement in order to recover damages. [31] Specifically, Plaintiffs assert that: (1) on June 30, 1994 Plaintiff Shariff flipped backward in his wheelchair and was injured as a result of the presence of a ditch in the Green Haven visiting-room yard; (2) on October 22, 1994, Plaintiff Shariff fell from his wheelchair due to a pothole in the A & B yard; (3) on December 27, 1994, the pavement in the "gate corridor" of Green Haven collapsed, causing Shariff to suffer injuries; (4) in May of 1996 Plaintiff Bartley fell from his wheelchair and suffered injury due to a pothole in the F & G yards; (5) Plaintiff Stevens suffered injuries because of potholes in the A & B yards on October 28, 1994; (6) Plaintiff Suluk suffered injuries because of conditions in the A & B yards; and (7) Plaintiff Stephenson suffered injuries as a result of a fall in August of 1996 in the C & D yards. (Fourth Am. Compl. ¶¶ 47, 49, 50, 62, 70, 74, 76.) [32] Plaintiffs' claims under the ADA and Rehabilitation Act against the individual Defendants in their official capacities amount to a suit against the state. See Ying Jing Gan v. City of New York, 996 F.2d 522, 529 (2d Cir.1993) (stating that "[t]o the extent that a state official is sued for damages in his official capacity, such a suit is deemed to be a suit against the state, and the official is entitled to invoke the Eleventh Amendment immunity belonging to the state"). [33] There are divergent views within this circuit as to whether Garcia remains good law in the wake of the Supreme Court's decisions in Tennessee v. Lane, 541 U.S. 509, 124 S. Ct. 1978, 158 L. Ed. 2d 820 (2004) and United States v. Georgia, 546 U.S. 151, 126 S. Ct. 877, 163 L. Ed. 2d 650 (2006). See Olson v. State of New York, No. 2:04-cv-00419-ENV-MLO, 2007 WL 1029021, at *7-8 (E.D.N.Y. Mar. 30, 2007) (collecting cases). However, after a close reading of Garcia this Court concludes that Garcia's requirement that a Plaintiff demonstrate "animus or ill will" to recover monetary damages under Title II survives those recent Supreme Court decisions. [34] Plaintiffs' request to amend their Complaint to insert allegations of animus is DENIED. Based on the Court's review of the record, it is clear that any such amendment would be futile. [35] Although during his deposition testimony Plaintiff Gobern stated that he had been told "everything from shit on yourself to pee on yourself," and Stevens stated that he had been told in reference to his use of the restrooms, "You guys in the wheelchairs, you can use it. Get up and walk," Plaintiffs attribute such statements only to individual prison guards, not Defendants or any other official responsible for making decisions regarding accessibility issues at Green Haven. (Gobern Dep. 13:10-11; Stevens Dep. 18:4-5.) Indeed, Gobern later testified that when he brought these comments to the attention of supervisory officials, specifically Defendant Artuz, Artuz spoke with the individual who had made the comments and "[i]t didn't really happen again." (Gobern Dep. 13:17-14:11). [36] The Court's finding that there is a disputed issue of fact as to whether Defendants were deliberately indifferent to Plaintiffs' needs with respect to the accessibility of restrooms throughout the facility has no bearing on whether Defendants were motivated by discriminatory animus or ill will. See Garcia, 280 F.3d at 115 (changing the standard for recovery of monetary damages in claims against the state under Title II from deliberate indifference to proof of discriminatory animus or ill will). Even if Defendants' failure to act with sufficient speed in making Green Haven's common restrooms wheelchair accessible amounts to deliberate indifference, there is no indication in the record that Defendants' alleged failures were motivated by discriminatory animus or ill will. [37] As the Second Circuit explained in Garcia, § 504 of the Rehabilitation Act and Title II of the ADA "offer essentially the same protections for people with disabilities." Garcia, 280 F.3d at 113. "Indeed, the most significant distinction between Title II of the ADA and § 504 of the Rehabilitation Act is their reach. While Title II applies to all state and municipal governments, § 504 applies only to those government agencies or departments that accept federal funds, and only those periods during which the funds are accepted." Id. at 113 n. 2. [38] Defendants do not argue that New York was not accepting federal funding during the time period at issue. [39] Because the Court finds that Plaintiffs' claims for monetary damages under the ADA and Rehabilitation Act must be dismissed for the reasons set forth above, the Court need not address Defendants' argument that suit under the ADA and Rehabilitation Act cannot be maintained against the individual Defendants in their official capacities because Defendants are not "public entities" or "programs or activities." [40] Given the Court's above holdings, the Court need not address Defendants' arguments regarding the res judicata effect of prior judgments against Shariff and Bartley on claims asserted here, the collateral estoppel effect of a certain judgment against Shariff, and the alleged double recovery by Suluk on one of his claims.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2593046/	805 F. Supp. 1157 (1992) APOLLO TECHNOLOGIES CORP., Plaintiff, v. CENTROSPHERE INDUSTRIAL CORP., Defendant. Civ. A. No. 92-3712 (AJL). United States District Court, D. New Jersey. September 25, 1992. 1158 1159 1160 1161 1162 1163 1164 1165 Martin H. Samson, Michael J. Silverberg, Phillips, Nizer, Benjamin, Krim & Ballon, New York City, David M. Hyman, Crummy, Del Deo, Dolan, Griffinger & Vecchione, Newark, N.J., for plaintiff. Max Manshel, South Orange, N.J., Joseph B. Blaustein, Philip J. Karlin, A Professional Law Corp., Los Angeles, Cal., for defendant. 1166 TABLE OF CONTENTS Introduction ............................................................... 1166 Facts ...................................................................... 1167 A. The Parties and Other Significant Persons ........................... 1167 B. Apollo's Fuel Additives and Pollution Control Technology ............ 1168 C. The Bid for the NAPOCOR Trial Contract .............................. 1169 1. Apollo's Version of Events ....................................... 1169 2. Centrosphere's Version of Events ................................. 1171 D. The Agency Contracts ................................................ 1171 1. The First Agency Contract ........................................ 1172 2. The Second Agency Contract ....................................... 1172 E. Performance of the Trial Contract ................................... 1174 F. Completion of the Trial Contract .................................... 1175 G. Relationship Between Apollo and Centrosphere After 1 January 1992 ... 1176 H. Recent Dealings Between Apollo and NAPOCOR .......................... 1178 I. Recent Actions By Centrosphere ...................................... 1178 J. The Complaint ....................................................... 1179 Discussion.................................................................. 1181 A. Personal Jurisdiction ............................................... 1181 1. Jurisdiction Pursuant to the New Jersey Long Arm Rule ............ 1181 a. Minimum Contracts ............................................. 1182 b. Fair Play and Substantial Justice.............................. 1186 2. Adequacy of Service of Process ................................... 1187 B. Preliminary Injunction .............................................. 1190 1. Standard of Review ............................................... 1190 2. Likelihood of Success on the Merits .............................. 1191 a. Breach of Contract ............................................ 1192 b. Breach of Fiduciary Duty ...................................... 1195 (1) An Agent's Duties to its Principal ........................ 1195 (2) Termination of the Agency Relationship .................... 1196 (3) What Constitute Trade Secrets ............................. 1197 (4) Apollo's Claim that Centrosphere Breached Its Fiduciary Duty By Purporting to Act as Apollo's Agent Following Termination of the Second Agency Contract ................ 1198 (5) Apollo's Claim that Centrosphere Breached Its Fiduciary Duty By Utilizing Confidential Information and Trade Secrets in Competition with Apollo ....................... 1200 c. Unfair Competition ............................................ 1202 d. Intentional Interference With Prospective Contractual Relations .............................................................. 1205 3. Irreparable Injury ............................................... 1206 a. The New Contract and the Interim Contract...................... 1208 b. The Potential Contracts ....................................... 1209 c. Trade Secrets ................................................. 1209 d. Injunctions Even Where Money Damages Appropriate .............. 1210 4. Balance of Hardships ............................................. 1211 5. Public Interest .................................................. 1211 Conclusion ................................................................. 1212 OPINION LECHNER, District Judge. Introduction This is an action brought by plaintiff Apollo Technologies Corp. ("Apollo") against Centrosphere Industrial Corp. ("Centrosphere") arising out of an agency agreement in which Centrosphere agreed to market fuel additives and equipment on behalf of Apollo to the National Power Corporation ("NAPOCOR") of the Republic of the Philippines (the "Philippines"). Apollo alleges jurisdiction pursuant to 28 U.S.C. § 1332(a)(2). On 2 September 1992, Apollo applied for a temporary restraining order ("TRO") and a preliminary injunction[1] (the Preliminary 1167 Injunction") to restrain and enjoin Centrosphere[2] from (1) competing with Apollo in the sale to NAPOCOR of fuel additives, equipment or other products or technologies competitive with those manufactured or sold by Apollo, (2) interfering in Apollo's sale of fuel additives to NAPOCOR, (3) utilizing or disclosing confidential information or trade secrets received from Apollo, including technologies and methods utilized in the selection, testing, operation and evaluation of Apollo's fuel additives and equipment and (4) acting or purporting to act as an agent of, or offering to sell fuel additives, equipment or other products made or sold by, Apollo. Moving Brief at 1; Becker Aff., ¶ 1. Centrosphere submitted a cross motion to dismiss the action for insufficient service of process and for lack of personal jurisdiction over Centrosphere pursuant to Fed. R.Civ.P. 4.[3] Opp. Brief at 1; WidjajA Aff., ¶ 1. In the alternative, should a preliminary injunction be granted to Apollo, Centrosphere cross-moves for a mutual preliminary injunction enjoining Apollo from: (1) refusing to provide Centrosphere with fuel additives, equipment and other products manufactured and sold by Apollo, for sale by Centrosphere to NAPOCOR, (2) interfering with Centrosphere in its relationship with NAPOCOR and (3) dealing directly with NAPOCOR, or dealing through organizations other than Centrosphere, for the purpose of providing fuel additives and related technologies to NAPOCOR. Opp. Brief at 1; Widjaja Aff., ¶ 1. On 2 September 1992, Judge Alfred M. Wolin of this court denied Apollo's request for a TRO and ordered Centrosphere to show cause before this court on 18 September 1992 as to why an order granting the Preliminary Injunction should not issue. On 24 September 1992, oral argument was held[4] to determine (1) whether personal jurisdiction exists over Centrosphere, (2) the adequacy of the process served on Centrosphere and (3) whether any preliminary injunction should issue. For the reasons set forth below, the Preliminary Injunction is denied; the cross-motion to dismiss or, if the Preliminary Injunction was granted, to make the Preliminary Injunction mutually enforceable, is also denied. Facts[5] A. The Parties and Other Significant Persons Apollo is a Delaware corporation with its principal place of business in New Jersey. Verified Complaint, filed 1 September 1992 (the "Complaint"), ¶ 1; Becker Aff., ¶ 8. 1168 Apollo is engaged in the sale of pollution control chemicals and related equipment with a focus in the sale of fuel additives and related equipment and technologies. Complaint, ¶ 1; Becker Aff., ¶ 8. It does not appear Apollo is licensed to do business in the Philippines. Widjaja Aff., ¶ 32, Ex. 10 (Affidavit of Julieta Ramos sworn to 9 September 1992). The founder and president of Apollo is Dr. Ira Kukin ("Kukin"). Kukin appears to be an expert in the pollution control field and an inventor of more than twenty-five products designed to control pollution and maximize energy efficiency through chemical means. Becker Aff., ¶ 9. The chief operating officer and vice president of Apollo is Donald G. Becker ("Becker"). Becker Aff., ¶ 1; Becker Reply Aff., ¶ 1. The vice president of engineering for Apollo is William Pepe ("Pepe"). Pepe Aff., ¶ 1. Centrosphere is a corporation organized under the laws of the Philippines with its sole place of business in the Philippines. Widjaja Aff., ¶ 4; Complaint, ¶ 2; Opp. Brief at 1. Centrosphere is neither authorized to do business in either the United States or its territories nor does it maintain any offices in the United States. Widjaja Aff., ¶ 4; Opp. Brief at 1-2. Only seven shareholders own stock in Centrosphere. Becker Aff., ¶ 37. These shareholders include Marian Mercado-DeLeon ("Mercado-DeLeon"), Fidel L. Bermudez ("Bermudez") and Ed Depano ("Depano"). Id.; Complaint, ¶ 4. Mercado-DeLeon is also the former president and general manager of Centrosphere. Widjaja Aff., ¶ 12; Becker Aff., ¶ 37. The president of Centrosphere is Alexander Widjaja ("Widjaja"). Widjaja Aff., ¶¶ 1, 4; Complaint, ¶ 4; Becker Aff., ¶ 41. Widjaja became president of Centrosphere in April 1992. Widjaja Aff., ¶ 4. In addition to Centrosphere, since 1985 Widjaja has been an officer or shareholder in several Philippines corporations which have supplied goods and services to Centrosphere. Id., ¶ 5; Opp. Brief at 2. Two of these corporations are Joseph London ("London") and East/West Consolidated Services ("East/West"). Widjaja Aff., ¶ 5; Opp. Brief at 2. Centrosphere was formed in April 1990 for the purpose of supplying fuel additives and related technology to entities in the Philippines. Widjaja Aff., ¶ 10; Opp. Brief at 2-3. Prior to April 1990, efforts had been made by Widjaja and East/West to establish interest in such products in the Philippines. Widjaja Aff., ¶ 10; Opp. Brief at 2. B. Apollo's Fuel Additives and Pollution Control Technology Apollo sells pollution control chemicals and related equipment to customers throughout the world, including utility customers such as NAPOCOR, the Israel Electric Company, the Commission Federal de Electricidad in Mexico and Public Service Electric & Gas in New Jersey. Becker Aff., ¶ 8; Kukin Exhibits, Ex. 4. Chief among Apollo's pollution control products are fuel additives. Complaint, ¶ 1. These fuel additives are used to make oil fired boilers at utility power plants operate more efficiently and for longer periods of time without the need for maintenance and repair. Becker Aff., ¶ 11. In addition, these additives reduce air pollution by reducing the emissions produced by power plant boilers. Id. Apollo holds patents covering the formulations of many of its fuel additives, including those that were marketed to NAPOCOR. Id., ¶ 12. Apollo also holds patents on the various forms of electronic equipment utilized to inject the additives into the boilers. Id. According to Apollo, operating the fuel additive system requires a highly specialized knowledge. Id., ¶¶ 13-14. For instance, Apollo indicates that knowledge of (1) the specific rates of additive feed, (2) the proper location of additive injection ports within the boilers, (3) the appropriate time to initiate and shut down application of the additives, (4) the methods of testing flue gases to determine the effectiveness of the products and (5) the methods for operating the feed equipment during various boiler operating conditions is essential 1169 to successful operation of the system. Id., ¶ 13. If, for example, the additives are supplied at the wrong time or in the wrong dose, the additives could cause the boiler to shut down rather than enhance its performance. Id., ¶ 14. Apollo emphasizes that it "takes great pains to preserve the confidentiality" of this information. Complaint, ¶ 18; Becker Aff., ¶ 15. Such information is disclosed only when essential to Apollo's operations and then only if the party receiving the information signs a confidentiality agreement with respect to the disclosure. Complaint, ¶ 18; Becker Aff., ¶ 15. Apollo states such agreements are obtained from "all Apollo employees, as well as any agents, testing laboratories and outside manufacturers that Apollo utilizes." Complaint, ¶ 18; Becker Aff., ¶ 15. C. The Bid for the NAPOCOR Trial Contract In 1989 or 1990, NAPOCOR invited interested parties to submit bids for a four month trial contract (the "Trial Contract") to control gaseous waste from its Malaya Thermal Power Plant, Units 1 and 2 (the "Malaya Plant").[6] Becker Aff., ¶ 16; Widjaja Aff., ¶ 11. The parties were asked to supply a product which could minimize the damaging effects caused by flue gases to power production boilers, when those boilers utilize fuel oil with a high sulfur and high vanadium content. Becker Aff., ¶ 16. In October 1990, Centrosphere submitted a bid to NAPOCOR. Id., ¶ 18; Opp. Brief at 3. On 14 December 1990, NAPOCOR awarded the Trial Contract to Centrosphere. Becker Aff., ¶ 19, Ex. B (copy of Trial Contract); Widjaja Aff., ¶ 11, Ex. 2 (same). Both Apollo and Centrosphere acknowledge Centrosphere solicited the assistance of Apollo in performing the Trial Contract. When this assistance was solicited, however, is disputed. 1. Apollo's Version of Events According to Apollo, Centrosphere contacted Apollo prior to bidding. Becker Aff., ¶ 17; Kukin Aff., ¶ 5. Apollo contends the events occurred as follows. In April 1990, Apollo received a letter, dated 16 April 1990 (the "16 April Letter"), from Centrosphere indicating NAPOCOR was considering the use of chemical additives to improve the efficiency of boilers and was suggesting a trial program at the Malaya Plant (the "Trial Program"). Kukin Aff., ¶ 5(a); Kukin Exhibits, Ex. 1 (16 April Letter). The 16 April Letter specifically stated: [NAPOCOR] requested [Centrosphere] to submit a detailed study on the use of chemical additive[s] and to come out with a proposal for [the T]rial [P]rogram on its Malaya [] Plant.... It took us only a short time to know that [Apollo] is the leader in this field of chemical additives. With your impressive product and the work we have made to introduce th[e Trial P]rogram of chemical additives plus our established relations with [NAPOCOR], we can look forward to a successful joint venture with your company. Kukin Exhibits, Ex. 1. Centrosphere concluded the 16 April Letter by requesting permission to send "one or two of our key people to your company" to discuss the proposed joint venture. Id. It is unknown whether Apollo responded to the 16 April Letter, but apparently it was initially uninterested in Centrosphere's offer. Kukin Aff., ¶ 5(a). In July 1990, Apollo received another letter from Centrosphere, dated 9 July 1990 (the "9 July Letter"), indicating that NAPOCOR had begun to take bids for the Trial Program. Id.; Kukin Exhibits, Ex. 2 (9 July Letter). The 9 July Letter stated: "As we stated in [the 16 April Letter, Centrosphere is] interested in representing [Apollo] in this bidding." Kukin Exhibits, Ex. 2. The 9 July Letter reiterated the offer to send Centrosphere personnel to Apollo's offices in New Jersey and suggested that Apollo temporarily certify Centrosphere as a distributor of Apollo's product to enable Centrosphere 1170 to make the bid to NAPOCOR. Id.; Kukin Aff., ¶ 5(b). On 10 July 1990, Apollo replied to Centrosphere. Kukin Aff., ¶ 5(c); Kukin Exhibits, Ex. 3 (letter from Kukin to Mercado-DeLeon, dated 10 July 1990 (the "10 July Letter")). Apollo expressed reservation about proceeding with Centrosphere's proposal due to Apollo's unfamiliarity with Centrosphere, the expense of the Trial Program and the uneasy political climate in the Philippines. Kukin Aff., ¶ 5(c); Kukin Exhibits, Ex. 3. Nevertheless, Apollo authorized Centrosphere to go ahead with the bidding and granted Centrosphere a certificate of distributorship. Kukin Aff., ¶ 5(c); Becker Aff., ¶ 17; Kukin Exhibits, Exs. 3, 4 (Certificate of Distributorship from Apollo to Centrosphere, dated 10 July 1990). Although the 10 July Letter indicated this distributorship was to be temporary, the Certificate contains no indication of temporariness. Kukin Exhibits, Exs. 3-4. By the 10 July Letter, Apollo supplied Centrosphere with the technical, product and customer information needed to complete a proposal and bid request to NAPOCOR for the Trial Program. Becker Aff., ¶ 17; Kukin Exhibits, Exs. 3-4. In October 1990, Centrosphere advised Apollo that NAPOCOR was going to award Centrosphere the Trial Contract. Kukin Exhibits, Ex. 5 (letter from Widjaja to Kukin and Pepe, dated 22 October 1990 (the "22 October Letter")).[7] In November 1990, the parties exchanged more correspondence in anticipation of being awarded the Trial Contract. In a memorandum, dated 7 November 1990,[8] Apollo apparently quoted Centrosphere prices for a number of Apollo's fuel additive products and reviewed the terms under which it would do business with Centrosphere. Kukin Aff., ¶ 5(e). Apollo also asserts it informed Centrosphere that it would begin assembling the additive and test equipment once Apollo received a purchase order and a letter of credit (the "Letter of Credit") from either Centrosphere or NAPOCOR. Kukin Aff., ¶ 5(e). On 8 November 1990, Centrosphere replied to Apollo and requested that Apollo's delivery of the additives be made within seventy-five days of receipt by Apollo of the Letter of Credit. Id., ¶ 5(f); Kukin Exhibits, Ex. 6 (letter from Widjaja to Pepe, dated 8 November 1990). On 9 November 1990, Apollo informed Centrosphere that Apollo would attempt to deliver the additives and equipment within seventy-five days after receipt of the Letter of Credit but could not guarantee this turnaround time. Kukin Aff., ¶ 5(f); Kukin Exhibits, Ex. 7 (letter from Pepe to Widjaja dated, 9 November 1990 (the "9 November Letter")). The 9 November Letter requested that Centrosphere send its personnel to Apollo's manufacturing facility in Israel for training in Apollo's fuel additives systems technology. Kukin Exhibits, Ex. 7. The 9 November Letter also indicated that either Centrosphere or Apollo could sign the Trial Contract with NAPOCOR; in either event, Centrosphere would receive a fifteen percent commission from the sale of Apollo's products. Id. On 14 December 1990, NAPOCOR awarded the Trial Contract to Centrosphere.[9] Becker Aff., ¶ 19, Ex. B (copy of Trial Contract); Widjaja Aff., ¶ 11, Ex. 2 (same). NAPOCOR agreed to pay nearly two million dollars (the "Purchase Price") in return for a supply of fuel additives and 1171 related technologies on a four month trial basis. Becker Aff., ¶¶ 18-19; Complaint, ¶ 7; Widjaja Aff., ¶ 13. Forty percent of the Purchase Price was payable upon delivery of the additives to NAPOCOR. Becker Aff., ¶ 19, Ex. B.; Widjaja Aff., Ex. 2 Payment of the balance of the Purchase Price was dependent on the additives meeting NAPOCOR's specific objectives. Becker Aff., ¶ 19. 2. Centrosphere's Version of Events Centrosphere argues it contacted Apollo only after it won the bid. Opp. Brief at 3. Centrosphere states: "Having won the bid, but lacking the requisite technology and financing to support this project on its own, Centrosphere contacted Apollo." Id. Centrosphere adds that the Trial Contract listed the types of fuel additives to be supplied generically and without reference to brand names or specific manufacturers. Id. Apollo attempts to rebut Centrosphere's position by contending that Centrosphere could not have submitted the bid without its assistance. Complaint, ¶ 2; Becker Aff., ¶ 4. Specifically, Apollo asserts that, prior to Centrosphere's contact with Apollo, Centrosphere had no business dealings or experience with air pollution control chemicals or fuel additives. Complaint, ¶ 2; Becker Aff., ¶ 4; Moving Brief at 7. It appears, however, that Widjaja and Centrosphere may have developed contacts at NAPOCOR and some experience in fuel additive technology prior to its contact with Apollo. Widjaja Aff., ¶¶ 6-9. According to Centrosphere, London, East/West and Centrosphere had supplied NAPOCOR with "coatings, chemicals, supplies, fuel additives and expertise in their application," particularly in the form of paints and water purification chemicals and systems. Id., ¶ 6; Opp. Brief at 2. Centrosphere states that in 1987 or 1988, while Widjaja was the Executive Vice President of East/West, the company was approached by Dr. Alfred E. Kober ("Kober") regarding the marketing of fuel additive and related technologies in the Philippines. Widjaja Aff., ¶ 8; Opp. Brief at 2. Kober was a former scientist at Apollo for ten years and was knowledgeable in fuel additive technology. Becker Aff., Ex. Q; Widjaja Aff., ¶ 8. Under Kober's direction, East/West began marketing fuel additives and related technologies in the Philippines but was unsuccessful in these efforts. Widjaja Aff., ¶ 8; Opp. Brief at 2. As evidenced by a letter sent by Apollo to East/West in February 1989, Apollo was aware that East/West was working with Kober and was marketing fuel additives in the Philippines. Widjaja Aff., ¶ 9, Ex. 1 (letter from Kukin to Tristan Calasanz, dated 15 February 1989). D. The Agency Contracts On 31 December 1990, Apollo and Centrosphere entered into two contracts establishing a written agency relationship (collectively, the "Agency Contracts") to assist in performance of the Trial Contract. Complaint, ¶¶ 8, 38; Becker Aff., ¶ 20; Kukin Aff., ¶ 5(k); Widjaja Aff., ¶ 15, Ex. 3 (copies of Agency Contracts). Negotiations occurred over the four day period from 28 December 1990 to 31 December 1990. Widjaja Aff., ¶ 15; Kukin Aff., ¶ 5(j). The Agency Contracts were negotiated and executed at Apollo's offices in New Jersey. Becker Aff., ¶ 20; Kukin Aff., ¶ 5(i); Widjaja Aff., ¶ 15. Present during the negotiations were Widjaja, Mercado-DeLeon and Reggie Liongson ("Liongson") for Centrosphere and Kukin, Becker and William Pepe ("Pepe") for Apollo.[10] Widjaja Aff., ¶ 15; Opp. Brief at 3-5; Kukin Aff., ¶ 5(j). Neither party appears to have been represented by counsel at any point throughout the four day negotiating period. Kukin Aff., ¶ 5(j); Widjaja Aff., ¶ 15. At the conclusion of the negotiations, Mercado-DeLeon remained in New Jersey while Widjaja and Liongson returned to the Philippines. Widjaja Aff., ¶ 18. According to Centrosphere, the parties had general discussions about the "fuel additive supply situation" in the Philippines on 28 December 1990. Widjaja Aff., ¶ 15; Opp. Brief at 4. These discussions took 1172 place at the hotel in which the Centrosphere personnel were staying. Widjaja Aff., ¶ 15. On 29 December 1990, the parties resumed discussions at Apollo's offices and discussed the Trial Program and the terms for the Agency Contracts. Id. On 31 December 1990,[11] Apollo and Centrosphere signed two contracts. Id.; Kukin Aff., ¶ 5(k). 1. The First Agency Contract The first contract (the "First Agency Contract") was entitled the "Agreement for Trial at Malaya Power Station of NAPOCOR." Widjaja Aff., Ex. 3. The First Agency Contract memorialized the discussions of 29 December 1990 and set forth the respective obligations, financial and otherwise, of Apollo and Centrosphere as they specifically related to the performance of the Trial Contract. Id.; Opp. Brief at 4. During negotiations, Centrosphere suggested a number of changes be made to the First Agency Contract and signed the First Agency Contract once those changes were implemented.[12] Widjaja Aff., ¶ 15. The parties agreed that performance under the First Agency Contract was to be controlled by a second agency contract discussed below. Id., Ex. 3. Under the First Agency Contract, Apollo was to receive $1,995,163 in return for supplying its fuel additives, equipment and technology. Id. Payment was to be made directly from NAPOCOR to Apollo.[13]Id.; Becker Aff., ¶ 19, Ex. C. As indicated in the Trial Contract, forty percent would be paid at the time of shipment of the additives and equipment to NAPOCOR, with the balance payable if the Trial Program proved successful. Widjaja Aff., Ex. 3; Kukin Aff., ¶ 6. Centrosphere would be paid a fifteen percent commission. Id. One hundred twenty one thousand dollars was payable to Centrosphere at the time payment was made by NAPOCOR to Apollo, with the balance payable after final payment was made to Apollo by NAPOCOR. Widjaja Aff., Ex. 3. The First Agency Contract further provided that Apollo would finance the shipping and insurance costs of additives and equipment to NAPOCOR. Id.; Becker Aff., ¶ 19; Kukin Aff., ¶ 6. Apollo also agreed to assume the risk of loss. Becker Aff., ¶ 19; Kukin Aff., ¶ 6. As indicated previously, Centrosphere was to obtain the Letter of Credit from NAPOCOR before 31 January 1991. Widjaja Aff., Ex. 3. The First Agency Contract contained an addendum (the "First Agency Contract Addendum"). Widjaja Aff., Ex. 3. The First Agency Contract Addendum provided that the First Agency Contract would not be effective without written verification by counsel for both Apollo and Centrosphere that the First Agency Contract "is accepted by both corporations' legal counsel." Id.; Kukin Aff., ¶ 5(k). Such confirmation was to be received by 31 January 1991 and, if not received, the First Agency Contract was to be considered binding. Kukin Aff., ¶ 5(k); Widjaja Aff., Ex. 3. According to Apollo, no confirmation on behalf of Apollo or Centrosphere occurred by 31 January 1991 or at any time thereafter. Kukin Aff., ¶ 5(k). 2. The Second Agency Contract The second contract signed on 31 December 1990 (the "Second Agency Contract") established the general terms of the agency relationship between Centrosphere and Apollo. Widjaja Aff., Ex. 3. According to Centrosphere, the Second Agency Contract had not been seen or discussed by Centrosphere prior to its presentation. Id., ¶ 17; Opp. Brief at 4. Also according to Centrosphere, Centrosphere signed the Second Agency Contract without reading it and 1173 without suggesting any changes.[14] Widjaja Aff., ¶¶ 15, 17; Opp. Brief at 4. Pursuant to the Second Agency Contract, Centrosphere was appointed as Apollo's agent in the Philippines for the sale of Apollo's products. Complaint, ¶ 9; Becker Aff., ¶ 21; Widjaja Aff., Ex. 3. For its services, Centrosphere was to receive a commission of fifteen percent of Apollo's net receipts from additive sales made during the term of the Second Agency Contract, subject to certain deductions and allowances. Complaint, ¶ 14; Becker Aff., ¶ 28; Widjaja Aff., Ex. 3. In conjunction with its appointment, Centrosphere was obligated "to devote its best efforts to the promotion of the sale of Apollo's products," "to engage a technical sales executive on a full time basis" and "to supplement its staff with adequate technical service, mechanical service and sales associates to handle the growth of Apollo's business in the Philippines." Becker Aff., ¶ 26 (quoting Ex. A); Complaint, ¶ 13; Widjaja Aff., Ex. 3. The Second Agency Contract also provided that Centrosphere's personnel were responsible for providing any technical and mechanical services required in the Philippines. Complaint, ¶ 13; Becker Aff., ¶ 26; Widjaja Aff., Ex. 3. Subsequently, Apollo was informed by Centrosphere that Widjaja would serve as Centrosphere's chief technical expert and would supervise the Trial Contract and Centrosphere's performance of its obligations under the Agency Contracts. Becker Aff., ¶ 41; Kukin Aff., ¶ 5(d). The First Agency Contract specifically obligated Centrosphere to assist Apollo in its efforts to obtain business from NAPOCOR and to provide technical engineers and mechanics to apply Apollo's fuel additives on-site at the Malaya Plant. Complaint, ¶ 15; Becker Aff., ¶ 27; Widjaja Aff., Ex. 3. To enable Centrosphere to fulfill these obligations, the Second Agency Contract provided that Apollo would give Centrosphere access to "customer lists, formulas, processes, data and know-how of Apollo and to confidential business information." Widjaja Aff., Ex. 3; Complaint, ¶ 16; Becker Aff., ¶¶ 24, 27. The Second Agency Contract referred to these items collectively as "company trade secrets." Widjaja Aff., Ex. 3; Complaint, ¶ 16; Becker Aff., ¶¶ 24, 27. Centrosphere agreed in the Second Agency Contract not to disclose any trade secrets provided to it by Apollo without the written consent of Apollo.[15] Widjaja Aff., Ex. 3; Complaint, ¶ 12; Becker Aff., ¶ 24. Centrosphere also agreed in the Second Agency Contract not to "manufacture or sell" fuel additives, equipment, feeding systems or any other products or services competitive with Apollo's products in the Philippines. Widjaja Aff., Ex. 3; Complaint, ¶ 11; Becker Aff., ¶ 23. This non-compete clause was to last for the term of the Second Agency Contract and for a period of three years after its termination. Widjaja Aff., Ex. 3; Becker Aff., ¶ 23; Kukin Aff., ¶ 5(m). The Second Agency Contract was expressly limited to a term of one year unless Centrosphere was able to obtain a "long term commitment" from a Philippine client within that time (the "Expiration Clause"). Widjaja Aff., Ex. 3; Opp. Brief at 5; Becker Aff., ¶ 22; Kukin Aff., ¶ 5(l). In the case of a long term commitment, the Second Agency Contract would be "extended for a minimum of two years and thereafter either party [would] be able to terminate on 1174 six months notice." Widjaja Aff., Ex. 3; Becker Aff., ¶ 22. Finally, the Second Agency Contract provided that it was to be governed by "the laws of the State of New York, U.S.A." and that "any breach of [the Second Agency Contract] shall entitle Apollo, in addition to any other legal remedies available to it, to apply to any court of competent jurisdiction to enjoin any violation of this agreement."[16] Widjaja Aff., Ex. 3; Kukin Aff., ¶ 5(m) (emphasis added). E. Performance of the Trial Contract Performance of the Trial Contract was to commence in the two Malaya Plant units on 30 November 1990 and 20 December 1990. Widjaja Aff., ¶ 14 (quoting Trial Contract article II), Ex. 2. After three months, an evaluation was to be made, followed by a determination of whether the test should continue. Id., Ex. 2; Opp. Brief at 5; Becker Aff., Ex. B. It was anticipated that a successful test would lead to a long-term contract with NAPOCOR. Opp. Brief at 5. Shipment of the fuel additives to the Philippines appears to have been delayed following the award of the Trial Contract. Widjaja Aff., ¶ 19. The parties dispute the extent and cause of this delay. According to Centrosphere, delay was caused because Apollo experienced supply problems and was unable to ship its fuel additives to the Philippines. Id. Apollo's account is different. On 12 December 1990, Apollo informed Centrosphere that it had begun assembling the equipment necessary for the Trial Program, despite the fact that Centrosphere had not yet supplied the Letter of Credit. Kukin Aff., ¶ 5(h); Kukin Exhibits, Ex. 8 (letter from Kukin to Widjaja, dated 19 December 1990 (the "19 December Letter")). The 19 December Letter reiterated that Centrosphere should dispatch an engineer to Apollo's Israel facility to learn about the fuel additives program and how to carry out the tests. Kukin Exhibits, Ex. 8. The 19 December Letter also indicated, however, that demand for Apollo's products and engineers in Eastern Europe had increased significantly and could result in production delays of Apollo's products.[17]Id. As mentioned, from 28 December 1990 to 31 December 1990, the parties met in New Jersey (the "New Jersey Meetings") to discuss the Trial Contract and to formalize the relationship between Apollo and Centrosphere. See supra at pp. 1171-1172. The Agency Contracts were signed during these meetings. See id. Although Centrosphere agreed to provide Apollo with the Letter of Credit by 31 January 1991, Widjaja Aff., Ex. 3; Kukin Aff., ¶ 6, on 24 January 1991 the parties signed a "Letter of Understanding" providing that Centrosphere would arrange for Apollo to receive the Letter of Credit from NAPOCOR by 15 February 1991. Kukin Aff., ¶ 7; Kukin Exhibits, Ex. 10. In February 1991, Apollo asserts it delivered twenty-one container loads of equipment and chemicals to the dockside in Newark, New Jersey, pending receipt of the Letter of Credit. Kukin Aff., ¶ 8. Although the Letter of Credit did not arrive, Apollo nevertheless shipped the twenty-one containers from Newark to the Philippines on 15 March 1991. Id.; Kukin Exhibits, Ex. 11 (bills of lading, dated 15 March 1991, for the twenty-one container shipment). An additional seven containers of chemicals were shipped from Newark to the Philippines on 20 April 1991. Kukin Aff., ¶ 8; 1175 Kukin Exhibits, Ex. 11 (bill of lading, dated 20 April 1991, for the seven container shipments). The Letter of Credit from NAPOCOR was received on 17 May 1991. Kukin Aff., ¶ 8; Becker Aff., Ex. C (Letter of Credit, dated 17 May 1991 from NAPOCOR to Apollo). Further delay in the tests at the Malaya Plant was caused when hearings were initiated before the Philippines Securities and Exchange Commission by a bidder who had lost the Trial Contract. Widjaja Aff., ¶ 20; Opp. Brief at 6; Kukin Aff., ¶ 10. The tests actually began in September 1991 and the Trial Contract was performed from September 1991 to 28 February 1992. Complaint, ¶ 21; Widjaja Aff., ¶ 21. According to Apollo, Centrosphere neither sent engineering personnel to be trained by Apollo nor provided sufficient personnel to the Malaya Plant to oversee and operate the Trial Program.[18] Kukin Aff., ¶¶ 5, 10. Widjaja, who was supposed to supervise the Trial Program, apparently did not go to the Philippines despite being notified that the shipments of materials had commenced.[19]Id. ¶ 9; Kukin Exhibits, Ex. 13 (letter from Kukin to Mercado-DeLeon, dated 6 June 1991). As a result, Apollo sent its own engineering personnel to the Malaya Plant to install the equipment, supervise the injection of additives, oversee the Trial Program and train and supervise local personnel. Kukin Aff., ¶ 10. On 29 October 1991, Apollo prepared a report on the preliminary results of the Trial Program. Id., ¶ 11. This report was sent by Apollo to Centrosphere for delivery to NAPOCOR. Id.; Kukin Exhibits, Ex. 15 (letter from Becker to Mercado-DeLeon, dated 29 October 1991). F. Completion of the Trial Contract Upon completion of the first three months of the Trial Contract, NAPOCOR determined that the Trial Program had been a success. Widjaja Aff., ¶ 22, 25; Complaint, ¶ 21; Becker Aff., ¶ 44, Ex. K (memorandum from Jose T. Ramos ("Ramos") to National Power Board, Quazon City, the Philippines, dated 20 January 1992). A meeting among Apollo, Centrosphere and NAPOCOR officials occurred in the Philippines on either 17 or 20 January 1992.[20] Becker Aff., ¶ 45; Widjaja Aff., ¶¶ 23-24. Although Apollo states that it requested this meeting, Centrosphere appears to have made the necessary arrangements with NAPOCOR. Widjaja Aff., ¶¶ 23-24, Ex. 4 (letter from Mercado-DeLeon to Pablo V. Malixi ("Malixi"), dated 26 December 1991); Kukin Aff., ¶ 11. The purpose of this meeting was to review the first three months of the Trial Program and make recommendations to conduct the final month of testing. Widjaja Aff., ¶¶ 23-24, Ex. 4; Opp. Brief at 5-6. Centrosphere asserts that it paid for Apollo's expenses arising from the visit, Widjaja Aff., ¶ 24; Opp. Brief at 6, while Apollo asserts that it paid for its own expenses. Kukin Aff., ¶ 13. The Apollo officials in attendance were Kukin and Becker. Id.; Widjaja Aff., ¶ 24. At this meeting, Apollo asserts NAPOCOR agreed to place an order for an additional one month supply of fuel additives. Becker Aff., ¶ 45; Kukin Aff., ¶ 13. Although 1176 this extension is confirmed by a letter from NAPOCOR to Apollo, dated 22 January 1992, Kukin Exhibits, Ex. 16, Centrosphere asserts that NAPOCOR had reservations about cost projections and wanted to enter into another four month trial period. Widjaja Aff., ¶ 25. On 10 February 1992, NAPOCOR did place an order for an additional four month trial supply of fuel additives for the Malaya Plant (the "Second Trial Order"). Becker Aff., ¶ 45; Widjaja Aff., ¶ 26. For these additional goods, NAPOCOR paid Apollo one million seven hundred fifty thousand dollars. Complaint, ¶ 21; Becker Aff., ¶ 45. Apollo alleges the Second Trial Order was placed directly with Apollo and did not involve the services of Centrosphere. Becker Aff., ¶ 45. In contrast, Centrosphere contends that it was Centrosphere who notified Apollo of the Second Trial Order.[21] Widjaja Aff., ¶ 26, Ex. 5. In support of this claim, Centrosphere submitted a letter, dated 23 January 1992, from Centrosphere to Apollo which states: "We are now working on the contract for the repeat order and expect [NAPOCOR] to negotiate for a reduced price...." Id. (letter from Medina to Kukin, dated 23 January 1992). G. Relationship Between Apollo and Centrosphere After 1 January 1992 Prior to 1 January 1992, neither NAPOCOR nor any other Philippine customer made a long term commitment to purchase fuel additives from Apollo. Complaint, ¶ 19; Becker Aff., ¶¶ 29-31; Kukin Aff., ¶ 5(l). As a result, Apollo alleges the Second Agency contract expired by its own terms on 31 December 1991.[22] Complaint, ¶¶ 19, 38, 44; Becker Aff., ¶¶ 3, 31. In May or June 1992, Apollo paid Centrosphere all sums due Centrosphere under the Agency Contracts, despite its claim that Centrosphere failed to provide the technical support staff and financial backing required by the Agency Contracts. Complaint, ¶¶ 32, 46; Becker Aff., ¶¶ 33, 35. Apollo alleges that at no time did it agree to extend the agency relationship with Centrosphere beyond 31 December 1991. Becker Aff., ¶¶ 33, 40. On numerous occasions, it appears that Apollo expressly notified Centrosphere that Centrosphere's authority to act as Apollo's agent had terminated as of 31 December 1991. Id., ¶ 3; Complaint, ¶¶ 20, 45. These notices appear to have occurred (1) by letter in January 1992, see Becker Aff., ¶ 32, Ex. E. (letter from Becker to Juan Medina, dated 24 January 1992), (2) by telephone conversation on 7 February 1992, see id., ¶ 32, Ex. F (Affidavit of Kukin, sworn to 30 August 1992) and (3) by letter in July 1992, see id., ¶ 32, Ex. G (letter from Kukin to Widjaja, dated 7 July 1992). Despite the alleged expiration of the Second Agency Contract, Apollo and Centrosphere entered into discussions regarding the future of their relationship. Id., ¶ 35; Kukin Aff., ¶ 14. In early February 1992, Apollo appears to have made two proposals to Centrosphere shareholders. Becker Aff., ¶ 35. First, Apollo offered to continue the agency relationship provided that Centrosphere share the cost of building facilities in the Philippines to manufacture the fuel additives to be sold to NAPOCOR (the "Continuance Option"). id., ¶ 35; Kukin Aff., ¶ 14. Apollo conditioned the Continuance Option on the ability of Centrosphere to provide the technical support staff and financial backing it had allegedly 1177 failed to provide during the Trial Contract. Becker Aff., ¶ 35; Kukin Aff., ¶ 14. In the alternative, Apollo offered to finance the buy-out of Centrosphere's shareholders by Mercado-DeLeon (the "Stock Purchase Option").[23] Becker Aff., ¶ 36. Mercado-DeLeon was and is the owner of twenty-seven percent of Centrosphere's outstanding stock. Id., ¶ 36. As part of the Stock Purchase Option, Apollo also offered to provide the Centrosphere shareholders with one year consulting agreements pursuant to which they would be paid an amount equal to five percent of the amounts realized on sales of additives to NAPOCOR during that year. Id., ¶ 36. Collectively, Centrosphere's shareholders would have received approximately four hundred fifty thousand dollars from these consulting agreements. Id. On 24 January 1992, Centrosphere indicated to Apollo that "[s]tockholders prefer total buy-out rather than joint venture scheme. Asking price is $2.5 Million Dollar[s]." Kukin Exhibits, Ex. 17 (letter from Medina to Kukin, dated 24 January 1992). By a facsimile, dated the same day, 24 January 1992, Apollo rejected Centrosphere's buy-out offer. Becker Aff., Ex. E; Kukin Aff., ¶ 15. Apparently, negotiations continued and a lower buy-out price was accepted. Kukin Aff., ¶ 15. On 19 February 1992, six of Centrosphere's shareholders, including Mercado-DeLeon as purchaser, approved the Stock Purchase Option over the Continuance Option and executed agreements to sell their stock to Mercado-DeLeon. Becker Aff., ¶ 37. These six shareholders together held eighty-five percent of Centrosphere's outstanding stock. Id. Nevertheless, the Stock Purchase Plan was never implemented. Id. In May or June 1992, the deal fell through when one of Centrosphere's stockholders, Bermudez, decided not to sell the remaining fifteen percent interest in Centrosphere to Apollo.[24]Id., ¶¶ 37, 50; Kukin Aff., ¶ 17. On 20 February 1992, Centrosphere withdrew from participation in the Trial Program. Kukin Aff., ¶ 16. Centrosphere notified Apollo that Centrosphere was "terminating its contractual obligations under the [T]rial [P]rogram effective February 27, 1992 due to the [Trial Program's] completion." Id. (quoting Becker Aff., Ex. I (letter from Medina to Kukin, dated 20 February 1992)). By the same letter, Centrosphere notified Apollo that it was terminating the employees who served as technical support staff at the Malaya Plant. Becker Aff., ¶ 38, Ex. I. Centrosphere took this action even though NAPOCOR had already committed to purchase an additional four months of fuel additives and related services. Id., ¶ 38. Centrosphere did not consult Apollo in deciding to terminate those employees. Id. From this point forward, Apollo states it took over responsibility for "the continuing trials" at the Malay Plant and assumed the salaries of the employees who continued on the project. Id., ¶ 60; Kukin Aff., ¶ 16. Moreover, Apollo employed two Centrosphere employees as independent consultants to assist Apollo in dealing with NAPOCOR. Becker Aff., ¶ 60. These employees 1178 were Mercado-DeLeon and Depano.[25]Id. H. Recent Dealings Between Apollo and NAPOCOR In March 1992, Apollo officials met with Ramos, Senior Vice President of Operations of NAPOCOR, in a continuation of Apollo's efforts to receive a long term commitment from NAPOCOR. Becker Aff., ¶ 46; Complaint, ¶ 22. This meeting occurred at Apollo's offices in New Jersey. Becker Aff., ¶ 46. On 15 June 1992, Apollo officials met again with Ramos, this time in the Philippines. Id., ¶ 47. The parties negotiated a one year contract (the "New Contract") calling for Apollo to supply fuel additives and injection equipment for the Malaya plant and for NAPOCOR's Bataan power plant (the "Bataan Plant"). Id., ¶ 47, Ex. M (letter of agreement, dated 16 June 1992); Complaint, ¶ 22. The value of the New Contract to Apollo is approximately six million five hundred thousand dollars. Id.; Becker Aff., ¶ 47. Although NAPOCOR's president has submitted a proposal in favor of the New Contract, the NAPOCOR Board of Directors has not yet approved the New Contract. Becker Aff., ¶¶ 48-49; Kukin Aff., ¶ 16; Kukin Exhibits, Ex. 19 (memorandum from Malixi to NAPOCOR board of directors, dated 18 June 1992). Thus, the New Contract has not yet become binding. Becker Aff., ¶¶ 48-49; Complaint, ¶ 22. In July 1992, pending approval of the New Contract, NAPOCOR tentatively agreed to purchase an additional four month supply of the fuel additives from Apollo for seven hundred seventy thousand dollars. Becker Aff., ¶ 49, Ex. N. (letter of intent, dated 30 July 1992); Complaint, ¶ 23. This transaction has not yet been consummated. Becker Aff., ¶ 49; Complaint, ¶ 23. NAPOCOR's current supply of fuel additives will be exhausted in late September 1992. Becker Aff., ¶¶ 7, 59. Apollo's efforts to obtain a long-term commitment from NAPOCOR continue. Complaint, ¶ 24. I. Recent Actions By Centrosphere On 22 June 1992, Bermudez of Centrosphere wrote to NAPOCOR requesting that the Second Trial Order be placed with Centrosphere rather than directly with Apollo. Kukin Aff., ¶ 17; Becker Aff., ¶ 50, Ex. O (letter from Bermudez to Malixi, dated 22 June 1992 (the "22 June Letter")). The 22 June Letter states: We appreciate your continuing confidence in the products by re-ordering the fuel additives for another 4 months.... We regret that the order was directly awarded to our principal [Apollo] and the price reduction that would have benefitted [NAPOCOR] are not realized.... We have agreed with our principal [Apollo] that prices for on going treatment must be reduced by not less than 25% on top of the 5.31% already given.... For our mutual benefit, may we request that transaction involving our principal [Apollo] be coursed through our company. We are in a better position to serve you better whether in price or service. Becker Aff., Ex. O. According to Apollo, copies of the 22 June Letter were sent to a Philippines senator and other Philippines government officials. Kukin Aff., ¶ 17. On 22 June 1992, Apollo became aware of the Centrosphere offer to NAPOCOR. Apollo alleges this offer was made without the authorization of or prior notice to Apollo. Becker Aff., ¶¶ 50-51; Complaint, ¶ 25. On 6 July 1992, Apollo notified NAPOCOR that Centrosphere had no power to act on its behalf because the Second Agency Contract had expired on 31 December 1991. Kukin Aff., ¶ 18; Becker Aff., ¶ 51, Ex. P (letter from Becker to Malixi, dated 6 July 1992); Complaint, ¶ 26. On 7 July 1992, Apollo sent a similar letter to Centrosphere. Kukin Aff., ¶ 18; Becker Aff., ¶ 51, Ex. P (letter from Kukin to Widjaja, dated 7 July 1992). 1179 Also on 7 July 1992, Apollo sent Centrosphere a check for two hundred three thousand one hundred fifty-eight dollars "representing full and final payment for any obligations" owed by Apollo to Centrosphere. Kukin Aff., ¶ 18; Kukin Exhibits, Ex. 21 (letter from Becker to Widjaja, dated 7 July 1992, with attached check). This check was apparently accepted and cashed by Centrosphere. Kukin Aff., ¶ 18. On 10 July 1992, Centrosphere again offered to fill the Second Trial Order at an additional discount of twenty-five percent. Kukin Aff., ¶ 19; Becker Aff., ¶ 52, Ex. Q (letter from Bermudez to Malixi, dated 10 July 1992). Centrosphere recognized that its prior letter had "triggered an unfavorable reaction from Apollo such that [the Second Agency Contract] was suddenly and unjustifiably revoked." Becker Aff., Ex. Q. Nevertheless, Centrosphere stated that it was "capable of supplying the same fuel additive of the same specifications" as Apollo, even though "the additive will not come from Apollo but direct from our manufacturer under the supervision of Dr. Alfred E. Kober."[26]Id.; Complaint, ¶ 27. In a follow-up letter to NAPOCOR, Centrosphere again stated that it would "use the same fuel additives of the same specifications with no deviation from the original formulation ... used in the [T]rial [P]rogram."[27] Becker Aff., ¶ 52, Ex. R (letter from Bermudez to Malixi, dated 15 July 1992) (emphasis removed). On 11 August 1992, NAPOCOR offered to purchase additives from Centrosphere on a trial basis for use in its Sucat power plant (the "Sucat Plant"). Becker Aff., ¶ 58, Ex. S (letter from Malixi to Bermudez, dated 11 August 1992); Kukin Aff., ¶ 21. The price of this purchase appears to have been seven hundred ten thousand dollars. Becker Aff., Ex. S. On 20 August 1992, Centrosphere agreed to supply the Sucat Plant with the additive ordered by NAPOCOR. Id., ¶ 58, Ex. T (letter from Bermudez to Malixi, dated 20 August 1992). At this time, Centrosphere again requested that NAPOCOR award Centrosphere with the Second Trial Order for the Malaya Plant. Id. Finally, in late August or early September 1992, Becker of Apollo met with NAPOCOR in the Philippines. Kukin Aff., ¶ 24; Becker Reply Aff., ¶ 2. According to Apollo, NAPOCOR officials told Becker that NAPOCOR feels threatened by Centrosphere because Centrosphere copies its communications to NAPOCOR to government officials. Kukin Aff., ¶ 21; Becker Reply Aff., ¶ 2. For this reason, Apollo asserts, NAPOCOR is hesitant to deal with Apollo. Kukin Aff., ¶ 21; Becker Reply Aff., ¶ 2. On 7 September 1992, a meeting was arranged between Apollo and Centrosphere at NAPOCOR's offices. Kukin Aff., ¶ 21; Becker Reply Aff., ¶ 2. It appears Becker attended this meeting for Apollo but Centrosphere failed to send a representative. Kukin Aff., ¶ 21; Becker Reply Aff., ¶ 2. J. The Complaint On 10 September 1992, Apollo served Centrosphere with a summons and the Complaint in this action. Widjaja Aff., ¶ 3. Service was made of Widjaja at his residence in Diamond Bar, California, at approximately 7:30 a.m. Widjaja Aff., ¶ 3. According to Centrosphere, the process server was dressed in civilian clothes and did not identify himself as a United States Marshal.[28] Widjaja Aff., ¶ 3; Opp. Brief at 7. 1180 The Complaint alleges claims for breach of contract, breach of fiduciary duty, unfair competition and intentional interference with a prospective contractual relation. Complaint, ¶ 33-60. Apollo alleges that Centrosphere has breached the noncompetition provision of the Second Agency Contract. Complaint, ¶ 34. The Complaint states: "Centrosphere, since on or about June, 1992, has entered into direct competition with Apollo for NAPOCOR's business, offering, inter alia, to sell NAPOCOR `the same fuel additives of the same specifications with no deviation from the original formulation of additives' previously supplied by Apollo." Complaint, ¶ 27. This competition, in turn, has allegedly caused Centrosphere to breach the confidentiality clause of the Second Agency Contract and to violate the fiduciary duties it owed to Apollo as Apollo's agent. Complaint, ¶¶ 28, 34, 37-40. The Complaint states: In attempting to compete with Apollo for NAPOCOR's business, Centrosphere is unfairly aided by, and is utilizing and disclosing, the confidential business information and trade secrets[29] it had access to as a result of its fiduciary relationship with Apollo. In addition, Centrosphere has improperly relied directly on the success and goodwill Apollo and its products achieved in the four month trial at [the Malaya Plant]. Complaint, ¶ 28. Apollo alleges Centrosphere has also breached its fiduciary duties by (1) retaining Widjaja, a former principal in two companies blacklisted by NAPOCOR, (2) failing to apprise Apollo of Widjaja's past employment, (3) offering to sell Apollo products without authorization and at unauthorized prices, (4) failing to send technical personnel for training prior to commencement of the Trial Program, (5) requiring Apollo to provide the technical services which Centrosphere was obligated to supply under the Agency Contracts, (6) failing to meet its financial commitments under the agreement and (7) purporting to act as Apollo's agent after the termination of the Second Agency Contract. Complaint, ¶¶ 46-47. Apollo further alleges that Centrosphere has engaged in practices that constitute unfair competition by utilizing trade secrets and confidential information of Apollo. Complaint, ¶ 51. The Complaint states: 52. [Centrosphere] has and continues to utilize these trade secrets and confidential information to aid it in competing with Apollo in the sale of products to NAPOCOR. 53. In addition, [Centrosphere] has wrongfully and improperly informed NAPOCOR that it could supply it with goods identical to those previously supplied by Apollo. 54. By these actions, [Centrosphere] is engaging in prohibited unfair competition. Complaint, ¶¶ 52-54 (paragraph numbers omitted). Finally, Apollo alleges that Centrosphere has "unjustifiably, intentionally and wrongfully interfered with Apollo's prospective business relations with NAPOCOR." Apollo asserts that, as a result of Centrosphere's unauthorized offers to NAPOCOR to sell Apollo products at unauthorized prices, NAPOCOR has "postponed ratification of the one year contract with Apollo, as well as the two month order for such additives it had tentatively agreed to make." Complaint, ¶¶ 29, 58. More generally, the Complaint states: Centrosphere's improper actions threaten to cause Apollo ... to lose millions of 1181 dollars worth of contracts to supply millions of dollars of fuel additives to [the Malaya Plant and] to lose the ability to supply millions of dollars of fuel additives to NAPOCOR's three other oil fired facilities as well. Centrosphere's actions also threaten Apollo's efforts to supply other technologies (which achieve similar objectives) to the NAPOCOR's coal powered plant. Complaint, ¶ 31. As described above, Apollo asks for preliminary and permanent injunctive relief on all of these claims. Complaint, ¶¶ 36, 42, 49, 56, 60. Despite its claim that Centrosphere's actions "threaten Apollo with ... the loss of millions of dollars of business from NAPOCOR," Apollo claims its potential harm is irreparable and it has no adequate remedy at law. Complaint, ¶¶ 35, 41, 48, 55, 59. Discussion A. Personal Jurisdiction[30] Centrosphere argues that personal jurisdiction over it is lacking in this forum. Opp. Brief at 8-11. Centrosphere contends it has no contacts with New Jersey and the dispute arises out of a contract that was to be performed in the Philippines and governed by New York law. Id. at 8, 10-11. Centrosphere also argues that Apollo has failed to properly serve process upon it. It argues, therefore, this court lacks personal jurisdiction. Id. at 8-10. According to Centrosphere, neither Fed.R.Civ.P. 4 nor the New Jersey long-arm rule (the "Long Arm Rule"), N.J. Court Rule 4:4-4 provide for personal service to an officer of a foreign corporation where that officer is not located within the New Jersey. Id. 1. Jurisdiction Pursuant to the New Jersey Long Arm Rule A federal court has jurisdiction over a non-resident defendant to the extent authorized by the law of the state in which that court sits. Fed.R.Civ.P. 4(e); North Penn Gas Co. v. Corning Natural Gas Corp., 897 F.2d 687, 689 (3d Cir.), cert. denied, ___ U.S. ___, 111 S. Ct. 133, 112 L. Ed. 2d 101 (1990); Provident Nat'l Bank v. California Fed. Sav. & Loan Ass'n, 819 F.2d 434, 436 (3d Cir.1987); American Tel. & Tel. Co. v. MCI Communications Corp., 736 F. Supp. 1294, 1301 (D.N.J.1990) (hereinafter "AT & T"). Federal courts sitting in New Jersey apply New Jersey law when interpreting the meaning of due process for the purpose of in personam jurisdiction. AT & T, 736 F.Supp. at 1301; Eason v. Linden Avionics, Inc., 706 F. Supp. 311, 319 (D.N.J.1989); Western Union Telegraph v. T.S.I., Ltd., 545 F. Supp. 329, 332 (D.N.J.1982). The Long Arm Rule permits the assertion of personam jurisdiction as far as is constitutionally permissible under the Fourteenth Amendment. N.J. Court Rule 4:4-4; DeJames v. Magnificence Carriers, Inc., 654 F.2d 280, 284 (3d Cir.), cert. denied, 454 U.S. 1085, 102 S. Ct. 642, 70 L. Ed. 2d 620 (1981); Charles Gendler & Co. v. Telecom Equip. Corp., 102 N.J. 460, 469, 508 A.2d 1127 (1986) (citing Avdel Corp. v. Mecure, 58 N.J. 264, 268, 277 A.2d 207 (1971). Under the Fourteenth Amendment, personal jurisdiction exists where the plaintiff demonstrates the defendant has sufficient "minimum contacts" with the forum state: The first step in a minimum contacts analysis ... is to determine whether the defendant has sufficient contacts with the forum state. The second step is to evaluate those contacts "in light of other factors to determine whether the assertion of personal jurisdiction would comport with `fair play and substantial justice.'" Charles Gendler & Co., 102 N.J. at 472, 508 A.2d 1127 (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476, 105 S. Ct. 2174, 2184, 85 L. Ed. 2d 528 (1985)); see also Lebel v. Everglades Marina, Inc., 115 N.J. 317, 322, 558 A.2d 1252 (1989); Ruetgers-Nease Chem. Co. v. Firemen's Ins., 236 N.J.Super. 473, 477, 566 A.2d 227 (App.Div. 1989). The courts of New Jersey have exercised in personam jurisdiction "wherever 1182 possible with a liberal and indulgent view if the facts reasonably support the presence of the flexible concepts of `fair play and substantial justice.'" Ketcham v. Charles R. Lister Int'l, Inc., 167 N.J.Super. 5, 7, 400 A.2d 487 (App.Div.1979); J.I. Kislak, Inc. v. Trumbull Shopping Park, Inc., 150 N.J.Super. 96, 98, 374 A.2d 1246 (App.Div.1977). a. Minimum Contacts Apollo bears the burden of demonstrating that Centrosphere's contacts with New Jersey are sufficient to give the court in personam jurisdiction. North Penn Gas Co., 897 F.2d at 690; Gehling v. St. George's School of Medicine, Ltd., 773 F.2d 539, 542 (3d Cir.1985); Compagnie des Bauxites de Guinee v. L'Union Atlantique S.A. d'Assurances, 723 F.2d 357, 362 (3d Cir.1983). "The plaintiff must sustain its burden of proof through `sworn affidavits or other competent evidence.'" North Penn Gas Co., 897 F.2d at 689 (quoting Stranahan Gear Co. v. NL Indust., 800 F.2d 53, 58 (3d Cir.1986)). In this case, Apollo relies on the fact that Centrosphere came to New Jersey and, while in the state, negotiated and executed the Agency Contracts. Reply Brief at 6. Centrosphere admits all of these contacts. Widjaja Aff., ¶ 15; Opp. Brief 3-5. Apollo must demonstrate that either specific or general jurisdiction exists over Centrosphere. Provident Nat'l Bank, 819 F.2d at 437; Giangola v. Walt Disney World Co., 753 F. Supp. 148, 154 (D.N.J.1990). Specific jurisdiction exists when "the cause of action arises from the defendant's forum-related activities." North Penn Gas, 897 F.2d at 690; see also Provident Nat'l Bank, 819 F.2d at 437; Giangola, 753 F.Supp. at 154; AT & T, 736 F.Supp. at 1302. Specific jurisdiction is satisfied by a showing of minimum contacts with the state, such that the defendant should reasonably anticipate being haled into court there. North Penn Gas, 897 F.2d at 690 (citing World-Wide Volkswagen v. Woodson, 444 U.S. 286, 297, 100 S. Ct. 559, 567, 62 L. Ed. 2d 490 (1980)); Giangola, 753 F.Supp. at 154-55. General jurisdiction exists where the defendant has continuous and systematic contacts with the state unrelated to the subject matter of the lawsuit. Provident Nat'l Bank, 819 F.2d at 437 (citing Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 414-16, 104 S. Ct. 1868, 1872-73, 80 L. Ed. 2d 404 (1984)); see also North Penn Gas, 897 F.2d at 690 n. 2. General jurisdiction requires a plaintiff to show significantly more than mere minimum contacts. Provident Nat'l Bank, 819 F.2d at 437 ("contacts to forum must be continuous and substantial"); see also North Penn Gas, 897 F.2d at 690 n. 2 (same); Gehling, 773 F.2d at 541 (same). For purposes of establishing either general or specific jurisdiction, minimum contacts with a state are shaped by purposeful conduct making it reasonable for the defendant to anticipate being haled into court there.[31]World-Wide Volkswagen, 444 U.S. at 297, 100 S. Ct. at 296; Hanson v. Denckla, 357 U.S. 235, 253, 78 S. Ct. 1228, 1239, 2 L. Ed. 2d 1283, reh'g denied, 358 U.S. 858, 79 S. Ct. 10, 3 L. Ed. 2d 92 (1958); North Penn Gas Co., 897 F.2d at 690; Lebel, 115 N.J. at 323, 558 A.2d 1252. These contacts must have a basis in "some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protection of its laws." Hanson, 357 U.S. at 253, 78 S. Ct. at 1240; accord Lebel, 115 N.J. at 323-24, 558 A.2d 1252. The absence of a "physical presence" in the state is not determinative for jurisdictional purposes. Burnham v. Superior Court, 495 U.S. 604, 618, 110 S. Ct. 2105, 2114, 109 L. Ed. 2d 631 (1990) (citing International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 158, 90 L. Ed. 95 (1945)); Burger King, 471 U.S. at 476, 105 S. Ct. at 2184; Charles 1183 Gendler, 102 N.J. at 469-70, 508 A.2d 1127 (same). In measuring the sufficiency of minimum contacts for in personam jurisdiction, a court must focus upon the "relationship among the defendant, the forum and the litigation."[32]Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 775, 104 S. Ct. 1473, 1478, 79 L. Ed. 2d 790 (1984) (quoting Shaffer v. Heitner, 433 U.S. 186, 204, 97 S. Ct. 2569, 2579, 53 L. Ed. 2d 683 (1977)); Giangola, 753 F.Supp. at 155. The "purposeful availment" requirement "ensures that a defendant will not be haled into a jurisdiction solely as a result of `random,' `fortuitous,' or `attenuated' contacts, or of the `unilateral activity of another person.'" Burger King Corp., 471 U.S. at 475, 105 S. Ct. at 2183 (citations omitted); accord Giangola, 753 F.Supp. at 155; AT & T, 736 F.Supp. at 1302-03; Lebel, 115 N.J. at 323, 558 A.2d 1252. Burger King indicates when jurisdiction based upon "purposeful availment" is proper. Jurisdiction is proper ... where the contacts proximately result from actions by the defendant himself that create a "substantial connection" with the forum state. Thus where the defendant "deliberately" has engaged in significant activities within a State, or has created "continuing obligations" between himself and residents of the forum, he manifestly has availed himself of the privilege of conducting business there, and because his activities are shielded by "the benefits and protections" of the forum's laws it is presumptively not unreasonable to require him to submit to the burdens of litigation on that forum as well. Burger King, 471 U.S. at 475-76, 105 S. Ct. at 2183-84 (citations omitted) (emphasis in original); accord North Penn Gas, 897 F.2d at 690; see also Hanson, 357 U.S. at 253, 78 S. Ct. at 1239 (by exercising privilege of conducting activities within forum state, defendant is put on "clear notice" that it is subject to suit there); Eason, 706 F.Supp. at 320 (fairness of exercising jurisdiction results from reciprocal relationship between defendant and forum state). In cases alleging breach of contract, New Jersey courts have held that non-resident defendants not doing business in the state may nonetheless be amenable to suit in New Jersey when they enter contracts which "will have a significant effect in [the] state." Avdel Corp., 58 N.J. at 268, 277 A.2d 207; accord Bovino, 221 N.J.Super. at 436, 534 A.2d 1032; Semcor, Inc. v. Satellite Air Transp. Assoc., 201 N.J.Super. 386, 389, 493 A.2d 75 (Law.Div.1985). Similarly, the United States Supreme Court has stated: [W]ith respect to interstate contractual obligations ... parties who "reach out beyond one state and create continuing relationships and obligations with citizens of another state" are subject to regulation and sanctions in the other State for the consequences of their actions. Burger King, 471 U.S. at 473, 105 S. Ct. at 2182 (quoting Travelers Health Ass'n v. Virginia, 339 U.S. 643, 647, 70 S. Ct. 927, 929, 94 L. Ed. 1154 (1950). In determining "whether and to what extent a contract can constitute a `contact' for purposes of due process analysis," the Supreme Court has indicated that certain factors are relevant. Burger King, 471 U.S. at 478-79, 105 S. Ct. at 2185. These factors include: prior negotiations, contemplated future consequences, terms of the contract and the parties actual course of dealing. Id. at 479, 105 S. Ct. at 2185. When the balance of these factors point to the forum state, courts have found purposeful availment by and personal jurisdiction over the non-resident defendant. See Complete Concepts, Ltd. v. General 1184 Handbag Corp., 880 F.2d 382, 388-89 (11th Cir.1989); see, e.g., Entek Corp. v. Southwest Pipe & Supply Co., 683 F. Supp. 1092, 1098-99 (N.D.Tex.1988) (minimum contacts established when defendants visited plaintiff's manufacturing plant, signed confidentiality agreements and observed plaintiff's product and processes prior to entering distributor agreement); New Generation Foods, Inc. v. Spicer's Int'l Common Trust, 669 F. Supp. 599, 601 (S.D.N.Y.1987) (same, when non-resident defendants visited forum state and negotiated and executed contract from which cause of action arose, even though visit lasted only one day); Cal Caulfield & Co. v. Colonial Nursing Homes, Inc., 642 F. Supp. 777, 780 (D.Kan.1986) (same, when contract was executed by parties in forum state, called for continuing relationship between the parties and called required preparatory performance in forum state, even though purpose of contract was to build nursing home in another state); Hardin v. DLF Computer Co., 617 F. Supp. 70, 72 (W.D.N.C.1985) (same, when contract was executed in forum state and called for plaintiff to ship goods from and receive payment in forum state). In Avdel Corporation v. Mecure, the New Jersey Supreme Court found minimum contacts and purposeful availment on facts similar to the facts of this case. 58 N.J. at 272-73, 277 A.2d 207. In Avdel, a non-resident defendant contacted the plaintiff, a New Jersey manufacturer and seller of rivets, expressing interest in the purchase of rivets. Id. at 267, 277 A.2d 207. After placing an order with the plaintiff's salesman in New York, the defendant telephoned the plaintiff's New Jersey plant two days later and increased his order of rivets. Id. Within a month, the defendant also visited the plaintiff's plant in New Jersey to discuss matters relating to the contract. Id. Plaintiff manufactured rivets specially designed for the defendant and, on numerous occasions, the plaintiff's representatives visited the defendant in New York to deliver rivets. Id. at 267, 277 A.2d 207. Plaintiff later sued the defendant in New Jersey for an amount due on the contract. Id. at 266-67, 277 A.2d 207. On these facts, the New Jersey Supreme Court held that the "defendant's contacts with this state were sufficient to meet the constitutional requirement of fairness," id. at 272, 277 A.2d 207, and stated: Defendant ordered rivets from the plaintiff corporation and he knew that his order would have significant effects in New Jersey since it was anticipated that the plaintiff would either manufacture the rivets here or obtain them from some other source.... Moreover, defendant actually entered this state to discuss his contract with the plaintiff. At defendant's request, plaintiff's representatives delivered rivets to defendant's job sites in New York.... [W]e have no difficulty holding defendant amenable to suit in this state since .... he purposely availed himself the opportunity to engage in a commercial transaction involving activities in this state. Id. at 272-73, 277 A.2d 207. Similarly, in Western Union Tel. Co. v. T.S.I., Ltd., a federal court applying New Jersey law found minimum contacts and purposeful availment where three of the defendant's officers travelled to New Jersey and entered into negotiations leading to the execution of three contracts. 545 F. Supp. at 335. The Western Union court also recognized that the defendant had made "numerous telephone and mail contacts" to the plaintiff in New Jersey with respect to the contracts. Id. at 335. The Western Union court concluded: [T]his case is quite unlike World-Wide Volkswagen and Hanson v. Denckla, in which defendants had only fortuitous, rather than purposeful, contacts with the forum state. The visits and communications in the instant case indicate bilateral, rather than unilateral, contact by the parties with New Jersey. Id.; accord Koff v. Brighton Pharmaceutical, Inc., 709 F. Supp. 520, 525-27 (D.N.J. 1988); see also Alchemie Int'l, Inc. v. Metal World, Inc., 523 F. Supp. 1039, 1049-52 (D.N.J.1981) (significant telephone and mail contacts with New Jersey plaintiff support jurisdiction over non-resident defendant even without visit to state). 1185 In this case, Centrosphere's contacts with New Jersey are sufficient to establish specific personal jurisdiction.[33] Regardless of when Centrosphere communicated with Apollo, Centrosphere concedes initiating communication with Apollo for its contract with NAPOCOR. Opp. Brief at 3; see also Kukin Exhibits, Exs. 1-2. Centrosphere reached into New Jersey to establish a commercial relationship with a New Jersey corporation. Burger King, 471 U.S. at 473, 479-80, 105 S. Ct. at 2182, 2185; Travelers Health Ass'n, 339 U.S. at 647, 70 S. Ct. at 929; Avdel, 58 N.J. at 272-73, 277 A.2d 207. This relationship, moreover, was a continuing one, rather than a one-time contact. Centrosphere agreed to serve as Apollo's agent for a period of at least one year. Becker Aff., ¶ 20; Widjaja Aff., ¶ 15, Ex. 3 (copies of Agency Contracts). Having come into New Jersey and having established such a relationship with a New Jersey corporation, Centrosphere should have anticipated being haled into the New Jersey courts. Burger King, 471 U.S. at 475-76, 479-80, 105 S. Ct. at 2184, 2185-86; North Penn Gas, 897 F.2d at 690; Entek, 683 F.Supp. at 1098-99; Cal Caulfield, 642 F.Supp. at 780. Officials of Centrosphere travelled to New Jersey to discuss the terms under which Centrosphere would supply Apollo's products to NAPOCOR. Becker Aff., ¶ 20; Widjaja Aff., ¶ 15; Kukin Aff., ¶ 5. This visit lasted four days. Widjaja Aff., ¶ 15; Opp. Brief at 4; Kukin Aff., ¶ 5. During this visit, Centrosphere officials read, negotiated and executed the First Agency Contract and executed the Second Agency Contract while in New Jersey.[34] Widjaja Aff., ¶¶ 15, 17; Opp. Brief at 4; Kukin Aff., ¶ 5. The record also indicates a good deal of correspondence by Centrosphere to Apollo in New Jersey. See, e.g., Widjaja Aff., ¶¶ 23, 26 Ex. 5; Becker Aff., Exs. E, H-I: Kukin Exhibits, Exs. 1-2, 5-6, 10, 12, 14, 17, 20. Centrosphere's physical presence in New Jersey, its negotiation and execution of contracts within the forum, together with its supporting correspondence to Apollo, speak in favor of personal jurisdiction. Koff, 709 F.Supp. at 525-27; Western Union, 545 F.Supp. at 335; Alchemie, 523 F.Supp. at 1049-52; Avdel, 58 N.J. at 272-73, 277 A.2d 207; see also New Generation Foods, 669 F.Supp. at 601; Entek, 683 F.Supp. at 1098-99; Hardin, 617 F.Supp. at 72. Finally, contrary to Centrosphere's suggestion, performance of the Agency Contracts was not to occur entirely within the Philippines. See Opp. Brief at 9. Apollo was required to supply and did supply fuel additives, equipment and intellectual property from New Jersey to the Philippines or to arrange for shipment from some other source. Kukin Aff., ¶ 8. Moreover, pursuant to the First Agency Contract, all payments passed through New Jersey. Payment to Apollo was received in New Jersey directly from NAPOCOR, while both payment and a loan to Centrosphere were 1186 made by Apollo from New Jersey. Widjaja Aff., Ex. 3; Kukin Aff., ¶ 10. In short, the subject matter of the Agency Contracts and the parties' course of dealing create significant contacts between the parties to the Agency Contracts and New Jersey. Again, these contacts support personal jurisdiction over Centrosphere. North Penn Gas, 897 F.2d at 690-91; Avdel, 58 N.J. at 272-73, 277 A.2d 207; Bovino, 221 N.J.Super. at 436, 534 A.2d 1032; Semcor, 201 N.J.Super. at 389, 493 A.2d 75. Taken together, Centrosphere's contacts with New Jersey arising from the Agency Contracts satisfy the minimum contacts due process requirements of personal jurisdiction. Centrosphere purposefully availed itself of the privilege of conducting business activities in New Jersey when it reached into New Jersey and established a continuing relationship with a New Jersey corporation. This conduct, including Centrosphere's visit to New Jersey, was voluntary and in no way random, fortuitous or attenuated.[35] On the basis of its conduct in and directed toward New Jersey, Centrosphere should have anticipated being haled into a court in New Jersey. b. Fair Play and Substantial Justice Once it has been decided that minimum contacts exist, the Supreme Court has established that "these contacts may be considered in light of other factors to determine whether the assertion of personal jurisdiction would comport with `fair play and substantial justice.'" Burger King, 471 U.S. at 476, 105 S. Ct. at 2184 (quoting International Shoe, 326 U.S. at 320, 66 S. Ct. at 160); see also Charles Gendler, 102 N.J. at 472, 508 A.2d 1127. These factors include: (1) the burden on the defendant, (2) the forum state's interest in adjudicating the dispute, (3) the plaintiff's interest in obtaining convenient and effective relief, (4) the interstate judicial system's interest in obtaining the most efficient resolution of the controversies and (5) the shared interest of the several states in furthering fundamental substantive social policies. Id. 471 U.S. at 477, 105 S. Ct. at 2184 (quoting World-Wide Volkswagen, 444 U.S. at 292, 100 S. Ct. at 564); see also Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 113, 107 S. Ct. 1026, 1032, 94 L. Ed. 2d 92 (1987); Charles Gendler, 102 N.J. at 472, 508 A.2d 1127. The Supreme Court has indicated that these considerations may serve to establish the reasonableness of jurisdiction upon a lesser showing of minimum contacts than would otherwise be required. Id. (citing Keeton, 465 U.S. at 780, 104 S. Ct. at 1481; Calder v. Jones, 465 U.S. 783, 788-89, 104 S. Ct. 1482, 1486-87, 79 L. Ed. 2d 804 (1984); McGee, 355 U.S. at 223-24, 78 S. Ct. at 201). On the other hand, where a defendant with minimum contacts seeks to defeat jurisdiction, the Court has required the defendant to present "a compelling case that the presence of some other considerations would render jurisdiction unreasonable."[36]Id.; see, e.g., Asahi, 480 U.S. at 114-16, 107 S. Ct. at 1033-34. In cases where the interest of the plaintiff and the forum state are minimal, the Supreme Court has indicated that "[g]reat care and reserve should be exercised when extending our notions of personal jurisdiction into the international field." Asahi, 480 U.S. at 115, 107 S. Ct. at 1034 (citing United States v. First Nat'l City Bk., 379 U.S. 378, 404, 85 S. Ct. 528, 542, 13 L. Ed. 2d 365 (1965) (Harlan, J., dissenting)). Nevertheless, such cases are rare where minimum contacts have been established. Id. 480 U.S. at 116, 107 S. Ct. at 1034 (Brennan, J. concurring). In determining the fairness of asserting personal jurisdiction, courts have emphasized that New Jersey has a strong interest in providing a forum for its residents and in enforcing the contractual obligations 1187 of parties who contract with New Jersey residents.[37]Koff, 709 F.Supp. at 528; CFTC v. American Metal Exch. Corp., 693 F. Supp. 168, 188 (D.N.J.1988); Alchemie, 523 F.Supp. at 1052; Lebel, 115 N.J. at 329, 558 A.2d 1252; see also Entek, 683 F.Supp. at 1098-99 (where plaintiff resides in forum, forum state has interest in suit because any recovery by plaintiff benefits forum state). It has also been recognized that New Jersey plaintiffs, like all plaintiffs, have a valid interest in preserving the choice of their home forum.[38]Koff, 709 F.Supp. at 528; American Metal, 693 F.Supp. at 188; Charles Gendler, 102 N.J. at 484, 508 A.2d 1127. Centrosphere neither argues nor does it present any facts showing that a finding of jurisdiction in this forum would be unreasonable. Jurisdiction cannot be defeated simply because the non-resident defendant is a foreign entity. Asahi, 480 U.S. at 115, 107 S. Ct. at 1033; Entek, 683 F.Supp. at 1102-03; Charles Gendler, 102 N.J. at 478-80, 483, 508 A.2d 1127. Litigation away from home creates hardship; there "is no constitutional requirement, however, that this hardship must be borne by the plaintiff whenever the defendant is not deemed present in the state of plaintiff's residence." Alchemie, 523 F.Supp. at 1052-53. It is fair and just for a defendant to be responsible for conduct in a state where its actions have had a detrimental impact. Burger King, 471 U.S. at 473-74, 105 S. Ct. at 2182-83; Semcor, 201 N.J.Super. at 390-91, 493 A.2d 75. Moreover, "[t]he greater the benefits derived from the defendant's contacts with the forum state, the more reasonable it is to require the defendant to be subject to the jurisdiction of the forum." Charles Gendler, 102 N.J. at 473, 508 A.2d 1127; see also Burger King, 471 U.S. at 473-74, 105 S. Ct. at 2182-83 ("where [defendant] engages in economic activity, it usually will not be unfair to subject [defendant] to the burdens of litigating in another forum for disputes relating to such activity"). In light of the facts that (1) Apollo has demonstrated the existence of minimal contacts, (2) both New Jersey and Apollo have a substantial interest in allowing this forum to adjudicate this dispute, (3) Centrosphere has not presented a compelling case that jurisdiction is unreasonable, (4) Centrosphere sought to benefit from its contacts with Apollo in New Jersey and (5) Centrosphere's actions may have caused Apollo significant damage, fair play and substantial justice are satisfied by the assertion of specific personal jurisdiction over Centrosphere. 2. Adequacy of Service of Process Due Process requires "every method of service to provide `notice reasonably calculated, under all circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.'" Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694, 707, 108 S. Ct. 2104, 2112, 100 L. Ed. 2d 722 (1987) (quoting Mullane v. Central Hanover Bk. & Trust Co., 339 U.S. 306, 314, 70 S. Ct. 652, 657, 94 L. Ed. 865 (1950). Indeed, before a court exercises personal jurisdiction over a defendant, the procedural requirement of service of a summons must be satisfied. Omni Capital Int'l, Ltd. v. Rudolf Wolff & Co., 484 U.S. 97, 104-05, 108 S. Ct. 404, 409-10, 98 L. Ed. 2d 415 (1987); Hemmerich Indus., Inc. v. Moss Brown & Co., 114 F.R.D. 31, 1188 32 (E.D.Pa.1987); Electro-Catheter v. Surgical Spec. Instr. Co., 587 F. Supp. 1446, 1449 (D.N.J.1984). There must be more than notice to the defendant; there must also be a basis for amenability to service of a summons. Omni Capital, 484 U.S. at 104, 108 S. Ct. at 409; Brink's Mat Ltd. v. Diamond, 906 F.2d 1519, 1521 (11th Cir. 1990). Service of process in a federal action is governed by Fed.R.Civ.P. 4. Omni Capital, 484 U.S. at 104, 108 S. Ct. at 409; see also Echevarria-Gonzalez v. Gonzalez-Chapel, 849 F.2d 24, 28 (1st Cir.1988) (defendant must be served in accordance with Rule 4 for the court to secure personal jurisdiction); Green v. Humphrey Elevator & Truck Co., 816 F.2d 877, 88 (3d Cir.1987) (actual notice is of paramount importance to the scheme contemplated by Rule 4). Rule 4(f) describes where process may be served. Fed.R.Civ.P. 4(f). Rule 4(f) states in pertinent part: All process other than a subpoena may be served anywhere within the territorial limits of the state in which the district court is held, and, when authorized by a statute of the United States or by these rules, beyond the territorial limits of that state. Id. (emphasis added). As the Supreme Court has indicated, the reference in Rule 4(f) to "these rules" is specifically directed to Fed.R.Civ.P. 4(e). Omni Capital, 484 U.S. at 105, 108 S. Ct. at 410. Pursuant to Rule 4(e),[39] a federal court may look to either a federal statute or to the long arm statute of the State in which it sits to determine whether a defendant is amenable to service of process outside of the state. Fed.R.Civ.P. 4(e); Omni Capital, 484 U.S. at 105, 108 S. Ct. at 410; Martin v. Delaware Law School of Widener Univ., 625 F. Supp. 1288, 1295 (D.Del. 1985), aff'd, 884 F.2d 1384 (3d Cir.), cert. denied, 493 U.S. 875, 110 S. Ct. 212, 107 L. Ed. 2d 165 (1989); see also Dent v. Cunningham, 786 F.2d 173, 175 (3d Cir.1986) ("In the absence of a federal statute authorizing nationwide service of process, federal courts are referred to the statutes or rules of the states in which they sit."); Max Daetwyler Corp. v. R. Meyer, 762 F.2d 290, 295 (3d Cir.) (same), cert. denied, 474 U.S. 980, 106 S. Ct. 383, 88 L. Ed. 2d 336 (1985). In this regard, a state long-arm statute is used twice. Max Daetwyler, 762 F.2d at 295-96 & n. 7; Harvey v. Price, 603 F. Supp. 1205, 1209 (S.D.Ill.1985). First, by determining whether personal jurisdiction exists over the non-resident defendant, the long arm statute determines the amenability of a non-resident defendant to the service of process. Max Daetwyler, 762 F.2d at 295-96 & n. 7; Harvey, 603 F.Supp. at 1209. Second, the long arm statute then authorizes the method by which service is to take place.[40]Max Daetwyler, 762 F.2d at 295-96 & n. 7; Harvey, 603 F.Supp. at 1209; see also Electro-Catheter, 587 F.Supp. at 1449 (law of forum determines the manner and the extent to which a federal court may assert jurisdiction over a non-resident). 1189 As explained above, the Long Arm Rule provides for personal jurisdiction over non-resident defendants "to the uttermost limits provided by the United States Constitution." Avdel, 58 N.J. at 268, 277 A.2d 207, see supra at p. 1181. As a practical matter, this also means that New Jersey will "allow out-of-state service to the uttermost limits permitted by the United States Constitution." Avdel, 58 N.J. at 268, 277 A.2d 207; see also Dent, 786 F.2d at 175; Because personal jurisdiction over Centrosphere in New Jersey has already been found, see supra at pp. 1181-1187, there is no question Centrosphere was amenable to process issued from New Jersey. See Electro-Catheter, 587 F.Supp. at 1455-56. The question that remains is whether service was properly effected under the Due Process Clause and the Long Arm Rule. As an initial matter, in cases where a foreign corporation is the defendant, the Supreme Court has stated: "Where service on a domestic agent is valid and complete under both state law and the Due Process Clause, our inquiry ends.... [T]he Due Process [C]lause does not require an official transmittal of documents abroad every time there is service on a foreign national."[41]Volkswagenwerk, 486 U.S. at 707, 108 S. Ct. at 2112. Personal service upon an officer of a corporation, including a foreign corporation, constitutes effective service on the corporation itself and satisfies due process.[42] Fed.R.Civ.P. 4(d)(3); see also United States v. Ayers, 857 F.2d 881, 888-89 (1st Cir.1988) (service on Panamanian corporation effective when served on corporate officer); Saez Rivera v. Nissan Mfg. Co., 788 F.2d 819, 821 (1st Cir.1986) (service on Japanese corporation proper if served on officer); United States v. Toyota Motor Corp., 561 F. Supp. 354, 361 (C.D.Cal.1983) (process properly served on Japanese corporation by serving its director and president within United States). The Long Arm Rule provides that process be served [u]pon a domestic or foreign corporation, by serving, in the manner prescribed in paragraph (a), either an officer, director, trustee, or managing or general agent; or any person authorized by appointment or by law to receive service of process on behalf of the corporation; or the person at the registered office of the corporation in charge thereof. N.J. Court Rule 4:4-4(c)(1). Paragraph 4(a) of the Long Arm Rule provides that service may occur by personal service or by registered, certified or ordinary mail. Id., 4:4-4(a). There is no question Centrosphere was properly served pursuant to the Long Arm Rule. Process was personally served on Widjaja, at his residence in California. Widjaja Aff., ¶ 3. Centrosphere and Widjaja admit Widjaja is the president of Centrosphere. Widjaja Aff., ¶¶ 1, 4. Because Widjaja is an officer of Centrosphere, service on Widjaja constitutes effective service on Centrosphere. Centrosphere contends the Long Arm Rule allows for service on a nonresident corporation only by registered 1190 mail delivered to the foreign corporation's principal place of business. Opp. Brief at 9. This reading is incorrect. The Long Arm Rule specifically states that the procedure suggested by Centrosphere is only available if "personal service cannot be made" upon the corporation directly or its officers. N.J. Court Rule 4:4-4(c)(1); see also N.J.Civ.Prac.R. 4:4-4(c) comment 4. Under the Long Arm Rule, as is generally the case, service by mail is a last resort. N.J. Court Rule 4:4-4(c)(1); see also N.J.Civ.Prac.R. 4:4-4(c) comment 4; Fed. R.Civ.P. 4(c), (d). The suggestion that mailed service of process is permissible, while personal service is not, is not correct.[43] No procedural defect occurred in this case. Apollo served Centrosphere in compliance with the manner authorized by both Fed.R.Civ.P. 4 and N.J.Court Rule 4:4-4. This service was reasonably calculated to give Centrosphere notice of this action and an opportunity to respond. As evidenced by Centrosphere's submissions in this case, Apollo's service has achieved both of these ends. B. Preliminary Injunction[44] 1. Standard of Review In examining requests for preliminary injunctions, federal standards are applied. Instant Air Freight Co. v. C.F. Air Freight, Inc., 882 F.2d 797, 799 (3d Cir.1989); System Operations, Inc. v. Scientific Games Dev. Corp., 555 F.2d 1131, 1141 (3d Cir.1977). As the Circuit has stated, "although the right upon which this cause of action is based is state created,[45] Rule 65(a) of the Federal Rules of Civil Procedure contemplates a federal standard as governing requests addressed to federal 1191 courts for preliminary injunctions."[46]Instant Air, 882 F.2d at 799 (quoting System Operations, 555 F.2d at 1141). The Circuit has established that, to prevail on its application for a preliminary injunction, the moving party must show: (1) the probability of irreparable injury to the moving party in the absence of relief; (2) the [absence of] a possibility of harm to the non-moving party if relief were granted; (3) the likelihood of success on the merits; and (4) the public interest [in granting preliminary relief]. Alessi v. Pennsylvania, Dept. of Pub. Welfare, 893 F.2d 1444, 1447 (3d Cir.1990); see also S & R Corp. v. Jiffy Lube Int'l, Inc., 968 F.2d 371, 374 (3d Cir.1992); Merchant & Evans, Inc. v. Roosevelt Bldg. Prods. Co., 963 F.2d 628, 632 (3d Cir.1992); Opticians Ass'n of Am. v. Independent Opticians of Am., 920 F.2d 187, 191-92 (3d Cir.1990); Instant Air, 882 F.2d at 800; Fechter v. HMW Indus., Inc., 879 F.2d 1111, 1116 (3d Cir.1989); Glenside West Corp. v. Exxon Co., U.S.A., 761 F. Supp. 1118, 1132 (D.N.J.1991); CPC Int'l, Inc. v. Caribe Food Distrib., 731 F. Supp. 660, 664 (D.N.J.1990); Bascom Food Prods. Corp. v. Reese Finer Foods, Inc., 715 F. Supp. 616, 624 (D.N.J.1989). Of these four requirements, the Circuit has placed particular weight on the probability of irreparable harm and the likelihood of success on the merits, stating: "[W]e cannot sustain a preliminary injunction ordered by the district court where either or both of these prerequisites are absent." Hoxworth v. Blinder, Robinson & Co., 903 F.2d 186, 197 (3d Cir.1990) (quoting In re Arthur Treacher's Franchisee Litigation, 689 F.2d 1137, 1143 (3d Cir.1982)); see also Instant Air, 882 F.2d at 800; Morton v. Beyer, 822 F.2d 364, 367 (3d Cir.1987); Freixenet, S.A. v. Admiral Wine & Liquor Co., 731 F.2d 148, 151 (3d Cir.1984). Significantly, the Circuit has repeatedly stated that a "grant of injunctive relief is an extraordinary remedy which should be granted only in limited circumstances." Frank's GMC Truck Center, Inc. v. General Motors Corp., 847 F.2d 100, 102 (3d Cir.1988); accord Chez Sez III Corp. v. Union, 945 F.2d 628, 634 (3d Cir.1991), cert. denied, ___ U.S. ___, 112 S. Ct. 1265, 117 L. Ed. 2d 493 (1992); Instant Air, 882 F.2d at 800; United States v. Philadelphia, 644 F.2d 187, 191 n. 1 (3d Cir.1980); see also Driscoll Potatoes, Inc. v. N.A. Produce Co., 765 F. Supp. 174, 176 (D.N.J. 1991). 2. Likelihood of Success on the Merits[47] Parties seeking injunctive relief must make a preliminary showing that they are likely to succeed on the merits of their claims. This requirement is satisfied if the moving party "make[s] a showing of a reasonable probability, not the certainty, of success on the merits." SK & F Co. v. Premo Pharmaceutical Labs., Inc., 625 F.2d 1055, 1066-67 (3d Cir.1980) (citations omitted). Nevertheless, a preliminary injunction cannot be issued when there are disputed issues of fact. Hunterdon Transformer Co. v. Cook, 89-3132, 1990 WL 10342 1 1990 U.S.Dist. LEXIS 1382 3-4 (D.N.J. 6 Feb. 1990) (citing Charles Simkin & Sons, Inc. v. Massiah, 289 F.2d 26, 29 (3d Cir.1961)); see also Oxford House-Evergreen v. Plainfield, 769 F. Supp. 1329, 1342-43 (D.N.J.1991). Apollo states the following claims against Centrosphere: (1) breach of contract, (2) breach of fiduciary duty, (3) unfair competition and (4) intentional interference with prospective contractual relations. Complaint at 11-19. Each of these claims is considered in turn. 1192 a. Breach of Contract Apollo's claim for breach of contract against Centrosphere alleges that Centrosphere violated the Non-Compete and Confidentiality Clauses of the Second Agency Contract. Id. at 11. Apollo has demonstrated that Centrosphere has entered into competition with Apollo in the sale of fuel additives. See supra at pp. 1178-1179. Centrosphere's numerous letters to NAPOCOR suggesting that the Second Trial Order be placed with Centrosphere rather than with Apollo demonstrate this competition. Becker Aff., Exs O, Q, R, T. The question remains, however, whether Apollo has demonstrated that the covenant not to compete in the Second Agency Contract would be enforceable under New York law. Baker's Aid v. Hussmann Foodservice Co., 730 F. Supp. 1209, 1213 (E.D.N.Y.1990) ("[e]nforceability of restrictive covenant is a threshold question that must be resolved before it can be determined whether the Agreement has been breached"). Under New York law, covenants not to compete are viewed unfavorably and are narrowly construed. Consolidated Brands, Inc. v. Mondi, 638 F. Supp. 152, 156 (E.D.N.Y.1986); Columbia Ribbon & Carbon Mfg. v. A-1-A Corp., 42 N.Y.2d 496, 499, 398 N.Y.S.2d 1004, 369 N.E.2d 4 (1977). As one court has stated: "Contracts to restrain competition are generally against public policy, illegal and void." Atkin v. Union Processing Corp., 77 A.D.2d 790, 791, 430 N.Y.S.2d 735, 736 (4th Dep't 1980). "Covenants restricting competition are enforceable only to the extent that they satisfy the overriding requirement of reasonableness." Reed, Roberts Assoc., Inc. v. Strauman, 40 N.Y.2d 303, 307, 386 N.Y.S.2d 677, 353 N.E.2d 590 (1976); see also Tender Loving Care v. Franzese, 131 A.D.2d 747, 748, 517 N.Y.S.2d 50, 51 (2d Dep't 1987). "[R]easonableness must be measured by the circumstances and context in which enforcement is sought." Gelder Medical Group v. Webber, 41 N.Y.2d 680, 684-85, 394 N.Y.S.2d 867, 363 N.E.2d 573 (1977); see also Sprinzen v. Nomberg, 46 N.Y.2d 623, 628, 415 N.Y.S.2d 974, 389 N.E.2d 456 (1979); Reed, Roberts, 40 N.Y.2d at 307, 386 N.Y.S.2d 677, 353 N.E.2d 590; Greenwich Mills Co. v. Barrie House Coffee Co., 91 A.D.2d 398, 400-01, 459 N.Y.S.2d 454, 456 (2d Dep't 1983). To determine the standard by which to judge a restrictive covenant, "the court must consider the type and breadth of the restriction as well as the nature of the business or service involved." Arthur Young & Co. v. Galasso, 142 Misc. 2d 738, 538 N.Y.S.2d 424, 428 (Sup.Ct.N.Y.County 1989). Covenants restricting competition are of several types and requirements. Baker's Aid, 730 F.Supp. at 1213; Alexander & Alexander Servs., Inc. v. Maloff, 105 A.D.2d 1066, 1067, 482 N.Y.S.2d 386, 387 (4th Dep't 1984). For instance, if a contract for the sale of a business contains an express covenant not to compete, it will be enforceable if it is reasonable in time, geographical scope and extent. Reed, Roberts, 40 N.Y.2d at 307, 386 N.Y.S.2d 677, 353 N.E.2d 590; Alexander & Alexander, 105 A.D.2d at 1067-68, 482 N.Y.S.2d at 387. In an employment contract, however, a covenant not to compete must meet more than these criteria. A covenant not to compete in an employment setting will be specifically enforceable only to the extent that it is also "necessary to protect employer's legitimate interests, not harmful to the general public and not unreasonably burdensome to the employee." Reed, Roberts, 40 N.Y.2d at 307, 386 N.Y.S.2d 677, 353 N.E.2d 590; see also Sprinzen, 46 N.Y.2d at 631-32, 415 N.Y.S.2d 974, 389 N.E.2d 456; Gelder Med. Group, 41 N.Y.2d at 683, 394 N.Y.S.2d 867, 363 N.E.2d 573; Mallory Factor, Inc. v. Schwartz, 146 A.D.2d 465, 467, 536 N.Y.S.2d 752, 753 (1st Dep't 1989); Weintraub v. Schwartz, 131 A.D.2d 663, 664-65, 516 N.Y.S.2d 946, 948 (2d Dep't 1987); Alexander v. Alexander, 105 A.D.2d at 1067-68, 482 N.Y.S.2d at 387. The New York Court of Appeals has stated that specific enforcement of an employee's agreement not to compete should not be ordered "unless necessary to protect 1193 the trade secrets, customer lists or good will of the employer's business, or perhaps when the employer is exposed to special harm because of the unique nature of the employee's services." American Broadcasting Cos. v. Wolf, 52 N.Y.2d 394, 403, 438 N.Y.S.2d 482, 420 N.E.2d 363 (1981); accord Reed, Roberts, 40 N.Y.2d at 308, 386 N.Y.S.2d 677, 353 N.E.2d 590; Garfinkle v. Pfizer, Inc., 162 A.D.2d 197, 556 N.Y.S.2d 322, 323 (1st Dep't 1990); Tender Loving Care, 131 A.D.2d at 749, 517 N.Y.S.2d at 51; Newco Waste Sys., Inc. v. Swartzenberg, 125 A.D.2d 1004, 1005, 510 N.Y.S.2d 399, 400 (4th Dep't 1986); see also McKay v. Communispond, Inc., 581 F. Supp. 801, 806 (S.D.N.Y.1983) (New York courts will enforce a restrictive covenant only if the employee is revealing trade secrets). Restrictive covenants are enforceable only if the confidential information is not readily ascertainable from independent sources, and then only to the extent necessary to protect an employer from unfair competition. Newco Waste Sys., 125 A.D.2d at 1005, 510 N.Y.S.2d at 400; see also Prime Enters. v. Bachner, 148 A.D.2d 350, 352, 539 N.Y.S.2d 320, 321 (1st Dep't 1989) (non-compete clauses are enforceable only to extent they afford employer demonstrably necessary protection against unfair competition stemming from use or disclosure of trade secrets); Up-Grade Educational Serv., Inc. v. Rappaport, 136 A.D.2d 628, 629-30, 523 N.Y.S.2d 872, 873 (2d Dep't 1988) (same). The same criteria for employment contracts have been applied in situations involving agency-type relationships. See, e.g., Ecolab, Inc. v. K.P. Laundry Mach., Inc., 656 F. Supp. 894, 896, 898-99 (S.D.N.Y.1987) (contract establishing distributorship); Gelder Medical, 41 N.Y.2d at 683, 394 N.Y.S.2d 867, 363 N.E.2d 573 (contracts establishing professional associations or partnerships); Up-Grade, 136 A.D.2d at 628-30, 523 N.Y.S.2d at 873 (licensing agreements); Arthur Young, 538 N.Y.S.2d at 428-29 (partnership contract). In the case at bar, the Non-Compete Clause is broad. The Non-Compete Clause reads: [Centrosphere] agrees not to manufacture or sell anywhere ... any ... products or services that are competitive with Apollo's products for the duration of this agreement and for three years thereafter. Likewise in the Philippines, [Centrosphere] will not handle any other products that are competitive with the above. Becker Aff., Ex. A (emphasis added). Covenants of this type have been struck down by New York courts. For example, in Columbia Ribbon & Carbon Mfg., the Court of Appeals struck down a clause almost identical to this one. The Columbia clause read: The Employee further covenants that he will not, for a period of twenty-four months after termination of his employment, sell or deliver any goods, wares and merchandise of the kind or character sold by the Company at any time during the term of his employment. 42 N.Y.2d at 498, 398 N.Y.S.2d 1004, 369 N.E.2d 4. The Court of Appeals stated: "It is clear that its broad-sweeping language is unrestrained by any limitations keyed to uniqueness, trade secrets, confidentiality or even competitive unfairness. It does no more than baldly restrain competition." Id. at 499, 398 N.Y.S.2d 1004, 369 N.E.2d 4; see also Great Lakes Carbon Corp. v. Koch Indus., Inc., 497 F. Supp. 462, 466, 471 (S.D.N.Y.1980) (striking down covenant restricting employee from "undertak[ing] any employment competitive with Company"); Up-Grade, 136 A.D.2d at 628, 523 N.Y.S.2d at 873 (striking down noncompete covenant prohibiting employee from being "associated, directly or indirectly ... with the operation of any business competitive with [the employer]"). In contrast, cases in which non-competition covenants have been upheld have emphasized the narrowness of those provisions. For instance, in upholding a restrictive covenant in Mallory Factor, the court emphasized that the defendant "was not restricted from seeking employment in any geographical region, nor was he precluded 1194 from obtaining employment with any [of plaintiff's] competitor[s], or from establishing his own public relations firm." 146 A.D.2d at 467-68, 536 N.Y.S.2d at 754. Rather, the court stated, the defendant "was restricted only from performing work for any account [he] had been involved with during [his] term of employment." Id.; see also Ecolab, Inc., 656 F.Supp. at 898-89 (restrictive covenant reasonable where employee prohibited only from soliciting clients personally solicited while in plaintiff's employ); Greenwich Mills, 91 A.D.2d at 401, 459 N.Y.S.2d at 457 (upholding noncompete clause and stating "much will depend on whether the covenant involves a total ban on competition with the former employer or, as here, the far lesser restriction of a ban on solicitation of its customers"). Apollo has not demonstrated that the Non-Compete Clause satisfies the other requirements necessary for a valid covenant not to compete. For instance, Apollo has not demonstrated that the Non-Compete Clause is specifically designed to protect its trade secrets or to prevent unfair competition. The Non-Compete Clause does not just protect against Centrosphere using the information it obtained from Apollo. Rather, the Non-Compete Clause prohibits Centrosphere from dealing with any other supplier of fuel additives or engaging in any activity related to the supply of fuel additives. These limitations, in turn, may be unduly oppressive to Centrosphere. Centrosphere was founded in April 1990, prior to its dealings with Apollo, for the purpose of supplying fuel additives and related technology to entities in the Philippines. Widjaja Aff., ¶ 10; Opp. Brief at 2-3. By prohibiting Centrosphere from engaging in this activity, the Non-Compete Clause prohibits Centrosphere from functioning at all. As the Court of Appeals has stated: "Even an otherwise valid covenant not to compete will not be enforced if it would be unreasonable in time, space or scope, or would operate in a harsh or oppressive manner." Wolff v. Wolff, 67 N.Y.2d 638, 641, 499 N.Y.S.2d 665, 490 N.E.2d 532 (1986); American Broadcasting Co., 52 N.Y.2d at 403-04, 438 N.Y.S.2d 482, 420 N.E.2d 363; see also Great Lakes Carbon, 497 F.Supp. at 471 (covenant that would bar employee from all employment was "beyond legal limits"); Reed, Roberts, 40 N.Y.2d at 307, 386 N.Y.S.2d 677, 353 N.E.2d 590 ("power considerations of public policy ... militate against sanctioning the loss of a man's livelihood"). Finally, Apollo also argues that Centrosphere breached the Confidentiality Clause of the Second Agency Agreement. Apollo has not shown the likelihood of success on this point either. The Confidentiality Clause expressly states: "[Centrosphere] will maintain in the strictest confidence and not divulge to any party ... the company trade secrets." Becker Aff., Ex. A. Despite this language, Apollo has not argued or demonstrated that Centrosphere has divulged any trade secrets.[48] Apollo's sole argument on this issue is that Centrosphere has utilized trade secrets and will disclose trade secrets. Moving Brief at 7-8, 13, 21-24. While utilizing trade secrets may give rise to some other cause of action, it does not appear to violate the Confidentiality Clause of the Second Agency Contract. Because Apollo has failed to demonstrate either that the Non-Compete Clause is valid and enforceable[49] or that Centrosphere actually disclosed trade secrets in violation of the Confidentiality 1195 Clause, Apollo has not demonstrated a likelihood or reasonable probability of success on the merits on this claim. b. Breach of Fiduciary Duty Apollo claims Centrosphere breached its fiduciary duty as an agent for Apollo by (1) retaining Widjaja who was allegedly blacklisted from working in the Philippines, (2) failing to inform Apollo of this alleged blacklisting, (3) offering to sell Apollo products without Apollo's authorization, (4) failing to send technical people to the Malaya Plant, (5) requiring excessive technical support from Apollo, (6) failing to meet its financial commitments under the Agency Contracts, (7) continuing to act as Apollo's agent without authorization after the alleged termination of the Second Agency Contract and (8) utilizing confidential information acquired from Apollo in competing with it.[50] Complaint at 12-15; Moving Brief at 14-16, 22. (1) An Agent's Duties to its Principal An agency is a fiduciary relationship which results from a manifestation of consent by a principal to agent that the agent shall act on the principal's behalf and subject to the principal's control, and subject to the consent of the agent to act. Meese v. Miller, 79 A.D.2d 237, 241, 436 N.Y.S.2d 496, 499 (4th Dep't 1981); L. Smirlock Realty Corp. v. Title Guar. Co., 70 A.D.2d 455, 464, 421 N.Y.S.2d 232, 238 (2d Dep't 1979), modified, 52 N.Y.2d 179, 437 N.Y.S.2d 57, 418 N.E.2d 650 (1981); Restatement (Second) of Agency § 1. An agent is a fiduciary with respect to all matters within the scope of the agency. Restatement (Second) of Agency § 13; Quintel Corp., N.V. v. Citibank, N.A., 567 F. Supp. 1357, 1362-63 (S.D.N.Y.1983); see also Meinhard v. Salmon, 249 N.Y. 458, 464, 164 N.E. 545 (1928) (fiduciary relationship involves "not honesty alone, but the punctilio of an honor most sensitive"). Authority to act as agent means an agent can only act for the benefit of the principal. Restatement (Second) of Agency §§ 39, 387; United Technologies Communications Co. v. International Brotherhood of Elec. Wkrs. Local Union No. 3, 597 F. Supp. 265, 284 (S.D.N.Y.1984); Sea Lar Trading Co. v. Michael, 107 Misc. 2d 93, 433 N.Y.S.2d 403, 406 (Sup.Ct.N.Y.County 1980). Among other things, this means an agent may not deal with his principal as an adverse party in a transaction connected with his agency or compete with the principal concerning the subject matter of the agency.[51] Restatement (Second) of Agency §§ 389, 393; see also § 393 comment b ("an agent to buy or sell for the principal must not buy or sell in competition with the principal"). As for confidential information, an agent is subject to a duty to the principal not to use or to communicate information confidentially given him by the principal or acquired by him during the course of or on account of his agency ... in competition with or to the injury of the principal although such information does not relate to the transaction in which he is then employed, unless the information is a matter of general knowledge. 1196 Id., § 395; ABKCO Music, Inc. v. Harrisongs Music, Ltd., 722 F.2d 988, 994 (2d Cir.1983) (citing Byrne v. Barrett, 268 N.Y. 199, 206, 197 N.E. 217 (1935)). This rule applies to "information which the agent should know his principal would not care to have revealed to others or used in competition with him." Id., § 395, comment b. Specifically, it applies to "unique business methods of the employer, trade secrets, lists of names, and all other matters peculiarly known in the employer's business." Id. The rule does not apply to matters of common knowledge in the community nor to special skills which the employee has acquired because of his employment. Id.; Byrne, 268 N.Y. at 207, 197 N.E. 217 (information is not general if it is "something known only to one or a few and kept from others"). An agent's duty of confidentiality does not end upon termination of the agency. Restatement (Second) of Agency § 396(b); ABKCO Music, 722 F.2d at 994; Byrne, 268 N.Y. at 206, 197 N.E. 217. Specifically, after the termination of the agency, the agent "has a duty to the principal not to use or to disclose to third persons ... in competition with the principal or to his injury, trade secrets, written lists of names, or other similar confidential matters given to him only for the principal's use." Restatement (Second) of Agency § 396(b); see also Carpenter v. United States, 484 U.S. 19, 26, 108 S. Ct. 316, 320, 98 L. Ed. 2d 275 (1987) (ownership of information obtained during agency belongs to principal); In re Estate of Corning, 108 A.D.2d 96, 102, 488 N.Y.S.2d 477, 481-82 (same), appeal dismissed, 66 N.Y.2d 695, 496 N.Y.S.2d 424, 487 N.E.2d 281 (1985). Nevertheless, the agent "is entitled to use general information concerning the method of business of the principal and the names of customers retained in his memory." Restatement (Second) of Agency § 396(b). A terminated agent may also use in competition with its former principal or otherwise any skill which he may have acquired during his agency. The line between what information an agent may and may not use following termination is not a clear one. As the comment to Section 396 of the Second Restatement of Agency states: Information ... is barred from use in competition only to the extent that, considering all the circumstances, it would be unfair to his former employer for the agent to use it.... Thus, although an agent cannot properly subsequently use copies of written memoranda ... or processes which the employer has kept secret from other manufacturers, [the agent] is normally privileged to use, in competition with the principal, ... methods of doing business and processes which are but skillful variations of general processes known to the particular trade. Id., § 396 comment b; Riteoff, Inc. v. Contact Indus., Inc., 43 A.D.2d 731, 732, 350 N.Y.S.2d 690, 692 (2d Dep't 1973) (secret cleaning formula constituted trade secret and agent breached duty of confidentiality when, following termination of employment, it manufactured and sold cleaning product identical to that of principal). (2) Termination of the Agency Relationship An agent's authority exists only during the period in which, from the manifestations of the principal and the happening of events which the agent has notice, the agent reasonably believes that the principal desires the agent to act. Id., § 38. Actual authority for an agency may terminate in a number of ways. A principal has the right to revoke the agency at any time, even though the principal has contracted with the agent for a definite period of time. Id., § 386 comment b; Sea Lar Trading, 433 N.Y.S.2d at 406; Smith v. Conway, 198 Misc. 886, 101 N.Y.S.2d 529, 531 (Sup.Ct.N.Y.County 1950) (citing cases), aff'd, 278 A.D. 566, 102 N.Y.S.2d 445 (1951). Where a principal wrongfully terminates an agent's authority, the agent may maintain an action against the principal, but it may not continue to act as an agent. Restatement (Second) of Agency §§ 168 & comment a, 386 & comment b. 1197 An agency also terminates when authority is conferred for a specific period of time or upon the happening of a specific event, and either the time expires or the event occurs. Id., § 105; Carvel Corp. v. Nicolini, 144 A.D.2d 611, 611-12, 535 N.Y.S.2d 379, 380-81 (2d Dep't 1988). An agent's authority will terminate when the agent has express notice of termination from the principal or has notice of the happening of an event or of a change in circumstances, from which the agent should reasonably infer that the principal no longer consents to the agent's exercise of authority. Id., §§ 134, 168 & comment b. Furthermore, an agent's authority will terminate if, without knowledge of the principal, the agent acquires an adverse interest or is guilty of a serious breach of loyalty to the principal.[52]Id., § 112. (3) What Constitutes Trade Secrets New York has substantially adopted the approach of the Restatement (First) of Torts to the law of trade secrets. Delta Filter Corp. v. Morin, 108 A.D.2d 991, 991-92, 485 N.Y.S.2d 143, 144 (3d Dep't 1985); see also Integrated Cash Mgmt. Serv., Inc. v. Digital Transactions, Inc., 920 F.2d 171, 173 (2d Cir.1990); Q-Co Indus. v. Hoffman, 625 F. Supp. 608, 616 (S.D.N.Y.1985); Sheridan v. Mallinckrodt, Inc., 568 F. Supp. 1347, 1351 (N.D.N.Y. 1983). Generally, trade secrets have been defined as "information known only to a few and not the general public." Consolidated Brands, 638 F.Supp. at 156; McKay, 581 F.Supp. at 807. More specifically, the First Restatement of Torts provides that trade secrets are any formula, pattern, device or compilation of information which is used in one's business, and which gives [the business] an opportunity to obtain an advantage over competitors who do not know or use it. It may be a formula for a chemical compound, a process of manufacturing, treating or preserving materials, a pattern for a machine or other device, or a list of customers.... Generally, it relates to the production of goods, as, for example, a machine or formula for the production of an article. Restatement (First) of Torts § 757 comment b; see also Integrated Cash, 920 F.2d at 173; Integrated Cash Mgmt. Serv., Inc. v. Digital Transactions, Inc., 732 F. Supp. 370, 375 (S.D.N.Y.1989), aff'd, 920 F.2d 171 (2d Cir.1990); Q-Co Indus., 625 F.Supp. at 616; McKay, 581 F.Supp. at 807; Delta Filter, 108 A.D.2d at 992, 485 N.Y.S.2d at 144; Eagle Comtronics, Inc. v. Pico, Inc., 89 A.D.2d 803, 804, 453 N.Y.S.2d 470, 472 (4th Dep't 1982) A trade secret can exist "in combination of characteristics and components, each of which, by itself, is in the public domain, but the unified process and operation of which, in unique combination, affords a competitive advantage and is a protectible secret." Integrated Cash, 732 F.Supp. at 376 (quoting Imperial Chemical Indus. v. National Distillers & Chem. Corp., 342 F.2d 737, 742 (2d Cir.1965)); see also Integrated Cash, 920 F.2d at 173; McKay, 581 F.Supp. at 807. In determining whether a method or process deserves trade secret protection, secrecy is an essential requisite. Delta Filter, 108 A.D.2d at 992, 485 N.Y.S.2d at 144. Secrecy is used by the First Restatement in two senses: (1) as substantial exclusivity of knowledge of the formula, process, device or compilation of information and (2) as the employment of precautionary measures to preserve such exclusive knowledge by limiting legitimate access by others.[53]Id.; see also Ecolab, Inc. 1198 v. Paolo, 753 F. Supp. 1100, 1111 (E.D.N.Y. 1991); Integrated Cash, 732 F.Supp. at 375; McKay, 581 F.Supp. at 807. Matters of public or general knowledge in an industry cannot be trade secrets. Sheridan, 568 F.Supp. at 1352 (citing Ferber v. Sterndent Corp., 51 N.Y.2d 782, 783-84, 433 N.Y.S.2d 85, 412 N.E.2d 1311 (1980)); Delta Filter, 108 A.D.2d at 992, 485 N.Y.S.2d at 144; see also Restatement (First) of Torts § 757 comment b ("a trade secret is known only in the particular business in which it is used"). Similarly, a substantial element of secrecy must exist such that there is difficulty in acquiring the information. Sheridan, 568 F.Supp. at 1352; Delta Filter, 108 A.D.2d at 992, 485 N.Y.S.2d at 144; Restatement (First) of Torts § 757 comment b. Thus, under New York law, a plaintiff may not recover for a trade secret when the idea has become part of the public domain through the issuance of a patent. Ferber, 51 N.Y.2d at 784, 433 N.Y.S.2d 85, 412 N.E.2d 1311; Laurie Visual Etudes, Inc. v. Chesebrough-Pond's, Inc., 83 A.D.2d 505, 506, 441 N.Y.S.2d 88, 89 (1st Dep't 1981). When the appropriate novelty and secrecy exist, courts have found customer information protectible as trade secrets. For instance, lists of customers have qualified as trade secrets. Defiance Sutton Mach. Co. v. C & C Metal Prods. Corp., 759 F.2d 1053, 1063 (2d Cir.), cert. denied, 474 U.S. 844, 106 S. Ct. 131, 88 L. Ed. 2d 108 (1985); Isra Fruit, Ltd. v. Agrexco Agricultural Exp. Co. Ltd., 631 F. Supp. 984, 989-90 (S.D.N.Y.1986), appeal denied, 804 F.2d 24 (2d Cir.1986); New York State Businessmen's Grp., Inc. v. Dalton, 154 A.D.2d 801, 801, 546 N.Y.S.2d 469, 470 (3d Dep't 1989). Courts have found price discount and customer product use and preference information to be trade secrets. Ecolab, 753 F.Supp. at 1112; Webcraft Tech., Inc. v. McCaw, 674 F. Supp. 1039, 1044-47 (S.D.N.Y.1987); Giffords Oil Co. v. Wild, 106 A.D.2d 610, 611, 483 N.Y.S.2d 104, 106 (2d Dep't 1984). (4) Apollo's Claim that Centrosphere Breached Its Fiduciary Duty By Purporting to Act as Apollo's Agent Following Termination of the Second Agency Contract The Second Agency Contract was expressly limited to a term of one year, unless Centrosphere obtained a "long-term commitment" from a Philippine client within that time. Widjaja Aff., Ex. 3; Opp. Brief at 5; Becker Aff., ¶ 22; Kukin Aff., ¶ 5(1). Centrosphere does not contest the fact that it failed to secure a long term commitment within one year from the effective date of the Second Agency Contract. Opp. Brief at 19. The Second Agency Contract terminated by its own terms on 31 December 1991, one year from its execution. Restatement (Second) of Agency § 105; Carvel, 144 A.D.2d at 611-12, 535 N.Y.S.2d at 380-81. Centrosphere was aware of this termination date and reasonably should have realized its authority had been revoked. In opposition, Centrosphere argues that, by reading the Agency Contracts together, the Second Agency Contract could not terminate until the First Agency Contract was complete. Opp. Brief at 19. Centrosphere states: Apollo was aware that the start of the [Trial Program], originally scheduled to begin in December of 1990, had been delayed until September of 1991,[54] and 1199 that Centrosphere could not possibly have obtained a long term commitment before the expiration date of the [Second Agency Contract].... It can be inferred, from the terms of the [Agency Contracts] that the intent was to acquire a long term contract from NAPOCOR, and that the parties knew this could only come to fruition after the end of the four month trial. Id. at 19-21. This argument is not convincing. While the First Agency Contract specifically references the Second Agency Contract, the Second Contract mentions neither the First Agency Contract nor the NAPOCOR Trial Program. Widjaja Aff., Ex. 3. The Expiration Clause is stated in general and unconditional terms. It states: "This agreement shall run initially for one year. Provided that [Centrosphere is] able to obtain a long term commitment in the Philippines within one year, then this agreement will be extended ..." Id. The Expiration Clause does not state that the contract will be extended pending completion of the Trial Program or on account of unexpected delay in initiating the trial program. Nor does it say Centrosphere must obtain a long-term commitment specifically from NAPOCOR. Centrosphere was free to pursue other clients in addition to NAPOCOR. It is uncontested that Centrosphere continued to act as Apollo's agent following 31 December 1992. In June 1992, Centrosphere wrote to NAPOCOR offering to sell products on behalf of its "principal" at discounts "agreed [to by] our principal." Kukin Exhibits, Ex. O; see also id., Ex. Q (letter from Centrosphere recognizing that Centrosphere had been acting as Apollo's agent prior to 7 July 1992). Assuming arguendo that Centrosphere was justified in not considering its agency terminated on 31 December 1991, it had no reason in June 1992 to believe it was still authorized to act on behalf of Apollo.[55] By letter dated 24 January 1992, Apollo expressly notified Centrosphere that "[s]ince our contract with [Centrosphere] has already expired, we have no legal commitment to continue our relationship." Becker Aff., Ex. E. Similarly, Centrosphere does not deny that, on 7 February 1992, it was again informed by Apollo that its authority to act as Apollo's agent had expired. Becker, Ex. F; see also Opp. Brief at 14 (mentioning without denying this notification). Once notified that its agency was terminated, Centrosphere was prohibited from holding itself out as Apollo's agent.[56] Restatement (Second) of Agency §§ 134, 168 & comment b. Centrosphere's argument that Apollo's termination of its agency was wrongful does not alter this conclusion. As indicated above, a principal may revoke an agency at any time, even though the principal has contracted with the agent for a definite period of time. Id., § 386 comment b; Sea Lar Trading, 433 N.Y.S.2d at 406; Smith, 101 N.Y.S.2d at 531. As mentioned, if the termination is wrongful, the agent may have an action for damages, but it cannot continue to act on behalf of the principal. Restatement (Second) 1200 of Agency §§ 168 & comment a, 386 & comment b. Apollo has demonstrated the likelihood of success on its breach of fiduciary duty claim arising from Centrosphere's continuing to hold itself out as Apollo's agent after the expiration of the agency relationship. (5) Apollo's Claim that Centrosphere Breached Its Fiduciary Duty By Utilizing Confidential Information and Trade Secrets in Competition with Apollo Apollo claims that Centrosphere has used confidential information and trade secrets obtained from Apollo to compete with Apollo. While it is not contested that Centrosphere has entered into competition with Apollo for NAPOCOR's business, Widjaja Aff., ¶ 31; Opp. Brief at 7; Becker Aff., Exs. O, Q-T, the question remains whether the information sought to be protected by Apollo constitutes protectible trade secret material. Apollo claims Centrosphere was exposed to and has utilized its trade secrets: These trade secrets include technologies utilized in the application of additives and the operation of electrical equipment utilized to inject the additives into the boilers. More particularly, these trade secrets include [1] the specific rates of feed of the chemical additives, [2] proper locations of additive injection ports within the boilers, [3] the appropriate time to initiate and shut down application of the additives, [4] methods of testing of flue gases and analysis of results, [5] methods for operating the feed equipment during various boiler operating conditions ... [and 6] the appropriate amount and mix of additives to utilize. Moving Brief at 7, 17. Apollo also argues that "[w]ithout this confidential information, [Centrosphere] could not supply additives to NAPOCOR"[57] and Centrosphere had "no prior business experience before its involvement with Apollo." Moving Brief at 2-3, 7-8, 17; Complaint, ¶ 17. As discussed above, a trade secret is a "formula, pattern, device or compilation of information which is used in one's business." Restatement (First) of Torts § 757 comment b. It may also be "a process of manufacturing, treating or preserving materials, a pattern for a machine or other device, or a list of customers." Id. Generally, however, a trade secret relates to the production of goods, as, for example, a machine or formula for the production of an article." Id.; see also Integrated Cash, 920 F.2d at 173; Integrated Cash, 732 F.Supp. at 375; Q-Co Indus., 625 F.Supp. at 616; McKay, 581 F.Supp. at 807; Eagle Comtronics, 89 A.D.2d at 804, 453 N.Y.S.2d at 472. A terminated agent cannot be prohibited from using "any skill which he may have acquired during his agency." Restatement (Second) of Agency § 396 comment h. It has also been suggested that an agent may employ information which the agent has casually "retained in [the agent's] memory as the result of his work for the principal." Id. at comment b. Apollo has not sufficiently demonstrated that the information it seeks to protect is a trade secret. While Apollo may have created formulae for fuel additives and equipment for additive injection, it does not claim that Centrosphere knows these formulae or has copied Apollo's fuel additives and/or equipment.[58] In contrast, the information that Apollo claims Centrosphere is using is arguably nothing more 1201 than information and techniques that are readily observable and capable of becoming part of an employee's acquired experience. Once a technician knows when, where, how and at what rate to inject fuel additives into a particular boiler model, that information has become a part of the technician's experience and skills. As the Restatement itself recognizes: [T]he skill with which an iron worker can determine the exact moment for pouring molten iron, and the skill of the glass molder in handling his tools, although the result of the master's directions, become part of the personality of the servant which he is entitled to use freely.... Likewise, the skill that comes from aptitude plus training ... becomes the agent's to use for himself ... Restatement (Second) of Agency § 396 comment h; see also Delta Filter, 108 A.D.2d at 992-93, 485 N.Y.S.2d at 145 (no trade secret protection where machine could be duplicated without blueprints, from memory to an experienced machinist). Apollo has failed to demonstrate a number of other essential points in determining the existence of a trade secret. For instance, Apollo does not explain what about its products or process is unique and gives it a competitive advantage. Apollo states on a number of occasions that it enjoys a world-wide reputation in the fuel additive technology. Kukin Aff., ¶ 5; Becker Aff., ¶ 8-9; Kukin Exhibits, Ex. 3. Nevertheless, Apollo recognizes it has competition within the fuel additive business, from such companies as Premier Chemical and Martin Marietta. Kukin Aff., ¶¶ 10, 21. Apollo does not explain how or the degree to which its technology differs from its competitors.[59]Sheridan, 568 F.Supp. at 1352-53 (no trade secret protection where competitors produce product of comparable quality); Delta Filter, 108 A.D.2d at 992-93, 485 N.Y.S.2d at 145 (same, where plaintiff failed to show filter production process was materially different from those of competitors). Skillful variations of general processes known to a particular trade are not trade secrets. Restatement (Second) Agency § 396 comment b. Similarly, matters of public or general knowledge in an industry cannot be trade secrets. Sheridan, 568 F.Supp. at 1352 (citing Ferber, 51 N.Y.2d at 783-84, 433 N.Y.S.2d 85, 412 N.E.2d 1311; Delta Filter, 108 A.D.2d at 992, 485 N.Y.S.2d at 144-45. A "trade secret is known only in the particular business in which it is used." Restatement (First) of Torts § 757 comment b. Apollo states that "it takes great pains to preserve the confidentiality" of its trade secret information. Complaint ¶ 18, Becker Aff., ¶ 15. Yet, with the exception of requiring employees and agents to sign confidentiality agreements, Apollo does not further explain its steps to maintain confidentiality generally or in the specific case of Centrosphere. Complaint, ¶ 18, Becker Aff., ¶ 15. In examining such matters, courts have looked to such indicia as whether only necessary information is provided to employees, the type of information presented in promotional literature or disseminated to prospective customers, the number of customers who are exposed to information about the alleged trade secrets, the security measures taken at the plaintiff's physical plant(s) and whether employees are required to return literature received in connection with their employment. See Integrated Cash, 920 F.2d at 174; Ecolab, 753 F.Supp. at 1112; Lehman v. Dow Jones & Co., 606 F. Supp. 1152, 1161 (S.D.N.Y.1985), aff'd, 783 F.2d 285 (2d Cir.1986). Apollo does not address any of these criteria. The Second Agency Contract specifically requires Centrosphere "to return all literature and documents" upon termination. Becker Aff., Ex. A. Apollo, however, 1202 does not indicate whether Centrosphere complied or even was asked to comply with this provision.[60] Similarly, Apollo objects to the use by Centrosphere of confidential price information in competing with Apollo. Moving Brief at 8 n. 3, 22. Yet, in November 1990, prior to the establishment of an agency relationship between the parties, Apollo, in an unrestricted manner, quoted Centrosphere prices for a number of Apollo's fuel additive products and reviewed the terms under which it would do business with Centrosphere. Kukin Aff., ¶ 5(e). Treatment processes can constitute trade secrets. However, this is a factspecific determination that defies easy categorization. Delta Filter, 108 A.D.2d at 992-93, 485 N.Y.S.2d at 145. Apollo has not sufficiently established the character, novelty or secretness of its fuel additive technology. See Businessmen's Grp., 154 A.D.2d at 801-02, 546 N.Y.S.2d at 470 (conclusory statements in affidavits declaring that information represents "confidential business records and trade secrets ... is palpably insufficient"). Apollo has therefore failed to demonstrate a likelihood of success on this aspect of its fiduciary duty claim. c. Unfair Competition Apollo claims Centrosphere is competing unfairly with Apollo for NAPOCOR's business. Apollo states: "[D]uring the course of its agency relationship with Apollo, Centrosphere received confidential information and trade secrets from Apollo. It is now attempting to use that information to directly compete with Apollo for the business of NAPOCOR, the very customer it was enlisted to aid Apollo in securing." Moving Brief at 25. Apollo also objects to the use by Centrosphere of its pricing and discount information for NAPOCOR. Id. at 2, 8, n. 3. The basic issue in a cause of action for unfair competition is "whether the acts complained of are fair or unfair." Capitaland Heating & Cooling, Inc. v. Capitol Refrigeration Co., 134 A.D.2d 721, 722, 521 N.Y.S.2d 202, 203 (3d Dep't 1987) (quoting Cigogne, Inc. v. Luxury Trading Corp., 13 A.D.2d 928, 929, 216 N.Y.S.2d 558, 559 (1st Dep't 1961)). More specifically, the inquiry under New York law is whether the defendant "has misappropriated the labors and expenditures of another." Saratoga Vichy Spring Co. v. Lehman, 625 F.2d 1037, 1044 (2d Cir.1980); Werlin v. Reader's Digest Ass'n, 528 F. Supp. 451, 464 (S.D.N.Y.1981); Electrolux Corp. v. Val-Worth, Inc., 6 N.Y.2d 556, 567, 190 N.Y.S.2d 977, 161 N.E.2d 197 (1959). Resolution of an unfair competition claim "requires a complex factual analysis of a variety of factors, including the character and circumstances of the business and the nature of the unfair alleged practices." Capitaland, 134 A.D.2d at 722, 521 N.Y.S.2d at 203 (citing International News Serv. v. Associated Press, 248 U.S. 215, 236, 39 S. Ct. 68, 71, 63 L. Ed. 211 (1918)); Sample, Inc. v. Porrath, 41 A.D.2d 118, 121, 341 N.Y.S.2d 683, 687 (4th Dep't 1973), aff'd, 33 N.Y.2d 961, 353 N.Y.S.2d 733, 309 N.E.2d 133 (1974). Although New York law is flexible in the area of unfair competition, Baker's Aid, 730 F.Supp. at 1215, a claim for unfair competition requires the plaintiff to prove bad faith on the part of the defendant. Saratoga, 625 F.2d at 1044; accord Werlin, 528 F.Supp. at 464; Capitaland, 134 A.D.2d at 722, 521 N.Y.S.2d at 203; Sample, 41 A.D.2d at 124, 341 N.Y.S.2d at 690. Solicitation of an employer's customers by a former employee is not actionable unless there was wrongful conduct by 1203 the employee, such a physical taking or copying of the employer's files or using confidential information. Advanced Magnification Instrs., Ltd. v. Minuteman Optical Corp., 135 A.D.2d 889, 891, 522 N.Y.S.2d 287, 289-90 (3d Dep't 1987); Levine v. Bochner, 132 A.D.2d 532, 532, 517 N.Y.S.2d 270, 271 (2d Dep't 1987); Leo Silfen, Inc. v. Cream, 29 N.Y.2d 387, 391-92, 328 N.Y.S.2d 423, 278 N.E.2d 636 (1972). In contrast, use of information about an employer's customers which is based on casual memory, as opposed to studied memorization, is not actionable. Leo Silfen, 29 N.Y.2d at 391-92, 328 N.Y.S.2d 423, 278 N.E.2d 636; Levine, 132 A.D.2d at 532-33, 517 N.Y.S.2d at 271; Continental Dynamics Corp. v. Kanter, 64 A.D.2d 975, 408 N.Y.S.2d 801, 802 (2d Dep't 1978); see also Catalogue Serv. of Westchester, Inc. v. Henry, 107 A.D.2d 783, 784, 484 N.Y.S.2d 615, 616 (2d Dep't 1985) ("remembered information as to specific needs and business habits of particular customers is not confidential"). The law focuses on the source of the information used by a former employee to solicit an employer's customers. If information is known only because of the former employment relationship, it may not be used to solicit customers. Town & Country House & Home Serv., Inc. v. Newbery, 3 N.Y.2d 554, 558-59, 170 N.Y.S.2d 328, 147 N.E.2d 724 (1958); Advanced Magnification, 135 A.D.2d at 891, 522 N.Y.S.2d at 289 (employee's right to compete does not extend so far that employee can unlawfully seize employer's property with impunity). As the New York Court of Appeals has stated: [An] employee may not solicit an employer's customers who are not openly engaged in business in advertised locations or whose availability as patrons cannot readily be ascertained but whose trade and patronage have been secured by years of business effort and activity, and the expenditure of time and money, constituting a part of the good will of a business which enterprise and foresight built up. Town & Country House, 3 N.Y.2d at 558, 170 N.Y.S.2d 328, 147 N.E.2d 724; accord Leo Silfen, 29 N.Y.2d at 392-93, 328 N.Y.S.2d 423, 278 N.E.2d 636; Barone v. Marcisak, 96 A.D.2d 816, 465 N.Y.S.2d 561, 562 (2d Dep't 1983); see also Advanced Magnification, 135 A.D.2d at 891, 522 N.Y.S.2d at 289 (it is "patently unfair" to allow employee to use information which employer gathered by considerable expense and effort). On the other hand, information known or accessible to an employee from other sources may be used to solicit customers. Town & Country House, 3 N.Y.2d at 558-59, 170 N.Y.S.2d 328, 147 N.E.2d 724; accord Advanced Magnification, 135 A.D.2d at 891, 522 N.Y.S.2d at 289; American Printing Converters, Inc. v. JES Label & Tape, Inc., 103 A.D.2d 787, 477 N.Y.S.2d 660, 661-62 (2d Dep't 1984); Continental Dynamics, 408 N.Y.S.2d at 802. From this background, a number of courts have distilled elements of an unfair competition cause of action. Merritt Forbes & Co. v. Newman Invest. Secur., Inc., 604 F. Supp. 943, 957 (S.D.N.Y.1985). To state a valid cause of action for unfair competition based on misappropriation, a plaintiff must show: (1) the defendant obtained access to the idea or information at issue through an abuse of a confidential or fiduciary relationship with the plaintiff, or via some fraud or deception; (2) the plaintiff disclosed what amounted to a trade secret to the defendant and the defendant made use of this disclosure; and (3) the defendant's use of the idea deprived the plaintiff of an opportunity to reap its due profits from the idea. Id.; Werlin, 528 F.Supp. at 464. Apollo has not demonstrated a likelihood of success on its unfair competition claim, even if Centrosphere obtained the confidential information described by Apollo, including access to the prices and discounts offered to NAPOCOR. It is not clear, for instance, whether Centrosphere has acted in bad faith and abused its fiduciary relationship with Apollo to obtain the information in question. Apollo does not argue that Centrosphere physically 1204 copied or refused to return secret information. Although Apollo emphasizes Centrosphere's statement that Centrosphere will supply NAPOCOR with "the same fuel additives of the same specifications with no deviation from the original formulation," this statement is unavailing. Moving Brief at 7, 22 (citing Becker Aff., Ex. Q). As indicated above, Apollo claims to have patents on its fuel additives. Becker Aff., ¶ 12. If these patents do exist, it appears Apollo has a cause of action for patent violation. Nevertheless, it does not appear Centrosphere can be enjoined for a trade secret violation because it re-reproduced a patented product. Apollo also fails to establish exactly what Centrosphere gained from its contact with Apollo. Because Centrosphere had contacts at NAPOCOR prior to working with Apollo on the Trial Contract, it cannot be said that Centrosphere's current solicitation of NAPOCOR is due entirely to customer information received from Apollo. Widjaja Aff., ¶¶ 5-10; Becker Aff., ¶ 17. Kukin Aff., ¶¶ 5(a)-(d); Kukin Exhibits, Exs. 1-3, 5, 8. Similarly, because it appears that Centrosphere personnel had worked with Kober and marketed fuel additives prior to dealing with Apollo, it is unclear what information Centrosphere already knew prior to the Trial Contract. Finally, even if the information in question was only available to Centrosphere by virtue of its contact with Apollo, Apollo has not established that Centrosphere is doing anything more than utilizing information that its technicians have observed, incorporated into their experience and now are recalling from memory. Leo Silfen, 29 N.Y.2d at 391-92, 328 N.Y.S.2d 423, 278 N.E.2d 636; Levine, 132 A.D.2d at 532-33, 517 N.Y.S.2d at 271; Catalogue Serv., 107 A.D.2d at 784, 484 N.Y.S.2d at 616; Continental Dynamics, 408 N.Y.S.2d at 802; see supra at pp. 1195-1196. As indicated above, Apollo has not demonstrated that the information it seeks to protect actually constitutes trade secrets. See supra at pp. 1200-1202. Apollo has failed to satisfy the second element of an unfair competition claim. In appropriate circumstances, information on pricing, discounts and other relevant customer data may enable an agent to take unfair advantage of its principal and therefore constitute protectible trade secrets. Ecolab, 753 F.Supp. at 1112; Webcraft, 674 F.Supp. at 1044-47; Giffords Oil, 106 A.D.2d at 611, 483 N.Y.S.2d at 106. In this case, unlike most cases involving customer information, Centrosphere is not attempting to steal a significant portion of Apollo's clientele by undercutting its prices.[61] Rather, Centrosphere has solicited only NAPOCOR, an entity with which Centrosphere had contacted prior to the venture with Apollo and which currently is only a potential client of Apollo. Given Centrosphere's past dealings with NAPOCOR, it is not apparent why Centrosphere could not obtain the price information and data regarding NAPOCOR's equipment and plant needs directly from NAPOCOR, and thereafter offer to do the job for less money. Use of information obtainable from other known sources is not unfair competition. Town & Country House, 3 N.Y.2d at 558-59, 170 N.Y.S.2d 328, 147 N.E.2d 724; accord American Printing, 103 A.D.2d at 788, 477 N.Y.S.2d at 661-62; Continental Dynamics, 408 N.Y.S.2d at 802. On the record established by Apollo, it has not been established that Centrosphere "has misappropriated [Apollo's] labors and expenditures." Saratoga, 625 F.2d at 1044; Werlin, 528 F.Supp. at 464. Resolution of an unfair competition claim "requires a complex factual analysis of a variety of factors," Capitaland, 134 A.D.2d at 722, 521 N.Y.S.2d at 203, and the issues left unresolved by Apollo are important to that analysis. Apollo may have a viable claim for unfair competition against Centrosphere but, by failing to address these 1205 issues, Apollo has failed to demonstrate a probability of success on this claim. d. Intentional Interference With Prospective Contractual Relations Apollo's final claim is that Centrosphere has tortiously interfered with Apollo's prospective business relations with NAPOCOR. According to Apollo, Centrosphere "owed Apollo a fiduciary duty not to use its confidential trade secrets to compete with Apollo for the NAPOCOR business." Moving Brief at 26. Because Centrosphere has "blatantly flouted this fiduciary duty," Apollo claims it is liable for the tort of interference. Id. Intentional interference with prospective contractual relations is a recognized tort in New York. Guard-Life Corp. v. S. Parker Hardware Mfg. Corp., 50 N.Y.2d 183, 190-91, 428 N.Y.S.2d 628, 406 N.E.2d 445 (1980). To prevail on such a claim, the plaintiff must show that a contract would have been entered into but for the actions of the defendant. Harden, S.P.A. v. Commodore Electronics, Ltd., 90 A.D.2d 733, 734, 455 N.Y.S.2d 792, 795 (1st Dep't 1982). In addition, the plaintiff must show either that the defendant's sole purpose was to damage the plaintiff or that the means employed to induce termination of the relationship were wrongful. PPX Enters., Inc. v. Audiofidelity Enters., Inc., 818 F.2d 266, 269 (2d Cir.1987); Sutton Import-Export Corp. v. Starcrest, 762 F. Supp. 68, 71 (S.D.N.Y.1991); International Minerals & Res., Inc. v. Pappas, 761 F. Supp. 1068, 1075 (S.D.N.Y.1991); Pennsylvania Eng. Corp. v. Islip Res. Recovery Agency, 710 F. Supp. 456, 468 (E.D.N.Y.1989); Lerman v. Medical Assoc. of Woodhull, P.C., 160 A.D.2d 838, 839-40, 554 N.Y.S.2d 272, 273 (2d Dep't 1990); Harden, 90 A.D.2d at 734, 455 N.Y.S.2d at 794. "Wrongful means" have been defined as including physical violence or threats of physical violence, fraud or misrepresentation, civil suits, criminal prosecutions and some degrees of economic pressure. Guard-Life, 50 N.Y.2d at 191, 428 N.Y.S.2d 628, 406 N.E.2d 445 (citing Restatement (Second) of Torts § 768 comment e, § 767, comment c); see also International Minerals, 761 F.Supp. at 1075; Perry v. International Transport Workers' Fed., 750 F. Supp. 1189, 1207 (S.D.N.Y. 1990). A defendant's breach of its fiduciary duty may also constitute wrongful means. Mayo, Lynch & Assocs., Inc. v. Fine, 148 A.D.2d 425, 426, 538 N.Y.S.2d 579, 580 (2d Dep't 1989). Mere persuasion alone, even though it is knowingly directed at interference with a prospective contract, will not be enough to constitute wrongful means. Guard-Life, 50 N.Y.2d at 191, 428 N.Y.S.2d 628, 406 N.E.2d 445 (citing Restatement (Second) of Torts § 768 comment e, § 767, comment c). Similarly, if the defendant's conduct is intended, at least in part, to advance its own competing interests, a tortious interference claim will fail unless the means employed include criminal or wrongful conduct.[62]Id.; accord PPX, 818 F.2d at 269; Mayo, Lynch, 148 A.D.2d at 425, 538 N.Y.S.2d at 580; Olympia House, Inc. v. Elghanayan, 111 A.D.2d 674, 677-78, 491 N.Y.S.2d 163, 166 (1st Dep't 1985); see also Masten v. C.D.I. Travel, Inc., 178 A.D.2d 248, 577 N.Y.S.2d 59, 60 (1st Dep't 1991) (complaint must allege wrongful means employed by defendant with specificity). Apollo has failed to demonstrate a likelihood of success on its claim for tortious interference. Apollo does not argue that Centrosphere's sole purpose in soliciting NAPOCOR's business is to harm Apollo. 1206 See Moving Brief at 26. Although Apollo contends that Centrosphere's sole purpose in this affair is "an effort to impose extortionate terms of a `buy-out'" on Apollo, Kukin Aff., ¶ 22, this assertion is unsupported. While Apollo may object to the price set by Centrosphere on this buyout, it appears that the buy-out proposal has been endorsed by Apollo. Becker Aff., ¶ 36, Ex. E (letter from Apollo to Centrosphere stating: "We were willing to compensate you for [your] work ... by providing some sort of `buy-out' of each shareholder...."). Absent a showing that Centrosphere lacks a competitive purpose, Apollo must show that Centrosphere has engaged in wrongful conduct in dealing with NAPOCOR. Apollo has not made such a showing. As previously discussed at length, Apollo has not demonstrated the information provided to Centrosphere constitutes trade secrets or that the information used by Centrosphere to deal with NAPOCOR was received entirely from Apollo. See supra at pp. 1200-1202, 1204-1205. Finally, the communications from Centrosphere to NAPOCOR, on which Apollo relies, are general in nature. Becker Aff., Exs. O, R, T. Although these letters do indicate the potential savings for NAPOCOR if the Second Trial Order is placed with Centrosphere instead of Apollo, these letters do not reveal or discuss any specific of the information regarded by Apollo as trade secrets.[63] Mere persuasion alone, even though it is knowingly directed at interference with a prospective contract, will not be enough to constitute wrongful means. Guard-Life, 50 N.Y.2d at 191, 428 N.Y.S.2d 628, 406 N.E.2d 445. Apollo has not demonstrated that Centrosphere's letters to NAPOCOR are anything more than mere persuasion. 3. Irreparable Injury In order to demonstrate irreparable injury, the moving party "must demonstrate potential harm which cannot be redressed by a legal or an equitable remedy following a trial. The preliminary injunction must be the only way of protecting the plaintiff from harm." Instant Air, 882 F.2d at 801 (emphasis added) (citing Weinberger v. Romero-Barcelo, 456 U.S. 305, 312, 102 S. Ct. 1798, 1803, 72 L. Ed. 2d 91 (1982); Continental Group, Inc. v. Amoco Chemicals Corp., 614 F.2d 351, 356 & n. 9 (3d Cir.1980)). The Supreme Court, in speaking to the irreparable injury requirement, has stated: [I]t seems clear that the temporary loss of income, ultimately to be recovered, does not constitute irreparable injury.... "The key word in this consideration is irreparable. Mere injuries, however substantial, in terms of money, time and energy necessarily expended in the absence of a stay are not enough. The possibility that adequate corrective relief will be available at a later date, in the ordinary course of litigation, weighs heavily against a claim of irreparable harm." Sampson v. Murray, 415 U.S. 61, 90, 94, 94 S. Ct. 937, 952-53, 954, 39 L. Ed. 2d 166 (1974) (emphasis original) (quoting Virginia Petroleum Jobbers Ass'n v. FPC, 259 F.2d 921, 925 (D.D.C.1958); quoted in Instant Air, 882 F.2d at 801). The Circuit has towed a similarly strict line on what constitutes irreparable injury. In Frank's GMC, the court stated that "[t]he availability of adequate monetary damages belies a claim of irreparable injury." 847 F.2d at 102; accord Morton, 822 F.2d at 372. In Instant Air, the court stated: "[W]e have never upheld an injunction where the claimed injury constituted a loss of money or loss capable of recoupment in a proper action at law."[64] 882 1207 F.2d at 801 (quoting Arthur Treacher's, 689 F.2d at 1145); see also Morton, 822 F.2d at 372 (no injunction to prevent termination of plaintiff's employment despite fact that significant cash flow problems and financial distress could follow). Frank's GMC involved a dispute arising from the obligations of a franchise relationship. Frank's GMC had been a franchisee of General Motors Corp. ("GM") since 1937, and since 1973 had sold a full line of GM trucks. 847 F.2d at 100. In 1986, GM advised Frank's GMC that it had entered into a joint venture with Volvo. Id. Pursuant to this venture, GM was no longer going to manufacture or supply parts for its former line of heavy-duty trucks. Id. Frank's GMC was ordered to cease taking orders for GM heavy-duty trucks and was advised that requests for parts would only be filled on a case-by-case basis. Id. Moreover, Frank's GMC was not selected to market or sell the new line of trucks that was to be manufactured jointly by GM and Volvo. Id. Frank's GMC sued GM for damages and for an injunction preventing GM from discontinuing its supply of heavy-duty trucks and parts. Id. Frank's GMC asserted that it had lost and would continue to lose significant sales from not being able to sell a full line of GM trucks. Id. at 102. According to Frank's GMC, this loss of sales would cause a corresponding decrease in service contracts, exacerbating the loss to its service business that had already been caused by GM's failure to supply parts and warranty support. Id. All of these, Frank's GMC claimed, would cause irreparable harm to its ongoing business. Id. The district court granted the injunction in favor of Frank's GMC; the Circuit reversed. The Circuit noted that "what stands out in all of Frank's GMC's arguments is that, absent the ad interim relief provided by the district court, Frank's GMC would stand to lose sales and service customers, and therefore profits." Id. The court continued: "Even assuming for purposes of argument that Frank's GMC's assertions are true and that it will in fact suffer substantial lost profit as a result of GM's withdrawal from the heavy-truck market, the harm flowing therefrom is compensable in money damages ... and cannot satisfy the irreparable injury requirement." Id. A similar result was reached in Instant Air Freight, 882 F.2d 797. In that case, Instant Air Freight ("Instant Air") and C.F. Air Freight ("C.F.") entered into a four year contract under which Instant Air would provide air freight handling services for C.F. Id. at 798. Handling C.F.'s freight constituted eighty percent of Instant Air's business. Id. Before the contract had expired, C.F. informed Instant Air that its Elizabeth, New Jersey terminal would be closed. Id. It was through this terminal that all of the C.F. freight handled by Instant Air passed. Id. In seeking a preliminary injunction, Instant Air argued that (1) its business would be completely destroyed, (2) it would be required to lay off most, if not all of its seventy employees and (3) its goodwill and business reputation would be destroyed. Id. at 801. In short, Instant Air argued, it would "lose everything it has built over the past two decades." Id. Recognizing that, absent an injunction, Instant Air would "undoubtedly be forced to shutdown or significantly curtail its operations," the district court granted the injunction. Id. at 798-99. On appeal, the Circuit reversed, stating: "The bottom line in this case, as in Frank's GMC, centers on the loss of money which Instant [Air] will suffer as a result of the contract termination. Here the money damages which Instant [Air] alleges are capable of ascertainment and award at final judgement if Instant [Air] prevails. These money damages will fully compensate Instant [Air] for its losses." Id. at 801. In Arthur Treacher's, the plaintiff also argued that it would go out of business without an injunction requiring one of its franchises to pay two hundred thousand dollars in back royalties. 689 F.2d at 1141. 1208 In granting the injunction, the district court reasoned: "If Arthur Treacher's ultimately prevails at trial, any award of money damages could hardly compensate if it is bankrupt and without a franchise system which took years to develop." Id. (quoting district court). Circuit rejected the argument this argument and denied the injunction. Finally, the Circuit has indicated that "[e]stablishing a risk of irreparable harm is not enough. A plaintiff has the burden of proving a clear showing of immediate irreparable injury." Hoxworth, 903 F.2d at 205 (quoting Ecri v. McGraw-Hill, Inc., 809 F.2d 223, 225 (3d Cir.1987)). Apollo argues that Centrosphere's conduct has "jeopardized and continues to jeopardize Apollo's efforts to obtain a long term commitment from NAPOCOR to purchase fuel additives and related technologies and services." Moving Brief at 26-29. This injury, Apollo contends, is irreparable and cannot be compensated by money damages. Id. at 28-29. In attempting to establish irreparable injury, Apollo describes a number of different types of injuries. First, Apollo points to the suspension two existing contracts the New Contract and the Interim Contract both of which have not been ratified by NAPOCOR's board of directors "because of the turmoil caused by Centrosphere's actions." Id. at 27-28. Second, Apollo points to the loss of contracts not yet negotiated. Specifically, Apollo states: Centrosphere's actions threaten Apollo with irreparable injury, causing it not only to lose millions of dollars worth of contracts to supply fuel additives to NAPOCOR's Malaya ... Plant, but also to lose the ability to supply fuel additives to NAPOCOR's three other oil fired facilities (including [the] Bataan and Sucat [Plants]). Centrosphere's actions also threaten Apollo's efforts to supply other technologies ... to Apollo's coal fired power facilities. Apollo has extended a great deal of time and effort over the last two years in attempting to secure NAPOCOR's business. Because of the difficulty in measuring the damages it will sustain, it is clear that Centrosphere's conduct, if left unchecked, will cause Apollo irreparable harm. Id. at 28-29; see also Complaint, ¶ 31. Finally, although Apollo does not assert a claim to protect trade secrets, it argues that because the case involves trade secrets (as well as a non-compete clause), an injunction is necessary. Id. at 26-27. a. The New Contract and the Interim Contract Apollo's claim that loss of the New Contract and the Interim Contract merits injunction relief is incorrect. In its own submissions, Apollo specifies the value of these contracts. The New Contract, Apollo admits, "represents a total order to Apollo of $6.5 million." Becker Aff., ¶ 47 & Ex. M; Moving Brief at 28. Similarly, the Interim Contract calls for the purchase of "an additional two month supply of fuel additives for approximately $770,000." Becker Aff., ¶ 49 & Ex. N. Should Apollo lose the New Contract or the Interim Contract or both because of Centrosphere, the amount of the loss has been quantified and is compensable by money damages.[65] Because these figures are known, there is no difficulty of precise measurement.[66]Barone, 465 1209 N.Y.S.2d at 562 (measure of damages for wrongful diversion of good will or competition in breach of contract is loss sustained by reason of breach, including profits of which plaintiff was deprived by defendant's acts). Apollo has neither demonstrated that it has lost either the New Contract or the Interim Contract nor established that the loss of these contracts is immediate and probable. Moreover, Apollo has not established such a loss is irreparable. Rather, as Apollo admits, ratification of these contracts by the NAPOCOR board of directors has merely been suspended. Becker Aff., ¶¶ 48-49; Kukin Aff., ¶ 16. In this sense, the loss of these contracts and any accompanying damages are purely speculative. The mere risk of harm does not constitute irreparable injury and may not provide the basis for injunctive relief. Hoxworth, 903 F.2d at 205; Ecri, 809 F.2d at 225. b. The Potential Contracts Apollo's contention that other potential contracts with NAPOCOR may be lost does not constitute irreparable injury and cannot provide the basis for injunctive relief. As indicated by the Circuit in Frank's GMC, Instant Air and Arthur Treacher's, the loss of potential business opportunities, profits, customers or contracts is compensable by money damages and does not constitute irreparable injury.[67]Instant Air, 882 F.2d at 801; Frank's GMC, 847 F.2d at 102; Arthur Treacher's, 689 F.2d at 1141. Moreover, Apollo continually recognizes that losing these contracts will result in monetary damage. Complaint, ¶¶ 31, 55, 59; Moving Brief at 28-29. Even if Apollo can prove that these opportunities have been lost because of Centrosphere, any damage suffered by Apollo is susceptible of precise measurement, based upon either the contract proposed by Apollo or the price received by the contract winner. For example, Centrosphere has been awarded a contract to supply fuel additives to NAPOCOR's Sucat Plant. Becker Aff., ¶ 58 & Exs. S-T. The price for this contract is seven hundred ten thousand dollars. Id. Although Apollo does not appear to have bid on this contract, should it be established that Apollo was injured by Centrosphere's obtaining this contract, Apollo's damages are measurable. In any event, a potential loss on these contracts is entirely speculative. Apollo has not demonstrated that such contractual opportunities for it exist or will exist. With the exception of the Malaya and Bataan Plants, Apollo does not appear to have negotiated with NAPOCOR to supply additives to any other NAPOCOR power facility. Moreover, Apollo concedes that past attempts to supply additives to the Philippines have made it hesitant to do business there because of the country's unstable political situation. Kukin Aff., ¶ 5(c). As Centrosphere also points out, Apollo lacks a license to do business in the Philippines[68] and may not even be able to do business directly with NAPOCOR.[69] Widjaja Aff., ¶ 32. Apollo has not demonstrated it is about to suffer immediate and irreparable harm with regard to these potential contracts. c. Trade Secrets In cases involving trade secrets, courts have shown a willingness to issue injunctions to prevent the disclosure of trade secrets. SI Handling Sys., Inc. v. Heisley, 753 F.2d 1244, 1263 (3d Cir.1985); BIEC Int'l, Inc. v. Global Steel Servs., Ltd., 791 F. Supp. 489, 539-48 (E.D.Pa. 1992); Campbell Soup Co. v. Conagra, 801 F. Supp. 1298 (D.N.J.1991). Injunctive relief, however, is only appropriate where the elements of a trade secret claim are 1210 established. SI Handling, 753 F.2d at 1265. In making this determination, federal courts apply the applicable state law. SI Handling, 753 F.2d at 1255. To assert a trade secrets claim under New York law, a plaintiff must show it possessed a trade secret and the defendant used that secret either in breach of an agreement, confidence or duty, or as a result of discovery by improper means. Integrated Cash, 920 F.2d at 173; Integrated Cash, 732 F.Supp. at 375. Even with such a showing, more than the risk of irreparable harm must be demonstrated. Continental Group, 614 F.2d at 359. As the Continental Group court stated: "There must be an imminent threat of the allegedly harmful disclosure.... `A trade secret will not be protected by the extraordinary remedy of injunction on mere suspicion or apprehension of injury.'" 614 F.2d at 358-59 (quoting Allis-Chalmers Mfg. Co. v. Continental Aviation & Eng. Corp., 255 F. Supp. 645, 654 (E.D.Mich.1966)); see also Bay State Lighting Co. v. Voight Lighting Indus., Inc., 224 U.S.P.Q. 708, 1984 WL 1450 at 12 (D.N.J. 17 July 1984) ("injunction is not automatic merely because a trade secret claim is alleged and ought not to be granted absent satisfaction of all prerequisites for equitable relief"). As discussed previously, Apollo has not demonstrated that (1) its fuel additive process constitutes a protectible trade secret, in whole or in part, (2) Centrosphere is prohibited from utilizing or disclosing those aspects of Apollo's system which have become part of its acquired experience and (3) that disclosure of these alleged trade secrets is imminent. See supra pp. 1194, 1200-1202, 1203-1204; see also Bay State Lighting, 224 U.S.P.Q. 708, 1984 WL 1450 at 16-17 (failure to prove defendants had already disclosed trade secrets, or that they intended to or inevitably would have disclosed those secrets, justified denial of preliminary injunction). To the extent Apollo seeks protection for its trade secrets, it is not to prevent disclosure of those secrets. Rather, Apollo seeks to prevent Centrosphere from using this information to compete with Apollo in procuring contracts with NAPOCOR. Moving Brief at 26-28; Reply Brief at 12-14. As also discussed previously, the loss of a contract through unfair means is the type of injury for which damages are ascertainable and appropriate. See supra n. 66; see also Hunterdon Transformer, 1990 WL 10342 at 1, 1990 U.S.Dist. LEXIS 1382 at 3-4 (improper use of trade secrets to pirate away business compensable by money damages and injunction was not was appropriate); Bay State Lighting, 224 U.S.P.Q. 708, 1984 WL 1450 at 11-12 (same, for unauthorized use of secret design in performing airport lighting contract). d. Injunctions Even Where Money Damages Appropriate In certain limited instances, the Circuit has recognized that a preliminary injunction is appropriate even though the plaintiff's injury is compensable by money damages. Hoxworth, 903 F.2d at 205-06; Instant Air, 882 F.2d at 801-02; Morton, 822 F.2d at 371; United Steel-workers of Am. v. Fort Pitt Steel Casting, 598 F.2d 1273, 1280 (3d Cir.1979). The following circumstances are significant: (1) the difficulty of proving damages with reasonable certainty, (2) the difficulty of procuring a suitable substitute performance by means of money awarded as damages and (3) the likelihood that an award could not be collected.[70]Id. at 802 (citing Restatement (Second) of Contracts § 360). 1211 Apollo argues an injunction is warranted in this case because Centrosphere "has no significant assets" and a money damages award would be "simply ineffective." Reply Brief at 14; Reply Brief at 3, 14. Absent statements by Apollo that Centrosphere failed to maintain its financial commitments under the Agency Contracts and borrowed money from Apollo, see Kukin Aff., ¶ 9; Kukin Exhibits, Exs. 13-14, Apollo has not supplied any proof or documentation to support its contention that Centrosphere is without assets. Nor has Apollo supplied specific facts or figures to indicate that Centrosphere failed to carry its share of the financial burden. While the circumstances cited by Apollo may indicate a lack of assets, insolvency is not the only explanation for such status. In addition, Centrosphere maintains that it "performed all its obligations under the contract." Reply Brief at 16. Where no clear factual record exists apart from the general statements of the plaintiff, a finding of irreparable injury is not warranted. Instant Air, 882 F.2d at 803; Arthur Treacher's, 689 F.2d at 1146. Similarly, a preliminary injunction cannot be issued when there are disputed issues of fact. Charles Simkin, 289 F.2d at 29; Oxford-Evergreen, 769 F.Supp. at 1343; Hunterdon Transformer, 1990 WL 10342 at 1, 1990 U.S.Dist. LEXIS 1382 at 4. Apollo also argues, without ever explaining, that damages in this case will be difficult to calculate. Moving Brief at 29; Reply Brief at 3. This argument is also without merit. As explained above, Apollo's potential damages from lost contracts and improperly used trade secrets are capable of calculation. See supra at pp. 1208-1210. Because Apollo has failed to articulate and adduce proof of actual or imminent harm which cannot otherwise be compensated by money damages, it has failed to sustain the substantial burden of showing irreparable harm. Frank's GMC, 847 F.2d at 102-03. 4. Balance of Hardships In deciding whether injunctive relief is appropriate, the hardships to the respective parties must be balanced. Opticians Ass'n, 920 F.2d at 197; Frank's GMC, 847 F.2d at 102. The purpose behind this balancing is to ensure that the issuance of an injunction would not harm the defendant more than a denial would harm the plaintiff. Opticians Ass'n, 920 F.2d at 197; Ecri, 809 F.2d at 226. The balance of hardships in this case favors not issuing the requested injunction. Centrosphere was founded prior to its contact with Apollo for the purpose of supplying fuel additives and related technology to entities in the Philippines. Widjaja Aff., ¶ 10; Opp. Brief at 2-3. By prohibiting Centrosphere from engaging in this activity, the Non-Compete Clause essentially prohibits Centrosphere from functioning at all. In contrast, if the injunction is not issued, Apollo still may pursue its negotiations with NAPOCOR and still may be awarded the contracts that have been suspended. Even if Apollo should lose these contracts, the loss is measurable and compensable by money damages following trial on the merits, if Apollo is successful. Apollo suggests that, absent serious questions going to the merits, the balance of hardships need not be considered. Moving Brief at 30. Even if this is true, Apollo has not demonstrated the likelihood of its success on the majority of its claims. Moreover, the one claim for which Apollo has shown a likelihood of success, the claim that Centrosphere purported to act as Apollo's agent following the termination of its agency, is no longer relevant to a discussion of the ongoing harm to Apollo. Centrosphere is no longer purporting to act as Apollo's agent and NAPOCOR has been notified that Centrosphere is no longer authorized to act for Apollo. Kukin Aff., ¶ 18; Becker Aff., ¶ 51, Ex. P; Moving Brief at 6. 5. Public Interest The final consideration in the preliminary injunction analysis is whether the 1212 issuance of a preliminary injunction furthers the public interest. Opticians Ass'n, 920 F.2d at 197. Neither party has argued nor does it appear that the public interest significantly affects the analysis in this case. Where the public interest has little to add to the other preliminary injunction factors, it is not considered. Hoxworth, 903 F.2d at 208; Instant Air, 882 F.2d at 803. Conclusion For the reasons set forth above, the Apollo motion for a preliminary injunction is denied and the Centrosphere cross-motion to dismiss for lack of personal jurisdiction and for improper process, or, if the preliminary injunction were to be granted, to make the preliminary injunction mutually enforceable, is also denied.[71] NOTES [1] Apollo has submitted the following in support of its motion for a TRO and a preliminary injunction: Plaintiff's Brief in Support of a Motion For a Temporary Restraining Order (the "Moving Brief"); Affidavit of Donald G. Becker (the "Becker Aff."); Plaintiffs Reply Brief in Support of Motion for a Preliminary Injunction (the "Reply Brief"); Reply Affidavit of Dr. Ira Kukin (the "Kukin Aff."); Exhibits to Reply Affidavit of Dr. Ira Kukin (the "Kukin Exhibits") (submitted as separate document); Reply Affidavit of Donald G. Becker (the "Becker Reply Aff."); Reply Affidavit of William Pepe (the "Pepe Aff."). Centrosphere has submitted the following in opposition to the Apollo motion: Defendant's Brief in Opposition to Motion For Preliminary Injunction (the "Opp. Brief") and Affidavit of Alex Widjaja (the "Widjaja Aff."). On 24 September 1992, the morning of oral argument, Centrosphere submitted an Errata to Defendant's Brief in Opposition to Motion for Preliminary Injunction, correcting grammatical, typographical and case citation errors. [2] Apollo asks for an injunction restraining "Centrosphere and its directors, officers, shareholders, employees and agents." Moving Brief at 1 (emphasis added). Nevertheless, the only named defendant in this action is the corporate entity of Centrosphere. Centrosphere's directors, officers, shareholders, employees and agents are not defendants in this action and can only be enjoined to the extent they act on behalf of Centrosphere. [3] Centrosphere appears to be moving to dismiss pursuant to Fed.R.Civ.P. 12(b)(2), (3), (4) although Centrosphere fails to cite this rule. [4] At oral argument, the parties requested an expedited trial. The parties were informed a trial could commence in approximately two weeks, 13 October 1992. The parties were to meet immediately following oral argument to discuss their respective needs for trial and to propose an expedited schedule for discovery and trial. After meeting for approximately ninety minutes, the parties reported they could not agree. Max Manshel, Esq., representing Centrosphere, indicated Centrosphere would not likely be able to proceed to trial prior to 1 January 1993. Michael Silverberg, Esq., representing Apollo, stated indicated he could not set up an expedited schedule until he first consulted with Apollo. A status conference was scheduled for 1 October 1992, as requested by counsel. [5] Many of the facts of this matter are contested. See Kukin Aff., ¶ 1. [6] The parties apparently disagree as to when NAPOCOR requested bids for fuel additive testing at the Malaya Plant. Apollo states that bids were requested in 1989, see Becker Aff., ¶ 16, while Centrosphere states that bids were invited in September 1990, see Widjaja Aff., ¶ 11. [7] Although Apollo claims that Centrosphere informed Apollo that Apollo was to be granted the Trial Contract, the 22 October Letter does not support this contention. Kukin Aff., ¶ 5(d); Kukin Exhibits, Ex. 5. The 22 October Letter from Centrosphere states: "We are glad to inform you of the result of the bidding for the fuel additive of [the] Malaya Plant. After a really stiff competition from four (4) other companies, we finally succeeded, in convincing [NAPOCOR's] bidding committee to negotiate the award in our favor, thanks to our inside contacts." Kukin Exhibits, Ex. 5 (emphasis added). [8] Apollo has not provided a copy of this memorandum despite the fact that the Kukin Aff. quotes it repeatedly. [9] Apollo contends Centrosphere submitted its bid and was awarded the Trial Contract as the representative for Apollo. Becker Aff., ¶ 19. The Trial Contract neither mentions Apollo nor indicates Centrosphere is awarded the contract as anything other than as a principal. Becker Aff., Ex. B; Opp. Brief at 5, Ex. 1. [10] Liongson apparently is Widjaja's secretary. Widjaja Aff., ¶ 15. [11] It appears that no discussions occurred between the parties on 30 December 1990. Opp. Brief at 4. [12] The First Agency Contract, which Centrosphere admits reading and suggesting changes, states that "[o]n behalf of Apollo, its principal, Centrosphere has obtained a commitment from NAPOCOR for [the Trial Program]." Widjaja Aff., Ex. 3. [13] NAPOCOR paid Apollo the entire Purchase Price. Complaint, ¶ 7. [14] Centrosphere asserts that it did not read the Second Agency Contract because of time constraints. Widjaja Aff., ¶¶ 15-16. Centrosphere contends it "was anxious to consummate a deal, fearing that Centrosphere might default on its contract with NAPOCOR which, by its terms, was supposed to commence on December 20th...." Opp. Brief at 5. Centrosphere also indicates that its personnel were anxious to return to the Philippines for the remainder of the Christmas holiday. Id. The Second Agency Contract is only two and one-half pages long. See Widjaja Aff., Ex. 3. [15] Apollo states that this confidentiality agreement was "integral to Apollo's decision both to allow Centrosphere to serve as its agent in the sale of its products, and to give it access to confidential information concerning the fuel additive business." Becker Aff., ¶ 25. [16] Based on this language, Apollo argues: "Our contract with Centrosphere expressly provided for injunctive relief in case of such violation." Kukin Aff., ¶ 4. This is not true. The right to "apply" for an injunction does not entitle Apollo to the "granting of an injunction." [17] Specifically, the 19 December Letter states: We have suddenly become confronted with the necessity of manufacturing Apollo injection systems for Poland and Greece in addition to our normal requirements. Unfortunately, it is impossible for us to gear up our equipment manufacturing facilities fast enough to handle all these requirements. We are indeed starting to do this but it will take between four to six months for us to reach anywhere the capacity that will be required. In addition, we shall be extremely hard pressed to provide engineers and technicians to handle the test programs. Kukin Exhibits, Ex. 8. [18] Apollo also asserts that Centrosphere failed to provide the financial support for the Trial Program which it was obligated to do under the Agency Agreements. Kukin Aff, ¶ 9; Kukin Exhibits, Ex. 13. Thus, on 15 September 1991, Apollo loaned Centrosphere seventy-five thousand dollars. Kukin Exhibits, Ex. 14 (Promissory Note from Centrosphere to Apollo, dated 15 September 1991). [19] Apollo asserts that Widjaja refused to go the Philippines because Widjaja and his former companies, London and East/West, had been blacklisted from doing business with NAPOCOR and Widjaja was afraid of prosecution. Becker Aff., ¶ 42; Kukin Aff., ¶ 9; Pepe Aff., ¶ 2. Widjaja denies these companies were ever the subject of a governmental investigation or were ever blacklisted. Widjaja Aff., ¶ 5 n. 1. Nevertheless, in July 1992, it appears that NAPOCOR became aware of Widjaja's connection with London and East/West and objected to Widjaja working at the Malay Plant. Becker Aff., ¶¶ 42-43, Ex. J (letter from J.C. Quadarrama to J. Samonte, Esq., dated 14 July 1992). [20] The Becker Aff. indicates the meeting occurred on 20 January 1992, while the Kukin Aff. indicates that the meeting occurred on 17 January 1992. Becker Aff., ¶ 45; Kukin Aff., ¶ 13. [21] Centrosphere asserts that, during this visit to the Philippines, Apollo began negotiating directly with NAPOCOR for a long term contract. Opp. Brief at 6. Centrosphere states that, during this visit, Apollo granted Mercado-DeLeon a Power of Attorney to be Apollo's "true and lawful attorney and ... sole representative ... in the Philippines." Widjaja Aff., ¶ 28 (quoting Ex. 6 (copy of Power of Attorney)). This Power of Attorney went into effect on 10 February 1992. Widjaja Aff., ¶ 28. [22] Centrosphere takes the position that the agency relationship could not expire on 31 December 1991 because (1) the Trial Contract was not scheduled to be completed until February 1992 and (2) Apollo was aware that NAPOCOR would not enter into a long term contract until the Trial Program was complete. Opp. Brief at 5-6. [23] The Becker Aff. submitted with the Moving Brief characterizes this buy-out proposal as a second option offered by Apollo to Centrosphere. Becker Aff., ¶ 36. The Moving Brief states: "Alternatively, in recognition of their past efforts and particularly, bringing NAPOCOR's bid to Apollo, Apollo offered to finance the buy-out of Centrosphere's shareholders by [Mercado]-DeLeon." Id. In contrast, the Kukin Aff. submitted with the Reply Brief characterizes the buy-out as a "demand" by Centrosphere for a buy-out at an "unconscionable and ill-advised price." Kukin Aff., ¶ 15. [24] Centrosphere takes the position that, prior to February 1992 and until her termination by Centrosphere, Mercado-DeLeon had been violating her fiduciary duty to Centrosphere by assisting Apollo in its attempt to secure contracts with NAPOCOR and other entities in the Philippines. Widjaja Aff., ¶ 29. Centrosphere points to the Power of Attorney granted by Apollo to Mercado-DeLeon as evidence of this claim. Widjaja Aff., ¶ 28; see supra n. 21. On 21 July 1992, Centrosphere filed a complaint against Mercado-DeLeon and Depano before the Philippines Securities and Exchange Commission alleging fraud and seeking an accounting. Widjaja Aff., ¶ 30, Ex. 7 (copy of complaint); Opp. Brief at 7. [25] Depano was the technical manager and a five percent shareholder of Centrosphere. Becker Aff., ¶ 60. [26] Since the Centrosphere letter of 10 July 1992, Kober has declined to participate in the Centrosphere's manufacture of fuel additives. Becker Aff., ¶ 52 n. 4; Kukin Aff., ¶ 20; Kukin Exhibits, Ex. 22 (letter from Kober to Malixi, dated 22 July 1992). [27] Centrosphere asserts it had initiated a search for alternative manufacturers of fuel additives and related technology, including Premier Chemical in New Jersey and Martin Marietta Magnesia Specialties ("Martin Marietta") in Maryland. Widjaja Aff., ¶ 31. On 23 July 1992, Martin Marietta expressed an interest in supplying Centrosphere with the necessary chemicals but revoked this intention on 4 August 1992. Id., Exs. 8-9. [28] Service on Centrosphere was effected by Barristers Attorney Service ("Barristers"), pursuant to its appointment on 10 September 1992 by the deputy of this court. Kukin Exhibits, Ex. 9; Reply Brief at 4. [29] Specifically, these trade secret and confidential information included: [T]he appropriate amount and mix of additives to utilize, the appropriate time to initiate and shut down application of the additives, the appropriate manner and feed rates at which to apply these additives, the appropriate locations for the additive injection ports, methods of operating the feed equipment during various boiler operating conditions, the capabilities of Apollo's products, NAPOCOR's needs for fuel additives, methods of flue gas tests and analysis of results (which, in turn, reveal the effectiveness of the products), and the prices both at which Apollo would sell and NAPOCOR would buy such additives, equipment and services. Complaint, ¶ 16; Becker Aff., ¶¶ 27, 54. [30] Centrosphere contends this court lacks personal jurisdiction over it. In order to avoid future disputes on this point, this opinion addresses the personal jurisdiction issue at length. [31] Because Apollo's claims originate from Centrosphere's contacts with this jurisdiction, the focus of this discussion is on the existence of specific jurisdiction over Centrosphere, although the principles of general jurisdiction and requisite minimum contacts are mentioned as well. [32] In establishing specific jurisdiction, an isolated act may be sufficient to subject the defendant to the jurisdiction of the forum. Charles Gendler, 102 N.J. at 471, 508 A.2d 1127 (citing McGee v. International Life Ins. Co., 355 U.S. 220, 223, 78 S. Ct. 199, 200, 2 L. Ed. 2d 223 (1957); see also DeJames, 654 F.2d at 286; Western Union, 545 F.Supp. at 333; Bovino v. Brumbaugh, 221 N.J.Super. 432, 435-36, 534 A.2d 1032 (App.Div.1987); Dave's Trash Removal v. Charm City Equip. Corp., 214 N.J.Super. 497, 501, 520 A.2d 415 (App.Div.1987). [33] Centrosphere maintains no offices in New Jersey or in the United States. Widjaja Aff., ¶ 4; Opp. Brief at 1-2. Similarly, Centrosphere is not licensed to do business in New Jersey or anywhere else in the United States. Widjaja Aff., ¶ 4; Opp. Brief at 1-2. Because Centrosphere lacks any "continuous and systematic" presence in New Jersey, general jurisdiction does not exist in this action. Provident Nat'l Bank, 819 F.2d at 437 (citing Helicopteros, 466 U.S. at 414-16, 104 S. Ct. at 1872-73); see also North Penn Gas, 897 F.2d at 690, n. 2. [34] Centrosphere's suggestion that it was forced to sign these contracts because it sensed "great urgency to consummate an agreement quickly," Opp. brief at 18, and that it never read the Second Agency Contract, Widjaja Aff., ¶¶ 15-16, does not affect the value of these contacts for purposes of determining jurisdiction. Centrosphere concedes it came to New Jersey to negotiate contracts with Apollo and did negotiate at least one contract with Apollo. Widjaja Aff., ¶ 15. By the time Centrosphere left New Jersey, it had voluntarily signed two contracts. Id., ¶ 15, Ex. 3. Whatever sense of "urgency" motivated Centrosphere to sign the Agency Contracts, nothing suggests that Centrosphere was involuntarily forced to sign the Agency Contracts by Apollo. New Generation, 669 F.Supp. at 601. It is difficult to understand why Centrosphere was unable to read the Second Agency Contract prior to its execution. The document is only slightly more than two pages long. Widjaja Aff., Ex. 3. [35] Contrary to Centrosphere's assertion, World-Wide Volkswagen, 444 U.S. 286, 100 S. Ct. 559, does not control this case and is distinguishable on its facts. See Opp. Brief at 10-11. [36] The Court has indicated that most considerations can usually be accommodated through means short of finding jurisdiction unconstitutional, such as applying a specific forum's choice of law rules or seeking a change in venue. Burger King, 471 U.S. at 477, 105 S. Ct. at 2185. [37] Centrosphere's observation that New York law was chosen by the parties to govern the Agency Contracts does not support its argument. The absence of New Jersey law does not detract from New Jersey's interest in providing Apollo with a forum in which to litigate its breach of contract and other claims against Centrosphere. In contrast, the application of New York law in New Jersey no more burdens Centrosphere than would the application of New York law in the Philippines. [38] In contrast, in Asahi, the plaintiff was not a resident of the forum state, California. Asahi, 480 U.S. at 114, 107 S. Ct. at 1032. Similarly, the state of California had no interest in adjudicating the only issue remaining in the case the issue of indemnification between Asahi, a Japanese company, and Cheng Shen, a Korean corporation. Id. [39] Rule 4(e) states in pertinent part: Whenever a statute of the United States or an order of court thereunder provides for service of a summons, or of notice, or of an order in lieu of summons upon a party not an inhabitant of or found within the state in which the district court is held, service may be made under the manner prescribed by the statute or order, or, if there is no provision therein prescribing the manner of service, in a manner stated in this rule. Whenever a statute or rule of court of the state in which the district court is held provides (1) for service of a summons, or of notice, or of an order in lieu of summons upon a party not an inhabitant of or found within the state ... service may ... be made under the circumstances and in the manner prescribed in the statute or rule. Fed.R.Civ.P. 4(e). [40] Under Fed.R.Civ.P. 4(c)(2)(C)(i), a summons and complaint may be served "pursuant to the law of the State in which the District Court is held" if the defendant is an individual or a domestic or foreign corporation. Id. Where the state long-arm statute provides personal jurisdiction over the defendant and hence the defendant's amenability to suit in federal court, application of the state service mechanisms is particularly appropriate. Max Daetwyler, 762 F.2d at 295-96 & n. 7; Harvey, 603 F.Supp. at 1209; Electro-Catheter, 587 F.Supp. at 1449, 1456; see also C. Wright & A. Miller, Federal Practice and Procedure, § 1115 at 244-53, § 1127 at 329. [41] The Court in Volkswagenwerk was specifically discussing the applicability of the Hague Convention Treaty to service made in the United States on the agent of a foreign national. Volkswagenwerk, 486 U.S. at 706-07, 108 S. Ct. at 2112. The Court concluded that the Hague Convention Treaty did not apply because no service abroad was required under either the Illinois long arm statute or the Due Process Clause. Id. at 707-08, 108 S. Ct. at 2112. Although Centrosphere has not argued that service was improperly served pursuant to the Hague Convention Treaty, such an argument would be ineffective because the Volkswagenwerk holding controls the case at bar. As indicated immediately below, service was properly effected within the United States. Because no service abroad was required, the Hague Convention Treaty is not implicated. Volkswagenwerk, 486 U.S. at 707-08, 108 S. Ct. at 2112; New York Marine Mgrs., Inc. v. M.V. "Topor-1", 716 F. Supp. 783, 786 (S.D.N.Y.1989). [42] Fed.R.Civ.P. 4(d)(3) provides in pertinent part: Service shall be made ... [u]pon a domestic or foreign corporation ... by delivering a copy of the summons and of the complaint to an officer, a managing or general agent, or to any agent authorized by appointment or by law to receive service of process.... Id. [43] Centrosphere also hints that somehow service was inadequate because the process server was not a United States Marshal. Widjaja Aff., ¶ 3; Opp. Brief at 7. This suggestion is baseless. Under Fed.R.Civ.P. 4(c)(1), a United States Marshal is not required to serve a summons and complaint. Id. As indicated by Fed.R.Civ.P. 4(c)(2), a summons and complaint may be served "by any person who is not a party and is not less than 18 years of age." Id.; American Metal Exch., 693 F.Supp. at 185. Under N.J. Court Rule 4:4-3, service of a summons may be made by a sheriff or other officer authorized by the law or by a person specially appointed by the court for that purpose. Id. As previously indicted, on 10 September 1992, the deputy of this court appointed Barristers to serve the summons and complaint on Widjaja. Kukin Exhibits, Ex. 9. In accordance with this appointment, Barristers served process on Widjaja on 10 September 1990. Id.; Reply Brief at 4. [44] Centrosphere has suggested a number of reasons why the preliminary injunction should not issue. In addition to arguing that Apollo has not met the standards required for a preliminary injunction, Opp. Brief at 17-25, Centrosphere also suggests that a preliminary injunction should not be granted where (1) enforcement will prove difficult or impossible, id. at 11-12, (2) the affidavits in support of the motion are based on hearsay, id. at 13-17, (3) Apollo is guilty of unclean hands, id. at 26-27 and (4) Apollo is guilty of laches. Id. at 27-28. Because Apollo has failed to satisfy the standards required for the issuance of a preliminary injunction, these arguments are not addressed in this Opinion. [45] In a diversity action the federal court is obliged to apply the substantive law of the state in which the forum is located, including that state's choice of law principles. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S. Ct. 1020, 1021, 85 L. Ed. 1477 (1941); Lacey v. Cessna Aircraft Co., 932 F.2d 170, 187 (3d Cir.1991); Pancza v. Remco Baby, Inc., 761 F. Supp. 1164, 1168 (D.N.J.1991); Hoffman Equip., Inc. v. Clark Equip., Co., 750 F. Supp. 1222, 1229 (D.N.J. 1990), aff'd, 935 F.2d 1281 (3d Cir.1991). Under New Jersey law, choice-of-law provisions are honored as long as fundamental public policies of New Jersey are not offended and the contract bears some relation to the jurisdiction whose law is chosen. Green Constr. Co. v. First Indem. of Am. Ins. Co., 735 F. Supp. 1254, 1259 n. 2 (D.N.J.1990), aff'd, 935 F.2d 1281 (3d Cir.1991); Security Sav. Bk. v. Green Tree Acceptance, Inc., 703 F. Supp. 350, 354 (D.N.J.1989) Kalman Floor Co. v. Jos. L. Muscarelle, Inc., 196 N.J.Super. 16, 21-22, 481 A.2d 553 (App.Div. 1984), aff'd, 98 N.J. 266, 486 A.2d 334 (1985); Bell v. Merchants & Businessmen's Mut. Ins. Co., 241 N.J.Super. 557, 562, 575 A.2d 878 (App.Div.), cert. denied, 122 N.J. 395, 585 A.2d 395 (1990); McCabe v. Great Pacific Century Corp., 222 N.J.Super. 397, 400, 537 A.2d 303 (App.Div. 1990); Winer Motors, Inc. v. Jaguar Rover Triumph, Inc., 208 N.J.Super. 666, 671-73, 506 A.2d 817 (App.Div.1986). Because the parties chose New York law to apply to the Agency Contracts and because they apply New York law in their submissions, New York law will be applied in this Opinion to determine whether Apollo has proven a likelihood of success on the merits for its claims against Centrosphere. [46] Throughout its papers, Apollo cites law from outside the Circuit in discussing when it is appropriate for a court to issue an injunction. See, e.g., Moving Brief at 23, 26-27; Reply Brief at 12-14. This law is inapplicable in determining the proper standards in the case at bar. [47] Because it is clear Apollo has not demonstrated irreparable injury, see infra at pp. 1205-1211, discussion of the likelihood of success on the merits would not be necessary. Nevertheless, because many of the concepts involved in this motion are implicated in the irreparable injury discussion, a full discussion on the merits is necessary. [48] Failure to show that trade secrets are actually being revealed also cuts against enforcing the Non-Compete Clause. McKay, 581 F.Supp. at 806. [49] Apollo's contention that a court can sever the unenforceable parts of a restrictive covenant and enforce only the reasonable parts does not affect this analysis. Review for preliminary injunction purposes is designed to make a threshold determination on whether Apollo has demonstrated a likelihood of success on the merits. Such a review is not designed to decide the merits of the controversy or to predict the specific remedial steps that equity may later require. United States v. Local 560 (I.B.T.), 974 F.2d 315, 330 (3d Cir.1992) (preliminary injunction ruling "is only a prediction about the merits of case"). [50] The final claim that Centrosphere utilized confidential information in competing with Apollo is not stated in the Complaint. It is, however, the primary argument advanced in the Moving Brief. Neither the Moving Brief nor the Reply Brief argues that Centrosphere breached its fiduciary duty by (1) hiring Widjaja, (2) failing to inform Apollo of Widjaja's alleged blacklisting and (3) failing to send technical and financial support to the Trial Program. Because Apollo has not attempted to prove a likelihood of success as to these matters, and because the facts constituting these matters appear to be in dispute, Oxford-Evergreen, 769 F.Supp. at 1343; Hunterdon Transformer, 1990 WL 10342 at 2, 1990 U.S.Dist. LEXIS 1382 at *4, this Opinion considers only the following claims: (1) Centrosphere purported to act as Apollo's agent following the termination of the agency relationship and (2) Centrosphere is competing with Apollo and is utilizing confidential information to do so. [51] If an agent receives anything as a result of a violation of the agent's duty of loyalty to the principal, the agent is subject to liability to deliver the thing, its value or its proceeds to the principal. Restatement (Second) of Agency § 403; Wolff, 67 N.Y.2d at 641, 499 N.Y.S.2d 665, 490 N.E.2d 532. [52] Termination of actual authority does not terminate an agent's apparent authority. Id., § 125. Apparent authority does not terminate until a third party with whom the agent has been dealing receives notice that the agent's authority has been terminated. Id., §§ 125, 129; Frank Mastoloni & Sons, Inc. v. United States Postal Service, 546 F. Supp. 415, 420-21 (S.D.N.Y.1982). From the submissions, Centrosphere's apparent authority ended when Apollo informed NAPOCOR on 7 July 1992 that Centrosphere was no longer Apollo's agent. Kukin Aff., ¶ 18; Becker Aff., ¶ 51, Ex. P. [53] Even so, the law does not protect the owner of a trade secret from "discovery by fair and honest means such as independent invention, accidental disclosure, or by so-called reverse engineering." Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 476, 94 S. Ct. 1879, 1883, 40 L. Ed. 2d 315 (1974); Telerate Sys., Inc. v. Caro, 689 F. Supp. 221, 232 (S.D.N.Y.1988). Nevertheless, the mere possibility of reverse engineering, does not preclude the finding of a trade secret. Telerate Sys., 689 F.Supp. at 232-33. It is one factor to consider in determining the novelty of the alleged trade secret. Id. at 233. Moreover, the proper inquiry is not whether an alleged trade secret can be deduced by reverse engineering, but whether improper means are required to access it. Id. [54] Centrosphere's suggestion that the delay of the trial period was caused by Apollo supply problems, see Opp. Brief at 6, does not appear credible in light of the documentation submitted by Apollo. Kukin Exhibits, Exs. 6, 10-11; Becker Aff., Ex. C. This documentation indicates that shipments to the Philippines were made in March and April 1991 and that the reason shipments were delayed that long was because of Centrosphere's repeated failure to obtain the Letter of Credit from NAPOCOR. See id.; see also Kukin Aff., ¶¶ 6-8. [55] Overall, Centrosphere's arguments are not consistent. If the expiration of the Second Agency Contract was contingent upon completion of the First Agency Contract, then the agency relationship should have expired in late February 1992. On 27 February 1992, Centrosphere withdrew from its participation in the Trial Program "due to the [Trial program's] completion." Becker Aff., Ex. I. No long-term commitment had been secured by Centrosphere by the date of its withdrawal. Centrosphere's own arguments cannot support the existence of an agency relationship with Apollo in June 1992. [56] Even if an agency relationship existed with Apollo in June 1992, it appears Centrosphere still violated its fiduciary duties to Apollo by its 22 June 1992 offer to NAPOCOR. This letter expressly urges NAPOCOR to withdraw acceptance of the Second Trial Order from Apollo and place the order instead with Centrosphere. Becker Aff., Ex. O. Such an action appears to violate the basic agency principles that an agent must act only for the benefit of its principal, may not compete with its principal and may not use a principal's business opportunity for its own benefit. Restatement (Second) of Agency §§ 39, 387, 389, 393, 393 comment b; United Technologies, 597 F.Supp. at 284; Sea Lar Trading, 433 N.Y.S.2d at 406. [57] Apollo never explains why, without information regarding the application and use of fuel additives such as the rates of feed, locations of additive injection, times for injection, testing of flue gases and methods of operating feed equipment Centrosphere would be prevented from supplying the actual product to NAPOCOR. [58] Even if Apollo made such a claim, it is not clear that its fuel additives or equipment are still protectible trade secrets. Apollo points out that it has "recent patents covering formulations of many of its fuel additives, including the products being marketed to NAPOCOR ... and patent coverage on various forms of electronic equipment utilized to inject the chemical additives into the boilers." Becker Aff., ¶ 12. As stated above, a plaintiff may not recover for a trade secret when the idea has become part of the public domain through the issuance of a patent. Ferber, 51 N.Y.2d at 784, 433 N.Y.S.2d 85, 412 N.E.2d 1311; Laurie Visual, 83 A.D.2d at 506, 441 N.Y.S.2d at 89. [59] In a letter to Centrosphere, dated 23 July 1992, Martin Marietta states: Martin Marietta ... the largest magnesium oxide producer and the largest supplier of fuel oil additives in North America, would be pleased to manufacture fuel additive products to your specifications.... We are capable of manufacturing products similar to Coaltrol F for the cold end additive treatment and SSI-3 for the hot end additive treatment. Widjaja Aff., Ex. 8. [60] As well, Apollo does not address Centrosphere's contention that Centrosphere personnel had developed contacts with NAPOCOR and experience in fuel additive technology prior to its contact with Apollo. Widjaja Aff., ¶ 6-9. While Apollo states that Centrosphere had no such experience, see Moving Brief at 3, 8, 17, it is clear that Apollo knew Widjaja's former company had marketed fuel additives in the Philippines under the direction of ex-Apollo employee Kober. Widjaja Aff., Ex. 1. What Centrosphere knew prior to meeting with Apollo is relevant to a determination of whether it is improperly using trade secrets in competing with Apollo. [61] In addition, it is not clear that Centrosphere even had access to the prices at which Apollo was subsequently offering fuel additives to NAPOCOR. See Moving Brief at 6 (commenting that Centrosphere offered to sell NAPOCOR products "at prices it believed were below those being offered by Apollo") (emphasis added). [62] A more stringent showing is required in the case of interference with a prospective contract than for an existing contract. Guard-Life, 50 N.Y.2d at 191, 428 N.Y.S.2d 628, 406 N.E.2d 445; see also Perry, 750 F.Supp. at 1207; Pennsylvania Eng., 710 F.Supp. at 464. A prospective contractual relation is afforded less protection under New York law than an existing contract because its is "less substantive [and] more speculative." Guard-Life, 50 N.Y.2d at 190-91, 428 N.Y.S.2d 628, 406 N.E.2d 445 ("status as a competitor does not protect the interferer from the consequences of his interference an existing contract, [but] it may excuse him from the consequences of interference with prospective contractual relationships"). [63] As indicated previously, the prices at which Apollo was willing to sell additives to NAPOCOR have not been demonstrated to be trade secrets because Centrosphere may well have obtained this information from NAPOCOR. See supra p. 1204. [64] Recently, the Circuit has stated in trademark cases that irreparable injury includes the loss of reputation, of trade and of goodwill. S & R Corp., 968 F.2d at 378; Opticians Ass'n, 920 F.2d at 195. Aside from the fact that this is not a trademark case, Apollo does not argue that Centrosphere is damaging its reputation or goodwill. Moving Brief at 8-9, 13. Rather, Apollo's only claim is that Centrosphere is improperly utilizing the goodwill developed by Apollo with NAPOCOR from the Trial Program. Id. [65] Apollo's contention that it has invested a significant amount of time and effort to negotiating these contracts is irrelevant. Reply Brief at 14-15. As indicated by Frank's GMC, Instant Air and Arthur Treacher's, the loss of significant investments of time, effort and business development do not justify the issuance of injunction, particularly where damages are readily ascertainable. Instant Air, 882 F.2d at 801; Frank's GMC, 847 F.2d at 102; Arthur Treacher's, 689 F.2d at 1141. Furthermore, where irreparable harm does not exist, a district court has no equitable discretion to issue an injunction. Frank's GMC, 847 F.2d at 102, n. 3. [66] Money damages are the appropriate remedy in claims involving unfair competition and interference with prospective contractual relations. International Minerals, 761 F.Supp. at 1079 (interference claim); Guard-Life, 50 N.Y.2d at 191 & n. 6, 428 N.Y.S.2d 628, 406 N.E.2d 445 (same); Allan Dampf, P.C. v. Bloom, 127 A.D.2d 719, 720, 512 N.Y.S.2d 116, 117 (2d Dep't 1987) (unfair competition); Barone, 465 N.Y.S.2d at 562 (same). [67] Significantly, Apollo does not once mention or discuss Frank's GMC, Instant Air or Arthur Treacher's in its discussion of irreparable injury. Moving Brief at 26-29; Reply Brief at 12-15. [68] Apollo did not address this contention in either the Reply Brief or the Kukin Aff. [69] The processes revealed by Apollo to Centrosphere specifically related to NAPOCOR's oil-fired power facilities. It is not clear how Centrosphere poses a threat to Apollo's ability to enter into contracts for NAPOCOR's coal-fired plants, which appear to utilize different methods of pollution control. Kukin Exhibits, Ex. 4. [70] Irreparable injury is not established merely because a defendant's assets are maintained in or transferred to a foreign country and therefore may be potentially uncollectible. Hoxworth, 903 F.2d at 207. As the Hoxworth court explained, a finding of irreparable injury based on overseas asset transfers, "appears somewhat problematic" and "presents difficult issues of international law" regarding the enforcement of judgments abroad. Id. That complexity "counsels against our issuing a ruling" of irreparable injury without the showing of a precise legal theory of uncollectibility by the plaintiff. Id. No such showing has been made or attempted by Apollo. In addition, it appears the difficulty of enforcing a money judgement in a foreign country is no greater, and may be less, than the difficulty of enforcing an injunction abroad. [71] Because Apollo's preliminary injunction motion is denied, it is not necessary to consider Centrosphere's arguments that (1) the injunction should be mutually-enforced and (2) a bond is required. Opp. Brief at 28-29.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2593057/	805 F. Supp. 958 (1992) Carrie MEEK, et al., Plaintiffs, v. METROPOLITAN DADE COUNTY, FLORIDA, et al., Defendants. No. 86-1820-CIV. United States District Court, S.D. Florida. May 26, 1992. 959 960 Thomasina H. Williams, Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A., Miami, Fla., for plaintiffs Packington, Meek Burke and Intervenor Ferguson. Steven M. Cody, Miami, Fla., for plaintiffs. Robert A. Duvall, Dade County Attorney's Office, Miami, Fla., for defendants. MEMORANDUM OPINION AND ORDER GRAHAM, District Judge. THIS CAUSE is before the Court upon Plaintiffs' various motions seeking summary judgment relief. The Court having considered the motions, responses, replies, the pertinent portions of the record, and having heard oral argument of counsel in this action, hereby DENIES final summary judgment specifically as to the third prong in Thornburg v. Gingles, 478 U.S. 30, 106 S. Ct. 2752, 92 L. Ed. 2d 25 (1986). Upon review of the record and history of this case, however, the Court finds that there are no genuine issues of material fact as to prongs one and two of the Gingles test for both Hispanic and Black Plaintiffs.[1] Accordingly, partial summary judgment, which is merely a pretrial adjudication that certain issues shall be deemed established for the trial of the case, is GRANTED for Hispanic and Black Plaintiffs as to prongs one and two of the Gingles test. I. BACKGROUND In 1986, Black and Hispanic citizens and registered voters of Dade County, Florida[2] brought suit against the County claiming that the structure for electing the Board of County Commissioners violated section two of the Voting Rights Act by diluting Black and Hispanic voting power.[3] On October 5, 1988, Judge Kenneth L. Ryskamp of this Court, on cross-motions for summary judgment, ruled in favor of Dade County because Black and Hispanic Plaintiffs had not satisfied the third factor in Gingles. The Court held that Plaintiffs failed to show the existence of a Non-Hispanic White majority that usually defeated the election of the minority's preferred candidate. As to Hispanic Plaintiffs, the Court reasoned that since the Non-Hispanic Whites did not constitute a 961 majority of the total population, the Non-Latin White voting bloc did not cause the defeat of Hispanic candidates. The District Court concluded instead that the defeat of the Hispanic candidates resulted from their failure to register and vote because Hispanics could constitute "the largest segment of registered voters with an effective registration drive." District Court Order of November 6, 1988 at 10.[4] The District Court, however, held that both Black and Hispanic Plaintiffs satisfied the first two prongs enunciated in Thornburg v. Gingles, 478 U.S. 30, 106 S. Ct. 2752, 92 L. Ed. 2d 25 (1986): 1) that Plaintiffs prove that they are sufficiently large and geographically compact minority groups to constitute a majority in a single-member district,[5] and 2) that the Plaintiffs are politically cohesive.[6] On appeal to the Eleventh Circuit Court of Appeals, the Eleventh Circuit reversed and remanded the case to this Court. Meek v. Metropolitan Dade County, 908 F.2d 1540 (11th Cir.1990), cert. denied, ___ U.S. ___, 111 S. Ct. 1108, 113 L. Ed. 2d 217 (1991). The Eleventh Circuit held that the District Court erroneously applied the third factor in Gingles. The Eleventh Circuit opined that although the Non-Hispanic White voting bloc did not constitute a majority, when paired with politically cohesive Blacks, who tend to vote against Hispanic candidates, a majority is formed which usually denies the Hispanics the opportunity to elect their preferred candidate. Meek, 908 F.2d at 1546-47. The Eleventh Circuit noted the District Court's lack of evidence of the voting age Hispanic population to support its conclusion. Id. Upon remand, all parties filed cross-motions for summary judgment before Judge James Lawrence King of this Court. Judge King denied the motions because there were genuine issues of material fact as to whether Plaintiffs could satisfy the third prong of the three-pronged test set forth in Gingles. As to Black Plaintiffs, Judge King held that due to unresolved conflicting factual issues involving the ability of Blacks to elect their preferred representatives, the Court could not enter summary judgment for any party as a matter of law. See Order Denying Plaintiffs' Motions for Final Summary Judgment ("Order"), July 30, 1991 769 F. Supp. 1220, 1222. With respect to Hispanic Plaintiffs, Judge King found that there was a genuine issue of material fact regarding the third factor in Gingles as to whether the "Hispanics are indeed an electoral minority that can be blocked from electing their preferred representatives." See Order, July 30, 1991 769 F. Supp. at 1221. Judge King reasoned that although recent census data 962 shows Hispanics constituting 50.5% of the voting age population in Dade County, the inclusion of many immigrants and refugees into this category decreases the number of Hispanics eligible to register to vote. Id. The basis for the genuine issue held to be of material fact by Judge King was the Eleventh Circuit's opinion which stated that there was no evidence of the "relative numbers of voting age persons in the various voting blocs" to support Judge Ryskamp's decision. Meek, 908 F.2d at 1546. Judge King explained that the Eleventh Circuit's concern, coupled with the composition of Dade County's Hispanic population, suggest that "the ages of Hispanics cannot be the sole determinative factor in measuring voting strength in Dade County"; rather, it is "available voting strength that should be evaluated." (Emphasis in original). See Order, July 30, 1991 769 F. Supp. at 1221, & 1222. The Court concluded as follows: Where Hispanics have become a bare majority of the voting age population achieving the majority status by just 0.5% there remains a material issue of fact as to whether the number of Hispanics who cannot yet register to vote will cause this Hispanic "majority" to be "politically submerged" as a minority of those who are either enfranchised or capable of becoming enfranchised. This is illustrated by the reality that Dade County Hispanics who have moved to the United States within the last five years, even if they are of voting age, cannot normally have obtained the right to vote. See, e.g., 8 U.S.C. § 1427(a) (imposing a five year residence period before persons can be naturalized). Given this factual issue as to Hispanic voting strength, this court finds that summary judgment cannot be entered for any party as a matter of law. Id. at 1222. Following the denial of Plaintiffs and Defendants' cross-motions for final summary judgment, Plaintiffs brought an action in Florida State Court before Judge Murray Goldman on August 21, 1991 to release the results of a survey of Hispanic citizenship that University of Miami Professor Ira Sheskin conducted for the County Attorney's office. On August 23, 1991, Judge Goldman held that the results of the survey were public records in accordance with Florida Statute § 119.01. On the same day, the County filed a motion for protective order in this Court requesting an order precluding any attempt by the Plaintiffs to use page 4 of the Sheskin survey report in these proceedings. The County, however, withdrew its motion for protective order after reaching an agreement with Plaintiffs regarding the admissibility and accuracy of the results of the Sheskin survey and a reasonable distribution of the costs for such survey. Based on the results of the Sheskin survey and other statistical calculations, Hispanic Plaintiffs filed their Renewed Motion for Final Summary Judgment on August 28, 1991; they claimed that the survey resolves the one remaining genuine issue of material fact and demonstrates that Hispanics constitute a minority of those who are enfranchised in Dade County, Florida. II. SUMMARY JUDGMENT STANDARD As a preliminary matter, a district court may grant summary judgment if the moving party shows that there is no genuine issue as to any material fact,[7] and it is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 2552, 91 L. Ed. 2d 265 (1986); Real Estate Financing v. Resolution Trust Corp., 950 F.2d 1540, 1543 (11th Cir.1992). The moving party bears the burden of demonstrating that there exists no genuine dispute as to any material factual issues. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S. Ct. 2505, 2514, 91 L. Ed. 2d 202 (1986). 963 Moreover, in assessing the motions for summary judgment, the Court must review the evidence and all factual inferences therefrom in the light most favorable to the party opposing the motions. Rollins v. TechSouth, Inc., 833 F.2d 1525, 1527-28 (11th Cir.1987). The non-moving party's burden, however, is not lessened by the movant's initial burden. Accordingly, once the movant has demonstrated that an essential element of the non-moving party's case is lacking, the non-moving party must offer proof sufficient to establish the existence of the essential element or else the district court will be required to grant the movant's motion for summary judgment. Id. at 1528; Real Estate Financing, 950 F.2d at 1543 citing Celotex Corp., 477 U.S. at 322, 106 S. Ct. at 2552.[8] If the party moving for summary judgment relief does not meet its burden, the court can still enter an order granting partial summary judgment on the material facts which have no substantial controversy. Fed.R.Civ.P. 56(d).[9] Partial summary judgment is merely a pretrial adjudication that certain issues shall be deemed established for the trial of the case. Lovejoy Electronics, Inc. v. O'Berto, 616 F. Supp. 1464, 1473 (N.D.Ill.1985) citing 6 J. Moore & J. Wicker, Moore's Federal Practice § 56.20 (2d ed. 1948). This adjudication accelerates litigation by framing and narrowing the triable issues, and by eliminating, before trial, matters that contain no genuine issue of material fact. See Lovejoy, 616 F.Supp. at 1473. III. GOVERNING LAW In order to prevail on a vote dilution claim in this Circuit, a plaintiff must establish the three core Gingles factors: First, the minority group must be able to demonstrate that it is sufficiently large and geographically compact to constitute a majority in a single-member district. If it is not, as would be the case in a substantially integrated district, the multi-member form of the district cannot be responsible for minority voters' inability to elect its candidates. Second, the minority group must be able to show that it is politically cohesive. If the minority group is not politically cohesive, it cannot be said that the selection of a multimember electoral structure thwarts distinctive minority group interests. Third, the minority must be able to demonstrate that the white majority votes sufficiently as a bloc to enable it in the absence of special circumstances, such as the minority candidate running unopposed usually to defeat the minority's preferred candidate. In establishing this last circumstance, the minority group demonstrates that submergence in a white multimember district impedes its ability to elect its chosen representatives. Meek, 908 F.2d at 1542 citing Gingles, 106 S.Ct. at 2766-67. This Court must apply the applicable law mandated by its reviewing Court of Appeals, which is binding on all subsequent proceedings in the same case. See Williams v. City of Dothan, 818 F.2d 755, 758, modified, 828 F.2d 13 (11th Cir.1987). This Court, however, is also cognizant of the Eleventh Circuit's conflicting interpretations 964 of Gingles, section 2 of the Voting Rights Act, 42 U.S.C. § 1973 (1982), and on the legal effect of proving the above-listed factors. In Solomon v. Liberty County, Fla., 899 F.2d 1012, 1013 (11th Cir.1990) (en banc), cert. denied, ___ U.S. ___, 111 S. Ct. 670, 112 L. Ed. 2d 663 (1991), the Eleventh Circuit stated that the Court is divided on the legal effect of satisfying the three Gingles factors. The Court did not specifically direct the district court on how to proceed on remand, but instead, instructed the district court to proceed in accordance with Gingles, while considering the two views of the Eleventh Circuit (i.e., Chief Judge Tjoflat's and Judge Kravitch's specially concurring opinions). The Eleventh Circuit in Hall v. Holder, 955 F.2d 1563, 1568 n. 9 (11th Cir.1992), also noted its division "on the issues of whether plaintiffs can make out a § 2 violation simply by establishing the Gingles factors and whether defendants can raise a defense under the totality of the circumstances after the plaintiffs have satisfied the Gingles preconditions." Furthermore, even Judge Kravitch in Meek did not find it unacceptable to make a totality of the circumstances analysis under Judge Tjoflat's approach after the plaintiffs have satisfied the three Gingles preconditions. Judge Kravitch opined as follows: If the district court found the plaintiffs to have satisfied the three Gingles factors, it appears on the facts of this case, where the district court has found the existence of racial hostility between Blacks and Hispanics driving electoral results, that under either view of the Solomon en banc court, the plaintiffs might be entitled to relief. Given the posture of this case, we decline to assume the existence of facts in order to apply the law hypothetically. Further, the Supreme Court has made clear that the district court should analyze the facts in the first instance. We therefore decline to reach issues not necessary to the decision of this case. Id. at 1549. Accordingly, this Court gives due consideration to the views expressed in Chief Judge Tjoflat's and Judge Kravitch's specially concurring opinions in Solomon, 899 F.2d 1012. In order to pass the summary judgment threshold, a minority group must satisfy the three Gingles factors. Upon satisfaction of these criteria, this Court may then conduct a "totality of the circumstances" analysis and consider other relevant factors referred to as the "Senate Report" or "Zimmer" factors.[10] In this case, however, the analysis ceases after consideration of the first three prongs of the Gingles test because there is a genuine issue of material fact as to the third prong, which can only be resolved at trial.[11] 965 IV. ANALYSIS As stated above, once Plaintiffs establish the three core Gingles factors, this Court may conduct a totality of the circumstances analysis. As to prongs one and two of the Gingles test, the Court has determined that both Black and Hispanic Plaintiffs have satisfied their respective burdens. On appeal, the Eleventh Circuit affirmed the District Court's conclusion that Plaintiffs satisfied their burden as to the first Gingles prong, and it also held that the second Gingles prong was not in dispute. Meek v. Dade County, 908 F.2d 1540, 1549 (11th Cir.1990). Consequently, this Court may not reconsider these issues. See Williams, 818 F.2d at 758.[12] As to the third Gingles prong, however, the Eleventh Circuit concluded that the District Court's determination was based upon an erroneous application of the law. Therefore, the Eleventh Circuit now instructs this Court to reconsider the third Gingles prong and determine whether "Hispanics[13] have thus far usually elected preferred representatives". Meek, 908 F.2d at 1549. The court should also consider "whether ... Hispanics are impaired in their ability to elect representatives of their choice by the manner in which the voting districts are now drawn." Id. In determining whether Hispanic Plaintiffs can satisfy the third Gingles prong, the Court must assess whether "Hispanics are indeed an electoral minority that can be blocked from electing their preferred representatives." 769 F. Supp. at 1221. The Court must resolve not whether Hispanics 966 are a majority of the population of Dade County, but rather, what percentage of Dade County's voting age population consists of voting age Hispanics eligible to vote. This endeavor requires an analysis of citizenship data for Dade County's population. In addressing the foregoing issues, the Court has relied upon and considered the pertinent pleadings, exhibits and stipulations on file, including a copy of the results of the survey of Hispanic citizenship that University of Miami Professor Ira Sheskin conducted for the County Attorney's office. The most recent 1990 Census data indicates that Dade County had a voting age population of 1,469,084 and that voting age Hispanics comprised 741,846 of the population, constituting forming 50.5% of the voting age population. The 1990 Census data, however, has not yet produced any information on citizenship in Dade County.[14] Hispanics rely on mathematical equations using figures obtained from the Sheskin survey to support their contention that Hispanics are a minority in Dade County. The results of the survey demonstrate that 61.1% of voting age Hispanics in Dade County are citizens, and 38.9% are not citizens and, therefore, ineligible to vote. Hispanic Plaintiffs' calculations consist of multiplying the number of voting age Hispanics by the citizenship level ascertained by the County, which concludes that 453,268 voting age Hispanics are eligible to vote[15]. Conversely, the remaining 288,578 are ineligible to vote.[16] The computation then excludes the ineligible, voting age Hispanics from the County's total voting age population and concludes that the number of eligible voters in Dade County is 1,180,506.[17] The Hispanic Plaintiffs then claim that dividing the number of eligible, voting age Hispanics by the total voting age population in Dade County makes eligible, voting age Hispanics 38.40% of the County's total voting age population.[18] If this Court were able to compare apples and oranges, then the above results would reveal that eligible, voting age Hispanics are a minority in Dade County. Due to Dade County's diverse cultural makeup, however, any numerical computation to determine voting status of a population must also examine the citizenship classification of populations of different races. Hispanic Plaintiffs' computations exclude ineligible, voting age Hispanics (288,578) from the County's total voting age population (1,469,084), but they do not exclude non-citizen Blacks and non-citizen, non-Hispanic Whites. For example, the Haitian population in Dade County, like the Hispanic population, is primarily an immigrant population and may well have a large noncitizen element. The exclusion of other voting age, non-citizens from the Hispanic Plaintiffs' calculations precludes this Court from ascertaining an accurate numerical measure of the County's total eligible voters. Therefore, because a genuine issue of material fact exists as to prong three of the Gingles test, this Court holds that Hispanic Plaintiffs fail to satisfy the preconditions necessary for this Court to make a totality of the circumstances analysis. VI. CONCLUSION Based on the foregoing, the Court finds that Hispanic Plaintiffs have not met their burden of demonstrating that there exists no genuine issues of material facts on the Gingles third prong. Accordingly, Hispanic *967 Plaintiffs' motion for final summary judgment is DENIED. It is further ORDERED AND ADJUDGED that partial summary judgment as to the first two prongs of the Gingles test is GRANTED as to both Black and Hispanic Plaintiffs. DONE AND ORDERED. NOTES [1] Hereafter referred to as "Plaintiffs" or "Hispanic Plaintiffs" or "Black Plaintiffs". [2] Hereafter referred to as "Dade" or "the County". [3] Section 2 of the Voting Rights Act, as amended in 1982 provides: (a) No voting qualification or prerequisite to voting or standard, practice, or procedure shall be imposed or applied by any State or political subdivision in a manner which results in a denial or abridgement of the right of any citizen of the United States to vote on account of race or color, or in contravention of the guarantees set forth in section 1973b(f)(2) of this title, as provided by subsection (b) of this section. (b) A violation of subsection (a) of this section is established if, based on the totality of the circumstances, it is shown that the political processes leading to nomination or election in the State or political subdivision are not equally open to participation by members of a class of citizens protected by subsection (a) of this section in that its members have less opportunity than other members of the electorate to participate in the political process and to elect representatives of their choice. The extent to which members of a protected class have been elected to office in the State or political subdivision is one circumstance which may be considered: Provided, That nothing in this section establishes a right to have members of a protected class elected in numbers equal to their proportion in population. 42 U.S.C. § 1973 (1982). [4] The November 6, 1988 order was a denial of Plaintiffs' Motion to Alter Summary Final Judgment entered for the Defendants on October 5, 1988. [5] In the October 5, 1988 order, Judge Ryskamp noted that "[t]he defendants do not dispute the Black Plaintiffs' ability to meet this first Thornburg precondition." Id. at 16. As to the Hispanic Plaintiffs, the District Court held that "this court is convinced that the approximately 811,000 Hispanics in Dade County ... meet Thornburg's first precondition." Id. at 17. In the November 6, 1988 order, the District Court again stated that it found that "both Blacks and Hispanics satisfy the first prong of the Thornburg test." District Court opinion of November 6, 1988 at 2. Moreover, Judge King's order dated July 30, 1991 769 F. Supp. 1220 (S.D.Fla.1991), also implies that the first prong of the Gingles test has been satisfied. Judge King's analysis of the Hispanic Plaintiffs, motion began by stating that "[t]he factual issue in question involves whether Hispanics are indeed an electoral minority that can be blocked from electing their preferred representatives." Order of July 30, 1991 at 1221. In concluding, Judge King again stated that "it is the conclusion of this court that genuine issues of material fact remain as to the third prong of the Gingles test." Id. at 1222-23. Thus, this Court finds that although Judge King didn't expressly address the first two prongs of the Gingles test, the July 30, 1991 order implies that those issues are resolved. [6] Judge Ryskamp's original order of October 5, 1988 held that Hispanics were not politically cohesive. Id. at 17. Upon re-examination of the statistical evidence, however, the Court in its November 6, 1988 order found that "[t]he use of homogeneous precinct analysis and bivariate regression analysis in this case has convinced this court of the political cohesiveness of both Blacks and Hispanics. The plaintiffs have sufficiently shown that a significant number of minority group members usually vote for the same candidates." Id. at 3. [7] As to materiality, the substantive law will identify which facts are material. Only disputed facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202 (1986). [8] The purpose of Rule 56 is to allow for the prompt disposition of a case when there is no genuine issue as to any material fact. See Advisory Committee Notes to Rule 56. As stated in the Advisory Notes: "The very mission of the summary judgment procedure is to pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial." [9] Rule 56(d) provides: (d) Case Not Fully Adjudicated on Motion. If on motion under this rule judgment is not rendered upon the whole case or for all the relief asked and a trial is necessary, the court at the hearing of the motion, by examining the pleadings and the evidence before it and by interrogating counsel, shall if practicable ascertain what material facts exist without substantial controversy and what material facts are actually and in good faith controverted. It shall thereupon make an order specifying the facts that appear without substantial controversy, including the extent to which the amount of damages or other relief is not in controversy, and directing such further proceedings in the action as are just. Upon the trial of the action the facts so specified shall be deemed established, and the trial shall be conducted accordingly. [10] One of the first cases to state the factors was Zimmer v. Mckeithen, 485 F.2d 1297, 1305-07 (5th Cir.1973) (en banc), aff'd on other grounds sub nom., East Carroll Parish School Board v. Marshall, 424 U.S. 636, 96 S. Ct. 1083, 47 L. Ed. 2d 296 (1976) (per curiam); see also White v. Regester, 412 U.S. 755, 766-67, 93 S. Ct. 2332, 2339-40, 37 L. Ed. 2d 314 (1973). [11] Assuming the plaintiffs satisfy the third Gingles prong at trial, then this Court will be free to consider the "Senate" or "Zimmer" factors set out in the legislative history of § 2 of the Voting Rights Act. The Senate factors provide courts with additional guidance in determining a vote dilution claim. The following is a list of the Senate factors: 1) The extent of any history of official discrimination in the state or political subdivision that touches the right of the members of the minority group to register, to vote or otherwise to participate in the democratic process; 2) The extent to which voting in the elections of the state or political subdivision is racially polarized; 3) The extent to which the state or political subdivision has used unusually large election districts, majority vote requirements, anti-single shot provisions, or other voting practices or procedures that may enhance the opportunity for discrimination against the minority group; 4) If there is a candidate slating process, whether the members of the minority group have been denied access to that process; 5) The extent to which members of the minority group in the state or political subdivision bear the effects of past discrimination which hinders their ability to participate effectively in the political process; 6) Whether political campaigns have been characterized by overt or subtle racial appeals; 7) The extent to which members of the minority group have been elected to public office in the jurisdiction. Senate Judiciary Committee Report, at 28-29, U.S.Code Cong. & Admin.News 1982, 177, 206-207; Gingles, 478 U.S. at 37, 106 S. Ct. at 2759. The Court can also consider the following additional factors: a) Whether there is a significant lack of responsiveness on the part of elected officials to the particularized needs of the members of the minority group. b) Whether the policy underlying the state or political subdivision's use of such voting qualification, prerequisite to voting, or standard, practice or procedure is tenuous. Senate Report, at 28-29, U.S.Code Cong. & Admin.News 1982, pp. 177, 206-207; Gingles, 478 U.S. at 37, 106 S. Ct. at 2759. These factors are to be considered within the totality of the circumstances; they are neither comprehensive nor exclusive. There is no requirement that any particular number of factors be proven. Gingles, 478 U.S. at 45, 106 S. Ct. at 2763. Instead, the determination depends upon "a searching practical evaluation of the `past and present reality' ... and on a functional view of the political process." Id. at 45, 106 S. Ct. at 2764. [12] A court may reconsider issues previously decided by a court of appeals if one of three exceptions is present: "`(1) substantially different evidence is produced at a subsequent trial; (2) controlling authority compels a contrary decision of law applicable to the issue; or (3) the prior decision was clearly erroneous and would work manifest injustice.'" Williams v. City of Dothan, 818 F.2d 755, 758 citing Dorsey v. Continental Cas. Co., 730 F.2d 675, 678 n. 2 (11th Cir.1984). The Court finds that no exception exists in the case sub judice, and, therefore, the Court is not required to reconsider the first two Gingles factors. Although not required, this Court conducted an independent review of all the relevant pleadings addressing prongs one and two of Gingles and concurs with the previous findings by the District Court and Court of Appeals that Black and Hispanic Plaintiffs have satisfied prongs one and two of the Gingles test. As to prong one of Gingles, this Court reviewed the deposition of Charles W. Blowers, Chief of the Research Division of the Metro-Dade Planning Department, which supports the assertion that both Black and Hispanic Plaintiffs reside in geographically compact areas in Dade County. The deposition also reveals that census tracts which contained 90% of the Blacks in Dade County contained only 10% of Non Latin Whites. Similarly, census tracts evidencing 90% of the Hispanics in Dade County contain less than 50% Non Latin Whites. Moreover, County Commission District 2 is made up of 62.8% Hispanic voters, and County Commission District 3 has a Black plurality of the total population. See Revised Pre-Trial Stipulation at 20. As to the second prong in Gingles, this Court reviewed the affidavit of Genie Stowers, Professor of Political Science and Public Affairs at the University of Alabama at Birmingham. Professor Stowers' conclusion that Black and Hispanic Plaintiffs are politically cohesive stems from the homogenous precinct and bivariate regression analyses of county elections held between 1976 and 1986, which showed strong support between Black voters and candidates of the same group, and between Hispanics and candidates of their group. See Affidavit of Genie Stowers at 3 (Feb. 11, 1988). [13] This Court addresses the Eleventh Circuit's instructions only as to Hispanic Plaintiffs. [14] The parties have informed the Court that they have received notice from the Bureau of the Census that information on the citizenship status of persons in Dade County, identified by race and ethnicity, will not be available until 1993. [15] 741,846 voting age Hispanics multiplied by 61.1% citizenship level = 453,268 Hispanics eligible to vote. [16] 741,846 voting age Hispanics minus 453,268 Hispanics eligible to vote = 288,578 Hispanics not eligible to vote. [17] Dade County's total voting age population of 1,469,084 minus 288,578 Hispanics not eligible to vote = 1,180,506. [18] 453,268 Hispanic eligible voters divided by 1,180,506 total eligible voters = percentage of Hispanic eligible voters among all eligible voters.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2593109/	805 F. Supp. 209 (1992) Nelson CHATELAIN, Lee Castagnos, Jr., James Goodwin, John Sagers, Robert Buckalew, individually and on Behalf of all others similarly situated, Plaintiffs, v. PRUDENTIAL-BACHE SECURITIES, INC.; Prudential-Bache Properties, Inc.; Sybedon Corporation; Mitchell Davis; Edwin Glickman; Bertram Lewis; Wilrock Appraisal & Consulting, Inc.; and Laventhol & Howarth, et al., Defendants. No. 90 Civ. 5164 (MJL). United States District Court, S.D. New York. November 5, 1992. 210 Aguirre & Meyer, San Diego, Cal. by Patricia A. Meyer, Law Offices of I. Stephen Rabin, New York City, by Joseph P. Garland, Law Offices of James C. Krause, San Diego, Cal., for plaintiffs. Colton, Hartnick, Yamin & Sheresky, New York City by Susan E. Keyes, for defendants Sybedon, Glickman, M. Davis, and B. Lewis. Skadden, Arps, Slate, Meagher & Flom, New York City by Richard Breslow, for defendants Prudential-Bache Properties, Inc., and Prudential-Bache Securities, Inc. Rivkin, Radler & Kremer, Uniondale, N.Y. by Janice J. DiGennaro, for defendant Wilrock Appraisal & Consulting, Inc. Orrick, Herrington & Sutcliffe, New York City by Barry Augenbraun, for defendant Laventhol & Howarth. OPINION AND ORDER LOWE, District Judge. Before the Court is the motion of Plaintiffs[1], by their attorneys, brought pursuant to Fed.R.Civ.P. 23(e), for Court approval of the settlement of this action by the terms set forth in the Stipulation of Settlement (the "Stipulation") signed by the parties to the action on June 26, 1992. On August 17, 1992, this Court's Preliminary Order was filed setting the date for the hearing at which the Court would determine the fairness of the settlement, and directing counsel for the class to notify class members of the pendency of the action. 296 notices were mailed to class members representing persons who purchased 300 Class A limited partnership interests ("Units"). Of those members, no objections to the proposed settlement have been received by the Court, and seven persons representing nine Units have requested exclusion from the class. Based upon a hearing before this Court held on October 19, 1992, as well as on submissions by the parties, settlement of this action by the terms stated in the Stipulation is approved. Also before the Court is the motion of Plaintiffs' counsel for an award of attorneys' fees, plus reimbursement of costs 211 and expenses. The request for fees is granted in part and denied in part, and the request for costs and expenses is granted. BACKGROUND On December 29, 1989, this class action was commenced in the United States District Court for the Southern District of California. The parties were identical to the present parties, but included one more defendant, National Union Fire Insurance Company of Pittsburgh, Pa. This defendant was voluntarily dismissed by Plaintiffs in April, 1992. It should also be noted that Defendant Laventhol is engaged in bankruptcy proceedings at the time of this action. Plaintiffs filed an amended complaint on April 12, 1990. Plaintiffs' First Amended Complaint alleges that the Defendants violated Sections 12(2) and 15 of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and the rules and regulations of the Securities and Exchange Commission promulgated thereunder. It also alleges that Defendants violated the common law in connection with the sale of Units by misstating or failing to disclose material facts in the Confidential Private Placement Memorandum issued in connection with the offering of those Units. These common law charges allege fraud, negligent misrepresentation, and breach of fiduciary duty. Further, Plaintiffs allege accounting malpractice by Laventhol & Howarth, and professional negligence against Wilrock Appraising. On July 12, 1990, the Action was transferred on motion by Defendants to the United States District Court for the Southern District of New York. In October, 1991, Plaintiffs sought leave to file a Second Amended Complaint alleging the above causes of action as well as claims under the Federal Racketeer Influenced and Corrupt Organizations Act, common law claims, and further claims under Section 10(b) which Plaintiff sought to reinstate as timely under Section 27A of the 1934 Act as amended in 1991. Plaintiffs also sought to add additional plaintiffs as intervenors. These requests were denied at a pre-trial conference in November, 1991. The Defendants at all times have denied allegations of wrongdoing and liability. In the Court's Preliminary Order of August 17, 1992, this action was certified as a class action for settlement purposes on behalf of all parties who purchased Units up through and including June 26, 1992 the date of the Stipulation of Settlement. In that order, a settlement hearing was scheduled for October 19, 1992, for the purposes of determining whether the settlement is fair, reasonable, and in the best interests of the class. At that hearing, the Court would also consider the application of Plaintiffs' counsel for an award of fees and expenses. The Preliminary Order mandated that notice of the pendency of the hearing and proposed settlement be sent to class members on or before August 21, 1992.[2] DISCUSSION I. The Proposed Class Settlement Agreement The exact terms of the proposed settlement are set forth in the Stipulation of Settlement, dated June 26, 1992, which is incorporated herein by reference. In sum, the settlement provides that Defendants will pay a total of $1,891,667, plus income and interest accrued, in escrow for the benefit of the class. The settlement fund will also include a $600,000 claim against Laventhol, which is presently engaged in bankruptcy proceedings. The amount of the settlement fund will be reduced by the amount awarded to Plaintiffs' counsel for fees and expenses incurred, including the costs of administration of the settlement fund such as the cost of notice to the class and taxes due. Class members filing timely Proofs of Claim shall receive money from the settlement fund based on their pro rata ownership 212 of Units. Special provisions have been made in Section II(F) of the Stipulation of Settlement for the allocation of funds when a Unit has been owned by more than one claimant. Within sixty days after the disbursement of funds, the parties to this action shall submit a report on the administration of the settlement fund to the Court. At that time, they will also apply for an order barring all claims against the parties related to the administration of the settlement. The Stipulation of Settlement contains provisions that an award of attorneys' fees shall not exceed 30% of the settlement fund, and that an award of expenses shall not exceed $25,000. Attorneys seek approximately 30% of the settlement fund in fees, and $13,726.74 as a reimbursement of expenses. The Stipulation of Settlement provides Defendants with the option of withdrawal from the proposed settlement upon the occurrence of certain conditions. The specific conditions for this are sealed and impounded. These rights were not exercised by Defendants. Settlement of this action is in the best interests of the parties involved. It will confer a substantial benefit upon the class, and it will end a complex and costly litigation. Plaintiffs' counsel is experienced in these matters, and has expressed their judgment that the proposed settlement is fair, reasonable, and in the best interests of the class. II. The Standards for Judicial Approval of Class Action Settlements. Rule 23(e) of the Federal Rules of Civil Procedure provides that a class action shall not be compromised without court approval. Fed.R.Civ.P. 23(e). In general, courts look upon the settlement of lawsuits with favor because it promotes the interests of litigants by saving them the expense of trial, and it promotes the interests of the judicial system by reducing the burdensome strain upon it. Newman v. Stein, 464 F.2d 689 (2d Cir.), cert. denied, 409 U.S. 1039, 93 S. Ct. 521, 34 L. Ed. 2d 488 (1972). Compromise is particularly appropriate in complex class actions. In re Union Carbide Corp. Securities Litigation, 718 F. Supp. 1099, 1103 (S.D.N.Y.1989). In deciding whether to approve a proposed class action settlement, the court must determine whether the compromise is fair, reasonable and adequate. Weinberger v. Kendrick, 698 F.2d 61, 73 (2d Cir.1982), cert. denied, 464 U.S. 818, 104 S. Ct. 77, 78 L. Ed. 2d 89 (1983). Also, the court has the fiduciary duty of insuring that the settlement is not the product of collusion. In re Warner Communications Sec. Litig., 798 F.2d 35, 37 (2d Cir.1986). Attention must be paid to the negotiating process which resulted in the proposed settlement. Weinberger, 698 F.2d at 74. The settlement must be the result of arm's length negotiations, and plaintiffs' counsel must be experienced and have engaged in adequate discovery necessary to represent the class effectively. Id. A strong initial presumption of fairness attaches to the proposed settlement when it is shown to be the result of this type of a negotiating process and when the number of objectors is small. Ross v. A.H. Robins Co., Inc., 700 F. Supp. 682, 683 (S.D.N.Y.1988). A substantial factor in determining the fairness of the settlement is the opinion of counsel involved in the settlement. Cannon v. Texas Gulf Sulphur Company, 55 F.R.D. 308 (S.D.N.Y.1972) (opinion of counsel should be given "great weight"). In the instant case, both class counsel and defense counsel satisfactorily represented their clients in negotiating the Stipulation of Settlement. In affidavits submitted by counsel, it is stated that they engaged in arm's length negotiations for eight months, and are satisfied with the proposed settlement. These opinions were considered in approving the Stipulation of Settlement. The court must also consider factors such as the nature of the class, possible defenses, the situation of the parties, the exercise of business judgment, and most importantly, the strength of the plaintiffs' case against the amount offered in the settlement, but the court must stop its inquiry short of a complete trial. City of 213 Detroit v. Grinnell Corp., 495 F.2d 448 (2d Cir.1974). Specifically, the Second Circuit has identified nine factors to be considered in determining whether to approve the settlement of a class action: (1) the complexity, expense and likely duration of the litigation; (2) the reaction of the class to the settlement; (3) the stage of the proceedings and the amount of discovery completed; (4) the risks of establishing liability; (5) the risks of establishing damages; (6) the risks of maintaining the class action through the trial; (7) the ability of the defendants to withstand a greater judgment; (8) the range of reasonableness of the settlement fund in light of the best possible recovery; and (9) the range of reasonableness of the settlement fund to a possible recovery in light of all the attendant risks of litigation. Id. at 463. We will now consider these criteria. A. The Complexity, Expense and Likely Duration of the Litigation. This action was brought over two and one-half years prior to the signing of the Stipulation of Settlement, yet remains at an early stage in the litigation. Although discovery has been conducted pursuant to the settlement, much more would remain if the action proceeded to trial. The factual and legal complexity of this case is great. Plaintiffs' amended complaint is fifty-seven pages in length. Despite the depth of the amended complaint, Plaintiffs' counsel questions whether Plaintiffs would be able to establish liability on the part of Defendants. The additional costs to class members of protracted litigation would be substantial. A judgment in favor of the class is not guaranteed, and even if had, would be reduced by the costs of litigation. The class would also be faced with the possibility of appellate litigation, which would still further increase the costs and uncertainty of this action. Therefore, the complexity, expense and likely duration of this litigation is great, and warrants a settlement of this action. B. The Reaction of the Class to the Settlement. Notices of the proposed settlement and proofs of claim were mailed to all class members on or before August 21, 1992, as ordered by this Court. In these mailings, class members were informed of: the background of the litigation, the pendency of the class action, the terms of the proposed settlement and the right to receive payment, the right to request exclusion from the class, the date and purpose of the settlement hearing, the right to appear and be heard at that hearing, and the potential amount of attorneys' fees to be paid. The last day to request exclusion was October 9, 1992 ten days before the settlement hearing. Only seven out of 296 have requested exclusion, representing nine of the 300 Units sold. No class members wrote in objection or appeared at the settlement hearing in protest of the settlement. This total absence of objection by class members is persuasive evidence of the fairness of the settlement. See Grinnell, 495 F.2d at 462. C. The Stage of the Proceedings and the Amount of Discovery Completed. Although this litigation is in its early stages, it has been ongoing for two and one-half years. During that time, discovery has been conducted, both before and after settlement negotiations began. Negotiations between experienced counsel have resulted in a settlement which both counsel recommend be approved. Counsel has engaged in limited discovery in the good faith belief that the class would obtain no benefit from substantial additional discovery. While limited discovery has been conducted here, even "[t]he absence of formal discovery has not always prevented consideration of settlement." Schwartz v. Novo Industri A/S, 119 F.R.D. 359, 362 (S.D.N.Y.1988); See also In re Baldwin-United Corp., 105 F.R.D. 475, 483 (S.D.N.Y.1984); Jones v. Amalgamated Warbasse Houses, Inc., 97 F.R.D. 355, 360 (E.D.N.Y.1982), aff'd, 721 F.2d 881 (2d Cir.1983), cert. denied, 466 U.S. 944, 214 104 S. Ct. 1929, 80 L. Ed. 2d 474 (1984). The Court must find that counsel had sufficient information to act intelligently on behalf of the class. Schwartz, 119 F.R.D. at 362. Given that document discovery and extensive discussions have already been conducted and resulted in the Stipulation of Settlement, all counsel are undoubtedly acting with a firm grasp of the strengths and weaknesses of the case. D. The Risks of Establishing Liability. In a complex securities class action such as this, there are undoubtedly considerable legal obstacles confronting plaintiffs in attempting to establish liability. These obstacles would remain were the settlement not approved. As class counsel admits, despite the strengths of plaintiffs' case, there are substantial risks present. Plaintiffs would have to show that misrepresentations and omissions made by Defendants were false and that Defendants made them with knowledge of their falsity or reckless disregard for their falsity. Further, class counsel states in its Memorandum of Points and Authorities in Support of Motion for Final Approval ("Plaintiffs' Memo"), at p. 6, and defense counsel states in its Memorandum of Law in Support of the Proposed Settlement ("Defendants' Memo"), at p. 13, that Plaintiffs would have to overcome, inter alia, a substantial statute of limitations defense. In view of the difficulties of litigating this case, Plaintiffs bear the risk of losing at trial or having the case dismissed prior to trial. The risks of continued litigation and the benefits of immediate settlement indicate that settlement is in the best interests of the class. E. The Risks of Establishing Damages. The amount of recovery Plaintiffs would have if they prevailed at trial is uncertain. In class actions, the "complexities of calculating damages increase geometrically." Bonime v. Doyle, 416 F. Supp. 1372, 1384 (S.D.N.Y.1976), aff'd, 556 F.2d 554 (2d Cir.), cert. denied, 434 U.S. 924, 98 S. Ct. 401, 54 L. Ed. 2d 281 (1977). In quantifying damages and causation in a securities case, the parties will argue that different theories be employed. Plaintiffs will argue for the potential increased price of the stock following revelation of Defendants' wrongdoing; Defendants will argue that such an increased price is due to factors unrelated to the revelation, such as changed market conditions. This complex issue would necessitate the use of expert witnesses to determine the existence and amount of actual damages. There will be much debate on this critical issue. See, e.g., In re Warner Communications Sec. Litig., 618 F. Supp. 735, 744-5 (S.D.N.Y.1985), aff'd, 798 F.2d 35 (2d Cir.1986); Bonime, 416 F.Supp. at 1384. F. The Risks of Maintaining the Class Action Through the Trial. The class here has been certified purely for the purposes of settlement. If litigation proceeds, this certification will be contested by Defendants. Even if certified, the class would face the risk of decertification. This factor indicates that settlement is advantageous to the class at this time. G. The Ability of the Defendants to Withstand a Greater Judgment. The collection of a judgment in this case is a significant factor in approving the settlement. "[T]he `prospect of a bankrupt judgment debtor down at the end of the road does not satisfy anyone involved in the use of class action procedures.'" In re Warner, 618 F.Supp. at 746 (quoting City of Detroit v. Grinnell Corp., 356 F. Supp. 1380, 1389 (S.D.N.Y.1972), aff'd in part, rev'd in part, 495 F.2d 448 (2d Cir.1974)). In Plaintiffs' Memo, at p. 6, it is submitted that Defendant Sybedon lacks significant assets or insurance, and that Defendant Wilrock has only limited insurance. Further, Defendant Laventhol is engaged in bankruptcy proceedings. "The class must especially consider this fact in its decision regarding approval of the settlement." Plaintiffs' Memo at p. 6. The certainty of payment through settlement points in favor of approval of the proposed settlement. 215 H. The Range of Reasonableness of the Settlement Fund in Light of the Best Possible Recovery and All the Attendant Risks of Litigation. The amount of the best possible recovery is speculative. For a class of this size, the amount of the settlement fund is substantial. According to Defendants' Memo, p. 14, the total initial investment by the class was $30 million. The amount recoverable, if any, is uncertain. "The fact that a proposed settlement may only amount to a fraction of the potential recovery does not, in and of itself, mean that the proposed settlement is grossly inadequate and should be disapproved." Grinnell, 495 F.2d at 455. This is especially true in light of the attendant risks of litigation. The risks of litigation are what ultimately leads to settlement. Smith v. Vista Org., Ltd., No. 89 Civ. 0048, 1991 WL 152612 (S.D.N.Y. July 30, 1991). These risks are delay, effort, and expense, as well as the risk of defeat. Experienced counsel for both parties have negotiated at arm's length while possessing all relevant information needed to proceed with litigation or settle. They recommend that the proposed settlement be approved. As discussed, their views are entitled to considerable weight. In light of the attendant risks of litigation, the settlement fund is reasonable and indicates that the proposed settlement should be approved. III. Attorneys' Fees. Plaintiffs' counsel moves for an award of attorneys' fees and reimbursement of costs and expenses. Plaintiffs' counsel seeks $567,489.95, or approximately 30%, of the settlement fund in fees. In calculating fees, counsel uses the lodestar-multiplier method where hours worked are enhanced by a certain "multiplier" in determining the number of hours the firm will charge at its current billable rates. They seek the use of multipliers of between 2.00 and 1.70 for certain partners, and multipliers of between 1.5 and 1.00 for certain associates. They also seek reimbursement of $13,726.74 in costs and expenses. Both of these amounts are to be deducted from the settlement fund. Courts have found disfavor with lodestar-multipliers, and favor with the percentage method, in both "common fund cases" and statutory fee-shifting cases. See, e.g., City of Burlington v. Dague, ___ U.S. ___, 112 S. Ct. 2638, 120 L. Ed. 2d 449 (1992) (lodestar amount in statutory fee shifting cases not to be enhanced to reflect the risk of contingency); Pennsylvania, et al. v. Delaware Valley Citizens' Council for Clean Air, et al., 478 U.S. 546, 106 S. Ct. 3088, 92 L. Ed. 2d 439 (1986) (it is unnecessary to enhance the lodestar figure because it contains the relevant factors constituting a "reasonable" attorney's fee); Blum v. Stenson, 465 U.S. 886, 900 n. 16, 104 S. Ct. 1541, 1550 n. 16, 79 L. Ed. 2d 891 (1984) (under the "common fund doctrine," a reasonable fee is based on a percentage of the fund bestowed on the class); In re RJR Nabisco, No. 88 Civ. 7905, 1992 WL 210138 (S.D.N.Y. August 24, 1992) (courts increasingly use the percentage basis over the lodestar approach in awarding attorney's fees). Indeed, in In re Union Carbide Corp. Consumer Prods. Business Sec. Litig., 724 F. Supp. 160 (S.D.N.Y.1989), although Chief Judge Brieant applied a lodestar-multiplier, the court criticized that method. The court stated that the lodestar-multiplier method is "not an ideal way to fix fees" because it wastes court time in determining the multiplier, lacks predictability, and provides little incentive to arrive at an early settlement. Id. at 166. This Court declines to apply the lodestar method, and instead favors the use of the straight percentage of recovery method. Courts in this circuit grant awards of 15% to 50% of the entire settlement fund in class actions. In re Warner Communications Sec. Litig., 618 F. Supp. 735 (S.D.N.Y.1985), aff'd, 798 F.2d 35 (2d Cir. 1986), stated an amount of 20%-50%, and gave an amount totalling less than 25%. In re Union Carbide Sec. Litig., 724 F. Supp. 160 (S.D.N.Y.1989), stated an amount of 15%-30%, and gave an amount totalling 27%. This Court finds that an amount of 28%, or $529,666.76, adequately *216 compensates class counsel for the risk of taking the instant action on a contingency basis. The requested costs of $13,726.74 are fully granted. In approving applications for attorneys' fees, courts in this circuit examine the following factors: (1) time and labor expended by counsel; (2) magnitude and complexity of the litigation; (3) risk of the litigation; (4) quality of representation; (5) requested fee in relation to the settlement; and (6) public policy considerations. In re Warner, 618 F.Supp. at 746-47. See also City of Detroit v. Grinnell Corp., 495 F.2d 448, 470 (2d Cir.1974). These factors, as indicated in the above analysis approving the settlement, turn in favor of the award granted to Plaintiffs' counsel. Plaintiffs' counsel prosecuted this action for two and one-half years, and engaged in factual research and negotiations with Defendants' counsel for eight months. The litigation involves numerous claims; the risk and complexity of this litigation has been discussed above and sworn to by counsel from both parties in affidavits. Plaintiffs' counsel has obtained a settlement which was approved by the Court as fair, reasonable, and in the best interests of the class. The fee awarded is 28% of the settlement fund, an amount justified in contingency cases such as this. As a result of Plaintiffs' counsel, the class has received a substantial benefit. Finally, such an adequate award furthers the public policy of encouraging private lawsuits in pursuance of the remedial federal securities laws. In re Warner, 618 F.Supp. at 750; See also, Eichler v. Berner, 472 U.S. 299, 309-10, 105 S. Ct. 2622, 2628, 86 L. Ed. 2d 215 (1985). For these reasons, attorneys' fees and costs are awarded to Plaintiffs' counsel in the above stated amounts. CONCLUSION For the reasons stated above, the settlement agreement in this action is approved pursuant to Fed.R.Civ.P. 23(e) as fair, reasonable, and in the best interests of the Plaintiff-class. In addition, based on the submissions of counsel and the record of the settlement hearing held on October 19, 1992, the motion of Plaintiffs' counsel is granted in part, and they are awarded fees in the amount of $529,666.76 and reimbursement for costs and expenses in the amount of $13,726.74. Accordingly, the Order and Final Judgment submitted by the parties will be entered by the Court. It is SO ORDERED. NOTES [1] Pursuant to this Court's Preliminary Order filed on August 17, 1992, this action was certified as a class action for settlement purposes under Fed.R.Civ.P. 23. The action is brought on behalf of a class consisting of all persons who purchased Class A limited partnership interests up through and including June 26, 1992, except for the Defendants in the action (the "Class"). [2] The specific requirements of the notice to class members and the accompanying instructions to class members are located in the Preliminary Order of August 17, 1992.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2593815/	743 F. Supp. 1302 (1990) William OZZELLO and Marlene Ozzello, Plaintiffs, v. PETERSON BUILDERS, INC., Defendant. No. 89-C-85. United States District Court, E.D. Wisconsin. August 24, 1990. 1303 Michael Tarnoff, Milwaukee, Wis., for plaintiffs. Dennis Minichello, Chicago, Ill., for defendant. OPINION AND ORDER CURRAN, District Judge. On June 18, 1987, William Ozzello fell on a hose aboard the MCM-01, a ship under 1304 construction by defendant Peterson Builders, Inc. (PBI). He injured his ankle and claims that the cause was PBI's negligence in failing to maintain a safe workplace. Therefore, he commenced this lawsuit in which he seeks $500,000.00 in compensatory damages. William's wife, Marlene, is seeking $60,000.00 in damages for loss of companionship. The plaintiffs are attempting to sue PBI as the vessel owner pursuant to the Longshore and Harbor Workers' Compensation Act (LHWCA), 33 U.S.C. §§ 901-50, and have invoked this court's admiralty jurisdiction over the subject matter of their claims. See 28 U.S.C. § 1333; Federal Rule of Civil Procedure 9(h). After jurisdiction was challenged, the plaintiffs amended their complaint to allege that this court has an alternate basis for jurisdiction diversity because the plaintiffs are both citizens of Michigan; defendant PBI is a Wisconsin corporation with its principal place of business in Wisconsin; and the amount in controversy as to each plaintiff exceeds $50,000.00, exclusive of interest and costs. See 28 U.S.C. § 1332. The defendant has answered and has denied liability. In addition, the defendant has continued to maintain that this court does not have admiralty, maritime, or federal question jurisdiction over the claims and that the plaintiffs are not entitled to relief under the LHWCA. After the defendant's motion for summary judgment was denied, a trial to the court commenced on May 7, 1990. Following three days of testimony, the trial concluded with closing arguments on May 24, 1990. Having reviewed the testimony, depositions and exhibits received at trial, the court now sets forth its Findings of Fact separately from its Conclusions of Law pursuant to Federal Rule of Civil Procedure 52. I. FINDINGS OF FACT Prior to trial the parties submitted a statement of uncontested facts. See Amended Final Pretrial Report at 1-3. Where material, these facts have been adopted by the court and incorporated into the court's own findings of facts which were established by a preponderance of the evidence at trial.[1] A. DIVERSITY JURISDICTION 1. Plaintiff William Ozzello is a citizen of Iron Mountain, Michigan. See Amended Complaint at ¶¶ 1 & 4. 2. Plaintiff Marlene Ozzello is a citizen of Iron Mountain, Michigan. She is the wife of plaintiff William Ozzello. See Amended Complaint at ¶¶ 4 & 8. 3. Defendant Peterson Builders, Inc. (PBI) is a Wisconsin corporation having its principal place of business in Sturgeon Bay, Wisconsin. PBI is engaged in the business of ship construction. See Amended Final Pretrial Report at (a), ¶ 4; Amended Complaint at ¶ 2. 4. The amount in controversy as to each plaintiff exceeds $50,000.00, exclusive of interest and costs. See Amended Complaint at ¶¶ 7 & 9. B. LHWCA CAUSES OF ACTION 5. At the time of William Ozzello's injury, Peterson Builders, Inc. was the owner of the MCM-01, a partially constructed minesweeper. See Amended Final Pretrial Report at (a), ¶ 6; Memorandum in Response to Order of January 26, 1990 (filed by PBI on February 21, 1990). 6. On June 18, 1987, William Ozzello was injured while working in the course of his employment aboard the MCM-01. See Testimony of William Ozzello (May 7, 1990). 7. At the time of William Ozzello's injury, the MCM-01 was afloat on the navigable waters of the United States on Lake Michigan secured to the shipbuilder's dock near Sturgeon Bay, Wisconsin. See Amended Complaint at ¶ 5; Defendant's Answer to Amended Complaint at ¶ 5. 1305 8. Prior to and at the time of his injury, William Ozzello was engaged in maritime employment as a shipbuilder. His duties included inspecting and testing winches which had been fabricated and installed aboard ships by his employer, the A.C. Hoyle Company. See Testimony of William Ozzello (May 7, 1990); Trial Exhibit 26; Affidavit of William Ozzello at ¶ 3. The fabrication, installation, testing, and inspection of this equipment was called for by the construction contract under which PBI was building the MCM-01. See Trial Exhibit 21. 9. The general conduct from which William Ozzello's injury arose was the performance of ship construction work aboard the MCM-01. See Testimony of William Ozzello (May 7, 1990); Trial Exhibit 26. 10. William Ozzello's injury did not occur while he or any PBI employees aboard the MCM-01 were performing the work of seamen, or in the course of navigation, or in the course of any conduct affecting maritime commerce. C. LIABILITY 11. At all times relevant to this action, defendant Peterson Builders, Inc. was an employer maintaining a place of shipbuilding employment. See Amended Final Pretrial Report at (a), ¶ 4; Amended Complaint at ¶ 2. 12. At all times relevant to this action, defendant Peterson Builders, Inc. was the owner of the MCM-01, a ship under construction which was a place of shipbuilding employment. See Amended Final Pretrial Report at (a), ¶ 6. 13. At all times relevant to this action, defendant Peterson Builders, Inc. was the general contractor under an agreement to construct the minesweeper MCM-01 for the United States Navy. See Trial Exhibit 21. 14. The A.C. Hoyle Company was a subcontractor working under Peterson Builders, Inc.'s agreement to build the MCM-01. See Amended Final Pretrial Order at (a), ¶¶ 3, 4 & 5; Trial Exhibit 21. 15. William Ozzello was and is an employee of the A.C. Hoyle Company. See Testimony of William Ozzello (May 7, 1990). 16. Around 7:00 A.M. on June 18, 1987, William Ozzello, in the course of his employment with the A.C. Hoyle Company, boarded the MCM-01 to test equipment. See Testimony of William Ozzello (May 7, 1990); Exhibit 26. 17. On June 18, 1987, William Ozzello was a frequenter aboard the MCM-01. 18. William Ozzello had been working aboard the MCM-01 for two months prior to June 18, and was familiar with the vessel. See Amended Final Pretrial Report at (a), ¶ 6. 19. William Ozzello climbed up onto a piece of equipment to check for a leak. As he stepped up, he noticed no hose beneath his feet. See Testimony of William Ozzello (May 7, 1990). 20. After approximately twenty minutes, William Ozzello turned to climb off the equipment to the deck which was approximately four feet below. See Testimony of William Ozzello (May 7, 1990). 21. Facing frontward, but without looking down, William Ozzello stepped down. His left foot landed on the nozzle of a hose. See Testimony of William Ozzello (May 7, 1990). 22. As he stepped on the nozzle, William Ozzello fell and injured his left ankle. See Testimony of William Ozzello (May 7, 1990). 23. The hose had been left on the deck near William Ozzello's work area by unidentified employees of PBI. See Testimony of William Ozzello (May 7, 1990). 24. At all times relevant to this action, the hose and the area in which it was placed were under the supervision, custody, and control of defendant Peterson Builders, Inc. See Testimony of Calvin Matzke (May 2, 1990). 25. Defendant Peterson Builders, Inc. had constructive notice that its employees had left the hose and its nozzle in a place where it was foreseeable that it could 1306 present a hazard to frequenters working aboard the MCM-01. 26. Pursuant to PBI safety practices, its employees were to keep gear stowed when not in use and areas such as walk-ways were to be kept cleared of equipment. See Testimony of Calvin Matzke (May 8, 1990); Trial Exhibit 27. 27. The area in which William Ozzello was working was marked with yellow tape indicating a restricted work area. See Testimony of William Ozzello (May 7, 1990). 28. PBI, through its employees, failed to exercise due care for the safety of William Ozzello when PBI employees left a hose fitted with a nozzle in a place where it could present a hazard to a person climbing off equipment in a restricted work area on the vessel. 29. The conduct of PBI, as described in paragraph 28, above, was a substantial cause of the injury sustained by William Ozzello on June 18, 1987. 30. William Ozzello could have seen the hose had he looked down before descending from the equipment. See Testimony of John K. Barto (May 8, 1990). 31. William Ozzello failed to exercise due care for his own safety by failing to look down to determine whether the deck was clear as he began his descent from the equipment above. 32. The conduct of William Ozzello, as described in paragraph 31, above, was a substantial cause of the injury he sustained on June 18, 1987. 33. Assuming the total negligence which caused the injury to William Ozzello on June 18, 1987, to be one hundred percent (100%), the court attributes forty percent (40%) of the total negligence to plaintiff William Ozzello and sixty percent (60%) of the total negligence to defendant Peterson Builders, Inc. D. DAMAGES 34. After being injured, William Ozzello was aided by a PBI nurse, then treated at a local hospital. See Testimony of William Ozzello (May 7 & 9, 1990); Deposition Testimony of Marilou Jane Bowen (read at trial on May 8, 1990); Amended Final Pretrial Report at (a), ¶ 9. 35. William Ozzello continued medical treatment of his ankle with Donald Jacobs, M.D. See Testimony of William Ozzello (May 7 & 9, 1990); Video Deposition Testimony of Donald Jacobs, M.D. (viewed at trial on May 7, 1990); Amended Final Pretrial Report at (a), ¶ 9. 36. Dr. Jacobs referred William Ozzello to the Mayo Clinic in Rochester, Minnesota, where Ozzello was examined five times. See Amended Final Pretrial Report at (a), ¶ 9; Trial Exhibit 31. 37. On April 27, 1988, an examining physician at the Mayo Clinic stated that it was his "IMPRESSION" that Ozzello had a "[s]train injury, left foot and ankle, with tibialis[2] posterior dysfunction and possible tibiotalar[3] or talocalcaneal[4] instability." See Trial Exhibit 31. 38. Through the time of trial, William Ozzello incurred $7,193.27 in medical and related expenses due to his injury. See Amended Final Pretrial Report at (a), ¶ 11; Trial Exhibits 29, 30, 31 & 42. 39. Ozzello did not establish that he will have any medical expenses in the future due to his June 18, 1987, injury. 40. William Ozzello did not return to work from June 18, 1987, the date of his injury, through August 31, 1987, thereby incurring a wage loss of $4,301.44. See Testimony of William Ozzello (May 7 & 9, 1307 1990); Amended Final Pretrial Report at (a), ¶ 10. 41. Following his return to work in September of 1987, William Ozzello has remained an employee of the A.C. Hoyle Company and has received the same salary and benefits. See Testimony of William Ozzello (May 7 & 9, 1990). 42. William Ozzello has failed to establish any future loss of earning capacity due to his injury of June 18, 1987. 43. Following his injury, William Ozzello's employment duties changed. Before his injury, he performed on-site inspections and testing. After his injury, he has been performing sales, set-up and maintenance work at the A.C. Hoyle office. The plaintiff considers his present work less interesting. See Testimony of William Ozzello (May 7 & 9, 1990); Deposition Testimony of William Cermak (read at trial on May 8, 1990). 44. Due to his injury, William Ozzello has experienced and will experience instability of his left ankle and foot drop. See Video Deposition Testimony of Donald Jacobs, M.D. (viewed at trial on May 7, 1990). 45. William Ozzello wears a brace on his left ankle which makes climbing, bending or being on his feet for long periods of time difficult. See Testimony of William Ozzello (May 7 & 9, 1990); Testimony of Marlene Ozzello (May 8, 1990). 46. Following his injury, William Ozzello has had to curtail recreational activities he formerly enjoyed such as hunting, fishing and gardening. See Testimony of William Ozzello (May 7 & 9, 1990); Testimony of Marlene Ozzello (May 8, 1990). 47. William Ozzello was born on June 21, 1932. At the time of trial he had a life expectancy of 19.9 years. See Amended Final Pretrial Report at (a), ¶ 1. 48. Since June 18, 1987, William Ozzello has experienced pain and suffering due to his injury, and he will continue to experience pain and suffering in the future. See Testimony of William Ozzello (May 7 & 9, 1990); Video Deposition Testimony of Donald Jacobs, M.D. (viewed at trial on May 7, 1990); Testimony of Marlene Ozzello (May 8, 1990). 49. The monetary amount which will compensate William Ozzello for medical and related expenses through the date of trial is $7,193.27. 50. The monetary amount which will compensate William Ozzello for past wage loss is $4,301.44. 51. The monetary amount which will compensate William Ozzello for past pain and suffering through the date of judgment is $29,250.00. 52. The monetary amount which will compensate William Ozzello for future pain and suffering is $108,000.00. 53. Following his injury, William Ozzello has had to curtail assisting his wife with household and yard maintenance chores and participating in some social activities such as dancing. See Testimony of William Ozzello (May 7 & 9, 1990); Testimony of Marlene Ozzello (May 8, 1990). 54. The monetary amount which will compensate Marlene Ozzello for the loss of the society, companionship and services of her husband, William Ozzello, due to his June 18, 1987 injury is $5,000.00. II. CONCLUSIONS OF LAW A. DIVERSITY JURISDICTION 1. This court has jurisdiction over the subject matter of the plaintiffs' claims pursuant to 28 U.S.C. § 1332, which provides, in relevant part, that: (a) The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $50,000, exclusive of interest and costs, and is between (1) citizens of different States; .... B. LHWCA CAUSES OF ACTION 2. Subsection 905(b) of the Longshore and Harbor Workers' Compensation Act provides that: In the event of injury to a person covered under this chapter caused by the negligence of a vessel, then such person, 1308 or anyone otherwise entitled to recover damages by reason thereof, may bring an action against such vessel as a third party in accordance with the provisions of section 933 of this title, and the employer shall not be liable to the vessel for such damages directly or indirectly and any agreements or warranties to the contrary shall be void. If such person was employed by the vessel to provide stevedoring services, no such action shall be permitted if the injury was caused by the negligence of persons engaged in providing stevedoring services to the vessel. If such person was employed to provide shipbuilding, repairing, or breaking services and such person's employer was the owner, owner pro hac vice, agent, operator, or charterer of the vessel, no such action shall be permitted, in whole, or in part or directly or indirectly, against the injured person's employer (in any capacity, including as the vessel's owner, owner pro hac vice, agent, operator, or charterer) or against the employees of the employer. The liability of the vessel under this subsection shall not be based upon the warranty of seaworthiness or a breach thereof at the time the injury occurred. The remedy provided in this subsection shall be exclusive of all other remedies against the vessel except remedies available under this chapter. 33 U.S.C. § 905(b). 3. Under the LHWCA, an injured employee may bring an action for damages against a "vessel," which is defined as follows: Unless the context requires otherwise, the term "vessel" means any vessel upon which or in connection with which any person entitled to benefits under this chapter suffers injury or death arising out of or in the course of his employment, and said vessel's owner, owner pro hac vice, agent, operator, charter or bare boat charterer, master, officer, or crew member. 33 U.S.C. § 902(21). 4. On June 18, 1987, defendant Peterson Builders, Inc., the owner of the MCM-01, was a "vessel" as defined by subsection 902(21) of the LHWCA. 5. For the LHWCA to apply, the injured person must be injured in the course of his employment; the injury must occur upon the navigable waters of the United States; and the employee who is injured must be a person engaged in maritime employment. See Chesapeake and Ohio Railway Company v. Schwalb, ___ U.S. ___, 110 S. Ct. 381, 384, 107 L. Ed. 2d 278 (1989). 6. Under the LHWCA: The term "injury" means accidental injury or death arising out of and in the course of employment, and such occupational disease or infection as arises naturally out of such employment or as naturally or unavoidably results from such accidental injury, and includes an injury caused by the willful act of a third person directed against an employee because of his employment. 33 U.S.C. § 902(2). 7. On June 18, 1987, plaintiff William Ozzello suffered an "injury" as defined by section 902(2) of the LHWCA. 8. In order to bring a claim under section 905 of the LHWCA, the plaintiff must meet the statutory situs requirement. See Chesapeake and Ohio Railway Company v. Schwalb, ___ U.S. ___, 110 S. Ct. 381, 384, 107 L. Ed. 2d 278 (1989). The Act provides that: Except as otherwise provided in this section, compensation shall be payable under this chapter in respect of disability or death of an employee, but only if the disability or death results from an injury occurring upon the navigable waters of the United States (including any adjoining pier, wharf, dry dock, terminal, building way, marine railway, or other adjoining area customarily used by an employer in loading, unloading, repairing, dismantling, or building a vessel). 33 U.S.C. § 903(a). 9. Plaintiff William Ozzello's June 18, 1987 injury occurred on "navigable waters" as defined by subsection 903(a) of the LHWCA. 1309 10. In order to bring a claim under section 905 of the LHWCA, an injured party must meet the statutory status requirement. See Chesapeake and Ohio Railway Company v. Schwalb, ___ U.S. ___, 110 S. Ct. 381, 384, 107 L. Ed. 2d 278 (1989). The LHWCA provides the following definition of an "employee" covered by the Act: The term "employee" means any person engaged in maritime employment, including any longshoreman or other person engaged in longshoring operations, and any harbor-worker including a ship repairman, shipbuilder, and ship-breaker, but such term does not include (A) individuals employed exclusively to perform office clerical, secretarial, security, or data processing work; (B) individuals employed by a club, camp, recreational operation, restaurant, museum, or retail outlet; (C) individuals employed by a marina and who are not engaged in construction, replacement, or expansion of such marina (except for routine maintenance); (D) individuals who (i) are employed by suppliers, transporters, or vendors, (ii) are temporarily doing business on the premises of an employer described in paragraph (4), and (iii) are not engaged in work normally performed by employees of that employer under this chapter; (E) aquaculture workers; (F) individuals employed to build, repair, or dismantle any recreational vessel under sixty-five feet in length; (G) a master or member of a crew of any vessel; or (H) any person engaged by a master to load or unload or repair any small vessel under eighteen tons net; if individuals described in clauses (A) through (F) are subject to coverage under a State workers' compensation law. 33 U.S.C. § 902(3). 11. Whether an employee is a shipbuilder under subsection 902(3) of the LHWCA is determined by applying a functional relationship test. This court must determine whether the employee's functions were an integral part of the new ship construction activities. See Dravo Corporation v. Maxin, 545 F.2d 374, 379-80 (3d Cir.1976), cert. denied, 433 U.S. 908, 97 S. Ct. 2973, 53 L. Ed. 2d 1092 (1977). 12. On June 18, 1987, plaintiff William Ozzello was employed as a "shipbuilder" as that term is used in the LHWCA. See Hall v. Hvide Hull No. 3, 798 F.2d 122, 123 (5th Cir.1986) (per curiam), cert. denied sub nom. Rosetti v. Avondale Shipyards, Inc., 484 U.S. 1008, 108 S. Ct. 703, 98 L. Ed. 2d 654 (1988). 13. On June 18, 1987, plaintiff William Ozzello was an "employee" engaged in "maritime employment" as defined by subsection 902(3) of the LHWCA. 14. In order to be cognizable under subsection 905(b) of the LHWCA, a tort must occur on or in navigable waters and there must be a substantial relationship between the activity giving rise to the incident and traditional maritime activity. See Richendollar v. Diamond M Drilling Company, Inc., 819 F.2d 124, 125 (5th Cir.) (en banc), cert. denied, 484 U.S. 944, 108 S. Ct. 331, 98 L. Ed. 2d 358 (1987); Drake v. Raymark Industries, Inc., 772 F.2d 1007, 1014-15 (1st Cir.1985), cert. denied sub nom. Raymark Industries, Inc. v. Bath Iron Works Corporation, 476 U.S. 1126, 106 S. Ct. 1994, 90 L. Ed. 2d 675 (1986). See also Molett v. Penrod Drilling Company, 872 F.2d 1221, 1224-25 (5th Cir.) (per curiam), cert. denied sub nom. Columbus-McKinnon, Inc. v. Gearench, Inc., ___ U.S. ___, 110 S. Ct. 563, 107 L. Ed. 2d 558 (1989). 15. The test to determine the existence of a cause of action in maritime tort under subsection 905(b) of the LHWCA is identical with that applied to determine jurisdiction in admiralty. May v. Transworld Drilling Company, 786 F.2d 1261, 1265 (5th Cir.), cert. denied, 479 U.S. 854, 107 S. Ct. 190, 93 L. Ed. 2d 123 (1986). 16. A party asserting admiralty jurisdiction must show that the tort occurred on or in navigable waters and that the tort bears a significant relationship to traditional maritime activity. See Sisson v. Ruby, ___ 1310 U.S. ___, 110 S. Ct. 2892, 2985, 111 L. Ed. 2d 292 (1990); Foremost Insurance Company v. Richardson, 457 U.S. 668, 673, 102 S. Ct. 2654, 2658, 73 L.Ed.2d XXXXXXXXXXXXXXX 7225 17. For purposes of determining whether a tort bears a significant relationship to traditional maritime activity, the relevant activity "is defined not by the particular circumstances of an incident, but by the general conduct from which the incident arose." Sisson v. Ruby, ___ U.S. ___, 110 S. Ct. 2892, 2897, 111 L. Ed. 2d 292 (1990). 18. Shipbuilding is not a traditional maritime activity. See Owens-Illinois, Inc. v. United States District Court, 698 F.2d 967, 971 (9th Cir.1983); People's Ferry Company of Boston v. Beers, 61 (20 How.) U.S. 393, 15 L. Ed. 961 (1858). 19. Factors to be considered in determining whether an injury has occurred in furtherance of an activity bearing a substantial relationship to a traditional maritime activity include: (1) whether the injury occurred in the course of maritime service; (2) whether the injury occurred in the course of navigation; (3) whether the injury occurred in the course of promoting maritime commerce or whether it presented a hazard to maritime commerce; and, (4) whether the conduct surrounding the injury gives rise to the need for the application of admiralty law, particularly the uniform "rules of the road" governing navigation. See Sisson v. Ruby, ___ U.S. ___, 110 S. Ct. 2892, 2898, 111 L. Ed. 2d 292 (1990); Foremost Insurance Company v. Richardson, 457 U.S. 668, 672-77, 102 S. Ct. 2654, 2656-59, 73 L. Ed. 2d 300 (1982); Executive Jet Aviation, Inc. v. City of Cleveland, 409 U.S. 249, 253-74, 93 S. Ct. 493, 497-507, 34 L. Ed. 2d 454 (1972). 20. Having found that William Ozzello was engaged in the activity of ship construction and was testing and inspecting winches at the time he stumbled on a hose nozzle and was injured and that the hose nozzle was a piece of equipment which was in the custody and control of defendant Peterson Builders, Inc. which was also engaged in the activity of ship construction, the court concludes that the activity giving rise to Ozzello's June 18, 1987 injury bore no substantial relationship to traditional maritime activity. 21. Because plaintiffs William and Marlene Ozzello have not established the nexus element of admiralty tort jurisdiction, they cannot maintain a negligence claim pursuant to 33 U.S.C. § 905(b) against defendant Peterson Builders, Inc., the owner and operator of the MCM-01. C. LIABILITY 22. The Wisconsin Safe Place Statute provides, in relevant part that: (1) Every employer shall furnish employment which shall be safe to the employes therein and shall furnish a place of employment which shall be safe for employes therein and for frequenters thereof and shall furnish and use safety devices and safeguards, and shall adopt and use methods and processes reasonably adequate to render such employment and places of employment safe, and shall do every other thing reasonably necessary to protect the life, health, safety, and welfare of such employes and frequenters. Every employer and every owner of a place of employment or a public building now or hereafter constructed shall so construct, repair or maintain such place of employment or public building as to render the same safe. (2)(a) No employer shall require, permit or suffer any employe to go or be in any employment or place of employment which is not safe, and no such employer shall fail to furnish, provide and use safety devices and safeguards, or fail to adopt and use methods and processes reasonably adequate to render such employment and place of employment safe, and no such employer shall fail or neglect to do every other thing reasonably necessary to protect the life, health, safety or welfare of such employes and frequenters; and no employer or owner, or other person shall hereafter construct or occupy or maintain any place of employment, 1311 or public building, that is not safe, nor prepare plans which shall fail to provide for making the same safe. Wis.Stat. § 101.11(1) & (2)(a). 23. Under the Wisconsin Safe Place Statute, an "employer" is defined as: "every person, firm, corporation, state, county, town, city, village, school district, sewer district, drainage district and other public or quasi-public corporations as well as any agent, manager, representative or other person having control or custody of any employment, place of employment or of any employe." Wis.Stat. § 101.01(2)(b). 24. On June 18, 1987, defendant Peterson Builders, Inc. was an "employer" as defined by subsection 101.01(2)(b) of the Wisconsin Safe Place Statute. 25. Under the Wisconsin Safe Place Statute: The term "employment" shall mean and include any trade, occupation or process of manufacture, or any method of carrying on such trade, occupation or process of manufacture in which any person may be engaged, except in such private domestic service as does not involve the use of mechanical power and in farm labor.... Wis.Stat. § 101.01(2)(c). 26. Under the Wisconsin Safe Place Statute: "Place of employment" includes every place, whether indoors or out or underground and the premises appurtenant thereto where either temporarily or permanently any industry, trade or business is carried on, or where any process or operation, directly or indirectly related to any industry, trade or business, is carried on, and where any person is, directly or indirectly, employed by another for direct or indirect gain or profit, but does not include any place where persons are employed in private domestic service which does not involve the use of mechanical power or in farming.... Wis.Stat. § 101.01(2)(f). 27. On June 18, 1987, the MCM-01 was a "place of employment" as defined by subsection 101.01(2)(f) of the Wisconsin Safe Place Statute. 28. Under the Wisconsin Safe Place Statute: The term "safe" or "safety" as applied to an employment or a place of employment or a public building, shall mean such freedom from danger to the life, health, safety or welfare of employes or frequenters, or the public, or tenants, or fire fighters, and such reasonable means of notification, egress and escape in case of fire, and such freedom from danger to adjacent buildings or other property, as the nature of the employment, place of employment, or public building, will reasonably permit. Wis.Stat. § 101.01(2)(h). 29. Under the Wisconsin Safe Place Statute: "Frequenter" means every person other than an employe, who may go in or be in a place of employment or public building under circumstances which render such person other than a trespasser.... Wis.Stat. § 101.01(2)(d). 30. An employee of a subcontractor is a frequenter of the place of employment of the general contractor. See Barth v. Downey Company, 71 Wis. 2d 775, 778-79, 239 N.W.2d 92, 93-94 (1976). 31. When plaintiff William Ozzello was aboard the MCM-01 on June 18, 1987, he was a "frequenter" as that term is defined by subsection 101.01(2)(d) of the Wisconsin Safe Place Statute. 32. Under the Wisconsin Safe Place Statute: The term "owner" shall mean and include every person, firm, corporation, state, county, town, city, village, school district, sewer district, drainage district and other public or quasi-public corporations as well as any manager, representative, officer, or other person having ownership, control or custody of any place of employment or public building, or of the construction, repair or maintenance of any place of employment or public building, or who prepares plans for the construction of any place of employment or 1312 public building. Said ss. 101.01 to 101.25 shall apply, so far as consistent, to all architects and builders. Wis.Stat. § 101.01(2)(e). 33. On June 18, 1987, defendant Peterson Builders, Inc. was the "owner" of a place of employment as the term "owner" is defined in subsection 101.01(2)(e) of the Wisconsin Safe Place Statute. 34. Plaintiffs alleging a violation of the Wisconsin Safe Place Statute have the burden of proving all elements of negligence by a preponderance of the evidence. See Paluch v. Baldwin Plywood & Veneer Company, 1 Wis. 2d 427, 432, 85 N.W.2d 373, 376 (1957). 35. The defendant has the burden of proving contributory negligence by a preponderance of the evidence. See Helmbrecht v. St. Paul Insurance Company, 122 Wis. 2d 94, 121, 362 N.W.2d 118, 132 (1985). 36. To constitute a cause of action for negligence, there must be: (1) a duty to conform to a certain standard of conduct to protect others against an unreasonable risk of harm; (2) a failure to conform to the required standard; (3) a causal connection between the conduct and the injury; and (4) actual loss or damage as a result of the injury. See Robinson v. Mt. Sinai Medical Center, 137 Wis. 2d 1, 15, 402 N.W.2d 711, 716 (1987); Hamed v. Milwaukee County, 108 Wis. 2d 257, 266-67, 321 N.W.2d 199, 204 (1982); Thomas v. Kells, 53 Wis. 2d 141, 144, 191 N.W.2d 872, 873 (1971). 37. To establish tort liability, the plaintiffs must prove the existence of a legal duty owed to them by the defendant. See Bogust v. Iverson, 10 Wis. 2d 129, 132, 102 N.W.2d 228, 229 (1960). 38. Under the Wisconsin Safe Place Statute, an owner or general contractor can owe a duty to the employee of a subcontractor as a "frequenter". See Wis.Stat. § 101.11; Lemacher v. Circle Construction Company, 72 Wis. 2d 245, 249, 240 N.W.2d 179, 181 (1974). 39. Under the Wisconsin Safe Place Statute, an employer or owner is not required to guarantee the safety of a frequenter, but must maintain a place of employment as safe as the nature of the place reasonably permits. See Zehren v. F.W. Woolworth Company, 11 Wis. 2d 539, 543, 105 N.W.2d 563, 565 (1960). The Safe Place Statute establishes a higher standard of care than ordinary negligence at common law. See Id. 40. A general contractor who sublets all or part of a contract to a subcontractor has a duty not to commit an affirmative act which would increase the risk of injury to an employee of the subcontractor. An affirmative act is an act of commissionthat is, something that one does as opposed to an act of omission, which is something one fails to do. See Wisconsin Jury Instructions Civil 1022.2; Wagner v. Continental Casualty Company, 143 Wis. 2d 379, 381-82, 421 N.W.2d 835, 836 (1988); Lemacher v. Circle Construction Company, 72 Wis. 2d 245, 248-49, 240 N.W.2d 179, 180-81 (1976). 41. Before an employer or owner has a duty to furnish a safe place of employment, such employer or owner must have the right to control the place so that it can perform its duty to furnish a safe place of employment. This control of the premises need not be exclusive, nor is it necessary to have control for all purposes in order to impose a duty to furnish a safe place of employment. The duty of a general contractor to furnish a safe place of employment for an employee of a subcontractor extends only to such use as the general contractor or its employees made of the premises and the effect produced thereon by its own work, materials, and equipment within its supervision and control. See Wisconsin Jury Instructions Civil 1911; Lemacher v. Circle Construction Company, 72 Wis. 2d 245, 249, 240 N.W.2d 179, 181 (1976). 42. In order for an employer or an owner to be liable for an unsafe condition, it must have actual or constructive notice of it. See Strack v. Great Atlantic & Pacific Tea Company, 35 Wis. 2d 51, 54, 150 N.W.2d 361, 362 (1967). However, when an unsafe condition, although temporary, 1313 arises out of the course of conduct of the owner or operator of a premises or may reasonably be expected to arise from its method of operation, a much shorter period of time, and possibly no appreciable period of time under some circumstances, need exist to constitute constructive notice. See May v. Skelley Oil Company, 83 Wis. 2d 30, 37 n. 7, 264 N.W.2d 574, 577 n. 7 (1978). 43. Evidence of custom can be considered in determining whether an employer or owner kept a place of employment as safe as the nature of the premises reasonably permitted. See Wisconsin Jury Instructions Civil 1019; Victorson v. Milwaukee & Suburban Transport Corporation, 70 Wis. 2d 336, 351-52, 234 N.W.2d 332, 339-40 (1975). 44. Although a frequenter is protected by the safe place law, he still has the duty to exercise reasonable care for his own safety, and if he fails to do so, he is guilty of contributory negligence. See Sachse v. Mayer, 18 Wis. 2d 457, 463, 118 N.W.2d 914, 917 (1963). 45. A frequenter has a duty to use ordinary care for his own safety and protection and to observe the immediate surroundings and all other conditions surrounding him, and the dangers, if any, which are open and obvious to him, and to use for his own safety all such care and caution as the ordinarily prudent person ordinarily uses under like circumstances. However, a frequenter is not bound absolutely by law to see every hazard or danger, if any exists in his pathway, even should such a hazard be plainly observable. He is only required to act as a reasonably prudent person under the same circumstances would act. See Wisconsin Jury Instructions Civil 1902. See also Steinhorst v. H.C. Prange Company, 48 Wis. 2d 679, 680, 180 N.W.2d 525, 525 (1970); Carlson v. Drews of Hales Corners, Inc., 48 Wis. 2d 408, 412-16, 180 N.W.2d 546, 548-50 (1970). 46. Preoccupation of a worker in the performance of his work minimizes or reduces the degree of care that would otherwise be required of him; nevertheless, a worker has the duty to use the same degree of care for his own safety that an ordinarily prudent worker would use under such conditions when preoccupied with his work. See Wisconsin Jury Instructions Civil 1051; Suhaysik v. Milwaukee Cheese Company, 132 Wis. 2d 289, 295-98, 392 N.W.2d 98, 100-02 (1986). 47. Whether a duty exists under the facts and circumstances of a particular case is a question of law. See Johnson v. Misericordia Community Hospital, 97 Wis. 2d 521, 542-43, 294 N.W.2d 501, 513 (Ct.App.1980), aff'd, 99 Wis. 2d 708, 301 N.W.2d 156 (1981). 48. Under the facts and circumstances of this case, defendant Peterson Builders, Inc. had a legal duty to maintain a safe place of employment for a frequenter such as plaintiff William Ozzello. 49. Under the facts and circumstances of this case, plaintiff William Ozzello had a legal duty to exercise ordinary care for his own safety. 50. Defendant Peterson Builders, Inc. was negligent in breaching its duty to William Ozzello, a frequenter on premises under its supervision and control, to keep its walkways and work areas cleared of hazards and obstructions. 51. Plaintiff William Ozzello was negligent in breaching his legal duty to exercise ordinary care for his own safety when he failed to check the area beneath his feet as he climbed down to the deck of the MCM-01. 52. Legal cause is made up of two components: cause-in-fact and proximate cause. See Johnson v. Misericordia Community Hospital, 97 Wis. 2d 521, 560 n. 20, 294 N.W.2d 501, 521 n. 20 (Ct.App.1980), aff'd, 99 Wis. 2d 708, 301 N.W.2d 156 (1981). 53. The test of cause-in-fact is whether the defendant's negligence was a substantial factor in contributing to the harm from which damages are claimed. The phrase "substantial factor" indicates the effect of the defendant's harm in leading the trier of fact, acting as the reasonable person, to regard it as a "cause," using the word "cause" in its popular sense. See Johnson 1314 v. Misericordia Community Hospital, 97 Wis. 2d 521, 560, 294 N.W.2d 501, 520 (Ct. App.1980), aff'd, 99 Wis. 2d 708, 301 N.W.2d 156 (1981). 54. There may be more than one substantial cause in any given case. See Merco Distributing Corporation v. Commercial Police Alarm Company, Inc., 84 Wis. 2d 455, 459, 267 N.W.2d 652, 655 (1978). 55. Negligence is a proximate cause of an injury when it appears that the injury was the natural and probable consequence of the negligence or wrongful act, and that the injury ought to have been foreseen. Public policy considerations which may preclude liability even when negligence is present are an element of legal cause, though not a part of the determination of cause-in-fact. See Morgan v. Pennsylvania General Insurance Company, 87 Wis. 2d 723, 737, 275 N.W.2d 660, 667 (1979). 56. Defendant Peterson Builders, Inc.'s negligence was a proximate cause of the injury sustained by William Ozzello on June 18, 1987. Having found that PBI's acts of negligence were also a cause-in-fact of William Ozzello's injury, the court concludes that PBI's negligence was a legal cause of William Ozzello's injury. 57. Plaintiff William Ozzello's negligence was a proximate cause of his own injury on June 18, 1987. Having found that William Ozzello's acts of negligence were also a cause-in-fact of his own injury, the court concludes that William Ozzello's negligence was a legal cause of his own injury. 58. Under the comparative negligence doctrine, when more than one substantial factor contributes to an injury, the contribution of all factors must be considered and determined in terms of percentages of total cause. See Sampson v. Laskin, 66 Wis. 2d 318, 325-26, 224 N.W.2d 594, 597-98 (1975). 59. Contributory negligence is not a complete defense unless the victim's negligence is greater than the injurer's. See Wis.Stat. § 895.045. See also Orthmann v. Apple River Campground, Inc., 757 F.2d 909, 913 (7th Cir.1985). D. DAMAGES 60. The injury suffered by plaintiff William Ozzello is legally compensable by money damages. 61. A plaintiff may recover a sum of money that will fairly and reasonably compensate him for the damages sustained by him from the date of the accident to the date of trial, which were the result of the accident, with respect to medical and hospital expenses. This amount need not be limited to doctor and hospital bills. The plaintiff is entitled to recover, as a part of these expenses, such an amount as will reasonably compensate him for costs of transportation from his home to the places of treatment and return. See Wisconsin Jury InstructionsCivil 1750A(1). See also Thoreson v. Milwaukee & Suburban Transport Company, 56 Wis. 2d 231, 243, 201 N.W.2d 745, 751 (1972). 62. A plaintiff may recover a sum of money which will fairly and reasonably compensate him for the damages sustained by him from the date of the accident to the date of trial, which were the result of the accident, with respect to wage loss. See Wisconsin Jury Instructions Civil 1750A(3). See also Burlison v. Janssen, 30 Wis. 2d 495, 503, 141 N.W.2d 274, 278 (1966). 63. A plaintiff may recover a sum of money which will fairly and reasonably compensate him for such pain and suffering and such impairment of his health, physical abilities, and bodily functions as he has suffered to date and is reasonably certain to suffer in the future as a consequence of his injury. In arriving at this sum, a court may consider the humiliation, embarrassment, worry, and mental distress, if any, which the plaintiff has endured in the past and is reasonably certain to endure in the future. The court may also consider to what extent the plaintiff's injuries have impaired and will impair his ability to enjoy the normal activities, pleasures, and benefits of life, the nature of his injuries, the effect produced thereby in the 1315 past, and the effect it is reasonably certain such injuries will produce in the future. The court may bear in mind the plaintiff's age, his prior physical condition, and the probable duration of his life. Pain and suffering cannot be computed with mathematical precision. See Wisconsin Jury InstructionsCivil 1750A(5). See also Johnson v. Misericordia Community Hospital, 97 Wis. 2d 521, 566-75, 294 N.W.2d 501, 523-28 (Ct.App.1980), aff'd, 99 Wis. 2d 708, 301 N.W.2d 156 (1981). 64. An injured plaintiff's spouse may recover a sum of money that will fairly and reasonably compensate her for loss of consortium. Consortium involves the love and affection, the companionship and society, the comfort, aid, advice and solace, the rendering of material services, and any other elements that normally arise in a close, intimate, and harmonious marriage relationship. A wrongful invasion, impairment, or deprivation of any of these rights, resulting from a disabling injury to a spouse, is a legal loss and a basis for damages to the other spouse harmed or deprived. A court can consider the nature, the form, and quality of the relationship that existed between the spouses up to the time of the injury. If the loss will continue in the future, damages may be included for the period the loss will continue to exist. Compensation for loss of consortium, except as it relates to material services, is not measured by any rule of market value. Instead, it is measured on the basis of what is fair and reasonable compensation for the loss sustained by the deprived spouse. See Wisconsin Jury Instructions Civil 1815. III. DISCUSSION A. JURISDICTION The plaintiffs' original complaint alleged that: "jurisdiction of this court over this action is invoked pursuant to Sec. 33 USCS, Sec. 901 et seq. known as the Longshoremens' [sic] and Harbor Workers' Compensation Act; this is an admiralty or maritime claim within the meaning of Rule 9(h)." Complaint at ¶ 3. As a threshold matter, the Longshore and Harbor Workers Compensation Act itself provides no independent basis of jurisdiction. See Lowe v. Ingalls Shipbuilding, a Division of Litton Systems, Inc., 723 F.2d 1173, 1177 n. 1 (5th Cir.1984). Moreover, attempting to state a claim under section 905(b) of the LHWCA, as the Ozzellos have done, does not automatically confer admiralty or federal question jurisdiction. See Drake v. Raymark Industries, Inc., 772 F.2d 1007, 1011-19 (1st Cir.1985), cert. denied sub nom. Raymark Industries, Inc. v. Bath Iron Works Corporation, 476 U.S. 1126, 106 S. Ct. 1994, 90 L. Ed. 2d 675 (1986). In general, a plaintiff with an admiralty or maritime claim has three alternatives: to bring an admiralty suit in federal court, invoking the court's exclusive admiralty jurisdiction under 28 U.S.C. § 1333; to bring a suit at law in state court under the "saving to suitors" clause; or to bring a maritime action on the law side of a federal court. Neal v. McGinnis, Inc., 716 F. Supp. 996, 998 (E.D.Ky.1989). When PBI challenged the admiralty basis for subject matter jurisdiction in this case, the plaintiffs filed an amended complaint alleging that this court also has diversity jurisdiction over their claims. See Amended Complaint at ¶ 4. There is no dispute that the plaintiffs and the defendant are citizens of different states and that the amount in controversy as to each plaintiff exceeds $50,000.00. Consequently, the court has concluded that it has diversity jurisdiction over the subject matter of these claims, and believes that, initially, it is unnecessary to decide whether it also has admiralty jurisdiction.[5] 1316 B. LHWCA CAUSES OF ACTION After William Ozzello was injured, he filed a claim for benefits under the Longshore and Harbor Workers' Compensation Act with the United States Department of Labor's Office of Workers' Compensation Programs. See 33 U.S.C. §§ 903 & 904. Benefits were granted for a period extending from June 20, 1987, through September 2, 1987. In addition, a deputy commissioner from the Office of Workers' Compensation Programs sent Ozzello a letter encouraging him to file a lawsuit against a "third party (other than your employer)." See Letter of Deputy Commissioner J. Hubert Doerr to Attorney John L. Mouw (dated July 26, 1989). Accordingly, the plaintiffs filed this lawsuit alleging that Peterson Builders, Inc. is liable to them under section 905(b) of the LHWCA for the negligence of the vessel MCM-01. See 33 U.S.C. § 905(b). Under section 905(b), certain covered employees[6] can sue a vessel[7] for damages due to injuries caused by the negligence of the vessel. PBI has stead-fastly maintained that any claims the plaintiffs might have do not arise under section 905(b) because Ozzello is not a covered employee and because the MCM-01 had not achieved vessel status at the time of the injury. 1. Statutory Requirements As a requisite to maintaining an action pursuant to section 905, an injured person must establish that he meets the statutory "situs" and "status" requirements. See Chesapeake and Ohio Railway Company v. Schwalb, ___ U.S. ___, 110 S. Ct. 381, 384, 107 L. Ed. 2d 278 (1989). First, the injury must have occurred on the navigable waters[8] of the United States. Second, the plaintiff must have engaged in maritime employment.[9] In this case the parties agree that William Ozzello's injury occurred aboard the MCM-01 when it was afloat upon the navigable waters of Lake Michigan near Sturgeon Bay, Wisconsin. See Complaint at 1317 ¶ 5; Defendant's Answer to Amended Complaint at ¶ 5. Therefore, his injury meets the locality test. However, PBI does not concede that Ozzello meets the "status," test. The defendant contends that Ozzello was working as a "vendor" or "supplier" two categories of employees which are specifically excluded from coverage. See 33 U.S.C. § 902(3)(D). The plaintiffs, on the other hand, maintain that William Ozzello was a shipbuilder and point out that a shipbuilder is specifically included in the statutory definition of "employee" in the LHWCA. See 33 U.S.C. § 902(3). At trial, William Ozzello testified that a large part of his employment functions with A.C. Hoyle entailed testing and inspecting equipment aboard ships under construction.[10] At the time of his fall, he was aboard the MCM-01 to test winches that had been fabricated and installed by Hoyle. See Trial Exhibit 26. This equipment was called for by the construction contract under which PBI was building the ship and its purpose was to equip the ship for navigating and for its intended special military use. See Trial Exhibit 21. Based upon these facts, the court will assume that William Ozzello was a shipbuilder for purposes of the LHWCA. See Hall v. Hvide Hull No. 3, 798 F.2d 122, 123 (5th Cir.1986) (per curiam), cert. denied sub nom. Rosetti v. Avondale Shipyards, Inc., 484 U.S. 1008, 108 S. Ct. 703, 98 L. Ed. 2d 654 (1988); Alford v. American Bridge Division, United States Steel Corporation, 655 F.2d 86, 87 (5th Cir.1981) (per curiam), cert. denied, 455 U.S. 927, 102 S. Ct. 1292, 71 L. Ed. 2d 472 (1982); Dravo Corporation v. Maxin, 545 F.2d 374, 380 (3d Cir.1976), cert. denied, 433 U.S. 908, 97 S. Ct. 2973, 53 L. Ed. 2d 1092 (1977). 2. Admiralty Jurisdiction a. Supreme Court Precedent With the situs and status requisites met, the question becomes whether the subject matter of the plaintiffs' claims must also meet the United States Supreme Court's test for admiralty tort jurisdiction. Traditionally, a court could exercise admiralty jurisdiction over a claim arising from any tort which occurred on navigable waters. See, e.g., The Propeller Genesee Chief v. Fitzhugh, 53 U.S. (12 How.) 443, 13 L. Ed. 1058 (1851). However, in 1972, the Court modified this traditional test. In Executive Jet Aviation, Inc. v. City of Cleveland, 409 U.S. 249, 93 S. Ct. 493, 34 L. Ed. 2d 454 (1972), a plane had lost power shortly after takeoff. The plane descended, missed the runway, and settled into Lake Erie. When the resulting suit for property damage reached the United States Supreme Court, Justice Stewart, writing for a unanimous Court, decided that the fact that the aircraft had gone down on navigable waters was not sufficient to invoke admiralty jurisdiction. Reasoning that the locality test "was established and grew up in an era when it was difficult to conceive of a tortious occurrence on navigable waters other than in connection with a waterborne vessel," id. at 254, 93 S. Ct. at 497, the Court held that in the context of aviation torts, "a significant relationship to traditional maritime activity" must be shown before admiralty jurisdiction can be invoked. Id. at 268, 93 S. Ct. at 504. A decade later, the Court indicated that the Executive Jet test applies in non-aviation contexts. Foremost Insurance Company v. Richardson, 457 U.S. 668, 673, 102 S. Ct. 2654, 2657, 73 L. Ed. 2d 300 (1982), was an action to recover for the death of an occupant of a pleasure boat resulting from a collision with another pleasure boat on a river in Louisiana. Even though neither boat was involved in maritime commerce, the Court held that: In light of the need for uniform rules governing navigation, the potential impact on maritime commerce when two vessels collide on navigable waters, and the uncertainty and confusion that would necessarily accompany a jurisdictional test tied to the commercial use of a given boat, we hold that a complaint alleging a collision between two vessels on navigable 1318 waters properly states a claim within the admiralty jurisdiction of the federal courts. Id. at 677, 102 S. Ct. at 2659. Following Foremost, several of the circuits concluded that a plaintiff must be able to meet the Executive Jet test for admiralty jurisdiction in order to maintain any maritime tort claim, including one brought pursuant to section 905(b) of the LHWCA. See, e.g., May v. Transworld Drilling Company, 786 F.2d 1261 (5th Cir.), cert. denied, 479 U.S. 854, 107 S. Ct. 190, 93 L. Ed. 2d 123 (1986). Courts impose this requirement regardless of the actual basis of jurisdiction, such as diversity, see May, 786 F.2d at 1264; Drake v. Raymark Industries, Inc., 772 F.2d 1007, 1012 (1st Cir.1985), cert. denied sub nom. Raymark Industries, Inc. v. Bath Iron Works Corporation, 476 U.S. 1126, 106 S. Ct. 1994, 90 L. Ed. 2d 675 (1986), and regardless of whether the action is commenced in state or federal court, see, e.g., Orgeron v. Avondale Shipyards, 561 So. 2d 38 (La.1990), petition for cert. filed, 59 U.S.L.W. 3004 (U.S. June 6, 1990) (No. 89-1896). b. Shipbuilder Claims Just two months before the Supreme Court restricted the reach of admiralty jurisdiction in Executive Jet, the 1972 amendments to the LHWCA went into effect. One of these amendments specifically included "shipbuilders" within the statutory definition of "employee." See Pub.L. 92-576, § 18(a), October 27, 1972, 86 Stat. 1263. In the wake of this amendment and Executive Jet, numerous cases reached the federal courts in which land-based shipbuilders attempted to sue for injuries caused by exposure to asbestos during the ship construction process. Most of these claims were brought against manufacturers and were not brought under section 905(b). Nevertheless, the opinions are instructive for purposes of the Ozzello case because all the circuits which considered such cases decided that plaintiffs must meet the Executive Jet case for admiralty tort jurisdiction regardless of the grounds for jurisdiction set forth in the complaints. Accordingly, these courts reviewed the records to determine whether the shipbuilder plaintiffs had established a substantial relationship between the circumstances of their injuries and traditional maritime activity. Under long-established admiralty law, contracts to build ships have not been considered maritime contracts. See, e.g., People's Ferry Company of Boston v. Beers, 61 U.S. (20 How.) 393, 15 L. Ed. 961 (1858); Thames Company v. The Francis McDonald, 254 U.S. 242, 41 S. Ct. 65, 65 L. Ed. 245 (1920). Likewise, torts occurring in the course of shipbuilding have not been considered maritime torts. See, e.g., Owens-Illinois, Inc. v. United States District Court, 698 F.2d 967, 971 (9th Cir.1983). Therefore, based on this legal reasoning,[11] the courts concluded that employees engaging in shipbuilding could not maintain maritime tort actions for asbestos-caused injuries whether the injuries took place on land or aboard partially completed ships on navigable 1319 waters. See Petersen v. Chesapeake & Ohio Railway Company, 784 F.2d 732 (6th Cir.1986); Drake v. Raymark Industries, Inc., 772 F.2d 1007 (1st Cir.1985), cert. denied sub nom. Raymark Industries, Inc. v. Bath Iron Works Corporation, 476 U.S. 1126, 106 S. Ct. 1994, 90 L. Ed. 2d 675 (1986); Oman v. Johns-Manville Corporation, 764 F.2d 224 (4th Cir.) (en banc) cert. denied sub nom. Oman v. H.K. Porter Company, 474 U.S. 970, 106 S. Ct. 351, 88 L. Ed. 2d 319 (1985); Woessner v. Johns-Manville Sales Corporation, 757 F.2d 634 (5th Cir.1985); Myhran v. Johns-Manville Corporation, 741 F.2d 1119 (9th Cir.1984); Harville v. Johns-Manville Products Corporation, 731 F.2d 775 (11th Cir.1984); Keene Corporation v. United States, 700 F.2d 836 (2d Cir.), cert. denied, 464 U.S. 864, 104 S. Ct. 195, 78 L. Ed. 2d 171 (1983); Owens-Illinois, Inc. v. United States District Court, 698 F.2d 967 (9th Cir.1983). c. Fifth Circuit Conflict Another line of cases arising in the wake of Executive Jet and the 1972 amendments addressed the issue of whether an employee injured aboard a ship still under construction could maintain a section 905(b) tort claim against the "vessel." A conflict developed in the Fifth Circuit with some panels ruling that a plaintiff need only satisfy the definitional requirements and the locality test in order to maintain a section 905(b) claim, see, e.g., Hall v. Hvide Hull No. 3, 746 F.2d 294 (5th Cir.1984), cert. denied sub nom. Avondale Shipyards, Inc. v. Rosetti, 474 U.S. 820, 106 S. Ct. 69, 88 L. Ed. 2d 56 (1985), and other panels ruling that a plaintiff must first satisfy the Executive Jet test for admiralty tort jurisdiction. See, e.g., May v. Transworld Drilling Company, 786 F.2d 1261 (5th Cir.), cert. denied, 479 U.S. 854, 107 S. Ct. 190, 93 L. Ed. 2d 123 (1986). In Hall v. Hvide Hull No. 3, 746 F.2d 294 (5th Cir.1984), cert. denied sub nom. Avondale Shipyards, Inc. v. Rosetti, 474 U.S. 820, 106 S. Ct. 69, 88 L. Ed. 2d 56 (1985), the panel decided that the scope of section 905(b) actions had not been limited by Executive Jet. After observing that a "shipbuilder" was an employee explicitly covered by the 1972 amendments to the LHWCA, the court focused on the definition of "vessel." In Hall, the shipbuilders had been killed or injured aboard floating hulls which were 70-90% completed. The court ruled that a section 905(b) claim could be maintained against these "vessels" even though they were still under construction, so long as they met the United States Code's general statutory definition of "vessel" which provides that: "The word `vessel' includes every description of watercraft or other artificial contrivance used, or capable of being used, as a means of transportation on water." 1 U.S.C. § 3. See also McCarthy v. The Bark Peking, 716 F.2d 130 (2d Cir.1983), cert. denied sub nom. South Street Seaport Museum v. McCarthy, 465 U.S. 1078, 104 S. Ct. 1439, 79 L. Ed. 2d 760 (1984); Burks v. American River Transportation Company, 679 F.2d 69 (5th Cir.1982); Lundy v. Litton Systems, Inc., 624 F.2d 590 (5th Cir.1980), cert. denied, 450 U.S. 913, 101 S. Ct. 1353, 67 L. Ed. 2d 337 (1981). The Hall court rejected earlier decisions holding that torts occurring on launched but incomplete vessels lacked maritime flavor. See Lowe v. Ingalls Shipbuilding, A Division of Litton Systems, Inc., 723 F.2d 1173, 1187 (5th Cir.1984); Hollister v. Luke Construction Company, 517 F.2d 920, 921 (5th Cir.1975) (per curiam). In Hall, once vessel status was determined, a finding of maritime jurisdiction immediately followed. A few months later, the First Circuit rejected Hall in Drake v. Raymark Industries, Inc., 772 F.2d 1007 (1st Cir.1985), cert. denied sub nom. Raymark Industries, Inc. v. Bath Iron Works Corporation, 476 U.S. 1126, 106 S. Ct. 1994, 90 L. Ed. 2d 675 (1986), a case in which manufactuers of asbestos products asserted section 905(b) claims against a shipowner as a basis for indemnity or contribution. After carefully examining alternative theories about the scope of section 905(b), the legislative history of the section, and the "admiralty traditions of simplicity and practicality," the court concluded that "the scope of § 905(b) is limited to maritime torts.... those which fall within the admiralty jurisdiction 1320 or satisfy the tests for the application of admiralty law" found in Executive Jet. Id. at 1012. Disagreeing with Hall, the First Circuit declined "to hold that jurisdiction under § 905(b) requires satisfaction merely of the definitional elements and the situs requirement." Id. at 1018 (footnote omitted). The court explained that allowing a plaintiff to maintain a section 905(b) action without establishing admiralty tort jurisdiction would lead to a "double standard" for maritime tort jurisdiction under which all other maritime tort actions would be subject to the Executive Jet requirements, while section 905(b) torts would only have to satisfy the definitional elements of the section in addition to the situs requirement. Drake, 772 F.2d at 1018. The court warned that: "Interpreting the scope of § 905(b) jurisdiction to include negligence actions other than maritime torts would federalize torts in an area which currently are [sic] governed by state law." Id. at 1019. The next year another panel of the Fifth Circuit, agreeing with Drake, suggested that the Hall panel's focus on the statutory definition of "vessel" was misplaced. In May v. Transworld Drilling Company, 786 F.2d 1261 (5th Cir.), cert. denied, 479 U.S. 854, 107 S. Ct. 190, 93 L. Ed. 2d 123 (1986), the court stated that: Our opinions interpreting the applicability of § 905(b) to injuries that are allegedly caused by the negligence of a vessel under construction, whether on water or on dry land, contain statements that are not fully consistent. The inconsistency has arisen, perhaps in part, because we have not always distinguished jurisdiction from the sufficiency of the plaintiff's evidence to establish a claim under § 905(b). Following prior Fifth Circuit precedent and the recent First Circuit decision in Drake v. Raymark Industries, Inc., [772 F.2d 1007 (1st Cir. 1985), cert. denied sub nom. Raymark Industries, Inc. v. Bath Iron Works Corporation, 476 U.S. 1126 [106 S. Ct. 1994, 90 L. Ed. 2d 675] (1986)], we here explicitly hold that § 905(b) permits only the assertion of a claim for a maritime tort. Only if a claimant first alleges facts comprising a maritime tort do we need inquire whether he has established the specific elements of a § 905(b) cause of action: (1) the involvement of a "vessel", (2) the "negligence of the vessel," and (3) other subsidiary issues, such as the identity of the vessel owner. .... "Congress did not," we said in Parker, [v. South Louisiana Contractors, Inc., 537 F.2d 113 (5th Cir.1976), cert. denied, 430 U.S. 906 [97 S. Ct. 1175, 51 L. Ed. 2d 582] (1977)], "intend section 905(b) to create a new or broader cause of action in admiralty." "Taken as a whole," we added, its primary purpose was "to curtail rather than expand the availability of third party actions in admiralty." It preserves an injured worker's pre-existing right, under general maritime law, to recover for third-party negligence, but eliminated his right to bring actions against third parties based on unseaworthiness. The test to determine the existence of a cause of action in maritime tort is identical with that applied to determine jurisdiction in admiralty. The Supreme Court, in Foremost Insurance Company v. Richardson, held that, as indicated in Executive Jet, it is requisite to proof of a maritime tort that there be an injury on navigable waters (the traditional "locality" test) and, in addition, that the alleged wrong bear a significant relationship to traditional maritime activity. Id. at 1264-65 (footnotes omitted). Just two days before Ozzello's accident, the Fifth Circuit resolved the conflict between the Hall and May panels in an en banc opinion rejecting Hall. See Richen-dollar v. Diamond M Drilling Company, 819 F.2d 124 (5th Cir.) (en banc), cert. denied, 484 U.S. 944, 108 S. Ct. 331, 98 L. Ed. 2d 358 (1987). The full court held that: [T]o be cognizable under § 905(b), a tort must occur on or in navigable waters subject, of course, to the special provisions of the Admiralty Extension Act, and there must be the traditional admiralty nexus. As a consequence, we now 1321 reject the suggestion made in Hall v. Hvide Hull No. 3, 746 F.2d 294, 302-03 (5th Cir.1984), that the pre-Executive Jet/Foremost Insurance test for a maritime tort was codified in § 905(b) by the 1972 amendments in the Longshore and Harbor Workers' Act. Further, we reject the use of the statutory definition of vessel in the LHWCA as the basis for the definition of vessel under § 905(b), as was done in Lundy v. Litton Systems, Inc., 624 F.2d 590 (5th Cir.1980), cert. denied, 450 U.S. 913 [101 S. Ct. 1353, 67 L. Ed. 2d 337] (1981).... Id. at 125-26. See also Molett v. Penrod Drilling Company, 872 F.2d 1221, 1224 (5th Cir.1989) (per curiam). The Richendollar court reiterated that "in enacting § 905(b), Congress did not `create a new or broader cause of action in admiralty,' and that `[t]aken as a whole, the manifest purpose of section 905(b) is to curtail, rather than expand the availability of third party actions in admiralty.'" Id. at 126 (quoting Parker v. South Louisiana Contractors, Inc., 537 F.2d 113, 117 (5th Cir.1976), cert. denied, 430 U.S. 906, 97 S. Ct. 1175, 51 L. Ed. 2d 582 (1977)). As the plaintiffs in this case have pointed out, these legal developments raise a conceptual difficulty.[12] A shipbuilder such as Ozzello is an employee engaged in "maritime employment," according to the LHWCA definition. Yet, under most circumstances, a shipbuilder will not be able to establish that any activity carried out in the course of his employment bears a substantial nexus to traditional maritime activity and, consequently, will not be able to maintain a negligence claim against a "vessel" under section 905(b). The Federal Circuit has attempted to explain this seeming discrepancy by saying that: [I]n our view ... section 905(b) is not coextensive in its coverage of employees with those for whom the employer must obtain coverage under section 903 [of Title 33 of the United States Code]. Under that law, those engaged in shipbuilding are covered and must be insured. However, eligibility for worker's compensation under section 903 is not the same as, and may be broader than, general maritime jurisdiction. Lopez v. A.C. & S., Inc., 858 F.2d 712, 720 (Fed.Cir.1988), cert. denied, ___ U.S. ___, 109 S. Ct. 3185, 105 L. Ed. 2d 694 (1989). See also Drake v. Raymark Industries, Inc., 772 F.2d 1007, 1018 (1st Cir.1985), cert. denied sub nom. Raymark Industries, Inc. v. Bath Iron Works Corporation, 476 U.S. 1126, 106 S. Ct. 1994, 90 L. Ed. 2d 675 (1986). d. The Ozzellos' Section 905(b) Claims The Seventh Circuit has not addressed the issue of whether an injured employee must establish admiralty jurisdiction in order to maintain a section 905(b) claim under the LHWCA, but the court sees no reason why this circuit would not adopt the position of the First and Fifth 1322 Circuits[13] limiting section 905(b) claims to maritime torts. No other circuit has rejected this position and, in past rulings, the Seventh Circuit has not taken an expansive view of admiralty jurisdiction. See, e.g., In re Complaint of Sisson, 867 F.2d 341 (7th Cir.1989), rev'd sub nom. Sisson v. Ruby, ___ U.S. ___, 110 S. Ct. 2892, 111 L. Ed. 2d 292 (1990). Therefore, this court will adhere to the rulings of the First and Fifth Circuits. Having determined that the Ozzellos have met the situs and status requirements for a section 905(b) claim, the court will now examine whether they have also established admiralty jurisdiction. In arguing the jurisdictional issue, the parties have focused on the configuration of the ship rather than on the tort's relationship to traditional maritime activity. The parties stipulated that, at the time of William Ozzello's injury, the MCM-01 was still under construction and was approximately 80-90% complete. See Amended Final Pretrial Report at (a), ¶ 6. The MCM-01 was afloat upon navigable waters and had actually been navigated during propulsion trials held on June 3, 1987. See Id.; Affidavit of Calvin Matzke at ¶ 5. However, "after Richendollar, the `configuration of the watercraft is of secondary importance.' Maritime jurisdiction can only be established by satisfying Executive Jet's two-part situs and nexus requirement." Molett v. Penrod Drilling Company, 872 F.2d 1221, 1225 (5th Cir.) (per curiam), cert. denied sub nom. Columbus-McKinnon, Inc. v. Gearench, Inc., ___ U.S. ___, 110 S. Ct. 563, 107 L. Ed. 2d 558 (1989) (quoting Richendollar v. Diamond M Drilling Company, Inc., 819 F.2d 124, 127 (5th Cir.) (en banc), cert. denied, 484 U.S. 944, 108 S. Ct. 331, 98 L. Ed. 2d 358 (1987)). Recently, in Sisson v. Ruby, ___ U.S. ___, 110 S. Ct. 2892, 111 L. Ed. 2d 292 (1990), a tort case in which fire destroyed a moored yacht then damaged a marina and neighboring boats, the United States Supreme Court reiterated that "the party seeking to invoke maritime jurisdiction must show a substantial relationship between the activity giving rise to the incident and traditional maritime activity." Id. 110 S.Ct. at 2897. As a first step, a court must "define the relevant activity," ... "not by the particular circumstances of the incident, but by the general conduct from which the incident arose." Id. Then, the court is to determine whether this activity "has a substantial relationship to a `traditional maritime activity' within the meaning of Executive Jet and Foremost." Id. (footnote omitted). The Court declined to adopt any of the multi-factor tests for identifying "traditional maritime activity" which various circuits had devised. See Id. at 2897-98 n. 4. Instead, the Court explained that: We believe that, at least in cases in which all of the relevant entities are engaged in similar types of activity, ... the formula initially suggested by Executive Jet and more fully refined in Foremost and in this case provides appropriate and sufficient guidance to the federal courts. Id. Therefore, guided by the factors considered by the Court in Executive Jet, Foremost and Sisson, this court will proceed to determine whether William Ozzello's injury occurred in furtherance of an activity bearing a substantial relationship to a traditional maritime activity. See Offshore Logistics, Inc. v. Tallentire, 477 U.S. 207, 219, 106 S. Ct. 2485, 2492, 91 L. Ed. 2d 174 (1986). First, the general conduct from which Ozzello's injury arose was shipbuilding. Defendant PBI and its employees were in the process of completing the MCM-01 and Ozzello himself was aboard to test and inspect equipment which had been fabricated by his employer, subcontractor A.C. Hoyle. As explained in Part III(B)(2)(b), above, shipbuilding has traditionally not been considered a maritime activity for purposes of asserting admiralty tort jurisdiction. See Lowe v. Ingalls Shipbuilding, a Division of Litton Systems, Inc., 723 F.2d 1173, 1187 (5th Cir.1984); Owens-Illinois, Inc. v. United States District Court, 698 1323 F.2d 967, 971 (9th Cir.1983). Nevertheless, resting a jurisdictional decision on this ground alone has been criticized,[14] so the court will go on to examine other circumstances. In Executive Jet, Foremost and Sisson (none of which involved shipbuilding), the Court said that the following factors weigh in favor of exercising maritime tort jurisdiction: when the accident occurs in the course of maritime service; when the accident occurs in the course of navigation; when the accident occurs in the course of promoting maritime commerce or presents a hazard to maritime commerce; when the conduct gives rise to the need for the application of admiralty law, particularly the uniform "rules of the road" governing navigation. See Sisson v. Ruby, ___ U.S. ___, 110 S. Ct. 2892, 2898, 111 L. Ed. 2d 292 (1990); Foremost Insurance Company v. Richardson, 457 U.S. 668, 672-77, 102 S. Ct. 2654, 2656-59, 73 L. Ed. 2d 300 (1982); Executive Jet Aviation, Inc. v. City of Cleveland, 409 U.S. 249, 253-74, 93 S. Ct. 493, 497-507, 34 L. Ed. 2d 454 (1972). No one of these factors is dispositive. In Sisson, for example, the Court declined to adopt the rule suggested by Justice Scalia in his concurrence that any tort taking place aboard a vessel would come under admiralty jurisdiction.[15]See Sisson, 110 S.Ct. at 2896-97 n. 2. Likewise, the Court has emphasized that there is no requirement that the activity involved be exclusively commercial, see Foremost, 457 U.S. at 674, 102 S. Ct. at 2658, or that the vessel be in navigation. See Sisson, 110 S.Ct. at 2898. Applying these guidelines to the Ozzello case, the court finds that only the location of Ozzello's injury weighs in favor of exercising admiralty jurisdiction. William Ozzello sprained his ankle aboard the MCM-01, a ship under construction upon the navigable waters of Lake Michigan. However, the involvement of the MCM-01 was tangential. The ship was not in navigation at the time of the injury and the plaintiffs presented no evidence that the general conduct involved had any effect on maritime commerce. Moreover, there is no evidence that William Ozzello or any of the PBI personnel were performing the work of seamen or that the hazard (a hose nozzle) is a piece of equipment peculiar to ships or navigation. Under these circumstances, the resolution of the Ozzellos' claims does not require the special expertise of a court in admiralty. The fundamental interests giving rise to the need to apply admiralty law[16] are the protection of maritime commerce and the need for uniform rules of navigation. See Sisson, 110 S.Ct. at 2898; Foremost, 457 U.S. at 676, 102 S. Ct. at 2659. Accordingly, in Foremost the Court decided that it should exercise admiralty jurisdiction because uniform rules of navigation should apply to pleasure boats as well as to vessels directly involved in maritime commerce. And, in Sisson, the Court ruled 1324 that admiralty law should govern the liability of a moored pleasure yacht for a fire that spread to a marina because storage and maintenance of a vessel is substantially related to traditional maritime activity. By contrast, in the instant case the court perceives no federal interest in uniformity of decision requiring the application of federal substantive law. The conduct which forms the basis for the Ozzellos' claims is more closely related to land-based negligence than to negligence taking place in maritime commerce or navigation. Furthermore, the legal issues are identical to those presented in countless other stumble and fall cases that are resolved by local tort law. The Executive Jet Court concluded that in a situation "which is only fortuitously and incidentally connected to navigable waters and which bears no relationship to traditional maritime activity," the state can "plainly exercise jurisdiction over the suit," and can "plainly apply familiar concepts of [state] tort law without any effect on maritime endeavors." Executive Jet Aviation, Inc., 409 U.S. at 273, 93 S. Ct. at 507 (footnotes omitted). Likewise, federalism concerns dictate that this case be litigated under state law. For these reasons, the court concludes that there is no substantial relationship between Ozzello's injury and traditional maritime activity. Consequently, the plaintiffs have not established admiralty tort jurisdiction over the subject matter of their claims and they cannot maintain their causes of action under section 905(b) of the Longshore and Harbor Workers' Compensation Act. C. LIABILITY Having ruled that the Ozzellos' causes of action do not arise under federal maritime law, the court must determine whether Peterson Builders, Inc. is liable to them under Wisconsin negligence law. Under Wisconsin's Safe Place Statute, an employer or owner of a place of employment, such as PBI, must do everything reasonably necessary to protect the health and safety of frequenters[17] such as William Ozzello. See Wis.Stat. §§ 101.11(1) & (2)(a). The court's finding that defendant Peterson Builders, Inc. is liable to the plaintiffs rests upon the court's view that plaintiff William Ozzello offered substantially credible testimony at trial. Ozzello stated positively that, after boarding the MCM-01 on the morning of June 18, 1987, he proceeded to climb up onto a fixture to check equipment for leaks. At the time of his ascent, he noticed no hose or other obstruction beneath his feet. Twenty minutes later, when he descended from the equipment, his foot landed upon a hose nozzle causing him to fall and injure his left ankle. No other person aboard the MCM-01 witnessed this accident and, although PBI was aware that Ozzello had been injured, the company conducted no investigation. Consequently, the recollections of its fact witnesses were dim and did not have a solid factual basis. In maintaining the workplace, PBI employees were supposed to observe the safety practice of keeping walk-ways and work areas free of obstructions and hazards. PBI conceded that any hose aboard the MCM-01 would have been in its custody and control and that the area in which Ozzello was working and in which the injury took place was also under its supervision and control. Because it could only have been PBI employees who deposited the hose on the deck, the company had constructive notice of this unsafe condition. See May v. Skelley Oil Company, 83 Wis. 2d 30, 37 n. 7, 264 N.W.2d 574, 577 n. 7 (1978). Thus, by the affirmative act of leaving the hose where it could present a hazard, PBI, through its employees, breached its duty to provide a safe work-place for Ozzello.[18] Consequently, the 1325 court assigned sixty percent of the causal negligence to defendant PBI. In deciding whether Ozzello was also a substantial cause of his own injury, the court was persuaded by the defendant's ship safety expert, John Barto, that Ozzello could have seen the hose had he looked before beginning his descent. Lying on the deck, this hose and its nozzle were open and obvious. However, this fact alone does not absolve PBI of liability. Obviousness of the hazard is merely a factor to consider in assessing the degree of Ozzello's contributory negligence. See Wisconsin Jury Instructions Civil 1902. The court also considered that, when a workman is preoccupied with his work, the degree of care expected of him is minimized in respect to a particular and immediate hazard. See Suhaysik v. Milwaukee Cheese Company, 132 Wis. 2d 289, 295-96, 392 N.W.2d 98, 100-02 (1986). Considering these circumstances in view of the applicable law, the court assigned forty percent of the causal negligence to William Ozzello. D. DAMAGES Prior to trial, the parties stipulated to William Ozzello's past wage loss ($4,301.44) and to part of his past medical bills and related travel expenses ($5,227.27). See Amended Final Pretrial Report at (a), ¶¶ 10 & 11. At trial, the plaintiff submitted additional bills for medical treatment in the amount of $1,966.00. See Trial Exhibit 42. These additional bills were unchallenged by the defendant. Therefore, the total amounts of past wage loss and past medical bills claimed by the plaintiffs have been awarded to William Ozzello. The largest factor in the damage calculus is the award of $29,250.00 for William Ozzello's past pain and suffering and $108,000.00 for his future pain and suffering. In arriving at these figures, the court considered that William Ozzello was just three days short of his fifty-fifth birthday on the date of his injury and that at the time of trial he had a remaining life expectancy of 19.9 years. Ozzello, his wife, and his treating physician all testified about the discomfort and physical limitations Ozzello has experienced since the date of his injury. Treating physician, Donald Jacobs, M.D., believes that this pain will likely plague Ozzello for the remainder of his life. The plaintiffs testified that William Ozzello has been wearing a brace and that, while before the accident he devoted most of his leisure time to outdoor activities such as hunting and fishing, his present ability to engage in many of these outdoor pursuits has been curtailed.[19] In addition, Ozzello's employment duties have been changed from inspecting equipment aboard ships to custodial and office work in order to accommodate his injury. Nevertheless, Ozzello's wages and benefits have not been reduced and the court did not find that he will sustain any future wage loss. As for the loss of society claim of Marlene Ozzello, the court considered the plaintiffs' testimony that William Ozzello now has a limited ability to help with yard work and house maintenance chores. At the same time, Mrs. Ozzello has had increased duties of care for her husband. She also testified that they are no longer able to participate fully in some social activities such as dancing; but, because William Ozzello spends most of his work and leisure time away from home, the court finds this factor to be of minor significance. For these reasons, the court has awarded Marlene Ozzello $5,000.00. Taking all these circumstances into consideration, the court arrived at its total award of $153,744.71. Under Wisconsin's principles of comparative negligence, this award must be reduced by forty percent to reflect William Ozzello's degree of contributory negligence. As a result, the plaintiffs 1326 will receive $92,246.83. Although this is considerably less than the $560,000.00 sought in their prayer for relief, the court believes that the award is adequate compensation under the circumstances and is generous compared to awards in similar cases. See, e.g., Callen v. OULU O/Y, 711 F. Supp. 244 (E.D.Pa.1989) (longshoreman plaintiff who was sixty-three years old at the time of trial and had experienced and would experience pain, discomfort and diminution in the quality of life due to ankle sprain injury awarded $60,000.00 for pain and suffering), aff'd, 897 F.2d 520 (3d Cir. 1990) (mem.), petition for cert. filed, 58 U.S.L.W. 3787 (U.S. May 29, 1990) (No. 89-1868); Gansch v. Nekoosa Papers, Inc., 152 Wis. 2d 666, 449 N.W.2d 307 (Ct.App. 1989) ($79,200.00 awarded by jury to plaintiff with crushed foot who had forty-eight years to live with pain and limited ability to work and enjoy recreational pursuits), petition for review granted, ___ Wis.2d ___, 451 N.W.2d 297 (1990). ORDER Based on the court's Findings of Fact and Conclusions of Law made following a bench trial, the court ORDERS that judgment be entered in favor of plaintiffs William Ozzello and Marlene Ozzello and against defendant Peterson Builders, Inc. on the plaintiffs' cause of action under the Wisconsin Safe Place Statute. See Wis. Stat. § 101.11. Defendant Peterson Builders, Inc. is liable to the plaintiffs for the following amounts of compensatory damages: Past medical, hospital and related travel expenses $ 7,193.27 Past wage loss $ 4,301.44 Past pain and suffering $ 29,250.00 Future pain and suffering $108,000.00 Loss of consortium $ 5,000.00 ___________ TOTAL: $153,744.71 IT IS FURTHER ORDERED that, under Wisconsin's doctrine of comparative negligence, the plaintiffs' total award shall be reduced by forty percent to reflect the percentage of the total causal negligence attributed to plaintiff William Ozzello. This results in an award to the plaintiffs of $92,246.83. IT IS FURTHER ORDERED that the plaintiffs' causes of action under section 905(b) of the Longshore and Harbor Workers' Compensation Act are dismissed. See 33 U.S.C. § 905(b). IT IS FURTHER ORDERED that this action is dismissed upon its merits. IT IS FURTHER ORDERED that, pursuant to Federal Rule of Civil Procedure 58, the Clerk of Court shall enter final judgment as a separate document. This judgment shall provide that: This action came on for trial before the Court, Honorable Thomas J. Curran, District Judge, presiding, and the issues having been duly tried and a decision having been duly rendered, IT IS ORDERED AND ADJUDGED that the plaintiffs William Ozzello and Marlene Ozzello recover of the defendant Peterson Builders, Inc. the sum of $92,246.83, with interest from the date of entry of judgment thereon at the statutory rate, and their costs of action. IT IS FURTHER ORDERED AND ADJUDGED that this action is dismissed upon its merits. Done and Ordered. NOTES [1] Although parties are entitled to require a fact finder to accept stipulations, modifications may be effected by the court if the parties present evidence on those issues at a bench trial. See Frank Music Corporation v. Metro-Goldwyn-Mayer, Inc., 772 F.2d 505, 515 n. 9 (9th Cir. 1985). [2] TIBIALIS: "Tibial: relating to the tibia [shin bone] or to any structure named from it; also denoting the medial or tibial aspect of the lower limb" Steadman's Medical Dictionary 1453 (5th ed. 1982). [3] TIBIO: "Combining form denoting the tibia [shin bone]." Steadman's Medical Dictionary, 1453 (5th ed. 1982). TALAR: "Relating to the talus [ankle bone]." Steadman's Medical Dictionary, 1408 (5th ed. 1982). [4] TALOCALCANEAL: "Relating to the talus [ankle bone] and the calcaneus [heel bone]." Steadman's Medical Dictionary 1408 (5th ed. 1982). [5] As will be discussed in the following section, other circuits have held that a party cannot maintain a tort claim under section 905(b) of the LHWCA unless the party can also establish federal maritime or admiralty jurisdiction. See, e.g., Molett v. Penrod Drilling Company, 872 F.2d 1221 (5th Cir.) (per curiam), cert. denied sub nom. Columbus-McKinnon, Inc. v. Gearench, Inc., ___ U.S. ___, 110 S. Ct. 563, 107 L. Ed. 2d 558 (1989). Thus, the court will consider the elements of admiralty jurisdiction when it considers the issue of whether the plaintiffs have viable claims under the LHWCA. [6] The LHWCA provides the following definition of an "employee" covered by the Act: The term "employee" means any person engaged in maritime employment, including any longshoreman or other person engaged in longshoring operations, and any harborworker including a ship repairman, shipbuilder, and ship-breaker, but such term does not include (A) individuals employed exclusively to perform office clerical, secretarial, security, or data processing work; (B) individuals employed by a club, camp, recreational operation, restaurant, museum, or retail outlet; (C) individuals employed by a marina and who are not engaged in construction, replacement, or expansion of such marina (except for routine maintenance); (D) individuals who (i) are employed by suppliers, transporters, or vendors, (ii) are temporarily doing business on the premises of an employer described in paragraph (4), and (iii) are not engaged in work normally performed by employees of that employer under this chapter; (E) aquaculture workers; (F) individuals employed to build, repair, or dismantle any recreational vessel under sixty-five feet in length; (G) a master or member of a crew of any vessel; or (H) any person engaged by a master to load or unload or repair any small vessel under eighteen tons net; if individuals described in clauses (A) through (F) are subject to coverage under a State workers' compensation law. 33 U.S.C. § 902(3). [7] The LHWCA does not define "vessel," but merely provides that: Unless the context requires otherwise, the term "vessel" means any vessel upon which or in connection with which any person entitled to benefits under this chapter suffers injury or death arising out of or in the course of his employment and said vessel's owner, owner pro hac vice, agent, operator, charter or bare boat charterer, master, officer, or crew member. 33 U.S.C. § 902(21). [8] The LHWCA provides that: Except as otherwise provided in this section, compensation shall be payable under this chapter in respect of disability or death of an employee, but only if the disability or death results from an injury occurring upon the navigable waters of the United States (including any adjoining pier, wharf, dry dock, terminal, building way, marine railway, or other adjoining area customarily used by an employer in loading, unloading, repairing, dismantling, or building a vessel). 33 U.S.C. § 903(a). [9] See 33 U.S.C. § 902(3). [10] In his Mayo Clinic records, the plaintiff is described as a "crane inspector" whose job "involves supervisory and inspection type work on high construction cranes...." Trial Exhibit 31 at entry for April 8, 1988. [11] The traditional rule that torts occurring in the course of the construction of new ships are not considered maritime torts was not the sole basis for rejecting these claims. Most of the courts also analyzed the claims by using a four-factor test under which the court considers: (1) the traditional concepts of the role of admiralty law; (2) the function and role of the parties; (3) the types of vehicles and instrumentalities involved; and (4) the causation and nature of the injury suffered. See, e.g., Myhran v. Johns-Manville Corporation, 741 F.2d 1119, 1121 (9th Cir.1984). As the Ninth Circuit explained: Although the traditional distinction between contracts for construction versus contracts for repair of ships that was noted in Owens-Illinois [v. United States District Court, 698 F.2d 967 (9th Cir.1983) (per curiam)] added support to the conclusion reached there, that distinction alone cannot be determinative.... the traditional contractual distinction may shed light on the nature of the injured worker's activity and may thus be relevant to the inquiry required by Executive Jet; but the inquiry must be broader and must be based upon the work actually performed by the injured worker.... The issue is whether Myhran's tort claims bear a significant relationship to traditional maritime activity not whether the tort actually occurred during the repair as opposed to the construction of ships. Id. at 1121-22. The United States Supreme Court has declined to adopt this four-factor test. See Sisson v. Ruby, ___ U.S. ___, 110 S. Ct. 2892, 2897-98 n. 4, 111 L. Ed. 2d 292 (1990). [12] In support of their contention that a section 905(b) plaintiff need not establish a substantial nexus between the accident and traditional maritime activity, the Ozzellos rely heavily throughout their pretrial submissions on language in the Supreme Court's opinion in Director, OWCP v. Perini North River Associates, 459 U.S. 297, 103 S. Ct. 634, 74 L. Ed. 2d 465 (1983). In Perini, the Court stated that an employee, as defined by the LHWCA, need not establish that "his employment possessed a direct (or substantial) relation to navigation or commerce in order to be covered." Id. at 318-19, 103 S. Ct. at 647-48. However, Perini involved a claim for workers' compensation benefits made pursuant to section 905(a) not a claim for tort damages made pursuant to section 905(b). Faced with an argument similar to the one raised by the Ozzellos, the First Circuit explained that: We discern no basis for this construction of the jurisdictional range of § 905(b). Perini was concerned solely with compensation, not with maritime tort jurisdiction, and these two boundaries have for a long time been quite distinct,.... We have uncovered no legislative history even intimating that Congress wished to incorporate into § 905(b) the then-current boundaries of maritime tort jurisdiction, and place them beyond the traditional common law powers of the admiralty courts. Drake v. Raymark Industries, Inc., 772 F.2d 1007, 1018 (1st Cir.1985), cert. denied sub nom. Raymark Industries, Inc. v. Bath Iron Works Corporation, 476 U.S. 1126, 106 S. Ct. 1994, 90 L. Ed. 2d 675 (1986). [13] The Third Circuit has indicated that it would follow the First and Fifth Circuits. See Eagle-Picher Industries, Inc. v. United States, 846 F.2d 888, 890 n. 2 (3d Cir.), cert. denied, 488 U.S. 965, 109 S. Ct. 490, 102 L. Ed. 2d 527 (1988). [14] See, e.g., Myhran v. Johns-Manville Corporation, 741 F.2d 1119, 1121-22 (9th Cir.1984). See also Sisson v. Ruby, ___ U.S. ___, 110 S. Ct. 2892, 2900-2901, 111 L. Ed. 2d 292 (1990) (Scalia, J., concurring). [15] Even under Justice Scalia's test, the reach of admiralty jurisdiction would depend upon whether the craft involved had attained vessel status. See Sisson, 110 S.Ct. at 2902 n. 5 (Scalia, J., concurring). [16] As described by the Executive Jet Court: The law of admiralty has evolved over many centuries, designed and molded to handle problems of vessels relegated to ply the waterways of the world, beyond whose shores they cannot go. That law deals with navigational rules rules that govern the manner and direction those vessels may rightly move upon the waters. When a collision occurs or a ship founders at sea, the law of admiralty looks to those rules to determine fault, liability, and all other questions that may arise from such a catastrophe. Through long experience, the law of the sea knows how to determine whether a particular ship is seaworthy, and it knows the nature of maintenance and cure. It is concerned with maritime liens, the general average, captures and prizes, limitation of liability, cargo damage, and claims for salvage. Executive Jet Aviation, Inc., 409 U.S. at 269-70, 93 S. Ct. at 505. [17] As an employee of A.C. Hoyle, a subcontractor of PBI, William Ozzello meets the Wisconsin Safe Place Statute's definition of "frequenter." See Wis.Stat. § 101.01(2)(d). See also Barth v. Downey Company, 71 Wis. 2d 775, 778-79, 239 N.W.2d 92, 93-94 (1976). [18] Ozzello claims to have seen two PBI employees remove the hose shortly after the accident; but, after working two months aboard the ship, he was unable to identify the employees. For lack of any corroborating evidence, the court declined to make a finding that this event occurred. The type and configuration of the hose was also hotly disputed by the parties. But, these details are not material, so the court found it unnecessary to resolve the conflicting versions. [19] According to the Mayo Clinic medical records, William Ozzello was still able to engage in the sport of snowshoeing during the winter following his injury. See Trial Exhibit 31 at entry of April 8, 1988.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2593497/	26 F.Supp. 743 (1938) UNLANDHERM v. PARK CONTRACTING CORPORATION et al. District Court, S. D. New York. December 12, 1938. Blair, Curtis, Dunne & Hayward, of New York City, (Daniel L. Morris, of New York City, of counsel), for plaintiff. Jacob I. Goodstein, of New York City, (Jacob I. Goodstein and Sanford H. Cohen, both of New York City, of counsel), for defendant Park Contracting Corporation. William C. Chanler, Corp. Counsel, of New York City (George H. Mitchell, of New York City, of counsel), for defendant City of New York. CONGER, District Judge. The plaintiff claims that he has a patent covering the method of supporting an elevated railroad while a subway is being constructed underneath the street. He claims that in the building of the Sixth Avenue subway in the City of New York, the Park Contracting Corporation, with the approval and at the direction of the City of New York, supported the elevated railway structure in a manner and means which he claims is a violation of his patent. He therefore sues the Park Contracting Corporation and the City of New York for an injunction, enjoining and restraining the defendants from infringing his patent, and also for an accounting and 744 assessment of damages. Both defendants have answered and among other things have set up a general denial, and deny that there is any infringement. There are two motions here, which were argued together and are being decided together. Both have to do with examination of parties and witnesses. They will be taken up in the order in which the notices for examination were served. The plaintiff first served, on October 6, 1938, a notice on the defendant, to examine Samuel R. Rosoff, President of the Park Contracting Corporation and Fred Stiefel, an employee of the Park Contracting Corporation, pursuant to Rule 26 of the Federal Rules of Civil Procedure for the District Courts of the United States, 28 U.S.C.A. following section 723c. The defendant Park Contracting Corporation moved in this Court to vacate the notice to take the said testimony or, in the alternative, to limit the examination. On the 10th day of October, 1938, the defendant Park Contracting Corporation gave notice to the plaintiff of its intention to take the testimony of the plaintiff, John H. Unlandherm, and Walter Caccia, plaintiff's assignor. The plaintiff has moved herein to vacate the taking of the testimony of the plaintiff and of the said Walter Caccia. Both motions came on to be heard together. The defendant City of New York appeared on the argument of the motions and contended that the plaintiff should be limited in his examination. The motions will be taken up in the order in which the notices for examination were served, which brings up first the motion of the defendant to vacate or limit the examination asked for by the plaintiff herein. The notice for examination, served on behalf of the plaintiff, is a general one and mentions no specific subjects for examination. However, upon the argument of the motion, it was agreed that the plaintiff seeks the examination upon the following subjects alone: 1. The method followed by Park Contracting Corporation, defendant, of supporting the elevated railroad and the street decking during excavation for and the building of the subway beneath the elevated railroad on 6th Avenue. 2. The succession of drawings that were submitted by defendant Park Contracting Corporation to the City of New York, relating to the supporting of the elevated structure and the street decking during the excavation for and the building of the subway beneath the elevated structure, including, not only the drawings on which the work actually proceeded, but also all drawings that were submitted and rejected prior to the acceptance of the ultimate drawings on which the work proceeded and the identity and location of persons having knowledge of the same. 3. The existence, description, nature, custody, condition of and the succession of drawings that were submitted by Rosoff-Brader Company to the City of New York relating to the supporting of the elevated structure and the street decking during the excavation for and the building of the subway beneath the elevated structure prior to the time that the ultimate drawings of the Park Contracting Corporation were accepted and approved by the City, and the identity and location of persons having knowledge of the same. 4. (a) The time saved by the Park Contracting Corporation in using the complained of method over methods previously used by subway contractors in supporting elevated structures and street deckings during the creation of a subway beneath the elevated structures; (b) the advantages, from the point of view of safety attributable to the complained of method used by Park Contracting Corporation; (c) the saving, measured in terms of money, attributed to the complained of method over previous methods of supporting the elevated structure, and the street decking during the creation of a subway therebeneath. 5. (a) When and where each of the individual, firms or corporations listed in paragraph XVII (sub. f) of the Answer of the defendant Park Contracting Corporation had knowledge of the inventions of the patents in suit, and of what that knowledge consisted, including a description and drawings of that of which each of the individuals, firms or corporations is alleged to have had knowledge; (b) the circumstances under which the alleged publications and drawings listed in paragraph XVII (sub. a) were published and distributed to the public and (c) the production of these alleged publications and drawings. 745 The question presented herein concerns the extent of the privilege of deposition-taking and the scope of the examination permitted thereunder. Rule 26(a) provides that: "* * * the testimony of any person, whether a party or not, may be taken at the instance of any party by deposition upon oral examination or written interrogatories for the purpose of discovery or for use as evidence in the action or for both purposes." Rule 26 (b) provides that: "* * * the deponent may be examined regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action, whether relating to the claim or defense of the examining party or to the claim or defense of any other party, * * *." The examination asked for comes clearly within the provisions of the above rules. These rules purport to provide a systematic and complete scheme on a very liberal basis, for discovery of various kinds before trial. These rules were adopted with a view to simplifying the issues. To keep in step with the purpose and spirit underlying the adoption of these rules, it is better that liberality rather than restriction of interpretation be the guiding rule. Under these rules, and in the light of the above principles, the plaintiff is entitled to the examination as follows: Item 1 Allowed. (Consented to on the argument of the motion.) Item 2 Allowed. Item 3 Disallowed, for the reason that this item has to do with the Rosoff-Brader Company, not a defendant in this action and as far as can be ascertained from the papers submitted by both parties, not connected directly or indirectly with the defendant herein. The information asked for in Item 3 may be obtained in another way, but not on this application. Item 4 Allowed, except Item 4 (c) which is disallowed because it relates to the question of damages. Items 4 (a) and (b) are allowed insofar as the information therein asked for may be within the knowledge of the persons asked to be examined. Item 5 Allowed, insofar as the parties asked to be examined have the knowledge or information. The examination asked for on behalf of the plaintiff is allowed as indicated above and the motion of the defendant Park Contracting Corporation, to vacate and limit herein, is denied as indicated above. Second. The examination asked for on behalf of the defendant Park Contracting Corporation, of John H. Unlandherm, the plaintiff, and Walter Caccia, plaintiff's assignor, is allowed and the motion on behalf of the plaintiff to vacate the taking of the testimony of the said John H. Unlandherm and Walter Caccia is denied. The examination asked for on behalf of the defendant is to be had first. The examination on behalf of the defendant is to be had within three days after the completion thereof. Settle orders on notice.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2597412/	89 F.Supp. 242 (1950) BOUNDS v. STRECKFUS STEAMERS, Inc. Civ. A. No. 1250. United States District Court D. Delaware. January 26, 1950. Sydney Hoffman, of Wilmington, Del., and S. Eldridge Sampliner, of Cleveland, Ohio, for plaintiff. William Prickett, of Wilmington, Del., for defendant. RODNEY, District Judge. This is an action instituted by a merchant seaman to recover damages under the Jones Act, 41 Stat. 1007, 46 U.S.C.A. § 688. The defendant is a corporation organized under the laws of the State of Delaware with its principal office in St. Louis, Missouri, and also maintaining an office and doing business in New Orleans, Louisiana. The present questions arise upon motion of the defendant to transfer the action to the Eastern District of Louisiana, New Orleans Division. As disclosed by the complaint and as corrected by the brief, the plaintiff was a deck hand on the S.S. President engaged in commerce and navigation on the Mississippi River in and about New Orleans. The gravamen of the complaint is that the defendant furnished to the plaintiff such an improper and unsafe place to work and to live that he contracted pulmonary tuberculosis from which he now suffers and is permanently disabled. The motion is for a transfer of the action under 28 U.S.C.A. § 1404(a), which provides "for the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." *243 The first question necessarily arising is whether the action could have been originally brought in the District of Louisiana, New Orleans Division. The Jones Act, 46 U.S.C.A. § 688 (1920), under which the suit is brought, provides that jurisdiction "shall be under the court of the district in which the defendant employer resides or in which his principal office is located." It is obvious that under the exact wording of this Act alone the suit is properly brought in the District of Delaware and could not have been brought in Louisiana.[1] However, the quoted provision of the Jones Act is one of venue.[2] The new judicial code, 28 U.S.C.A. § 1391(c) (1948), provides "a corporation may be sued in any judicial district in which it is incorporated or licensed to do business or is doing business, and such judicial district shall be regarded as the residence of such corporation for venue purposes." It has been expressly determined that the provisions of Sec. 1391(c) apply to cases brought under the Jones Act.[3] The correctness of this view is apparent when it is realized that the benefit to the injured seaman is thus greatly increased, for instead of two forums for the institution of his suit, he has a choice only limited by the business activities of the defendant. It therefore appears that this suit could have been instituted in Louisiana, New Orleans Division, and the transfer must only depend upon the propriety of such action. The transfer may be made "for the convenience of parties and witnesses, in the interest of justice". The defendant has filed supporting affidavits showing that a transfer should be made for the convenience of parties and witnesses. The plaintiff has filed none. It is apparent that most, if not all, witnesses are in Louisiana and none in or near Delaware. It is equally apparent that questions necessarily arising at the trial involve the actual condition of the living quarters and facilities furnished by the defendant to the plaintiff and alleged as the actionable negligence of the defendant. The vessel is at New Orleans and may be seen by the jury if so desired and ordered. The language of Gulf Oil Corporation v. Gilbert, 330 U.S. 501, 508, 67 S.Ct. 839, 843, 91 L.Ed. 1055, is not inappropriate: "Important considerations are the relative ease of access to sources of proof; availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses; possibility of view of premises, if view would be appropriate to the action; and all other practical problems that make trial of a case easy, expeditious and inexpensive." It does not clearly appear where the permanent home of the plaintiff is. He was employed in New Orleans and is now in New Mexico. It does not appear that Delaware, some 800 miles farther from New Mexico than is New Orleans, would or could be more convenient for the plaintiff. The convenience of parties and witnesses is clearly enhanced by the transfer of the cause to Louisiana. It seems equally clear that the transfer would be in the interest of justice. The interest of justice must largely depend upon the convenience of the parties and witnesses, but in addition in this case, is the fact that the boat itself with the actual accommodations complained of is there available for inspection by jury or witnesses. It is unnecessary to consider whether this case will be tried solely upon the principles of admiralty or whether any law of the place where the actionable tort occurred, viz., Louisiana, will be given any consideration. If any local law have application, then it must be the law of Louisiana, and it will be manifestly in the interest of justice that such trial be in Louisiana, for it is common knowledge that the basic principles of law in that jurisdiction differ somewhat from principles existing elsewhere. An appropriate order may be submitted. NOTES [1] Burris v. Matson Nav. Co., D.C., 37 F. Supp. 648; Ebanks v. Grace Line, Inc., D.C., 73 F.Supp. 749. [2] Panama Railroad Co. v. Johnson, 264 U.S. 375, 44 S.Ct. 391, 68 L.Ed. 748. [3] Bagner v. Blidberg Rothchild Co., D.C., 84 F.Supp. 973.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2668437/	UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA GEORGE K. PRAGOVICH, et al., : : Plaintiffs, : : v. : Civil Action No. 07-2079 (JR) : UNITED STATES OF AMERICA, : : Defendant. : MEMORANDUM Pro se plaintiffs George and Claudia Pragovich sue the United States Government seeking money damages for asserted violations of the Internal Revenue Code.1 The case is similar to an earlier one brought by the same plaintiffs (and dismissed). Pragovich v. United States, 2007 WL 521890 (D.D.C. 2007). It is genetically indistinguishable from a gaggle of other tax protest suits that have been filed in this court, and it is almost identical to one dismissed by Judge Huvelle in Wesselman v. United States, 501 F. Supp. 2d 98 (D.D.C. 2007). Because this court has no jurisdiction over many of the plaintiffs’ claims, and because the plaintiffs have failed to exhaust their administrative remedies as to the rest, the government’s motion to dismiss will be granted. 1 A conspicuous footnote to the complaint disavows any claim for declaratory or injunctive relief, or for a tax refund -- remedies that are unavailable to these plaintiffs anyway. Analysis This court does not have jurisdiction to hear claims for money damages under the Administrative Procedure Act. 5 U.S.C. § 702. There is no waiver of sovereign immunity for a damages claim in the Federal Records Act or the National Archives Act. See, Ross v. United States, 460 F. Supp. 2d 139, 148-50 (D.D.C. 2006). No Bivens remedy is available to the plaintiffs because the internal Revenue Code contains a comprehensive remedial scheme. Marsoun v. U.S., 591 F. Supp. 2d 41, 47-48 (D.D.C. 2008) (citing, Wilson v. Libby, 535 F.3d 697, 705 (D.C. Cir. 2008)). The only waiver of sovereign immunity applicable to the plaintiff’s claims is found in 26 U.S.C. § 7433, which is limited to actions seeking damages “in connection with any collection of Federal tax with respect to a taxpayer.” All of the plaintiffs counts that deal with issues other than the collection of taxes -- counts 1-19, 27-29, and 33 -- must therefore be dismissed for lack of jurisdiction. Fed. R. Civ. Pro. § 12(b)(1); accord, Wesselman, 501 F. Supp. 2d at 100-101. Section 7433(d)(1) states that a “judgment for damages shall not be awarded . . . unless the court determines that the plaintiff has exhausted the administrative remedies available to such plaintiff within the Internal Revenue Service.” The exhaustion procedures are set out in 26 C.F.R. § 301.7433-1. The defendants urge me to reverse the position I took in Gross v. - 2 - United States, 2006 U.S. Dist. LEXIS 68965 at 1 fn. 1 (D.D.C. 2006), that this exhaustion requirement is non-jurisdictional, arguing that, in relevant part, the Supreme Court’s recent decision in John R. Sand & Gravel Co. v. United States, ---U.S. ----, 128 S.Ct. 750 (2008), has undermined my reliance on Arbaugh v. Y&H Corp., 546 U.S. 500 (2006), and Avocados Plus v. Veneman, 361 U.S. App. D.C. 519, 370 F.3d 1243, 1247-48 (D.C. Cir. 2004). I decline to do so for substantially the same reasons articulated by Judge Bates in the Marsoun case, i.e., that John R. Sand & Gravel provides little support for the defendant’s position. Marsoun, 591 F. Supp. 2d at 44-45. In any event, the plaintiffs do not assert that they have exhausted their administrative remedies. Instead, they argue that § 301.7433-1 is a nonbinding “interpretive” rule that courts should ignore or invalidate. Their assumption, apparently, is that regulations issued under 26 U.S.C. § 7805(a)’s general grant of authority after notice and comment, which have been called “interpretive,” are like the non-binding interpretations issued by some administrative agencies to clarify existing duties, but which are not the product of notice and comment rulemaking and do not have the force of law. This - 3 - assumption is mistaken. Regulations issued under § 7805 after notice and comment do have the force of law.2 Because it is “quite clear” from the “statutory and historical context” of § 7433(d)(1) “that Congress has implicitly authorized the IRS to prescribe the details of administrative exhaustion,” Evans v. U.S., 433 F. Supp. 2d 17, 22 (D.D.C. 2006), and thus that the “IRS ha[d] authority under 26 U.S.C. § 7805(a), and § 7433 itself, to promulgate the exhaustion regulation,” Marsoun, 591 F. Supp. 2d at 46; because the regulation is reasonable; and because the plaintiffs have given me no reason to do otherwise; I will follow the lead of several of my learned colleagues and find that the regulation is deserving of deference and valid. See, e.g., Evans, 433 F. Supp. 2d at 22; O'Connor v. U.S., 2007 WL 274755 (D.D.C. 2007); 2 The fact that regulations are issued under § 7805 are “interpretive” raises the question of whether their validity will be reviewed using the analysis prescribed by National Muffler Dealers Ass'n, Inc., v. U.S., 440 U.S. 472 (1979), and its more recent derivatives, or under Chevron USA, Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984). See, Swallows Holding, Ltd. V. C.I.R., 515 F.3d 167, 168 (3rd Cir. 2008). The D.C. Circuit appears to have resolved the matter by applying Chevron. See, Tax Analysts v. IRS, 350 F.3d 100, 103 (D.C. Cir. 2003); New Millennium Trading, L.L.C. v. C.I.R., 131 T.C. No. 18, 2008 WL 5330940 (U.S. Tax Ct. 2008) (“The U.S. Court of Appeals for the District of Columbia Circuit has held that regulations issued under the general authority of the IRS to promulgate necessary rules are entitled to Chevron deference.”) (citing Tax Analysts). - 4 - Anderson v. U.S., 2007 WL 2059737 (D.D.C. 2007); Rippl v. U.S., 2006 WL 2024966 (D.D.C. 2006).3 The plaintiffs’ argument that the regulation is not binding because it was not properly promulgated also fails: notice was published in the Federal Register. Civil Cause of Action for Unauthorized Collection Actions, 56 Fed. Reg. 28842 (June 25, 1991). The regulation’s validity would not be compromised, in any event, by technical Treasury Directives. See, 1 C.F.R. § 5.1. The plaintiffs have made no showing of exhaustion, and so their claims in counts 20-26 and 30-32 must be dismissed for failure to state a claim upon which relief can be granted. Fed. R. Civ. Pro. § 12(b)(6). * * An appropriate order accompanies this memorandum. JAMES ROBERTSON United States District Judge 3 Even under National Muffler I “must still treat the regulation with deference,” Boeing Co. v. U.S., 537 U.S. 437 (2003) (citing, Cottage Savings Assn. v. Commissioner, 499 U.S. 554, 560-561 (1991)), and “defer to the Commissioner's regulations as long as they implement the congressional mandate in some reasonable manner,” United States v. Cleveland Indians Baseball Co., 532 U.S. 200, 219 (2001), because “Congress has delegated to the [Secretary of the Treasury and his delegate, the] Commissioner [of Internal Revenue], not to the courts, the task of prescribing all needful rules and regulations for the enforcement of the Internal Revenue Code,” Nat'l Muffler Dealers Ass'n v. United States, 440 U.S. 472, 4777 (1979) (quoting United States v. Correll, 389 U.S. 299, 307 (1967)). The regulation here is reasonable. - 5 -	01-03-2023	04-04-2014
https://www.courtlistener.com/api/rest/v3/opinions/2664980/	UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA KWAKU ATTA POKU Plaintiff, v. Civil Action No. 09-02441 (JDB) FEDERAL DEPOSIT INSURANCE CORPORATION Defendant. MEMORANDUM OPINION Kwaku Atta Poku ("Plaintiff") brings this action against the Federal Deposit Insurance Corporation ("FDIC") seeking compensatory damages for the alleged wrongful foreclosure of his home and for relief on other related claims. The FDIC moves to dismiss the complaint for lack of subject matter jurisdiction and improper venue, pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(3), because plaintiff has a pending case involving substantially the same claims and the same subject matter against the FDIC in the United States District Court for the District of Maryland. The Court finds that it has subject matter jurisdiction over plaintiff's claims and that venue is proper; however, in the interest of comity and judicial economy, the Court will grant the FDIC's motion to dismiss. BACKGROUND The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA") was enacted in response to the savings and loan crisis and, among other provisions, it granted FDIC the authority to act as a receiver for failed financial institutions and preserve, manage, and -1- liquidate the failed institutions' assets as appropriate. See Financial Institutions Reform, Recovery, and Enforcement Act of 1989, Pub. L. No. 101-73, 103 Stat. 183 (1989); 12 U.S.C. §§ 1821(d)(2). Once the FDIC is appointed receiver, a claimant must submit all claims it originally had against the failed institution to the FDIC to review. 12 U.S.C. § 1821(d)(6). On December 31, 2007, plaintiff filed an action in the Circuit Court for Baltimore City, Maryland, against Washington Mutual Bank and Washington Mutual Home Loans ("WAMU"), Stewart Title Guaranty Company, Advance Settlement Agency, Inc., and other foreclosure trustees. Def.'s Mem. in Support of Mot. to Dismiss ("Def.'s Mem.") at 2. Plaintiff alleged that WAMU, among others, wrongfully foreclosed his home when a loan he obtained was not properly applied to his mortgage. Pl.'s Opp. to Mot. to Dismiss ("Pl.'s Opp.") at 1-2. On May 8, 2008, the action was removed to the United States District Court for the District of Maryland ("District of Maryland"). Id. WAMU subsequently failed, and on September 25, 2008, the FDIC was appointed receiver for the failed institution. Id. The FDIC, as receiver, assumed all rights, titles, power, and privileges of WAMU. 12 U.S.C. § 1821. On January 15, 2009, the FDIC replaced WAMU in the Maryland case. Def.'s Mem. at 2. The District of Maryland imposed a mandatory 90-day stay and, by consent, stayed the action until December 25, 2009. Id. In the interim, as required by 12 U.S.C. § 1821(d)(6), plaintiff filed an administrative claim with the FDIC, which was rejected on November 4, 2009. Id. On December 1, 2009, plaintiff filed a motion to lift the stay and allow the action to proceed, which was granted on January 7, 2010. Id. On December 29, 2009, while his motion was pending, plaintiff filed this complaint in this Court. Id. Plaintiff brings essentially the same claims he brought in the District of Maryland but argues that the District of Maryland cannot exercise -2- jurisdiction over his claims against the FDIC. STANDARD OF REVIEW Under Rule 12(b)(1), the party seeking to invoke the jurisdiction of a federal court -- plaintiffs here -- bears the burden of establishing that the court has jurisdiction. See US Ecology, Inc. v. U.S. Dep't of Interior, 231 F.3d 20, 24 (D.C. Cir. 2000) (citing Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 103-04 (1998)); see also Grand Lodge of Fraternal Order of Police v. Ashcroft, 185 F. Supp. 2d 9, 13 (D.D.C. 2001) ("[A] Rule 12(b)(1) motion imposes on the court an affirmative obligation to ensure that it is acting within the scope of its jurisdictional authority."); Pitney Bowes, Inc. v. U.S. Postal Serv., 27 F. Supp. 2d 15, 19 (D.D.C. 1998). Although a court must accept as true all the factual allegations contained in the complaint when reviewing a motion to dismiss pursuant to Rule 12(b)(1), Leatherman v. Tarrant Cnty. Narcotics Intelligence & Coordination Unit, 507 U.S. 163, 164 (1993), "'plaintiff[s'] factual allegations in the complaint . . . will bear closer scrutiny in resolving a 12(b)(1) motion' than in resolving a 12(b)(6) motion for failure to state a claim." Grand Lodge, 185 F. Supp. 2d at 13-14 (quoting 5A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1350 (2d ed. 1990)). At the stage of litigation when dismissal is sought, a plaintiff's complaint must be construed liberally, and the plaintiff should receive the benefit of all favorable inferences that can be drawn from the alleged facts. See EEOC v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 624 (D.C. Cir. 1997). Additionally, a court may consider material other than the allegations of the complaint in determining whether it has jurisdiction to hear the case, as long as it still accepts the factual allegations in the complaint as true. See Jerome Stevens Pharmaceuticals, Inc. v. FDA, 402 F.3d 1249, 1253-54 (D.C. Cir. 2005); St. Francis Xavier Parochial Sch., 117 F.3d at 624-25 -3- n.3; Herbert v. Nat'l Acad. of Scis., 974 F.2d 192, 197 (D.C. Cir.1992). Rule 12(b)(3) instructs the court to dismiss or transfer a case if venue is improper or inconvenient in the plaintiff's chosen forum. Fed. R. Civ. P. 12(b)(3). When federal jurisdiction is premised on diversity of citizenship, 28 U.S.C. § 1391(a) controls venue, establishing three places where venue is proper: (1) a judicial district where any defendant resides, if all defendants reside in the same State, (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or (3) a judicial district in which any defendant is subject to personal jurisdiction at the time the action is commenced, if there is no district in which the action may otherwise be brought. If the district in which the action is brought does not meet the requirements of section 1391(a), then that district court may either dismiss, "or if it be in the interests of justice, transfer such case to any district or division in which it could have been brought." 28 U.S.C. § 1406(a). The decision whether dismissal or transfer is "in the interests of justice" is committed to the sound discretion of the district court. Naartex Consulting Corp., 722 F.2d at 789. Generally, the interests of justice require transferring such cases to the appropriate judicial district rather than dismissing them. Goldlawr, Inc. v. Heiman, 369 U.S. 463, 466- 67 (1962); James v. Booz-Allen, 227 F.Supp.2d 16, 20 (D.D.C. 2002). To transfer a case, the transferor court must find that the intended transferee court is one in which the plaintiff could have originally brought the action. 28 U.S.C. § 1406(a). While the D.C. Circuit does not appear to have addressed the meaning of the phrase "in which an action could have been brought," the phrase has been interpreted to mean that the transferee court must have both personal jurisdiction and venue. Id.; 17 FED. PRAC. & PROC. § 3827; 17 -4- MOORE'S FED. PRAC., § 111.33[1] (citing Minnette v. Time Warner, 997 F.2d 1023, 1026 (2d Cir. 1993) (observing that the district court properly denied transfer to a district in which venue was improper)); Harman v. Pauley, 522 F.Supp. 1130, 1133 (S.D.W.Va.1981) (noting that "[t]he transferee court must have or be able to obtain personal jurisdiction over the defendant")). DISCUSSION I. Subject Matter Jurisdiction The FDIC moves to dismiss the complaint for lack of subject matter jurisdiction on the ground that FIRREA allows plaintiff to file suit against the FDIC in only one jurisdiction. Plaintiff responds that FIRREA authorizes this Court to exercise jurisdiction over his claim. For the reasons discussed below, the Court will deny the FDIC’s motion to dismiss for lack of subject matter jurisdiction. Under FIRREA, a person with claims against a failed financial institution must submit those claims to the FDIC if the FDIC steps in as a receiver. 12 U.S.C. § 1821(d)(6). If the FDIC denies those claims, the person can then seek judicial review of the FDIC decision within 60 days. To do so, the claimant must file suit on such claim (or continue an action commenced before the appointment of the receiver) in the district or territorial court of the United States for the district within which the depository institution’s principal place of business is located or the United States District Court for the District of Columbia (and such court shall have jurisdiction to hear such claim). 12 U.S.C. §1821 (d)(6). The FDIC argues that plaintiff could only either (1) continue the action commenced in the District of Maryland before the FDIC was appointed as receiver or (2) initiate new litigation in this Court or the district court for the district in which WAMU’s principal place of business is -5- located. See Def.’s Mem. at 4-5. Because plaintiff has continued his suit in the District of Maryland, the FDIC contends, he must abandon his case there if he wishes to file a new action in this Court. Id. at 5. The statute, however, does not divest this Court of subject matter jurisdiction over plaintiff’s claim, which he timely and properly filed under FIRREA. By the time that plaintiff filed his case in this Court, the FDIC had already been appointed as receiver. In such “post- receivership” cases, the District of Maryland would not have had subject matter jurisdiction over plaintiff’s case. Instead, under FIRREA, only this Court or the district court in the district where WAMU’s principal place of business is located would have jurisdiction over plaintiff’s claims. See Lloyd v. Federal Deposit Ins. Corp., 22 F.3d 335, 337 (1st Cir. 1994). The statute explicitly provides that these courts “shall have jurisdiction over such claims”; no provision divests jurisdiction in cases where the plaintiff has continued a previous claim in a different court. The Court therefore declines to adopt the FDIC’s narrow interpretation, which would automatically deprive this Court of jurisdiction in post-receivership cases if the plaintiff had filed elsewhere. Here, plaintiff timely filed his post-receivership complaint in this Court within 60 days of the FDIC’s denial of his claims, as required under FIRREA in order to seek judicial review of his claims. As described above, section 1821(d)(6)(a) explicitly permits plaintiff to file in this Court or in the district court where WAMU’s principal place of business is located. Under FIRREA, it is plain, then, that this Court exercises subject matter jurisdiction over plaintiff’s claim. II. Venue The FDIC also moves to dismiss for improper venue, arguing that plaintiff's pending litigation in the District of Maryland renders venue in this Court improper. See Def.'s Mem. at 3. -6- The Court finds that venue in this Court is proper, however. In post-receivership cases such as this one, FIRREA authorizes filing in either the District of Columbia or the district court of the district where WAMU's principal place of business is located. See Hudson United Bank v. Federal Deposit Ins. Co., 43 F.3d 843, 849 (3rd Cir. 1994) (affirming district court's holding that, in post-receivership cases, 12 U.S.C. § 1821(d)(6)(A) limits venue to the district court where the depository institution had its principal place of business or the District of Columbia); American Nat'l Ins. Co. v. Federal Deposit Ins. Co., No. G-09-44, 2009 U.S. Dist. LEXIS 89465, at 6 (D. Tex. Sept. 9, 2009) (finding that the FDIC as a receiver for failed institutions has a "right to defend suits against it at specific locations," including the District of Columbia). Nothing in the statute indicates that the District of Columbia becomes an improper venue under circumstances such as those in this case. Accordingly, this Court is a proper venue for plaintiff's case. III. Duplicative Litigation Finally, the FDIC asserts that this case is duplicative of plaintiff's pending case in the District of Maryland, which also involves the FDIC, the same subject matter, and substantially similar claims. Plaintiff acknowledges that he has filed the same case in this Court, out of concern that the District of Maryland no longer has subject matter jurisdiction over his claim. For reasons of comity and judicial economy, the Court will grant the FDIC's motion to dismiss this plainly duplicative case. District courts have the discretion to stay or dismiss a pending suit when confronted with parallel litigation of factually related cases filed in two separate forums. Handy v. Shaw, 325 F.3d 346, 349 (D.C. Cir. 2003). In fact, in situations of parallel litigation in two federal district -7- courts, the U.S. Supreme Court has stated that "though no precise rule has evolved, the general principle is to avoid duplicative litigation." Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 817 (1976) (citations omitted). Moreover, it is well-established in the D.C. Circuit that "[w]here two cases between the same parties on the same cause of action are commenced in two different federal courts, the one which is commenced first is to be allowed to proceed to its conclusion first." Washington Metro. Area Transit Auth. v. Rogonese, 617 F.2d 828, 830 (D.C. Cir. 1980) (citations omitted). The Circuit has warned against mechanically applying the first-filed-rule if the second-filed action deserves priority, see Columbia Plaza Corp. v. Sec. Nat'l Bank, 525 F.2d 620, 628 (D.C. Cir. 1975), but "considerations of comity and orderly administration of justice dictate that two courts of equal authority should not hear the same case simultaneously," Washington, 617 F.2d at 830 (citations omitted); see also Columbia, 525 F.2d at 626 ("Sound judicial administration counsels against separate proceedings, and the wasteful expenditure of energy and money incidental to separate litigation of identical issues should be avoided."); Nat'l Family Planning and Reproductive Health Ass'n v. Sullivan, 1991 WL 345629, at 2 (D.D.C. Oct. 5, 1992) ("This principle of judicial comity is derived from the policies favoring the conservation of judicial resources as well as providing for the comprehensive disposition of litigation before the federal courts."). Plaintiff acknowledges that he has a case involving substantially similar claims and the same subject matter pending against the FDIC in the District of Maryland. See Pl.'s Opp. at 3. ("There is another pending action between the same parties in a different forum."). Plaintiff filed his case against WAMU in Maryland state court on December 31, 2007. Def.'s Mem. at 2. The -8- case was later removed to the District of Maryland, and the FDIC substituted itself for WAMU in the suit on January 15, 2009, nearly a year before the filing of this action. Id. In the Maryland case, plaintiff has also sued additional parties, including the FDIC; he makes some additional claims; and he also seeks relief under Maryland's Consumer Protection Act. See Compl. ¶¶ 79-100. Although the Maryland case was stayed for approximately a year while the FDIC evaluated plaintiff's claims, the stay was lifted, and litigation recommenced as of January 7, 2010. Since then, plaintiff's case in Maryland has proceeded further, and the FDIC has a pending cross-claim in that case. See Def.'s Mem. at 6. The most recent filing in that case was on May 11, 2010, and the litigation has now reached the summary judgment stage. Although plaintiff is concerned that the District of Maryland no longer retains subject matter jurisdiction over his claims, the case law overwhelmingly suggests otherwise. Under FIRREA, courts have recognized that a plaintiff can "continue an action commenced before the appointment of the receiver," whether or not the case was originally filed in this Court or in the district within which the depository institution's principal place of business is located. See e.g., Holmes Financial Assoc. v. Resolution Trust Corp., 33 F.3d 561, 567 (6th Cir. 1994) (finding state court retained original jurisdiction over pre-receivership claim); Serge Marquis v. Federal Deposit Ins. Corp., 965 F.2d 1148, 1152-55 (1st Cir. 1992) (holding that federal court retains jurisdiction in a pre-receivership claim); King v. Long Beach Mortgage Co., 672 F. Supp. 2d 238, 245 (D. Mass. 2009); Resolution Trust Corp. v. J.F. Assocs., 813 F. Supp. 951, 956-58 (N.D.N.Y. 1993); Vinton v. Trustbank Savings, 798 F. Supp. 1055, 1061 (D. Del. 1992); Coston v. Gold Coast Graphics, Inc., 782 F. Supp. 1532, 1535-36 (S.D. Fl. 1992); Guidry v. Resolution Trust Corp., 790 F. Supp. 651, 653 (E.D. La 1992); Aliberti, Larochelle & Hodson Eng'r Corp. v. -9- First Meridian Group, 795 F. Supp. 42, 45 (D. Me. 1992). Here, plaintiff filed his complaint in Maryland before the FDIC was appointed as receiver, and under FIRREA, plaintiff was entitled to continue his Maryland action in that court. In such "pre-receivership claims," the District of Maryland retains jurisdiction over his complaints. Indeed, the FDIC has not challenged plaintiff's claim that his complaint is properly in the District of Maryland. See Def.'s Reply to Pl.'s Opp. to Mot. to Dismiss at 1 ("Def.'s Reply") ("There is no dispute that [the Maryland] Court has jurisdiction over Plaintiff's claims.). Additionally, plaintiff need not have any concern about the propriety of venue in Maryland. The FDIC has acknowledged that venue properly lies in the District of Maryland and has waived any objection to venue in that court. See Def.'s Mem. at 1 (The FDIC "respectfully submits that . . . the United States District Court for the District of Maryland is the proper forum to litigate Plaintiff's claims."). Accordingly, the District of Maryland both has subject matter jurisdiction and is a proper venue to entertain plaintiff's claims under FIRREA. CONCLUSION This Court will avoid duplicative litigation by deferring to the United States District Court for the District of Maryland to resolve this case. Hence, although the Court will deny the FDIC’s motion to dismiss on subject matter jurisdiction and venue grounds, for reasons of comity and judicial economy the Court will dismiss plaintiff’s complaint without prejudice. A separate Order accompanies this Memorandum Opinion. /s/ JOHN D. BATES United States District Judge Dated: November 23, 2010 -10-	01-03-2023	04-04-2014
https://www.courtlistener.com/api/rest/v3/opinions/2665102/	UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA Teddy-Lawrence, ) ) Plaintiff, ) ) v. ) Civil Case No. 10-1786 (RJL) ) State of Michigan Inc. et ai., ) ) Defendants. ) MEMORANDUM ORDER Plaintiff, who identifies himself as "Teddy-Lawrence .. From the family of [Boniecki]," filed a pro se civil complaint on October 21, 2010, against the State of Michigan, the County of Macomb, and the City of Roseville-all of which he refers to as incorporated entities-and a number of individual defendants. For the following reasons, the complaint is DISMISSED without prejudice. Rule 8(a) of the Federal Rules of Civil Procedure requires that a complaint contain a short and plain statement of the grounds upon which the court's jurisdiction depends, a short and plain statement showing that the pleader is entitled to relief, and a demand for judgment for the relief the pleader seeks to obtain. Fed. R. Civ. P. 8(a). The purpose of the minimum standard of Rule 8 is to give fair notice to the defendants of the claim being asserted, sufficient to prepare a responsive answer, to prepare an adequate defense and to determine whether the doctrine of res judicata applies. Brown v. Califano, 75 F.R.D. 497,498 (D.D.C. 1977). The Court is mindful that complaints filed by pro se litigants are held to less stringent standards than formal pleadings drafted by lawyers. See Haines v. Kerner, 404 u.s. 519, 520 (1972). Having reviewed plaintiffs complaint, however, the Court cannot discern which claims are made against the various defendants and on what basis. Plaintiff alleges that he is "a living soul" that was the victim of unspecified fraud, constitutional violations, and "Plunder." He quotes unrelated portions of the u.s. Code and references congressional acts against communist takeovers. As drafted, the complaint fails to comply with Rule 8(a). It simply does not contain a short and plain statement of ~ claim showing that the plaintiff is entitled to relief. Accordingly, it is, this «day of October, 2010, hereby ORDERED that the case is dismissed without prejudice pursuant to Rule 8(a); and it is further ORDERED that the Clerk, in addition to electronic notice, shall mail a paper copy of this Order to plaintiff at his address of record. SO ORDERED. ct Judge 2	01-03-2023	04-04-2014
https://www.courtlistener.com/api/rest/v3/opinions/2668408/	UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ACTION ALLIANCE OF SENIOR CITIZENS, et al., Plaintiffs, v. Civil Action 06-01607 (HHK) CHARLES E. JOHNSON, Acting Secretary of Department of Health and Human Services, et al. Defendants. MEMORANDUM OPINION Action Alliance of Senior Citizens (“Action Alliance”), the Gray Panthers, and Lucy Carolyn Loveall (together, “Plaintiffs”) bring this action against defendants Charles E. Johnson (“Secretary”) in his official capacity as Acting Secretary of the Department of Health and Human Services (“HHS”) and Michael J. Astrue (“Commissioner”) in his official capacity as Commissioner of the Social Security Administration (“SSA”) (together, “Defendants”). Plaintiffs bring their claims in response to the Secretary’s efforts to recover erroneous Medicare premium payments sent to approximately 230,000 participants in the Medicare Part D Prescription Drug Plan (“Part D”) including Loveall and participants belonging to the Action Alliance or the Gray Panthers (together, “Medicare Participants”). Plaintiffs seek injunctive, declaratory, and mandamus relief requiring the Secretary to provide the Medicare Participants with notice of their putative right to seek a waiver of recovery, a period within which to exercise their rights, and a hearing. For those Medicare Participants who have returned the premiums, Plaintiffs seek a court order that would require the Secretary to return those funds to those Medicare Participants until they have been notified of and given an opportunity to request the aforementioned waiver. Before the court are Defendants’ motion to dismiss the complaint [#49], and Plaintiffs’ cross-motion for summary judgment [#50]. Upon consideration of the motions, the oppositions thereto, and the record of this case, the court concludes that Defendants’ motion should be granted and Plaintiffs’ motion should be denied. I. BACKGROUND The background facts concerning the Medicare program, Medicare Part D specifically, and the facts giving rise to this litigation along with its procedural history are thoroughly set forth in the D.C. Circuit’s opinion in this case:1 Medicare Part D, established by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Pub. L. No. 108-173, 117 Stat. 2066, offers subsidized prescription drug insurance coverage. 42 U.S.C. § 1395w-101(a)(1). Whereas under Medicare Parts A and B the government pays providers on participants’ behalf for goods or services received, under Part D the government contracts for and subsidizes insurance plans offered by private, third-party insurers. Id. at § 1395w-115. Part D participants pay monthly premiums to their insurers. See id. § 1395w-113(a). Most make these payments directly, but about 20% have opted to have the [SSA] deduct the amount of their Part D premium from their monthly benefits under Title II of the Social Security Act and transmit that sum, on the participant's behalf, to the insurer. Id. §§ 1395w-116(b)(3) & 1395w-24(d)(2)(A); see also 42 C.F.R. §§ 423.293(a) & 422.262(f) (2006). [Qualifying low-income participants may have their premiums subsidized in full or in part by the government. 42 U.S.C. § 1395w-114.] 1 On September 27, 2006, this court issued an order granting the Plaintiffs’ motion for a preliminary injunction and denying the Defendants’ motion to dismiss. Action Alliance of Senior Citizens v. Leavitt, 456 F. Supp. 2d 11 (D.D.C. 2006) (“Action Alliance I”). The U.S. Court of Appeals for the D.C. Circuit vacated that order and remanded the case. Action Alliance of Senior Citizens v. Leavitt, 483 F.3d 852 (D.C. Cir. 2007) (“Action Alliance II”). After the case was remanded, a supplemental and second amended complaint was filed that included the Commissioner and Loveall, neither of whom were parties to this action in the original complaint. 2 The SSA, which plaintiffs have not sued, administers Old-Age, Survivor, and Disability Insurance benefits under Title II of the Social Security Act; [HHS] administers the various Medicare programs found under Title XVIII of that Act. Since 1994 the SSA, directed by the [Commissioner], has been independent of HHS. See Social Security Independence and Program Improvements Act of 1994, Pub. L. No. 103-296, 108 Stat. 1464; 42 U.S.C. §§ 401-434 (Title II); id. §§ 1395-1395hhh (Title XVIII). In a monumental gaffe in early August 2006, the SSA wrote to some 230,000 participants, stating “[w]e will no longer deduct money for your health plan premium(s) from your monthly benefits.” The letter also said, without further explanation, that the addressee would be receiving a check in a specified amount, coinciding with the recipient's premium for the just-past month. The average payment was $215, for a total of some $47 million. The parties agree these payments were all made in error. In early September, the Secretary requested repayment of the funds by the end of that month, but indicated that “[i]f returning the amount in full presents you with a hardship, you may request to make monthly installment payments for as many as seven months.” The Secretary's letter also stated (accurately) that despite the mistaken payment to the insured, “prescription drug coverage will continue uninterrupted.” On September 15, Action Alliance and the Gray Panthers . . ., advocacy organizations whose membership includes many Part D participants, filed suit in district court seeking injunctive, declaratory, and mandamus relief on statutory and constitutional grounds. (The plaintiffs later amended their complaint to add Lucy Carolyn Loveall, a Part D participant who received a check for $161.70, a sum which she spent and states she is now unable to repay.) The complaint rested in part on 42 U.S.C. § 1395gg, which allows the government to recover funds where “more than the correct amount is paid under th[e] [Medicare] subchapter . . . for items or services furnished an individual,” § 1395gg(b), but provides for government waiver of this recovery: There shall be no adjustment as provided in subsection (b) of this section (nor shall there be recovery) in any case where the incorrect payment has been made . . . with respect to an individual who is without fault . . . if such adjustment (or recovery) would defeat the purposes of subchapter II [Old-Age, Survivors, and Disability Insurance] or subchapter XVIII [Medicare] of this chapter or would be against equity and good conscience. 42 U.S.C. § 1395gg(c). The Alliance asserted that Part D participants who received erroneous payments were entitled, under § 1395gg, to “written notice . . . of their right to seek waiver of 3 repayment” and an oral hearing prior to recovery of such payments. The district court rejected this claim, noting that § 1395gg applies only to payments for “items or services” (such as under Medicare Parts A and B), and thus that its waiver provision did not encompass erroneous premium refunds. Action Alliance I, 456 F. Supp. 2d at 18. But the court observed that Medicare Part A and B participants who authorize SSA to withhold their premiums under those parts do enjoy a waiver right for erroneous premium refunds. Internal SSA policy guidelines, in the form of its Program Operations Manual System (“POMS”), create such a right on the basis of Title II’s general waiver provision, 42 U.S.C. § 404(b). Action Alliance I, 456 F. Supp. 2d at 18-20; see also Social Security Administration, Program Operations Manual System § HI 01001.330.A. Section 404 addresses adjustment or recovery of incorrect payments to Title II (Social Security) beneficiaries “[w]henever the Commissioner of Social Security finds that more or less than the correct amount of payment has been made to any person under this [Title II] subchapter.” 42 U.S.C. § 404(a). Section 404(b) goes on to say: In any case in which more than the correct amount of payment has been made, there shall be no adjustment of payments to, or recovery by the United States from, any person who is without fault if such adjustment or recovery would defeat the purpose of this subchapter or would be against equity and good conscience. Id. § 404(b). Although the POMS was silent as to waiver for erroneous refunds of Part D premiums, the district court [concluded] that the “statutory scheme” required that Part D beneficiaries receive the same treatment as those under Parts A and B. Action Alliance I, 456 F. Supp. 2d at 20. [Therefore, the district court granted Plaintiffs’ motion for a preliminary injunction and] ordered the Secretary to re-return the erroneous payments to Part D participants who had repaid them and to notify all recipients of a right to request a hardship waiver. Action Alliance II, 483 F.3d at 854-55 (internal record citations omitted) (alteration in original). Defendants appealed, and the D.C. Circuit vacated this court’s preliminary injunction order and remanded the case. With respect to this court’s finding of a meritorious waiver claim under 42 U.S.C. § 404(b), the D.C. Circuit held that this court lacked jurisdiction to consider the 4 claim because Plaintiffs did not present it to the Commissioner before seeking judicial review as required by 42 U.S.C. § 405(g)-(h) and because the existence of an administrative remedy precluded mandamus jurisdiction. See Action Alliance II, 483 F.3d at 856-58 (citing Weinberger v. Salfi, 422 U.S. 749 (1975)). With respect to Plaintiffs’ waiver claim under 42 U.S.C. § 1395gg, the D.C. Circuit agreed with this court in holding that the claim lacked merit because “by its plain terms, 1395gg applies to overpayments to a ‘provider of services’ for ‘items or services furnished an individual.’ It has nothing to do with erroneous refunds of Medicare premiums.” Action Alliance II, 483 F.3d at 860-61. Following the D.C. Circuit’s decision and in an apparent effort to meet the jurisdictional requirements set forth in that decision with respect to a waiver claim under 42 U.S.C. § 404(b), Plaintiffs’ counsel sent a separate letter from each of the plaintiffs to the Secretary and the Commissioner asking them to notify the Medicare Participants of their right to request a waiver under 42 U.S.C. § 404(b) and how to exercise that right. (See Pl’s. Second Am. Compl. [#47], Ex. B.) On August 16, 2007, Plaintiffs received a response from Beatrice M. Disman, Chair of the SSA’s Medicare Planning and Implementation Task Force (“Chair”) denying their requests. (See id., Ex. H.) Specifically, the Chair reasoned that 42 U.S.C. § 404(b) did not apply to the erroneous refunds of Part D premiums because such refunds did not cause Plaintiffs to receive more than the correct amount of Title II social security benefits; rather, Plaintiffs received the correct amount of Title II benefits. (See id.) Thereafter, Plaintiffs filed their Second Amended Complaint [#47]. In that complaint, Plaintiffs contend that Defendants’ refusal to provide written notice to Medicare Participants of their right to seek a waiver of repayment and Defendants’ failure to offer Medicare Participants an 5 oral hearing prior to such recovery violate 42 U.S.C. § 404(b), 20 C.F.R. § 404.501 et seq., POMS § HI 01001.330B, and the Due Process Clause. II. ANALYSIS The briefs of the parties raise two principal issues. First, whether this court lacks subject matter jurisdiction over the claims raised by Action Alliance and the Gray Panthers because they failed to meet the presentment requirement.2 Second, whether the 42 U.S.C. § 404(b) waiver provision applies to the erroneous refunds of Part D premiums, which are at issue in this case.3 The court will address these issues in turn. A. The Court Has Subject Matter Jurisdiction Over The Claims Raised By The Association Plaintiffs Action Alliance and the Gray Panthers. Defendants contend that the court lacks subject matter jurisdiction over the claims of the two association plaintiffs, Action Alliance and the Gray Panthers, because these two plaintiffs have not satisfied the requirement that they present their claims to the Commissioner before seeking judicial review. See 42 U.S.C. §§ 405(g)-(h); Action Alliance II, 483 F.3d at 856-58 (relying on Weinberger, 422 U.S. at 756, 763-64). Specifically, Defendants contend that the letters that Action Alliance and the Gray Panthers sent to the Commissioner did not satisfy the presentment requirement because they were from the associations rather than their members, (Pl’s. Second Am. Compl. [#47], Ex. B), and the court has held that neither association has 2 Defendants concede that the court has subject matter jurisdiction over Loveall’s claim, and the court agrees. 3 The court rejects Plaintiffs’ efforts to re-characterize the erroneous Part D premium refunds as anything other than premium refunds. See Action Alliance II, 483 F.3d at 860-61 (holding that 42 U.S.C. 1395gg had nothing to do with the “erroneous refunds of Medicare premiums” at issue in this case); Action Alliance I, 456 F. Supp. 2d en passim (adopting Plaintiffs’ initial characterization of the erroneous payments as Medicare Part D premium refunds). 6 organizational standing. Action Alliance I, 456 F. Supp. 2d at 16 n.4. Although this court has held that Action Alliance and the Gray Panthers have representational standing,4 see Action Alliance I, 456 F. Supp. 2d at 16, Defendants still contend that the associations cannot establish subject matter jurisdiction in their representational capacities because none of their members have presented a claim to the Commissioner. Plaintiffs counter that Defendants’ position would have the court conflate the presentment requirement with the representational standing analysis, and that whether individual members have presented a claim to the Commissioner cannot disturb the court’s holding that Action Alliance and the Gray Panthers have representational standing. See id. Defendants rejoin, in essence, that Plaintiffs have missed the point and in doing so confused the issue. According to Defendants, representational standing alone is not enough for Action Alliance and the Gray Panthers to maintain this action. In addition to representational standing, Defendants point out that the D.C. Circuit has identified a separate and independent hurdle that Plaintiffs must clear—the presentment requirement. According to Defendants, the association plaintiffs cannot meet the presentment requirement because none of their members have presented a claim to the Commissioner and received a final decision rejecting that claim. The issue before the court is not whether Action Alliance and the Gray Panthers have standing but rather whether they have satisfied the presentment requirement and thereby established this court’s subject matter jurisdiction over their claims. Plaintiffs bear the burden of establishing subject matter jurisdiction. See Shuler v. United States, 531 F.3d 930, 932 (D.C. Cir. 2008). As the D.C. Circuit observed in vacating this court’s previous order, the “starting point[s] 4 To the extent that Defendants seek to reargue the court’s holding that Action Alliance and the Gray Panthers have representational standing, the court rejects their attempt. 7 for analysis” of the subject matter jurisdiction question here are 42 U.S.C. §§ 405(g)-(h), which contain the “nonwaivable” requirement that Plaintiffs present their claims to the Commissioner before seeking judicial review. See Action Alliance II, 483 F.3d at 856-57 (citing Mathews v. Eldridge, 424 U.S. 319, 328 (1976)). This presentment requirement serves as an “absolute prerequisite” to review and precludes jurisdiction. Id. at 857 (citing Nat’l Kidney Patients Ass’n v. Sullivan, 958 F.2d 1127, 1129-30 (D.C. Cir. 1992)). The court finds that Action Alliance and the Gray Panthers have satisfied the presentment requirement; therefore, this court has subject matter jurisdiction over their claims. The case that decides the issue is Shalala v. Illinois Council on Long Term Care, Inc., 529 U.S. 1 (2000) (“Illinois Council”). In Illinois Council, an association representing several nursing homes filed suit against the Secretary invoking federal question jurisdiction and alleging that certain Medicare-related regulations violated various statutes and the Constitution. Id. at 5. The district court dismissed the suit finding that it lacked subject matter jurisdiction. Id. Specifically, the district court held that the plaintiff association could not establish subject matter jurisdiction because it had not presented a claim to the Commissioner before seeking judicial review as required by 42 U.S.C. §§ 405(g)-(h). Id. Before the Supreme Court, the plaintiff association contended that it should be excused from satisfying the presentment requirement because “[as] an association, not an individual, it [could] not take advantage of the special review channel” for presenting a claim. Id. at 24. The Court rejected this argument finding that the association “speaks only on behalf of its member[s] . . . and [i]t is essentially their rights to review that are at stake.” Id. Therefore, the Court held that either “[t]he association or its members” may satisfy the presentment requirement before seeking judicial review. Id. at 5. Thus, under Illinois 8 Council, Action Alliance and the Gray Panthers may satisfy the presentment requirement of 42 U.S.C. § 404(b), and their letters to the Commissioner did so. Accordingly, the court holds that it has subject matter jurisdiction over the claims raised by Action Alliance and the Gray Panthers. B. The 42 U.S.C. § 404(b) Right To Seek A Waiver Does Not Apply To Erroneous Refunds of Medicare Premiums. Plaintiffs contend that the Medicare Participants are entitled to notice of their right to seek waiver of repayment of the erroneous premium refunds, the opportunity to exercise their rights, and a hearing. Defendants counter that no statute or regulation provides the Medicare Participants with the right to seek a waiver of recovery. The issue boils down to a question of statutory interpretation. The parties and the court agree that in reviewing this question of statutory interpretation, the court must follow the two-step inquiry set forth in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43 (1984). Under Chevron, the court first inquires as to “whether Congress has directly spoken to the precise question at issue.” Id. at 842. “If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.” Id. at 842-43. Second, “[if] the court determines [that] Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute . . . .” Id. at 843. “Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s [interpretation] is based on a permissible construction of the statute.” Id. If the agency’s interpretation “fills a gap or defines a term in a way that is reasonable in light of the legislature's revealed design, [the court gives] the administrator's judgment ‘controlling weight.’” 9 NationsBank of N.C. v. Variable Annuity Life Ins. Co., 513 U.S. 251, 257 (1995) (quoting Chevron, 467 U.S. at 844). The court may disregard the agency’s interpretation, however, where it is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A); Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 413-14 (1971); Kent County v. EPA, 963 F.2d 391, 393 (D.C. Cir. 1992). Proceeding to the first step of the Chevron analysis, the court asks whether Congress has spoken to the precise question at issue; namely, whether the Medicare Participants have a right to request a waiver of repayment of the erroneous Medicare Part D premium refunds. Plaintiffs’ purported right to request a waiver is rooted in provisions of the Social Security statute; namely in “Subchapter II. Federal Old-Age, Survivors, and Disability Insurance Benefits” (“Title II”). Therein, Plaintiffs rely on § 404, which “addresses adjustment or recovery of incorrect payments to Title II (Social Security) beneficiaries.” Action Alliance II, 483 F.3d at 855 (emphasis added). The provisions of § 404 grant the Commissioner the authority to recover erroneous payments “whenever [he] . . . finds that more or less than the correct amount of payment has been made to any person under this subchapter [Title II] . . . .” 42 U.S.C. § 404(a) (emphasis added). Subsection (b), however, provides a limitation on the Commissioner’s authority to recover: [i]n any case in which more than the correct amount of payment has been made, there shall be no adjustment of payments to, or recovery by the United States from, any person who is without fault if such adjustment or recovery would defeat the purpose of this subchapter [Title II] or would be against equity and good conscience. 42 U.S.C. § 404(b) (emphasis added). The right to seek a waiver of recovery arises from the limitation in § 404(b). The question here is not whether the right to seek a waiver under § 404(b) 10 exists in the abstract but rather whether that waiver right applies to the erroneous Part D premium refunds in this case. Defendants contend that the Medicare Participants are not entitled to seek a waiver of recovery because § 404(b) applies only to payments under “this subchapter [Title II],” whereas the erroneous Part D premium refunds were made under “Subchapter XVIII. Health Insurance for Aged and Disabled” (“Title XVIII”), not under Title II. Plaintiffs counter that § 404(b) is not limited to Title II, and even if it were so limited, § 404(b) would apply to the erroneous Part D premium refunds at issue in this case because those refunds were provided to the Medicare Participants from Title II funds. The court’s interpretation of §404 begins with the plain “text and the presumption that Congress ‘says in a statute what it means and means in a statute what it says there.’” Nuclear Energy Inst., Inc. v. EPA, 373 F.3d 1251, 1309 (D.C. Cir. 2004) (quoting Conn. Nat’l Bank v. Germain, 503 U.S. 249, 254 (1992)). The text here could not be clearer: under § 404(a)-(b), the Commissioner’s right to recover and the concomitant right to seek a waiver of recovery are limited to payments made “under this subchapter [Title II].” The statutory text provides no indication that Congress intended the provisions to apply to any subchapters other than Title II.5 Indeed, Title XVIII does not incorporate § 404 as it does numerous other provisions of Title II: The provisions of sections 406 and 416(j) of [42 U.S.C.], and of subsections (a), (d), (e), (h), (i), (j), (k), and (l) of section 405 of [42 U.S.C.], shall also apply with respect to this subchapter [Title XVIII] to the same extent as they are applicable with respect 5 The court need look no further than the statute at issue in Action Alliance I for the proposition that Congress says so when it intends the waiver right to reach beyond Title II. 42 U.S.C. § 1395gg(c) (“There shall be no . . . recovery . . . where the incorrect payment has been made . . . with respect to an individual who is without fault . . . if such . . . recovery would defeat the purposes of subchapter II or subchapter XVIII . . . .”) (emphasis added). 11 to subchapter II of this chapter [Title II], except that . . . any reference therein to the Commissioner . . . shall be considered a reference to the Secretary . . . .”). 42 U.S.C. § 1395ii; cf. Action Alliance II, 483 F.3d at 859 (noting that “§ 405(g) is conspicuously absent from the list of Title II provisions incorporated into Medicare by § 1395ii.”) To the extent that Plaintiffs invite the court to read a waiver right into § 404(b) that is broader than the recovery right in § 404(a) simply because § 404(b) refers to “the purposes of [Title II]” in contrast to § 404(a) which refers to “payments . . . under [Title II],” the court refuses that invitation. To accept it would be to divorce § 404(b) from § 404(a) and in doing so contravene the canon of statutory construction that “a statute is to be read as a whole,” see King v. St. Vincent's Hosp., 502 U.S. 215, 221 (1991), especially where construing adjacent subsections with remarkably similar structures, see United States v. Atl. Research Corp., 551 U.S. 128, [2336] (2007). Because the court finds that § 404(b) applies only to payments under Title II, the court cannot sustain Plaintiffs’ contention that they are entitled to seek a waiver of recovery for the erroneous Part D premium refunds they received under Title XVIII. The court also rejects Plaintiffs’ effort to bring Part D premium refunds within the gambit of Title II and thus within the scope of § 404(b) by arguing that the refunds must have been debited from Title II funds considering that the Secretary already had paid the premiums to private insurers. Although the parties expend much effort tracing the source of the erroneously-paid funds in distinguishing between an “overpayment” and a “premium refund,” the source of the funds has no bearing on the court’s determination because the statute does not contemplate the precise source of the funds as being indicative of legal rights. The erroneous refunds were distributed under the authority of Title XVIII, which governs Medicare programs administered by 12 HHS, see 42 U.S.C. §§ 1395-1395hhh, independently of the SSA, see id. §§ 901 et seq., and provides the statutory authority for the SSA to deduct Part D premiums from Social Security benefits, id. § 1395w-113(c)(1) (incorporating by reference id. § 1395w-24(d)(2)(A)). Even if the erroneous Part D refunds were made from Title II funds, the SSA made them under the authority of Title XVIII, not Title II; thus, they fall outside the scope of § 404(b).6 Because the court finds that “the intent of Congress is clear, that is the end of the matter.” Chevron, 467 U.S. at 842. Accordingly, the court need not proceed to the second step of the Chevron analysis nor need it consider Plaintiffs’ arguments based on the C.F.R. or the POMS. Finally, the court rejects Plaintiffs’ claim that Defendants violated Due Process by failing to provide the Medicare Participants with notice of their waiver right because Plaintiffs can identify no protected liberty or property interest stemming from the putative waiver right considering the court’s holding that the Medicare Participants have no right to seek a § 404(b) waiver in the first place. 6 The court reaches this conclusion notwithstanding its previous observation that the POMS modeled its waiver for Medicare Parts A and B on the general waiver provision in § 404(b), see Action Alliance I, 456 F. Supp. 2d at 18, and notwithstanding its previous holding that Plaintiffs demonstrated a substantial likelihood of success on the merits of their claim that the POMS waiver extends to Part D, see id. at 23. Although both this court and the D.C. Circuit observed that the POMS waiver was modeled after § 404(b), neither court held that the POMS waiver was authorized by § 404(b) nor that plaintiffs were entitled to seek a waiver under § 404(b). See Action Alliance II, 483 F.3d at 855; Action Alliance I, 456 F. Supp. 2d at 18. 13 III. CONCLUSION For the foregoing reasons, Defendants’ motion to dismiss [#49] is GRANTED, and Plaintiffs’ motion for summary judgment [#50] is DENIED. An appropriate order accompanies this Memorandum Opinion. Henry H. Kennedy, Jr. United States District Judge 14	01-03-2023	04-04-2014
https://www.courtlistener.com/api/rest/v3/opinions/2593136/	805 F. Supp. 436 (1992) Willie Lee GRACE, Jr. v. KEYSTONE SHIPPING COMPANY. No. 1: 91 CV 964. United States District Court, E.D. Texas, Beaumont Division. October 19, 1992. 437 438 Theodore R. Johns, Jr., Beaumont, Tex., for plaintiff. Alan G. Sampson, Benckenstein Oxford & Radford, Beaumont, Tex., for defendant. MEMORANDUM OPINION AND ORDER GRANTING SUMMARY JUDGMENT FOR KEYSTONE SHIPPING COMPANY SCHELL, District Judge. CAME ON TO BE CONSIDERED Defendant's Motion for Summary Judgment and the court's Notice of Intent to Consider Additional Grounds for Summary Judgment in Favor of Keystone Shipping, and the court, after reviewing the Motion, the Notice, the responses in opposition, the pleadings of record, and all attached exhibits is of the opinion that summary judgment should be GRANTED for Defendant Keystone Shipping Company. I. BACKGROUND A. Facts The Plaintiff, Willie Lee Grace, Jr. ("Grace"), filed suit against Keystone Shipping Company ("Keystone"), Shipco 669, Inc., and Connecticut National Bank under the Jones Act, 46 U.S.C.App. § 688, and under general maritime law. The plaintiff voluntarily dismissed his claims against Shipco 669, Inc., and Connecticut National Bank, leaving Keystone as the remaining defendant. Grace's claims against Keystone arise out of an incident on January 6-7, 1989, aboard the S/S KENAI, a ship operated by Keystone. The S/S KENAI was returning from Panama en route to Texas City, Texas laden with crude oil. On January 6, 1989, ship Captain Charles Ebersole and Chief Mate Mark Sizemore conducted a pre-arrival search for contraband. Upon discovering a plastic baggie containing a green leafy substance in Grace's stateroom, the captain placed an entry in the ship's Official Log charging Grace with possession of marijuana. On January 7, the U.S. Coast Guard boarded the S/S KENAI with U.S. Customs and search dogs. The Coast Guard conducted a test on the green leafy substance and the substance tested positive as marijuana. Subsequently, the Coast Guard initiated proceedings to revoke Grace's seaman's document in a Coast Guard administrative proceeding pursuant to 46 U.S.C. § 7703 and 46 C.F.R. Part 5. Grace was charged with possession of a controlled substance while serving under the authority of his seaman's document. Also charged in the same proceeding was Ruby Payten. Grace's attorney objected to the joinder of Grace and Payten as unduly prejudicial to Grace because Payten had previously been convicted of marijuana possession. The objection was overruled. Both Payten and Grace denied the charge of misconduct. See, U.S. Coast Guard Hearing of Willie Lee Grace and Ruby Payten, (March 20, 1989), (attached as Exhibit "G" to Keystone's 439 Further Support for Summary Judgment). In accord with 46 C.F.R. Part 5, Grace was afforded the near equivalent of a civil trial in front of an Administrative Law Judge. Grace was represented by counsel, given the opportunity to subpoena, present, and cross-examine witnesses, and given the right to testify or remain silent. Grace's defense to the charge of possession was that any marijuana found in his stateroom was not his, nor did he have any knowledge of it. At the conclusion of the administrative hearing, the Administrative Law Judge found by a preponderance of the evidence that the marijuana found in Grace's stateroom was possessed by him. Having found that Grace possessed contraband, the Administrative Law Judge automatically revoked Grace's seaman's document. Section 5.61 of 46 C.F.R. makes revocation mandatory when a charge of "wrongful possession" of "dangerous drugs" is proven by a preponderance of the evidence, except when a respondent in a revocation hearing involving marijuana can establish that any use was merely experimentation. Because Grace denied any ownership or knowledge over the marijuana found in his locked briefcase in his stateroom, he did not raise this defense and revocation was mandatory. Grace appealed the Administrative Law Judge's decision of October 17, 1989. The Administrative Law Judge's decision was affirmed. Commandant Appeal Decision 2504 (Grace), August 20, 1990. Grace's further appeal to the National Transportation Safety Board was dismissed as untimely. Commandant v. Grace, N.T.S.B. Order No. ME-144. The Fifth Circuit affirmed the dismissal. Grace v. National Transp. Safety Bd., 966 F.2d 1447 (5th Cir. 1992). B. Grace's Jones Act and General Maritime Claims Section V of Plaintiff's First Amended Original Complaint alleges: On or about the 7th day of January, 1989, Plaintiff was employed as a seaman aboard the vessel "SS KENAI" official number 586127. That on that date the Master of said ship caused the Coast Guard to place a charge of misconduct against Plaintiff and as a result of the actions of the Master, Plaintiff sustained severe and painful injuries to his body. Such action and injuries occurred as proximate result of the unsafe and unseaworthy condition of the "SS KENAI" and its appurtenances and/or equipment, or in whole or in part as a proximate result of the negligence and lack of attention on the part of the Defendant-Employer, its agents, servants and/or employers [sic], acting in the course and scope of their employment or agency. In answers to interrogatories propounded by Keystone as to injury or illness, Grace responded that he "suffered injury to his stomach, nervous system, and chest resulting in physical pain and mental anguish. The injuries were caused by the trauma of being charged due to the unseaworthiness of the vessel due to the making-up [sic] of the crew." (answer to interrogatory number 18, dated May 11, 1992). In response to interrogatory 19 concerning unseaworthiness and negligence, Grace responded: The vessel was unsafe and unseaworthy on the occasion in question because the crew contained a person or persons that had been convicted of the possession of controlled substances and jeopardized Plaintiff as a seaman. That some members of the crew were in use of alcoholic beverages aboard the vessel, making the vessel unsafe and the make-up of the crew was a proximate cause of injuries to the Plaintiff. (May 11, 1992 answer to interrogatories). C. Keystone's Motion for Summary Judgment and the Court's Sua Sponte Notice to Consider Additional Grounds Keystone filed its motion for summary judgment on the basis that the plaintiff had failed to present any evidence linking Keystone to any wrongdoing, negligence, or unseaworthiness, and the plaintiff had also failed to present any evidence that any alleged wrongdoing or unseaworthiness 440 was a proximate or producing cause of the plaintiff's injuries. The court sua sponte tendered to the parties its intention to consider two additional bases for summary judgment: 1) the Administrative Law Judge's finding that Grace knowingly possessed marijuana collaterally estops Grace from further contesting that fact, thereby precluding any liability on the part of Keystone, since Grace's liability contentions necessarily hinge on his claim that the marijuana was not his but was surreptitiously planted in his briefcase inside his stateroom by other crew members; and 2) no recovery under the Jones Act or under general maritime law is possible for purely emotional injuries in the absence of physical contact or the threat of physical contact. II. DECISION A. Standards for Summary Judgment Rule 56(c), Fed.R.Civ.P., permits a district court to grant a summary judgment sua sponte. Arkwright-Boston Mfrs. Mutual Ins. Co v. Aries Marine Corp., 932 F.2d 442, 445 (5th Cir.1991). Summary judgment is required when there is no genuine issue of material fact. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). There is no "genuine issue" when the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986). The moving party, or in this case the party in whose favor summary judgment on sua sponte notice can be granted, may discharge its burden by showing to the court that there is an absence of evidence on an essential element of the nonmovant's case, and on which the nonmovant will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). In this situation, "... there can be no genuine issue as to any material fact, since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Id. 477 U.S. at 323, 106 S. Ct. at 2552-53. When summary judgment is sought on this basis, it is the nonmoving party's burden to submit sufficient probative "evidence favoring the nonmoving party for a jury to return a verdict for that party." Anderson, 477 U.S. at 249, 106 S. Ct. at 2511. All evidence of the nonmovant is to be believed, and all reasonable inferences are to be drawn in the nonmovant's favor. Id. 477 U.S. at 254-57, 106 S. Ct. at 2513-14. B. Collateral Estoppel Entitles Keystone to Summary Judgment 1. Grace's Two Theories of Liability? Based on Grace's pleadings, answers to the Defendant's interrogatories, and Grace's response to Keystone's Motion For Summary Judgment Or Abatement, it appears that he bases his liability contentions on possibly two theories. First, the unseaworthy or unsafe condition of the S/S KENAI crew caused someone else's marijuana to turn up in his stateroom. In other words, the drug using propensities of one or more crew members, possibly Ruby Payten, led to a false charge to be placed against Grace. Second, Grace is apparently now alleging that general drunkenness and drug use among the crew led to the search of his stateroom, somehow creating a fact issue on negligence and proximate cause, even if the marijuana was in fact Grace's. 2. Collateral Estoppel based upon the Coast Guard Proceeding In the Fifth Circuit, collateral estoppel bars relitigation of issues if: 1) the issue at stake is identical to the one involved in the prior litigation; 2) the issue was actually litigated; and 3) the determination of the issue in the prior litigation was a critical and necessary part of the judgment in the earlier action. Matter of Lewisville Properties, Inc., 849 F.2d 946, 949 (5th Cir.1988). The Supreme Court has "long favored" the application of collateral estoppel to determinations of administrative bodies acting in a judicial capacity that have achieved finality. Astoria Fed. Sav. & 441 Loan Ass'n v. Solomino, ___ U.S. ___, ___, 111 S. Ct. 2166, 2169, 115 L. Ed. 2d 96 (1991); United States v. Utah Constr. & Mining Co., 384 U.S. 394, 86 S. Ct. 1545, 16 L. Ed. 2d 642 (1966). In Utah Construction, the Supreme Court upheld the use of preclusion "[w]hen an administrative agency is acting in a judicial capacity and resolves disputed issues of fact properly before it which the parties have had an adequate opportunity to litigate...." 384 U.S. at 422, 86 S.Ct. at 1560. The Fifth Circuit has applied the Utah Construction test to preclude relitigation. See, e.g., Castillo v. Railroad Retirement Bd., 725 F.2d 1012, 1014 (5th Cir.1984) (prior administrative determination that employee was not disabled precluded relitigation in subsequent proceeding); Painters District Council No. 38 v. Edgewood Contracting Co., 416 F.2d 1081, 1084 (5th Cir.1969) (N.L.R.B. finding that union had engaged in an unfair labor practice was entitled to preclusive effect in a subsequent lawsuit). "The policy considerations which underlie res judicata finality to litigation, prevention of needless litigation, avoidance of unnecessary burdens of time and expense are as relevant to the administrative process as to the judicial." Id. at 1084. The Coast Guard administrative hearing Grace received satisfies the Utah Construction test. The administrative hearing was judicial because its very purpose was to resolve the fact question of whether the marijuana found in his stateroom was wrongfully possessed by Grace. See 46 C.F.R. Part 5 (describing hearing procedure). The issue of whether the marijuana was Grace's was properly before the Administrative Law Judge because the Coast Guard has jurisdiction pursuant to 46 U.S.C. § 7703. The Administrative Law Judge resolved the disputed issues of fact and found by a preponderance of the evidence that Grace wrongfully possessed marijuana. Grace had an adequate opportunity to litigate the issue of wrongful possession in the administrative hearing. Grace was represented by counsel, was given the opportunity to call and cross-examine witnesses, was given the opportunity to make opening and closing statements, and was entitled to and did receive ultimate findings of fact and conclusions of law on the record. Furthermore, Grace was entitled to appeal the administrative decision, which he did. With such an elaborate procedure, it is no surprise that other federal district courts have applied collateral estoppel to issues previously decided by Coast Guard document revocation proceedings under 46 C.F.R. Part 5 and 46 U.S.C. § 7703. See, e.g., Wentworth v. Cole, 1990 A.M.C. 253, 1989 WL 208287 (D.Haw.1990) (permitting plaintiffs to collaterally estop defendants from contesting negligence where Coast Guard revocation proceeding found defendants negligent). Grace will be collaterally estopped if the fact issue adjudicated in the administrative hearing satisfies the three-part test of Lewisville. First, the precise issue of which Keystone seeks to preclude relitigation is the issue of Grace's marijuana possession, and is therefore identical. The only arguable variance between the administrative hearing and this lawsuit concerns whether the Administrative Law Judge found that the marijuana was "knowingly possessed" by Grace, or merely "possessed," without knowledge. Although the Administrative Law Judge did not use the exact words "knowingly possessed," it is abundantly clear from the Administrative Law Judge's decision and order that his use of the word "possession" included "knowingly." In normal and customary legal usage, "possession" includes knowledge of control. See BLACK'S LAW DICTIONARY 1047 (5th ed. 1979). The Administrative Law Judge's opinion reflects that Grace "denied knowledge or ownership" of the marijuana found in his stateroom and the record of the hearing reflects that Grace testified that he did not have knowledge of the substance. If the Administrative Law Judge understood that the charge of possession did not include a requirement of knowledge, then the Administrative Law Judge would not have given any consideration to Grace's contentions that he had no knowledge of the substance. At the very least, he would have stated that knowledge was not a necessary element of possession. 442 Instead, the Administrative Law Judge undertook to enunciate the facts that tended to prove that Grace had the means and the opportunity to purchase the marijuana while in Panama. Furthermore, Grace was charged with and found liable for "misconduct" and his document was suspended for "wrongful possession" of dangerous drugs. There is no reported decision which even indirectly suggests that a seaman's document can be suspended or revoked for "unknowing" possession of a controlled substance. The terms "misconduct" and "wrongful" necessarily connote knowledge of wrongdoing. Consequently, when the Administrative Law Judge used "possession" of marijuana as a basis to find "misconduct" and "wrongful possession", he defined "possession" as "knowing possession." Second, Lewisville requires that the issue must have been actually litigated. The issue of Grace's marijuana possession was the only issue litigated in the Coast Guard hearing. Finally, the issue resolved in the administrative hearing must have been essential to the judgment. The Administrative Law Judge revoked Grace's seaman's document and could not have done so without first finding the charge of misconduct to be true. Furthermore, Grace's document was revoked pursuant to 46 C.F.R. § 5.59, which is only applicable when the Administrative Law Judge finds proven a charge of misconduct for "wrongful" possession or use of drugs. Thus, the judgment in the administrative hearing necessarily turned on the fact issue of marijuana possession. 3. A Collateral Attack on Collateral Estoppel? Grace argues that collateral estoppel is not applicable because the joining of Ruby Payten as a co-respondent in the administrative hearing was procedurally incorrect and so highly prejudicial as to render the hearing unfair to Grace. Grace raised this issue in his appeal of the Administrative Law Judge's decision. The U.S. Coast Guard Commandant found no prejudicial error and found that the record with respect to the co-respondent was individualized and adequate to support the findings. Even if the joinder of Payten constituted some sort of irregularity, Grace's remedy was to timely appeal the decision of the Commandant affirming the Administrative Law Judge. Of course, if the prior administrative hearing denied Grace "the full and fair opportunity" to litigate the claim or issue, then preclusion is improper. Griffen v. Big Spring Indep. School Dist, 706 F.2d 645, 654 (5th Cir.1983), cert. denied, 464 U.S. 1008, 104 S. Ct. 525, 78 L. Ed. 2d 709 (1984). The procedure in the Coast Guard administrative hearing was not so fundamentally unfair that it denied Grace the opportunity to fully and fairly litigate the issue of whether Ruby Payten was improperly joined. Erroneous final judgments, even if based upon subsequently overruled legal principles, are entitled to preclusive effect. Federated Dep't Stores v. Moitie, 452 U.S. 394, 399, 101 S. Ct. 2424, 2428, 69 L. Ed. 2d 103 (1981). To open a voidable, but not void, final judgment to collateral attack on the basis of some procedural error in the proceedings would render the doctrines of collateral estoppel and res judicata meaningless, since the very purpose of those doctrines is to avoid relitigation. Id. This court concludes that the doctrine of collateral estoppel precludes Grace from relitigating the issue of whether he "knowingly possessed" the marijuana found in his stateroom. Therefore, as a matter of law, the marijuana was Grace's. 4. Grace's Possession of Marijuana and the Viability of His Jones Act and General Maritime Claims Grace's first theory is that the unseaworthy and unsafe make-up of the crew led to the clandestine placement of marijuana in Grace's stateroom by other crew members. Grace's affidavit and deposition testimony denying ownership or knowledge of the marijuana, see Opposing Affidavit of Willie Lee Grace, Jr., and Deposition of Willie Lee Grace, Jr., pages 66-68, (attached as exhibits "D" and "E" to the Plaintiff's Response to Motion for Summary Judgment or Abatement), coupled with his affidavit 443 and deposition testimony that Ruby Payten had a key to his locked stateroom, see Grace Affidavit, Grace Deposition, pages 114-116, plus his affidavit testimony of rampant drug and alcohol use among the crew, see Grace Affidavit, might well support an inference that the unseaworthy nature of the crew led to a false charge of marijuana possession. However, the Administrative Law Judge's finding that Grace possessed the marijuana precludes Grace from contesting that fact in this forum, and Grace cannot prevail as a matter of law on this theory of liability. Grace's second theory of liability seems to be that the general unseaworthy nature of the crew led to the discovery of the marijuana in Grace's stateroom. Grace argues that even if the marijuana was his, that fact is only evidence of contributory negligence and cannot preclude Keystone's liability completely. Johnson v. Offshore Express, Inc., 845 F.2d 1347, 1355 (5th Cir.) (pure comparative negligence governs Jones Act and unseaworthiness claims), cert. denied, 488 U.S. 968, 109 S. Ct. 497, 102 L. Ed. 2d 533 (1988). Nevertheless, Grace must still establish either that Keystone's negligence or the unseaworthy condition of the ship proximately caused his injuries in the first place. In re Cooper/T. Smith, 929 F.2d 1073, 1076-77 (5th Cir. 1991), cert. denied, ___ U.S. ___, 112 S. Ct. 190, 116 L. Ed. 2d 151 (1992). To establish proximate cause in an unseaworthiness claim, the plaintiff must prove that the unseaworthy condition played a substantial part in bringing about the injury and that the injury was a direct result or a reasonably probable consequence of the unseaworthiness. Johnson, 845 F.2d at 1354. Compared to unseaworthiness, the Jones Act burden to prove causation is "very light" or "featherweight." Landry v. Two R. Drilling Co., 511 F.2d 138, 142 (5th Cir.1975). Nevertheless, summary judgment in a Jones Act case is proper when there is a complete absence of proof on any essential element of the nonmoving party's case, including proximate cause. In re Cooper/T. Smith, 929 F.2d at 1077. Assuming that the Jones Act or the general maritime law actually permits a seaman to knowingly possess marijuana and yet maintain an action against his employer for damages when it is discovered, Grace has no evidence to support his contention that the unseaworthy or unsafe nature of the crew was even a "featherweight" proximate cause of his injuries. All the evidence before the court shows that the search of Grace's stateroom was conducted pursuant to a routine pre-arrival search for contraband. Nothing offered by Grace shows any causal connection between the allegedly unsafe nature of the crew and the discovery of marijuana in Grace's stateroom. Grace relies on Captain Ebersole's testimony at the revocation hearing to show causation. Captain Ebersole's testimony at Grace's revocation hearing does not demonstrate how the allegedly unseaworthy crew led to the discovery of the marijuana. His testimony at the revocation hearing was that the Coast Guard search dogs were alerted in Ruby Payten's room on January 7, 1989, but that he did not witness the event. U.S. Coast Guard Hearing of Willie Lee Grace and Ruby Payten, March 20, 1989, 41-42, (attached as Exhibit "F" to the Plaintiff's Response to the Court's Notice to Consider Additional Grounds for Summary Judgment). Normally, Captain Ebersole's lack of personal knowledge would render his statement incompetent under Federal Rule of Evidence 602. Lack of personal knowledge would make Ebersole's statement unusable by Grace because summary judgment evidence must be such that it can be produced in admissible form at trial. Geiserman v. MacDonald, 893 F.2d 787, 793 (5th Cir.1990). However, it appears that Captain Ebersole's statement at the document revocation hearing was made while he was still an agent or servant of the defendant and it does concern a matter within the scope of his employment or agency. Therefore, it is an admission of a party opponent under Federal Rule of Evidence 801(d)(2)(D), and no personal knowledge is required. Mahlandt v. Wild Canid 444 Survival & Research Ctr., Inc., 588 F.2d 626, 630-31 (8th Cir.1978). Even with Ebersole's statement, however, there is no evidence of a causal connection between the allegedly unseaworthy crew and the discovery of marijuana in Grace's stateroom. The dog search with U.S. Customs took place after Customs boarded on January 7, 1989. The undisputed evidence shows that the search of Grace's stateroom took place on January 6, 1989, a full day before the search dogs were alerted to Ruby Payten. Furthermore, nothing links the discovery of Payten's marijuana to the discovery of Grace's, or in the alternative, demonstrates how Grace would have avoided discovery had the search dogs not been alerted by Payten's possession. Despite the "featherweight" burden of causation in a Jones Act case, mere speculation or conjecture is insufficient to overcome summary judgment. In re Cooper/T. Smith, 929 F.2d at 1078. Grace's conclusory allegations in his answers to the Keystone's interrogatories that the unsafe condition of the crew proximately caused his injuries are insufficient. Orthopedic & Sports Injury Clinic v. Wang Laboratories, Inc., 922 F.2d 220, 225 (5th Cir.1991) (unsupported affidavits that set forth ultimate or conclusory facts are insufficient to defeat a motion for summary judgment). C. Grace's Injuries do not Support Recovery under the Jones Act or the General Maritime Law 1. No Unseaworthiness Claim for Mental Anguish Keystone is also entitled to summary judgment on the basis that Grace's injuries are not compensable under either general maritime law or the Jones Act. As to Grace's unseaworthiness claim, the rule in the Fifth Circuit is that: the ancient right to recover for unseaworthiness is limited to recovery of "loss of earnings, past and prospective, ... medical expenses ..." and also an additional sum on account of his physical injuries and for pain and suffering. Gaston v. Flowers Transp. Co., 866 F.2d 816, 820-21 (5th Cir.1989) (citing Sosa v. M/V Lago Izabal, 736 F.2d 1028, 1034 (5th Cir.1984)). It is also the established rule of this court. Kiffe v. Neches-Gulf Marine, Inc., 709 F. Supp. 743, 745 (E.D.Tex.1989) (Schell, J.). Grace presents no cognizable claim under general maritime law. 2. No Jones Act Recovery without the Threat of Physical Contact The rule in the Fifth Circuit for recovery of purely emotional injuries under the Jones Act was recently reemphasized in Plaisance v. Texaco, Inc., 966 F.2d 166 (5th Cir.1992) (en banc). In Plaisance, the en banc majority rejected the panel's holding that purely emotional injuries were recoverable when "a reasonable person, normally constituted, would not be able to cope adequately with the mental distress occasioned by the circumstances." Id. at 168 (citing Plaisance v. Texaco, Inc., 937 F.2d 1004, 1010 (5th Cir.1991)). The en banc court emphasized that the Fifth Circuit rule remained the one announced in Gaston v. Flowers Transp., 866 F.2d 816 (5th Cir. 1989). Plaisance, 966 F.2d at 169. Gaston denied recovery for purely emotional injury from witnessing harm to another in the absence of physical contact. 866 F.2d at 821. The en banc court in Plaisance interpreted Gaston as leaving open the question of whether recovery was permitted under a "zone of danger" theory, but rejecting all less exacting standards of recovery for purely emotional injuries. Plaisance, 966 F.2d at 169. The "zone of danger" theory permits recovery for purely emotional injuries absent any physical contact, which result "from the witnessing of peril or harm to another if the plaintiff is also threatened with physical harm as a consequence of the defendant's negligence." Plaisance, 966 F.2d at 168. The Fifth Circuit has not adopted this theory of recovery. Ainsworth v. Penrod Drilling Corp., 972 F.2d 546 (5th Cir.1992). Even if it did, Grace cannot recover under it. The "zone of danger" theory requires the threat of physical harm or contact. Id. Grace argues that he was confronted with search dogs, and *445 those dogs produced fear on his part. The only evidence of Grace's contact with search dogs is in his deposition where he states: "They [the Coast Guard] came in with some dogs and they went through all my baggage and stuff." Deposition of Willie Lee Grace, Jr., lines 20-21, page 61, (attached as Exhibit "A" to Plaintiff's Response to Motion for Summary Judgment or Abatement). There is no showing that Grace was ever threatened with physical contact or harm. 3. No Purely Emotional Recovery Even with Intentional Tortious Conduct Grace arguably could distinguish Gaston and Plaisance by arguing that neither dealt with employer negligence which results in intentional tortious conduct directly aimed at harassing the plaintiff. Gaston recognized that the Ninth Circuit permitted recovery for emotional damage resulting from a campaign of harassment directed at the plaintiff. 866 F.2d at 821 (citing Taylor v. Burlington Northern R.R. Co., 787 F.2d 1309, 1312-13 (9th Cir. 1986). Other circuits have rejected purely emotional recovery for intentionally tortious conduct aimed at the plaintiff. See, e.g., Hammond v. Terminal R.R. Ass'n of St. Louis, 848 F.2d 95, 96 (7th Cir.1988) (claim that employer had harassed plaintiff with unwarranted disciplinary charges and deliberately inflicted emotional distress was not actionable under F.E.L.A), cert. denied, 489 U.S. 1032, 109 S. Ct. 1170, 103 L. Ed. 2d 229 (1989); Adkins v. Seaboard Sys. R.R., 821 F.2d 340, 341 (6th Cir.) (deliberate and premeditated tortious conduct not actionable under F.E.L.A in the absence of physical contact), cert. denied, 484 U.S. 963, 108 S. Ct. 452, 98 L. Ed. 2d 392 (1987). Given these authorities and the Plaisance court's interpretation of Gaston, it is highly unlikely that the Fifth Circuit would permit recovery for purely emotional injuries resulting from even intentional tortious conduct. Even if the Fifth Circuit did carve out an exception to Gaston for intentional conduct aimed at the plaintiff, Grace would still not be able to recover. In order for Grace to make out a case that he was the target of intentional tortious conduct, he would have to establish that someone intentionally created conditions that led to his injuries. The only possible scenario for intentional conduct resulting from an unseaworthy crew is that Keystone's negligence caused someone to plant the marijuana with the intent that it would be discovered in Grace's possession. Grace is collaterally estopped from contesting that the marijuana was his. Keystone is therefore entitled to summary judgment. IT IS, therefore, ORDERED that Summary Judgment is GRANTED for Defendant Keystone for the reasons set forth in this memorandum opinion and order.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2593658/	743 F. Supp. 112 (1990) TOWN OF SAUGERTIES, Plaintiff, v. EMPLOYERS INSURANCE OF WAUSAU, a mutual company, and D'Annunzio Constructors Corp., Defendants. Nos. 85-CV-1633, 85-CV-1523. United States District Court, N.D. New York. July 19, 1990. 113 Couch, White Brenner Howard & Feigenbaum (Leslie F. Couch, of counsel), Albany, for plaintiff. Hart & Hume (Henry James Wallach, of counsel), for defendants. MEMORANDUM-DECISION AND ORDER McCURN, Chief Judge. Introduction This action arises out of a contract entered into in 1984 by the Town of Saugerties and a contractor, D'Annunzio Constructors Corp. ("D'Annunzio" or "contractor"), for the construction of a sewer project in the town. Disputes over performance of the contract developed between the town, D'Annunzio, and Employers Insurance of Wausau ("Wausau"), the holder of a performance bond on which D'Annunzio was the principal and the town the obligee. The disputes culminated in two lawsuits that have been consolidated and are now before the court. In counterclaims against the town, the defendants D'Annunzio and Wausau seek recovery of a sum of money they contend they are owed under a change order in the contract, and/or recovery in quantum meruit for services rendered to the town. The town now moves for summary judgment dismissing the counterclaims on the ground that the defendants failed to comply with Section 65(3) of the New York Town Law, which requires that a party bringing a contract action against a town must first file a notice of claim with the town within six months of the accrual of its cause of action, and must not commence the action until 40 days have elapsed from the filing of the notice of claim. The defendants argue that a timely notice of claim was filed with the town, and that, in addition, Section 65(3) does not apply to those counterclaims which seek quasi-contractual remedies. The defendants cross-move for leave to amend their counterclaims to include an allegation that a timely notice of claim was filed, and for the court to deem that the 40-day waiting period for commencement of their action has passed. Background On June 25, 1984, the plaintiff, Town of Saugerties, entered into a contract with defendant D'Annunzio for the construction of a sewer project. In connection with the contract, defendant Wausau, as the surety, issued performance and payment bonds on behalf of the contractor, as principal, and in favor of the town, as obligee. The parties agree that the contractor entered into performance of the contract, and that disputes eventually arose over, among other things, the contractor's contention that certain subsurface conditions unknown to the parties at the time of contracting made it impossible for the contractor to complete the contract as originally agreed. On November 22, 1985, the contractor commenced an action in this court against the town, seeking damages for (1) moneys due but unpaid under the contract; (2) extra work performed at the request of the town; and (3) interference and other acts by the town including the careless and negligent preparation of plans and specifications for the contract. See Wallach affid., Exh. 1. On or about December 20, 1985, the town commenced an action against defendant Wausau, as surety on the performance bonds. Around this time, the contractor stopped work on the project. Negotiations began between the town and D'Annunzio toward resolution of the disputes and the two pending lawsuits. As a result of the negotiations, the town and D'Annunzio entered into a change order, known as Change Order 3-12. The important alterations made by the change order were that the time to complete the contract was extended to December 1, 1987, and that the contract was changed from a unit price contract to a stipulated sum contract, with the contract amount set at $3,600,000.00. At the same time, attorneys for 114 the town, D'Annunzio and Wausau entered into a stipulation signed as "so ordered" by the court and dated September 5, 1987, which, among other things, provided for the dismissal of the two lawsuits upon completion of the work to be performed under the contract, including Change Order 3-12. The contractor then resumed work on the sewer project. The contractor submitted estimates for payment to the town in October and November 1987. Estimate No. 20, submitted in November, showed that the value of the work completed was $3,600,000.00, the total contract amount. The town, however, withheld payment of approximately $427,000, because it contended the contractor did not comply with the plans and specifications of the original contract or with Change Order 3-12. Couch affid., para. 21. Nevertheless, the sewer system is functional, and has been used by the town since December 1987. Through 1988, the town and contractor continued to meet and exchange correspondence regarding work the town felt was required to complete the contract, and the disposition of the $427,000 withheld by the town. For example, in a May 17, 1988, letter from Mr. Wallach, the attorney for the defendants, to Mr. Couch, attorney for the town, Mr. Wallach refers to a meeting at which a settlement proposal was discussed: ... The work under the contract has long been completed, the sewer system has been in operation for quite some time, and the Town is holding in excess of $428,000 in contract balances and retainages for reasons which remain unclear to me. At the meeting on March 31, 1988 among representatives of the Town, D'Annunzio and surety, we made what we believed, and still believe, to be a fair, reasonable and practical proposal, namely, that the Town agree to take a $60,000 total credit against the $428,000 remaining to be paid under the contract for all its claims, including, but not limited to, claims for incomplete and defective work, punchlist items, prospective maintenance, and engineering costs.... Couch affid., Exh. F. In a letter dated September 8, 1988, from Mr. Wallach to Mr. Couch, Mr. Wallach states: The time has come for a decision by the Town with respect to our most recent, and final, settlement proposal. You have indicated that the Town will accept a credit of $150,000 and I have advised you that D'Annunzio and the Surety will agree to such a credit provided that it is in full and final settlement of all matters, claims and disputes of any kind under or in connection with the Contract and performance bond, and that no issues, claims or matters are left open or pending.... Accordingly, you are hereby advised that unless this matter has been resolved among the parties by September 26, 1988, we will proceed to take such action as we deem appropriate, including litigation, to protect and enforce D'Annunzio's and the Surety's interests.... Couch affid., Exh. F. Again, in a letter dated October 19, 1988, Mr. Wallach writes to Mr. Couch: ... D'Annunzio and the Surety renew their offer set forth in my letter of September 8, namely, that they will accept a credit of $150,000 against the contract balance and retainages, in full and final settlement of all matters, claims and disputes of any kind or nature among the parties arising out of or in connection with the Contract and the performance bond, including, but not limited to, all matters involving the DEC and/or EPA. The Town of Saugerties is hereby advised that unless the Contract is closed out on or before November 7, 1988, on the terms and conditions set forth in my letter of September 8, and above, D'Annunzio and the Surety intend to take such action as they deem appropriate to enforce their rights, including seeking relief from the United States District Court, Northern District of New York, on the grounds that the Town has breached the settlement agreement and 115 stipulation entered into in connection with the litigation pending in that Court.... Couch affid., Exh. F. Indeed, in a letter dated November 8, 1988, Mr. Wallach requested the court to schedule a conference to discuss settlement or resumption of litigation: ... The purpose of this letter is to request a conference before the Court to discuss settlement of both the captioned actions and the underlying disputes, or, in the alternative, [if] settlement is not possible, to establish a schedule for the completion of discovery proceedings and the trial of the actions. ... In the circumstances, we respectfully request that the Court schedule a conference in order to discuss settlement of the matter and/or to establish a discovery and trial schedule. Couch affid., Exh. E. A conference was scheduled and the parties met with the court on March 8, 1989. In the meantime, the town had declared the contractor in default on the contract on March 2, 1989, by resolution of the town council. At the conference, the parties informed the court that resolution of many of the disputes between the parties might well depend upon how the New York State Department of Environmental Conservation responded to the town's request for funding of the contract and Change Order 3-12. Wallach affid., p. 7. The attorneys for the town and contractor exchanged correspondence over the next few months, dealing primarily with testing to be done on the sewer project to receive reimbursement for part of the cost from the state. See Wallach affid., Exh. 3 and 4. In a letter dated August 18, 1989, regarding certain testing being done on the sewer project, Mr. Couch wrote to Mr. Wallach that: ... The Town is taking what steps it can to convince the DEC that even though D'Annunzio did not comply with its contract, or meet the ten state standards, the Federal and State governments should fund the project to the maximum percentage of cost allowed by law. Without the cooperation of your client or your clients [sic] principal, this funding will not be available. The Town is also seeking full funding for Change Order 3-12. Again, without cooperation from your client or its principal, this funding will not be available. Given that Federal and State funding is the only way to mitigate the Town's damages, I don't understand your clients [sic] attitude. I suggest we schedule a meeting with the Court to get the litigation back on track and dispose of this matter.... Wallach affid., Exh. 5. Mr. Wallach sent a letter to the court, dated October 5, 1989, summarizing the status of negotiations: ... In response to your letter dated September 27, 1989 requesting counsel to advise you as to the current status of the actions, settlement discussions have so far been unproductive and the status of the matter remains as it was when we last met with Judge McCurn in March, 1989. In the circumstances, we respectfully request that another pretrial conference be scheduled, in Albany if possible, in mid-November, for the purpose of discussing settlement and/or fixing a timetable for the continuation of the actions.... Wallach affid., Exh. 8. Another pretrial conference was conducted on December 6, 1989. According to Mr. Wallach in his affidavit, Mr. Couch stated at the meeting that he had met with representatives from the DEC and they had indicated that the DEC might deduct some $390,000 from its funding of the contract. Mr. Couch also stated that the town would not pay any portion of the $427,000 it withheld from the contractor, and that since D'Annunzio and Wausau were unwilling to sign releases, he would continue litigation. The court also fixed dates for the town to amend its complaint to include allegations arising subsequent to service of the original complaint, and for filing of an answer, and conducting discovery and motions. The town filed an amended complaint on or about January 9, 1990, seeking damages 116 against the contractor and Wausau in the approximate amount of $2,750,000, and including four causes of action alleging that Change Order 3-12 was void and unenforceable because, among other reasons: (1) the change order was entered into at a time when the town was under severe economic duress; (2) the change order was contrary to public policy; (3) the change order was contrary to public bidding laws; and (4) there was no consideration given for the change order. In the defendants' answer, they asserted four counterclaims. In the first counterclaim, defendants seek to recover $425,000 from the plaintiff under the contract, less an amount defendants estimate at $25,000 for certain "punchlist" items remaining to be performed. The second, third and fourth counterclaims assert quasi-contractual claims for the reasonable value of the services performed and unjust enrichment of the plaintiff, conditioned upon the court's finding that Change Order 3-12 is void and unenforceable. The defendants did not allege in their answer or counterclaims that they timely filed a notice of claim with the town, which is a jurisdictional prerequisite to bringing a contract action against a town. N.Y. Town Law § 65(3); Wa-Wa-Yanda, Inc. v. Town of Islip, 25 A.D.2d 762, 269 N.Y.S.2d 154 (2d Dept.1966); aff'd 21 N.Y.2d 1013, 290 N.Y.S.2d 932, 238 N.E.2d 332 (1968); Montauk-Caribbean Airways, Inc. v. Hope, 132 Misc. 2d 496, 505 N.Y.S.2d 297 (Sup.Ct. Suffolk Co.), cert. denied, 479 U.S. 872, 107 S. Ct. 248, 93 L. Ed. 2d 172 (1986); Franza's Universal Scrap Metal, Inc. v. Town of Islip, 89 A.D.2d 843, 453 N.Y.S.2d 24 (2d Dept.1982). Mr. Wallach states in his affidavit, however, that a notice of claim was filed with the town on or about April 4, 1990. The town now moves to dismiss the counterclaims on the ground that no notice of claim was filed, and that the time within which the defendants could file a notice of claim has expired. The defendants contend, on the other hand, that their notice of claim was timely filed, and that their cause of action for the difference, if any, between the amount which would have been payable to D'Annunzio if the contract had been completed, and liquidated damages and the town's cost of completing the work allegedly uncompleted, has not yet accrued. The defendants also argue that the notice provisions of Town Law § 65(3) do not apply to the quasi-contractual remedies sought in the second, third and fourth counterclaims. Defendants cross-move for leave to amend their counterclaims to assert that a timely notice of claim was filed, and asking the court to deem the 40-day waiting period under Town Law Section 65(3) has elapsed. Discussion New York Town Law § 65(3) provides: On and after the first day of September, nineteen hundred thirty-nine, no action shall be maintained against a town upon or arising out of a contract entered into by the town unless the same shall be commenced within eighteen months after the cause of action thereof shall have accrued, nor unless a written verified claim shall have been filed with the town clerk within six months after the cause of action shall have accrued, but no such action shall be brought upon any such claim until forty days have elapsed after the filing of the claim in the office of the town clerk. N.Y. Town Law § 65(3). As discussed supra, the timely filing of a notice of claim is a condition precedent to filing suit against a town, and failure to file a timely notice of claim is a jurisdictional bar to an action. See, e.g., Wa-Wa-Yanda, Inc., 25 A.D.2d 762, 269 N.Y.S.2d 154; Montauk-Caribbean Airways, 132 Misc. 2d 496, 505 N.Y.S.2d 297; Franza's Universal Scrap Metal, 89 A.D.2d 843, 453 N.Y.S.2d 24. In addition, Town Law § 65(3), unlike some other notice statutes, contains no provision allowing the court to excuse compliance with its requirements, and the court lacks authority to do so. See Aqua Dredge, Inc. v. Little Harbor Sound Civic Improvement Ass'n, 114 A.D.2d 825, 826, 494 N.Y.S.2d 736, 737 (2d Dept.1985). The town contended that the counterclaims should be dismissed because no notice of claim has been filed. It should be noted 117 here that the defendants allege a notice of claim was filed with the town clerk on or about April 4, 1990, two days before the filing of the town's motion to dismiss, and that counsel for the town conceded at oral argument that a notice of claim has been filed. The court will proceed, therefore, under the assumption that a notice of claim was filed on April 4, 1990. The town contends, nevertheless, that defendants' cause of action under the contract, if any, accrued when the contractor submitted his final request for payment on the project on November 24, 1987, or in any event, no later than March 2, 1989, when the town declared the contractor in default under the contract. Thus, if the defendants' cause of action accrued on either of these dates, or any date in between, even the notice of claim filed on April 4, 1990, would not have been filed within six months of accrual, and would therefore be untimely. The defendants contend, however, that the parties continued negotiations on a settlement of their contractual disputes after the contractor's final request for payment and the town's declaration of default by the contractor, up until the pretrial conference on December 6, 1989, and therefore, the April 4, 1990, notice of claim was timely filed. In New York, a contractor's cause of action accrues when he should have viewed his claim as being rejected. Arnell Const. Corp. v. Village of North Tarrytown, 100 A.D.2d 562, 473 N.Y.S.2d 489, 491 (2d Dept.1984), aff'd, 64 N.Y.2d 916, 488 N.Y.S.2d 379, 477 N.E.2d 620 (1985); Memphis Const., Inc. v. Village of Moravia, 59 A.D.2d 646, 398 N.Y.S.2d 386, 389 (4th Dept.1977). The town relies on Arnell Const. Corp., in which the court held that a contractor's cause of action accrued when his request for final payment was rejected by the village, and the village indicated it would be willing to pay a lesser amount. The court ruled that the contractor should have viewed its claim as having been rejected on the date its request for final payment was denied, and that a notice of claim filed over two years later was untimely under CPLR § 9802, which contains the notice of claim provision that applies to villages. The contractor's action was thus barred, and its claim was dismissed. Arnell Const. Corp. is distinguishable from the case at bar, however, in that the defendants assert that settlement negotiations continued up until December 6, 1989, after the contractor submitted its final payment and after the town's declaration of the contractor's default. It is important to note here that, although the contractor did not receive payment on his final request for payment, the papers do not show any formal rejection of the contractor's claim, at least until the town's declaration of default on March 2, 1989. The court must determine, then, if at any time, the contractor "should have viewed his claim as having been constructively rejected, thus giving rise to the accrual of a cause of action." Memphis Const., Inc., 59 A.D.2d 646, 398 N.Y.S.2d at 388 (citing City of New York v. State of New York, 40 N.Y.2d 659, 668, 389 N.Y.S.2d 332, 339, 357 N.E.2d 988, 995 (1976)). Certainly, in most cases, the town's declaration that the contractor was in default would indicate that the contractor "possesse[d] the legal right to be paid and to enforce its right to payment in court," thus giving rise to the accrual of the contractor's cause of action. City of New York, 40 N.Y.2d at 668, 389 N.Y.S.2d at 339, 357 N.E.2d at 995. However, as indicated by the correspondence between the parties, they continued thereafter to seek reimbursement from the state under Change Order 3-12, a part of the contract, and the part under which payment is claimed, in hopes of settling their disputes without resort to the judicial process. In the court's view, and as the Court of Appeals noted in City of New York, "it cannot be said as a matter of law that the [contractor's] failure to regard its claims as having been rejected earlier than it did was not justified by the facts surrounding" its communications with the town. Id. at 669, 389 N.Y.S.2d at 340, 357 N.E.2d at 996. The rulings by the courts in City of New York and Memphis Const., Inc. indicate that, although the notice provisions must be strictly adhered to, a party should not be prejudiced by its 118 pursuit of settlement when the circumstances suggest it is possible. See City of New York, 40 N.Y.2d at 669-70, 389 N.Y. S.2d at 340-41, 357 N.E.2d at 996-97; Memphis Const., Inc., 59 A.D.2d 646, 398 N.Y.S.2d at 388; see also J.G. Georg Serv. Corp. v. Town of Summit, 28 A.D.2d 578, 279 N.Y.S.2d 674 (3d Dept.1967). As the Court of Appeals stated in City of New York, "... a disagreement which was never resolved and which was treated by the parties as on-going and capable of nonjudicial resolution ... argue[s] strongly that the city acted properly in basing its conduct on the supposition that something could be worked out short of a lawsuit." Id. at 669, 389 N.Y.S.2d at 340, 357 N.E.2d at 996. Concededly, both City of New York and Memphis Const., Inc. are distinguishable in that they involved delays by the municipalities in performing audits which were statutory conditions precedent to the plaintiffs' claims. However, this difference does not bear on those courts' position that negotiations or other circumstances suggesting the possibility of settlement may delay the accrual of the claimant's cause of action. The town also points to the holding in Memphis Const., Inc. that the plaintiff's claims there were constructively rejected and its claims thus accrued on the date set for the commencement of litigation by the plaintiff's attorney. Plaintiff's attorney wrote to defendant's attorney that: "I now say that we will commence an action against the Village of Moravia in 30 days from this date." Id., 59 A.D.2d 646, 398 N.Y.S.2d at 388. The town here notes that the defendants' attorney sent three letters in 1988 threatening the commencement of litigation. However, the defendants refrained from doing so, apparently because circumstances, including the scheduling of a conference with the court and continuing communications with the state regarding reimbursement, indicated the possibility of settlement. Notwithstanding the foregoing, the defendants also argue that their claim to the difference between the amount which would have been payable under the contract to D'Annunzio if it had completed the work, and liquidated damages and the town's cost of completing the unfinished work, pursuant to Arts. 51 and 52 of the contract,[1] has not yet accrued. Defendants maintain that the town has not advised them that such work has been completed or of its cost. Wallach affid., p. 9. This assertion is not addressed by the town in reply papers, but the defendants appear to be correct in asserting that a cause of *119 action for such amounts has not yet accrued, and thus they would retain the right to that claim. With respect to defendants' second, third and fourth counterclaims, the defendants correctly contend that the notice provisions of Town Law § 65(3) do not apply to them, since they are for quasi-contractual remedies in quantum meruit and for unjust enrichment in the event Change Order 3-12 is declared void and unenforceable. Loughman v. Town of Pelham, 126 F.2d 714, 717 (2d Cir.1942); cf. Accredited Demolition Const. Corp. v. City of Yonkers, 37 A.D.2d 708, 324 N.Y.S.2d 377 (2d Dept.1971) (in action grounded in quasi-contractual principle of unjust enrichment, plaintiff need not comply with notice provisions of Gen.Mun. Law § 50-e); Rochester-Genesee Regional Transp. Dist. v. Trans World Airlines, Inc., 86 Misc. 2d 1011, 383 N.Y.S.2d 856 (Sup.Ct. Monroe Co.1976) (filing of notice of claim under CPLR § 203 unnecessary where defense founded on equitable principles). In addition as defendants' counsel urged at oral argument, the causes of action in the second, third and fourth counterclaims cannot be said to have accrued until the plaintiff raised claims in its amended complaint in January 1990 that Change Order 3-12 was void. The defendants had no basis to raise counterclaims with respect to Change Order 3-12 until that time. Thus, even if the notice of claim provision was to apply to these counterclaims, which in the opinion of the court it does not, the filing of a notice of claim on April 4, 1990, would have been timely. Finally, although the town does not raise this issue, the defendants apparently run afoul of the provision in Town Law § 65(3) which requires that 40 days must elapse from the filing of the notice of claim before commencement of the action. Here, the notice of claim was filed on April 4, 1990, approximately two months after defendants' answer and counterclaims were filed. Although the court could locate no caselaw on this point pertaining to the Town Law, the courts have ruled that, under the analogous provisions of Gen.Mun. Law § 50-i, the service of a notice of claim after, rather than prior to, commencement of the action is a procedural defect only, and is not fatal to the cause of action. Runyan v. Bd. of Educ., 121 A.D.2d 708, 504 N.Y.S.2d 146, 147 (2d Dept.1986); Kelly v. Kane, 98 A.D.2d 861, 470 N.Y.S.2d 816, 818 (3d Dept.1983). Thus, the court may allow the defect to be corrected if there is no showing of prejudice to the other party. Id. Since no showing of prejudice has been made here, the court will allow this procedural defect to be corrected. Conclusion By reason of the foregoing, the town's motion for summary judgment dismissing the counterclaims is denied. Conversely, the defendants' cross-motion for leave to amend the counterclaims to include the allegation that a notice of claim was filed, and for the court to deem the 40-day period for commencement of the action after the filing of the notice of claim as elapsed, is granted. IT IS SO ORDERED. NOTES [1] According to the Wallach affidavit, Art. 51 provides: Unfinished Work Completed by Owner. Upon such declaration of default under the provisions of Art. 48, the Owner shall, by written notice, order the Contractor not to begin or not to resume, or to discontinue all work under this Contract, or any part of such work, and thereupon the Contractor shall not begin, or shall not resume, or shall discontinue all work or such part thereof, and the Owner shall thereupon have the power, in the manner prescribed by law, to contract for the completion of the work of such part thereof, or to place such and so many persons as it may deem advisable by contract or otherwise to work at and to complete the work or part thereof as the Owner may direct, or to place under contract, and take possession of and use any or all plant, tools, appliances, equipment, supplies, property and materials as the Owner may find upon the site, and to procure or cause to be procured, by contract or otherwise, all other plant, tools, appliances, equipment, supplies and property, and materials for the completion of the same, and to charge the whole expense for the completion of the work, or any part thereof, to the Contractor. Art. 52 provides: Payments for Unfinished Work Completed by Owner. The expense so charged, as prescribed in the preceding Article, and also liquidated damages for delay in the completion of the work, if any, as provided, shall be deducted and paid by the Owner out of such monies as may be then due the Contractor, or may at any time thereafter become due under and by virtue of this Contract or any part thereof. In case such expense and liquidated damages, if any, shall exceed the sum which would have been payable under this Contract, if the same had been completed by the Contractor, the Contractor shall pay the amount of such excess to the Owner; and in case such expense and liquidated damages, if any, shall be less than the sum which would be payable to the Contractor, if the Contractor had completed the Contract, he shall be entitled to the difference, subject to all the other terms, covenants, and conditions of this Contract. Wallach affid., p. 8 (emphasis added).	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2593207/	805 F. Supp. 93 (1991) LOCAL 217 HOTEL & RESTAURANT EMPLOYEES UNION, et al. v. MHM, INC. Civ. No. H-90-1038 (JAC). United States District Court, D. Connecticut. August 22, 1991. 94 95 Ruth L. Pulda, Daniel E. Livingston, Gould, Livingston, Adler & Pulda, Hartford, Conn., for plaintiffs. Emanuel N. Psarakis, Duncan R. MacKay, Robinson & Cole, Hartford, Conn., for MHM, Inc. Glifford J. Grandjean, Sorokin, Sorokin, Gross, Hyde & Williams, P.C., Hartford, Conn., for Constitution Management Corp. John P. Pavia, III, Taggart D. Adams, Kelley, Krye & Warren, Stamford, Conn., for Colonial Constitution East Ltd. Partnership. Richard P. Weinstein, Pearson, Baum & Weinstein, P.C., Kerry M. Wisser, Weinstein & Wisser, West Hartford, Conn., for Colonial Realty/USA Corp. 96 ORDER JOSÉ A. CABRANES, Chief Judge. Following review of the record, plaintiffs' objections are OVERRULED, and the recommended ruling of the Magistrate Judge Margolis is APPROVED and ADOPTED as the ruling of the court. It is so ordered. RECOMMENDED RULING ON PLAINTIFFS' MOTION FOR PRELIMINARY INJUNCTION MARGOLIS, United States Magistrate Judge. On December 18, 1990, plaintiffs Joseph Jean, Frederick Grilli, and Harry Parlee, who were formerly employed at the Summit Hotel until its precipitous closing on August 10, 1990, and plaintiff Local 217, the union to which the individual plaintiffs belong, commenced this action against defendant MHM, Inc. ["defendant" or "MHM"], claiming violation of their rights under the following four federal statutes § 301 of the Labor Management Relations Act ["LMRA"], as amended, 29 U.S.C. § 185 (First Count); the Worker Adjustment and Retraining Notification Act of 1988 ["WARN"], 29 U.S.C. § 2102 (Second Count); the Consolidated Omnibus Budget Reconciliation Act of 1986 ["COBRA"], 29 U.S.C. § 1161 et seq. (Third Count); and § 404(a)(1)(A), (B), and (D) of the Employee Retirement Income Security Act of 1974 ["ERISA"], as amended, 29 U.S.C. § 1104(a)(1)(A), (B), and (D).[1] The next day, on December 19, 1990, plaintiffs filed an application for temporary restraining order ["TRO"], a motion for preliminary injunction, and brief in support of both.[2] (Dkt. ## 4-6). On January 4, 1991, a hearing was held before U.S. District Judge Jose A. Cabranes (see Dkt. ## 7-8, 21), at the conclusion of which Judge Cabranes denied the TRO application (Dkt. # 21, at 24-26). Judge Cabranes scheduled the evidentiary hearing on plaintiffs' motion for preliminary injunction for January 17, 1991 (id. at 26-27, 34), permitted both sides to submit affidavits in lieu of direct examination (id. at 28-29, 30-31), and established deadlines for the filing of certain motions (id. at 5-8, 27, 29-30, 31-33).[3] On January 10 and 11, 1991, plaintiffs submitted four affidavits. (Dkt. ## 13-15, 20). On January 16, 1991, Chief Judge Ellen Bree Burns referred the motion for preliminary injunction to this Magistrate Judge in light of Judge Cabranes' serious illness. (Dkt. # 23). On January 31, 1991, defendant filed its brief in opposition to plaintiffs' motion. (Dkt. ## 32-33). Such evidentiary hearing was held before this Magistrate Judge on Friday, February 1, 1991 and on Monday, February 4, 1991, at which a joint stipulation of facts ["Jt. Stip."] was filed. (Dkt. ## 34-35).[4] Four individuals testified for plaintiffs Soula Bitsounis, Frederick Grilli, Harry Parlee, and Joseph Jean, and two individuals testified for defendant Jerry Brophy and Michael Burke. In addition, two witnesses were called by both sides Dennis Cahill and Connie Holt. With permission of the court, on February 19, 1991 and February 21, 1991, defendant and plaintiffs, respectively, filed lengthy post-hearing briefs. (Dkt. ## 46, 41, 42, 45). Supplementary letter-briefs were submitted by plaintiffs and defendant on March 4, 1991 and March 8, 1991, respectively. For the reasons stated herein, plaintiffs' motion for preliminary injunction is denied.[5] 97 I. FACTUAL BACKGROUND Prior to December 1988, the 287-room Summit Hotel in Hartford, Connecticut was owned by the Travelers Indemnity Co. ["Travelers"], through Constitution Plaza, Inc. (Jt. Exh. 58, ¶ 2). On January 1, 1983, Constitution Plaza, Inc. entered into a twenty-eight page "Management Contract" with defendant MHM, Inc., a Delaware corporation with its principal place of business in Dallas, Texas,[6] under which MHM was "... to supervise and administrate ... the management and operation ..." of the Summit Hotel. (Jt. Exh. 9, ¶ 1(a)). Paragraph 2(b) of this Management Contract provided in pertinent part as follows: Employees; Independent Contractor. ... All matters pertaining to the employment, supervision, compensation, promotion and discharge of such employees are the responsibility of ... M.H.M., which is in all respects the employer of such employees. M.H.M. will negotiate with any union lawfully entitled to represent such employees and may execute in the name of the hotel, [sic] collective bargaining agreements or labor contracts resulting therefrom. M.H.H. [sic] shall fully comply with all applicable laws and regulations having to do with worker's compensation, social security, unemployment insurances, hours of labor, wages, working conditions, and other employer-employee related subjects.... This Agreement is not one of agency by ... M.H.M. for [Constitution Plaza, Inc.] but one with ... M.H.M. engaged independently in the business of managing properties on its own behalf as an independent contractor. All employment arrangements are therefore solely its concern and [Constitution Plaza, Inc.] shall have no liability with respect thereto. Paragraph 18 further provided that Constitution Plaza, Inc. retained the right to assign this agreement to any purchaser of the Summit Hotel, provided such purchaser expressly assumed same in writing. The Management Contract was to remain in effect until December 31, 1985, with automatic renewal, if not terminated by either party, for two independent successive terms of three years each. (Id. ¶ 9 & 9(a)). While this Management Contract was in force, on October 1, 1987, the forty-four page Collective Bargaining Agreement at issue in this litigation was executed between plaintiff union Local 217 and MHM. (Jt. Exh. 1, at 44). Like many of the documents discussed in this recommended ruling, the Collective Bargaining Agreement contains inconsistencies as to its parties. Like the signatory section, the first definitional section on page 1 indicates that MHM is the "Employer." However, the cover page reflects that the agreement is between Local 217 and "The Summit Hotel." Travelers is not mentioned in the entire agreement, and had no involvement in its negotiation. (Tr. 82; Tr. 177). Under this agreement, plaintiffs were entitled to a wide variety of benefits, including sick leave (§ 8), vacations (§ 23), group health insurance, group dental insurance, life insurance, and disability insurance (§ 30), and pension benefits (§ 31). Section 45.1 further provided that the agreement was to remain in full force and effect through September 30, 1990, and would be automatically renewed from year to year 98 unless terminated in writing by either party. In December 1988, the Summit Hotel was purchased by Colonial Constitution East Limited Partnership ["CCELP"], a Connecticut limited partnership, the purpose of which was to acquire the Summit Hotel.[7] (Jt. Exh. 58, ¶ 5; Jt. Exh. 62B, ¶ B; Jt. Stip. ¶¶ 5 & 9). MHM had no involvement in the transfer of the hotel from Travelers to CCELP. (Tr. 91). MHM has no common ownership interest, general or limited partners, shareholders, officers or directors with CCELP, or in the Summit Hotel. (Jt. Stip. ¶¶ 7-8; Jt. Exh. 58, ¶ 6). On December 8, 1988, CMC and MHM entered into a letter-agreement, under which the 1983 Management Contract was terminated, a new basis for compensation was established, and the parties agreed to use all reasonable efforts to negotiate a new agreement. (Jt. Exh. 10). Five days later, however, CMC (as agent for CCELP) and MHM entered into a supplemental letter-agreement which reinstated the 1983 Management Contract during the term of negotiations, except for the compensation provisions set forth in the December 8th letter-agreement. (Jt. Exh. 11). A third letter-agreement was signed by CMC (again as agent for CCELP) and MHM on March 15, 1989, which provided that the 1983 Management Contract would continue on a month-to-month basis, except for the compensation provisions found in the December 8th letter-agreement. (Jt. Exh. 12). The next day, MHM forwarded a letter to Colonial Realty Co., the third paragraph of which stated: "The employees of the Summit Hotel became employees of [CCELP] at the time of the ownership change, per our agreements and as stated in the proposed management contract." (Jt. Exh. 13). Local 217 neither received a copy of this letter nor was advised of its contents. (Tr. 89-90, 91, 124-25). Both sides agreed, however, Local 217's relationship with MHM was not altered by the purchase of the Summit Hotel by CCELP, in that MHM continued to remain in charge of the hotel in its day-to-day operations, including hiring of employees, firing of employees, discipline of employees, processing of wages, and grievance procedures. (Tr. 76-78, 80-86, 120-21, 122-24). Like the documents discussed above, there are also inconsistencies in the submissions to governmental agencies with respect to the wages of the employees of the Summit Hotel. For example, plaintiff Grilli's Wage and Tax Statements (IRS Form W-2) for the tax years 1988 and 1989 list the employer as "MHM, INC. C/SUMMIT HOTEL-HARTFORD." (Ps' Exh. 2; Jt. Exh. 4). Michael Burke, who was the General Manager of the Summit Hotel from February 4, 1985 until August 1988 and a Vice President of MHM thereafter (Tr. 75-76), characterized this as a "data processing mistake," in that the federal employer identification number belongs to CCELP. (Tr. 48-49). The Employer's Annual Federal Unemployment (FUTA) Tax Return for tax year 1988, the Employer's Quarterly Federal Tax Return (IRS Form 941) for the last quarter of 1988, and the Employer Summary of Form W-2 Magnetic Media Wage Information (IRS Form 6560) for tax year 1989 all list CCELP as the employer. (Jt. Exhs. 16, 17, 61; Tr. 49-50). The same is true for completed forms provided to the Employment Security Division of the Connecticut Department of Labor for the last quarter of 1988. (Jt. Exhs. 14 & 15). Commencing in late December 1989, MHM, as agent for Summit Hotel, contacted Blue Cross & Blue Shield of Connecticut, Inc. ["BC & BS"] to revise the coverage for the hotel's employees. (See Jt. 99 Exhs. 45, 31, 43, 46-50). Effective February 1, 1990, the health insurance was converted from a fully insured arrangement to a self-insured arrangement; an "Administrative Services Only Agreement" ["ASO"][8] was entered with BC & BS and was signed by Robert Lobo, the hotel's General Manager in which the employer is listed as "The Summit Hotel." (Jt. Exh. 18; Tr. 36-37, 38-40, 46-51. See also Jt. Exh. 32). Between January 1990 and May 1990, MHM engaged in lengthy negotiations with Local 217 with respect to the layoff of approximately twenty employees of the Summit Hotel's restaurant, Gabriel's Cafe. (Tr. 91-92). Although MHM had made the recommendation to close the restaurant, CCELP had the "final say" both with respect to the layoff themselves and the severance package to be given. (Tr. 100, 102-03). On May 15, 1990, Local 217 and MHM entered into a lengthy letter-agreement, effective as of February 1, 1990, with respect to this "reduction in force." (Jt. Exh. 5, ¶ 1.A). This agreement reaffirmed the hotel's right to lay off employees in accordance with and pursuant to the 1987 Collective Bargaining Agreement. (Id.) The Summit Hotel was a financial burden to its respective owners for eighteen years and during 1990 it continued to lose substantial money. (Tr. 239-40, Tr. 36-37, 57-58). On or about June 19, 1990, Lobo received a copy of a report from an accountant for Colonial Realty, a copy of which also was sent to Sisti, which concluded that the Summit Hotel had "experienced a significant operating loss in 1989 and is expected to have negative net operating income for 1990 which will greatly exceed the loss budgeted for the year." (Ps' Exh. 3, at 8; Tr. 65, 66, 68). This report further recommended "disposition of the subject property ... during 1990." (Ps' Exh. 3, at 8). Burke testified that he "discounted" this report, as he "didn't put a whole lot of stock" in it, nor did he believe that the report foreshadowed the closing of the Summit Hotel. (Tr. 97-98, 103-06). One week later, on June 26, 1990, Burke sent a letter to George Lee of Colonial Realty, Inc., which sought "input from ownership regarding how you wish us to handle" negotiations with the plaintiff union. (Jt. Exh. 19). This letter further indicated that "[t]he current cash crisis grows larger and more difficulty every day" and that pending and threatened judicial actions by creditors "will force us to cease operating as we will no longer be able to buy food or fund payroll." (Id.) Burke testified that at the time he wrote this letter, he did not envision that the hotel would close. (Tr. 60, 97). On July 6, 1990, a meeting was attended by Henry Tamarin and Connie Holt for Local 217, Lobo and Burke for MHM, and Preston Harding, Marc Olins, and Bruce Linton for Colonial Realty. (Jt. Exh. 58, ¶ 12, D's Exh. A; Tr. 171-72, 174-76, 178-79, 180, Tr. 50-55, 73-74). This meeting provided the first opportunity for representatives of the union to meet with representatives from Colonial Realty. (Tr. 172, 174-76, Tr. 125-26). This meeting did not constitute a formal negotiating session, but instead consisted of a general discussion of the economy and its impact upon the hotel's financial condition, as well as of the union's position in the upcoming contract negotiations. (Tr. 178, Tr. 51-52, 53-54, 73-74). Holt described this meeting as a "chit chat," the purpose of which was to solicit "creative ideas" in improving the hotel's operation. (Tr. 178-79, 180). Upon questioning by Tamarin, representatives of Colonial Realty indicated that they were "very concerned" about the hotel but that closing it was "only a doomsday approach." (D's Exh. A; Tr. 54). 100 The first negotiating session was held on July 16, 1990, attended only by representatives of Local 217 and MHM, at which the union presented a two-page summary of its demands. (Jt. Exh. 20, Jt. Exh. 58, ¶ 14; Tr. 181-83, Tr. 74-75). No representatives of Colonial Realty were present because they had failed to provide Burke with any "feedback" as to how the negotiations should proceed. (Jt. Exh. 58, ¶ 14; Tr. 98-99). A copy of the two-page summary was forwarded to Linton by MHM on July 25, 1990; this letter further indicated that the next negotiating session was scheduled for August 16, 1990. (Jt. Exh. 21). A meeting was held on July 30, 1990 at Colonial Realty's office, which was attended by Googel, Sisti and Jerry Brophy from CCELP, and by Burke and William Kidwell from MHM. (Jt. Exh. 58, ¶ 16; Tr. 227-29, Tr. 32). It was at this meeting that CCELP instructed MHM to close the hotel within sixty to ninety days, the original concept being that such a time period would comply with applicable law. (Tr. 229-30, Tr. 69-70). Burke testified that despite the hotel's precarious financial state, he had not expected this decision. (Tr. 32, 36-37). Burke further testified that he did not consider Googel and Sisti's decision to close the hotel to be a "final one," as they had elicited additional information from MHM, including detailed information regarding reservations. (Tr. 37-38). On August 2, 1990, Burke forwarded a letter to Sisti, which letter sought guidance as to details for closing and included a proposed draft press release for an anticipated closing on Sunday, October 7, 1990. (Jt. Exh. 59; Tr. 38-41, 43-44). Four days later, on August 6, 1990, Lobo sent Sisti a seven-page letter, with six attachments, which provided specific information on the hotel's operations for the past four months. (Jt. Exh. 60; Tr. 41-42). Attachments 1 and 2 included proposals and forecasts for 1991; Burke testified that at that point, "... we were still trying to convince them to keep the hotel open and provide them some light at the end of the tunnel ..." (Tr. 42). These efforts were in vain, however, for "within a few days" of the July 30th meeting, Googel, Sisti, Shuch and Candelori, after "extensive conversations," decided to close the hotel immediately, as the financial burden to pay the employees what was due to them was less than the expense of keeping the hotel open for the summer months. (Tr. 230-31, 234-36, 238-39). On Monday, August 6, 1990, Lobo was informed that CCELP wanted to close the hotel by Friday, August 10, 1990, a decision about which Burke felt "first ... shock and then disappointment." (Tr. 44). The next day, on Tuesday, August 7, 1990, Lobo, as the hotel's General Manager, sent out, on Summit Hotel stationery, the requisite Notices of Closing to Holt, employees, and designated local and state officials; these notices were drafted by an attorney for Colonial Realty. (Jt. Exhs. 2, 22, Jt. Exh. 58, ¶ 17; Tr. 70-73, 99). Lobo's cover letter to Holt closed as follows: The employer will continue to pay employee wages and salaries, and will continue any employer contributions to employee benefit plans for a period not to exceed 60 days. Further, the employer will continue to provide health insurance continuation consistent with the requirements of State and Federal law. (Jt. Exh. 2). Lobo also met with employees, without any representatives from CCELP present. (Tr. 71-73). Although the decision to close the Summit Hotel was made solely by CCELP about which MHM had "absolutely no[]" control (Tr. 99; see also Jt. Exh. 58, ¶ 29), MHM did the "dirty work" in implementing that decision. (Tr. 71). Like the pay checks, the severance checks were processed through MHM's payroll department in Texas. (Jt. Exh. 7; Tr. 73). On Friday, August 10, 1990, the day the Summit Hotel closed, MHM and CCELP entered into a two-page letter agreement which further modified the existing management agreement between the parties, "due to the decision of [CCELP] to cease operation of The Summit Hotel." (Jt. Exh. 24). This agreement set forth MHM's responsibilities for the sixty day period between August 10, 1990 and October 8, 1990 for the "orderly shutdown of the business." (Id.) With respect to employment 101 matters, MHM agreed to "supervise and only process weekly payroll for the terminated employees until no longer required or until funds to cover said payroll are not forthcoming." (Id. ¶ 1). The agreement further provided: MHM, Inc. will assist as necessary or required by [CCELP] in the union negotiation that is required to negotiate the effects of the closing. It is also expressly understood that nothing in our current agreement or in this modification creates on the part of MHM, Inc. any liability for the payment of severance or benefit costs committed to by [CCELP]. (Id. ¶ 6). Copies of this agreement were forwarded only to other representatives of MHM. That same day, Tamarin sent a letter to Lobo in which he advised that Local 217 wished to commence negotiations on the impact of the hotel's closing. (Jt. Exh. 23). He further confirmed his understanding of the "hotel's position" to provide severance of sixty days' wages and benefits and an additional ninety days of insurance coverage thereafter. (Id.) The letter further advised that a meeting was scheduled for Tuesday, August 14, 1990 and urged that MHM "make every effort to have a representative of Colonial present." (Id.) A copy of this letter was forwarded to Harding of Colonial Realty. (Id.) On Monday, August 13, 1990, Burke also sent a copy of this letter to Lee at Colonial Realty. (Jt. Exh. 25). Three "effects bargaining" sessions were held in August and September, which were attended by Lobo on behalf of MHM, by Holt on the union's behalf, and by Lee and an attorney for CCELP. (Jt. Exh. 58, ¶ 21; Tr. 176-77, 179-80, 184, Tr. 126-28). Holt testified that it was necessary to have Colonial Realty participate in these discussions, since its decision to close the hotel had an impact on the hotel's employees. (Tr. 127-28). During this time frame, the principals of Colonial Realty Company and Colonial Realty/USA Corp., specifically Googel and Sisti, continued to provide the funds necessary to make these severance payments. (Jt. Exh. 58, ¶ 22; Tr. 236-38, Tr. 44-45, 47-48). In September, a comprehensive agreement was reached with CCELP, with respect to wages, insurance, pension, vacation and sick day payments; although Tamarin memorialized this agreement in writing, no contract ever was executed in light of the involuntary bankruptcy petition which was filed against Colonial Realty Co. and its principals in early September 1990. (Tr. 184-90).[9] After the involuntary bankruptcy petitions were filed, Googel and Sisti stopped making the severance payments as well. (Jt. Exh. 58, ¶ 22; Tr. 236-38, Tr. 45, 47-48, 117-18). On Monday, August 13, 1990, Lobo sent a letter to BC & BS, on Summit Hotel letterhead, which informed the insurance company of the August 10th closing and which indicated that "Colonial Realty, which owns the hotel, has informed me that it wishes to continue the existing policy with Blue Cross for 150 days from August 10, 1990." (Jt. Exh. 33). The letter continued that Colonial Realty had informed Lobo that it will continue funding the insurance with approximately $50,000 per month. (Id.) Cahill testified that upon receipt of this letter, he learned for the first time that CCELP was the owner of the Summit Hotel. (Tr. 53-56, 81-82). A corrected letter was sent by Lobo on August 29, 1990, which indicated that Colonial Realty wished to continue the existing insurance policy "for a minimum of 150 days from August 10, 1990." (Jt. Exh. 34. See also Jt. Exh. 35). In early September 1990, two checks which had been placed in the insurance account, totalling $20,338.52, had bounced, so that on September 18, 1990, BC & BS sent a letter to Colonial Realty in which it terminated the ASO agreement. (Jt. Exhs. 3, 36, 40, 37-39, 42; Tr. 34-35, 54-55, 60, 74-78, 94-101, 223-24, 225, 226-27). An internal BC & BS memorandum, dated November 12, 1990, indicated that the insurance company would be offering 102 former Summit Hotel employees a "Direct Pay Plan". (Jt. Exh. 41; Tr. 88-92). By this time, the total debt to BC & BS was $101,215.81. (Id.; Tr. 74). Claims submitted after that date by individuals formerly employed at the Summit Hotel were rejected by BC & BS. (See e.g., Jt. Exh. 6, Jt. Exh. 54, ¶ 5; Jt. Exh. 55, ¶¶ 4-8; Tr. 60, 242-44, Tr. 12-14). On or about November 21, 1990, BC & BS forwarded undated letters to former Summit Hotel employees which provided in pertinent part: Now that your Blue Cross & Blue Shield coverage is no longer being paid through your employer's group, we are offering you the opportunity to continue your group coverage for the period shown on the enclosed notice and then to convert your coverage to our direct payment plan. The enclosed notice represents the amount you must pay if you wish to continue your coverage. If you received Blue Cross & Blue Shield dental coverage or major medical coverage through your employer's group, you are no longer eligible for those coverages and the charges are not included on this notice. The direct payment plan does not necessarily offer the same combination of benefits you may have received through your employer's group.... (Jt. Exhs. 8, 29, Jt. Exh. 53, ¶¶ 4-6, Jt. Exh. 57, ¶ 4; Ps' Exhs. 1A & 1B; Tr. 114-17, 141-44, 206-10). The attached notices listed the amount of the premium and also indicated that the period covered was from September 18, 1990 through December 31, 1990, with the payment due on November 21, 1990. (Jt. Exh. 8; Ps' Exh. 1B). This letter and notice were the only communications plaintiffs received from MHM or BC & BS with respect to medical insurance. (Jt. Exh. 53, ¶ 4, Jt. Exh. 57, ¶ 3; Tr. 119). Cahill agreed that the direct payment plan provided less insurance coverage to the employees than did the ASO plan, and thus it was his understanding that such plan did not constitute an offer of continued benefits under COBRA. (Tr. 57-60, 82, 83, 84-87, XXX-XXX-XX). All of the plaintiffs who testified rejected BC & BS' offer for a variety of reasons, including lack of funds due to unemployment, financial inability to pay premiums on a quarterly (as opposed to monthly) basis, refusal to pay three months' premiums for one month's coverage, perception that the new insurance would not cover preexisting conditions, and obtaining insurance through a new employer. (Jt. Exh. 53, ¶¶ 4-6, Jt. Exh. 54, ¶¶ 6-9, Jt. Exh. 56, ¶ 7, Jt. Exhs. 57, ¶ 5; Tr. 124-25, 126-28, 130-33, 136, 138, 144-47, 210-13, 244-46, Tr. 18-21, 23-26). Plaintiff Grilli is suffering from a painful hernia which requires surgical correction, but he cannot afford surgery without health insurance. (Jt. Exh. 56, ¶¶ 4-6). Although plaintiff Jean has had recurrences of skin cancer, he has not sought medical care because he no longer has health insurance. (Jt. Exh. 54, ¶ 9). On September 12, 1990, the Unemployment Compensation Division of the State of Connecticut Department of Labor issued a decision disqualifying unemployment compensation claims, which was followed by a corrected decision issued on October 2, 1990. (Jt. Exh. 30, Jt. Exh. 58, ¶ 28; Tr. 113-18). The corrected decision held that payment of unemployment benefits was to commence on September 9, 1990, since salary continuation under WARN had been suspended due to Colonial Realty's bankruptcy. (Jt. Exh. 30). On September 28, 1990, Local 217 submitted a grievance to MHM with respect to the failure to provide insurance benefits. (Jt. Exh. 26; Tr. 158-60). On October 3, 1990, MHM responded in a letter to Local 217 which indicated that the union's grievance had been forwarded to CCELP, which "is the appropriate party to receive and negotiate the grievance." (Jt. Exh. 27). This letter continued: As you are well aware, MHM, Inc. has no financial or any other equity interest in the ownership of the Summit Hotel. Our relationship with the owner, [CCELP], through Colonial Realty is one of agency and we have merely acted on their behalf. 103 (Id.) Holt and Local 217 perceived this response as a denial of the grievance. (Tr. 160-61, 161-63, 165). Holt testified this was the first time MHM had denied being the "employer" of those who worked in the Summit Hotel. (Tr. 163). Burke agreed that in no other instance did MHM deny that it was the "employer" for purposes of processing grievances. (Tr. 93-94). On October 17, 1990, Local 217 forwarded a letter to MHM which read in full: The Union's position is that MHM is the Employer under the terms of our collective bargaining Agreement. We are therefore amending our earlier grievance for the Employer's failure to make pension contributions since May, 1990 and also its failure to pay accrued vacation pay. (Jt. Exh. 28. See also Tr. 166-71). As previously stated, this lawsuit was filed on December 18, 1990; plaintiffs' motion for preliminary injunction was filed the next day. Holt testified that Local 217 chose to pursue its remedies in federal court because the arbitration process can be very sluggish. (Tr. 196-98).[10] On January 7, 1991, Local 217 commenced an arbitration against MHM before the Connecticut State Board of Arbitration, with respect to wages, insurance coverage, pension contributions, accrued sick days, and vacation pay. (Jt. Exh. 52. See also Tr. 169-71, 198).[11] At no time did MHM discourage Local 217 from commencing this arbitration. (Tr. 157-58). II. DISCUSSION In their motion for preliminary injunction, plaintiffs ask this Court to enjoin defendant MHM from refusing to provide 26 days of health insurance under the Collective Bargaining Agreement,[12] from refusing to provide an additional 57 days of health insurance under WARN, 29 U.S.C. § 2104,[13] and from refusing to provide the continuation of their insurance at the group rate after expiration of the 83 days described above, under COBRA, 29 U.S.C. § 1161 et seq. A. STANDARDS FOR PRELIMINARY INJUNCTIONS As the Second Circuit observed last year: It is well established in this Circuit that party seeking an preliminary injunction must show that it is likely to suffer possible irreparable injury if the injunction is not granted and "either (1) likelihood of success on the merits of its case or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly in its favor." ... Reuters Ltd. v. United Press Int'l, Inc., 903 F.2d 904, 907 (2d Cir.1990) (multiple citations omitted). See also Paulsen v. County of Nassau, 925 F.2d 65, at 68 (2d Cir.1991); Tsokalas v. Purtill, 756 F. Supp. 89, 92 (D.Conn.1991); UAW, AFL-CIO v. Cowen, Civ. No. H90-588(TEC) (D.Conn. Nov. 30, 1990), slip op. at 5-6; Guitard v. United States, Civ. No. H90-323(AHN) (D.Conn. Nov. 5, 1990), slip op. at 4; Westinghouse Electric Corp. v. Bank of Boston Connecticut, Civ. No. N90-430(TFGD) (D.Conn. Sept. 21, 1989), slip op. at 4; Architectural Eagle Wood Windows of Connecticut, Inc. v. Eagle Window & Door, 104 Inc., Civ. No. B90-144(TFGD) (D.Conn. Sept. 17, 1990), slip op. at 3; Bartalotta v. Otay Mesa Land Partners, Civ. No. H90-399(PCD) (D.Conn. July 2, 1990), slip op. at 5. 1. Irreparable Harm As the Second Circuit continued in Reuters, supra: Because a showing of probable irreparable harm is "the single most important prerequisite for the issuance of a preliminary injunction," ... the moving party must first demonstrate that such injury is likely before the other requirements for the issuance of an injunction will be considered. Irreparable harm must be shown by the moving party to be imminent, not remote or speculative, ... and the alleged injury must be one incapable of being fully remedied by monetary damages.... 903 F.2d at 907 (multiple citations omitted). See also Paulsen, supra, 925 F.2d 65, at 68; Abish v. Northwestern National Ins. Co., 924 F.2d 448, 453-54 (2d Cir.1991). Irreparable harm "is the sine qua non for the grant of such equitable relief." Guitard, supra, slip op. at 4-5 (citation omitted). As the Second Circuit held twelve years ago, "... the threatened termination of benefits such as medical coverage for workers and their families obviously raised the spectre of irreparable injury." Whelan v. Colgan, 602 F.2d 1060, 1062 (2d Cir. 1979). Just last year, the Second Circuit similarly found that the threat of termination of medical benefits to striking workers constituted irreparable harm. Communication Workers of America, District 1, AFL-CIO v. NYNEX Corp., 898 F.2d 887, 891 (2d Cir.1990) ["NYNEX"]. See also International Union, United Automobile, Aerospace & Agricultural Implement Workers of America, U.A.W. v. Exide Corp., 688 F. Supp. 174, 186-87 (E.D.Pa.), aff'd mem., 857 F.2d 1464 (3d Cir.1988) ["Exide"]; Mamula v. Satralloy, Inc., 578 F. Supp. 563, 577 (S.D. Ohio 1983).[14]But see United Electrical, Radio & Machine 105 Workers of America, Local 296 v. Stone Safety Corp., Civ. No. N88-423(WWE) (D.Conn. Oct. 25, 1988) ["Stone Safety"], slip op. at 7-10 (finding no "irreparable injury" to 70 employees facing lay off by financially solvent employer, of whom a substantial number were "threatened with ... the prospect of losing their health insurance coverage") (distinguishing Exide). Defendant MHM argues that the Whelan and NYNEX decisions are inapposite, as they involved affirmative actions by the defendants-employers to terminate employees' health benefits and did not concern the specific federal statutes at issue here. For purposes of an irreparable harm analysis, these distinctions are irrelevant, for it is the impact upon the plaintiffs which must be considered. At least two of the plaintiffs Grilli and Jean are foregoing medical care for want of health insurance; Grilli has postponed surgery for a painful hernia and Jean has not sought medical scrutiny which might prevent a potentially life-threatening recurrence of skin cancer. There is little doubt that plaintiffs have satisfied this first hurdle. 2. Likelihood of Success on the Merits A party seeking injunctive relief under this prong ... need not show that success is an absolute certainty. He need only make a showing that the probability of his prevailing is better than fifty percent. There may remain considerable room for doubt.... Abdul Wali v. Coughlin, 754 F.2d 1015, 1025 (2d Cir.1985). Such standard applies only when the relief sought is "prohibitory," i.e., where "the purpose of the preliminary injunction is to maintain the status quo ante pending a full hearing on the merits." Id. (citation omitted). A "greater showing is required of the moving party" when the relief sought is "mandatory," where "the grant of injunctive relief will change the positions of the parties as it existed prior to the grant." Id. As the Second Circuit acknowledged, The distinction between mandatory and prohibitory injunctions, however, cannot be drawn simply by reference to whether or not the status quo is to be maintained or upset. As suggested by the terminology used to describe them, these equitable cousins have been differentiated by examining whether the non-moving party is being ordered to perform an act, or refrain from performing. In many instances, this distinction is more semantical than substantive. For to order a party to refrain from performing a given act is to limit his ability to perform any alternative act; similarly, an order to perform in a particular manner may be tantamount to a proscription against performing in any other. Id. at 1025-26. For mandatory relief, ... we have held that an injunction should issue "only upon a clear showing that the moving party is entitled to the relief requested ..." or where "extreme or very serious damage will result" from a denial of preliminary relief.... In sum, we have shown "greater reluctance to issue a mandatory injunction than a prohibitory injunction." ... Id. (multiple citations omitted). Compare Westinghouse Electric, supra, slip op. at 1-6 (relief sought to require secured creditor to relinquish documents, materials and equipment so that plaintiff can turn to other suppliers to complete work at dispute is prohibitory rather than mandatory) with Artemisia Holdings, Inc. v. Connecticut Bancorp., Inc., Civ. No. B89-510(TFGD) (D.Conn. Oct. 2, 1989), slip op. at 1-5 (in securities fraud action, plaintiffs' request to postpone date of annual shareholders' meeting is mandatory, not prohibitory); Stellmaker v. Depetrillo, Civ. No. H88-542(PCD) (D. Conn. Aug. 30, 1988), slip op. at 13-15 (teacher's request to preclude his transfer to a new school and to reinstate him in his former job is mandatory, as the relief sought "would roll the clock back ..."). Not unexpectedly, the parties disagree as to whether the relief sought here by plaintiffs is prohibitory or mandatory. Deciding into which category this motion falls is not a mere academic exercise, for this is one of those rare instances where the standard to 106 be applied has some impact upon the result reached. Despite the closure of the Summit Hotel on August 10, 1990, plaintiffs had no legitimate concerns about the payment of wages and benefits, as the owners of the hotel continued to fund a severance program, which program was administered by MHM. For purposes of this motion for preliminary injunction, several critical events transpired during the autumn of 1990, the first of which was the filing of the involuntary bankruptcy petitions against Colonial Realty and its principals in early September 1990. The second critical event was BC & BS' termination of the ASO agreement, on September 18, 1990, about which plaintiffs apparently received no immediate notice. The third crucial sequence of events was the exchange of letters between Local 217 and MHM with respect to the grievance, from September 28, 1990 until October 17, 1990. And the last critical event was receipt by plaintiffs of BC & BS' notice, shortly after November 21, 1990. The motion for preliminary injunction was filed on December 19, 1990. Like the transferred teacher in Stellmaker, supra, plaintiffs here are asking this Court to "roll the clock back," to return the parties to early September 1990, before BC & BS terminated the ASO agreement. If plaintiffs were asking the Court to extend rather than reinstate their health insurance, the relief sought would be prohibitory in nature; given the sequence of events described above, the Court must conclude that the injunctive relief requested is mandatory, not prohibitory.[15] B. APPLICATION OF STANDARDS TO PLAINTIFFS' CLAIMS 1. LMRA Claims The Collective Bargaining Agreement which forms the basis of plaintiffs' claims under § 301 of LMRA, 29 U.S.C. § 185, provides that in a "grievance pertaining to the interpretation or application of this Agreement," any party to the agreement "may appeal [the grievance] in writing to the Connecticut State Board of Mediation and Arbitration" within forty days. (Jt. Exh. 1, § 27.1). The arbitrator's decision "shall be final and binding upon both parties." (Id., § 27.4). After the commencement of this lawsuit, on January 7, 1991, Local 217 commenced an arbitration against MHM before the Connecticut State Board of Arbitration. (Jt. Exh. 52; Tr. 198-99, 200-01). MHM has reserved its right to contest the arbitrability of this matter. (Jt. Exh. 52). MHM's only argument with respect to plaintiffs' LMRA claims is that this court lacks jurisdiction because plaintiffs failed to exhaust their administrative remedies prior to commencing this suit. A federal court's authority to issue preliminary injunctions in labor cases is limited by virtue of the Norris-LaGuardia Act, as amended, 29 U.S.C. §§ 101-15 ["NLGA"]. Section 101 provides in pertinent part: No court of the United States ... shall have jurisdiction to issue any ... temporary ... injunction in a case involving or growing out of a labor dispute, except in a strict conformity with the provisions of this chapter ... Further substantive and procedural constraints are found in §§ 104, 105, 107, 108, and 109. Of particular significance here is § 108, which provides: No ... injunctive relief shall be granted to any complainant who has failed to comply with any obligation imposed by law which is involved in the labor dispute in question, or who has failed to make every reasonable effort to settle such dispute either by negotiation or with the aid of available governmental machinery of mediation or voluntary arbitration. As one district judge explained just a few months ago, The NLGA was enacted in 1932 with the specific and limited purpose of divesting federal courts of jurisdiction to issue injunctions in labor disputes.... Congress 107 concluded that the federal judiciary was abusing its equity powers and, often on an ex parte basis, issued injunctions that inhibited lawful labor union activities. ... To remedy this perceived problem the legislature sent a strict and clear message to the courts.... In the ensuing years the courts have continually followed the language of the NLGA.... There are few cases where the courts have made exceptions.... Although the NLGA anti-injunction mandate is not absolute, it prescribes certain procedural requirements that must be followed before a party can successfully pursue equity relief in a federal court.... International Ass'n of Machinists & Aerospace Workers, AFL-CIO v. Eastern Air Lines, Inc., 121 B.R. 428, 434 (S.D.N.Y. 1990), (multiple citations & footnote omitted), aff'd per curiam, 923 F.2d 26 (2d Cir.1991) ["Eastern"]. As indicated by the court in Eastern, the seminal case with respect to § 108 is Brotherhood of Railroad Trainmen, Enterprise Lodge, No. 27 v. Toledo, Peoria & Western Railroad, 321 U.S. 50, 64 S. Ct. 413, 88 L. Ed. 534 (1944) ["Toledo"]. In Toledo, the railroad's employees engaged in a strike, in which there were a number of acts of violence, after a year of unsuccessful negotiations and after both sides refused to submit the disputes to arbitration. The district court granted the railroad's application for a temporary injunction against the union, which was upheld on appeal. In reversing, the Supreme Court observed that NLGA "sought to make injunction a last line of defense, available not only after other legally required methods, but after all reasonable methods as well, have been tried and found wanting." Id. at 58-59, 64 S. Ct. at 417-418. The "over-all policy" of NLGA "was to encourage use of the nonjudicial processes of negotiation, mediation and arbitration for the adjustment of labor disputes." Id. at 58, 64 S. Ct. at 417 (citations omitted). During legislative debate, § 108 was described as "the `clean hands' provision." Id. at 60, 64 S. Ct. at 418 (citation omitted). While the Court emphasized that arbitration was "voluntary," id. at 62, 64 S. Ct. at 419, by circumventing that option, a party waives its opportunity to obtain equitable relief: [A party] is free to arbitrate or not, as it chooses. But if it refuses, it loses the legal right to have an injunction issued by a federal court or, to put the matter more accurately, it fails to perfect the right to such relief. This is not compulsory arbitration. It is compulsory choice between the right to decline arbitration and the right to have the aid of equity in a federal court. Id. at 63, 64 S. Ct. at 420. Thus, the remedies with which the railroad was left were damages suits and criminal prosecutions. Id. The Eastern decision recognized that there are "few" exceptions to NLGA, 121 B.R. 428, at 434 n. 9, the most noted of which is Boys Markets, Inc. v. Retail Clerks Union, Local 770, 398 U.S. 235, 90 S. Ct. 1583, 26 L. Ed. 2d 199 (1970), in which the parties were bound by a mandatory arbitration clause in the disputed collective bargaining agreement. After the union initiated a strike, the employer obtained an injunction, first in state court and then in federal court, which enjoined the strike and compelled the union to arbitrate. The Ninth Circuit reversed the injunction, under NLGA; the U.S. Supreme Court, in turn, reversed the Court of Appeals. In Boys Markets, the Supreme Court set forth "the correct principles concerning the accommodation necessary between the seemingly absolute terms of [NLGA] and the policy considerations underlying § 301(a)." Id. at 249, 90 S. Ct. at 1591 (footnote omitted). The Court reviewed the historical context in which NLGA was enacted and found that the situation then was "totally different from that which exists today." Id. at 250, 90 S. Ct. at 1592. The Court thus held as follows: We conclude, therefore, that the unavailability of equitable relief in the arbitration context presents a serious impediment to the congressional policy favoring the voluntary establishment of a mechanism for the peaceful resolution of labor 108 disputes, that the core purpose of [NLGA] is not sacrificed by the limited use of equitable remedies to further this important policy, and consequently that [NLGA] does not bar the granting of injunctive relief in the circumstances of the instant case. ... Our holding in the present case is a narrow one. We do not undermine the vitality of [NLGA]. We deal only with the situation in which a collective-bargaining contract contains a mandatory grievance adjustment or arbitration procedure. Nor does it follow from what we have said that injunctive relief is appropriate as a matter of course in every case of a strike over an arbitrable grievance.... Id. at 253-54, 90 S. Ct. at 1593-94. In subsequent labor cases in which a party requests equitable relief, federal courts must decide whether to follow the general prohibition described in Toledo or whether the situation falls within the narrow exception described in Boys Markets. For example, in the collective bargaining agreement at issue in United Parcel Service (New York), Inc. v. Local 804, Int'l Brotherhood of Teamsters, Chauffeurs, Warehousemen & Helpers of America, 698 F.2d 100 (2d Cir.1983) ["UPS"], the union agreed not to engage in any strikes so long as UPS abided by the grievance and arbitration procedures established in the agreement and similarly, UPS agreed that there would be no "lockouts" so long as the union abided by these same procedures. After the union engaged in six work stoppages, UPS commenced a lawsuit, in which it obtained a preliminary injunction against the union's activities. Upon appeal, the union argued that the injunction was in violation of NLGA and Boys Markets, as UPS had failed to demand arbitration prior to commencing the lawsuit. As the Second Circuit recognized, arbitration is not a rapid process: Most arbitration machinery is not suited to expedited resolution of disputes.... Thus, invoking the arbitral process before obtaining a Boys Markets injunction would not obviate the court's need to engage in a preliminary interpretation of the contract.... Normally, only after injunctive relief has been obtained will the arbitrator hear the case.... Id. at 104 n. 7. The Second Circuit rejected what it described as the union's "strained reading" of Boys Markets, id. at 104: We hold ... that "every reasonable effort" to resolve a dispute through non-judicial means does not necessarily include a prior demand for arbitration. In view of the lengthy arbitration process, little if anything can be gained by demanding arbitration when confronted with an ongoing strike. Despite the demand, a federal court nevertheless may grant temporary injunctive relief as well as render a decision on the merits under Boys Markets well before the arbitrator can decide the case. An employer's failure to demand arbitration, therefore, does not necessarily tip the equitable scales so as to preclude a claim for injunctive relief. As long as a demand for arbitration has little chance of inducing settlement of the dispute before entry of a Boys Markets injunction, the "clean hands" provision does not require the formality of demanding arbitration on the way to the courthouse door. Id. at 106. In this particular case, however, a demand for arbitration would not have been "a mere formality," in that there was an explicit provision in the collective bargaining agreement under which either party could demand an "immediate arbitration" for an alleged violation of the no-strike clause. Id. at 106-07. The import of this clause was that ... it clearly envisages a prompt, effective extrajudicial means of resolving alleged breaches of the no-strike clause. Submission to the expedited arbitration procedure could have obviated the need for a Boys Markets injunction.... [B]y utilizing the expedited arbitration procedure, the employer might have been able to obtain relief equivalent to that available through a Boys Markets injunction. Thus, utilizing the expedited procedure in such situation should be viewed as part of the required "reasonable effort" to 109 resolve the dispute through extrajudicial means.... Id. at 107 (citations omitted). The preliminary injunction thus was vacated and the matter remanded back to the district court for further development on the record as to how effective the expedited arbitration would be in providing an "immediate, effective remedy." Id. at 108-09. See also Eastern, supra, 121 B.R. 428, at 434-438 (Eastern barred from seeking injunctive relief against union's violence by failing to seek arbitration first). The analysis applied in UPS appears appropriate here. The last correspondence between Local 217 and MHM took place on October 17, 1990 (Jt. Exh. 28), to which MHM apparently never responded. Had the union initiated the arbitration process within a reasonable period of time thereafter, it is not inconceivable that an arbitration decision would have been rendered by now. As in UPS, Local 217 might well have been able to obtain through "a prompt, effective extrajudicial means" the very relief which it seeks here. A corollary doctrine which plaintiffs seek to apply is an "injunction in aid of arbitration." Such an injunction was at issue in American Postal Workers Union, AFL-CIO v. United States Postal Service, 766 F.2d 715 (2d Cir.1985), cert. denied, 475 U.S. 1046, 106 S. Ct. 1262, 89 L. Ed. 2d 572 (1986) ["USPS"], where the district court had granted the postal union's motion for preliminary injunction to stay its president's discharge pending the outcome of the grievance and arbitration procedure. In this context, besides the traditional requirements for a preliminary injunction, see Section II.A. supra, the union also needed to demonstrate "that the injunction was necessary to preserve the jurisdiction of the arbitrator or as an aid to arbitration." 766 F.2d at 722 (citation omitted). Such an injunction is necessary to prevent a favorable award from an arbitrator from becoming "but an empty victory." Id. (citations omitted). In reversing the district court, the Second Circuit held that an injunction "to aid the arbitral process" was not necessary for if this employee's discharge were ultimately deemed to have been without cause, he could be reinstated with full pay. Id. at 723. The passage of time works to plaintiffs' disadvantage with respect to this doctrine as well. As discussed in Section II.A.2. supra, in their requested preliminary injunction, plaintiffs seek not to preserve the status quo, but to resurrect their medical insurance coverage. The relief requested here would not be in "aid" of the arbitration, but essentially would be in lieu of it; plaintiffs do not merely ask the court to extend its "holding pattern" but to recreate one. Plaintiffs rely upon Exide, supra, a case in which the factual situation is somewhat parallel to that here. But see Stone Safety, supra, slip op. at 9-10 (questioning Exide decision). In Exide, the plaintiff union and defendant employer had been engaged in three months of negotiations with respect to the employer's proposal to dramatically reduce medical benefits. Once an impasse was reached, Exide gave the union only three days warning that it would unilaterally implement the new health plan, as of April 1, 1988. On April 13, 1988, the union filed its grievance; the employer refused the union's request to expedite the grievance and arbitration process and to refrain from implementing these changes until a decision had been issued. Six days later, the union commenced this lawsuit. An evidentiary hearing was held one month later, following which the union's motion for preliminary injunction was granted. The court found that Exide's refusal to arbitrate "interfered with and frustrated the arbitration process." Id. at 186. It further found that Exide's actions would render an arbitrator's award a "hollow formality" because "when rendered it could not return the parties substantially to the status quo ante." Id. (citations omitted). Unlike Exide, however, defendant MHM has not refused to arbitrate the matter if that were the case, the equities might well tip in plaintiffs' favor. Here, MHM, outside of refusing to proceed on an expedited basis,[16] which is not an unreasonable position 110 given the significant issues here, has not taken any steps to "interfere[] or frustrate[] the arbitration process." For these reasons, plaintiffs are not entitled to a preliminary injunction with respect to their claims under LMRA. 2. Warn Claims The key threshold issue at dispute is whether MHM is the plaintiffs' "employer" for purposes of WARN.[17] The WARN statute, which contains only nine sections, 29 U.S.C. §§ 2101-09, went into effect on February 4, 1989. Solberg v. Inline Corp., 740 F. Supp. 680, 682 (D.Minn.1990); Finnan v. L.F. Rothschild & Co., 726 F. Supp. 460, 462-64 (S.D.N.Y.1989). As a result, there are few published decisions which construe it. "Employer" is defined as "any business enterprise that employs ... 100 or more employees, excluding part-time employees ..." 29 U.S.C. § 2101(a)(1)(A).[18] There is no dispute that there were more than 100 employees at the Summit Hotel. Under § 2102(a), an employer is precluded from ordering a plant closing or mass layoff until sixty days after a written notice of such order is served. Section 2104(a)(1)(A) further provides: Any employer who orders a plant closing or mass layoff in violation of section 2102 of this title shall be liable to each aggrieved employee who suffers an employment loss as a result of such closing or layoff for ... benefits under an employee benefit plan ..., including the cost of medical expenses incurred during the employment loss which would have been covered under an employee benefit plan if the employment loss had not occurred. ... See generally Jones v. Kayser-Roth Hosiery, Inc., 748 F. Supp. 1292 (E.D.Tenn. 1990); Jones v. Kayser-Roth Hosiery, Inc., 748 F. Supp. 1276, 1289-91 (E.D.Tenn. 1990).[19] Section 2104(a)(4) also provides: If an employer which has violated this chapter proves to the satisfaction of the court that the act or omission that violated this chapter was in good faith and that the employer had reasonable grounds for believing that the act or omission was not a violation of this chapter the court may, in its discretion, reduce the amount of the liability or penalty provided for in this section.[20] See generally Jones, supra, 748 F.Supp. at 1291-92. Some suggestion of the legislative intent behind this act is set forth in § 2106, which provides in full: "It is the sense of Congress that an employer who is not required to comply with the notice requirements of section 2102 of this title should, to the extent possible, provide notice to its employees about a proposal to close a plant or permanently reduce its workforce." The Secretary of Labor was ordered, under § 2107, to promulgate "such regulations as may be necessary to carry out this chapter."[21] 111 These regulations, which are only ten sections long, are found at 20 C.F.R. §§ 639.1 through 639.10. The scope of these regulations is described as follows in § 639.1(b): These regulations establish basic definitions and rules for giving notice, implementing the provisions of WARN. The Department's objective is to establish clear principles and broad guidelines which can be applied in specific circumstances. However, the Department recognizes that Federal rulemaking cannot address the multitude of industry and company-specific situations in which advance notice will be given. The lengthy definition section, § 639.3, gives some additional guidance in construing the term "employer": Under existing legal rules, independent contractors and subsidiaries which are wholly or partially owned by a parent company are treated as separate employers or as a part of the parent or contracting company depending upon the degree of their independence from the parent. Some of the factors to be considered in making this determination are (i) common ownership, (ii) common directors and/or officers, (iii) de facto exercise of control, (iv) unity of personnel policies emanating from a common source, and (v) the dependency of operations. Section 639.3(a)(2).[22] As to the first two factors, the parties have stipulated that MHM has no common ownership interest, general or limited partners, shareholders, officers or directors with CCELP or in the Summit Hotel. With regard to the last three factors, there is no dispute that MHM was in charge of the day-to-day operations of the hotel, such as the hiring and firing of employees, discipline of employees, processing of wages, and grievance procedures. In a different context, it is not inconceivable for MHM to be considered plaintiffs' "employer." The evidence was irrefutable, however, that the original decision to close the Summit Hotel in early October 1990 was initiated by the Colonial Realty organization and that the decision to accelerate the closing by two months to Friday, August 10, 1990 was the brainchild of Googel, Sisti, Shuch and Candelori, about which MHM had no notice until Monday, August 6, 1990. Even Holt acknowledged that it was necessary to have Colonial Realty participate in the "effects bargaining" sessions held in August and September, as it was Colonial Realty's decision which had an impact upon the hotel's employees. It is that decision alone which triggered plaintiffs' rights and remedies under WARN. Under the heightened standard which applies here, where plaintiffs must make "a clear showing that [they are] entitled to the relief requested," it does not appear that the liabilities under WARN should shift to MHM, merely because defendant did the "dirty work" for Colonial Realty in implementing Colonial Realty's decision. The Court could only locate two related published decisions which address who among two possible candidates was the "employer" for purposes of WARN.[23] Both decisions, Hotel Employees Restaurant Employees Int'l Union Local 54 v. Elsinore Shore Associates, 724 F. Supp. 333 (D.N.J.1989) and Finkler v. Elsinore Shore Associates, 725 F. Supp. 828 (D.N.J. 1989), issued within eight days of one another, concern the Atlantis, a hotel and casino owned by the defendants, which in 112 1985 filed a bankruptcy petition under Chapter 11 of the Bankruptcy Code. The Atlantis' financial condition continued to deteriorate and on April 7, 1989, the New Jersey Casino Control Commission ["NJCCC"] denied the defendants' application to renew their license. Six days later, on April 13, 1989, the NJCCC appointed a conservator, thus permitting the hotel and casino to operate without a license on a temporary basis. On May 16, 1989, the NJCCC decided to cease all gambling operations at the Atlantis, the employees were notified the next day, and the employees were "laid off" as of May 22, 1989. The plaintiffs then commenced actions under WARN, as to which the defendants did not deny that they were the plaintiffs' "employer" prior to April 14, 1989, the date the conservator assumed his responsibilities. 724 F. Supp. at 335; 725 F.Supp. at 830-31. The defendants argued, however, that they were discharged of their obligations under WARN once the NJCCC's conservator was appointed and that he instead was the "employer" for purposes of WARN. 724 F. Supp. at 335; 725 F.Supp. at 831. The test the court applied was who was actually in charge of the business if the conservator "continued the business in operation, then he filled the role of the employer for purposes of `WARN'," whereas if the defendants "continued the business in operation and the [c]onservator simply monitored and assessed the business in consultation with the [NJCCC]," then the obligations imposed by WARN remained with the defendants. 724 F.Supp. at 335; 725 F. Supp. at 831. As the order issued by the NJCCC gave the conservator a "relatively limited role," the Court held that he "did not succeed" to the defendants' obligations under WARN. 724 F. Supp. at 335-36; 725 F.Supp. at 831-32. Each side claims that these decisions are helpful. Plaintiffs are correct that in these two decisions, the defendants were not absolved of their responsibilities under WARN merely because the decision effectively to close the hotel and casino (by ceasing its gambling operations) was not made by them. But the issue in the Elsinore decisions was not choosing between the defendants and the NJCCC, the decision-maker there, but between the defendants and the conservator. The issue, in its most basic form, was "who ran the show?" Just like the analysis with respect to the five factors set forth in 20 C.F.R. § 639.3(a)(2), the literal "show stopper" here was Colonial Realty, whose principals decided in late July or early August 1990 to close the Summit Hotel as of August 10, 1990. While the WARN statute is remedial in nature and compliance with its procedures is to be encouraged even where not required, see 29 U.S.C. § 2106, "... the Supreme Court has cautioned that `where a statute expressly provides a particular remedy or remedies, a court must be chary of reading others into it.'" Finnan, supra, 726 F.Supp. at 464 (citation omitted). Given that "[t]he notice obligations of WARN and the accompanying remedies are novel creations of Congress and represent a public policy decision to establish new legal obligations for employers," the court in Finnan refused to create a right to punitive damages not otherwise found in the WARN statute. Id. at 464-65. As defendant has pointed out, in other labor statutes, Congress specifically has defined an employer to include agency situations, such as Title VII of the Civil Rights Act (defining an employer as a "person engaged in an industry affecting commerce ... and any agent of such person ...," 42 U.S.C. § 2000e(b)), the Fair Labor Standards Act (including within the definition of employer "any person acting indirectly or directly in the interests of an employer in relation to an employee ...," 29 U.S.C. § 203(d)), and the National Labor-Management Relations Act (including within the definition of employer "any person acting as an agent of the employer, directly or indirectly ...," 29 U.S.C. § 152(2)). For all these reasons, the Court finds that in this preliminary injunction context, plaintiffs have not sustained the burden necessary to show that defendant MHM is their "employer" for purposes of the 113 WARN statute.[24] 3. COBRA Claims Defendant MHM similarly argues that it is not plaintiffs' "employer," nor the "plan sponsor," for purposes of COBRA.[25] While COBRA, like WARN, is relatively short statute, 29 U.S.C. §§ 1161-68, it is nonetheless quite complicated. COBRA was enacted to provide benefits which were otherwise unavailable under ERISA: ERISA was designed to protect private-sector employees from losing pension rights after many years of service. ERISA failed to cover workers' health-insurance benefits, however. As a result, Congress enacted COBRA to fill the gap by requiring employers who participate in group health plans to continue to provide health coverage to employees who leave work under certain statutorily prescribed circumstances. An employer who fails to comply with COBRA loses the tax deduction for expenses incurred in providing the group health plan. Kidder v. H & B Marine, Inc., 932 F.2d 347, at 349 n. 1 (5th Cir.1991). The heart of COBRA is found in § 1161(a), which provides in full: The plan sponsor of each group health plan shall provide, in accordance with this part, that each qualified beneficiary who would lose coverage under the plan as a result of a qualifying event is entitled, under the plan, to elect, within the election period, continuation coverage under the plan. The remainder of COBRA essentially explains, in considerable detail and with a number of permutations, the terminology used in this deceptively simple provision. The "qualifying event" here apparently was "[t]he termination ... of the covered employee's employment." Section 1163(2). Detailed notice provisions are found in § 1166, which impose a responsibility upon the employer to notify the plan administrator of the qualifying event within thirty days thereof (§ 1166(a)(2)) and upon the plan administrator to notify any qualified beneficiary within fourteen days thereafter (§§ 1166(a)(4)(A) & (c)). Within sixty days of either the date coverage terminates due to the qualifying event or notice by the plan administrator, whichever occurs later, § 1165(1), the employee may elect to continue coverage "... which is identical to the coverage provided under the plan to similarly situated beneficiaries under the plan with respect to whom a qualifying event has not occurred," § 1162(1), for a specified "period of coverage," which is generally eighteen months, § 1162(2),[26] at a premium rate not to exceed 102% of the applicable rate for such period, § 1162(3). See generally Kidder, supra, 932 F.2d 347, at 356; NYNEX, supra, 898 F.2d at 888-89; Paris v. F. Korbel & Brothers, Inc., 751 F. Supp. 834, 837-40 (N.D.Cal.1990); Dehner v. Kansas City Southern Industries, Inc., 713 F. Supp. 1397, 1400-01 (D.Kan.1989). If both the "employer" and the "plan administrator" fail to meet their respective duties under COBRA, a court may apportion damages between the two. See Kidder, supra, 932 F.2d 347, at 355-356. Under ERISA, the "plan sponsor" is defined as the "employer in the case of an employee benefit plan established or maintained by a single employer." 29 U.S.C. § 1002(16)(B)(i). The term "employer" is defined as "any person acting directly as an employer, or indirectly in the interest of an employer, in relation to an employee benefit plan ..." 29 U.S.C. § 1002(5).[27] In its multitude of contacts 114 with BC & BS, both in instituting the ASO plan and in its eventual termination, there is little doubt that MHM acted "indirectly in the interest of [the] employer, in relation to an employee benefit plan," and thus could be considered an "employer," and consequently a "plan sponsor,"[28] for purposes of COBRA. If the "qualifying event" occurred on August 10, 1990, when the hotel was closed, then MHM satisfied its obligations under COBRA by virtue of the letter it sent to BC & BS on August 13, 1990. (Jt. Exh. 33). If so, the entity which failed to notify plaintiffs in a timely fashion would be BC & BS, which is not a party to this litigation. However, as previously mentioned, Colonial Realty continued to fund the ASO agreement throughout the month of August 1990. Thus, if the "qualifying event" was the bouncing of two checks payable to BC & BS in early September 1990, an event not specifically listed in § 1163, there is no dispute that MHM failed to provide the appropriate notification to BC & BS,[29] and BC & BS belatedly sent notices to plaintiffs in late November 1990.[30] (Jt. Exhs. 8, 29, Ps' Exhs. 1A & 1B).[31] As a further complication, as stated in Section II.A.2. supra, plaintiffs ask the Court not to extend their insurance coverage, but rather to reinstate or reestablish it. In NYNEX, supra, in contrast, the defendant-employer was ordered to provide appropriate clarifying notice to its employees prior to the expiration of the insurance coverage.[32] Defendant MHM has argued that "... no effective remedy can be forged unless plaintiffs amend their complaint to add [BC & BS] so that it may be within reach of a court remedy." (Dkt. # 33, at 50). In rejecting that contention, plaintiffs claim that ... MHM can either enter into another agreement with [BC & BS] to recreate or replicate the insurance; it can enter into an agreement with another provider to provide the same level of benefits, or it can, as it chose to do before, self-insure. Whatever scenario it chooses, it must first provide the coverage and then provide the COBRA continuation. (Dkt. # 45, at 43 (footnote omitted)). Plaintiffs acknowledge that they do not expect MHM to pay for these premiums, but that they simply want an opportunity to pay for the premiums themselves. (Id. at 43 n. 39). While the Court fully appreciates the precarious positions in which plaintiffs find themselves, through no fault of their own, 115 MHM is correct that no remedy can be fashioned against it only. While the Court may have the authority to compel a defendant to perform an affirmative act on the defendant's own accord, the Court simply lacks the power to order a defendant to enter into a contractual relationship with an unspecified third party outside the court's control. Given the present state of the economy, and particularly as it affects those in the insurance industry, there are no assurances that MHM will even find an insurance company willing to enter into a policy with respect to these employees. In light of the $101,215.81 debt owed to BC & BS, it would come as no surprise that BC & BS would not be enthusiastic towards reinstating the ASO policy, absent a court order specifically directed towards it.[33] Accordingly, in light of these substantial hurdles, plaintiffs have not sustained the burden necessary for the issuance of a preliminary injunction under COBRA. III. CONCLUSIONS For the reasons stated above, plaintiffs' motion for preliminary injunction is denied.[34] See 28 U.S.C. § 636(b) (written objections to ruling must be filed within ten days after service of same); F.R.Civ.P. 6(a), 6(e) & 72; Rule 2 of the Local Rules for United States Magistrates, United States District Court for the District of Connecticut; Small v. Secretary, H & HS, 892 F.2d 15, 16 (2d Cir.1989) (failure to file timely objection to Magistrate Judge's recommended ruling may preclude further appeal to Second Circuit). Dated at New Haven, Connecticut, this 9th day of April, 1991. NOTES [1] Five exhibits were attached to this complaint. [2] Attached to this brief were affidavits from four of the plaintiffs. [3] See note 5 infra. [4] The stipulations were identical, except the February 4th version refers to the joint exhibits in the same manner as they were introduced at the hearing. The transcript from February 1, 1991 was filed on February 6, 1991 (Dkt. # 36) and is referred to as "Tr." The transcript from the February 4th session was filed on February 8, 1991 (Dkt. # 37) and is referred to as "Tr." The parties submitted Joint Exhibits ["Jt. Exh."] 1 through 62E; plaintiffs admitted four exhibits of their own Ps' Exhs. 1A, 1B, 2 and 3; and defendant admitted one exhibit D's Exh. A. [5] There is one additional substantive motion pending before this Magistrate Judge defendant's motion to dismiss, filed January 7, 1991 (Dkt. ## 11-12), as to which plaintiffs filed a brief in opposition on January 18, 1991 (Dkt. # 25). By agreement of counsel on February 1, 1991, this motion was converted into one for summary judgment, under F.R.Civ.P. 56, and was to be held in abeyance pending a recommended ruling on plaintiffs' motion for preliminary injunction, so that both parties would have an opportunity to supplement the record. (Tr. 8-9). On January 11, 1991, Judge Cabranes provisionally permitted defendant's oral application to cite in third party defendants. (Dkt. # 21, at 29-30, 31-33. See also Dkt. ## 16-19). On January 30, 1991, defendant filed a third-party complaint against Colonial Constitution East Limited Partnership, Colonial Realty/USA Corp., and Constitution Management Corp. (Dkt. # 26). [6] MHM, Inc. is also known as Motor Hotel Management, Inc. [7] The general partner of CCELP is Colonial Realty/USA Corp.; the limited partners of CCELP are Jonathan Googel, Benjamin Sisti, Frank Shuch, and William Candelori. (Jt. Exhs. 62A-62C; Tr. 217). Colonial Realty/USA Corp. is a Delaware corporation with its principal place of business in West Hartford, Connecticut; its corporate officers and directors are Messrs. Googel, Sisti, Shuch, and Candelori. (Jt. Exh. 62D; Tr. 217-18). Unlike many of the other Colonial Realty related entities, neither CCELP nor Colonial Realty/USA Corp. is subject to bankruptcy proceedings. (Tr. 218). CCELP's managing agent was Constitution Management Corp. ["CMC"], a Connecticut corporation, whose president is Frank Shuch. (Jt. Exh. 62E). [8] Dennis Cahill, a Sales Manager in BC & BS' Hartford office who oversaw the insurance for the Summit Hotel and who was subpoenaed by both sides (Tr. 29-31), explained that BC & BS' only responsibility under an ASO contract is to administer and process the claims and that payment for such claims would come from a bank account the plan sponsor would create for that purpose. (Tr. 46-51). A bank account in Texas was established by MHM, as "Agent for Summit Hotel" for that purpose. (Jt. Exh. 49; Jt. Exh. 58, ¶ 10; Tr. 75-78). Cahill analogized an ASO agreement to a checking account if there are insufficient funds in the account, there is no insurance coverage. (Tr. 32-33, 66-67). [9] Burke denies that any final agreement was reached between Local 217 and Colonial Realty. (Jt. Exh. 58, ¶ 21). [10] See note 11 infra. [11] Jt. Exh. 52 consists of a compilation of letters, from January 7, 1991 until January 25, 1991. As these letters indicate, Local 217 requested that this arbitration be held on an "expedited" basis, to which MHM objected, because there are no written briefs or decision in an "expedited arbitration," which is decided by a sole arbitrator. Although MHM has reserved its right to contest the arbitrability of this matter, it has agreed that this matter can be heard by the Connecticut State Board of Mediation and Arbitration on an accelerated basis. (See also Tr. 198-99, 200-01). By letter, dated March 20, 1991, however, the Connecticut State Board denied plaintiffs' request for the case to be "taken out of chronological order...." (See Letter of Plaintiffs' Counsel, dated March 29, 1991). [12] As plaintiffs explain on pp. 43-44 of Dkt. # 45, the 26-day period runs from September 3, 1990 until September 30, 1990, when the Collective Bargaining Agreement expired. [13] Because plaintiffs only received three days' notice of the closing (from August 7, 1990 to August 10, 1990), they claim they were entitled to an additional 57 days under WARN. See note 12 supra. [14] As the Mamula decision so poignantly observed: The injury to the plaintiffs, here, is not merely monetary. The plaintiffs are not now covered by the group insurance plan because of its termination by defendant. Despite the opportunity to convert their group coverage to individual policies, many of the plaintiffs were not able financially to afford to convert their policies or, at best, they were able to convert only part of the coverage. To presume that one not able to afford health insurance coverage is harmed only in a monetary sense is to ignore the realities of the situation. ... The adequacy of a monetary award to a person unable to afford health insurance coverage rests on the assumption that the person will seek and obtain necessary medical care, will pay for the medical care received at that time, and will simply be recompensed later by the defendant when a judgment is rendered against it. Such an assumption could have some validity if the costs of medical services and hospitalization in today's society were well within the financial reach of the average worker. In reality, they are not. It is an unfortunate but true fact of life today that health care costs have skyrocketed to the point where health care insurance is virtually a necessity for persons of modest incomes if needed medical attention is to be obtained. Indeed, it is not unusual for a provider of major medical care often the most needed care to require evidence of insurance in advance of delivery of medical or hospital care. It is largely because health care costs have reached such heights that provisions in collective bargaining contracts requiring the employer to pay the cost of the premiums have become so important to employees and, as a result of increasingly higher premium costs, an ever larger financial burden to the employer. It is a utopian notion that all working men and women or retirees can well afford, without insurance, the cost of essential medical services today or that, if they cannot afford them, those services will always be provided to them.... Being denied today's passport to the doctor's office and hospital the health insurance card which the employer promised under the collective bargaining agreement, results in harm that is not readily measurable but is clearly present. The ultimate effects of delay in obtaining medical attention or of not receiving any medical attention, or of purchasing inadequate medical coverage are all incapable of being easily measured. The harm, difficult to assess in monetary terms but real to the plaintiffs, cannot be adequately compensated by some judgment for damages awarded many months or even years after the termination of the plan occurred. If anything, the situation has worsened since the Mamula opinion was written more than seven years ago. [15] There is precious little that plaintiffs could have done to prevent this conclusion, for they apparently lacked immediate knowledge of the actions taken by BC & BS on September 18, 1990. Once they received notice from BC & BS in late November 1990, their comprehensive complaint and motion were filed shortly thereafter. [16] See note 11 supra. [17] Defendant MHM has made two additional arguments with respect to plaintiffs' claims under WARN: (1) a district court lacks authority to issue an injunction under the exclusivity provision found in 29 U.S.C. § 2104(b); and (2) MHM is entitled to the "good faith" defense found in § 2104(a)(4). [18] Of the few published decisions construing the WARN statute, three concern the manner in which the number of employees is calculated. Solberg, supra, 740 F.Supp. at 683-86; Damron v. Rob Fork Mining Corp., 739 F. Supp. 341 (E.D.Ken.1990); United Electrical, Radio & Machine Workers of America v. Maxim, Inc., 1990 WL 66578, at 2-4 1990 U.S.Dist. LEXIS 5988, at 3-5 (D.Mass.1990). [19] The court, in its discretion, may also award attorneys' fees to the prevailing party. 29 U.S.C. § 2104(a)(6). See generally Solberg, supra, 740 F.Supp. at 687 (denying attorneys' fees to prevailing defendant, where plaintiffs' claims under WARN were not "frivolous, unreasonable, or without foundation"). [20] See note 17 supra. [21] Section 2105 indicates that the rights and remedies provided under WARN "are in addition to, and not in lieu of, any other contractual or statutory rights and remedies of the employees ..." See also 20 C.F.R. § 639.1(g). On the other hand, § 2104(b) provides that the remedies established in this section "shall be the exclusive remedies for any violation of this chapter" and further advises that "[u]nder this chapter, a Federal court shall not have authority to enjoin a plant closing or mass layoff." This exclusivity provision does not deprive a federal court of its authority to issue a preliminary injunction under WARN. See Local 397, Int'l Union of Electronic, Electrical, Salaried, Machine & Furniture Workers, AFL-CIO v. Midwest Fasteners, Inc., 763 F. Supp. 78, 81 (D.N.J.1990). See note 17 supra. [22] This test is analogous to the "four-factor test" developed by the National Labor Relations Board in determining whether two or more related entities constitute a single entity for purposes of employee relations. The "four-factor" test is analyzed in considerable detail in Owens v. American National Red Cross, 673 F. Supp. 1156, 1158-61 (D.Conn.1987) (dismissing wrongful discharge action against defendant American National Red Cross brought by employee of its Greater Hartford Chapter). [23] The Magistrate Judge located a third decision, Holcomb v. Pilot Freight Carriers, Inc., 120 B.R. 35 (M.D.N.C.), Magistrate's Ruling adopted, 1990 U.S.Dist. LEXIS 14333 (M.D.N.C.1990), which concerned a "piercing the corporate veil" analysis under bankruptcy law, North Carolina law, and federal common law. No similar issue is raised here. [24] In light of this conclusion, there is no need to address the other two arguments made by MHM. See note 17 supra. [25] Plaintiffs agree that MHM is not the "plan administrator." (See Dkt. # 45, at 39 n. 33). Under the clear language of the ASO (Jt. Exh. 18), BC & BS was the "plan administrator." [26] See note 31 infra. [27] As with WARN, see note 18 supra, most of the published decisions construing this aspect of COBRA concern an employer's attempt to be exempted from the COBRA requirements under the "small employer" exemption found in § 1161(b). See Kidder, supra, 932 F.2d 347, at 353; Martinez v. Dodge Printing Centers, Inc., 123 B.R. 77 (D.Colo.1991), at 3-15; Krogh v. Chamberlain, 708 F. Supp. 1235, 1237-39 (D.Utah 1989). [28] Curiously, the term "plan sponsor" is not found in COBRA in any provision other than § 1161(a). [29] As previously indicated, it was BC & BS which itself terminated the ASO agreement, so that it of all people did not need to be advised of same by MHM. There was no testimony about when and by whom MHM was informed of the demise of the insurance policy. [30] There is no need to discuss in this recommended ruling whether the notice itself, and the insurance coverage offered, complied with the COBRA requirements. [31] Although not raised by defendant, there is also a serious question as to whether plaintiffs had any right to "continuation coverage" under COBRA after September 18, 1990. Section 1162(2) provides that The coverage must extend for at least the period beginning on the date of the qualifying event and ending not earlier than the earliest of the following: . . . . . (C) ... The date on which coverage ceases under the plan by reason of a failure to make timely payment of any premium required under the plan with respect to the qualified beneficiary. As the Fifth Circuit noted in Kidder, supra, COBRA applies to employers who participate in group health plans, the penalty for which is the loss of a tax deduction for the expenses incurred in providing the group health plan. 1991 U.S.App. LEXIS 3558, at 2 n. 1. None of these considerations apply when the entire plan lapses for nonpayment of premiums. [32] On August 28, 1989, NYNEX notified its striking employees that it intended to terminate their medical coverage as of September 15, 1989. Under COBRA, the employees had until November 15, 1989 to elect to receive continued coverage. On October 18, 1989, plaintiff filed its complaint and motion for preliminary injunction. The hearing thereon was held on October 19, 1989 and the injunction was issued the next day. 898 F.2d at 888-90. [33] See also note 31 supra. [34] Counsel are requested to contact the Magistrate Judge's New Haven Chambers for the purpose of scheduling a status conference to discuss, inter alia, the filing of additional briefs with respect to defendant's motion for summary judgment. See note 5 supra.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2592847/	722 F. Supp. 971 (1989) UNO'S PIZZA, INC., Plaintiff, v. PIZZERIA UNO CORPORATION, Uno Restaurants, Inc., and Pyramid Companies, Defendants. No. CIV-89-1154C. United States District Court, W.D. New York. October 13, 1989. 972 Sommer, Oliverio & Sommer (Daniel C. Oliverio, of counsel), Buffalo, N.Y., for plaintiff. Wolf, Greenfield & Sacks (John L. Welch, of counsel), Boston, Mass., and Saperston & Day (Tricia T. Semmelheck, of counsel), Buffalo, N.Y., for defendants Pizzeria Uno Corp. and Uno Restaurants. Rodgers, Menard & Coppola (Mark C. Rodgers, of counsel), Buffalo, N.Y., for defendant Pyramid Companies. BACKGROUND CURTIN, District Judge. Plaintiff Uno's Pizza, Inc., commenced this action against defendants Pizzeria Uno Corporation ("Pizzeria Uno"), Uno Restaurants, Inc. ("Uno Restaurants"), and the Pyramid Companies ("Pyramid") seeking a declaration by the court that it has a superior right to use the mark "UNO," or "any colorable variation thereof," for restaurant services or related enterprises in the plaintiff's established trading area in western New York. Pending before the court are the applications of both the plaintiff and defendants Pizzeria Uno and Uno Restaurants for a preliminary injunction pursuant to Rule 65 of the Federal Rules of Civil Procedure. Briefs and affidavits have been submitted by the parties, and the court considered 973 oral argument on September 20, 1989. After carefully examining the record and considering the respective arguments, the court has determined that none of the parties has established that it is entitled to the issuance of an injunction. The principal focus of this litigation is on the plaintiff's claims under the Lanham Trade-Mark Act, 15 U.S.C. §§ 1115(b)(5), 1125(a). The plaintiff also alleges violations of New York State law for trademark infringement, unfair competition, and dilution of business reputation. The parties agree, and the court has determined, that jurisdiction lies in this court. Pyramid is in the process of developing a large shopping mall, known as the Walden Galleria Mall ("the mall"), in the Town of Cheektowaga. Pyramid is the owner and operator of the mall. Defendants Pizzeria Uno and Uno Restaurants plan to open a restaurant in the mall in October, 1989, under the name "Pizzeria Uno." The plaintiff's application seeks, essentially, to enjoin the defendants from using the mark "UNO" in connection with the restaurant pending final adjudication of its claim that it has a superior right to use of the mark. The defendants' application seeks to enjoin the plaintiff from using the mark "UNO'S" in connection with two establishments the plaintiff is currently operating in West Seneca and East Aurora, claiming that such use violates the rights acquired by the defendants after the mark "PIZZERIA UNO" was registered in 1978. The plaintiff is a New York corporation that was organized in 1971. It has owned and operated a number of restaurants in the western New York area that offer pizza and a varied menu emphasizing Italian food. It has owned and operated restaurants at the following locations for the indicated periods of time: (a) Uno's 1 Pizza, 507 Center Road, West Seneca, New York, from 1971 until 1984; (b) Uno's 1 Pizza, 2580 Elmwood Avenue, Kenmore, New York, from 1972 until 1987; (c) Uno's 1 Pizza, 1091 Oliver Street, North Tonawanda, New York, from 1973 until 1986; (d) Uno's 1 Pizza, 6000 South Park Avenue, Hamburg, New York, from 1974 until 1987; (e) Uno's Pizza, 408 Main Street, East Aurora, New York, from 1982 to date; (f) Uno's Family Restaurant, 1481 Union Road, West Seneca, New York from 1984 to date. Item 3, Affidavit of Roger Paul ("Paul Affidavit") at ¶ 4. As indicated above, the plaintiff is presently operating only the latter two restaurants, which are located on Union Road in West Seneca and on Main Street in East Aurora.[1] The mall is approximately three-and-one-half to five miles from the plaintiff's West Seneca restaurant; it is approximately fourteen or fifteen miles from the plaintiff's East Aurora location. According to the plaintiff, it has emphasized the use of the mark "UNO'S" at all of its locations through promotion and advertising since 1972. Item 3, Paul Affidavit at ¶¶ 7-15. The plaintiff describes its establishments as "offer[ing] a variety of services, including delivery, a pick-up window and table service. In addition ... Uno's offers a varied menu that includes not only pizza and Italian dishes, but also sandwiches, soups, salads, seafood and other appetizer-type foods." Id. at ¶ 9. In contrast to the defendants' large operation, the plaintiff's facilities have been located on suburban streets in converted homes or similar structures that are much smaller by comparison. The East Aurora restaurant is primarily a take-out operation, with only a few booths for customers. The West Seneca location also offers take-out service, 974 but apparently provides more space for dining on the premises. According to the defendants, the first Pizzeria Uno restaurant opened in Chicago in 1943 and acquired a national reputation for its distinctive "deep-dish" pizza. The mark "PIZZERIA UNO" was registered with the United States Patent Office on April 11, 1978, although the registration contains a disclaimer regarding the right to exclusive use of the word "Pizzeria." See Defendants' Exhibit 25. Rights to the mark were acquired by Uno Restaurant Corporation in 1979 for the purpose of developing a chain of Pizzeria Uno restaurants. Defendants Pizzeria Uno and Uno Restaurants, wholly owned subsidiaries of Uno Restaurant Corporation, have a total of fifty-five restaurants in cities such as New York, Boston, Albany, Miami, and London. The defendants assert that these restaurants feature a distinguishing decor of brass, polished wood, and checkered ceramic tile, as well as waiters and waitresses who wear distinctive attire. Annual gross revenues for the chain currently exceed $100,000,000. The defendants have nine restaurants in New York State four in Manhattan, three on Long Island, one in Albany, and one in Rochester. In May, 1988, the defendants reached an agreement with Pyramid to open a Pizzeria Uno restaurant in the mall in Cheektowaga. According to the defendants, the construction costs for this location are expected to exceed $1,000,000. The parties originally quarreled over the marks at issue in 1981. After learning that the plaintiff planned to register the mark "UNO'S FAMILY RESTAURANT," counsel for defendant Pizzeria Uno wrote to plaintiff's counsel in April, 1981, and demanded that the plaintiff discontinue further use of the mark. See Item 7 at Exhibit 11. In reply, plaintiff's counsel stated that the plaintiff would abandon the trademark application and phase out use of the mark. Plaintiff's counsel also stated that the mark would not be used in future advertisements. In the letter, counsel noted that the plaintiff had used the mark "UNO'S PIZZA" in western New York since April, 1972, and that it had four restaurants using the mark that had opened several years prior to the registration of the mark "PIZZERIA UNO." See id. at Exhibit 12. Defendant Pizzeria Uno then sought more information, id. at Exhibit 13, and the plaintiff responded by giving the addresses of the four pre-1978 restaurants, as well as a description of the operations. Id. at Exhibit 14. Further correspondence followed in 1984, when defendant Pizzeria Uno wrote to plaintiff's counsel to inquire about any geographical expansion by the plaintiff beyond the boundaries of its pre-1978 trading area. Id. at Exhibit 15. Plaintiff's counsel responded by stating that his client had considered the matter settled, and by requesting that Pizzeria Uno clarify its charge that the plaintiff had improperly expanded its trading area. Id. at Exhibit 16. The defendants claim that the plaintiff neither disclosed the East Aurora location nor revealed that it was still using the mark "UNO'S FAMILY RESTAURANT" in West Seneca. They further assert that, as a result, they continued to believe that the plaintiff was operating only the establishments that had opened prior to 1978 and thus took no action. Item 7, Affidavit of Aaron Spencer ("Spencer Affidavit") at ¶ 12. The defendants' announcement of plans to open a restaurant in the mall followed in 1988. In January, 1989, plaintiff's counsel wrote to defendant Pizzeria Uno and threatened to seek an injunction and damages if the mall location was opened, invoking Section 33(b)(5) of the Lanham Trade-Mark Act. Item 7 at Exhibit 6. A series of letters followed, with the defendants stating that they were proceeding with plans to open the mall restaurant and urging the plaintiff to commence an action. See id. at Exhibits 7-10. Settlement efforts during that period failed, and each side has charged the other with bad faith. The record indicates that the plaintiff told the defendants that it would file suit by July 31, 1989, if it intended to proceed with litigation, see Item 7, Spencer Affidavit at ¶ 9; id. at Exhibit 9, but the plaintiff did 975 not commence the present action until September 5, 1989. DISCUSSION The relevant standards for issuance of a preliminary injunction, which serves to "preserve the status quo pending the final determination of a dispute," Arthur Guinness & Sons v. Sterling Publishing Co., 732 F.2d 1095, 1099 (2d Cir.1984), are well settled. An applicant has the burden of showing "both possible irreparable injury and either (1) a likelihood of success on the merits or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly in the movant's favor." LeSportsac, Inc. v. K Mart Corp., 754 F.2d 71, 74 (2d Cir.1985). In the present case, the plaintiff contends that it has established that it will suffer irreparable harm unless an injunction issues, and that there is a "substantial likelihood" that it will be successful on the merits at trial. With regard to the issue of irreparable harm, the plaintiff argues it has established that a "likelihood of confusion" between the marks "PIZZERIA UNO" and "UNO'S" would result from the failure to issue an injunction, and that that, without more, manifests irreparable harm. See Item 2 at 11. Initially, the court notes that the plaintiff misstates the standard it must meet in order to establish entitlement to issuance of an injunction. The plaintiff acknowledges that one of the alternative tests it must pass requires it to establish both irreparable harm and a likelihood of success on the merits at trial, and then argues that it can establish irreparable harm by showing a likelihood of confusion. See Item 2 at 10-11. The plaintiff then argues, however, that the "key" issue before the court is thus whether it has shown "a probability of success on the merits of its claim of a `likelihood of confusion' between the marks," citing Berrigan v. Norton, 451 F.2d 790 (2d Cir.1971). Id. at 11. In fact, establishing a likelihood of confusion would only satisfy one part the test namely, that possibly irreparable harm would result from the failure to issue an injunction. The plaintiff, however, would still have to establish a likelihood of success on the merits of the underlying controversythat is, the issue of which party has a superior right to the mark in dispute and nothing in Berrigan v. Norton suggests otherwise. See Arthur Guinness & Sons v. Sterling Publishing Co., 732 F.2d at 1101. In other words, establishing a likelihood of confusion will not advance the plaintiff's claim unless the plaintiff can establish that such confusion somehow compromises its rights to the mark at issue. The court notes that there may well be a likelihood of confusion in light of the obvious similarity of the marks and of the types of services provided by the respective restaurants run by the parties.[2] No finding in this regard is necessary, however, because the plaintiff has not established the boundaries of its pre-1978 trading area that the defendants allegedly have violated and, consequently, has failed to demonstrate that it is likely to succeed on the merits at trial. Section 33 of The Lanham Trade-Mark Act provides in relevant part: (b) If the right to use [a] registered mark has become incontestable ... the registration shall be conclusive evidence of the registrant's exclusive right to use the registered mark in commerce on or in connection with the goods or services specified ... subject to any conditions or limitations stated therein except when one of the following defenses or defects is established: .... (5) That the mark whose use by a party is charged as an infringement was adopted without knowledge of the registrant's prior use and has been continuously used by such party or 976 those in privity with him from a date prior to registration of the mark under this chapter or publication of the registered mark ... Provided, however, That this defense or defect shall apply only for the area in which such continuous prior use is proved.... 15 U.S.C.A. § 1115(b)(5) (1982) (latter emphasis added).[3] This section requires the plaintiff to establish "the extent of the trade area" in which it used the mark prior to the filing of the defendants' registration. Thrifty Rent-A-Car System, Inc. v. Thrift Cars, Inc., 831 F.2d 1177, 1181 (1st Cir. 1987). The court does not accept the defendants' position that, simply by virtue of its location in a different town, the plaintiff's East Aurora site represents an impermissible geographical expansion of the plaintiff's pre-1978 trading area. If, for example, a prior user of a mark such as the plaintiff operates an establishment abutting a town's geographical boundary, its trading area surely would not be limited solely because of the boundary; similarly, opening a new establishment just across the boundary surely would not necessarily constitute an improper expansion. See Hanover Star Milling Co. v. Metcalf, 240 U.S. 403, 415-16, 36 S. Ct. 357, 361, 60 L. Ed. 713 (1916). The problem for the plaintiff here, however, is that the extent of its pre-1978 trading area remains unclear. Although the plaintiff has offered evidence of the promotional and advertising efforts it has made both before and after 1978, it has not offered sufficient evidence of the effects of the pre-1978 advertising to demonstrate a pre-1978 trading area that included the defendants' planned mall location. See Spartan Food Systems, Inc. v. HFS Corp., 813 F.2d 1279, 1283-84 (4th Cir.1987); Natural Footwear Ltd. v. Hart, Schaffner & Marx, 760 F.2d 1383, 1397-1400 (3rd Cir.), cert. denied, 474 U.S. 920, 106 S. Ct. 249, 88 L. Ed. 2d 257 (1985). Attracting occasional or sporadic customers from a given area does not compel the conclusion that that area is encompassed within an applicant's trading area, see Natural Footwear Ltd. v. Hart, Schaffner & Marx, 760 F.2d at 1400; Sweetarts v. Sunline, Inc., 380 F.2d 923, 929 (8th Cir.1967), but that is all the plaintiff has thus far established. For example, through an affidavit submitted in support of its application, the plaintiff asserts that its radio advertising has attracted "on a regular basis telephone and take out orders from Cheektowaga (668 telephone prefix exchange) and the Cheektowaga zip code (14225)." Item 3, Paul Affidavit at ¶ 14. In support of this assertion, the plaintiff has attached copies of six telephone order slips from its current West Seneca location covering a period of approximately fifteen days. See Item 3 at Exhibit O.[4] This evidence is not sufficient to establish that the plaintiff's present trading area includes the mall, let alone that its pre-1978 trading area included the mall. Based on the present record, copies of telephone listings and advertising used by the plaintiff, see Item 3 at Exhibit C, add little to the plaintiff's position. Finally, the court notes that the balance of hardships tips decidedly in the defendants' favor in light of the construction expenses incurred by the defendants and the proximity of the planned opening date. In short, the plaintiff has not established that it had a pre-1978 trading area that included the defendants' planned mall location. Its application must, therefore, be denied. The defendants' application for an injunction fares no better. First, the parties agree that the central issue concerns use of the marks "UNO" and "UNO'S." Consequently, the court rejects the defendants' claim that the plaintiff abandoned any rights it may have had in the mark "UNO'S" simply by adopting the name "UNO'S FAMILY RESTAURANT" in West Seneca in 1984. See Item 6 at 18. 977 Second, the defendants have not established that the fundamental character of the services offered by the plaintiff in West Seneca changed when the plaintiff's present location in that town opened. Third, the defendants have failed to establish that the plaintiff's pre-1978 trading area did not include the defendants' planned mall location. The defendants thus have failed to establish that the plaintiff has not made "continuous prior use" of the mark "UNO'S" in the plaintiff's pre-1978 trading area. See 15 U.S.C.A. § 1115(b)(5). The defendants have also failed to establish that the opening of the plaintiff's East Aurora location constituted an impermissible geographical expansion beyond the plaintiff's pre-1978 trading area. Finally, the defendants have not even alleged that they will suffer irreparable harm unless an injunction issues. The court emphasizes that it takes no position on the relative strength of the parties' positions concerning the merits of the plaintiff's underlying claims. This ruling simply holds that neither side has established that it is entitled to a preliminary injunction. So ordered. NOTES [1] In 1984, the plaintiff closed the "Uno's 1 Pizza" located on Center Road in West Seneca, and opened "Uno's Family Restaurant" on Union Road in West Seneca. According to the plaintiff, Uno's Family Restaurant is located a half-mile from the site of Uno's 1 Pizza. The plaintiff has explained that the change in its West Seneca location came about because of its desire to expand its business. Uno's Family Restaurant was opened because zoning restrictions prohibited further expansion at the Center Road site. See Item 3, Paul Affidavit at ¶ 4 n. 2. [2] The court also notes, however, that the plaintiff previously maintained that the mark "UNO'S FAMILY RESTAURANT" did not infringe the mark "PIZZERIA UNO" when defendant Pizzeria Uno protested over the plaintiff's attempt to register the former mark in 1981. See Item 7 at Exhibit 12. [3] An amendment to this section will go into effect on November 16, 1989. See 15 U.S.C.A. § 1115(b)(5) (Supp.1989). [4] The year in which those orders were taken is not clear from the exhibit.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2593220/	576 F. Supp. 95 (1983) Vincent RAMIREZ, Jr., an infant by his father and natural guardian, Harry RAMIREZ, and Harry Ramirez, individually, Plaintiffs, v. NATIONAL RAILROAD PASSENGER CORPORATION, National Railroad Passenger Corporation, d/b/a Amtrak, and Pennsylvania Tunnel and Terminal Company, Defendants. No. 82 Civ. 1376 (CBM). United States District Court, S.D. New York. July 28, 1983. 96 Wilson, Elser, Edelman & Dicker by Harry P. Brett, New York City, for defendant National Railroad Passenger Corp. Conboy, Hewitt, O'Brien & Boardman by Henry W. Herbert, New York City, for defendant Pennsylvania Tunnel and Terminal Co. OPINION MOTLEY, Chief Judge. This action was commenced in New York state court. In the original state complaint, plaintiffs alleged that the infant plaintiff, Vincent Ramirez, Jr., was injured when he came in contact with a power line in a rail yard owned by defendant National Railroad Passenger Corporation (NRPC). The rail yard, known as the "Sunnyside" yard, is located in the borough of Queens, in the city of New York. The complaint alleged that the infant plaintiff gained access to the Sunnyside yard through a fence that was owned by NRPC. NRPC removed the action to this court on diversity grounds, and commenced a third-party action against defendant Pennsylvania Tunnel and Terminal Co. (PT & TC), alleging that the infant plaintiff "actually entered the railroad yard through a fence and a piece of property" owned by PT & TC, which fence had been negligently maintained by PT & TC.[1] NRPC sought "contribution and/or indemnification" from PT & TC.[2] PT & TC denied the allegations of the third-party complaint.[3] Plaintiffs then filed an amended complaint, naming both NRPC and PT & TC as defendants, alleging, inter alia, that both defendants had a duty with respect to the fence through which the infant plaintiff gained access to the railroad yard.[4]97 NRPC's third-party action was discontinued without prejudice by stipulation. Shortly thereafter, PT & TC answered the amended complaint, and in its answer asserted a cross-claim against NRPC for indemnification, or, in the alternative, apportionment and contribution. In the cross-claim, PT & TC asserted that its negligence, if any, was "secondary and passive," while that of NRPC was "primary and active."[5] The action was settled as between both defendants and plaintiffs on or about March 31, 1983. Plaintiffs settled with NRPC for the sum of $35,000, and with PT & TC for the sum of $11,000. The case came before the court on cross-motions for summary judgment directed to PT & TC's cross-claim. By order dated June 30, 1983, the court granted NRPC's motion for summary judgment in its favor on the cross-claim, and denied PT & TC's cross-motion for summary judgment. The reasons for the court's decision are set forth below. DISCUSSION PT & TC conceded that, by virtue of its settlement of the claims against it, its action for contribution or apportionment was barred by N.Y.G.O.L. § 15-108(c).[6] PT & TC could still, however, pursue a commonlaw action for indemnity. See McDermott v. City of New York, 50 N.Y.2d 211, 220, 406 N.E.2d 460, 428 N.Y.S.2d 643 (1980). The parties did not dispute the applicability of New York law to the claims before the court. There was initially some confusion as to the location of the fence through which the infant plaintiff gained access to the Sunnyside yard. It appears that the Sunnyside yard adjoins property owned by PT & TC, and that there is no fence separating the Sunnyside yard from the property of PT & TC. In the original complaint, plaintiffs alleged that the infant plaintiff gained access to the Sunnyside yard through a fence owned by NRPC, located near 43rd Street and Barnett Place.[7] Through discovery, it was allegedly ascertained that the fence through which the infant plaintiff passed was located at 43rd Street and 37th Avenue, on property belonging to PT & TC, and that the fence belonged to PT & TC.[8] These facts were alleged in NRPC's third-party complaint. In plaintiffs' amended complaint, it was alleged that both defendants owned, operated and controlled the fence and railroad yard in question. The parties ultimately agreed, however, that PT & TC owned the fence through which the infant plaintiff gained access to the NRPC property upon which he was allegedly injured.[9] On the cross-claim, PT & TC's contention was that, notwithstanding its admitted ownership of the fence, NRPC should ultimately be held liable for any sums paid to plaintiffs by PT & TC, because, as between PT & TC and NRPC, NRPC had the duty to maintain the fence. This duty, according to PT & TC, had been "assumed" by NRPC and the "assumption" was evidenced by a course of conduct of NRPC. See Affidavit of Henry W. Herbert in support of PT & TC's cross-motion for summary judgment at 3. PT & TC characterized this allegedly 98 "assumed" duty as a "primary" duty to maintain and repair the fence. Id. at 4. Until recently, the law of New York State held that a tortfeasor who was sued by a plaintiff could not seek contribution from a joint tortfeasor who had not been named as a party defendant. In practical application, however, courts "abandon[ed] the rigorous common-law policy," developing an "`active-passive' negligence concept." Dole v. Dow, 30 N.Y.2d 143, 148, 282 N.E.2d 288, 331 N.Y.S.2d 382 (1972). The tortfeasor who was named as a defendant could seek to shift the entire burden of responsibility to the joint tortfeasor by means of an action over for indemnity. Id. The process "became a measure of degree of differential culpability .... The `passive' negligent act was treated ... as less a wrong than the `active' negligent act." Id. In Dole v. Dow, the New York Court of Appeals criticized the use of the terms "active" and "passive" negligence in the context of indemnity, noting that, under that analytical construct, "there could be indemnity where a party `was less culpable than the principal wrongdoer, although both [were] equally liable to the person injured' ...." 30 N.Y.2d at 150, 282 N.E.2d 288, 331 N.Y.S.2d 382. The court undertook to "re-examine" the doctrine of indemnity, and held that, where each party is in part responsible for the negligence for which one has been held liable in damages, the "prime defendant" may recover for that part of the negligence attributable to the other. Id. at 148-49, 282 N.E.2d 288, 331 N.Y.S.2d 382. In other words, the court recognized a "[r]ight to apportionment ... rest[ing] on relative responsibility." Id. at 153, 282 N.E.2d 288, 331 N.Y.S.2d 382. The effect of the Dole decision was to narrow the availability of the common-law remedy of indemnity to situations in which the tortfeasor seeking such relief is liable only vicariously, or by operation of law. See Tokio Marine & Fire Insurance Co., Ltd. v. McDonnell Douglas Corp., 465 F. Supp. 790, 796 (S.D.N.Y.1978), aff'd, 617 F.2d 936 (2d Cir.1980). Since the decision in Dole v. Dow, the courts of New York State have employed the terms "primary" and "secondary" in examining claims for indemnity. Thus, one who is in the "first instance" liable to a plaintiff for breach of a nondelegable duty is "secondarily" liable, because the duty "could not be delegated as against persons injured by the breach of the duty." Kelly v. Diesel Construction, 35 N.Y.2d 1, 7, 315 N.E.2d 751, 358 N.Y. S.2d 685 (1974) (emphasis added). If the party who must pay in the first instance has, however, in fact delegated the duty to another, he is only "vicariously liable" to the injured plaintiff, and may seek indemnity from the actual tortfeasor, who is "primarily" liable. 35 N.Y.2d at 7, 315 N.E.2d 751, 358 N.Y.S.2d 685. See also Rogers v. Dorchester Associates, 32 N.Y.2d 553, 564-65, 300 N.E.2d 403, 347 N.Y.S.2d 22 (1973). In the instant case, PT & TC admitted that there was no contract providing for indemnity between it and NRPC.[10] PT & TC argued, however, that it was only vicariously, or "secondarily," liable to plaintiffs and that it was therefore entitled to indemnification by NRPC. PT & TC's argument implicitly acknowledged that PT & TC, as owner of the fence, had a nondelegable duty to maintain the fence, i.e., that there was a legal basis for PT & TC's liability to plaintiffs.[11] As the court has already noted, it is clear that one who in the first instance has a nondelegable duty and is therefore absolutely liable for breach of that duty may delegate the responsibility 99 for performance of the duty to another, and recover under a theory of implied indemnity from the party to whom the duty was in fact delegated. The facts asserted by PT & TC, however, did not substantiate its claim of delegation nor, a fortiori, its claim that it was only vicariously liable as a result of NRPC's negligence. According to PT & TC, NRPC's Supervisor of Buildings and Bridges admitted in the course of a deposition that his department had maintained the fence in question, and had placed signs and "chicken wire patching" thereon.[12] PT & TC further asserted that NRPC's security personnel patrolled the area around the fence, and reported any holes that they observed in the fence to NRPC's maintenance department.[13] Significantly, PT & TC went on to state that: [p]rior to [the infant] plaintiff's accident, PT & T[C] had nothing to do with the maintenance of the fence ... and none of its employees ever worked on that fence for any reason either prior or subsequent to [the infant] plaintiff's accident. PT & T[C] did not know of the existence of any holes in that fence as of [the date of the accident] nor did PT & T[C] have knowledge that children were trespassing upon said premises. PT & T[C] was unaware of any prior accidents on either its land or upon NRPC's abutting property.[14] PT & TC did not allege that it entered into any agreement with NRPC whereby NRPC undertook to maintain the fence. It would appear from PT & TC's evidence that PT & TC had no knowledge of any actions taken to maintain the fence by NRPC prior to discovery conducted in connection with this action. Indeed, even taking all of PT & TC's allegations as true and drawing all inferences in favor of PT & TC, it would appear that PT & TC was completely derelict in its duty to maintain its own fence. Having discovered that NRPC made efforts to remedy the situation caused by PT & TC's failure to maintain its fence, PT & TC sought to shift the entire responsibility for lapses in maintenance to NRPC, notwithstanding the absence of an agreement for such maintenance between the parties. The court has found no case in which indemnity has been held proper in such a situation. To maintain a cause of action for indemnity, the party seeking indemnity must show that the proposed indemnitor owed it a duty to perform the act in question. Absent a duty between the tortfeasors independent of the plaintiff's cause of action, there can be no claim for indemnity. PT & TC's claim for indemnity fails because PT & TC has not shown that NRPC had any duty to PT & TC to maintain the fence. In other words, there has been no showing that PT & TC actually delegated its admitted duty to maintain its own fence to NRPC, thus absolving PT & TC of ultimate liability for negligent maintenance. The right to indemnity is predicated either on a duty assumed expressly by contract ..., or on the quasi-contract theory of unjust enrichment .... [T]he indemnity cross claim shifts the duty to pay in full from one joint tort-feasor to another, from the one called upon to pay to the one who ought to pay because as between them he has a duty to do so .... If there is no duty as between the two to prevent injury to the injured victim, there can be no right of indemnity by one from the other. Smith v. Hooker Chemical and Plastics Corp., 83 A.D.2d 199, 200-01, 443 N.Y.S.2d 922, 924 (4th Dep't 1981) (citations omitted) (emphasis added). As the Smith court noted, the right to indemnity is not derivative in the sense that the third-party plaintiff sues the third-party defendant for damages sustained by the injured party as a result of the accident.... In the indemnity claim, the third-party plaintiff shifts the ultimate 100 burden of his own responsibility to the prime plaintiff to the third-party defendant who owed [the third-party plaintiff] a duty to prevent the accident and thus also to prevent the liability he incurred to the prime plaintiff. Id. (citations omitted) (emphasis added). See also Tipaldi v. Riverside Memorial Chapel, Inc., 273 A.D. 414, 419, 78 N.Y.S.2d 12, 18 (1st Dep't), aff'd, 298 N.Y. 686, 82 N.E.2d 585 (1948), quoting Phoenix Bridge Co. v. Creem, 102 A.D. 354, 356, 92 N.Y.S. 855, 856 (2d Dep't 1905), aff'd, 185 N.Y. 580, 78 N.E. 1110 (1906) ("[W]hile both the plaintiff [in action over for indemnity] and the defendants were equally culpable and equally liable to the ... public for the omission of duty which resulted in the injury, yet as between themselves the plaintiff was entitled to rely upon the defendants to discharge the duty because of their contractual relations ...." (emphasis in original)); Swanson v. 97 Fifth Avenue Corp., 141 N.Y.S.2d 125, 127 (Sup.Ct. 1955), aff'd, 1 A.D.2d 768, 149 N.Y.S.2d 208 (1st Dep't 1956) (owner of property may seek indemnification from independent contractor for non-performance of contractual duty independently owing to owner). None of the cases cited by PT & TC would support the finding of a valid claim for indemnity on the facts alleged by PT & TC. In McDermott v. City of New York, 50 N.Y.2d 211, 216, 406 N.E.2d 460, 428 N.Y.S.2d 643 (1980), the defendant city was sued by a sanitation worker whose arm had been severed by the hopper mechanism of a garbage truck. The city was permitted to pursue a third-party action for indemnification against the manufacturer of the truck, which action was based on "a duty imposed by the law of products liability." 50 N.Y.2d at 219, 406 N.E.2d 460, 428 N.Y. S.2d 643. The general contractor's claim for indemnification in Kelly v. Diesel Construction, 35 N.Y.2d 1, 315 N.E.2d 751, 358 N.Y.S.2d 685 (1974) was predicated upon a subcontract whereunder the subcontractor was to supply and maintain an elevator for the use of construction personnel. Similarly, in Rogers v. Dorchester Associates, 32 N.Y.2d 553, 300 N.E.2d 403, 347 N.Y.S.2d 22 (1973), the owner and manager of a building were granted judgment on a cross-claim against an elevator company which had, by "written agreement with [the manager], ... undert[aken] to `regularly and systematically examine, adjust [and] lubricate' elevator machinery, to `repair or replace' parts if required in [the elevator company's] judgment, and to `use all reasonable care to maintain the elevator equipment in proper and safe operating condition.'" 32 N.Y.2d at 558, 300 N.E.2d 403, 347 N.Y.S.2d 22. PT & TC also cited Mauro v. McCrindle, 70 A.D.2d 77, 419 N.Y.S.2d 710 (2d Dep't 1979), aff'd, 52 N.Y.2d 719, 417 N.E.2d 567, 436 N.Y.S.2d 273 (1980). In that case, an owner sought indemnification from an employee of a general contractor that had been engaged to demolish a building. The employee had erected a "protective sidewalk shed," which shed collapsed, injuring plaintiff. The employee conceded his negligence for purposes of the appeal. 70 A.D.2d at 79-80, 419 N.Y.S.2d 710. PT & TC relied on language in the Mauro opinion indicating that "the right of indemnity exists independently [of] any special relationship or duty and rests instead on the parties' relative responsibility as determined on the facts as a whole,"[15] arguing that "nothing short of simple fairness entitles PT & T[C] to full indemnity from the primary tortfeasor, NRPC."[16] The Mauro opinion does not, however, support the existence of a valid claim for indemnity in the absence of secondary liability predicated on a duty or relationship imposing liability on one tortfeasor for the acts of the other. Cf. 70 A.D.2d at 82-83, 419 N.Y.S.2d 710. The issue addressed by the Mauro court was whether "a property owner [may] bypass his contractor and directly seek indemnification from the contractor's negligent 101 employee." 70 A.D.2d at 80, 419 N.Y. S.2d 710 (emphasis added). The trial court had found that the owner's liability was "entirely vicarious, resulting from the inherently dangerous nature of the work ... which was negligently performed by [the general contractor]." 70 A.D.2d at 79, 419 N.Y.S.2d 710 (emphasis added). Both the parties and the court recognized that, under settled law, the owner would have a valid action for indemnity against the contractor, based on their contractual agreement, and that the contractor could in turn seek indemnity from its employee, by virtue of the master-servant relationship. See 70 A.D.2d at 84, 419 N.Y.S.2d 710. The unusual aspect of the case was the absence of a contractual duty or "special relationship" running directly between the owner and the contractor's employee. The court found, however, that the employee did have a duty of care as to the owner, and recognized that its decision to permit the action for indemnity against the employee "merely eliminate[d] a step in the indemnity cycle, thereby achieving directly what ... could have been achieved through indirection." Id. Thus, the Mauro decision does not disturb the well-settled precondition for an action over for indemnity that there be a duty as between the indemnitor and indemnitee independent of the plaintiff's cause of action for injury. This is simply the reverse side of vicarious liability absent some sort of relationship, or duty as between the joint tortfeasors, there would be no vicarious liability imposed on one for the acts of the other. Cf., 70 A.D.2d at 82, 419 N.Y. S.2d 710. Here, plaintiffs alleged that PT & TC was negligent in the maintenance of its fence, and that PT & TC's negligence contributed to plaintiffs' injuries. It is clear that, even on the facts alleged by PT & TC, PT & TC alone had a duty to maintain the fence, which duty was not fulfilled by PT & TC. PT & TC had no agreement with NRPC whereby NRPC undertook to fulfill PT & TC's acknowledged duty; PT & TC had no right to rely on NRPC to fulfill PT & TC's duty of maintenance; and, indeed, PT & TC's own evidence indicated that there could have been no reliance, since PT & TC was apparently unaware of any actions taken by NRPC with respect to maintenance of the fence. This is not a situation in which a landowner has been held liable for injuries resulting from a dangerous condition created by another on the owner's land. Rather, the danger in this case was created by PT & TC's own negligence in failing to perform its duty to maintain its property. NRPC, according to the evidence offered by PT & TC, merely failed to remedy completely the danger created by PT & TC's negligence. No action for indemnity lies as between PT & TC and NRPC. The court, construing all of PT & TC's allegations as true, and taking all inferences in the light most favorable to PT & TC, found that NRPC was entitled to summary judgment in its favor on the cross-claim as a matter of law. There was no disputed issue of material fact. NRPC's motion for summary judgment on the cross-claim was therefore granted. PT & TC's motion for summary judgment was denied. NOTES [1] Third-Party Complaint at ¶ 9. [2] Id. at ¶ 12. [3] Answer to Third-Party Complaint. [4] See Amended Complaint at ¶¶ 26 and 27. [5] Answer of PT & TC to Amended Complaint at ¶ 14. [6] The statute provides, in pertinent part, that "[a] tortfeasor who has obtained his own release from liability shall not be entitled to contribution from any other person." N.Y.G.O.L. § 15-108(c) (McKinney 1978). [7] See Verified Complaint, appended to Third-Party Complaint as Exhibit A. [8] See Third-Party Complaint at ¶ 9; Affidavit of Harry P. Brett in Support of [NRPC's] Motion for Summary Judgment at ¶ 3. [9] Consent Pre-Trial Order at ¶ 5. A court order reciting "the agreements made by the parties as to any of the matters considered, and which limits the issues for trial to those not disposed of by admissions or agreements of counsel ... controls the subsequent course of the action ...." Fed.R.Civ.P. 16. See also Consent Pre-Trial Order at ¶¶ 6(3) and 7(b)(8); and PT & TC's Statement Pursuant to General Rule 9(g) [sic] (Rule 9(g) Statement) at ¶ 3. [10] Rule 9(g) Statement at ¶ 14. [11] A tortfeasor who has settled with the plaintiff may pursue an action for indemnity. The would-be indemnitee must, however, have been liable to the plaintiff under some theory. "[I]ndemnity will not be granted to a `volunteer.' ... It is not open to the indemnity plaintiff to argue that he was in no way liable to the tort plaintiff." Tokio Marine & Fire Ins. Co., Ltd., 465 F. Supp. 790, 794 (S.D.N.Y.1978), aff'd, 617 F.2d 936 (2d Cir.1980). See also Martinez v. Fiore, 90 A.D.2d 483 (Case 10), 454 N.Y.S.2d 475 (2d Dep't 1982) ("a party seeking indemnity must be held liable to the plaintiff before he can recover over from a third party"). [12] Rule 9(g) Statement at ¶ 15. [13] Id. [14] Id. at ¶ 16 (emphasis added). [15] 70 A.D.2d at 83, 419 N.Y.S.2d 710. [16] Memorandum of Law of PT & TC in support of motion at 8.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2592899/	722 F. Supp. 912 (1989) DISANDRO-SMITH & ASSOCIATES, P.C., INC. v. EDRON COPIER SERVICE, INC., Edward Brummerlow and Roland Brummerlow. Civ. A. No. 88-0323 P. United States District Court, D. Rhode Island. October 3, 1989. 913 Anthony J. Giafrancesco, Providence, R.I., for plaintiff. Gary D. Berkowitz, Pawtucket, R.I., for defendants. OPINION AND ORDER PETTINE, Senior District Judge. Defendants have moved to dismiss plaintiff's complaint under Fed.R.Civ.P. 12(b)(1). Though the motion to dismiss recites Rule 12(b)(1), I consider it to be more appropriately a 12(b)(6) action and will proceed on this basis. A complaint should not be dismissed for failure to state a claim upon which relief can 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). In deciding whether to dismiss under Fed.R.Civ.P. 12(b)(6), factual allegations of the complaint are to be accepted as true and reasonable factual inferences will be drawn to aid the plaintiff. The plaintiff's complaint includes a claim under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. Sections 1961-68, and state law claims involving fraud and breach of contract. Plaintiff is a Rhode Island professional corporation. Defendant Edron Copier Service, Inc., is a Delaware corporation doing business in the State of Rhode Island, and defendants Edward Brummerlow and Roland Brummerlow are residents of Massachusetts. Plaintiff has in good faith alleged an amount in controversy greater than $10,000. Therefore, the Court has jurisdiction over all claims pursuant to 28 U.S.C. Section 1332. Background According to the complaint, the defendants sold to the plaintiff a Toshiba BD 5620 copy machine, representing that it was new when, in fact, it was used. In addition, plaintiff alleges defendants had earlier sold the same machine to Parkman, Inc., a Massachusetts corporation, as new, when it was, in fact, used. The matter was originally referred to the Magistrate, who recommended that I grant the motion to dismiss. The plaintiff duly objected, and the motion is now before me for de novo review. I find that certain counts should be dismissed, but for reasons somewhat different from the Magistrate's. The Allegations of "Racketeering Activity" The RICO claim is premised on allegations that defendants Edward Brummerlow, Roland Brummerlow, and Edron Copier Service, Inc., conducted or participated in, directly or indirectly, "the conduct of Edron's affairs through a `pattern of racketeering activity,' within the meaning of 18 U.S.C. Section 1961(5), by obtaining money 914 under false pretenses in violation of R.I. G.L. Section 11-41-4, a felony under Rhode Island law." Obtaining money under false pretenses is not a "racketeering activity." As defined by 18 U.S.C. Section 1961(1): (1) "racketeering activity" means (A) any act or threat involving murder, kidnapping, gambling, arson, robbery, bribery, extortion, dealing in narcotic or other dangerous drugs, which is chargeable under State law and punishable by imprisonment for more than one year; (B) any act which is indictable under any of the following provisions of Title 18 United States Code: Section 201 (relating to bribery), section 224 (relating to sports bribery), sections 471, 472, and 473 (relating to counterfeiting), section 659 (relating to theft from interstate shipment) if the act indictable under section 659 is felonious, section 664 (relating to embezzlement from pension and welfare funds), section 891-894 (relating to extortionate credit transactions), section 1029 (relating to fraud and related activity in connection with access devices), section 1084 (relating to the transmission of gambling information), section 1341 (relating to mail fraud), section 1343 (relating to wire fraud), ...[1] Although obtaining money under false pretenses violates State law (R.I.G.L. Section 11-41-4) and is punishable by imprisonment for more than one year, as required by section 1961(1)(A), it is not one of the acts specified in that subsection. Furthermore, plaintiff has not alleged that defendants committed any act indictable under any of the enumerated provisions of Title 18 of the United States Code, listed in section 1961(1)(B), nor has it alleged any act by the defendants which fits the categories of subsections (C), (D), or (E). Thus, the complaint fails to allege that defendants committed any of the acts enumerated as predicates to a RICO violation. While I might be disposed to give plaintiff leave to amend the pleading to allege, if it can, specific actions by the defendants that constitute "racketeering activity" as defined in 18 U.S.C. Section 1961(1), I will not do so because I find that the acts alleged do not establish a "pattern of racketeering activity" under the United States Supreme Court's analysis in H.J., Inc. v. Northwestern Bell Tel. Co., ___ U.S. ___, 109 S. Ct. 2893, 106 L. Ed. 2d 195 (1989). The Court in H.J., Inc. attempted to settle the split in the lower courts over the definition of "pattern" under RICO. The Court held "a pattern of racketeering activity" has two elements: relatedness and continuity. "RICO's legislative history," the Court said, "reveals Congress' intent that to prove a pattern of racketeering activity a plaintiff or prosecutor must show that the racketeering predicates are related, and that they amount to or pose a threat of continued criminal activity." Id. 109 S.Ct. at 2900. To define relatedness, the Court used a provision in Title X of the Organized Crime Control Act of 1970, Pub.L. No. 91-452, 84 Stat. 922 (RICO formed Title IX). Title X provides for enhanced sentences for defendants who have committed a prior felony as part of a pattern of criminal conduct or in furtherance of a conspiracy to engage in a pattern of criminal conduct. In the Court's view, Congress defined Title X's pattern requirement solely in terms of the relationship of the defendant's criminal acts one to another: "criminal conduct forms a pattern if it embraces criminal acts that have the same or similar purposes, results, participants, victims, or methods of commission, or otherwise are interrelated by distinguishing characteristics and are not isolated events." 18 U.S.C. Section 3575(e). We have no reason to suppose that Congress had in mind for RICO's pattern of racketeering component any more constrained a notion of the relationships between predicates that would suffice. H.J., Inc., 109, S.Ct. at 2901. By importing 915 the definition of "pattern" from Title X,[2] the Court, therefore, provided lower courts with a list of factors they might use to determine whether the predicate offenses are related. Unfortunately, H.J., Inc. does not provide much guidance as to the level of "relatedness" of the predicate acts necessary to find a RICO violation. Relatedness of predicate acts alone is not enough to satisfy Section 1962's pattern element. "To establish a RICO pattern it must also be shown that the predicates themselves amount to, or that they otherwise constitute a threat of, continuing racketeering activity." Id. at 2901. Some lower courts, prior to H.J., Inc., had used a "multiple scheme" test to satisfy the "continuity" requirement. The Court rejected that test: [A]lthough proof that a RICO defendant has been involved in multiple criminal schemes would certainly be highly relevant to the inquiry into the continuity of the defendant's racketeering activity, it is implausible to suppose that Congress thought continuity might be shown only by proof of multiple schemes. ... We adopt a less inflexible approach that seems to us to derive from a common-sense, everyday understanding of RICO's language and Congress' gloss on it. What a plaintiff ... must prove is continuity of racketeering activity, or its threat, simpliciter. This may be done in a variety of ways, thus making it difficult to formulate any general test for continuity. We can, however, begin to delineate the requirement. "Continuity" is both a closed- and open-ended concept, referring either to a closed period of repeated conduct, or to past conduct that by its nature projects into the future with a threat of repetition.... A party alleging a RICO violation may demonstrate continuity over a closed period by proving a series of related predicates extending over a substantial period of time. Predicate acts extending over a few weeks or months and threatening no future criminal conduct do not satisfy this requirement: Congress was concerned in RICO with long-term criminal conduct. Often a RICO action will be brought before continuity can be established in this way. In such cases, liability depends on whether the threat of continuity is demonstrated. Id. at 2901-02 (citation omitted). The Supreme Court realized that "[t]he limits of the relationship and continuity concepts that combine to define a RICO pattern, and the precise methods by which relatedness and continuity or its threat may be proved, cannot be fixed in advance with such clarity that it will always be apparent whether in a particular case a `pattern of racketeering activity' exists. The development of these concepts must await future cases, absent a decision by Congress to revisit RICO to provide clearer guidance as to the Act's intended scope." Id. at 2902. The determination of a "pattern of racketeering activity" is to be made on a case-by-case basis. Analysis On the facts alleged by plaintiff, I find that the element of continuity or threat of continuity is utterly lacking in this case. Plaintiff states that it entered an agreement with defendant corporation, Edron Copier Service, Inc., in January 1988, whereby Edron was to sell to plaintiff a new Toshiba BD 5620 copy machine for $4,200. Edron delivered a Toshiba BD 5620 copy machine to plaintiff, which plaintiff learned was a used machine. Plaintiff also learned that this machine had been sold earlier to Parkman, Inc., a Massachusetts corporation, as new, when it was used. For these acts to constitute a RICO violation, they must be "a series of predicates 916 extending over a substantial period of time." Id. The acts in this case do not fulfill this requirement. Plaintiff claims the copy machine was manufactured in July 1986. Therefore, the sale to Parkman, Inc., necessarily occurred after July 1, 1986. In the memorandum of law attached to plaintiff's objection to the Report and Recommendation of the Magistrate, plaintiff refers to the affidavit of Z. Hershel Smith, a principal of plaintiff's corporation, wherein Smith stated, "I have obtained information regarding three (3) separate transactions, wherein the defendant sold used copy machines as new." This allegation does not specify a date for the third sale. Since the affidavit was executed on or about June 22, 1988, this transaction must have occurred sometime before that date. Therefore, the three sales that form the basis for the RICO claim occurred between July 1, 1986 and June 22, 1988. Plaintiff's complaint states; 30. Beginning at a time unknown but at least as early as 1986 and extending through 1988, Edron has conducted or participated, directly or indirectly, in the conduct of the affairs of such enterprise through two separate but related schemes, constituting a pattern of racketeering, all as is alleged more specifically below. This statement alleges that defendants participated in a closed period of racketeering activity, ending in 1988 with the sale of a copier to plaintiff. The acts alleged here three sales of used copy machines as new within approximately two years do not amount to the "long-term criminal conduct" that civil RICO is intended to redress. Having found that plaintiff's allegations do not demonstrate the requisite "continuity" of RICO's pattern requirement, I need not evaluate the allegations according to the "relatedness" prong of the pattern requirement. Conclusion Defendant Edron Copier's motion to dismiss is granted only as to Counts 1, 2, and 3, claiming RICO violations. The plaintiff's state law claims, breach of contract in Count 4 and fraudulent conveyance in Count 5, are not dismissed. NOTES [1] This is an excerpt from the long list of enumerated activities. The parts not reproduced here describe activities that are not involved in this case. [2] Justice Scalia, writing for four Justices in concurrence, criticized the importation of this definition from Title X into Title IX, as contrary to normal rules of statutory construction. See H.J., Inc., 109 S.Ct. at 2907. Further, he found the definition provided by Section 3575(e) to be utterly uninformative: "I doubt that the lower courts will find the Court's instructions much more helpful than telling them to look for a `pattern' which is what the statute already says." Id.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2593479/	576 F. Supp. 463 (1983) John DOE, Robert Seawright, Donald E. Dill, Charles W. Boyd, Dorothy J. Messenger, Gloria Washington, and Yvonne Dunlap, Individually and on behalf of all others similarly situated v. Margaret M. HECKLER, Secretary, United States Department of Health and Human Services. Civ. A. No. M-83-2218. United States District Court, D. Maryland. December 13, 1983. 464 Dennis W. Carroll and Ethel Zelenske, Administrative Law Center, Legal Aid Bureau, Inc., Baltimore, Md., for plaintiffs. J. Frederick Motz, U.S. Atty., D. Maryland, Glenda G. Gordon, Asst. U.S. Atty., Baltimore, Md., Diane C. Moskal, Regional Atty., Michael P. Meehan and Thomas A. Dougherty, Jr., Asst. Regional Attys., Dept. of Health and Human Services, Philadelphia, Pa., Randolph W. Gaines, A. George Lowe and Gabriel L. Imperato, Dept. of Health and Human Services, Baltimore, Md., for defendant. JAMES R. MILLER, Jr., District Judge. MEMORANDUM AND ORDER I. Background On June 27, 1983, plaintiffs, John Doe and Richard Seawright, filed a putative class action challenging the actions of the Secretary of the United States Department of Health and Human Services (HSS) in terminating the plaintiffs' social security benefits under the Old Age, Survivors, and Disability Insurance Act, 42 U.S.C. §§ 401 et seq. (Paper No. 3). 465 On July 15, 1983, John Doe was reinstated to the disability benefit rolls. On September 16, 1983, the defendant filed a motion to remand Robert Seawright's case for a de novo hearing. (Paper No. 27). Finding that the Secretary had established good cause for the remand, this court, on September 30, 1983, granted that motion. (Paper No. 38). In the meantime, Charles Boyd, Dorothy Messenger, Gloria Washington and Donald Dill sought leave to intervene in this case. (Paper No. 24). Because the applicant intervenors met the requirements of Fed.R. Civ.P. 24(a)(2), their motion was granted. (Paper No. 35). At the hearing held on November 18, 1983, the plaintiffs sought leave to file a second complaint in intervention in order that at least one plaintiff would represent those members of the class who had not fully exhausted their administrative remedies. The defendant, on December 9, 1983, filed an objection to the motion for leave to intervene. (Paper No. 43). This court now grants the motion of Yvonne Dunlap to intervene as of right for the same reasons set forth in this court's previous order granting Washington, Boyd, Messenger, and Dill the right to intervene. (Paper No. 35). Since the claims of the original plaintiffs are now moot, those five intervenors must be considered, for class certification purposes, the named plaintiffs in this case. In fact, in their complaints in intervention, the applicant intervenors sought leave to intervene individually and on behalf of all other similarly situated. (Paper Nos. 36 & 42). II. Requested Definition of the Class The plaintiffs originally moved for certification of a class composed of all persons in the State of Maryland: "(a) Who have applied for disability benefits under the Social Security Act; "(b) Who have been found by the Secretary to be under a disability as defined in the Social Security Act, 42 U.S.C. § 416(i) and determined to be eligible for monthly disability benefits under the Act; "(c) Whose disability has been determined by the Secretary to have ceased in a decision issued on or after the 60th day prior to the filing of this action; "(d) Whose disability has been determined to have ceased based on medical factors; "(e) Who have had or will have their monthly benefit checks stopped; and "(f) Who have had their disability benefits terminated without any finding that either (i) there has been a change in their medical condition since the time that the Secretary first determined that they were under a disability as defined in the Act or (ii) that the original favorable decision was erroneous." (Paper No. 6). On November 10, 1983, the plaintiffs sought leave to amend the definition of the proposed class to include a requirement that class members, after being notified that the Secretary was reviewing their continued disability and/or proposed to terminate their benefits, either: (a) filed the questionnaire, SSA-454aF4, asserting that they were still disabled, or (b) filed a request for reconsideration following the formal decision to terminate their benefits. (Paper No. 40). The defendant, at the hearing, raised no objection to the motion. Such an amendment, slightly limiting the original breadth of the requested class, is proper in light of the fact that this court would have no jurisdiction in any event over any purported class member who had not "presented a claim" to the Secretary. Mathews v. Eldridge, 424 U.S. 319, 96 S. Ct. 893, 47 L. Ed. 2d 18 (1976); McDaniels v. Heckler, 571 F. Supp. 880 (D.Md.1983). Leave to amend is granted. III. Procedural Status of the Named Plaintiffs The proposed class is represented by five plaintiffs. The parties have stipulated to 466 the facts surrounding the procedural history in four of the named plaintiffs' cases. Donald Dill, a 57 year old man, was found to be disabled under the Social Security Act on June 28, 1978. He was advised by letter of June 30, 1982 that his disability had ceased as of June, 1982. He appealed that decision, and on April 28, 1983, the ALJ held that his disability continued. On its own motion, the Appeals Council reversed the ALJ's decision, and held in an opinion announced on August 5, 1983, that Dill's disability ceased in June, 1982. Thus, Mr. Dill has fully exhausted his administrative remedies. The decision of the Appeals Council was not made on the basis that Mr. Dill's condition had improved. The Council concluded that Dill's original condition had not "worsened." (Ex. 2 at 5, Stipulations of Fact, Paper No. 41). Dorothy Messenger is 41 years old. She was found to be disabled in March, 1969. By letter of April 9, 1982, Messenger was notified that her disability had ceased. She was denied benefits after her request for reconsideration was denied. In April, 1983, after a hearing in February, the ALJ determined that she was no longer entitled to disability benefits. On September 2, 1983, the Appeals Council affirmed the ALJ's decision. Messenger has exhausted all administrative remedies. In reviewing the ALJ's decision to terminate Messenger's benefits, there appears to be no finding of medical improvement. The ALJ concluded that her medical condition "would not prevent her from performing her prior work activity...." (Ex. 3 at 6, Stipulations of Fact, Paper No. 41). Gloria Washington, now 30 years old, began receiving benefits in November, 1979. On July 16, 1982, Washington was advised that her disability had ceased. She appealed that decision. The same ALJ who had granted her benefits in 1978, unfavorably reviewed her case and decided that her disability had ceased. The Appeals Council affirmed the ALJ's decision on July 19, 1983. Washington has exhausted her administrative remedies. It appears to this court that the ALJ did not make a finding of medical improvement in Washington's case. In his findings he concluded that the medical evidence showed that the claimant continued to suffer from the original disability, but that she was no longer "disabled." (Ex. 6 at 8, Stipulations of Fact, Paper No. 41). Charles Boyd began to receive disability benefits on April 7, 1981. He was notified in September, 1982 that his disability had ceased. The ALJ upheld that determination in a decision dated July 21, 1983. Boyd's appeal to the Appeals Council was unsuccessful. On November 1, 1983, the Council affirmed the ALJ's decision denying Boyd's claim for continuation of disability benefits. Boyd has exhausted his administrative remedies. Again, it appears to this court that the ALJ did not find that Boyd's medical condition had improved. The ALJ considered evidence of headache, depression, and myocardial infarction the same medical problems experienced by the claimant in 1981. The ALJ concluded that the same medical problems were no longer severe. (Ex. 8 at 7, Stipulations of Fact, Paper No. 41). Yvonne Dunlap began receiving disability benefits in October, 1976 due to mental retardation, personality disorders and schizophrenia. She was notified on September 7, 1982 that her disability had ceased. A hearing was held on July 11, 1983, and the ALJ determined that Ms. Dunlap's disability had ceased. (Paper No. 42, Ex. 1). She has appealed the termination of her benefits to the Appeals Council, but no decision has yet been rendered in her case. IV. Legal Analysis a. Class Certification Each member of a purported plaintiff class, in a suit under the Social Security Act, must meet the jurisdictional requirement of 42 U.S.C. § 405(g) of having received a final decision from the Secretary. See Weinberger v. Salfi, 422 U.S. 467 749, 763-64, 95 S. Ct. 2457, 2465-66, 45 L. Ed. 2d 522 (1975). The Supreme Court has defined the two elements of finality. First, each member must have presented a claim for benefits to the Secretary. Second, each class member normally must have exhausted his administrative remedies. Mathews v. Eldridge, 424 U.S. 319, 328, 96 S. Ct. 893, 899, 47 L. Ed. 2d 18 (1976). In denying the defendant's motion to dismiss for lack of subject matter jurisdiction (Paper No. 22), this court, on September 9, 1983, determined that each member of the proposed class had presented a claim for continued benefits to the Secretary and that the exhaustion requirement was waivable and had been waived in this particular case. Therefore, all the named plaintiffs have met the jurisdictional requirements for bringing a class action. The plaintiffs assert in their motion for class certification (Paper No. 6) that the proposed class meets the requirements of Fed.R.Civ.P. 23(a). The defendant argues that the plaintiffs do not meet three of the four requirements of Rule 23(a) numerosity, commonality, and typicality. She apparently concedes that the plaintiffs and their counsel are adequate representatives of the proposed class. (Paper No. 28). (1) Numerosity The plaintiffs state in their motion for class certification (Paper No. 6) that between March, 1981 and August, 1982 the Secretary terminated disability benefits in 134,000 cases nationally. They assert that thousands of these individuals reside in Maryland. In addition to those statistics, the parties have stipulated that in Maryland, from April July, 1983, ALJ's in the Maryland area have upheld the termination of disability benefits in 55 cases.[1] This suit was filed on June 27, 1983. The proposed class includes all persons whose disability has been determined by the Secretary, based on medical factors, to have ceased on or after the 60th day prior to the filing of this action. Because it is likely that the Secretary has continued to terminate benefits since June 27, the number of members in the proposed class presumably has grown during these months of litigation. Although it is difficult to determine the exact size of the class, this court speculates that it exceeds fifty members. "Where `the only relief sought for the class is injunctive and declaratory in nature...,' even `speculative and conclusory representations' as to the size of the class suffice as to the requirement of many." Doe v. Charleston Area Medical Center, Inc., 529 F.2d 638, 645 (4th Cir.1975) quoting Doe v. Flowers, 364 F. Supp. 953, 954 (N.D.W.Va. 1973), aff'd mem., 416 U.S. 922, 94 S. Ct. 1921, 40 L. Ed. 2d 279 (1974); Fitzgerald v. Schweiker, 538 F. Supp. 992, 1000 (D.Md. 1982). Therefore, this court finds the class to be sufficiently numerous to make joinder difficult or impracticable. (2) Commonality Despite the defendant's argument to the contrary, the claims of the members of the proposed class share common questions of law and fact as required by Rule 23(a). Each class member's claim is based on the same facts: his/her disability benefits were terminated without a finding of medical improvement by the Secretary; he/she presented a claim to the Secretary to reinstate benefits; and he/she has either exhausted administrative remedies or the exhaustion of those remedies has been waived. No other facts are relevant in relation to the class members in this case. Similarly, legal questions also are common to the class. At issue for all class members is whether the defendant's failure to apply a medical improvement standard violates the Social Security Act and/or the Due Process Clause of the Fifth Amendment. 468 (3) Typicality The typicality requirement tests whether the named class representatives' interests are consistent with those of the class members. See, e.g., Smith v. B & O Railroad Co., 473 F. Supp. 572, 581 (D.Md.1979). In the instant case, the claims of the representative plaintiffs are typical of the claims of the proposed class members. The representatives seek to enjoin the defendant from continuing policies and practices which allegedly violate constitutional and statutory mandates. No plaintiff claims an interest that can be interpreted as adverse to any class member. If the named plaintiffs are successful, all members of the class will benefit from the suit. (4) Rule 23(b)(2) The plaintiffs have adequately demonstrated that this cause of action is one which fits within the definition set forth in Fed.R.Civ.P. 23(b)(2). Under that Rule an action may be maintained as a class action if "the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole." Fed.R.Civ.P. 23(b)(2). The defendant has established a policy of refusing to apply the medical improvement standard when terminating disability benefits. That policy has been made generally applicable to the class members herein. In addition, the defendant has refused to be bound by a medical improvement standard despite the fact that the use of such a standard has been ordered by other federal courts in individual cases. See, e.g., Simpson v. Schweiker, 691 F.2d 966 (11th Cir. 1982); Patti v. Schweiker, 669 F.2d 582 (9th Cir.1982); Musgrove v. Schweiker, 552 F. Supp. 104 (E.D.Pa.1982). Certification of the proposed class will be granted since the requirements of Rule 23 have been fully met. b. Medical Improvement Standard At issue here is whether the Secretary, after reevaluating an individual's medical condition, can terminate disability benefits without a showing that the recipient's medical condition has improved.[2] The plaintiffs contend that the Secretary's actions in terminating benefits without finding medical improvement contravene the Social Security Act and the Constitution.[3] They seek a permanent injunction, enjoining the Secretary from terminating disability benefits to members of the class without first determining that the class member's medical condition has improved. They also seek a declaratory judgment that the defendant's policies and practices violate the Fifth Amendment to the United States Constitution and the Social Security Act. Finally, they request that the court order the defendant to restore to plaintiffs their full disability benefits until such time as the defendant determines that their medical condition has improved, and that the defendant be required to pay members of the class all monies unlawfully withheld. The defendant responds that under the Social Security Act the Secretary has full power and authority to establish, by regulation, a broad and flexible standard by which to determine when a person's disability ceases, a determination which, when made, gives the Secretary the power legally to terminate that recipient's benefits. (Paper No. 26). The plaintiffs do not contest the Secretary's power to make rules and regulations, but they contend that the Secretary has exceeded her statutory authority in promulgating 469 the regulation found at 20 C.F.R. § 404.1594 and that said regulation is arbitrary and capricious. Review by this court is appropriate under those circumstances. Heckler v. Campbell, ___ U.S. ___, ___, 103 S. Ct. 1952, 1956, 76 L. Ed. 2d 66 (1983); Schweiker v. Gray Panthers, 453 U.S. 34, 44, 101 S. Ct. 2633, 2640, 69 L. Ed. 2d 460 (1981). Although plaintiffs and defendant have cited an impressive array of recent decisions on the issue in almost every circuit, the starting point for this court's inquiry must be the Fourth Circuit's recent decision in Dotson v. Schweiker, 719 F.2d 80 (4th Cir.1983). In Dotson, the plaintiff appealed from an order of the district court, affirming the Secretary's termination of his social security disability insurance benefits. He had applied for and was awarded disability insurance benefits in 1974. In May, 1981, the Secretary determined that his disability had ceased. His benefits were terminated on July 31, 1981. At the administrative hearing, the ALJ upheld the Secretary's determination that Dotson's disability had ceased. Dotson v. Schweiker, 719 F.2d at 81. Before the Court of Appeals, Dotson argued that he was entitled to a presumption that, as a result of the Secretary's prior ruling of disability, he continued to be disabled. The court agreed that the ALJ had incorrectly allocated the burdens, and, therefore, remanded the case with instructions that the Secretary come forward at the hearing to rebut the presumption of disability. Dotson v. Schweiker, 719 F.2d at 82-83. The Secretary suggests here that the holding in Dotson is a narrow one and is not controlling in this case. The plaintiffs read the case as adopting the medical improvement standard. Although the Dotson court did not specifically articulate that a medical improvement standard is applicable in disability termination hearings, the holding in Dotson supports the plaintiffs' case and provides guidance to this court in deciding the issue before it. At least one court has noted that whether a court adopted the medical improvement standard or relied on a presumption of disability the results would be the same. Trujillo v. Heckler, 569 F. Supp. 631, 635 (D.Colo.1983). In Trujillo, the court held that the Secretary could not terminate Social Security "Title II or Title XVI benefits in the absence of proof of a material medical improvement in the recipient's condition." Id. at 635. Although the plaintiffs urged the court to apply a "presumption of disability to the earliest proceeding finding the recipient disabled," the court noted that "[t]he presumption of disability approach ... accomplishes the same thing as an improvement standard. More to the point, it typically incorporates an improvement standard. As the court in Patti v. Schweiker said: In an appropriate case, however, a prior ruling of disability can give rise to a presumption that the disability exists. `Once evidence has been presented which supports a finding that a given condition exists, it is presumed in the absence of proof to the contrary that the condition remains unchanged.' 669 F.2d 582, 586, 587 (9th Cir.1982) ... (Emphasis added)." Trujillo v. Heckler, 569 F.Supp. at 635-36. Therefore, the Trujillo court declined to adopt the presumption theory simply because it was duplicative of the medical improvement standard. The Fourth Circuit quoted the above-cited paragraph from Patti v. Schweiker as support for its decision in Dotson. Dotson v. Schweiker, 719 F.2d at 82. The reasoning in Trujillo that the application of a medical improvement standard and the use of presumption of disability lead to the same result is sound. Under either approach, the recipient bears the initial burden of demonstrating that he is disabled. As noted in Dotson, a social security benefit claimant always "bears a continuing burden of showing ... that he has a physical or mental impairment." Dotson v. Schweiker, 719 F.2d at 82, citing Mathews v. Eldridge, 424 U.S. 319, 336, 96 470 S.Ct. 893, 903, 47 L. Ed. 2d 18 (1976). Once he has established at an earlier hearing that a disability in fact exists, the use of a presumption of disability at a termination hearing merely "requires the Secretary to come forward with evidence that the [recipient] is not disabled." Dotson v. Schweiker, 719 F.2d at 83. Logically, if the recipient is presumed disabled because of prior medical findings, diagnosis, and testimony, the Secretary must rebut that presumption with medical evidence that the disabling condition has changed to such an extent that the recipient is able to engage in substantial gainful activity. That evidence cannot consist solely of the same medical evidence presented at the prior hearing. "To conclude otherwise would permit the Secretary to submit the same medical evidence to different physicians time and time again until the Secretary obtains a favorable result." Dotson v. Schweiker, 719 F.2d at 82. Similarly, if a medical improvement standard is applied at termination hearings, the recipient by law must present evidence of continuing disability. Mathews v. Eldridge, 424 U.S. at 343, 96 S. Ct. at 907. At the termination hearing, such evidence will not be presented on a clean slate. It is most likely that the recipient will present the medical evidence found relevant to disability at his initial hearing and any current medical evidence he possesses to support his claim. After the recipient presents his medical evidence, the Secretary must show, by medical evidence, that the condition has improved to the extent that the recipient is able to engage in substantial gainful activity. Courts applying the medical improvement standard make clear that the Secretary cannot use the termination hearing to relitigate facts and determinations already decided. "If ... the evidence in a continuation case is substantially the same as the evidence had been in the initial disability benefits request case, benefits must be continued." Simpson v. Schweiker, 691 F.2d 966, 969 (11th Cir.1982). See also Musgrove v. Schweiker, 552 F. Supp. 104, 106 (E.D.Pa.1982). Thus, the medical improvement standard, in effect, establishes a presumption of disability which the Secretary must rebut. Finding no distinct difference between the medical improvement standard and the presumption theory, this court concludes that Dotson implicitly controls the issue before this court today. Although the Dotson court did not specifically hold that the Secretary's failure to use a medical improvement standard violated the Social Security Act or the Constitution, that appears to be the logical result of Dotson. Thus, in relation to the claims presented and the relief requested in the instant case, Dotson must be the initial starting point and the controlling precedent. (1) Application of Dotson to Class Members' Claims The class members first argue that the Secretary's refusal to apply a medical improvement standard in their cases violates the Social Security Act. Clearly the Social Security Act allows the Secretary to terminate benefits when an individual's disability "ceases."[4] 42 U.S.C. §§ 416(i)(2)(D) and 423(a)(1). The Act requires the Secretary to adopt "reasonable and proper rules and regulations to regulate and provide for the nature and extent of the proofs and evidence and the method of taking and furnishing same in order to establish the right to benefits hereunder." 42 U.S.C. § 405(a). The Secretary, in 1980, promulgated regulations regarding the termination of benefits. The regulations state in part: 471 "Why and when we will find that your disability has ended. (a) General. When the medical or other evidence in your file shows that your disability has ended, we will contact you and tell you that the evidence in your file shows that you are able to do substantial gainful activity and that your eligibility for cash benefits and for a period of disability will end. Before we stop your benefits or a period of disability, we will give you a chance to give us your reasons why we should not stop your benefits or your period of disability. Section 404.1595 describes your rights and the procedures we will follow. We may also stop payment of your benefits if you have not cooperated with us in getting information about your disability or if we cannot find you (see paragraph (c) of this section). (b) Disabled workers and persons disabled since childhood. If you are entitled to disability cash benefits as a disabled worker or to child's insurance benefits, we will find that your disability ended in the earliest of the following months (1) The month in which your impairment, as shown by current medical or other evidence, is such that you are able to do substantial gainful activity; (2) The month in which you demonstrated your ability to engage in substantial gainful activity (following completion of a trial work period); or (3) The month in which you actually do substantial gainful activity (where you are not entitled to a trial work period)...." 20 C.F.R. 404.1594 (1983) (emphasis added). In promulgating the regulations the Secretary explained the policy underlying them: "At one time we would not find that disability or blindness stopped unless the medical evidence showed that the person's condition had improved since we last determined that he or she was disabled. About three years ago we changed this policy and began to find that disability or blindness had stopped if we found, on the basis of new evidence, that the person was not disabled or blind as defined in the law." 45 Fed.Reg. 5556 (Aug. 20, 1980). In addition, the Secretary issued a Social Security Ruling in January, 1981 which stated that under current policy in cessation hearings "[i]t will not be necessary to determine whether or how much the individual's condition has medically improved since the prior favorable determination." Social Security Ruling No. SSR-81-6 (Ex. C, Paper No. 3). Thus, as long as the ALJ or Appeals Council finds that a recipient is not "currently disabled," benefits will cease. Id., see also SSR 82-10C and 82-49C (Ex. R & T, Paper No. 7). The Secretary argues that the regulations and the policy underlying them are consistent with the Social Security Act's mandate that disability benefits be paid until the "disability ceases." When medical factors, however, are the basis for terminating benefits, this court agrees with the plaintiffs that the regulations, promulgated pursuant to the Social Security Act, must be interpreted to require a finding of medical improvement prior to termination. In reaching this conclusion, this court gives effect to the reasoning and holding in Dotson. The Fourth Circuit has specifically stated that "the Secretary is required to rebut the presumption [of disability]. To conclude otherwise would permit the Secretary to submit the same medical evidence to different physicians time and time again until the Secretary obtains a favorable result." Dotson v. Schweiker, 719 F.2d 80 at 82. Therefore, the Secretary's failure or refusal to utilize the medical improvement standard in termination hearings, in which evidence consists solely of the physical or mental condition of the claimant, violates this circuit's interpretation of the regulations adopted under the Social Security Act. Although the Social Security Act itself does not mandate a medical improvement 472 standard,[5] that standard must be read into the regulations in light of the Dotson opinion. As one court stated, "if the Secretary's action and official policy contravenes the [legal standard established in this circuit] ... this court is not even called upon to interpret the statute, because the ... circuit has already spoken on the subject." Siedlecki v. Schweiker, 563 F. Supp. 43, 45 (W.D.Wash.1983) (referring to the 9th Circuit's decision in Finnegan v. Matthews, 641 F.2d 1340 (9th Cir.1981) mandating a medical improvement standard). Therefore, this court finds that in this circuit the Secretary must comply with the Dotson ruling and come forward at all termination hearings in which medical factors are considered with evidence to rebut the presumption of disability. In essence, the Secretary must establish that the claimant's medical condition has improved. Thus, the Secretary will be enjoined from terminating disability benefits to members of the class in contravention of the medical improvement and other standards set out in or encompassed by the decision in Dotson v. Schweiker, 719 F.2d 80 (4th Cir.1983). (2) Application of Dotson to Individual Plaintiff's Claims In their complaint in intervention, plaintiffs Washington and Dill assert that, because a medical improvement standard was not applied at hearings and/or on appeal to the Appeals Council, decisions rendered in their cases were not supported by substantial evidence. (Paper No. 36, ¶ 91 & 92). They seek reversal of the Secretary's decision denying them disability benefits or, in the alternative, remand of their cases to the Secretary. At the time the complaint in intervention was filed, plaintiffs Messenger and Boyd were awaiting a final decision by the Secretary on their appeals. Those decisions were rendered prior to the hearing held on November 18, 1983. This court has noted previously that not only in the cases of Dill and Washington, but in Messenger's and Boyd's cases also, neither the ALJ nor the Appeals Council found that the claimant had medically improved. Having concluded that such a finding is necessary before a claimant may be found no longer disabled, this court will remand the cases of each of those plaintiffs to the Secretary for reconsideration in light of this decision. As to Yvonne Dunlap, whose appeal has not yet been considered by the Appeals Council, this court's holding in this case should govern the Appeals Council ruling. If it is determined that the ALJ had not found medical improvement in Ms. Dunlap's condition, then the Appeals Council should rule accordingly. V. Restoration of Benefits The plaintiffs have requested additional relief in the form of restoration of benefits and repayment of money which was unlawfully withheld from the class members. Such relief will not be granted in light of Justice Rehnquist's decision in Heckler v. Lopez, ___ U.S. ___, 104 S. Ct. 10, 77 L. Ed. 2d 1431 (1983). In that case, the Secretary sought and was granted a stay of the district court's order in Lopez v. Heckler, 572 F. Supp. 26 (C.D.Cal.1983). That court had ordered the Secretary to notify each class member that he could apply for reinstatement of benefits, and be reinstated, if he believed that his medical condition had not improved since his disability determination. Heckler v. Lopez, 473 ___ U.S. at ___, 104 S.Ct. at 11. Justice Rehnquist indicated that such an order, similar to mandamus, "significantly interferes with the distribution between administrative and judicial enforcement of the Social Security Act...." Id. at ___, 104 S.Ct. at 12. Therefore, he granted the stay pending determination of the Secretary's appeal to the Ninth Circuit. The plaintiffs here have requested almost the same type of relief which the Lopez plaintiffs had requested. Justice Rehnquist stated, and this court agrees, that such relief may not be consistent with 42 U.S.C. 405(i) which directs payment of disability benefits only "[u]pon final decision of the Secretary or upon final judgment of any court of competent jurisdiction...." This court cannot decide, at this time, the merits of each individual class member's claims for reinstatement. Thus, the plaintiffs' request for restoration of benefits and repayment of illegally withheld money must be denied. Accordingly, it is this 13th day of December, 1983, by the United States District Court for the District of Maryland, ORDERED: 1. That the motion to certify the class is GRANTED to include all persons: "(a) Who have applied for disability benefits under the Social Security Act; "(b) Who have been found by the Secretary to be under a disability as defined in the Social Security Act, 42 U.S.C. § 416(i) and determined to be eligible for monthly disability benefits under the Act; "(c) Who after being notified that the Secretary was reviewing their continued disability and/or proposed to terminate their benefits either 1) filed form SSA-454aF4 asserting that they were still disabled, or 2) filed a request for reconsideration following the formal decision to terminate their benefits. "(d) Whose disability has been determined by the Secretary to have ceased in a decision issued on or after the 60th day prior to the filing of this action; "(e) Whose disability has been determined to have ceased based on medical factors; "(f) Who have had or will have their monthly benefit checks stopped; and "(g) Who have had their disability benefits terminated without any finding that either (i) there has been a change in their medical condition since the time that the Secretary first determined that they were under a disability as defined in the Act or (ii) that the original favorable decision was erroneous." 2. That the Secretary be, and is hereby, ENJOINED from terminating the social security disability benefits of all class members absent a finding of medical improvement when the evidence at the cessation hearing relates solely to the claimant's physical or mental condition. 3. That the cases of plaintiffs Washington, Dill, Boyd, and Messenger are REMANDED to the Secretary for reconsideration in light of this decision. 4. That the class members' claim for immediate restoration of benefits is DENIED. 5. That the Clerk shall mail a copy of this Memorandum and Order to counsel for the parties. NOTES [1] It is not possible to determine if medical factors were considered by the ALJ's in upholding the terminations. Therefore, it is likely that not all of the 55 persons terminated would satisfy the requirements set out for membership in the class. [2] The plaintiffs do not argue that a medical improvement standard must be applied in all termination cases. They recognize that there are a variety of other reasons why benefits may be terminated. See Paper No. 7 at 2 & 22, Paper No. 31 at 3. [3] The plaintiffs also argue that the Secretary's position is contrary to the principles of res judicata and administrative finality. The res judicata and administrative finality issues need not be addressed, given this court's decision today. [4] The Act also allows the Secretary to terminate benefits if the individual returns to work, 42 U.S.C. § 423(d)(4); fails to supply medical evidence when requested, 42 U.S.C. § 423(d)(5), or refuses without good cause to attend vocational rehabilitation, 42 U.S.C. § 422(b)(1). Thus in these, and in other types of situations, the Secretary may terminate benefits without ever reaching the medical improvement issue. The plaintiffs recognize that the decision in this case is limited to the medical improvement issue. [5] The Social Security Act itself does not shed light on whether the Secretary, if she considers medical factors at the cessation hearing, must find that those medical factors have changed as a basis for her decision that the disability has ceased. In fact, it was not until recently that Congress has addressed the medical improvement issue. In debates over the 1982 Amendments to the Act, a number of Senators called for a medical improvement standard. See 128 Cong.Rec. 13857-13866 (Dec. 3, 1982) (comments of Senators Heinz, Pryor, Reigal, Dole, Cohen, Metzenbaum). No decision on appropriate legislation was reached by the 1982 Congress, but bills on the issue have been introduced and are pending before the 1983 Congress. See H.R. 3755.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2463911/	339 F.Supp.2d 944 (2004) BLISS CLEARING NIAGARA, INC., Plaintiff, v. MIDWEST BRAKE BOND CO, Defendant. No. 5:02-CV-67. United States District Court, W.D. Michigan, Southern Division. August 30, 2004. 945 946 947 948 949 950 951 John M. Brown, Bruce G. Davis, Dykema, Gossett PLLC, Lansing, MI, and Douglas A. Dozeman, Warner, Norcross & Judd, LLP, Grand Rapids, MI, for Plaintiff. Dean W. Amburn, Robert J. Lenihan, II, Harness, Dickey & Pierce, P.L.C., Troy, MI, and Richard A. Gaffin, Miller, Canfield, Paddock & Stone, PLC, Grand Rapids, MI, for Defendant. 952 OPINION QUIST, District Judge. TABLE OF CONTENTS I. Facts and Procedural History ......................................953 A. BCN/Clearing and its Predecessors ...............................953 B. Midwest .........................................................954 C. Business Transactions and Negotiations Between the Parties.......954 D. Midwest's Use of the Torc-Pac Mark ..............................955 E. The Litigation ..................................................956 II. Summary Judgment Standard ..........................................957 III. Discussion .........................................................957 A. Trademark Issues ................................................958 1. Standing .....................................................958 2. Limitations, Laches, and Acquiescence ........................961 3. Fair Use Defense .............................................962 4. Likelihood of Confusion ......................................963 a. Strength of the Plaintiff's Mark ..........................964 b. Relatedness of the Goods ..................................965 c. Similarity of the Marks ...................................965 d. Evidence of Actual Confusion ..............................966 e. Marketing Channels Used ...................................966 f. Likely Degree of Purchaser Care ...........................967 g. Intent of Defendant .......................................967 h. Expansion of Product Line .................................967 i. Conclusion Regarding Likelihood of Confusion ..............968 5. Actual Confusion Dilution Claim ............................968 B. MUTSA Claim .....................................................969 C. Breach of Contract (Count V) ....................................969 D. Counts VI, VII, IX, and X .......................................971 1. Tortious Interference ........................................971 2. Unfair Competition ...........................................973 3. Fraud ........................................................973 4. Accounting ...................................................974 E. Determination of Trade Secret ...................................974 IV. Conclusion .........................................................974 Plaintiff, Bliss Clearing Niagara, Inc. ("BCN/Clearing"), has sued Defendant, Midwest Brake Bond Co. ("Midwest"), alleging claims for trademark infringement, unfair competition, and dilution under the Lanham Act, 15 U.S.C. §§ 1114, 1125(a) and (c), a claim for misappropriation under the Michigan Uniform Trade Secrets Act ("MUTSA"), M.C.L. § 445.1901-.1910, and various tort claims. BCN/Clearing alleges that, among other things, Midwest obtained and used BCN/Clearing's trade secrets and confidential and proprietary information to manufacture, distribute, and sell a machine and parts identical to BCN/Clearing's "Torc-Pac 40" clutch and parts. Now before the Court are the following motions filed by Midwest: (1) motion for summary judgment on Counts I, II, and III of BCN/Clearing's complaint (the Lanham Act claims) ("First Motion"); (2) motion for summary judgment on Count IV of BCN/Clearing's complaint on the basis that the Michigan Uniform Trade Secret Act mandates dismissal of 953 BCN/Clearing's claim for trade secret misappropriation ("Second Motion"); (3) motion for summary judgment on Count V and the remaining portions of Counts IV, VI, and VII (statutory misappropriation of trade secrets; breach of contract; tortious interference with contractual relations and advantageous business opportunity; and unfair competition) on the basis that BCN/Clearing's purported trade secrets are not secret ("Third Motion"); (4) motion for summary judgment on Count V of BCN/Clearing's complaint (breach of contract) ("Fourth Motion"); and (5) motion for summary judgment on Counts VI, VII, IX, and X of BCN/Clearing's complaint (tortious interference with contractual relations and advantageous business opportunity; unfair competition in violation of the common law; fraud; and accounting) ("Fifth Motion"). I. Facts and Procedural History A. BCN/Clearing and its Predecessors BCN/Clearing is engaged in the business of developing, manufacturing, marketing, servicing, selling, and rebuilding industrial presses and components such as clutches and brakes and other machines under the trade names of Bliss, Clearing, Torc-Pac, and Niagara. One of BCN/Clearing's products is the well-known "Torc-Pac 40" wet-type clutch.[1] The Torc-Pac was developed in approximately 1958 by the Clearing Division of U.S. Industries, Inc. to work with a press it manufactured for various industrial applications. Over the past 40 or so years, the press has become well known in the manufacturing industry as the "Clearing" press. Gordon Sommer was the Director of Research for the Clearing division when the Torc-Pac 40 was developed, and in 1956 he became the Vice President Engineering of Clearing-Chicago. Mr. Sommer spearheaded the initiative to develop a wet clutch, and in that effort he hired John Liu, an engineer, to design a wet clutch for Clearing presses.[2] On February 13, 1962, the United States Patent office issued patent number 3,020,990 (the "'990 patent") for the Torc-Pac 40 in the name of John Liu. Liu subsequently assigned the '990 patent to Clearing. In 1984, Clearing, Inc. acquired some or all of the assets of U.S. Industries, Inc. Clearing, Inc. subsequently changed its name to U.S.I. Press Company. In November 1986, U.S.I. Press Company transferred certain assets to Hitachi Zosen Clearing, Inc. (then known as HZ America Corp.), including those used in the manufacture of the Clearing press. In September 1992, Verson International Group and its subsidiary purchased the business and certain assets of Hitachi Zosen Clearing, Inc. Subsequent to that sale, Hitachi Zosen Clearing, Inc. changed its name to Chicago Service, Inc., and Verson International Group, through related transactions, assigned all of its rights, benefits, and liabilities acquired in the 1992 transaction, including the assets used in the Clearing press business, to a related entity, Clearing International, Inc. In approximately 1994, Clearing International, Inc. transferred its assets and liabilities to Niagara Machine & Tool Works, and Niagara Machine & Tool Works was renamed Clearing-Niagara, Inc. In March 1996, CNB International, Inc. ("CNB") acquired the assets of Clearing-Niagara, Inc. and E.W. 954 Bliss, Inc. In March 1999, CNB filed a Chapter 11 bankruptcy petition. BCN/Clearing was formed in connection with CNB's bankruptcy and acquired certain of CNB's assets pursuant to the Fifth Amended Plan of Reorganization. When used in this Opinion, "Clearing" refers to all of BCN/Clearing's predecessors that manufactured the Clearing press and Torc-Pac 40 clutch. U.S. Industries, Inc. registered the Torc-Pac trademark on April 18, 1967. U.S. Industries, Inc. assigned the Torc-Pac mark and registration to U.S. Press, Inc. (Clearing, Inc.), and U.S. Press, Inc. subsequently assigned the Torc-Pac mark and registration to Chicago Service, Inc. (Hitachi Zosen Clearing, Inc.) Chicago Service, Inc. ("CSI") is currently the record owner of the Torc-Pac mark and registration. In connection with the 1992 asset sale, CSI licensed its trademark and proprietary rights, including the Torc-Pac trademark, to Clearing International, Inc. Pursuant to a Settlement Agreement (the "Settlement Agreement") dated January 27, 1995, CSI and Clearing International, Inc. agreed to resolve certain disagreements that had arisen following the 1992 asset sale. BCN/Clearing succeeded to the rights granted to Clearing International, Inc. pursuant to the Settlement Agreement as a result of the intervening transactions involving Clearing International, Inc., Clearing-Niagara, and CNB and the CNB bankruptcy. B. Midwest Midwest was established in 1950 to provide friction products such as clutches, brakes, drives, and friction material to the automotive industry and other segments of the manufacturing industry. In addition to other products, Midwest has developed its own wet clutch/brake design. Midwest also makes replacement parts for other wet clutch manufacturers. Midwest began repairing Torc-Pac 40 wet clutches in approximately 1985 or 1986. Midwest has since competed with Clearing and other companies to service, repair, and provide replacement parts for Torc-Pac 40 wet clutches.[3] C. Business Transactions and Negotiations Between the Parties Prior to 1993, Clearing had an established buyer/supplier relationship with Midwest. Clearing was aware that Midwest had manufactured a line of clutch and brake products and materials, and Clearing had purchased such materials from Midwest. In approximately 1993, Clearing and Midwest discussed the possibility of a joint venture aimed at capturing a greater share of the after-market for Torc-Pac 40s as well as for clutch and brake components for competitors' presses. Although the venture never materialized, Clearing and Midwest continued their preexisting business relationship. Clearing and Midwest renewed their discussions regarding a joint venture in late 1995 and early 1996. Clearing sought to reduce its costs by having Midwest produce Torc-Pac 40 parts and/or perform Clearing's Torc-Pac 40 repair work. In connection with these discussions, Clearing, on or about January 23, 1996, delivered a complete set of Torc-Pac 40 drawings to Midwest to enable Midwest to quote its costs to produce certain Torc-Pac 40 parts. Clearing and Midwest signed a Confidentiality Agreement, which provided: The clutch and brake drawing sets for the Torc-Pac 40, D22-D22 and D28-D28 955 are being furnished to you for quotation purposes only. It may not be duplicated or distributed in any manor [sic] whatsoever without written authorization from Clearing-Niagara. Each print is the property of Clearing-Niagara, Inc., and contains confidential information. It is being issued to you in confidence on the condition that it is to be returned on request and that it is not to be copied or reproduced in any way or used to furnish information to others, or used in the manufacture of the subject matter thereof, without the written consent of Clearing-Niagara, Inc. (Confidentiality Agreement, Def.'s Br. Supp. Fourth Mot. Ex. 14.) The parties were not able to agree upon satisfactory terms for a joint venture. On or about February 23, 1996, Midwest delivered the Torc-Pac 40 drawings covered by the Confidentiality Agreement to its business attorneys at the law firm of Marco, Watkins and Owsiany LLP ("MWO"). (Watkins Aff. ¶¶ 4, 5, Def.'s Br. Supp. Fourth Mot. Ex. 12.) The drawings remained at MWO's offices until November 13 or 14, 1996, when MWO returned them to John G. Comley at Clearing. (Id. ¶¶ 7, 8.) Following the 1996 discussions, Midwest manufactured Torc-Pac 40 replacement parts and by March of 1999 was manufacturing and selling complete new and refurbished Torc-Pac 40-type clutches. Clearing purchased Torc-Pac 40 parts from Midwest on several occasions from 1998 to 2000. On or about February 9, 2000, Clearing purchased an entire Torc-Pac unit from Midwest because Clearing was unable to meet its customer's demand for a Torc-Pac 40 unit that same day. D. Midwest's Use of the Torc-Pac Mark Midwest began to use the Torc-Pac mark in its advertising materials in 1999. Midwest first used the mark on its website in February 1999, stating that Midwest had "[a] first class Torc-Pac program, including new units, exchange units, parts and services." (Johnston Aff., Def.'s Br. Supp. First Mot. Ex. X.) Midwest also used the Torc-Pac mark in a marketing document prepared and/or distributed in 2000. That document showed a picture of a Midwest replica Torc-Pac 40 and stated, "Torc-Pac 40 Ready For Immediate Delivery." (Pl.'s Br. Opp'n Def.'s First Mot. Ex. 12.) The document also repeated the statement from Midwest's website that Midwest had "[a] first class Torc-Pac program, including new units, exchange units, parts and services." (Id.) In the fall of 2000, Clearing learned that Midwest was using the Torc-Pac mark in its marketing literature without attributing ownership of the mark to Clearing. (Laski Aff. ¶¶ 27-29, Pl.'s Br. Opp'n Def.'s First Mot. Ex. 12.) On October 5, 2000, Clearing's counsel notified Midwest by letter of Clearing's concerns that Midwest was misusing the Torc-Pac 40 drawings covered by the 1996 Confidentiality Agreement and that Midwest was infringing Clearing's trademark rights. (Letter from Semmelhack to Taylor of 10/5/00, Pl.'s Br. Opp'n Def.'s First Mot. Ex. 13.) By letter dated October 24, 2000, Midwest's counsel informed Clearing's counsel that his investigation showed that: (1) Midwest had never used Clearing's drawings covered by the Confidentiality Agreement to produce its products; and (2) while Midwest had used the Torc-Pac mark in its trade literature, his understanding was that such use had been accompanied by a reference to Clearing as the owner of the mark. (Letter from Miller to Semmelhack of 10/24/00, Pl.'s Br. Opp'n Def.'s First Mot. Ex. 15.) Midwest's counsel also stated that in the future, Midwest would refrain from using 956 the Torc-Pac mark without referring to Clearing as the owner of the mark; that Midwest would return to Clearing, to the extent not previously done, all of the drawings and other materials furnished under the 1996 Confidentiality Agreement; and that in the future Midwest would produce Torc-Pac 40 replacement parts from its own drawings which existed prior to the 1996 Confidentiality Agreement. (Id.) In the Summer of 2001 during a meeting with Midwest, BCN/Clearing discovered that Midwest was using a marketing document that misidentified a Midwest Torc-Pac 40 replica as a Torc-Pac 40 unit. (Stowell Aff. ¶¶ 2, 4, Pl.'s Br. Opp'n Def.'s First Mot. Ex. 16.) BCN/Clearing also discovered that Midwest was manufacturing a replica of the entire Torc-Pac 40 unit and was affixing a "Midwest Brake" nameplate to the unit. (Id. ¶ 6.) Finally, BCN/Clearing learned that Midwest was providing a manual to its customers for Midwest's Torc-Pac 40 replica that was virtually identical to the manual developed by BCN/Clearing's predecessors. (Stroner Aff. ¶¶ 14-17, Pl.'s Br. Opp'n Def.'s First Mot. Ex. 17.) The manual did not identify BCN/Clearing or its predecessors as the manufacturer of the Torc-Pac 40 or as the holder of the license to the Torc-Pac mark. E. The Litigation BCN/Clearing filed suit against Midwest on April 25, 2002. In its ten-count complaint, BCN/Clearing alleged claims for trademark infringement, statutory unfair competition, and dilution under the Lanham Act; misappropriation of trade secrets in violation of the common law and the Michigan Uniform Trade Secrets Act; breach of contract; tortious interference with contractual relations and advantageous business opportunity; unfair competition in violation of the common law; conversion; fraud; and accounting. During discovery, Midwest sought to determine in an interrogatory to BCN/Clearing the trade secrets BCN/Clearing contends were misappropriated by Midwest. BCN/Clearing initially responded that the trade secrets included all of the information in the drawings that Clearing supplied to Midwest in January 1996. In response to a motion to compel by Midwest, BCN/Clearing stated in a supplemental answer that the trade secrets included all of the revisions Midwest made to its drawings after January 23, 1996, that incorporated proprietary information from Clearing's drawings. After Midwest filed another motion to compel, BCN/Clearing provided another answer in which it stated that the misappropriated information is found in the revision table included in Midwest's drawings. This time, BCN/Clearing provided a copy of Midwest's drawings on which it highlighted each post-January 1996 revision as reflecting the trade secrets allegedly misappropriated by Midwest. Following the deposition of Phillip Schlachter, BCN/Clearing's Rule 30(b)(6) witness on the issue of trade secrets, BCN/Clearing provided to Midwest a second set of highlighted Midwest drawings deleting some of the previously-highlighted changes as trade secrets BCN/Clearing alleges were misappropriated by Midwest. Also during discovery, it came to light that Midwest possessed at least three sets of Torc-Pac 40 engineering drawings of the type that BCN/Clearing alleges to be trade secrets. Two sets of the drawings have the date December 20, 1990, stamped on them and contain the serial number "85-1311." The third set of drawings apparently came from a former Clearing employee who left employment with that company to work for Midwest in approximately 2000. 957 The Court has issued one previous decision on the merits in this case. On May 14, 2003, the Court issued an Opinion and Order regarding Midwest's Rule 12(c) motion for judgment on the tortious interference, unfair competition, conversion, and common law misappropriation claims. See Bliss Clearing Niagara, Inc. v. Midwest Brake Bond Co., 270 F.Supp.2d 943 (W.D.Mich.2003). Midwest argued that it was entitled to judgment on these claims because they were displaced by MUTSA. Midwest also argued that BCN/Clearing's claims occurring before the enactment of MUTSA, and thus not affected by MUTSA's displacement provision, were untimely. The Court denied the motion based upon displacement with regard to the tortious interference and unfair competition claims and granted it with respect to the conversion claim. Id. at 950-51. The Court also held that the common law misappropriation claim is displaced by MUTSA to the extent that it relies upon allegations of misappropriation occurring after the effective date of MUTSA. Id. at 951. The Court also held that the conversion claim was barred by the statute of limitations and that the common law misappropriation, unfair competition, and tortious interference claims were similarly barred to the extent that they relied upon acts occurring more than three years prior to the date BCN/Clearing filed its complaint. Id. at 953-54. Finally, the Court held that the discovery rule does not apply to misappropriation of trade secret, unfair competition, and tortious interference claims. Id. II. Summary Judgment Standard Summary judgment is appropriate if there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56. Material facts are facts which are defined by substantive law and are necessary to apply the law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). A dispute is genuine if a reasonable jury could return judgment for the non-moving party. Id. The court must draw all inferences in a light most favorable to the non-moving party, but may grant summary judgment when "the record taken as a whole could not lead a rational trier of fact to find for the non-moving party." Agristor Financial Corp. v. Van Sickle, 967 F.2d 233, 236 (6th Cir.1992) (quoting Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986)). III. Discussion As noted above, Midwest has filed five separate motions for summary judgment pertaining to different aspects of BCN/Clearing's claims. In its First Motion, Midwest argues that it is entitled to summary judgment on the trademark infringement, statutory unfair competition, and dilution claims because: (1) BCN/Clearing is not the owner of the mark and lacks standing to assert the infringement and dilution claims; (2) the claims are barred by the statute of limitations, laches, and acquiescence; (3) Midwest's use of the Torc-Pac mark constituted fair use; (4) there is no likelihood of confusion; and (5) BCN/Clearing has failed to support its dilution claim with evidence of actual confusion. In the Second Motion, Midwest argues that it is entitled to summary judgment on BCN/Clearing's misappropriation claim because the claim accrued before the effective date of MUTSA. Midwest's Third Motion asserts that summary judgment is proper on the misappropriation, breach of contract tortious interference, and unfair competition claims because the information in BCN/Clearing's Torc-Pac 40 drawings does not qualify as a trade secret. In its 958 Fourth Motion Midwest asserts that BCN/Clearing's breach of contract claim is barred by the six-year statute of limitations. Finally, the Fifth Motion seeks summary judgment on several of the state law claims upon various grounds. A. Trademark Issues 1. Standing Midwest contends that BCN/Clearing lacks standing to assert claims for trademark infringement under 15 U.S.C. § 1114(1)(a) and dilution under 15 U.S.C. § 1125(c) because such actions may be brought only by the registrant and owner of the mark. Midwest argues that as a licensee of the Torc-Pac mark, BCN/Clearing is not a proper party to assert those claims. Midwest apparently concedes that BCN/Clearing has standing as a licensee to assert a claim for unfair competition in violation of 15 U.S.C. § 1125(a)(1). See Frisch's Rests., Inc. v. Elby's Big Boy of Steubenville, Inc., 670 F.2d 642, 649 (6th Cir.1982) (holding that the plaintiff, an exclusive licensee of the mark, had standing to bring a claim under § 43(a)). Section 32 of the Lanham Act, which governs actions for trademark infringement, limits the plaintiff in such actions to the "registrant" of the mark. See 15 U.S.C. § 1114(1) ("Any person who shall, without the consent of the registrant [infringe the registrant's mark] ... shall be liable in a civil action by the registrant for the remedies hereinafter provided.") A "registrant" also includes the registrant's "legal representatives, predecessors, successors and assigns." 15 U.S.C. § 1127. Section 43(c) of the Lanham Act provides that the "owner" of the mark may assert a claim against a person who causes dilution to the distinctive quality of the mark. 15 U.S.C. § 1125(c)(1). Nothing in the Lanham Act suggests that any person other than the registrant, in the case of a trademark infringement claim, or the owner, in the case of a dilution claim, has standing to seek relief for either violation. In this case, it is undisputed that BCN/Clearing is neither the registrant nor the owner of the Torc-Pac mark. Instead, BCN/Clearing is an exclusive licensee of the mark under the 1995 Settlement Agreement with CSI. The question, then, is whether BCN/Clearing's status as a licensee under the 1995 Settlement Agreement is sufficient to confer standing on BCN/Clearing. The only Sixth Circuit authority on the issue of licensee standing in a trademark infringement case is Wynn Oil Co. v. Thomas, 839 F.2d 1183 (6th Cir.1988). The parties dispute the significance of the court's statements in that case. Midwest contends that the statements in that case regarding licensee standing are dicta because the court was not addressing the issue presented here, while BCN/Clearing contends that Wynn Oil establishes the rule in the Sixth Circuit that an exclusive licensee has standing to prosecute a trademark infringement action. Wynn Oil Co. was the owner and registrant of the service mark at issue and CCWI was the exclusive licensee of the mark. Wynn Oil and CCWI sued the defendant claiming infringement. The defendant argued that CCWI did not have standing to sue for infringement because CCWI had not proven any interest in the mark. In particular, the defendant argued that while CCWI claimed to have an exclusive license to use the mark, CCWI had failed to produce the license agreement establishing its interest. In spite of that failure, the court held that undisputed testimony from the plaintiffs' representatives regarding the existence of an exclusive license was sufficient to establish CCWI's interest. The court observed, "[t]his evidence establishes CCWI's standing to protect its rights in the service 959 mark." Id. at 1190. The Court does not find this brief statement in Wynn Oil helpful or instructive on the issue presented here. The issue in Wynn Oil was whether CCWI had presented sufficient evidence to establish an exclusive license. The court apparently was not asked to consider standing in light of the reference in Section 32 to the "registrant," nor was the court asked to determine whether CCWI had sufficient rights under the exclusive license agreement to constitute something akin to an ownership interest. While Midwest correctly notes that the registrant and owner, Wynn Oil, was also a plaintiff in that case, the Court is not convinced that the addition of the owner as a plaintiff constitutes a material distinction for purposes of the issue before the Court. In spite of the statutory language limiting the proper plaintiff in a trademark infringement case to the registrant or its assignee, several courts have recognized that in some instances an exclusive licensee's interest in the mark may be sufficient to confer standing.[4]See Quabaug Rubber Co. v. Fabiano Shoe Co., 567 F.2d 154, 159 (1st Cir.1977) (stating that some "courts have followed the approach used in patent infringement cases and permitted trademark infringement suits to be maintained by exclusive distributors and sellers of trademarked goods, i.e., `exclusive licensees' who had a right by agreement with the owner of the trademark to exclude even him from selling in their territory"). The rule is that a licensee will have standing only where the licensing agreement grants the licensee either a property interest in the trademark or rights tantamount to an assignment. Calvin Klein Jeanswear Co.v. Tunnel Trading, No. 98 Civ. 5408(THK), 2001 WL 1456577, at 4 (S.D.N.Y. Nov. 16, 2001). The Seventh Circuit has observed that "`a truly exclusive licensee, one who has the right even to exclude his licensor from using the mark ... is equated with an assign[ee] since no right to use [the mark] is reserved to the licensor, and the licensee's standing derives from his presumed status as an assignee.'" Fin. Inv. Co. (Bermuda) Ltd. v. Geberit AG, 165 F.3d 526, 531-32 (7th Cir.1998) (quoting 3 Jerome Gilson, Trademark Protection & Practice § 8.16(1)(b) (1997)). Thus, a licensee has no standing where the license is non-exclusive or the license does not equate to an assignment. Quabaug Rubber Co., 567 F.2d at 159; ICEE Distribs., Inc. v. J&J Snack Foods Corp., 325 F.3d 586, 598-99 (5th Cir.2003). Although there is no precise rule for determining when a licensee's rights are sufficient to confer standing, the cases establish several useful principles. The following considerations, although not exhaustive, tend to weigh against standing: (1) the licensee lacks the power to exclude the licensor from using the mark in the licensee's territory, see Quabaug Rubber Co., 567 F.2d at 159; ICEE Distribs., Inc., 325 F.3d at 598-99; (2) the license provides that the licensor retains exclusive ownership of the mark, see Ultrapure Sys., Inc. v. Ham-Let Group, 921 F.Supp. 659, 665 (N.D.Cal.1996) (citing DEP Corp. v. Interstate Cigar Co., 622 F.2d 621, 623 (2d Cir.1980)); (3) the license imposes geographical restrictions on the licensee's use of the mark, see Calvin Klein Jeanswear 960 Co., 2001 WL 1456577, at 5; (4) the licensing agreement requires the licensee to maintain the quality of the mark or reserves to the licensor the right to monitor the quality of the licensee's products, see id. at 5; Gruen Mktg. Corp. v. Benrus Watch Co., 955 F.Supp. 979, 983 (N.D.Ill.1997); (5) the license contains duties and rights between the parties that are inconsistent with an assignment, see Fin. Inv. Co. (Bermuda) Ltd., 165 F.3d at 532; and (6) the license limits the licensee's ability to enforce the mark against infringers, STX, Inc. v. Bauer USA, Inc., No. C 96-1140 FMS, 1997 WL 337578, at 3 (N.D.Cal. June 5, 1997). On the other hand, a licensee will have standing where the agreement transfers to the licensee all of the licensor's rights in the use of the trademark, see Etri, Inc. v. Nippon Miniature Bearing Corp., No. 85 C 615, 1989 WL 99575, at 3 (N.D.Ill. Aug. 18, 1989), or where the agreement grants the licensee exclusive use of the mark without restricting the licensee's ability to enforce the mark, see Ultrapure Sys., Inc., 921 F.Supp. at 665-66. With regard to the license of the Torc-Pac mark, the Settlement Agreement grants to BCN/Clearing "the exclusive and perpetual right and license to utilize the Proprietary Rights ... to... design, engineer, manufacture, service, maintain, repair, rebuild, retrofit, use and sell Clearing Machines and Parts throughout the world and the right to sublicense such rights," subject to certain rights reserved by CSI. (Settlement Agreement § 2.3.) The Settlement Agreement also emphasizes that CSI retains its ownership interest in the mark: "The Verson Parties [Clearing] acknowledge that the Hitachi Parties [CSI] are and shall remain the exclusive owners of all Proprietary Rights." (Id. § 2.1.) Section 2.6 grants BCN/Clearing the right to grant sublicenses, but that right is subject to various restrictions. For example, a non-affiliate sublicensee may not grant sublicenses; BCN/Clearing must provide immediate notice to CSI when it enters into a sublicense; and BCN/Clearing may not grant a sublicense to a non-affiliate in the United States, England, or Japan without the prior written consent of CSI. (Id. § 2.6(i), (iii), and (iv).) Section 2.15 reserves to CSI "the continuing right in perpetuity to utilize the Proprietary Rights" and to license others to utilize the Proprietary Rights with regard to "HZC Machines," but neither CSI nor its affiliates and licensees has the right to grant any licenses or sublicenses with regard to Torc-Pac clutch equipment or to manufacture Clearing Machines and Parts. (Id. § 2.15(ii), (iii).) BCN/Clearing is required to make royalty payments to CSI, and BCN/Clearing's failure to make such payments constitutes an event of default, entitling CSI to terminate the license. (Id. §§ 2.4, 2.7.) BCN/Clearing has no further right to use the mark in the event the license is terminated. (Id. § 2.10.) Finally, the Settlement Agreement designates CSI as the party responsible for maintaining all registrations of the trademarks and provides that BCN/Clearing "will cooperate with and assist CSI in reestablishing CSI's ownership rights" in any trademarks for which the registrations have expired. (Id. § 2.18.) CSI is not required to initiate any actions with regard to alleged infringement of the trademarks, but BCN/Clearing has the right to pursue any infringement actions at its own expense. In the event BCN/Clearing decides to pursue an infringement action, CSI is required to "sign all documents and provide such other assistance" as BCN/Clearing may request. (Id.) Based upon the foregoing provisions, the Court concludes that BCN/Clearing's interest as an exclusive licensee of the Torc-Pac mark is sufficient to confer standing 961 on BCN /Clearing to maintain its infringement and dilution claims. BCN/Clearing has an exclusive and perpetual right and license to use the Torc-Pac mark "throughout the world" as well as the right to pursue actions for infringement of the mark. In addition, the license at issue lacks many of the features indicative of a license agreement for example, quality control provisions and geographical limitations (although Midwest asserts that there are such limitations, the scope of the license is "throughout the world" and the Court has not found any exceptions to this coverage). Thus, even though the Settlement Agreement states that CSI retains ownership of the mark, BCN/Clearing has substantial rights in the mark, including the right to enforce those rights against third parties. See Ultrapure Sys., Inc., 921 F.Supp. at 665-66 (concluding that the licensee had standing where the licensee had the exclusive use of the trademarks in the United States and the agreement did not limit the licensee's ability to enforce the trademarks); Shoney's Inc. v. Schoenbaum, 686 F.Supp. 554, 563 (E.D.Va.1988) (concluding that because the licensee had the exclusive right to use the trademarks within the licensed territory and the agreement contained a provision for cooperation between the licensor and the licensee for protecting the mark, the licensee had "some rights to protect"). The standing argument is therefore rejected. 2. Limitations, Laches, and Acquiescence Midwest next contends that BCN/Clearing's Lanham Act claims are untimely because they were filed beyond the applicable limitations period or are barred by the doctrines of laches and acquiescence. In determining whether a plaintiff asserted his Lanham Act claim in a timely manner, courts apply the equitable doctrine of laches because the Lanham Act does not contain a statute of limitations. Tandy Corp. v. Malone & Hyde, Inc., 769 F.2d 362, 365 (6th Cir.1985). The doctrine of laches requires proof of unreasonable delay by the party seeking to enforce its trademark rights and material prejudice to the alleged infringer. Kellogg Co. v. Exxon Corp., 209 F.3d 562, 569 (6th Cir.2000). In the Sixth Circuit, "there is a strong presumption that a plaintiff's delay in asserting its rights is reasonable as long as an analogous state statute of limitations has not elapsed." Nartron Corp. v. STMicroelectronics, Inc., 305 F.3d 397, 408 (6th Cir.2002) (citing Elvis Presley Enter., Inc. v. Elvisly Yours, Inc., 936 F.2d 889, 894 (6th Cir.1991)). The applicable period in this case is Michigan's three-year limitation period for injury to personal property under M.C.L. § 600.5805(8). Id. "The period of delay begins to run when plaintiff had actual or constructive knowledge of the alleged infringing activity." Id. (internal quotation marks omitted). Midwest argues that BCN/Clearing's complaint, filed on April 25, 2002, was beyond the three-year limitations period. Midwest cites several reasons why BCN/Clearing had actual or constructive knowledge of Midwest's use of the Torc-Pac mark prior to April 25, 1999. Midwest points out that it was using the Torc-Pac mark on its website and in its brochures to identify its replacement parts in February of 1999. Midwest also notes that it has sold Torc-Pac parts to mutual customers since at least as early as 1996 and has submitted an invoice from a 1998 sale to General Motors that bears the Torc-Pac mark. Finally, Midwest points out that Clearing purchased Torc-Pac parts from Midwest in August of 1998. Midwest's evidence fails to show that BCN/Clearing had actual or constructive 962 knowledge of Midwest's use of the Torc-Pac mark prior to April 25, 1999. The fact that Clearing purchased Torc-Pac parts from Midwest in August of 1998 is insignificant because Midwest fails to explain why such purchases should have alerted Clearing to the fact that Midwest was using the Torc-Pac mark. The invoices Midwest sent to Clearing did not contain the Torc-Pac mark, and Midwest's assertion that Clearing, as a Midwest customer, could have asked for Midwest's product literature is specious in light of Midwest's own admission that it did not actually begin using the Torc-Pac mark until February of 1999. Similarly, other than noting that Clearing and Midwest cater to the same customers in the automotive industry, Midwest fails to provide any reasonable explanation why Midwest's invoices to third-party customers should have put Clearing on notice that Midwest was using the Torc-Pac mark. In addition, Midwest's assertion that Clearing should have known about Midwest's use of the Torc-Pac mark on its website and on its marketing brochures in February 1999 must be rejected because there is no evidence to show that Clearing had any reason to know that Midwest was using the Torc-Pac mark. In fact, BCN/Clearing's evidence shows that in September or October of 2000, when it did learn that Midwest was using the Torc-Pac mark, it took prompt action to protect its rights by inquiring about Midwest's use of the mark. Moreover, Midwest has failed to offer any real evidence that it has suffered prejudice as a result of the alleged delay. Midwest also contends that BCN/Clearing is estopped from seeking injunctive relief in this case. However, in order to establish estoppel, the party asserting the defense must show affirmative misconduct or intentional silence "amounting to a virtual abandonment of the trademark." Kellogg Co., 209 F.3d at 574. Midwest has failed to demonstrate such conduct by Clearing. Midwest's assertion that a lack of objections by Clearing's customers to Midwest's use of the Torc-Pac mark somehow shows acquiescence by Clearing makes no sense and is rejected. Finally, the cases Midwest cites in support of its assertion that BCN/Clearing had a duty to inquire about Midwest's use of the Torc-Pac mark do not support Midwest's position. For example, in Armco, Inc. v. Armco Burglar Alarm Co., 693 F.2d 1155 (5th Cir.1982), the plaintiff knew that the defendant was using the name "Armco" as early as 1970 but did not file suit until 1978. Although a tracing service was unable to locate the defendant company in 1970, there was no dispute that the defendant was conducting business at that time using the telephone number and address listed in the directory. Id. at 1157-58. Here, as discussed above, there is no evidence showing that Clearing knew or had reason to know that Midwest was using the Torc-Pac mark. What Midwest really advocates is a duty of paranoia, not a duty of inquiry. This is not the law. 3. Fair Use Defense Midwest contends that its use of the Torc-Pac mark constituted a "fair use" of the mark. The fair use defense applies if the defendant's use was "a use, otherwise than as a mark, ... which is descriptive of and used fairly and in good faith only to describe the goods of such party." 15 U.S.C. § 1115(b)(4). "Under the doctrine of `fair use,' the holder of a trademark cannot prevent others from using the word that forms the trademark in its primary or descriptive sense." Herman Miller, Inc. v. Palazzetti Imports & Exports, Inc., 270 F.3d 298, 319 (6th Cir.2001). "[F]air use permits others to use a protected mark to describe aspects of their 963 own goods." Car-Freshner Corp. v. S.C. Johnson & Son, Inc., 70 F.3d 267, 270 (2d Cir.1995). In considering a fair use defense, a court should consider whether the defendant has used the mark: (1) in its descriptive sense; and (2) in good faith. ETW Corp. v. Jireh Publ'g, Inc., 332 F.3d 915, 920 (6th Cir.2003) (citing Victoria's Secret Stores v. Artco Equip. Co., 194 F.Supp.2d 704, 724 (S.D.Ohio 2002)). In what is often referred to as nominative fair use, a defendant uses the plaintiff's mark to describe the plaintiff's product rather than its own. New Kids on the Block v. News Am. Publ'g Inc., 971 F.2d 302 (9th Cir.1992). An example is found in Volkswagenwerk Aktiengesellschaft v. Church, 411 F.2d 350 (9th Cir.1969), where an automobile repair business specializing in the repair of Volkswagen and Porsche vehicles placed a large sign on the front of its premises stating "Modern Volkswagen Porsche Service". Id. at 351. "Volkswagen" was the registered mark of the plaintiff. Id. Midwest contends that its use of the Torc-Pac mark was fair use in this sense: it only used the Torc-Pac mark to designate the replacement parts it made for Torc-Pac-type clutches. In other words, Midwest contends that its use of the mark was not deceptive because its use only indicated the fact that it was providing replacement parts and repair services (including rebuilt units) for the Torc-Pac 40. BCN/Clearing does not dispute Midwest's claim that its use of the Torc-Pac mark to indicate that it provides replacement parts and services for Torc-Pac units would not be improper. However, BCN/Clearing argues that Midwest improperly used the Torc-Pac mark to induce BCN/Clearing customers and potential customers into believing that Midwest sells authentic Torc-Pac 40 units and parts. BCN/Clearing's evidence supports its claim. That evidence shows that in 1999 and 2000, Midwest used the Torc-Pac mark in a manner indicating that Midwest was selling authentic Torc-Pac units and parts. For example, in a bulletin issued in 1999, Midwest stated that it had a "first class Torc-Pac program, including new units, exchange units, parts and services." Other Midwest bulletins featured a photograph of a Torc-Pac 40 unit along with the statements: "Repairs, New Units; Exchange Units; Quality Inspected Parts," and "Wet Clutch/Brakes for New & Retrofit Applications." Some of Midwest's marketing materials showed a Torc-Pac 40 in conjunction with statements indicating that Midwest had "new units available." In a 1999 customer newsletter, Midwest stated: "We intend to focus on what we know best our core products [including] TORC-PAC drives our popular and dependable wet-clutch drives." Midwest also identified its replicas of the Torc-Pac 40 as "Torc-Pac 40(New)" on its invoices. This evidence refutes Midwest's fair use defense because it shows that Midwest was not simply using the Torc-Pac mark in a descriptive manner, but instead was using the mark to represent that it was selling new Torc-Pac 40 units. This is not a fair use of the Torc-Pac mark. 4. Likelihood of Confusion Midwest also argues that it is entitled to summary judgment on BCN/Clearing's infringement and false designation of origin claims because BCN/Clearing cannot show a likelihood of confusion, as is required for such claims. The Sixth Circuit employs an eight-factor analysis in determining whether the defendant's use of the plaintiff's mark created a likelihood of confusion: (1) strength of the plaintiff's mark; (2) relatedness of the goods or services; (3) similarity of the marks; (4) evidence of actual confusion; 964 (5) marketing channels used; (6) likely degree of purchaser care and sophistication; (7) the defendant's intent in selecting the mark; and (8) likelihood of expansion of the product lines using the marks. Frisch's Rests., Inc. v. Shoney's Inc., 759 F.2d 1261, 1264 (6th Cir.1985)(citing Frisch's Rests., Inc. v. Elby's Big Boy of Steubenville, Inc., 670 F.2d 642, 648 (6th Cir.1982)). These factors do not represent a precise formula for determining whether confusion may exist but should be considered in light of the specific facts and circumstances in each case. Homeowners Group, Inc. v. Home Mktg. Specialists, Inc., 931 F.2d 1100, 1107 (6th Cir.1991). "The ultimate question remains whether relevant consumers are likely to believe that the products or services offered by the parties are affiliated in some way." Id. Initially, Midwest contends that the Court need not resort to the eight-factor analysis because BCN/Clearing's Rule 30(b)(6) witness, Karen Adams, admitted that there is no likelihood of confusion because customers would know the identity of the Torc-Pac 40 seller, Midwest, and would thus have no reason to believe that they were buying the Torc-Pac 40 from Clearing. This argument misses the point, because the issue is whether customers would believe that they were buying an authentic Clearing Torc-Pac 40, not a replica. Moreover, Ms. Adams testified that "[t]he Torc-Pac name is used almost synonymously in the industry with ... Clearing's trade name." (Adams Dep. at 127, Pl.'s Br. Opp'n Def.'s First Mot. Ex. 26.) Ms. Adams also stated: "We own the rights to the Clearing and the Torc-Pac trade names. We are the exclusive owner, and, therefore, it would be confusing for anyone to think that someone else is selling the Torc-Pac name or selling Torc-Pacs." (Id.) Similarly, Midwest's argument that BCN/Clearing has failed to identify a single instance of actual confusion is irrelevant, because, as noted below, the concern here is potential, not actual, confusion. Therefore, the Court will address each of the relevant considerations. a. Strength of the Plaintiff's Mark The protection accorded a mark under the Lanham Act depends upon the "strength" of the mark. See Qualitex Co. v. Jacobson Prods. Co., 514 U.S. 159, 167, 115 S.Ct. 1300, 1305, 131 L.Ed.2d 248 (1995). A mark's "strength" is gauged by its "distinctiveness and degree of recognition in the marketplace." Homeowners Group, Inc., 931 F.2d at 1107. "`A mark is strong if it is highly distinctive, i.e., if the public readily accepts it as the hallmark of a particular source; it can become so because it is unique, because it has been the subject of wide and intensive advertisement, or because of a combination of both.'" Frisch's Rest., 759 F.2d at 1264 (quoting Callman, Unfair Competition, Trademarks & Monopolies, ¶ 20.43 (4th ed.1983)). The initial task in determining the strength of a mark is to place it in one of four categories which provide a range of protection: generic, descriptive, suggestive, and fanciful or arbitrary. Daddy's Junky Music, 109 F.3d at 280. Fanciful or arbitrary marks, such as CAMEL cigarettes or APPLE computers, are the strongest and most distinctive marks. Id. Generic and descriptive marks, which describe the product or aspects of the product, are on the other end of the spectrum and are not entitled to trademark protection unless they have acquired secondary meaning. Boustany v. Boston Dental Group, Inc., 42 F.Supp.2d 100, 105 (D.Mass.1999). A mark's strength is not entirely dependent upon the category into which it falls. An arbitrary mark may 965 deserve limited protection where it "ha[s] little customer recognition or `strength' in the market, or perhaps ha[s] high recognition which is limited to a particular product or market segment." Homeowners Group, 931 F.2d at 1107. Thus, evidence concerning market recognition is highly relevant in assessing the strength of a mark. See Frisch's Rest., 759 F.2d at 1265. Midwest argues that the Tor-Pac mark is very weak because it has become descriptive of wet clutches in the manufacturing industry. Midwest cites Adams' acknowledgment that "Torc-Pac is used as a noun to describe a wet clutch." (Adams Dep. at 133.) Midwest also contends that Adams admitted that the name "Torc-Pac" is descriptive of the product's function. In addition, Midwest notes that Clearing has used the Torc-Pac name as descriptive of wet clutches without any assertion of it being a registered trademark and that other entities, such as machine repair businesses, have used the Torc-Pac name or variations of it in their marketing literature. Midwest's arguments must be rejected, because the evidence shows that Torc-Pac is not simply a descriptive term for any wet clutch used in the industry, but instead describes the particular wet clutch that is used in Clearing presses. Adams testified that BCN/Clearing uses the Torc-Pac 40 wet clutch in the Clearing press and that "[n]one other than a Clearing press owner typically has a Torc-Pac in their press." (Adams Dep. at 154.) In fact, Midwest's own representative, James Taylor, Jr., admitted that the Torc-Pac wet clutch is not interchangeable with other wet clutches. (Taylor, Jr. Dep. I at 278-79, Pl.'s Br. Opp'n Def.'s First Mot. Ex. 27.) Moreover, Adams did not agree that the Torc-Pac name was merely descriptive of the machine's function, and the Court agrees with BCN/Clearing that the name does not adequately describe the two functions of transferring torque to the moving parts of the press and applying the brake to decelerate those parts. Finally, the evidence of use of the name by other entities is not persuasive, because those businesses only used the name to describe their repair services for Torc-Pac clutch units, not to promote the sale of new Torc-Pac units and replacement parts. Although the mark is more suggestive than fanciful or arbitrary, the Court concludes that it is a strong mark. The evidence shows that the Torc-Pac mark has been in use for years, is widely associated with Clearing and Clearing presses, and connotes the particular wet clutch manufactured by Clearing. Thus, the Torc-Pac has not become merely a noun used to describe any wet clutch as Midwest asserts. b. Relatedness of the Goods With regard to the relatedness factor, cases usually fall into one of three categories: (1) direct competition of services, in which case confusion is likely if the marks are sufficiently similar; (2) services are somewhat related but not competitive, so that likelihood of confusion may or may not result depending on other factors; and (3) services are totally unrelated, in which case confusion is unlikely. Homeowners Group, 931 F.2d at 1108. The goods in this case fall into the same category because they directly compete: BCN/Clearing's Torc-Pac 40 clutch and Midwest's Torc-Pac 40 clutch. Thus, this factor suggests a likelihood of confusion. c. Similarity of the Marks In evaluating the similarity of the marks, a court should not make a side-by-side 966 comparison but "[i]nstead... must determine, in the light of what occurs in the marketplace, whether the mark `will be confusing to the public when singly presented.'" Wynn Oil Co., 839 F.2d at 1187 (quoting Beer Nuts, Inc. v. Clover Club Foods Co., 711 F.2d 934, 941 (10th Cir.1983)). A proper analysis of this factor "includes examining the pronunciation, appearance, and verbal translation of conflicting marks." Id. at 1188. The marks in this case are exactly the same. Therefore, this factor suggests that confusion is likely to occur. d. Evidence of Actual Confusion "Evidence of actual confusion is undoubtedly the best evidence of likelihood of confusion." Wynn Oil Co., 839 F.2d at 1188. However, such evidence is not always entitled to significant weight. For example, evidence of actual confusion is less significant where the parties have competed in the same area for a several of years with only a few incidents of confusion. Homeowners Group, Inc., 931 F.2d at 1110. Moreover, "`[s]hort-lived confusion or confusion of individuals casually acquainted with a business is worthy of little weight,' while chronic mistakes and serious confusion of actual customers are worthy of greater weight." Id. (citation omitted) (quoting Safeway Stores, Inc. v. Safeway Discount Drugs, Inc., 675 F.2d 1160, 1167 (11th Cir.1982)). Midwest contends that there is no evidence of actual confusion, but BCN/Clearing disputes this assertion, citing statements by Dave Stroner, BCN/Clearing's Regional Account Manager. According to Stroner, one of BCN/Clearing's customers located in Mexico told Stroner that Midwest was selling new Torc-Pac 40 component parts and also stated his belief that Midwest's parts were identical to BCN/Clearing's Torc-Pac 40 parts, with the exception of price. (Stroner Aff. ¶ 26, Pl.'s Br. Opp'n Def.'s First Mot. Ex. 17.) Stroner adds that the customer believed that the Midwest parts were authentic Torc-Pac parts. Midwest argues that this evidence is of little consequence. Playboy Enterprises, Inc. v. Chuckleberry Publishing, Inc., 687 F.2d 563 (2d Cir.1982), which Midwest cites in support of this contention, stated that a lack of actual confusion in a foreign country (Italy) would have limited probative value in determining likelihood of confusion in the United States because it is a different market. Id. at 569. This case is not entirely apposite, however, because here the evidence tends to show some actual confusion and there is a difference in that Mexico is not as removed from the United States market as Italy and the Mexican customer was dealing directly with two United States companies. Nonetheless, the Court declines to give this evidence much weight because it is an isolated instance. Because the Lanham Act is concerned with potential and not actual confusion, however, even a total lack of evidence of actual confusion is not fatal to BCN/Clearing's claim. See Mktg. Displays, Inc. v. TrafFix Devices, Inc., 200 F.3d 929, 935 (6th Cir.1999). e. Marketing Channels Used A court should consider whether the parties' marketing efforts are similar or different and whether their marketing efforts are designed to reach the same customer base. Daddy's Junky Music Stores, 109 F.3d at 285. Obviously, dissimilarities between the predominant customers of a plaintiff's and defendant's goods or services lessens the possibility of confusion, mistake, or deception. Likewise if the services of one party are sold through different marketing media in a different context 967 than those of another seller, the likelihood that either group of buyers will be confused by similar service marks is much lower than if both parties sell their services through the same channels of trade. Homeowners Group, 931 F.2d at 1110. Midwest concedes that both parties sell their products to a similar set of customers, but contends that they do not share a common marketing channel.[5] This argument must be rejected, because the fact that Midwest and BCN/Clearing sell to essentially the same customers is indicative of similar marketing channels. See Mexican Food Specialties, Inc. v. Festida Foods, Ltd., 953 F.Supp. 846, 852 (E.D.Mich.1997). f. Likely Degree of Purchaser Care In general, the standard to be applied in determining whether this factor indicates the potential for confusion is "the typical buyer exercising ordinary caution." Homeowners Group, 931 F.2d at 1111. A higher standard may be required where the buyer has more expertise or where the product is more expensive, such as a house, because the purchaser is more likely to exercise a higher degree of care. Id. "The ultimate significance of a given degree of care, however, often will depend upon its relationship with the other seven factors." Daddy's Junky Music Stores, 109 F.3d at 285. Midwest argues that because the Torc-Pac clutch is an intricate and expensive piece of machinery, the ordinary purchaser of the product will be a highly sophisticated user, well-versed in technology and industry. However, even where the buyer is highly sophisticated, confusion may be likely where the marks are confusingly similar because the purchaser may believe that the seller and its product are affiliated with the other party. See Daddy's Junky Music, 109 F.3d at 286. Here, as noted, the marks were identical, which could easily lead to consumer confusion. In addition, as is evident from BCN/Clearing's history, the press manufacturing industry has seen its share of reorganization and it is possible that a customer would not know which company is the OEM manufacturer for Clearing press parts. g. Intent of Defendant This factor is relevant if a party chooses a mark with the intent of causing confusion. If such is the case, that fact by itself may be sufficient to support an inference of confusing similarity. Wynn Oil, 839 F.2d at 1189. Direct evidence of intentional copying is not necessary to prove intent. Daddy's Junky Music Stores, 109 F.3d at 286. "Rather, the use of a contested mark with knowledge of the protected mark at issue can support a finding of intentional copying." Id. This factor tends to show a likelihood of confusion. Midwest argues that it only used the Torc-Pac mark to advertise its repair business, but as already noted, Midwest used the Torc-Pac mark in connection with its sale of parts and new wet clutch units. Moreover, although Midwest may have attributed the Torc-Pac mark to BCN/Clearing in its 2001 literature, it apparently began to do so only after receipt of the letter from BCN/Clearing's counsel. h. Expansion of Product Line "[A] `strong possibility' that either party will expand his business to compete with the other or be marketed to the 968 same consumers will weigh in favor of finding that the present use is infringing." Homeowners Group, Inc., 931 F.2d at 1112 (quoting Restatement of Torts § 731(b) & comment c (1938)). Midwest contends that this factor does not support a likelihood of confusion because the Torc-Pac business is generally in decline. While this may be true for the sale of new Torc-Pac units, there will still be a demand for Torc-Pac replacement parts well into the future. i. Conclusion Regarding Likelihood of Confusion The factors set forth above, considered in their totality, strongly suggest a likelihood of confusion arising from Midwest's use of the Torc-Pac mark. In fact, although BCN/Clearing has not moved for summary judgment on this point, BCN/Clearing would have a substantial basis for such a motion. In any event, Midwest has failed to show that it is entitled to summary judgment with regard to the likelihood of confusion. 5. Actual Confusion Dilution Claim Midwest contends that it is entitled to summary judgment on BNC/Clearing's dilution claim because BCN/Clearing has admitted that it has no evidence of actual confusion. Midwest then rolls this assertion into the Supreme Court's holding in Moseley v. V. Secret Catalogue, Inc., 537 U.S. 418, 123 S.Ct. 1115, 155 L.Ed.2d 1 (2003), that proof of actual dilution is required in order to prove a claim under the Federal Trademark Dilution Act ("FTDA"). Id. at 433-34, 123 S.Ct. at 1124-25. This argument is easily rejected for two reasons. First, the argument is misleading because it improperly assumes that confusion and dilution are either interchangeable or are that they are both elements of a dilution claim, both of which are wrong. The FTDA protects the holder of a trademark from dilution, which is different from, and broader than, infringement in that neither confusion nor competition is required and the protection is nationwide in scope. Dilution is "the lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of (1) competition between the owner of the famous mark and other parties, or (2) likelihood of confusion, mistake, or deception." Nissan Motor Co. v. Nissan Computer Corp., 378 F.3d 1002 (9th Cir.2004) (citation omitted) (quoting 15 U.S.C. § 1127). See also I.P. Lund Trading ApS v. Kohler Co., 163 F.3d 27, 43 n. 9 (1st Cir.1998) ("We note again that the test for dilution is different and does not require a showing of confusion."); Victoria's Secret Stores v. Artco Equip. Co., 194 F.Supp.2d 704, 730 (S.D.Ohio 2002) (stating that "defendants' argument that no actual confusion exists, even if true, does not provide a meritorious defense for their actions"). Second, Midwest apparently failed to read the portion of the Moseley opinion where the Court observed that "direct evidence of dilution such as consumer surveys will not be necessary if actual dilution can reliably be proved through circumstantial evidence the obvious case is one where the junior and senior marks are identical," Moseley, 537 U.S. at 434, 123 S.Ct. at 1125, which is precisely the case here. See also Am. Honda Motor Co. v. Pro-Line Protoform, 325 F.Supp.2d 1081 (C.D.Cal.2004) (stating that "when identical marks are used on similar goods, dilution the capacity of the famous mark to identify and distinguish the goods of the trademark holder obviously occurs"); Gen. Motors Corp. v. Autovation Techs., Inc., 317 F.Supp.2d 756, 764 (E.D.Mich.2004) ("GM has presented reliable, 969 circumstantial proof of actual dilution. GM's evidence establishes actual dilution in that Defendant has used marks that are identical to the world-famous GM Trademarks."). B. MUTSA Claim In its Second Motion, Midwest argues that it is entitled to summary judgment on BCN/Clearing's trade secret misappropriation claim under MUTSA set forth in Count IV. As noted above, in its earlier Opinion, this Court concluded that BCN/Clearing's common law trade secret misappropriation claim was filed beyond the three-year limitations period and that the discovery rule did not apply to that claim. Midwest argues in this motion that BCN/Clearing has no claim under MUTSA because BCN/Clearing alleges that Midwest began misappropriating BCN/Clearing's trade secret relating to the Torc-Pac 40 engineering drawings before MUTSA was enacted. BCN/Clearing concedes that it has no claim under MUTSA. However, it requests that the Court reconsider its prior ruling and hold that the discovery rule applies. In addition, BCN/Clearing argues that its claim is timely because Midwest fraudulently concealed facts surrounding Midwest's misappropriation of BCN/Clearing's trade secret. Although BCN/Clearing has not filed a motion for reconsideration, the Court has reexamined its prior ruling on the issue of the discovery rule in light of the cases and developments cited by BCN/Clearing, including the Texas Legislature's enactment of a statute applying the discovery rule to common law trade secret misappropriation claims following the Texas Supreme Court's decision in Computer Associates International, Inc. v. Altai, Inc., 918 S.W.2d 453 (1996), and concludes that its decision was not based upon "a palpable defect by which the Court and the parties have been [misled]." LCivR 7.4(a). Although there are persuasive arguments on both sides of the issue and decisions going both ways, see Bausch & Lomb, Inc. v. Alcon Labs., Inc., 64 F.Supp.2d 233, 246 (W.D.N.Y.1999) (declining to apply the discovery rule to misappropriation of trade secret claims under New York law), and Prescott v. Morton Int'l, Inc., 769 F.Supp. 404, 408 (D.Mass.1990) (applying the discovery rule to a trade secrets claim under Massachusetts law), the Court is not persuaded that its prior decision was incorrect. The Court also rejects BCN/Clearing's fraudulent concealment argument because a plaintiff must affirmatively allege in its complaint facts giving rise to fraudulent concealment. See City of Detroit Pension Fund v. Prudential Secs., Inc., 91 F.3d 26, 30 (6th Cir.1996) (noting that the plaintiffs failed to adequately plead fraudulent concealment before the district court). Moreover, a "party alleging fraudulent concealment must plead the circumstances giving rise to it with particularity" as required by Rule 9(b). Ames v. Texaco, Inc., 758 F.2d 652, 1985 WL 12931, at 2 (6th Cir.1985). Here, BCN/Clearing's complaint not only fails to meet the requirements of Fed.R.Civ.P. 9(b), it wholly omits any reference to fraudulent concealment. Finally, the Court notes that BCN/Clearing has never moved to amend its complaint to allege fraudulent concealment. C. Breach of Contract (Count V) Midwest contends that summary judgment is proper on BCN/Clearing's breach of contract claim because the claim is barred by Michigan's six-year statute of limitations for breach of contract actions. Midwest argues that the claim accrued more than six years prior to April 25, 2002 the date BCN/Clearing filed its complaint because BCN/Clearing highlighted 970 a change made by Midwest on March 18, 1996, on the drawings BCN/Clearing supplied to Midwest during discovery to indicate the trade secrets BCN/Clearing claims Midwest misappropriated. As an alternative argument, Midwest argues that any breach of the January 23, 1996, Confidentiality Agreement would have occurred prior to February 23, 1996 the date that Midwest claims to have delivered the drawings to its counsel because Midwest did not have access to the drawings after that date to copy them or to use the information they contained. The statute of limitations for a breach of contract action in Michigan is six years. M.C.L. § 600.5807(8); see also Santino v. Provident Life & Accident Ins. Co., 276 F.3d 772, 776 (6th Cir.2001). A claim for breach of contract accrues on the date of the breach. City of Wyandotte v. Consol. Rail Corp., 262 F.3d 581, 589 (6th Cir.2001). See also Blazer Foods, Inc. v. Rest. Props., Inc., 259 Mich.App. 241, 245-46, 673 N.W.2d 805, 809 (2003) (stating that "this Court has generally held that a cause of action for breach of contract accrues when the breach occurs, i.e., when the promisor fails to perform under the contract").[6] Thus, BCN/Clearing's breach of contract claim is timely only if the breach occurred within six years of April 25, 2002. With regard to Midwest's first argument, that BCN/Clearing has admitted that its claim accrued on March 18, 1996, Midwest is correct that BCN/Clearing identified the change Midwest made to its drawings on that date as representing information taken from BCN/Clearing's drawings. In fact, the initial set of drawings BCN/Clearing provided to Midwest during discovery shows that Schlachter highlighted in yellow the March 18, 1996, change, identified by the letter "B," in both the revision summary table and in the body of the drawing. (1st Set of Midwest Drawings at M000237, Pl.'s Br. Opp'n Def.'s Third Mot. Ex. C.) While this evidence, alone, might be sufficient to show that BCN/Clearing's claim is untimely, Schlachter stated in his deposition that he misunderstood his assignment and highlighted all changes made on Midwest's drawings after January 1996, regardless of whether they incorporated information from BCN/Clearing's drawings. (Schlachter Dep. at 92-94, Def.'s Br. Supp. Fourth Mot. Ex. 9.) Schlachter then prepared another set of highlighted drawings which identifies the same information as set forth in the first set of drawings but does not highlight the dates of the change in the revision summary table or the letter in the body of the drawing corresponding to the change date. In his affidavit, Schlachter states that the current version of 971 Midwest's drawing does not show how the March 18, 1996, revision changed the drawing or whether revision "B" conformed the drawing to BCN/Clearing's drawing. (Schlachter Aff. ¶ 69, Pl.'s Br. Opp'n Def.'s Fourth Mot. Ex. 11.) Schlachter also states that "[t]he highlighting on both the first and second sets of highlighted drawings was intended to represent that Revisions C and D were revisions by which Midwest Brake confirmed its drawings to the Clearing drawings." (Id. ¶ 72.) Given Schlachter's explanation for the highlighting on the first set of drawings, the credibility of which is for a jury to decide, the Court concludes that there is a genuine issue of material fact regarding when BCN/Clearing's breach of contract claim accrued that precludes summary judgment on BCN/Clearing's breach of contract claim. Cf. Hudick v. Hastings Mut. Ins. Co., 247 Mich.App. 602, 605-06, 637 N.W.2d 521, 523 (2001) (noting that "[a]bsent disputed questions of fact, whether a cause of action is barred by a statute of limitations is a question of law").[7] The Court also rejects Midwest's second argument for summary judgment that Midwest could not have breached the Confidentiality Agreement after February 23, 1996, when it delivered the drawings to its counsel. Midwest supports its motion with an affidavit from its former attorney, Robert D. Watkins, who states that his firm obtained "exclusive possession [of the drawings] on or about February 23, 1996," and that they remained at his firm's offices from that date until they were returned to BCN/Clearing in November 1996. (Watkins Aff. ¶¶ 5 7, Def.'s Br. Supp. Fourth Mot. Ex. 12.) Citing nothing more than Watkins' affidavit, Midwest states that after it delivered the drawings to Watkins' firm, it "did not see, use or possess them again." (Def.'s Br. Supp. Fourth Mot. at 8.) While Watkins' affidavit states that his firm continued to possess the drawings after February 23, 1996, it does not state that Midwest never had or requested access to them. As Midwest's attorney, Watkins was Midwest's agent and would have been obliged to comply with such a request. Thus, Midwest has failed to present sufficient summary judgment evidence to establish that it could not have breached the Confidentiality Agreement after April 25, 1996. Accordingly, the Court will deny this motion for summary judgment. D. Counts VI, VII, IX, and X In its Fifth Motion, Midwest seeks summary judgment on BCN/Clearing's tortious interference, unfair competition, fraud, and accounting claims on various grounds. The Court will address each claim in turn. 1. Tortious Interference In Count VI of its complaint, BCN/Clearing alleges a claim for tortious interference with contractual relations and advantageous business opportunity. To establish a claim for tortious interference with a contract, a plaintiff must allege: (1) the existence of a contract; (2) a breach; and (3) an unjustified instigation of the breach by the defendant. Mahrle v. 972 Danke, 216 Mich.App. 343, 350, 549 N.W.2d 56, 60 (1996). The elements of tortious interference with a business relationship are: (1) the existence of a valid business relationship or expectancy; (2) knowledge of the relationship or expectancy by the defendant; (3) intentional interference by the defendant which induces or causes a breach or termination of the relationship or expectancy; and (4) damage to the plaintiff. BPS Clinical Labs. v. Blue Cross & Blue Shield of Mich., 217 Mich.App. 687, 698, 552 N.W.2d 919, 925 (1996) (per curiam). A plaintiff seeking to establish a tortious interference claim must allege the intentional doing of a per se wrongful act or the intentional doing of a lawful act with malice and unjustified in law for the purpose invading plaintiff's contractual rights or business relationship. Under the latter instance, plaintiff necessarily must demonstrate, with specificity, affirmative acts by the interferer which corroborate the unlawful purpose of the interference. Feldman v. Green, 138 Mich.App. 360, 369-70, 360 N.W.2d 881, 886 (1984) (per curiam). An act does not constitute improper motive or interference "[w]here the defendant's actions were motivated by legitimate business reasons." BPS Clinical Labs., 217 Mich.App. at 699, 552 N.W.2d at 925. "However, where a defendant's actions overreach the bounds of permissible interference and improperly sabotage the contractual agreements of others, a defendant is not immune from liability." Kavanaugh v. VMC Indus., Inc., No. 213219, 2000 WL 33400199, at 3 (Mich.App. Nov. 21, 2000) (per curiam). BCN/Clearing alleges that Midwest improperly interfered with BCN/Clearing's valid business expectancy (providing new and replacement Torc-Pac 40 units, replacement parts, and repair services to OEM standards to Clearing press owners) by misappropriating BCN/Clearing's trade secrets and by using the Torc-Pac mark on Midwest's sales and marketing materials. The Court previously held that BCN/Clearing's tortious interference claim based upon misappropriation of trade secrets was displaced by MUTSA to the extent that the claim arose after October 1, 1998. See 270 F.Supp.2d at 949-50. In addition, the Court held that the discovery rule does not apply to the tortious interference claim, which is subject to a three-year limitations period.[8]Id. at 953. Therefore, BCN/Clearing's tortious interference claim based upon misappropriation of trade secrets, to the extent it is not displaced by MUTSA, is barred by the statute of limitations because BCN/Clearing filed its complaint more than three years after the enactment of MUTSA. Moreover, by BCN/Clearing's own admission, the evidence shows that the alleged misappropriation began in late 1996, when Midwest began to incorporate the Torc-Pac 40 information into its own drawings at least five years before BCN/Clearing filed its complaint in this case. (Schlachter Aff. ¶ 73.) In its prior opinion the Court held that BCN/Clearing's tortious interference claim would not be barred by MUTSA if the claim were based upon Midwest's use of the Torc-Pac mark and name and if the claim did not accrue more than three years prior to the date BCN/Clearing filed its complaint. Midwest contends that this 973 aspect of the tortious interference claim is also barred by the statute of limitations because the evidence, which BCN/Clearing has failed to rebut, shows that the alleged trademark infringement began as early as February 1999. However, this date is not dispositive for purposes of the commencement of the limitations period for the tortious interference claim, because such a claim accrues "at the time all elements, including damages, can be alleged in a proper complaint." Blazer Foods, Inc. v. Rest. Props., Inc., 259 Mich.App. 241, 254, 673 N.W.2d 805, 813 (2003). Thus, BCN/Clearing's claim accrued not when the alleged infringement occurred, but on the date BCN/Clearing suffered damage as a result of the infringement, i.e., when the infringement caused the termination of valid business expectancy BCN/Clearing had with some third party. There is no evidence that this occurred prior to April 25, 1999. By the same token, BCN/Clearing has failed to provide any admissible evidence that Midwest's alleged infringement caused BCN/Clearing to lose any sales for purposes of proving the claim. As mentioned in the discussion above regarding BCN/Clearing's statutory unfair competition claim under the Lanham Act, BCN/Clearing offered the affidavit of Dave Stroner to show that a customer located in Mexico believed that Midwest was selling authentic Torc-Pac 40 parts. This affidavit is insufficient to establish a lost sale for two reasons: (1) it is hearsay and therefore inadmissible; and (2) it fails to show that BCN/Clearing actually lost a sale because of Midwest's alleged confusion. BCN/Clearing also notes that in 2001 Midwest contacted Holland Alloys and JNL-CNC to be a supplier of Clearing components for the Torc-Pac 40. However, BCN/Clearing fails to explain why or how this evidence regarding a non-customer supplier supports BCN/Clearing's claim or caused BCN/Clearing to lose sales. Accordingly, Midwest is entitled to summary judgment on this claim. 2. Unfair Competition Midwest also contends that it is entitled to summary judgment on BCN/Clearing's common law unfair competition claim for a number of reasons. The Court concludes that summary judgment is proper because the claim is barred by the statute of limitations. As with the tortious interference claim, the Court held in its previous opinion that this claim is displaced by MUTSA to the extent that it is based upon misappropriation of trade secrets occurring after the effective date of MUTSA and that any aspect of the claim not based upon misappropriation of trade secrets is subject to the three-year statute of limitations without the benefit of the discovery rule. See 270 F.Supp.2d at 950, 953-54. The aspect of this claim relating to Midwest's infringement of BCN/Clearing's trademark is barred by the statute of limitations because the evidence shows that Midwest began using BCN/Clearing's trademark at least as early as February 1999.[9] 3. Fraud In Count IX, BCN/Clearing alleges that Midwest committed fraud by using BCN/Clearing's trademark in Midwest's sales and marketing materials in order to mislead BCN/Clearing's past, current, 974 and potential customers. (Compl. ¶ 72.) BCN/Clearing's fraud claim fails because BCN/Clearing does not allege or offer any evidence that Midwest's materials creating the alleged misrepresentations were directed at BCN/Clearing, with the intent that BCN/Clearing rely upon them, and that BCN/Clearing did in fact rely on them. These are essential requirements for a fraud claim. Hi-Way Motor Co. v. Int'l Harvester Co., 398 Mich. 330, 336, 247 N.W.2d 813, 816 (1976). Moreover, because the alleged fraud was aimed not at BCN/Clearing, but at BCN/Clearing's customers, BCN/Clearing lacks standing to assert the claim as alleged. BCN/Clearing does not dispute these points, but argues instead that the fraud it alleges is Midwest's fraudulent concealment. However, the Court has already concluded that BCN/Clearing has failed to properly allege a claim for fraudulent concealment. Thus, Midwest is also entitled to summary judgment on the fraud claim. 4. Accounting Midwest is also entitled to summary judgment on BCN/Clearing's accounting claim set forth in Count X. Michigan courts hold that an accounting in equity is unnecessary where discovery is sufficient to determine the amounts at issue. See Wilson v. Cont'l Dev. Co., 112 F.Supp.2d 648, 663 (W.D.Mich.1999). BCN/Clearing has had a full opportunity to obtain discovery from Midwest relative to BCN/Clearing's damages. Moreover, BCN/Clearing's expert has prepared a report which outlines BCN/Clearing's claim for damages. Although BCN/Clearing states that an accounting may be necessary because Midwest has destroyed much of its documents, BCN/Clearing fails to explain why an accounting is necessary in light of the evidence BCN/Clearing has obtained from Midwest. Therefore, the Court will also grant summary judgment on this claim. E. Determination of Trade Secret In its final motion, Midwest argues that BCN/Clearing's engineering drawings for the Torc-Pac 40 are not trade secrets. Midwest contends that this issue pertains to BCN/Clearing's misappropriation, breach of contract, tortious interference, and unfair competition claims. In light of the Court's determination that the misappropriation, tortious interference, and unfair competition claims are barred by the statute of limitations, the Court need not determine whether BCN/Clearing's drawings constitute a trade secret relative to those claims. As for the breach of contract claim, whether the set of Torc-Pac 40 drawings covered by the Confidentiality Agreement constitutes a trade secret is immaterial to BCN/Clearing's breach of contract claim. In Kadant, Inc. v. Seeley Machine, Inc., 244 F.Supp.2d 19 (N.D.N.Y.2003), the court observed that the plaintiff's breach of contract action could lie even in the absence of the customer databases and design specifications being entitled to trade secret protection. [Defendant] signed the confidentiality agreement, so if he disclosed to others or used to his own benefit "private information" which, for the purposes of this motion, are the design specifications and customer databases he is in breach of ... his contract.... Id. at 39. Similarly, if Midwest used the drawings subject to the Confidentiality Agreement in violation of that agreement, Midwest will be liable for breach of contract. Therefore, the Court will deny this motion. IV. Conclusion For the foregoing reasons, the Court will grant summary judgment to Midwest 975 on BCN/Clearing's misappropriation, tortious interference, unfair competition, fraud, and accounting claims. The case will proceed on BCN/Clearing's trademark, dilution, and statutory unfair competition claims under the Lanham Act and BCN/Clearing's breach of contract claim. An Order consistent with this Opinion will be entered. NOTES [1] "Torc-Pac" refers generally to the wet-type clutch that BCN/Clearing's predecessors developed, while "Torc-Pac 40" refers to the specific Torc-Pac model. [2] Sommer later worked for Midwest either as a full-time employee or as a consultant until 1997. [3] With regard to replacement parts, the Court notes that there is no evidence that any company other than Clearing and Midwest has provided Torc-Pac replacement parts made to OEM specifications. [4] The few courts that have considered the issue have indicated that the same rule applies to dilution claims under § 1125(c). See ICEE Distribs., Inc. v. J & J Snack Foods Corp., 325 F.3d 586, 597-98 (5th Cir.2003); World Championship Wrestling v. Titan Sports, Inc., 46 F.Supp.2d 118, 122 (D.Conn.1999); BMW of N. Am., Inc. v. Au-tomotive Gold, Inc., No. 96-384-CIV-J-20, 1996 WL 1609124, at *3 (M.D.Fla. June 19, 1996). The Court finds no reason to differentiate between the two claims for standing purposes and therefore considers its standing analysis to cover both claims. [5] Midwest cites Exhibit O to its brief in support of this statement, at pages 152-53. However, that exhibit consists of only two pages, contains no page numbers corresponding to the site, and does not support Midwest's point. [6] BCN/Clearing argues that its breach of contract claim accrued only when Midwest used the drawings in a way that actually injured BCN/Clearing, for example, by manufacturing Torc-Pac 40 parts or entire Torc-Pac 40 clutches. In other words, BCN/Clearing asserts that Midwest's mere act of copying the drawings is insufficient to support accrual of the claim. The cases BCN/Clearing cites for this argument are inapposite, because they concerned claims grounded in tort or breach of warranty rather than breach of contract. See Perreault v. Hostetler, 884 F.2d 267 (6th Cir.1989) (civil rights claim under 42 U.S.C. § 1983); Connelly v. Paul Ruddy's Equip. Repair & Service Co., 388 Mich. 146, 200 N.W.2d 70 (1972) (negligence); Stephens v. Dixon, 449 Mich. 531, 536 N.W.2d 755 (1995) (negligence); Filcek v. Utica Building Co., 131 Mich.App. 396, 345 N.W.2d 707 (1984) (negligent construction and breach of implied warranty). Moreover, BCN/Clearing does not deny that Midwest would breach the Confidentiality Agreement either by actually copying BCN/Clearing's engineering drawings or by transferring the information in those drawings to Midwest's drawings. [7] Midwest argues that accepting Schlachter's affidavit and testimony would be contrary to the rule set forth in Reid v. Sears, Roebuck & Co., 790 F.2d 453 (6th Cir.1986), that "[a] party may not create a factual issue by filing an affidavit, after a motion for summary judgment, which contradicts her earlier deposition testimony." Id. at 460. The Court disagrees, because Schlachter's affidavit does not contradict his prior deposition testimony but instead further explains his prior deposition testimony about why he highlighted the March 18, 1996, change on the initial set of Midwest drawings. [8] As with the trade secret misappropriation claim, BCN/Clearing requests that the Court reconsider its decision that the discovery rule does not apply to the tortious interference claim. The Court declines to do so for the reasons set forth above in connection with the misappropriation claim. [9] The limitations analysis for this claim differs from the limitations analysis for the Lanham Act claim because the discovery rule and the continuing wrong doctrine both apply to the Lanham Act claim, see Island Insteel Sys., Inc. v. Waters, 296 F.3d 200, 214 n. 8 (3d Cir.2002), but not to the unfair competition claim under Michigan law, see Blazer Foods, Inc., 259 Mich.App. at 254, 673 N.W.2d at 814 (noting that the continuing wrong "doctrine has been given limited application to trespass, nuisance, and civil rights cases").	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/1764740/	528 F. Supp. 372 (1981) CHATTANOOGA CORPORATION v. Dale H. KLINGLER, Harlan B. Jensen, Thomas H. Church, Richard Wilkins, Lewis C. Duncan, M. D. and James W. Sauder. No. Civ-1-81-145. United States District Court, E. Tennessee, S. D. December 3, 1981. 373 374 John B. Phillips, Jr. and Hoyt O. Samples, Stophel, Caldwell & Heggie, Chattanooga, Tenn., for plaintiff. Hugh J. Moore, Jr., Witt, Gaither & Whitaker, Chattanooga, Tenn., V. Frank Asaro, Asaro & Associates, San Diego, Cal., for defendants. OPINION FRANK W. WILSON, Chief Judge. This lawsuit arises out of the purchase by a Tennessee corporation of the corporate assets of a California corporation. Included within the assets purchased were four patents. A portion of the purchase price consisted of the payment by the purchaser of patent royalties to the sellers. The plaintiff contends that it no longer markets a product that comes within the patent claims and seeks a declaration relieving it of the payment of further patent royalties. The case is presently before the Court upon a motion to dismiss filed on behalf of each defendant, or in the alternative, a motion to change the venue of the lawsuit. The defendants having initiated arbitration proceedings in California that are related to the matters here sought to be litigated, the case is also before the Court upon the plaintiff's motion for a preliminary injunction staying the California arbitration proceedings. Before considering the plaintiff's motion for an injunction, it will be necessary for the Court to decide the jurisdiction and venue questions. It may also be appropriate for the Court to consider whether this declaratory judgment action should be dismissed as a matter of judicial discretion. A review of the facts is necessary. Vari-Temp Manufacturing Corporation, until its dissolution in 1977, was a California corporation with its principal place of business and only office in San Diego County, California. This office served as corporate headquarters, sales office, and manufacturing facility. Vari-Temp had some distributors who operated outside San Diego County, but none in Tennessee. These distributors handled other products besides those of Vari-Temp and Vari-Temp conducted none of its normal ongoing business in Tennessee and was not qualified to do business in Tennessee. Defendant Klingler resides in San Diego County, California, and was president of Vari-Temp. Defendant Sauder resides in Reno, Nevada, and was also active in the affairs of Vari-Temp. The other four defendants in this case were the sole remaining shareholders of Vari-Temp but they were only passive investors. Duncan resides in San Diego County, California. Jensen and Church reside in Burley, Idaho, and Wilkins in Alto Loma, California. Klingler owned a controlling interest in Vari-Temp while the other defendants owned varying amounts up to a 15% interest. In July, 1977, the president of Chattanooga Corporation contacted Vari-Temp about the possible sale of Vari-Temp's assets, including 375 its patent rights. Negotiations were conducted in St. Louis, Salt Lake City, Chattanooga, and finally concluded in San Diego. Only Klingler went to Chattanooga at plaintiff's request to conduct negotiations on behalf of all the defendants. Miscellaneous phone calls and correspondence between the parties also took place and had Chattanooga as its origin or destination. To accomplish the sale of assets, Vari-Temp was dissolved on August 22, 1977, and its assets distributed to the six shareholders. On August 31, 1977, in San Diego, California, the six former shareholders sold the former assets of Vari-Temp to Chattanooga Corporation as specified in a Memorandum of Sale which was to be governed by the laws of California. A Bill of Sale and Assignment transferred title to the assets and patents from the defendants to Chattanooga Corporation. Defendants Klingler and Sauder were briefly employed by Chattanooga Corporation to assure a smooth transition but such employment ended in 1977. Sauder's employment contract was executed and performed completely in California, but Klingler made two trips to Chattanooga in the course of his employment. Chattanooga Corporation has made payments of $205,000 as "minimum royalties" as required by the Memorandum of Sale, ¶ 7, but seeks to be relieved of any further payments on the ground that it is not manufacturing products which utilize the patented inventions. The patents relate to inventions used in cold therapy apparatus which is useful in the field of physical therapy. Service was had on the defendants under the Tennessee Long Arm Statute through the Secretary of State as allowed by F.R.C.P. 4. The first question to be faced is one of jurisdiction. Subject matter jurisdiction is not disputed. If the case arises under patent law, as plaintiff contends, then this Court has jurisdiction under the federal question provision, 28 U.S.C. § 1331. If the case instead arises under contract law, as defendants contend, then the Court has diversity jurisdiction under 28 U.S.C. § 1332. The question of in personam jurisdiction is more difficult. In a diversity case, the jurisdictional reach of a United States District Court is determined by the law of the state where the court is located, Pickens v. Hess, 573 F.2d 380 (6th Cir. 1978). In a federal question case, the District Court's power to exercise in personam jurisdiction is limited to that provided by the Federal Rules of Civil Procedure, and because it was necessary to utilize state long-arm provisions to obtain service of process, in personam jurisdiction is also limited by the Tennessee Long Arm Statute. See Wells Fargo & Co. v. Wells Fargo Exp. Co., 556 F.2d 406 (9th Cir. 1977); Navarro v. Sedco, Inc., 449 F. Supp. 1355 (S.D.Tex. 1978). As a result, whether the case is properly a diversity case or a patent case, the Tennessee Long Arm Statute, TCA § 20-2-214, will be applicable. That broadly phrased statute is limited only by Fourteenth Amendment due process considerations, Nicholstone Book Bindery, Inc. v. Chelsea House Publishers, 621 S.W.2d 560 (Tenn.1981). The Supreme Court has recently reaffirmed its holding in International Shoe Co. v. Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945), that a state cannot exercise personal jurisdiction over a nonresident defendant unless "minimum contacts" exist between the defendant and the forum state. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S. Ct. 559, 62 L. Ed. 2d 490 (1980). International Shoe was a landmark in jurisdictional thinking as it expanded jurisdiction far beyond the strictly territorial notions espoused by Pennoyer v. Neff, 95 U.S. 714, 24 L. Ed. 565 (1877). In Pennoyer, States were held to be unable to extend their process beyond their territorial limits, in the usual case. Any extra-territorial reach by a state's courts was viewed as an encroachment on the rights of the other states and was to be "resisted as usurpation." In light of the harsh limitations of Pennoyer, the International Shoe decision was a welcome addition to the states' jurisdictional powers. The new test for jurisdiction stated that: 376 "... due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'" 326 U.S. at 316, 66 S.Ct. at 158. The nature of the minimum contacts required to satisfy due process considerations was explained in McGee v. International Life Insurance Co., 355 U.S. 220, 78 S. Ct. 199, 2 L. Ed. 2d 223 (1957) and Hanson v. Denckla, 357 U.S. 235, 78 S. Ct. 1228, 2 L. Ed. 2d 1283 (1958). In McGee, California was allowed to assert jurisdiction over a Texas insurance company whose only contacts with the state consisted of mailing an insurance contract to a California resident and receiving his mailed premium payment. The Court was influenced by the following factors: (1) the suit was based on a contract which had substantial connection with California; (2) California had a manifest interest in providing effective means of redress to its residents when insurers refused to pay claims; (3) the inability of small or moderate individual claimants to afford the cost of an action in a foreign forum; and (4) the crucial witnesses' location in California. In Hanson the Court indicated that not all restrictions upon the exercise of personal jurisdiction were to be abandoned. The case involved Delaware's refusal to accord full faith and credit to a Florida probate decision purporting to decide the distribution of the corpus of a Delaware trust. The Court held that Florida could not exercise jurisdiction over the Delaware trust company based on contacts which were only minor matters of trust administration conducted by mail. Chief Justice Warren, in his majority opinion, noted that the restrictions on personal jurisdiction were a consequence of territorial limitations on the power of the respective states, at p. 251, 78 S.Ct. at p. 1238. In this regard he found that Florida did not have a substantial connection with the contract on which the suit was based, at p. 253, 78 S.Ct. at p. 1239. A critical portion of the opinion read: "The unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State. The application of that rule will vary with the quality and nature of the defendant's activity, but it is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting business within the forum State, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235, 253, 78 S. Ct. 1228, 1239, 2 L. Ed. 2d 1283 (1958). In Kulko v. California Supreme Court, 436 U.S. 84, 98 S. Ct. 1690, 56 L. Ed. 2d 132 (1978), the Court declined to allow California to exert personal jurisdiction over a New York resident. The New York defendant's wife had obtained a Haitian divorce and subsequently sought to have the child support agreement modified in California, her new domicile, after the husband had allowed one child to live with her year round. The Court noted that the child support agreement was negotiated and signed in New York, that it contemplated sending payments to California, that California had an interest in the welfare of minors within the state, that the husband had consented to one child's desire to live with her mother in California and still found that California's assertion of personal jurisdiction was unreasonable. The Court found the child support agreement had virtually no connection with the forum state, at p. 97, 98 S.Ct. at p. 1699, and thought New York was the appropriate forum. California's interest in its minor residents was found neither specific nor strong enough to outweigh the fact that the husband derived no personal or commercial benefit from his child's presence in California and who could not be said to have purposefully availed himself with privileges and protections of conducting activities in California. The unilateral nature of the wife's move to California was a substantial consideration in denying jurisdiction. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S. Ct. 559, 62 L.Ed.2d 377 490 (1980) is the most recent word on in personam jurisdiction. The plaintiff sought to obtain jurisdiction over the New York wholesaler and retailer of his Audi for a products liability action in Oklahoma where the automobile had been involved in an accident. The New York defendants' only apparent connection with the forum state was that the plaintiff had driven a car he had purchased in New York from the retailer to Oklahoma and been involved in an accident. The Court explicitly stated that the minimum contacts requirement retained a notion of the state sovereignty principle which many had assumed met its demise with the downfall of Pennoyer. The Court said: "The concept of minimum contacts, in turn, can be seen to perform two related, but distinguishable functions. It protects the defendant against the burdens of litigating in a distant or inconvenient forum. And it acts to ensure that the States, through their courts, do not reach out beyond the limits imposed on them by their status as coequal sovereigns in a federal system." Supra at 291-292, 100 S.Ct. at 564. The Court pointed out that due process guarantees against inconvenient litigation have been substantially relaxed since McGee but insisted that the principles of interstate federalism embodied in the Constitution require that state lines remain relevant for jurisdictional purposes. The plaintiffs in the present case place a great deal of emphasis on the case of Southern Machine Co. v. Mohasco Industries, Inc., 401 F.2d 374 (6th Cir. 1968). That case set forth a three-part test to which plaintiffs endeavor to fit their case. Under Mohasco, in personam jurisdiction is present if: "First, the defendant must purposefully avail himself of the privilege of acting in the forum state or causing a consequence in the forum state. Second, the cause of action must arise from the defendant's activities there. Finally, the acts of the defendant or consequences caused by the defendant must have substantial enough connection with the forum state to make the exercise of jurisdiction over the defendant reasonable." Supra at 381. While Mohasco does provide insightful analysis of due process questions posed by long-arm statutes, the additional emphasis placed by the Supreme Court on matters of federalism and state sovereignty seem to displace Mohasco as the controlling law. To fully understand the changes that have occurred since the 1968 decision in Mohasco, it is necessary to examine the state sovereignty considerations in some detail. In 1887 when Pennoyer was decided, state sovereignty was strictly a matter of territorial boundaries. A state could not exercise its power beyond its political boundary. Today, state sovereignty is viewed in a somewhat broader fashion and the interest protected is explained by one commentator as, "The threat to state sovereignty derives from the fact that if one state can adjudicate the rights of any defendant no matter where he is located, the sovereignty of the other states is diminished," Allen R. Kamp, Beyond Minimum Contacts: The Supreme Court's New Jurisdictional Theory, 15 Ga.L.Rev. 19, 37 (1980). Every time a state exercises long-arm jurisdiction over a nonresident defendant, it deprives another state of control over one of its own residents. Unwarranted extension of long-arm jurisdiction is an inherent danger to a coordinated system of state courts. See Comment, 69 Mich.L.Rev. 300 (1970). The problem of state sovereignty is to decide how much protection to accord the federalistic values it encompasses. In Mohasco, the Court of Appeals concluded that the forum state had an interest in the controversy and this satisfied its third criterion. However, the Supreme Court did not deny that California had an interest in child support for its minor residents in Kulko, or that Oklahoma had an interest in injuries caused by defective products within its confines in World-Wide Volkswagen. The Supreme Court in Kulko found that California's exercise of jurisdiction was "unreasonable" because of the superior affiliation of New York with the controversy in that case. Similarly, World-Wide 378 Volkswagen held that the defendants' contacts with Oklahoma did not constitute sufficient "affiliating circumstances" to allow long-arm jurisdiction. In short, the interest of the forum state in the controversy must not merely exist, it must also be found to be sufficient in light of other states' interests and the defendant's contacts with the forum. The best interests of international and interstate judicial systems require that a forum state should not impinge on interests of other states by trying in its courts a case with which it has no adequate relationship, Lakeside Bridge & Steel v. Mountain State Construction, 597 F.2d 596 (7th Cir. 1979). While the development of the state sovereignty requirement has been greeted with consternation in some quarters, Allen R. Camp, Jurisdictional Theory, 15 Ga.L.Rev. 19 (1980), The Supreme Court, 1979 Term, 94 Harv.L.Rev. 75, 114 (1980), the fear of a return to the mutually exclusive territorial sovereignty of Pennoyer seems unfounded. The interests of other states appear to be merely one more factor in determining the nature and quality of a defendant's contacts with a state that will serve as the basis for the exercise of personal jurisdiction. The minimum contacts test is not susceptible of mechanical application, Kulko, 436 U.S. at 92, 98 S.Ct. at 1696, and state sovereignty considerations are one more factor to be weighed to determine whether the requisite affiliating circumstances are present. It appears that in applying the minimum contacts test the requisite amount of contacts should vary according to the state's interest. See Comment, 69 Mich.L. Rev. 300 (1970), Carrington & Martin, Substantive Interests and the Jurisdiction of State Courts, 66 Mich.L.Rev. 227 (1967). It is suggested that a state has a greater interest in personal injury cases, the physical welfare of its inhabitants, than in economic injury. And also a greater interest in protecting the economic reliance interests of its residents than the expectation interests, Carrington & Martin, 66 Mich.L.Rev. 227 (1967). If convenience and reasonableness weigh in favor of the forum state the "center-of-gravity" test less contacts should be required. See Allen R. Kamp, 15 Ga.L.Rev. 19 (1980). The center-of-gravity of the instant case appears to be in San Diego County rather than Tennessee. The neutrality of the forum is a factor favoring reduced contacts, Mehren & Trautman, Jurisdiction to Adjudicate: A Suggested Analysis, 79 Harv.L.Rev. 1121 (1966). In the instant case, California would probably be slightly more neutral than Tennessee since Tennessee is the domicile of the only plaintiff, while California is the domicile of only half the defendants. The essentially local character of a defendant requires more substantial contacts in the forum state, Mehren & Trautman, supra. Vari-Temp was essentially a California operation. If the cause of action arose from tortious or wrongful activity contacts may be minimized, Jasper Aviation, Inc. v. McCollum Aviation, Inc., 497 S.W.2d 240 (Tenn.1972). But the defendants are not accused of such conduct. Contacts might also be minimized if the claim involves the placing of a dangerous instrumentality in commerce, Poyner v. Erma Werke Gmbh., 618 F.2d 1186 (6th Cir. 1980), but no such instrumentality is involved in this case. If Tennessee has a valid regulatory interest, few contacts might be required, but Tennessee's interest stems almost exclusively from wishing to provide a forum for its residents. California has an interest in supervising the application of its laws, which could be applicable should contract questions need to be answered in this case. The forum which can provide the most efficient judicial administration of the claim may also require less contact. This factor predominates only slightly in California's favor. This analysis shows that the interest of California in the adjudication of this controversy is somewhat greater than Tennessee's interest. As a result, Tennessee should be required to have somewhat more than the absolute minimum of contacts which might provide personal jurisdiction, in order to warrant depriving California of jurisdiction over a case with which it has a more substantial connection. 379 To examine the contacts of the defendants with Tennessee, the forum state, it is necessary to analyze those contacts in relation to the defendants' realistic expectation that they would be haled into court in Tennessee, World-Wide Volkswagen, 444 U.S. at 297, 100 S.Ct. at 567. In Flight Devices Corporation v. Van Dusen Air, Inc., 466 F.2d 220 (6th Cir. 1972) provides insightful analysis of the nature and quality of a defendant's contacts with the forum state regarding the expectation of litigation. It suggests that the active initiation of a deal in the forum state, vigorous and substantial negotiation in the state, inspection of facilities in the state, the discussion of marketing approaches in the state, and the existence of substantial interstate business all favor finding meaningful contacts existed, heralding the possibility of litigation in the forum state. The conduct of the four passive investors in Vari-Temp can hardly be said to fit this categorization. Those four apparently authorized Klingler to act as their agent and Klingler was in touch with Chattanooga by phone and mail and made one visit in person. The four passive defendants have also received payments sent from plaintiff's Chattanooga, Tennessee office. Even given the knowledge that plaintiff would transfer Vari-Temp's assets to Chattanooga after winding down the California operation, the four passive investor defendants cannot be said to have purposefully availed themselves of the privilege of doing business in Tennessee. The unilateral conduct of the plaintiff in transferring Vari-Temp's assets to Tennessee cannot form the basis for exerting long-arm jurisdiction over the defendants. See Lakeside Bridge & Steel v. Mountain State Construction, 597 F.2d 596 (7th Cir. 1979). When coupled with the indication that long-arm jurisdiction is more easily asserted over corporations than individuals because of both financial deference to individuals and the increased regulatory power of states over corporations, W. B. Dunavant & Co. v. Perkins, 498 S.W.2d 905 (Tenn.1973), Developments in the Law-State Court Jurisdiction, 73 Harv.L.Rev. 909, 936 (1960), the Court has no difficulty in holding that an application of the Tennessee Long-Arm Statute to assert jurisdiction over the four passive investor defendants would constitute a violation of due process. The finding that these four passive investor defendants did not purposefully avail themselves of the privilege of carrying on activities in Tennessee is the death knell for plaintiff's hopes to assert jurisdiction over those defendants. The purposeful availment requirement has been present in every case from Hanson, 357 U.S. 235, 78 S. Ct. 1228, 2 L. Ed. 2d 1283 (1958) to World-Wide Volkswagen, 444 U.S. 286, 100 S. Ct. 559, 62 L. Ed. 2d 490 (1980). Even the three-prong Mohasco test includes that requirement. With respect to the remaining two defendants, the jurisdictional question is closer. Both defendants Klingler and Sauder were active in the management of Vari-Temp, Sauder as an inventor, and Klingler as President. Both were employed by plaintiff after the sale of Vari-Temp. The employment contracts were executed in San Diego County and Sauder performed his contract completely in California. Klingler made two trips to Chattanooga during the course of his employment. The employment contracts provided that the principal place of employment shall be San Diego but that the plaintiff could require the employees to travel and work in areas outside of San Diego. The Court has no difficulty in deciding that the employment contracts must be included in the consideration of minimum contacts for this cause of action as the defendants' employment was needed to assist Chattanooga Corporation in the transfer and winding up of Vari-Temp's business. The nature of Klingler's actions make it appropriate for the Court to assert jurisdiction over him. By personally conducting the negotiations for the sale, Klingler indicated that he attached more significance to the negotiations and contacts with plaintiff than the passive investors who were content to let Klingler act as their agent. Furthermore, Klingler's position as 380 the majority stockholder of Vari-Temp makes it clear that even when performing corporate acts as Vari-Temp's president, he was acting largely in his own interests. The degree of Klingler's involvement in Vari-Temp, the negotiations with Chattanooga Corporation, and the subsequent employment contract all lead the Court to find him subject to the reach of the Tennessee Long-Arm Statute. The defendant Sauder lacked the personal involvement in the negotiations with plaintiff and the control over Vari-Temp and high stake in Vari-Temp's disposition. While Sauder did have some relation to the ongoing business of Vari-Temp, the Court cannot find that he attached sufficient importance to his dealings with the plaintiff to assume he foresaw the possibility of being haled into court in Tennessee. Furthermore, unless it can be shown the nature of his employment involved more than the winding down of the California operation, the Court cannot see how he purposefully availed himself of the privileges of conducting business in Tennessee. Accordingly, it appears that the Court lacks personal jurisdiction over the defendant Sauder. In light of this Court's failure to find jurisdiction over five of the six named defendants, the wisdom of issuing a declaratory judgment becomes questionable. In Public Affairs Associates v. Rickover, 369 U.S. 111, 82 S. Ct. 580, 7 L. Ed. 2d 604 (1962) the Supreme Court stated that the Declaratory Judgment Act (28 U.S.C. §§ 2201, 2202) gave federal courts the competence to make a declaration of rights but did not impose a duty to do so. The District Courts cannot decline to entertain a declaratory action as a matter of whim or personal disinclination but should balance the needs of the plaintiff and the consequences of giving the desired relief. If the Court were to find in favor of the plaintiff, the plaintiff would then have to institute a proceeding in the Southern District of California urging res judicata to obtain the same judgment against the defendants not subject to this Court's jurisdiction. This would not be the most efficient use of judicial resources. The strong public interest in determining patent validity in order to prevent invalid patents from withdrawing knowledge from the public realm, Lear v. Adkins, 395 U.S. 653, 656, 89 S. Ct. 1902, 1903, 23 L. Ed. 2d 610 (1969), is weakened in the present situation. The party holding the right to keep the patented invention from the public is the same party seeking to have the patent declared invalid. If the plaintiff is concerned that knowledge is being inappropriately denied the public, the plaintiff can act unilaterally to disseminate that knowledge. Plaintiff's interest is in defeating the defendants' claim for money due under the contract, not in averting harm to its business from a patent infringement suit or in providing the public with access to the inventions covered by the patents in this suit. Declaratory judgments are problematical because such actions are often brought by a party who would otherwise have been a defendant in the action. They often have the effect of depriving a party who otherwise would have been the plaintiff of any choice in selecting the forum in which the lawsuit is initiated. Declaratory judgment actions which are obvious cases of forum shopping are not favored, Hanes Corporation v. Millard, 531 F.2d 585 (D.C.Cir. 1976). In the instant case, plaintiffs mailed letters dated April 20, 1980 to the defendants which repudiated the Memorandum of Sale and offered to tender back the patents involved in the sale. On April 21, 1980, without waiting for defendants to reply or even receive the letters, plaintiff filed suit. The appearance of forum shopping by such hasty instigation of legal action without prior notice to the defendants is unavoidable. Another problem is that if this Court adjudicates plaintiff's claims, the agreement of the parties to arbitrate all disputes arising from the contract will not be given any effect. Courts are reluctant to preempt the resolution process agreed to by the parties. Though patent questions are probably not suitable for determination by an arbitrator, if the defendants' contentions *381 are correct, an arbitrator might be able to settle the controversy without reaching the patent issues. The final consideration is an apparent inconsistency under the venue statutes. If this case is a patent action, then the federal question venue statute, 28 U.S.C. § 1391(b), would apply and venue would not appear to be proper in this district. Federal question venue is appropriate where all the defendants reside or where the claim arose. Since the defendants reside in different districts, the only proper district is where the claim arose. Plaintiff contends the claim arose where the patents are presently located, Chattanooga, because an infringement action arises on the site of the infringement. Defendants assert the claim arose in California where the contracts were signed. The nature of the patent agreement is an assignment rather than a license as plaintiff received all the rights of an owner of patents, including the exclusive right to license the patents and the right to enforce the patents for infringement. [See Memorandum of Sale ¶ 7(c) & (g)] See Deller's Walker on Patents § 343, Pope Mfg. Co. v. Gormally & Jeffery Mfg. Co., 144 U.S. 248, 12 S. Ct. 641, 36 L. Ed. 414 (1892), Littlefield v. Perry, 21 Wall. 205, 220, 88 U.S. 205, 220, 22 L. Ed. 577 (1875), Dynatech Corp. v. Frigitronics, Inc., 318 F. Supp. 851 (D.Conn.1970). The defendants in this case could not even bring an infringement action as that right belongs solely to the plaintiff. The inescapable conclusion is that the cause of action arose under the contract and not because of infringement per se. If there is federal question jurisdiction because of the infringement nature of plaintiff's claim, Deller's Walker on Patents § 469, venue would only be proper in California. To avoid this result, plaintiff could rely on the contract nature of the suit to obtain proper diversity venue where all of the plaintiffs reside, 28 U.S.C. § 1391(a). The problem with this is that if the action is predominantly a contract action, arbitration is the appropriate remedy under the contract. The above considerations: the lack of jurisdiction over five of the defendants, the superiority of California as an appropriate forum, the lack of a strong public policy urging resolution of patent validity in this instance, the appearance of forum shopping, the venue problems, and the preemption of the parties' arbitration agreement all militate against this Court's exercise of its power to render a declaratory adjudication. While no one factor is controlling, the Court believes the combination argues in favor of the dismissal of this case. An order dismissing the action will enter.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/1803146/	368 F. Supp. 785 (1974) OLD COLONY DONUTS, INC., d/b/a Jollie Donuts v. AMERICAN BROADCASTING COMPANIES, INC., et al. Civ. A. No. 73-1377-C. United States District Court, D. Massachusetts. January 10, 1974. 786 Leonard Kopelman, Judith E. Soltz, Kopelman & Soltz, Boston, Mass., for plaintiff. Michael J. Liston, John R. Hally, Nutter, McClennen & Fish, Boston, Mass., for defendants. 787 OPINION CAFFREY, Chief Judge. This is a civil action sounding in tort brought by plaintiff, a corporation organized under the laws of the Commonwealth of Massachusetts, against the American Broadcasting Companies, Inc., a corporation organized under the laws of the State of New York; Alan Lansburg Productions, Inc., a corporation organized under the laws of the State of California; Bristol-Myers Co., Inc., a corporation organized under the laws of the State of Delaware; and Lawrence D. Savadove and Robert Young, citizens of California. Plaintiff operates a donut shop in Boston, Massachusetts under the name of "Jollie Donuts." The action arises out of the presentation on television, on the ABC network, of a program sponsored by Bristol-Myers, produced by defendants Alan Lansburg Productions and Lawrence D. Savadove, and narrated by defendant Young. The complaint alleges the program was broadcast in Massachusetts over Channel 7, WNAC TV, at 10:00 p. m. on May 4, 1971, and at other times subsequent thereto. Jurisdiction of this court is based on 28 U.S.C.A. § 1332. Plaintiff's complaint purports to set out four separate causes of action, all based on the presentation by the ABC network and its local outlet on May 4, 1971 of a program entitled "How to Stay Alive." The first cause of action charges that defendants intentionally interfered with plaintiff's business relations; the second cause of action alleges that pictures of plaintiff's donut shop and business name were used in the TV program without plaintiff's consent or authorization, in violation of Mass.G.L. c. 214, § 3A; the third cause of action alleges in substance that defendants' agents or employees trespassed on plaintiff's property by entering plaintiff's place of business and taking pictures without obtaining plaintiff's permission to do so, as well as by taking pictures of plaintiff's place of business from the outside; and the fourth cause of action charges that the program was derogatory of plaintiff's business and was intended by defendants to prevent other persons from dealing with plaintiff and from consuming plaintiff's products, i. e., that defendants publicly disparaged plaintiff's products. The matter is before the Court on defendants' motions to dismiss the complaint for failure to state a claim upon which relief can be granted. The motions to dismiss were orally argued and briefed by the parties and defendants have filed as an attachment to their memorandum of law the actual script of the TV program under attack. The motions will be treated herein as being separately addressed to each of the four causes of action alleged in plaintiff's complaint. The first cause of action purports to be for intentional interference with plaintiff's advantageous contractual relations. It is settled Massachusetts law that the elements which constitute this tort and must be alleged and proved by the plaintiff are: (1) a legally protected interest, (2) intent, (3) conduct which is either per se unlawful or is conducted with malice, and (4) damages. Walsh v. O'Neill, 350 Mass. 586, 588-589, 215 N.E.2d 915 (1966); Caverno v. Fellows, 300 Mass. 331, 333, 15 N.E.2d 483 (1938). The complaint herein satisfies the first two of the four elements necessary to state a cause of action for interference with advantageous relations, i. e., the plaintiff's ownership of a legally protected interest and intentional conduct on the part of the defendants. Plaintiff also alleges that it has suffered money damages. The third element, per se unlawful or malicious conduct, is not alleged in the complaint. In the absence of such allegation, in order for plaintiff to prevail, its complaint must be construable as charging that defendants' interference was without legal justification. According to Massachusetts law, legal justification is an affirmative defense that must be pleaded and proved by the defendant and a cause of 788 action can be stated without negativing legal justification. Ross v. Wright, 286 Mass. 269, 271-272, 190 N.E. 514 (1934). Defendants assert in their memorandum that their legal justification for presenting this program is found in their First Amendment rights to freedom of speech concerning matters of public interest in this case, the causes of heart disease which, from the script attached, was obviously the subject matter of the program under attack. It is now well-established that in matters of public interest the exercise of First Amendment rights establishes a qualified constitutional privilege against tort liability. New York Times v. Sullivan, 376 U.S. 254, 84 S. Ct. 710, 11 L. Ed. 2d 686 (1967); Time, Inc. v. Hill, 385 U.S. 374, 87 S. Ct. 534, 17 L. Ed. 2d 456 (1967). Qualified privilege has prevailed under state law in an analogous situation to the instant case in Krebiozen Research Foundation v. Beacon Press, Inc., 334 Mass. 86 at p. 99, 134 N.E.2d 1 at p. 9 (1956), where the court observed: "In cases of torts perpetrated by means of spoken or written words, the public interest in the freedom of speech frequently comes into conflict with the public interest in the prevention of tortious harms. Adjustments of this conflict must be made as best they can, in the light of the circumstances of each case, and in the light of the basic policies underlying each public interest. Sometimes the public interest in the freedom of speech prevails. For example, the public's concern with matters affecting health justifies denial of injunctive restraint of a newspaper's exposé of the supposed qualities of a patent medicine." (Citing Restatement: Torts, § 942). It should be noted that in cases within the penumbra of the First Amendment a special situation exists vis-a-vis so-called "affirmative defenses." Normally under Massachusetts law the burden of alleging and proving an "affirmative defense" rests upon the defendant. But under the Supreme Court's ruling in Time, Inc. v. Hill, 385 U.S. 374, 387, 87 S. Ct. 534, 541, the burden is on the plaintiff to allege facts sufficient to overcome the claimed First Amendment privilege of legal justification, i. e., plaintiff must (but does not) allege "actual malice knowledge that the statements are false or in reckless disregard of the truth." In the instant case, to prevail against defendants' First Amendment privileges plaintiff would have to, but does not, allege express malice or reckless and wanton disregard of the truth on the part of defendants. In the absence of any such allegations, the first cause of action relied on by plaintiff fails to state a claim upon which relief can be granted. Beclause it is necessary to an understanding of this case, the Court has adverted to the script appended to defendants' memorandum of law, as well as to the affidavits of John E. Premack and Lawrence D. Savadove. Thus, this Court will treat defendants' motion under Rule 12(b)(6) as a motion for summary judgment under Rule 56, since the Court has considered matters outside the pleadings in resolving this matter. I rule that the script of the program and the affidavits clearly establish that the broadcast in question concerned a matter of public interest, causes and prevention of heart disease, privileged under the First Amendment, and that, consequently, the defendants are entitled to judgment as a matter of law against the allegation of intentional and tortious interference with plaintiff's contractual relations. Plaintiff's second theory of liability is based on Mass.G.L. c. 214, § 3A, which forbids the unauthorized use of a person's name, portrait or picture for advertising purposes or for purposes of trade. It would appear that the decision of the Supreme Court in Time, Inc. v. Hill, 385 U.S. 374, 87 S. Ct. 534, 17 L. Ed. 2d 456 (1967), which contained a claim under the New York State Right to Privacy statute, was adverse to the plaintiff. The New York statute was 789 similar in language and import to Mass. G.L. c. 214, § 3A. Thus, it would appear that defendants' First Amendment privilege would override any cause of action under the Massachusetts statute. The third cause of action in plaintiff's complaint purports to be in tort for trespass, consisting of an allegation that employees or agents of defendants entered plaintiff's premises without permission from plaintiff, and without plaintiff's knowledge, and took films of the interior of plaintiff's premises, thereby allegedly causing damages to plaintiff. The allegations of this complaint facially state a cause of action in tort for trespass. However, an uncontroverted affidavit filed by John E. Premack establishes that the taking of pictures on plaintiff's premises occurred during the fall of 1970 and, in no event, later than January of 1971. Mass.G.L. c. 260, § 2A, imposes a two-year time limit on actions of tort for trespass. The time stamp on the complaint indicates that it was filed on May 2, 1973. Thus, Count 3 is barred by the statute of limitations. Plaintiff has attempted in its brief to circumvent the running of the statute of limitations with the contention that the trespass was not completed until May 4, 1971 when the films were first shown on television. However, this contention is not tenable in light of decisions of the Supreme Judicial Court that damages are not an essential element of the tort of trespass. See Sheppard Envelope Co. v. Arcade Malleable Iron Co., 335 Mass. 180, 188-189, 138 N.E.2d 777 (1956); Appleton v. Fullerton, 67 Mass. (1 Gray) 186, 190 (1854). See, also, Federal Insurance Co. v. Summers, 330 F. Supp. 1041, 1043-1044 (D.Mass.1970), and Attleboro Mfg. Co. v. Frankfort Marine Accident & Plate Glass Co., 240 F. 573, 580 (1st Cir., 1917). Plaintiff's fourth cause of action purports to be one for "intentional disparagement" of the plaintiff's business within the ruling of Lawrence Trust Co. v. Sun-American Publishing Co., 245 Mass. 262, 266, 139 N.E. 655 (1923). It would appear from the cited decision of the Supreme Judicial Court that in order to state a cause of action for intentional disparagement, the complaint must allege the inflicting of intentional harm to the plaintiff's business by the use of false and misleading statements published by the defendants. The instant complaint contains no allegation that any statements made by defendants are false and misleading. Hence, for lack thereof no cause of action is stated under the doctrine of the Lawrence Trust Co. case, supra. Additionally, even if a cause of action were stated, this count likewise must be ruled subject to the same First Amendment infirmities which have been ruled above to be fatal to purported causes of action Nos. 1 and 2 herein. In summary, plaintiff's purported first, second and fourth causes of action fail in the light of defendants' First Amendment privileges, and the purported second cause of action is barred by the running of the statute of limitations.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/1483623/	129 F.2d 651 (1942) CONNECTICUT IMPORTING CO. v. CONTINENTAL DISTILLING CORPORATION et al. No. 235. Circuit Court of Appeals, Second Circuit. July 16, 1942. 652 Raymond E. Hackett, of Stamford, Conn. (Mark W. Norman, of Stamford, Conn., Earl Jay Gratz, of Philadelphia, Pa., and Walter B. Lockwood, of Stamford, Conn., of counsel), for defendant-appellant Continental Distilling Corporation. Abraham S. Weissman and Charles Henchel, both of New Haven, Conn., for defendant-appellant A. Sherman Mfg. Co., Inc. Arthur Klein and Robert J. Woodruff, both of New Haven, Conn. (David S. Day and Norman K. Parsells, both of Bridgeport, Conn., of counsel), for plaintiff-appellee Connecticut Importing Co. Before L. HAND, SWAN, and AUGUSTUS N. HAND, Circuit Judges. AUGUSTUS N. HAND, Circuit Judge. This is an action to recover treble damages, brought under Section 7 of the Sherman Anti-Trust Act. 15 U.S.C.A. § 15 note. The violations of the act set forth in the complaint and in plaintiff's proof consisted of a conspiracy between Continental Distilling Corporation and the other defendants named in the complaint, as well as Austin-Nichols and McKesson & Robbins, to control wholesale and retail prices on the liquor products sold by Continental Distilling Corporation through its Connecticut distributors and to boycott and blacklist all retailers and distributors, including the plaintiff, who would not maintain the prices agreed upon. The defendants denied the existence of the conspiracy and introduced testimony in support of their position, but there was enough evidence to justify the jury in finding that such a conspiracy was formed, that it restrained competition and that it caused damage to the plaintiff. The jury returned a verdict for the plaintiff in the sum of $16,000, upon which judgment was entered for treble the amount. The defendants Continental Distilling Corporation and A. Sherman Manufacturing Company have appealed. In September, 1936, Continental Distilling Corporation appointed the plaintiff a distributor of its liquor products for the State of Connecticut and informed it that it would remain a distributor as long as it paid its bills. Continental issued price lists containing suggested resale prices from its distributors to retailers and from retailers to the public. During the same month representatives of Austin-Nichols, McKesson & Robbins and the defendant Libbey & R. C. Williams Corporation, which were also distributors of Continental's liquor products for Connecticut, met in New Haven at the Hotel Taft and complained to each other about the appointment of the plaintiff as a distributor, and Libbey of Libbey & R. C. Williams Corporation was said to have then sent a telegram to the sales manager of Continental objecting to the appointment. The plaintiff did not adhere to the Continental price lists in respect to resales of its products, but began price cutting. The various distributors, including the plaintiff, all belonged to a Connecticut trade organization which was committed to price maintenance in the liquor business. In November, 1936, Continental adopted the policy of obtaining agreements from its distributors to maintain its price schedules and of enforcing observance of these agreements. Libbey & R. C. Williams Corporation, A. Sherman Manufacturing Company, Austin-Nichols, McKesson & Robbins and the plaintiff all wrote letters to Continental agreeing to adhere to its schedule of resale prices. But the plaintiff continued price cutting in spite of this, though the other distributors in general carried out their agreements. Grabuski, the sales manager of Continental for Connecticut, vainly protested to Brochin, who was the plaintiff's president, about this price cutting and told him that the other distributors were objecting. The representative of Austin-Nichols testified that, in December, he had accumulated complaints and was then promised by Grabuski that their "trouble would be over soon." Brochin testified that on January 7 or 8, 1937, Grabuski notified him that Continental had held a meeting with all the distributors and that they and Continental had decided to cut off the plaintiff who was no longer to receive Continental merchandise. Grabuski said: "You are cut off because you didn't abide by the policy of our company, and that is the decision made between all of us," and added that Brochin didn't "know how to make profits." When Brochin asked if there was any chance to be reinstated Grabuski told him that there was no chance, that no distributor would buy of Continental if it reinstated the plaintiff and that he was not going to lose five distributors because of Brochin. Brochin then telephoned Robert A. Smith, the vice president and general sales manager of Continental, at Philadelphia, and requested an interview. Smith agreed to see Brochin in New Haven. He 653 came there on January 18 and told Brochin that he had arranged for a meeting on January 19 because the question of reinstatement was one that he had to decide with all the distributors. The meeting was held on the 19th at the Hotel Taft; representatives of Libbey & R. C. Williams Company, A. Sherman Manufacturing Company and McKesson & Robbins were present, as well as Grabuski and Smith of Continental. Lapides of Austin-Nichols was also at the Taft at that time, though on instructions from his company he did not attend the meeting. He was, however, told the result of it by Grabuski the next day and had talked with Smith about it just after it ended. According to the plaintiff's testimony, Brochin and Rabinowitz, who went to New Haven to obtain reinstatement for the plaintiff, were excluded from the meeting on the motion of the representatives of Libbey and Sherman. After the meeting was concluded Brochin and Rabinowitz were handed their hats by Smith, the plaintiff was not reinstated, and thereafter was never sold any of the Continental brands of liquor. When Smith gave Brochin and Rabinowitz their hats, he remarked: "Well, gentlemen, it was decided that you gentlemen are to be definitely discontinued as our distributors." Defendant's witness, Samuel A. Sherman, the vice-president of A. Sherman Manufacturing Company, testified that the latter's brother Joe had a heated argument with Brochin, just before the meeting was held, and accused Brochin and his salesmen of "secret `kickbacks' that discredited the whole line with the retailers." There was proof that in order to carry out the arrangement to fix prices Continental employed so-called "missionary men" to canvass retail stores and to advise such stores as were found to be selling Continental's brands below the list prices to desist and, if they did not desist, to report them to the distributors, blacklist them and prevent them from buying any more goods. Other means Continental adopted to penalize retailers who refused to conform to the price schedule were to buy out their stocks of Continental goods and to induce newspapers not to carry their advertising. From the membership of all the distributors in a price maintenance trade association, the letters in which each promised to adhere to the price schedules of Continental, the asserted inability of Continental to reinstate plaintiff without the consent of the other distributors, and the meeting of January 19th at which the reinstatement of the plaintiff was refused, it is a reasonable inference: (1) that the defendants agreed at some time in November, 1936, to maintain uniform prices in disposing of Continental's liquors, (2) that when plaintiff was found to be under-cutting and failing to maintain prices, its competitors, Libbey, Sherman, McKesson & Robbins and Austin-Nichols insisted on removing a distributor (to whom in fact they had objected from the beginning) and refused to allow it to be reinstated, and (3) that the defendants entered into a conspiracy to violate the Sherman Act which resulted in the loss to plaintiff of its position as distributor of Continental and deprived it of such profits as it would have realized if it had been allowed to continue its former status. There can be no doubt that an agreement to fix resale prices restrains competition and violates the Sherman Anti-Trust Act, and that there was substantial proof of a conspiracy by the defendants and other distributors to that end and of acts on their part to carry out the illegal agreement. This rule is well settled by repeated decisions. United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 218, 224 note 59, 60 S. Ct. 811, 84 L. Ed. 1129; Ethyl Gasoline Corp. v. United States, 309 U.S. 436, 438, 60 S. Ct. 618, 84 L. Ed. 852; United States v. Trenton Potteries Co., 273 U.S. 392, 397, 47 S. Ct. 377, 71 L. Ed. 700, 50 A.L.R. 989; Federal Trade Commission v. Beech-Nut Co., 257 U.S. 441, 452, 453, 42 S. Ct. 150, 66 L. Ed. 307, 19 A.L.R. 882. Such an agreement is illegal irrespective of the reasonableness of the prices. It necessarily restricts freedom of competition and is contrary to the policy of the Sherman Act. We recently upheld a judgment awarding damages to the present plaintiff against different defendants under facts closely resembling those now before us. Connecticut Importing Company v. Frankfort Distilleries, 2 Cir., 101 F.2d 79. The present situation is not one where Continental indicated that it would not sell to plaintiff in the future if the latter did not observe its price schedules, but one where there was proof of an agreement among the defendants to maintain the schedules and of a conspiracy on their part to exclude plaintiff as a distributor because it failed to keep its bargain. 654 Accordingly, the doctrine announced in United States v. Colgate & Co., 250 U.S. 300, 39 S. Ct. 465, 63 L. Ed. 992, 7 A.L.R. 443, does not apply. Appellants argue that the court erred in allowing the jury to award damages up to the time of the bringing of this action or for so long as the plaintiff remained in business. This criticism is based on the following statement in the charge of Judge Clark, who presided at the trial in the District Court: "If it were proven, and you find it proven, that there was a definite contract for a certain period of time, then the amount of damages might well cover that period. I think that it is only fair to express the comment that it seems to me the general trend of the evidence was not so much to show a definite period of the contract or arrangement, but more one at the will of the parties. This, however, I leave to your recollection and to your finding as to whether there was a definite period or otherwise. If it was not a definite period, then I think you have to consider the amount of damage along the line of a probable expectancy, a kind of expected good will." It is to be observed that no objection was made to the foregoing charge and also that no testimony was offered of damages computed beyond estimated profits which might have been realized up to the date of suit. No objection was made to the admission of these computations as evidence of damages, and the only attack upon them as proof of loss was that plaintiff's scale of earnings, prior to its exclusion as a distributor, did not afford a proper forecast for the value of its expectancy and that in any event its damages should have been limited to the period prior to August 17, 1937, when the Miller-Tydings Act, 15 U.S.C.A. § 1, went into effect and Continental might lawfully have required a price-fixing agreement from its distributors. The wrong the plaintiff suffered occurred when it was excluded as a distributor. Any continuance of the conspiracy beyond that period could have no effect on its right to damages after Continental had once terminated its agency with the joint action of the other defendants. For the reasons we have already given a conspiracy was proved to fix prices on the resale of Continental's brands in violation of the Sherman Act. Under the Miller-Tydings Act which, on August 17, 1937, amended Section 1 of the Sherman Act, it would have been lawful after that date for Continental to make an agreement with the plaintiff "prescribing minimum prices for the resale" of commodities bearing the brand or name of Continental, if such an agreement was lawful under the Connecticut law; and by the Fair Trade Act adopted at the 1937 Session of the Connecticut Legislature an agreement prescribing minimum prices for resale would have been valid. But the Miller-Tydings Act did not relieve the acts of the defendants from illegality. On the contrary, it specifically provided that in spite of the exemption permitting an agreement between a buyer and seller to fix prices it would still be unlawful for distributors of commodities to conspire together to fix prices. This proviso was to the effect that the preceding exemption of contracts, prescribing minimum prices for resale, from the incidence of the Sherman Act did not make lawful any agreement "for the establishment or maintenance of minimum resale prices * * between manufacturers, or between producers, or between wholesalers * * * or between retailers, or between persons, firms, or corporations in competition with each other." In other words the violation of law would not be in the agreement of Continental to fix resale prices, but in the combination of the distributors with one another and with Continental to effect this result. The defendants tortiously caused the plaintiff to lose its right to act as a distributor of Continental. If it had been allowed to continue in that relation it could, after August 17, 1937, have been prevented by Continental from price-cutting. It is quite problematical what effect such prevention would have had upon its net earnings. The question of whether it would have affected its prior scale of profits was left by Judge Clark to the jury. That was the most favorable action the defendants could ask for. Perhaps, as Grabuski said, cessation of price-cutting would have resulted in better earnings. The verdict for less than the amount of earnings estimated on the former scale probably indicated that the jury thought higher prices would have resulted in less profits and also they may have regarded a scale of anticipated earnings based on those of the autumn of 1936 as subject to some discount. Prior to plaintiff's exclusion as a distributor, it had made money from buying and selling the *655 Continental brands. The defendants were wrongdoers and, it seems to us, had the burden of proving that the plaintiff whom they had driven out of business would not have realized the profits it once enjoyed if it had had to charge higher prices to its customers. We have examined the various criticisms by the defendants of the charge and refusals to charge and think them of little moment. The only points of any importance that we have not disposed of in our previous discussion are (1) the instruction to the jury that it might find that the conspiracy had its inception at the meeting of January 19, 1937, and (2) the admission of Brochin's testimony that two nationally known distributors had discontinued the plaintiff as a distributor in January, 1937. While the meeting of the representatives of Continental and the defendant distributors that resulted in barring plaintiff's reinstatement was most important as indicating that they had wrongfully cooperated in discharging it as a distributor, it also showed a joint action on the part of the defendants aimed at preventing its continuance as a distributor and furnished proof of an additional invasion of plaintiff's rights. Brochin's testimony as to the discontinuance of the plaintiff as a distributor by two distillers other than Continental was clearly admissible in reply to matter brought out on his previous cross-examination. We find no error in the conduct of the trial and accordingly the judgment is affirmed.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2401929/	647 F. Supp. 2d 285 (2009) FLIGHT SCIENCES, INC., Plaintiff, v. CATHAY PACIFIC AIRWAYS LIMITED, Defendant. No. 07 Civ. 2830VM. United States District Court, S.D. New York. August 18, 2009. 286 Michael Justin Holland, Anthony U. Battista, Condon and Forsyth LLP, New York, NY, Roderick David Margo, Condon & Forsyth LLP, Los Angeles, CA, for Cathay Pacific Airways Limited. Arthur C. Chambers, Law Offices of Arthur C. Chambers, San Francisco, CA, Hank Louis Goldsmith, Louis M. Solomon, William M. Hart, Proskauer Rose LLP, New York, NY, for Flight Sciences, Inc. DECISION AND ORDER VICTOR MARRERO, District Judge. Plaintiff Flight Sciences, Inc. ("FSI") brought this action against defendant Cathay Pacific Airways Limited ("CPAL") for breach of contract, breach of the covenant of good faith and fair dealing, unjust enrichment, and misappropriation of trade secrets. CPAL now moves for summary judgment pursuant to Federal Rule of Civil Procedure 56 ("Rule 56"), alleging that FSI's claims are barred by the relevant statutes of limitations. For the reasons discussed below, CPAL's motion is DENIED. I. BACKGROUND[1] On April 17, 1997, CPAL and FSI executed a Fuel Conservation Consulting Agreement (the "Agreement"), under which FSI was engaged to undertake an analysis of CPAL's operations and make fuel conservation recommendations to 287 CPAL. Pursuant to the Agreement, CPAL paid FSI a retainer of $50,000 on June 13, 1997, and a second payment of $100,000 on September 10, 1997. The Agreement also entitled FSI to additional payments from CPAL if CPAL's agreed-upon projected net cost savings arising out of FSI's fuel-conservation recommendations reached at least three percent of CPAL's fuel consumption in the first year after the project was completed. Finally, the Agreement stated that "[a]cceptance of the agreed upon cost savings shall not be unreasonably withheld." (Affidavit of Michael J. Holland, dated March 19, 2009, Ex. 4 ("Agreement") ¶ 6.4.) As of March 5, 1998, FSI preliminarily valued the projected net cost savings arising out of its recommendations at $44,084,600 while CPAL valued the projected net cost savings at $3,486,400. On September 9, 1998, FSI provided to CPAL a 300-page book that contained twenty-nine fuel savings recommendations.[2] As of July 7, 1999, FSI valued the projected net cost savings at $40,395,125, while CPAL valued the projected net cost savings at $7,893,368. After September 9, 1998, FSI did not forward any other fuel cost savings recommendations books to CPAL, although FSI did stay in communication with CPAL about fuel savings strategies. Communications between FSI and CPAL continued for at least two more years. FSI and CPAL were never able to agree upon the projected net cost savings attributable to FSI's recommendations produced pursuant to the Agreement. In May 2006, FSI discovered that CPAL implemented several of FSI's recommendations for which FSI believed it was entitled to additional payment under the Agreement. FSI made a demand to CPAL for payment on June 19, 2006, and CPAL refused on July 27, 2006, responding that the recommendations at issue were developed internally by CPAL staff and did not originate with FSI. FSI filed the Complaint on April 9, 2007. CPAL now claims that because the parties never agreed upon CPAL's projected net cost savings arising out of FSI's recommendations, no further payments were due and the Agreement was completed by August 16, 2000, which CPAL asserts was the last time FSI communicated with CPAL about the Agreement until June 19, 2006. CPAL argues that FSI's claims accrued on August 16, 2000, and all of FSI's claims are thus time-barred. FSI counters that (1) neither FSI nor CPAL terminated or abandoned the Agreement, so the date the statute of limitations began to run is a question of fact; and (2) CPAL's commission of wrongful acts warrants equitable tolling of the relevant statutes of limitations. II. DISCUSSION A. LEGAL STANDARD In connection with a Rule 56 motion, "[s]ummary judgment is proper if, viewing all the facts of the record in a light most favorable to the non-moving party, no genuine issue of material fact remains for adjudication." Samuels v. Mockry, 77 F.3d 34, 35 (2d Cir.1996) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-50, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986)). The role of a court in ruling on such a motion "is not to resolve disputed issues of fact but to assess whether there are any factual issues to be tried, while resolving ambiguities and drawing reasonable inferences against the moving party." Knight 288 v. U.S. Fire Ins. Co., 804 F.2d 9, 11 (2d Cir.1986). The moving party bears the burden of proving that no genuine issue of material fact exists or that, due to the paucity of evidence presented by the non-movant, no rational jury could find in favor of the non-moving party. See Gallo v. Prudential Residential Servs., L.P., 22 F.3d 1219, 1223 (2d Cir.1994). B. STATUTE OF LIMITATIONS Under New York law, the statute of limitations for a breach of contract claim is six years. See N.Y. C.P.L.R. § 213(2). "A cause of action for breach of contract ordinarily accrues and the limitations period begins to run upon breach." Guilbert v. Gardner, 480 F.3d 140, 149 (2d Cir.2007) (citing Ely-Cruikshank Co. v. Bank of Montreal, 81 N.Y.2d 399, 599 N.Y.S.2d 501, 615 N.E.2d 985, 986 (1993)). However, "[w]here a contract does not specify a date or time for performance, New York law implies a reasonable time period." Id. (citing Schmidt v. McKay, 555 F.2d 30, 35 (2d Cir.1977); Lituchy v. Guinan Lithographic Co., 60 A.D.2d 622, 400 N.Y.S.2d 158, 159 (App. Div.2d Dep't 1977)). Similarly, claims for breach of the covenant of good faith and fair dealing and for unjust enrichment are also subject to a six-year statute of limitations. See, e.g., Resnick v. Resnick, 722 F. Supp. 27, 38 (S.D.N.Y.1989) (breach of the covenant of good faith and fair dealing); Golden Pac. Bancorp v. FDIC, 273 F.3d 509, 518 (2d Cir.2001) (unjust enrichment). Finally, under New York law, the statute of limitations for a claim for misappropriation of trade secrets is three years. See Architectronics, Inc. v. Control Sys., Inc., 935 F. Supp. 425, 432 (S.D.N.Y.1996) (citing N.Y. C.P.L.R. § 213(4)). "The date upon which a cause of action for misappropriation of trade secrets begins to accrue depends on the nature of the misappropriation alleged." Gurvey v. Cowan, Liebowitz & Latman, PC., No. 06 Civ. 1202, 2009 WL 1117278, at 2 (S.D.N.Y. Apr. 24, 2009). "If a defendant misappropriates and discloses a trade secret, he becomes liable to plaintiff upon disclosure. On the other hand, if the defendant keeps the secret confidential, yet makes use of it to his own commercial advantage, each successive use constitutes a new, actionable tort for the purpose of the running of the Statute of Limitations." Id. (quoting Architectronics, 935 F.Supp. at 433). C. EQUITABLE TOLLING Much of the parties' submissions to the Court focus on whether FSI filed the Complaint prior to the expiration of the statute of limitationsan inquiry that depends upon the date that FSI's claims accrued. The Court need not wade into CPAL's and FSI's arguments regarding when that date occurred; even assuming without deciding that FSI's filing was untimely,[3] there are multiple issues of disputed 289 fact as to whether the statute of limitations should be equitably tolled. CPAL's motion for summary judgment must therefore be denied. The doctrine of equitable tolling is reserved for "`rare and exceptional circumstance[s],'" Zerilli-Edelglass v. New York City Transit Auth., 333 F.3d 74, 80 (2d Cir.2003) (alteration in original) (quoting Smith v. McGinnis, 208 F.3d 13, 17 (2d Cir.2000)), where "a party is `prevented in some extraordinary way from exercising his rights.'" Id. (quoting Johnson v. Nyack Hosp., 86 F.3d 8, 12 (2d Cir. 1996)). A litigant seeking equitable tolling "bears the burden of establishing two elements: (1) that he has been pursuing his rights diligently, and (2) that some extraordinary circumstance stood in his way." Pace v. DiGuglielmo, 544 U.S. 408, 418, 125 S. Ct. 1807, 161 L. Ed. 2d 669 (2005) (citing Irwin v. Department of Veterans Affairs, 498 U.S. 89, 96, 111 S. Ct. 453, 112 L. Ed. 2d 435 (1990)); see also Smith, 208 F.3d at 17. "Equitable tolling is generally considered appropriate in situations where the complainant ... has been induced or tricked by his adversary's misconduct into allowing the filing deadline to pass.'" Jacobsen v. The Stop & Shop Supermarket Co., No. 02 Civ. 5915, 2004 WL 1918795, at 3 (S.D.N.Y. Aug. 27, 2004) (quoting Irwin, 498 U.S. at 96, 111 S. Ct. 453). In other words, equitable tolling "can overcome a statute of limitations defense if the `plaintiff was induced by fraud, misrepresentations or deception to refrain from filing a timely action.'" Sanders v. New York City Dep't of Corrections, No. 07 Civ. 3390, 2009 WL 222161, at 4 (S.D.N.Y. Jan. 30, 2009) (quoting Abbas v. Dixon, 480 F.3d 636, 642 (2d Cir.2007)). In the Complaint, FSI alleges that after it presented its recommendations to CPAL, CPAL delayed the negotiations through which the parties were to agree upon the projected net cost savings of the recommendations. FSI further alleges that, "through its concealment and subsequent wrongful conduct," CPAL "feigned a disinterest in fuel conservation" and purported to reject recommendations that CPAL nonetheless later adopted. (Complaint ¶ 34.) FSI thus alleges that "CPAL purposefully concealed for a period, and for its own wrongful enrichment, the extent to which it had implemented or was going to implement the [FSI] strategies, in order to prevent [FSI] from knowing the extent to which its strategies were going to be used (or in fact were being used) and it was only by happenstance," beginning with the May 17, 2006 press release, "that the truth began to emerge." (Id. ¶ 35.) As one example, FSI contends that it recommended that CPAL reduce the paint on its aircraft in favor of a more polished aircraft design, which FSI projected could save CPAL millions of dollars in weight reduction. On March 5, 1998, CPAL acknowledged to FSI that reducing or eliminating paint would reduce aircraft weight and thus fuel consumption, but rejected the strategy as unacceptable to management from a product and marketing point of view. In the May 17, 2006 press release, however, CPAL stated that it was adopting a "polished fuselage" as a weight reduction strategy, and that the idea had been generated internally by CPAL staff. (Id. ¶ 36.) Upon discovering that CPAL adopted this measure, FSI made a demand 290 for compensation based on a percentage of the fuel savings benefit, as provided in the Agreement, but CPAL rejected the request because it did not see any connection between FSI's recommendations and its own efforts. FSI has submitted to the Court documents that it asserts demonstrate that "CPAL continued to review a number of FSI's recommendations" from 2000-2006, (SMF Opp. ¶ 85), accompanied by examples of recommendations FSI gave to CPAL that CPAL ultimately adopted, (see, e.g., id. ¶¶ 93-103). CPAL also conceded in a deposition that it reviewed FSI's recommendations before receiving the internal staff suggestion to reduce paint. (See id. ¶ 95.) FSI concludes that "[i]t would be particularly inequitable to apply the statute of limitations where, as here, once learning of CPA's duplicity (in May 2006, within the statute of limitations) and after CPAL falsely represented to FSI that its implementation of paint versus polish ... had nothing to do with FSI's recommendations, FSI discovers that CPAL had consulted and utilized FSI's recommendations within the applicable statute of limitations period." (FSI Opp. at 6.) The Court is persuaded that genuine issues of disputed fact exist as to multiple issues, including whether: (1) CPAL feigned disinterest in FSI's recommendations; (2) CPAL intentionally and wrongfully delayed agreement upon the projected net cost savings attributable to FSI's recommendations; (3) CPAL used FSI's recommendations that would have entitled FSI to demand additional payment pursuant to the Agreement; (4) CPAL concealed that it relied upon and used FSI's recommendations; (5) as a result of CPAL's concealment, FSI could not have reasonably known about CPAL's use of its recommendations until the May 17, 2006 press release; (6) after May 17, 2006, while the statute of limitations period was still active, FSI made deliberately false statements intended to mislead and deceive FSI as to its reliance upon FSI's recommendations; and (7) FSI's diligence in pursuing its claims once CPAL's allegedly wrongful acts were discovered. Under these circumstances, and drawing all inferences in FSI's favor, CPAL fails to carry its burden of showing that no rational juror could find that (1) FSI pursued its rights diligently since first becoming aware of CPAL's use of its recommendations, demanding payment within one month and filing this action in less than one year; or (2) "extraordinary circumstances" prevented FSI from filing earlier. Pace, 544 U.S. at 418, 125 S. Ct. 1807. At a minimum, disputed, material facts exist as to whether FSI "was induced by fraud, misrepresentations or deception to refrain from filing a timely action." Abbas, 480 F.3d at 642; see also Independent Order of Foresters v. Donald, Lufkin & Jenrette, Inc., 157 F.3d 933, 942-43 (2d Cir.1998) (reversing district court's grant of summary judgment, holding that "[w]ith both [defendant's] deliberate concealment of the facts necessary to support the claim and [plaintiff's] diligence in pursuing it once discovered thus in genuine issue, the district court erred in deciding the equitable estoppel issue against [plaintiff] as a matter of law"). CPAL argues that the equitable tolling doctrine does not apply here because the parties' exchanges regarding the projected net cost savings all occurred before August 16, 2000, and FSI thus failed to act with reasonable diligence to preserve its rights for six years. However, even if FSI's claims accrued on August 16, 2000 (which, again, is a question of fact), if CPAL, by fraud, misrepresentations, or deception, concealed its use of FSI's recommendations during the statute of limitations period, 291 and if FSI could not have reasonably known about such use, then it may be appropriate to toll the statute of limitations. The determination of these factual predicates must be left to a jury. CPAL further asserts that FSI had three months to file its action within the statute of limitations period after the issuance of the press release in May 2006 and thus FSI was not induced into allowing the filing deadline to pass. However, after becoming aware of the press release, FSI made its first demand for payment on June 19, 2006, to which CPAL did not respond until July 27, 2006. (See SMF Opp. ¶¶ 106, 107). In addition, as discussed above, the parties sharply dispute when FSI's claims accrued in the first placemore facts for the jury to determine. Under these circumstances, particularly given the dispute as to the proper accrual date, CPAL has not sufficiently established that no rational juror could conclude that FSI acted diligently in filing the Complaint. See Independent Order of Foresters, 157 F.3d at 943 (finding plaintiff's due diligence in filing to be an issue of fact precluding summary judgment against equitable tolling). To be clear, the Court is not determining at this point whether FSI has established that it is entitled to equitable tolling of the relevant statutes of limitations. However, there is no doubt that multiple issues of disputed fact exist as to resolving this issue, and on this basis, CPAL's motion for summary judgment must be denied. On a final point, the Court notes that its ruling should come as no surprise to CPAL. When CPAL first notified the Court of its interest in moving for summary judgment, the Court gave the parties an opportunity to set forth their arguments in letter form. At a pre-motion conference on January 30, 2009, and again during a telephone conference on February 18, the Court, having reviewed the parties' contentions in the light of the record then available, offered its preliminary assessment that this litigation seemed replete with factual disputes, and expressed strong skepticism about the likelihood that a motion for summary judgment, even limited to the issue of the statute of limitations, would prevail. Magistrate Judge Frank Maas, who supervised pretrial proceedings, expressed similar reservations, at a conference before him as early as October 10, 2007, about the appropriateness of this case for disposition by summary judgment. This Court endeavored repeatedly to discourage unnecessary motion practice, cautioning of the effect of such a course in prolonging the resolution of the merits and extending the costs of litigation. Nonetheless, CPAL chose to proceed with a motion that, even narrowed to one issue as guided by the Court, produced massive submissions bordering on legal excess. The needless time delays and ensuing costs incurred, both by the parties and by the Court, raise substantial concerns implicating the fair and efficient administration of justice. Of equal moment is that the expenditure of these resources could have been avoided given that CPAL's motion produced nothing more than glaring factual disputes the Court had suggested would surface, as well as legal theories and arguments that the Court had already heard during the pre-motion discussions and that it had strongly signaled were unlikely to succeed. Under these circumstances, it is the Court's view that some form of sanction, such as imposing a fixed monetary penalty or placing the costs of this motion on CPAL and/or its counsel, may be warranted. The Court will thus direct CPAL to show cause why the Court should not so order. See Sassower v. Field, 973 F.2d 75, 292 80-81 (2d Cir.1992); see also Williams v. White Castle Sys. Inc., 526 F. Supp. 2d 830, 834 (M.D.Tenn.2007) (accepting magistrate judge's award of sanctions based, in part, on futility of proceeding with filed motions despite repeated requests for their withdrawal). III. ORDER Accordingly, for the reasons stated above, it is hereby ORDERED that the motion (Docket No. 38) of defendant Cathay Pacific Airways Limited ("CPAL") for summary judgment is DENIED; and it is further ORDERED that CPAL is directed to show cause why the Court should not impose sanctions against CPAL and/or its counsel in connection with the denial of this motion under the circumstances described in the Court's decision. The parties are directed to appear at a final pretrial conference on September 17, 2009 at 11:45 a.m. to schedule a date for trial and related preparations. SO ORDERED. NOTES [1] The factual summary below is derived from FSI's complaint in this action, dated April 9, 2007 (the "Complaint"); Memorandum of Law in Support of Cathay Pacific Airways Limited's Motion for Summary Judgment, filed March 20, 2009 ("CPAL Mem."); Defendant's Statement of Undisputed Facts Pursuant to Local Rule 56.1, dated March 19, 2009 ("SMF"); Memorandum of Law in Opposition to Defendant's Motion for Summary Judgment, dated April 3, 2009 ("FSI Opp."); Plaintiff's Rule 56.1 Response and Statement of Facts, dated April 3, 2009 ("SMF Opp."); and Reply Memorandum of Law in Support of Cathay Pacific Airways Limited's Motion for Summary Judgment, dated April 9, 2009 ("CPAL Reply"). Except as quoted or otherwise cited, no other specific reference to these documents will be made. [2] FSI argues that the book was labeled an "interim report" and that FSI never characterized these recommendations as its final recommendations. [3] The Court notes, however, that the timeliness arguments are not necessarily well-suited for summary judgment. For example, because the Agreement does not specify a time by which the parties must agree upon the projected net cost savings attributable to FSI's recommendations, a claim for unreasonably withholding agreement would accrue upon the expiration of a "reasonable time period." Ely-Cruikshank, 599 N.Y.S.2d 501, 615 N.E.2d at 986. However, "the determination of what is a reasonable time is usually a question of fact." Wexselblatt v. Bank of Boston Int'l, 666 F. Supp. 513, 516 (S.D.N.Y. 1987) (quoting Southard v. Alford, 50 A.D.2d 664, 374 N.Y.S.2d 832, 834 (App. Div.3d Dep't 1975)). In addition, if CPAL's obligations under the Agreement continued beyond August 16, 2000 because the Agreement was not terminated or abandoned, then CPAL's breach arguably occurred upon CPAL's first use of the recommendations without payment, the determination of which is yet another question of fact. As to the trade secret misappropriation claim, "each successive use constitutes a new, actionable tort for the purpose of the running of the Statute of Limitations," Architectronics, 935 F.Supp. at 433, and the dates of CPAL's alleged uses of FSI's trade secrets are questions of fact.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2135824/	978 F. Supp. 806 (1997) Marsha SMITH, Plaintiff, v. Jesse BROWN, Secretary of the Department of Veterans Affairs, Defendant. No. 95 C 5282. United States District Court, N.D. Illinois, Eastern Division. September 26, 1997. 807 808 Rick Allan White, Chicago, IL, for Plaintiff. Marsha Smith, Chicago, IL, pro se. Young B. Kim, U.S. Attorney's Office, Chicago, IL, for Defendant. MEMORANDUM OPINION AND ORDER BUCKLO, District Judge. The plaintiff, Marsha Smith, brought suit against the defendant, Jesse Brown, the Secretary of her employer, the Department of Veterans Affairs, alleging violations of Title VII. The defendant moved for summary judgment. For the following reasons, the motion is granted. I.[1] Ms. Smith works for the defendant's West Side Medical Center in Chicago, Illinois ("West Side"). She began her employment in 1984 as a clerk-typist; in 1985, Ms. Smith was promoted to the position of secretary/typing, grade GS-5; and in 1990, the plaintiff became a secretary of the Chief of Police and Security Service ("PSS") at West Side. On August 1992, James Curry became the Chief of PSS at West Side. Smith's immediate supervisor during the relevant time period was Richard E. Green, the Assistant Chief of PSS. On March 3, 1994, Ms. Smith contacted an Equal Employment Opportunity ("EEO") Counselor, Patricia Dawson, and complained 809 about Mr. Curry's use of profanities and his habit of touching her. On the same day, Ms. Dawson relayed to Mr. Curry Ms. Smith's complaint. Mr. Curry ceased all physical contact immediately. After complaining to Ms. Dawson, Ms. Smith received several written work directives authored by Mr. Green and prompted by Mr. Curry. Mr. Curry also requested that she twice copy her files onto diskettes and twice retrieve certain documents from the Personnel Dispensary. On June 3, 1994, not being able to reach an informal resolution of the conflict, Ms. Dawson advised Ms. Smith of her right to file a formal complaint with the Department of Veterans Affairs. Ms. Smith filed such a complaint on June 17, 1994 ("June 17, 1994 complaint"), complaining of sexual harassment and retaliation. On September 14, 1994, the defendant assigned an EEO Investigator to investigate Ms. Smith's complaint, who interviewed the plaintiff on October 3 and 5. Ms. Smith indicated to Ms. Dawson and in her June 17, 1994 complaint that she wished to be transferred out of PSS. Bernadette Biskup, the Acting Associate Medical Center Director, transferred Ms. Smith first, to the Planning and Data Management ("PDM") Division; second, to the Office of Rehabilitation and Medicine ("ORM"); and finally, to the Veterans Resource Center ("Veterans Center"). During the same time period, Ms. Smith applied for but was denied promotions to the following two GS-6 level positions: Program Clerk at the Education Service ("Program Clerk") and Program Assistant at the Woman's Veterans Program ("Program Assistant"). Believing these denials to be retaliatory, Ms. Smith again complained to an EEO Counselor and filed another complaint with the Department of Veterans Affairs on June 22, 1995 ("June 22, 1995 complaint"). Ms. Smith's three-count Second Amended Complaint charges the defendant with sexual harassment perpetrated by Mr. Curry (Count I) and with retaliation for complaining about the harassment (Count II and III). Ms. Smith claims that the written work directives, "redundant" work tasks, "menial" temporary assignments, and the denial of promotions constitute retaliation. The defendant has moved for summary judgment on all counts. II.[2] I. SEXUAL HARASSMENT Title VII protects employees from employers who "discriminate against an[] individual ... because of such individual's ... sex." 42 U.S.C. § 2000e-2(a)(1). A form of "sex" discrimination is sexual harassment. Meritor Sav. Bank, FSB v. Vinson, 477 U.S. 57, 64-66, 106 S. Ct. 2399, 2404-05, 91 L. Ed. 2d 49 (1986). To prove sexual harassment, the plaintiff must show (1) that the harassing conduct was motivated by her gender and (2) that the conduct created a hostile working environment. Galloway v. General Motors Serv. Parts Operations, 78 F.3d 1164, 1167-68 (7th Cir.1996); Doe v. R.R. Donnelley & Sons Co., 42 F.3d 439, 443 (7th Cir.1994). A hostile working environment exists if the defendant's conduct is "sufficiently severe or pervasive to alter the conditions of [her] employment and create an abusive work environment." Koelsch v. Beltone Elecs. Corp., 46 F.3d 705, 708 (7th Cir.1995) (quotation omitted). Ms. Smith complains that Mr. Curry used terms such as "son of a bitch" and "thumbs up their butts," while talking to male police officers in the vicinity of the plaintiff's work space. Speech that has sexual overtones does not automatically violate Title VII. Doe, 42 F.3d at 443. The comments at issue here were not directed at the plaintiff. Ms. Smith does not argue that Mr. Curry deliberately spoke the profanities within her hearing. Vulgar banter of the sort engaged in by Mr. Curry, although offensive and unpleasant, is not sufficiently severe to constitute sexual harassment. Baskerville v. Culligan Int'l Co., 50 F.3d 428, 430-31 (7th Cir.1995). Ms. Smith also complains that Mr. Curry touched her shoulders, hands, and arms. 810 The defendant contends that Mr. Curry's physical contact with Ms. Smith was not motivated by her gender. In support, it furnishes affidavits of male employees, stating that Mr. Curry touched them on arms and shoulders in the course of conversations. However, the male employees use the term "touching," while Ms. Smith uses the term "rubbing and/or massaging" to describe the physical contact. Ms. Smith also complains of Mr. Curry's staring at her chest.[3] Drawing all inferences in favor of Ms. Smith, a rational fact finder could find that the above conduct was motivated by Ms. Smith's gender. Whether a working environment is "hostile" is determined by "evaluating all of the circumstances, including the frequency of the discriminatory conduct, its severity, whether it is physically threatening or humiliating, and whether it unreasonably interferes with the worker's performance." McKenzie v. Illinois Dept. of Transp., 92 F.3d 473, 479-80 (7th Cir.1996) (quotation omitted). The court must evaluate the relevant factors from both an objective and a subjective viewpoint.[4]Id. at 480. "[R]elatively isolated instances of non-severe misconduct will not support a hostile environment claim." Saxton v. American Tel. & Tel. Co., 10 F.3d 526, 533 (7th Cir.1993) (quotation omitted). Here, Ms. Smith and Mr. Curry were in daily contact for a two-year period. During that period, from mid-January to February 1994, Ms. Smith says that she experienced Mr. Curry's unwelcome touching and staring three to four times a week. That is sufficient to find a question of fact as to whether Mr. Curry's conduct created a hostile environment. Ms. Smith's sexual harassment claim must fail, however, because the defendant took steps to rectify the situation. The defendant is responsible for Mr. Curry's conduct only if it "knew or should have known about [Mr. Curry's] acts of harassment and fail[ed] to take appropriate remedial action." McKenzie, 92 F.3d at 480. Accord Jansen v. Packaging Corp. of Am., 123 F.3d 490, 498-99, 505-07 (7th Cir.1997) (en banc). The defendant must have responded in a manner "reasonably calculated to prevent further harassment under the particular facts and circumstances of the case at the time the allegations [we]re made." McKenzie, 92 F.3d at 480. The reasonableness of the action depends upon the gravity of the alleged harassment. Baskerville, 50 F.3d at 432. Ms. Smith complained to Ms. Dawson, the defendant's EEO Counselor, about Mr. Curry's offensive conduct on March 3, 1994. Ms. Dawson contacted Mr. Curry on the same day and apprised him of the situation. It is undisputed that Mr. Curry immediately ceased all physical contact with Ms. Smith. Thus, the defendant's response was reasonable and effective. Having taken "prompt and appropriate remedial action," the defendant discharged its legal duty towards Ms. Smith. Id. Defendant's summary judgment motion is granted with respect to Count I. II. RETALIATION Title VII makes it unlawful "for an employer to discriminate against any of his employees ... because [s]he has opposed any practice made an unlawful practice by [Title VII]." 42 U.S.C. § 2000e-3(a). Ms. Smith claims that the defendant retaliated against her because she complained about Mr. Curry's sexual harassment. Ms. Smith identifies the following retaliatory employment actions: (1) written work directives; (2) "redundant" work tasks; (3) three "menial" temporary assignments; and (4) a denial of promotions to two GS-6 level positions. 811 A. Adverse Employment Action Retaliatory employment actions must be materially adverse to be actionable. Rabinovitz v. Pena, 89 F.3d 482, 488 (7th Cir.1996). "[A]dverse job action is not limited solely to loss or reduction of pay or monetary benefits." Collins v. State of Illinois, 830 F.2d 692, 703 (7th Cir.1987). It may be "indicated by ... a demotion evidenced by a decrease in wage or salary, a less distinguished title, a material loss of benefits, significantly diminished material responsibilities, or other indices that might be unique to a particular situation." Crady v. Liberty Nat'l Bank & Trust Co., 993 F.2d 132, 136 (7th Cir.1993). The employment action must be "more disruptive than a mere inconvenience or an alteration of job responsibilities." Id. "[N]ot everything that makes an employee unhappy is an actionable adverse action." Smart v. Ball State Univ., 89 F.3d 437, 441 (7th Cir.1996). Ms. Smith reports receiving four written work directives one on March 3, 1994, immediately after Ms. Smith complained to Ms. Dawson, one on March 16, 1994, and two on March 17, 1994. She also says that Mr. Curry requested that she twice copy her hard drive onto diskettes, and twice retrieve copies of certain documents from the Personnel Dispensary. Neither the written work directives nor the "redundant" work tasks amount to materially adverse employment actions. The written work directives explained assignments and set completion dates. The tasks, even if redundant,[5] were, at most, an inconvenience. B. Direct Evidence of Retaliation A plaintiff who asserts a claim of retaliation under Title VII may proceed under one of two methods: the "direct evidence" analysis, Price Waterhouse v. Hopkins, 490 U.S. 228, 244-45, 109 S. Ct. 1775, 1787-88, 104 L. Ed. 2d 268 (1989), or the "burden-shifting" approach. McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802-04, 93 S. Ct. 1817, 1824-25, 36 L. Ed. 2d 668 (1973). Under the former method, the employee must proffer direct evidence that retaliatory motives played a substantial role in the employer's adverse employment action. Larsen v. Club Corp. of Am., Inc., 855 F. Supp. 247, 252-56 (N.D.Ill.1994) (applying Price Waterhouse method to retaliation claim). The employee ultimately succeeds, unless the employer can show it would have taken the same action in the absence of such motives. Id. Ms. Smith argues that she has direct evidence of retaliation. She refers to a telephone conversation in which she says Mr. Green told her that Mr. Curry was trying to force her to quit PSS. As the defendant argues, the telephone conversation, which Ms. Smith tape-recorded, is open to different interpretations. Interpreting it in Ms. Smith's favor, it is evidence that Mr. Curry's actions towards Ms. Smith prior to her transfer out of PSS, discussed above, were retaliatorily motivated. However, "[a]n employee's ... `direct evidence' ... must ... relate to the specific employment decision in question." Oates v. Discovery Zone, 116 F.3d 1161, 1170 (7th Cir.1997). Mr. Curry was not responsible for the two employment actions which can be deemed materially adverse: detailing Ms. Smith to three "menial" temporary positions and failing to select her for the GS-6 level positions for which she applied. The telephone conversation provides no direct evidence that the ultimate decision-makers shared Mr. Curry's motive. Therefore, the telephone conversation cannot be offered as direct evidence of retaliation.[6] C. Burden-Shifting Method Ms. Smith also relies on the McDonnell Douglas "burden shifting" method. Under this method, the employee must first establish a prima facie case of retaliation. To establish a prima facie case of retaliation, Ms. Smith must show (1) that she engaged in a statutorily protected expression; (2) that she suffered an adverse action by her employer; 812 and (3) that there is a "causal link" between her protected expression and the adverse action. Dey v. Colt Constr. & Dev. Co., 28 F.3d 1446, 1457 (7th Cir.1994). Once the plaintiff has made out her prima facie case, the employer must articulate a legitimate, non-retaliatory reason for its adverse action. The burden then shifts back to the plaintiff to create a genuine issue of material fact that the offered reason was merely pretextual. Id. 1. Temporary "Menial" Assignments Ms. Smith complains that the temporary positions to which Ms. Biskup, the Acting Associate Medical Center Director, transferred her first, to PDM, next, to ORM, and finally, to the Veterans Center were below her skill and grade levels, while there was a permanent secretarial position available at the office of the Chief of Psychology Service. Ms. Biskup knew of Ms. Smith's complaint. Thus defendant concedes that the plaintiff has shown a prima facie case with respect to the three temporary assignments. The defendant has provided a legitimate, non-retaliatory reason for the nature of Ms. Smith's assignments. It is undisputed that Ms. Biskup transferred Ms. Smith out of PSS because Ms. Smith indicated that she no longer wanted to work there. Pursuant to the defendant's standard procedure, Ms. Smith was placed in a "pool" of employees in need of new positions. These employees were expected to "pitch in and help out" wherever necessary, and were therefore "detailed" to fill the temporary needs of the departments Ms. Biskup staffed. Ms. Smith attempts to show that although the defendant treated her in accordance with its standard procedure, the defendant's reasons are pretextual, and Ms. Biskup was really motivated by retaliation. The fact that Ms. Smith was required to perform clerical, rather than secretarial, tasks does not raise an inference of pretext. Ms. Smith was in need of a new position and the departments to which she was assigned were in need of the type of assistance Ms. Smith was able to provide. The temporary positions affected neither her grade level nor her salary. Ms. Smith also says that she was not, in fact, needed at ORM because the permanent secretary was in the office during the plaintiff's "detail." This evidence does not undermine the defendant's proffered reason. The defendant said that ORM needed help due to a secretary's illness. Secretaries perform a variety of tasks and this secretary's illness may have affected her ability to fulfill the typing needs of the department. In keeping with the defendant's standard procedure, Ms. Smith was assigned to ORM to aid them with typing.[7] Ms. Smith also says that a permanent position comparable to the one she held at PSS was available in the office of the Chief of Psychology Service, and that Ms. Biskup should have transferred the plaintiff to that position. The defendant says that Ms. Biskup did not have the authority to take a person from the "pool" of available employees and place him or her in that vacancy. Ms. Smith insists that the defendant had the authority to override the competitive selection process and place her in that position. (Smith Aff. ¶ 14.) The plaintiff does not indicate which of the defendant's decision-makers had such authority or how she knows that such an override was possible. At any rate, it is undisputed that Dr. George Meschel was responsible for staffing the Department of Psychology. Dr. Meschel states that he received a list of qualified candidates from the Human Resource Management Service and chose the best qualified individual. Ms. Smith does not claim that Dr. Meschel's decision was tainted by the retaliatory motive. Therefore, the plaintiff cannot create a genuine issue of material fact with respect to pretext concerning the nature of the three *813 temporary positions to which she was transferred. 2. Denied Promotions Ms. Smith applied for but was denied promotions to two GS-6 level positions, Program Clerk and Program Assistant.[8] The defendant concedes that Ms. Smith satisfies the first two elements of her prima facie case. As to the third element, the "causal link" between the protected expression and the adverse employment action, the plaintiff must demonstrate that the adverse action would not have occurred "but for" the protected expression. McKenzie, 92 F.3d at 483. Thus, the party responsible for the action must be aware of the protected expression. Dey, 28 F.3d at 1458. The officials responsible for selecting the Program Clerk and the Program Assistant state that they were unaware of Ms. Smith's complaint against Mr. Curry at the time they made their selections. Ms. Smith counters that her complaint against Mr. Curry undoubtedly surfaced during the selection procedure, and that Mr. Curry "would have been contacted and ... would have tainted any possibility of her selection." (Smith.Aff. ¶ 23.) Ms. Smith's belief is insufficient to raise a genuine issue of material fact as to the existence of a "causal link" between her complaint and the decisions to deny her the Program Clerk and the Program Assistant positions.[9]See Johnson v. University of Wis.-Eau Claire, 70 F.3d 469, 480 (7th Cir. 1995). Consequently, her prima facie case for retaliation fails with respect to the denied promotions.[10] Conclusion For the reasons stated above, the defendant's summary judgment motion is granted. NOTES [1] The following facts are undisputed. [2] The standard for summary judgment is well known and will not be repeated here. [3] Ms. Dawson's report does not reflect Ms. Smith's complaint that Mr. Curry stared at her chest. Ms. Smith says that she does not remember whether she advised Ms. Dawson about that practice. [4] Ms. Smith stresses that the objective inquiry is to be conducted from the perspective of a reasonable woman, as opposed to a genderless person. Although other circuits have agreed with her proposition, see, e.g., Burns v. McGregor Electronic Indus., Inc., 989 F.2d 959, 962 n. 3 (8th Cir.1993); Ellison v. Brady, 924 F.2d 872, 878-79 (9th Cir.1991), the Seventh Circuit has not yet decided this question. Saxton, 10 F.3d at 534 n. 13. The result of my analysis is the same under either standard. [5] The defendant disputes that the tasks were redundant. [6] The evidence of Mr. Curry's retaliatory motive may nevertheless be relevant insofar as that motive may have tainted the materially adverse employment actions of other decision-makers. [7] Ms. Smith insists that Ms. Biskup's actions were retaliatory because "Biskup ... is believed to reside with one of [Mr.] Curry's relatives and it [is] a matter of common knowledge ... that [Mr.] Curry and [Ms.] Biskup are good friends." (Smith Aff. ¶ 18.) At a hearing on August 12, 1997, I gave plaintiff until September 10, 1997 to provide the court with any supplemental material that might substantiate this statement with non-hearsay evidence. Plaintiff did not do so. [8] Ms. Smith withdrew her allegation that she was retaliatorily denied a promotion to the position of Program Clerk at the Veterans Center. [9] The plaintiff may establish the "causal link" by providing evidence that the adverse employment action took place "on the heels" of the protected expression. Dey, 28 F.3d at 1458 (firing within four weeks of complaint establishes causal link). Ms. Smith does not argue that the temporal proximity of her complaint, March 3, 1994, and her failure to be selected for the two positions establishes the "causal link." The record shows that Ms. Smith applied for the Program Clerk position in June 1994, which was filled in December 1994. (Def.'s Ex. 37, 38.) Ms. Smith applied for the Program Assistant position in August 1994, which was filled in November 1994. (Def.'s Ex. 40, 41.) At a hearing on August 12, 1997, I gave Ms. Smith until September 10, 1997 to take additional depositions and to provide any evidence that the officials responsible for selecting the Program Clerk and the Program Assistant contacted Mr. Curry or anyone else from whom they might have learned of her complaint. She did not do so. [10] Even if Ms. Smith was able to make out her prima facie case, the defendant offers legitimate reasons for not selecting Ms. Smith. Although Ms. Smith was deemed qualified, the decision-makers affirmed that they selected the best qualified candidates. Ms. Smith cannot create a factual issue of pretext because she offers the same conjecture she did to establish the "causal link."	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2469639/	764 F. Supp. 2d 761 (2011) Robert J. ENGLAND, et al., Plaintiffs, v. MARRIOTT INTERNATIONAL, INC., et al., Defendants. Case No. RWT 10cv1256. United States District Court, D. Maryland. February 14, 2011. 763 George A. Zelcs, Korein Tillery LLC, Chicago, IL, Mark Robert Leventhal, William Herbert Bode, Bode and Grenier LLP, Washington, DC, Michael E. Klenov, Steven Arthur Katz, Korein Tillery LLC, St Louis, MO, Timothy Francis Maloney, Joseph Greenwald and Laake P.A., Greenbelt, MD, for Plaintiffs. Benjamin David Schuman, Charles P. Scheeler, Ian Cameron Taylor, DLA Piper LLP US, Mark Muedeking, Piper Rudnick LLP, Baltimore, MD, for Defendants. MEMORANDUM OPINION ROGER W. TITUS, District Judge. This putative class action involves ERISA claims by former employees of Marriott International, Inc. and its predecessor companies, who worked for Marriott for various periods from 1966 to 1991. Plaintiffs allege that they were given Retirement Deferred Stock Bonus Awards ("Retirement Awards") during their employment but Defendants have failed to pay retirement benefits under these awards, despite the fact that Plaintiffs have since reached retirement age. Further, Plaintiffs allege that the terms of the Awards violate ERISA and therefore must 764 be reformed to comply with ERISA's minimum vesting requirements. Defendants filed a motion to dismiss Plaintiffs' First Amended Complaint on August 20, 2010, arguing that the Amended Complaint must be dismissed because (1) Plaintiffs claims are time-barred; (2) Plaintiffs failed to exhaust their administrative remedies; (3) Plaintiffs may not simultaneously pursue claims under ERISA Sections 502(a)(1)(B) and 502(a)(3); and (4) Count I fails to state a claim as to employees who terminated employment with Defendants and their corporate predecessors before ERISA's enactment. Defendants also argue that Plaintiffs' claim for breach of contract is preempted by ERISA. The Court heard oral argument on December 20, 2010. For the reasons that follow, Defendants' motion to dismiss will be granted in part and denied in part. BACKGROUND FACTS Plaintiffs Robert England, Dennis Bond, Lewis Foster, and Douglas Craig (collectively "Plaintiffs") worked for various corporate predecessors of Defendant Marriott International, Inc., including Marriott-Hot Shoppes, Inc., Marriott Corporation and their subsidiaries. Am. Compl. ¶ 1, ECF No. 39-1. During their employment, Plaintiffs received Retirement Deferred Stock Bonus Awards ("Retirement Awards") which promised to issue stock to the recipients when they turned 65, took early retirement, became permanently disabled or died. Id. The four named plaintiffs in this action are recipients of Retirement Awards from Defendant Marriott International, Inc.'s various corporate predecessors. Plaintiff England, who worked for Marriott-Hot Shoppes and/or Marriott Corporation from 1966 through January 9, 1970, alleges he received Retirement Awards in 1966 and 1967 from Marriott-Hot Shoppes and in 1968 from Marriott Corporation. Id. ¶ 50. Plaintiff Bond was employed by Marriott Corporation from 1971-1991, during which time Marriott Corporation issued him "a number of Retirement Awards." Id. Plaintiff Foster was employed by Marriott Corporation from September 1974 to November 1976, during which time he received "at least one Retirement award," id. ¶ 69, and Plaintiff Craig was employed by Marriott Corporation from 1977-1987, during which time the company issued him "a number of Retirement Awards." Id. ¶ 74. Each plaintiff alleges that he only received a paper copy of the Retirement Award at the time the award was given, that the paper award apprised him of the number of shares of Marriott-Hot Shoppes or Marriott Corporation stock he had been awarded along with the terms and conditions governing accrual, vesting, and eventual distribution of stock, and that he did not receive any additional information in the form of plan documents or Summary Plan Descriptions thereafter. Id. ¶ 51, 60, 70, 75. Plaintiff England's awards indicated that his shares would vest "pro rata" while Plaintiff Bond's Retirement Awards provided that his shares would vest on a pro-rata annual basis. Id. ¶¶ 57, 61. All four named plaintiffs have since turned 65 and Defendants have not contacted them to inform them of their entitlement to distributions under their Retirement Awards. Id. ¶¶ 53, 68, 73, 75, 78. At the time the employees received their Retirement Awards, they became participants in the Marriott-Hot Shoppes, Inc. Deferred Stock Bonus Plan or the Marriott Corporation Deferred Stock Plan. Id. ¶ 1. Plaintiffs allege that the Marriott International, Inc. Stock and Cash Incentive Plan, a Defendant in this action, subsequently assumed all obligations under the Retirement Awards and is failing to honor 765 its obligations because it has not issued stock to Award recipients or has issued them less stock than that to which they are entitled. Id. Marriott-Hot Shoppes issued Retirement Awards to employees between 1963 and 1968, at which time Marriott-Hot Shoppes changed its name to Marriott Corporation, id. ¶ 11, and Marriott Corporation issued Retirement Awards to its employees between 1968 and 1993. Id. When they received their Retirement Awards from Marriott-Hot Shoppes, recipients became participants in the Marriott-Hot Shoppes, Inc. Deferred Stock Bonus Plan. Id. ¶ 12. When Marriott-Hot Shoppes became Marriott Corporation, the recipients of prior awards became participants in the Marriott Corporation Deferred Stock Plan, along with recipients of awards from Marriott Corporation. Id. The Retirement Awards provided that the awarded shares would vest pro-rata during the course of the recipient's employment until company approved early retirement, retirement at age 65, disability or death. Id. ¶ 17. Employees who had vested in any portion of their Retirement Awards remained participants in the Deferred Stock Plan even if they terminated employment with the company. Id. ¶ 15. The accrual terms of the Retirement Awards provided that awarded shares would participate, until final payout, in dividends, stock splits, spin-offs and reclassifications of the Marriott-Hot Shoppes/Marriott Corporation stock in order to prevent dilution of the shares from market transactions. Id. ¶ 18. The distribution terms of the Retirement Awards provided that vested stock would be distributed to recipients over a ten year period following retirement, disablement, death, or age 65. Id. ¶ 19. The Retirement Awards contained a number of conditions, including that the employee's shares, including vested shares, would be forfeited if the recipient failed to maintain a valid current address with the Plan Administrator, competed with any Marriott business after retirement or termination, or committed any criminal offense or malicious tort against the company. Id. ¶ 20. The Retirement Awards did not contain a provision reserving for Marriott companies or the Plan administrator the discretion to interpret the terms of the Retirement Awards. Id. ¶ 21. Plaintiffs allege that after the passage of ERISA, which became effective in 1976, the Retirement Award program became subject to and governed by ERISA's provisions, which govern "employee pension benefit plans" and "pension plans" as defined by 29 U.S.C. § 1002(2)(A). Id. ¶ 23. Plaintiffs further allege that the Retirement Awards were given to a large portion of the salaried workforces of Defendants' predecessor companies and were not limited to a subgroup of employees at one compensation level. Id. ¶ 24. Despite the fact that the Retirement Awards were subject to ERISA, Defendants and their predecessor companies never informed Plan participants, the Department of Labor or the IRS that the Retirement Award program was an ERISA-governed plan. Id. ¶ 25. Defendants never complied with the reporting and disclosure requirements or the vesting schedule mandated by ERISA. Id. ¶ 26. In 1993, Marriott Corporation underwent a reorganization, spun off of its subsidiaries into a new company called Marriott International, Inc., and renamed the remaining company Host Marriott Corporation. Id. ¶ 27. As part of the reorganization, Marriott International, Inc. agreed to assume the obligations and liabilities for the Retirement Awards issued by Marriott-Hot Shoppes and Marriott Corporation to three classes of individuals: (1) former employees of Marriott-Hot Shoppes or Marriott Corporation who left 766 the company before the 1993 reorganization; (2) former employees of either of these companies who became employees of Marriott International, Inc.; and (3) former employees of either of these companies who became employees of Host Marriott Corporation and elected to receive their future benefits under their Retirement Awards in the form of Marriott International, Inc. stock. Id. ¶¶ 27-28. The Retirement Awards assumed under this arrangement were converted to provide recipients with benefits in the form of Marriott International, Inc. stock. Id. ¶ 29. These awards were called 1993 Conversion Awards. Id. Immediately after its spin-off, Marriott International, Inc. established the Marriott International Inc. 1993 Comprehensive Stock Incentive Plan. Id. ¶ 30. Marriott International agreed to administer and distribute benefits under the 1993 Conversion Awards in accordance with the terms of the original Retirement Awards and the terms of the old Deferred Stock Plan that had existed under Marriott-Hot Shoppes and later Marriott Corporation. Id. Employees who were not employed by the predecessor companies in 1993 were not informed of or provided documents addressing the transfer of the former Deferred Stock Plan to Marriott International, Inc., nor were they informed of the conversion of their Retirement Awards into 1993 Conversion Awards or their options arising from reorganization. Id. ¶ 31. In other words, Marriott International Inc. did not proactively communicate with former employees who had received Retirement Awards regarding the impact of the reorganization on their retirement benefits. Id. ¶ 32. After the 1993 reorganization, Marriott International, Inc. did not have a written or formal claims procedure for benefits due under the Retirement Awards, or an appeals procedure for the denial of benefits due under Retirement Awards. Id. Plaintiffs allege Marriott International, Inc. also continued to conceal from Plan participants, the Department of Labor and the IRS that the Retirement Award program was governed by ERISA. Id. In 1998, Marriott International, Inc. underwent a second reorganization that resulted in the spin-off of a new company, also called Marriott International, Inc., which is a Defendant in this lawsuit. The remaining company was renamed Sodexho Marriott Services, Inc. ("Sodexho") Id. ¶ 33. The new Marriott International, Inc. again agreed to assume the obligations and liabilities for the Retirement Awards issued by its predecessor companies, except with regard to recipients who became Sodexho employees. Id. ¶ 34. Employees who had previously received Retirement Awards who became part of Sodexho were issued all vested shares due to them under the Retirement Awards prior to the 1998 reorganization, and were issued cash for shares under the Retirement Awards that had not yet vested. Id. ¶ 35. The Retirement Awards for which the new Marriott International, Inc. assumed obligations of its predecessor were converted to provide Retirement Award recipients with benefits in the form of stock of the new Marriott International, Inc. Id. ¶ 36. Twenty-one million shares of both Marriott common stock and Marriott A common stock were reserved in order to satisfy the company's obligations under the "1998 Conversion Awards." Id. The new Marriott International, Inc. established the Marriott International, Inc. 1998 Comprehensive Stock and Cash Incentive Plan, which eventually became the Marriott International, Inc. Stock and Cash Incentive Plan, the second Defendant in this action. Id. ¶ 37. The new company agreed to administer and distribute benefits under the 1998 Conversion Awards in accordance with the terms of the original Retirement Awards and the terms of the Marriott-Hot Shoppes/Marriott 767 Corporation Deferred Stock Plans. Id. Plaintiffs allege that recipients of Retirement Awards not employed by Defendant at the time of the 1998 reorganization were not informed of or provided documents addressing the conversion of their awards or their options arising from the reorganization. Id. Plaintiff England turned 65 on March 30, 2006 and shortly thereafter made an informal inquiry regarding his benefits under the Retirement Awards. Id. ¶ 53. Tracy Vance, Manager of Stock Plan Operations for Defendant Marriott International, Inc. responded to England by a letter in which Vance conceded that some shares of stock associated with the Retirement Awards had vested prior to England's separation from Marriott Corporation in 1970, but refused to issue him any stock on the basis of a purported "plan practice" in 1970 of distributing accounts valued under $3,500 at the time of separation from employment. Id. ¶ 55. Plaintiffs allege that this plan practice did not come into effect until some two decades after England separated from the company. Id. England's attorney responded to Vance's letter by making a formal demand for stock owed England under the Retirement Awards. Id. ¶ 56. In its response to that letter, Marriott acknowledged that England had never received a distribution in 1970, and offered to distribute stock to England if he signed a release of all claims against Defendant Marriott and its predecessors. Id. at ¶ 57. Marriott offered England adjusted vested shares based on its calculation that 3.41 shares had vested to England's benefit before his separation from Marriott Corporation. Id. This calculation was based on Marriott's interpretation that the vesting provision in England's Retirement Awards called for annual vesting. Id. England refused the offer and argued that the term "pro rata" vesting meant monthly, not annual, vesting. Id. at ¶ 58. Marriott, through Vice President and Senior Counsel Gordon Klepper, responded to England stating that Marriott's stock award administrator had always maintained sole authority to interpret the terms of the stock awards, and that the administrator had consistently applied annual vesting for all Deferred Stock bonus awards. Id. at ¶ 59. Defendant Marriott International, Inc. controls Defendant Marriott International, Inc. Stock and Cash Incentive Plan, and Plaintiffs allege that Defendants are liable for (1) failing to bring the Retirement Awards distribution plan into compliance with ERISA; (2) failing to proactively distribute retirement benefits to Award recipients who have become eligible for distribution; (3) failing to communicate with or distribute necessary documentation to recipients of Retirement Awards regarding the impact of corporate reorganizations on their benefits; (4) maintaining a policy of denying that they had any obligation or liability to distribute benefits to Retirement Award recipients; (5) distributing stock due to Retirement Award recipients in a manner violative of ERISA and the terms of the Retirement Awards; (6) failing to establish a formal or written claims procedure or appeals procedure for denial of Retirement Award benefits; and (7) improperly calculating distributions to Retirement Award recipients. Am. Compl. ¶¶ 41-49. Defendants did not implement a formal or written claims procedure, or an appeals procedure for the denial of benefits due under the Retirement Awards, until March 3, 2010, after Plaintiffs had instituted this lawsuit. Am. Compl. Ex. A at 6. ECF No. 42-2. The First Amended Complaint contains three counts: Count I alleges that the vesting scheme established in Plaintiffs' 768 Retirement Awards violates the minimum vesting requirements of 29 U.S.C. § 1053(a). Am. Compl. ¶¶ 88-92. Plaintiffs therefore seek injunctive and other equitable relief pursuant to 29 U.S.C. § 1132(a)(3): (1) declaring that the Retirement Awards program is an employee pension benefit plan governed by ERISA; (2) declaring that the vesting terms of the Retirement Awards violate 29 U.S.C. § 1053(a); (3) enjoining Defendants from administering the Retirement Awards, calculating the benefits due under those awards, and distributing benefits due under those awards in a manner that violates 29 U.S.C. § 1053(a); (4) reforming the terms of the Retirement Awards so that they comply with 29 U.S.C. § 1053(a); and (5) ordering Defendants to recalculate the benefits owed to all Retirement Award holders using ERISA-compliant vesting terms. Id. at 23-24. Count II seeks declaratory relief and the distribution of benefits under ERISA, 29 U.S.C. § 1132(a)(1)(B). Id. at 24-26. Specifically, Plaintiffs seek (1) a declaration that the Retirement Awards program is an employee pension benefit plan that is governed by ERISA; (2) a declaration that Defendants are obligated to distribute proactively benefits to all Retirement Award holders eligible for distributions; and (3) an order requiring Defendants to distribute benefits to all Retirement Award recipients. Id. Count III asserts a breach of contract claim and alleges that Defendants and their predecessor companies materially breached their obligations under the Retirement Awards by not distributing benefits under the Retirement Awards to Plaintiffs and class members, improperly calculating the number of vested shares due to Retirement Award recipients, and improperly accounting for market events in calculating the number of adjusted shares due to Retirement Award holders. Id. at 27-28. Count III is pled in the alternative to the ERISA claims raised in Counts I and II. Plaintiffs seek certification of this action as a class action under Fed.R.Civ.P. 23 and the appointment of Plaintiffs as class representatives, but have not yet made a motion for class certification. PROCEDURAL HISTORY On January 19, 2010, Plaintiffs filed a three-count complaint in the United States District Court for the District of Columbia, alleging violations of 29 U.S.C. § 1053 (establishing ERISA's minimum vesting schedule); seeking declaratory relief and benefits under ERISA, 29 U.S.C. § 1132(a)(1)(B); and alleging breach of contract due to Defendants' non-payment of retirement benefits. ECF No. 1. On March 4, 2010, Defendants moved to transfer the case from the District Court for the District of Columbia to this Court. ECF No. 10. In support of their motion to transfer, Defendants asserted that a case filed by Plaintiff England which encompassed the same issues as the District of Columbia case was pending before Judge Peter J. Messitte of this Court (Case No. 10cv0331). On May 17, 2010, the case was transferred to this Court. ECF No. 26. On June 22, 2010, the Court ordered Defendants to move, answer, or otherwise respond to the complaint on or before June 30, 2010 and further directed Plaintiffs to file any amended complaint on or before July 21, 2010. ECF No. 37. On June 30, 2010, Defendants moved to dismiss the complaint and on July 21, 2010, Plaintiffs moved to file an amended complaint. The Court granted Plaintiffs' motion for leave to amend the complaint and denied Defendants' motion to dismiss as moot on July 22, 2010. ECF No. 41. Defendants moved to dismiss the First Amended Complaint on August 20, 2010. 769 The motion was fully briefed and a hearing was held on December 20, 2010. STANDARD OF REVIEW To survive a 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.'" Ashcroft v. Iqbal, ___ U.S. ___, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007)). "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." Iqbal, 129 S.Ct. at 1949. "But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has allegedbut it has not `show[n]'`that the pleader is entitled to relief.'" Id. at 1950 (quoting Fed. R.Civ.P. 8(a)(2)). When deciding a motion to dismiss, the Court must therefore consider all well-pled allegations in a complaint as true, see Albright v. Oliver, 510 U.S. 266, 268, 114 S. Ct. 807, 127 L. Ed. 2d 114 (1994), and must construe factual allegations in the light most favorable to the Plaintiff, see Lambeth v. Bd. of Comm'rs of Davidson County, 407 F.3d 266, 268 (4th Cir.2005). Nevertheless, the Court is not required to accept as true "a legal conclusion couched as a factual allegation," Papasan v. Allain, 478 U.S. 265, 286, 106 S. Ct. 2932, 92 L. Ed. 2d 209 (1986), conclusory allegations devoid of any reference to actual events, United Black Firefighters v. Hirst, 604 F.2d 844, 847 (4th Cir.1979), or "allegations that are merely conclusory, unwarranted deductions of fact or unreasonable inferences," Veney v. Wyche, 293 F.3d 726 (4th Cir.2002). ANALYSIS Defendants move to dismiss the First Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) on six grounds. First, Defendants argue that Count I and Count II are claims for benefits under ERISA Section 502(a)(1)(B) and Plaintiffs failed to exhaust their administrative remedies, a prerequisite to bringing suit under this section of ERISA. Second, Defendants argue that Count II does not state a claim for equitable relief and Plaintiffs cannot simultaneously maintain claims under ERISA Sections 502(a)(3) and 502(a)(1)(B). Third, Defendants argue that Count I fails to state a claim on behalf of any member of the alleged class who terminated employment prior to ERISA's enactment. Defendants also argue that Count I is barred by the statute of limitations as to all members of the putative class, and all counts are barred by the statute of limitations with respect to members of the alleged class who were paid any benefits more than three years prior to the filing of the initial Complaint. Finally, Defendants argue that Plaintiffs' breach of contract claim must be dismissed because it is preempted and precluded by ERISA. I. Statute of Limitations Defendants argue that Count I is barred by the statute of limitations because the Retirement Awards that Plaintiffs complain fail to comply with ERISA's vesting requirements were issued between 1963 and 1993, between 17 and 47 years before the initial complaint in this case was filed. Defendants reason that the terms of the Retirement Awards, including the offending vesting provisions, were included in the awards themselves, and Plaintiffs therefore knew of the terms at least 17 years before filing the initial complaint. Plaintiffs' vesting claims, they conclude, are time-barred. 770 A motion to dismiss under Rule 12(b)(6), "which tests the sufficiency of the complaint, generally cannot reach the merits of an affirmative defense, such as the defense that the plaintiff's claim is time-barred." Goodman v. Praxair, Inc., 494 F.3d 458, 464 (4th Cir.2007). Courts may, however, consider the statute of limitations defense in a 12(b)(6) motion if the facts necessary to the defense "clearly appear on the face of the complaint." Id. ERISA does not contain an explicit statute of limitations for claims brought pursuant to Section 502(a)(3). Romero v. Allstate Corp., 404 F.3d 212 (3d Cir.2005). Where ERISA provides no explicit statute of limitations for a given cause of action, the court must refer to the forum state's laws and apply the most analogous statute of limitations. Shofer v. Hack Co., 970 F.2d 1316, 1319 (4th Cir.1992). The Court agrees with the parties that the most analogous statute of limitations is Maryland's statute of limitation for breach of contract actions, which provides for a three-year statute of limitations. Id. (citing Md. Code Ann. Cts. & Judic. Proc. § 5-101). Even where the court applies the forum state's statute of limitations, it must "treat the time at which the statute begins to run as governed by a uniform federal rule rather than the laws of the states." White v. Sun Life Assurance Co. of Canada, 488 F.3d 240, 245 (4th Cir.2007). The statute of limitations "clock generally begins to run at the time the plaintiff can first file suit." Id. In an ERISA case, a cause of action generally does not accrue until a claim for benefits is made and formally denied. Rodriguez v. MEBA Pension Trust, 872 F.2d 69, 72 (4th Cir.1989). However, the Third Circuit has held that an ERISA cause of action may accrue later if the plaintiff had no reason to know of his injury at the time it occurred. See, e.g., Romero v. Allstate Corp., 404 F.3d 212, 222 (3d Cir.2005). Pursuant to the "discovery rule," the Third Circuit held, an ERISA claim will accrue only "when the plaintiff discovers, or with due diligence should have discovered, the injury that forms the basis of the claim." Id. Still other courts have held that the statute of limitations may begin to run earlier than the date on which benefits are denied if there is an event that constitutes a "clear repudiation" of the participant's rights under ERISA. See Carey v. Int'l Broth. of Elec. Workers Local 363 Pension Plan, 201 F.3d 44, 48 (2d Cir.1999), Young v. Verizon's Bell Atlantic Cash Balance Plan, 615 F.3d 808, 814-15 (7th Cir.2010), Miller v. Fortis Benefits Ins. Co., 475 F.3d 516, 521 (3d Cir.2007). Defendants cite Bilello v. JPMorgan Chase Retirement Plan, 607 F. Supp. 2d 586 (S.D.N.Y.2009) in support of their argument that the claims asserted in Count I accrued when plaintiffs were awarded their Retirement Awards because the vesting terms they now claim violate ERISA were contained on the face of those Awards. Defs.' Mot. to Dismiss at 28. In other words, the "terms of the `Retirement Awards' contain the very terms that Plaintiffs claim violate ERISA" so plaintiffs became aware of the ERISA violation, at the latest, 17 years ago. Id. (citing Am. Compl. ¶¶ 89, 90, 91, 92). In Bilello, the District Court for the Southern District of New York held that "where the [ERISA] plan documents themselves, rather than their application, are at issue, the statute of limitations for [plaintiff's] ERISA claims accrues when he discovered or with reasonable due diligence could have discovered the deficiencies in the plan documents of which he complains." Bilello, 607 F.Supp.2d at 593. The court held that plaintiff's claim that a plan amendment violated ERISA accrued when plan participants were "given notice 771 of an amendment that contain[ed] a clear repudiation of the benefit terms to which [plaintiff] claim[ed] he [was] entitled." Id. The Bilello court noted that the thrust of plaintiff's claim was that the formula used by his ERISA plan to calculate his "cash balance" violated ERISA because it did not specify a minimum interest rate. Id. at 595-96. The court found that the plan documents themselves did not specify a minimum interest rate or suggest the existence of such a rate; therefore, plaintiff was on notice that his claim, predicated on that absence of such a rate, began to accrue when he received the plan documents showing the absence of such a rate. Id. The Bilello court concluded that because plaintiff's ERISA plan document apprised him of the basis of his claim, the statute of limitations clock began to run upon plaintiff's receipt of that plan document. His claims were therefore time-barred. Similarly, the Eighth Circuit has held that plan participants' receipt of a "fact sheet" containing the "challenged terms" put the participants on notice of their ERISA claim and started the statute of limitations clock running. Union Pac. R. Co. v. Beckham, 138 F.3d 325, 331 (8th Cir.1998). Plaintiffs Amended complaint alleges that Defendants "conceal[ed] the ERISA status of the Retirement Awards" and therefore "the mere notice of the terms of the Awards did not alert Plaintiffs to their ERISA injury, and it did not constitute a clear repudiation of their rights under ERISA." Pls.' Opp'n at 41. Plaintiffs argue that "[w]here the ERISA status of a plan is uncertain, courts have rejected the argument that mere notice of plan terms constitutes a clear repudiation of rights under ERISA." Pls.' Opp'n at 40. In support of this proposition, Plaintiffs cite Fenwick v. Merrill Lynch & Co., Inc. 570 F. Supp. 2d 366 (D.Conn.2008). In Fenwick, the court held that a complaint was not time-barred where plaintiffs did not receive a summary plan description communicating the terms of the purported "top hat plan" to plaintiffs, and the "plaintiffs had no notice that the terms of the [purported top hat] Plan repudiated their entitlement to accrued benefits because they had no knowledge of the Plan terms as a whole or whether the Plan was subject to ERISA." Id. at 372 (emphasis added). Where there was "no evidence indicat[ing] that plaintiffs received or should have known information regarding either the Plan['s ERISA] status or the Plan participants prior to their termination of employment," the plaintiffs did not have knowledge of a "clear repudiation of benefits to which they now allege entitlement until they terminated their employment." Id. The court concluded that the plaintiffs' claims did not accrue when they received notice of the non-ERISA compliant forfeiture provisions. Id. This Court finds Fenwick's reasoning persuasive, and concludes that where an employer denies that a plan is subject to ERISA, a claim that the plan violates ERISA does not accrue when plaintiffs receive notice of non-ERISA compliant plan terms. Defendants attempt to distinguish Fenwick on the grounds that that case involved a claim of breach of fiduciary duty and a claim for benefits, rather than a claim for equitable relief under Section 502(a)(3). Defs.' Reply at 6. The Defendants' purported distinction is a classic distinction without a difference. It is true that the Fenwick court applied a statutorily prescribed "actual knowledge" test when analyzing when the statute of limitations began to run with respect to the plaintiffs' breach of fiduciary duty claim, but this fact does not undercut the applicability of the court's analysis to the facts of this case. Here, the ERISA status of the Retirement Awards was unclear for many years; indeed, Defendants still do not concede 772 that the Retirement Awards are subject to ERISA. Under these facts, a rule that ties the date of accrual to the date the Retirement Awards were given would "have the undesirable effect of requiring plan participants and beneficiaries likely unfamiliar with the intricacies of pension plans formulas and the technical requirements of ERISA to become watchdogs over potential plan errors and abuses." Romero, 404 F.3d 212, 224 (3d Cir.2005). The Amended Complaint does not allege exactly when Plaintiffs became aware that ERISA governed the Retirement Awards. It seems clear, however, that Plaintiffs were not aware that the Retirement Awards were subject to ERISA's requirements at the time ERISA was passed. Plaintiffs apparently were not aware that ERISA governed the awards until at least February, 2010, when Defendants removed Plaintiff England's state court breach of contract claim on the ground that ERISA governed England's award. See Notice of Removal, Pls.' Opp'n, Ex. 5. To conclude that Plaintiffs' claims accrued while their employer was actively denying ERISA's applicability to their Retirement Awards would make no sense and would undermine ERISA's underlying purposes of promoting the interests of employees and protecting their contractually defined retirement benefits. Romero, 404 F.3d at 224. Such a rule would "impose an unfair duty of clairvoyance on employees" who allege that the detrimental effect on them by their employer's non-compliance with ERISA was not apparent during the many years in which their employer denied ERISA applied to their retirement plan. It would be a disservice to deem a claim to have accrued before plaintiff's knew or should have known that their plans were governed by ERISA. It is important to note what the Retirement Awards did not contain to see why there were simply no "red flags" which should have alerted Plaintiffs to the fact that ERISA governed these Awards and, consequently, that they might have claims for the Awards' failure to comply with ERISA. The Retirement Awards did not even mention ERISA, did not indicate how Defendants intended to calculate a year of service and did not indicate how participants could be apprised of Plan amendments; the awards did not indicate how Plaintiffs' shares would be converted when obligations under the Retirement Awards were assumed by successor companies and they contained no details regarding any claims procedures (because there were none until after this complaint was filed). Summary Plan Descriptions were never provided to Plaintiffs with respect to the Awards and the Department of Labor and the IRS were never informed of the ERISA status of the Retirement Awards. See Am. Compl. ¶ 25. If Defendants, the Department of Labor and the IRS had no reason to know that these awards were subject to ERISA until at least 2010, then surely the Plaintiffs had no reason to know that these awards were governed by ERISA until then. In Cotter v. ECT Retirement Plan, the Fourth Circuit noted that it might be anomalous if an ERISA claim accrued only once an ERISA lawsuit was filed. 898 F.2d 424, 429 (4th Cir.1990). However, in an unusual case such as this one, in which both the Plaintiffs and their former employers believed a retirement plan was not subject to ERISA, that anomaly may here be the reality. In any event, the Court cannot conclude from the face of the Amended Complaint that Plaintiffs' claims, as articulated in Count I, accrued more than 3 years before the initial complaint in this suit was filed. Dismissal on statute of limitations grounds is therefore inappropriate at this time.[1] 773 II. Failure to Exhaust Administrative Remedies Defendants argue that Counts I and II must be dismissed because Plaintiffs failed to pursue and exhaust their administrative remedies before bringing this lawsuit. Defs.' Mot. to Dismiss, ECF No. 42-1 at 20. This argument is not even a "close call." Though it is true that ERISA plan participants must "both pursue and exhaust [ERISA] plan remedies before gaining access to the federal courts," Gayle v. UPS, 401 F.3d 222, 226 (4th Cir.2005), Defendants did not implement an administrative claims procedure until after this lawsuit was filed. Plaintiffs instituted this lawsuit in January, 2010, and Defendants did not implement a claims procedure or an appeals procedure for the denial of benefits due under the Retirement Awards until March 3, 2010. Am. Compl. Ex. A at 6. ECF No. 42-2. In Eastman Kodak Co. v. STWB, Inc., the Second Circuit held that, "under the `deemed exhausted' provision of [Department of Labor regulation] 29 C.F.R. § 2560.503-1(l), an ERISA benefits claimant is not required to exhaust a claims procedure that was adopted only after a suit to recover benefits has been brought." 452 F.3d 215, 223 (2d Cir.2006). The "deemed exhausted" provision of 29 C.F.R. § 2560.503-1(l) provides, in pertinent part, In the case of the failure of a plan to establish or follow claims procedures consistent with the requirements of this section, a claimant shall be deemed to have exhausted the administrative remedies available under the plan and shall be entitled to pursue any available remedies under section 502(a) of the Act on the basis that the plan has failed to provide a reasonable claims procedure that would yield a decision on the merits of the claim. The Second Circuit noted that interpreting the "deemed exhausted" provision to allow a company to compel litigants to exhaust an administrative procedure that was only implemented after they had filed a lawsuit would "force claimants, first, to resort to litigation to obtain their benefits, and then, to abandon their suit at whatever point (prior to final judgment) the plan adopted a claims procedure." Id. at 222. The Second Circuit looked at the context in which the "deemed exhausted" provision was adopted and held that "[t]he `deemed exhausted' provision was plainly designed to give claimants faced with inadequate claims procedures a fast track into court an end not compatible with allowing a `do-over' to plans that failed to get it right the first time." Id. The Second Circuit held that the litigants' administrative remedies should be "deemed exhausted" due to the Defendant's failure to provide them with an adequate claims procedure until after they brought suit to recover their ERISA benefits in court. This Court finds the reasoning of Eastman Kodak to be highly persuasive. Defendants in this case instituted a claims procedure and appeals process for denial of benefits under the Retirement Awards less than two months after Plaintiffs filed this suit. It appears Defendants were motivated to institute a formal claims procedure only after they were sued. To allow Defendants to require Plaintiffs, who have incurred the expense of investigating the 774 grounds for and filing this suit, to go back and exhaust an administrative procedure that may never have been implemented but for their lawsuit would completely undermine the "deemed exhausted" provision of 29 C.F.R. § 2560.503-1(l). If companies could wait until they were sued to establish a claims procedure, and then force litigants to go back and bring their claims through that procedure, there would simply be no incentive for them to institute an ERISA-compliant procedure in the first instance. The Court therefore concludes that Plaintiffs' administrative remedies are "deemed exhausted" because Defendants' administrative procedure for bringing ERISA claims and appealing denials of ERISA benefits was only implemented after this litigation commenced.[2] Defendants attempt to distinguish Eastman Kodak on the ground that "the Kodak case was not a class action and the concern for varying claims, decisions and interests was nonexistent" in that case whereas here, four plaintiffs who worked for Defendants in different years assert claims involving Retirement Awards that contained different terms. Defs.' Reply at 16-19. Exhaustion of administrative remedies is even more important in this case than in Kodak, Defendants assert, because the administrative process is necessary to develop the factual record regarding each plaintiff's claims, and requiring plaintiffs to complete the administrative process would advance the congressional intent "to minimize the number of frivolous lawsuits, promote consistent claims administration and judicial economy, and decrease the cost and times of claims settlement." Defs.' Reply at 20. White it may be true that an administrative claims procedure would have benefited the parties by allowing for the development of a factual record, and potentially avoiding this litigation, Defendants are the ones who failed to provide an administrative claims procedure which would have allowed for this factual development and efficient resolution of claims, and they should not be allowed to take unfair advantage of their own violation of the law. They cannot now argue that the Court should strictly enforce the exhaustion of administrative remedies under a procedure which they earlier refused to implement. The policy concerns outlined in Eastman Kodak are no different in this case than in a non-class action. The Court will not allow Defendants to force claimants to complete an administrative claims process after they essentially refused to provide such a process before this suit was brought. Defendants attempt to distinguish Eastman Kodak, arguing that the case of Kern v. Verizon Communications, 381 F. Supp. 2d 532, 536 (N.D.W.Va.2005), is more applicable to the facts of this case. In Kern, the court rejected Plaintiffs' argument that the exhaustion requirement should be waived because their employer failed to comply with ERISA's notice provisions, which required their employer to notify them of either the denial of their benefits claims or the procedures available to challenge that denial. Kern, 381 F. Supp. 2d 532, 536 (N.D.W.Va.2005). The Kern court held that plaintiffs had not shown that the pursuit of administrative remedies would be "futile" or "clearly useless" and therefore the exhaustion requirement would not be waived. Id. (citing Hickey v. Digital Equip. Corp., 43 F.3d 941, 945 (4th Cir.1995) (to circumvent exhaustion 775 requirement plaintiffs had to make "clear and positive showing of futility")). Kern is not even remotely applicable to the facts of this case. Kern involved an ERISA plan's failure to give plaintiffs notice of the pre-existing administrative procedure they were required to exhaustnot the complete and total failure of an employer's ERISA plan to establish an administrative claims procedure at all, as in this case. There simply was no claims procedure to exhaust at the time Plaintiffs filed the instant suit. The small, technical noncompliance at issue in Kern is simply not comparable to the complete non-existence of any formal claims procedure in this case. Defendants also make an essentially factual argument that Plaintiffs Craig, Bond and Foster should be required to exhaust administrative remedies because they did not make any inquiry of Marriott about their benefits before filing this action. See Defs.' Mot. to Dismiss, ECF No. 42-1 at 17, Defs.' Reply, ECF No. 48 at 15. It appears that only Plaintiff England made any inquiry of Defendants or demand that they pay benefits under the Retirement Awards. Defs.' Mot. to Dismiss at 17. ECF no. 42-1. Plaintiffs Craig, Bond and Foster apparently did not make any claim, formal or informal, on Defendants for the distribution of benefits owed them under the Retirement Awards. However, requiring Craig, Bond, and Foster to exhaust administrative remedies also would be inequitable for two reasons. First, there is no reason to believe Craig, Bond and Foster, had they inquired of Marriott regarding their benefits, would have been given any other response than that given England. England was told he was not entitled to benefits because those benefits had been paid out when he separated from Marriott; then, after his attorney made a demand for the benefits, he was told he would be given certain stock if he signed a release of all claims. Pls.' Opp'n at 12-14. At no time was England told of an administrative claims process through which he could seek payment of benefits under the Retirement Awards. Id. There is no reason to believe that, had Craig, Bond and Foster inquired of Marriott regarding payment of Retirement Award benefits, they would have been told to pursue an administrative claims process that did not then exist. Second, the policy implications outlined in Eastman Kodak persuade the Court that to allow Defendants to now compel Plaintiffs Craig, Bond and Foster to complete an administrative claims process would create a perverse incentive for a company to delay implementing an ERISA-compliant claims procedure until litigation was initiated. The exhaustion requirement is designed to require utilization of extant administrative processes, not to wear out employees with after-the-fact diversions and detours. III. Failure to State a Claim for Equitable Relief Defendants argue that Count I should be dismissed because it fails to state a claim for equitable relief, and that even if it does, the equitable relief it seeks may not be granted. Defendants argue that even though Plaintiffs purport to seek equitable relief under Count I, they really seek legal relief, because they seek the payment of benefits. Defs.' Mot. to Dismiss at 21. Further, Defendants argue that even if Plaintiffs are seeking "equitable relief" in connection with reformation of the Retirement Awards, they cannot simultaneously seek equitable relief under ERISA Section 502(a)(3) and legal relief under ERISA Section 502(a)(1)(B) because the Supreme Court's decision in Varity Corp. v. Howe, as interpreted by the 776 Fourth Circuit in Korotynska v. Metropolitan Life Ins. Co., prohibits a plaintiff from simultaneously seeking relief under both sections of ERISA. Under ERISA Section 502(a)(3), 29 U.S.C. § 1132(a)(3), plan participants or beneficiaries may sue to "(A) enjoin any act or practice which violates any provision of [ERISA] or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of [ERISA] or the terms of the plan." Under ERISA Section 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B), an ERISA plan participant may sue "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan[.]" Defendants argue that though Plaintiffs purport to seek equitable relief in Count I, this claim is actually a claim for legal relief. Specifically, Defendants argue that "[a]lthough Plaintiffs purport to seek equitable remedies of `[e]njoining Marriott and the Marriott Plan' from administering the `Retirement Awards' in a manner which they allege violates ERISA's vesting requirements and a `reformation of the terms of the Retirement Awards to comply with the allegedly applicable vesting requirements of ERISA,' it is clear that in substance they seek legal relief: payment of additional shares of stock and a declaration of rights to additional shares of stock, both of which are remedies available under ERISA Section 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B), not ERISA Section 502(a)(3), 29 U.S.C. § 1132(a)(3)." Defs.' Mot. to Dismiss at 21. ECF Bi, 42-1. Plaintiffs counter that the payment of benefits to Retirement Award recipients are merely "necessary consequences of the central injunctive relief they seek" and the relief they seek, reformation of the Retirement Awards, is equitable. Pls.' Opp'n at 28. Plaintiffs seek to compel Defendants, pursuant to Count I, to reform the terms of the Retirement Awards so that distribution of benefits under the Awards complies with ERISA's vesting requirements, and pursuant to Count II, to compel Defendants to "recalculate and distribute additional benefits due under the new ERISA-compliant terms." Id. at 30. The federal courts diverge as to the proper characterization of claims alleging that because of an ERISA plan's use of illegal terms, the plan has improperly calculated and paid benefits to plan participants. For example, in Fenwick v. Merrill Lynch & Co., the District Court for the District of Connecticut held that a claim challenging the legality of an ERISA plan's terms and seeking payment of additional benefits under ERISA-compliant terms was not a claim for equitable relief under Section 502(a)(3). 570 F. Supp. 2d 366, 374-75 (D.Conn.2008). The Fenwick court stressed that "Section 502(a)(3) requires that both the basis for the claim and the nature of the recovery be equitable" and that claims are properly brought under ERISA Section 502(a)(3) only "if plaintiff seeks relief that was typically available in equity." Id. at 374 (internal quotations and citations omitted). "Specific performance to pay on a contract or an injunction to compel the payment of money past due were not typically available in equity" and therefore plaintiffs failed to state a claim under Section 502(a)(3) where their claim, at its core, sought payment of money. Id. (internal quotations and citations omitted). The court therefore concluded that plaintiffs' claims primarily sought legal remedies, and were properly brought under Section 502(a)(1)(B), not Section 502(a)(3). Id. The Sixth Circuit expressed a similar view in West v. AK Steel Corp., 484 F.3d 395 (6th Cir.2007). In AK Steel Corp., the 777 Sixth Circuit noted that "[plaintiffs'] prayer for relief ... centers on money damages for the alleged underpayment of a[n ERISA] benefit. Although the plaintiffs also request unspecified `other relief as may be deemed just and equitable' ... where the heart of the plaintiff's prayer for relief was a request for recovery of additional lump sum benefits" their claim sought a legal remedy, and was therefore not properly brought under Section 502(a)(3). Id. at 403-04. Other courts express a contrary view. In Carrabba v. Randalls Food Markets, Inc., 145 F. Supp. 2d 763 (N.D.Tex.2000), plaintiffs alleged that a plan considered by the employer to be a "top hat plan"a plan restricted to highly compensated employees as an additional benefit and not subject to ERISA's accrual and vesting requirementswas not in fact a top hat plan, and therefore, they were entitled to additional benefits that they would have received had the plan been properly categorized as a plan subject to ERISA's accrual and vesting requirements. Id. at 766. After a bench trial, the District Court for the Northern District of Texas agreed that the plan was not a top hat plan, and was therefore subject to ERISA's vesting and accrual requirements. Id. In determining to what relief plaintiffs were entitled, the court held that where plan participants alleged that the terms of their ERISA plan were illegal and sought payment of additional benefits under revised terms that complied with ERISA, plaintiffs were entitled to seek relief under Section 502(a)(3) not Section 502(a)(1)(B). Id. at 770-71. The court reasoned that the plaintiffs were not seeking to recover "under the terms of" their plan, as provided for by Section 502(a)(1)(B), but were seeking reformation of the terms of their plan to comply with ERISA and payment of benefits under these revised terms. Similarly, in Laurenzano v. Blue Cross & Blue Shield of Massachusetts, Inc. Retirement Income Trust, 134 F. Supp. 2d 189 (D.Mass.2001), the District Court for the District of Massachusetts held that because plaintiffs sought the payment of benefits under terms not contained in their plan, the claim would properly be brought under Section 502(a)(3), not Section 502(a)(1)(B). The court specifically held that the plaintiff, suing on behalf of a class, "probably cannot state a claim under ERISA § 502(a)(1)(B) because he does not seek a benefit due to him under the terms of his plan." Id. at 194 (emphasis in original). The court noted that plaintiff sought benefits that included cost of living adjustments ("COLA payments"), which were not provided for under the terms of his ERISA plan. Id. "In this case, the parties do not seriously dispute that ... the Plan specifically excludes COLA payments from any lump sum distributions... Rather than pervert the plain meaning of ERISA § 502(a)(1)(B), this Court will assume that [plaintiff] must find a cause of action elsewhere." Id. The appropriate provision of ERISA under which to bring his claims that he was entitled to COLA payments was Section 502(a)(3). The Court finds the reasoning of the Laurenzano and Carrabba courts more persuasive than the reasoning articulated in the Fenwick and AK Steel Corp. decisions. Under ERISA Section 502(a)(1)(B)'s plain language, that section only provides relief to a plaintiff who seeks "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan[.]" (emphasis added). Therefore, Plaintiffs do not have any right, under the plain terms of Section 502(a)(1)(B), to seek recovery under vesting provisions not contained in their Retirement 778 Awards. Further, reformation of the terms of a contract is a form of equitable relief. 66 Am.Jur.2d Reformation of Instruments § 3. Therefore, to the extent that Plaintiffs seek to reform the Retirement Awards' vesting provisions to comply with ERISA's vesting requirements, they seek equitable relief. The heart of the allegations contained in Count I is that payment under the terms of the Retirement Awards' vesting provisions will violate ERISA, and reformation of the terms of the Awards is the only way to bring the Retirement Awards into compliance with ERISA. Count I therefore states a claim "to obtain other appropriate equitable relief" under 29 U.S.C. § 1132(a)(3). Defendants also argue that the Supreme Court's decision in Varity Corp. v. Howe, as interpreted by the Fourth Circuit in Korotynska v. Metropolitan Life Ins. Co., precludes Plaintiffs from simultaneously pursuing claims under ERISA Sections 502(a)(1)(B) and 502(a)(3). In Varity Corp. v. Howe, the Supreme Court held that ERISA Section 502(a)(3) creates a "catchall" which "act[s] as a safety net, offering appropriate equitable relief for injuries caused by violations that [§ 1132] does not elsewhere adequately remedy." Varity Corp. v. Howe, 516 U.S. 489, 512, 116 S. Ct. 1065, 134 L. Ed. 2d 130 (1996). The plaintiffs in Varity, relying on their employer's representations, agreed to transfer from that employer to another company and the new company's ERISA benefit plan. Id. at 494, 116 S. Ct. 1065. When the company to which they transferred later failed, they sued the corporate parent and a subsidiary of their former employer to recover benefits under their old ERISA plan. The Supreme Court held that the Varity plaintiffs, who could not sue under § 1132(a)(1), because they were no longer members of the plan from which they sought benefits (and who also could not sue under § 1132(a)(2), because that provision did not provide a remedy for individual beneficiaries), could sue under § 1132(a)(3) because they had no "adequate relief" under other provisions of ERISA. Id. at 515, 116 S. Ct. 1065. The Varity Court held: "[T]he [ERISA] statute authorizes `appropriate' equitable relief. We should expect that courts, in fashioning `appropriate' equitable relief, will keep in mind the `special nature and purpose of employee benefit plans,' and will respect the `policy choices reflected in the inclusion of certain remedies and the exclusion of others.' Thus we should expect that where Congress elsewhere provided adequate relief for a beneficiary's injury, there will likely be no need for further equitable relief, in which case such relief normally would not be `appropriate.'" Id. at 515, 116 S. Ct. 1065 (emphasis in original). In Korotynska v. Metropolitan Life Ins. Co., the Fourth Circuit held that the plaintiff could not bring a claim for equitable relief under Section 1132(a)(3) because her injury could adequately be redressed under Section 1132(a)(1)(B). 474 F.3d 101, 106 (4th Cir.2006). The Fourth Circuit found that, though the plaintiff couched her claim as one alleging a breach of fiduciary duty, what she actually sought was the payment of ERISA benefits which she claimed had been improperly denied her. Id. The Fourth Circuit held that claims for payment of individual benefits were more properly brought under Section 1132(a)(1)(B), and plaintiff's claim under Section 1132(a)(3) was improper because it was a mere "repackaging" of a denial of benefits claim. Id. at 106. The Fourth Circuit noted that "[a]lthough the Second Circuit has held that plaintiffs may seek relief simultaneously under § 1132(a)(1)(B) and § 1132(a)(3), the great majority of circuit courts have interpreted Varity to hold that a claimant whose injury creates a 779 cause of action under § 1132(a)(1)(B) may not proceed with a claim under § 1132(a)(3)." Id. Defendants argue that Korotynska stands for the principle that plaintiffs may not simultaneously seek relief under Sections 502(a)(3) and 502(a)(1)(B). Id. at 24. Plaintiffs counter that they cannot obtain complete relief just by bringing a claim under Section 1132(a)(1)(B), because they do not seek only payment of benefits under the terms of their Retirement Awards, but also seek reformation of those awards to comply with ERISA's vesting requirements. Plaintiffs point out that they "seek to enforce the terms of ERISA and to make the Retirement Awards comply with ERISA's substantive provisionsrelief that is only available under § 502(a)(3)." Pls.' Opp'n at 29 (emphasis added). Section 502(a)(1)(B) only allows a plaintiff to sue "under the terms of his plan" and to enforce his rights "under the terms of his plan." Pls.' Opp'n at 29 (citing ERISA Section 502(a)(1)(B)'s language). Defendants read Korotynska too broadly. The fairest reading of Korotynska's holding is that where a plaintiff can obtain complete relief under Section 502(a)(1)(B), for example, where he seeks only the payment of benefits under the terms of his ERISA plan, he cannot simultaneously bring a claim under Section 502(a)(3). The Korotynska court did not hold that bringing simultaneous claims for relief under Sections 502(a)(3) and 502(a)(1)(B) is always inappropriate. The Korotynska court highlighted the fact that "[t]here is [] no question that Korotynska's injury is redressable elsewhere in ERISA's scheme" and explicitly stated, "our holding preserves the true purpose of § 1132(a)(3): to authorize individual equitable relief, not where plan administrators have made a mistake on an individual benefits determination, but where, as in Varity, ERISA's other provisions do not afford adequate relief." Korotynska, 474 F.3d at 108 (emphasis added). Though Korotynska cited positively other circuits' interpretations of Varity as precluding a plaintiff from simultaneously seeking relief under Sections 502(a)(3) and 502(a)(1)(B), the actual holding of Korotynska is that where "§ 1132(a)(1)(B) affords plaintiff adequate relief for her benefits claim, ... a cause of action under § 1132(a)(3) is [ ] not appropriate." Id. at 107 (emphasis added). Korotynska clearly involved a plaintiff's attempt to "repackage" a Section 502(a)(1)(B) claim for denial of benefits into a claim for injunctive relief under Section 502(a)(3). Where plaintiffs are not merely repackaging a benefits claims, "it is entirely appropriate to bring simultaneous § 502(a)(3) and § 502(a)(1)(B) claims to address `two separate and distinct injuries' that are based in whole or in part on different facts." See, e.g., Gore v. El Paso Energy Corp. Long Term Disability Plan, 477 F.3d 833, 839-40 (6th Cir.2007) (plaintiff could simultaneously bring claims under ERISA Sections 502(a)(3) and 502(a)(1)(B) where plaintiff's breach of fiduciary duty claims under Section 502(a)(3) were not a "repackaging" of his claim that he was improperly denied ERISA benefits). Plaintiffs' claims under § 502(a)(3) are based on Defendants' failure to bring the Retirement Awards into compliance with ERISA's vesting requirements. By contrast, Plaintiffs' § 502(a)(1)(B) claims are based on Defendants' refusal to pay benefits to recipients of the Retirement Awards upon request (as in England's case) or proactively when the recipients reached the age of 65 (as in the case of the other named Plaintiffs), consistent with the terms of those awards. In other words, Count I alleges that (1) the Retirement Awards program is subject to ERISA and the terms of the Retirement Awards violate 780 ERISA, whereas (2) Count II alleges that Marriott is failing to accurately account for market transactions and failing to proactively distribute benefits to eligible plan participants as required under the terms of their Retirement Awards. These two claims appear to be based, at least in part, on different facts, and therefore Plaintiffs § 502(a)(3) claim is not a mere "repackaging" of their § 502(a)(1)(B) claim, as in Korotynska. Plaintiffs here clearly seek reformation of their Retirement Awards to comply with the terms of ERISA and the payment of benefits under those reformed awards. See Pls.' Opp'n at 30. Plaintiffs cannot receive complete and adequate relief under Section 502(a)(1)(B) alone, because that Section only allows a beneficiary "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." Nor can they receive complete relief under Section 502(a)(3), which does not allow for payment of damages. Plaintiffs are entitled to first pursue a claim under Section 502(a)(3) for reformation of the terms of the Retirement Awards, and then to pursue a claim under Section 502(a)(1)(B) for recalculation and distribution of benefits due under the ERISA-complaint terms of the revised awards. Accordingly, the Court rejects Defendants' argument that Count I fails to state a claim for equitable relief and that Plaintiffs may not simultaneously bring claims under ERISA Sections 502(a)(3) and 502(a)(1)(B).[3] IV. Failure of Count I to State a Claim for Employees Who Terminated Employment Before ERISA's enactment Defendants argue that ERISA's vesting provisions, which became effective on January 1, 1976, do not apply to any member of the putative classincluding Mr. Englandwho terminated employment with Marriott's corporate predecessors prior to that date. Defs.' Mot. to Dismiss at 25. ECF No. 42-1. Defendants cite to Cohen v. Martin's, 694 F.2d 296 (2d Cir.1982) in support. In Cohen, the Second Circuit held that ERISA's vesting requirements, outlined in 29 U.S.C. § 1053(a), which became effective January 1, 1976, did not apply retroactively to persons who terminated their employment before the requirements became effective. 694 F.2d at 300. The Cohen court noted that ERISA's vesting provisions spoke "of `an employee's right' to receive pension benefits" and noted that an "employee" is defined under ERISA as "any individual employed by an employer." Id. at 298 (emphasis added). The court noted that other sections of ERISA referred to plan "participants," which ERISA defines as "any employee or former employee of an employer ... who is or may become eligible to receive a benefit of any type from an employee benefit plan." Id. (emphasis added). The court concluded that "[h]ad Congress intended to extend the protections of the vesting requirement to retirees such as [plaintiff], it would have spoken of a `participant's right' to receive benefits" rather than an 781 "employee's right" to receive benefits under the mandatory vesting provisions. Id. Use of the term "employee" in the vesting requirements section of ERISA demonstrates Congress' intent to apply the mandatory vesting requirements only to employees actually employed on January 1, 1976. This interpretation has been consistently followed by other federal courts, and this Court thinks it is the correct interpretation of the statute. See Fremont v. McGraw-Edison Co., 606 F.2d 752, 755 (7th Cir.1979), Bruchac v. Universal Cab Co., 580 F. Supp. 295, 302 (N.D.Ohio 1984), Stewart v. Nat'l Shopmen Pension Fund, 563 F. Supp. 773, 777 (D.D.C.1983). According to the Amended Complaint, Plaintiff England was employed by Defendants' predecessor companies from "at least 1966 to January 9, 1970." Am. Compl. ¶ 50. Plaintiff England was not an employee of Marriott or its corporate predecessors at the time ERISA's mandatory vesting requirements went into effect and thus cannot state a claim alleging he is entitled to enforce ERISA's minimum vesting requirements. Defendants similarly argue that members of the putative class who ceased employment prior to January 1, 1976, have no claim that their Retirement Awards fail to comply with ERISA's vesting requirements. The Court agrees. Both the reasoning of Cohen and the broad consensus of the federal courts in interpreting 29 U.S.C. § 1053(a) as applying only to employees employed on January 1, 1976 supports the conclusion that Count I fails to state a claim with respect to employees, like Plaintiff England, who terminated employment with Marriott's predecessor companies before ERISA's effective date. The Court concludes that Count I fails to state a claim that the Retirement Awards fail to comply with ERISA's minimum vesting requirements with respect to employees who ceased employment with Defendants' predecessor companies prior to January 1, 1976. V. Breach of Contract Claim Defendants argue that Count III is preempted to the extent that Count II seeks claims for benefits under ERISA Section 502(a)(1)(B). Defendants acknowledge that Count III is explicitly pled in the alternative to the ERISA claims raised in Counts I and II. See Defs.' Mot. to Dismiss at 35 n. 15. While it is clear that, for those to whom ERISA applies, contract claims are preempted, Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 45-55, 107 S. Ct. 1549, 95 L. Ed. 2d 39 (1987), it would be premature to dismiss the breach of contract claims at this point. The central dispute in this case is whether ERISA applies to the Retirement Awards. Only if and when the Court decides that ERISA does apply to the Retirement Awards would dismissal of the breach of contract claims (Count III) be appropriate. Further, as to Plaintiff England, who is not covered by ERISA's vesting requirements, a breach of contract claim may be his only viable claim. CONCLUSION Accordingly, the Court shall, by separate order, grant Defendants' motion to dismiss Count I as to Plaintiff England and deny Defendants' motion in all other respects. ORDER For the reasons stated in the accompanying Memorandum Opinion, it is, this 14th day of February, 2011, by the United States District Court for the District of Maryland, hereby ORDERED, that Defendants' Motion to Dismiss Plaintiffs' First Amended Complaint [ECF No. 42] is GRANTED IN 782 PART AND DENIED IN PART; and it is further ORDERED, that Count One is DISMISSED as to Plaintiff England; and it is further ORDERED, that Defendants' Motion to Dismiss Plaintiffs' First Amended Complaint [ECF No. 42] is DENIED IN ALL OTHER RESPECTS. NOTES [1] Defendants also argue that the statute of limitations has run on Counts I-III with respect to any members of the putative class who received Retirement Award payments more than three years before the initial complaint was filed. Defs.' Mot. to Dismiss at 33. The Court concludes that a "motion to dismiss `is not an appropriate time to consider the impact of a statute of limitations defense on absent class members.'" Guerra v. GMAC LLC, 2009 WL 449153 (E.D.Pa. Feb. 20, 2009). That is especially so when no class certification has yet occurred. [2] Eastman Kodak has recently been cited positively by one of our sister courts in the Fourth Circuit. See, e.g., King v. United Way of Central Carolinas, Inc., 2010 WL 3636151 at *3 (W.D.N.C. Sept. 15, 2010) (administrative remedies deemed exhausted where ERISA-compliant claims procedure was implemented after litigation was initiated). [3] Defendants also argue that Plaintiffs do not seek "appropriate" equitable relief because Plaintiffs seek to enforce ERISA's vesting requirements while ignoring ERISA's corresponding trust and funding requirements. Defs.' Mot. to Dismiss at 22. Therefore, Plaintiffs are "ignor[ing] those [ERISA provisions] that would work to their financial detriment" while suing to enforce those that work to their financial benefit, according to Defendants. Id. This argument is premature: to the extent that the Court finds that the Retirement Awards are subject to ERISA, it can order relief that complies with all provisions of ERISA, not just ERISA's vesting requirements.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2594450/	670 F. Supp. 1215 (1987) UNITED STATES of America v. Robert GUERRERIO, Sr., Rosalie Guerrerio, Robert Guerrerio, Jr., John Guerrerio, and Edward Lustig, Defendants. No. 86 Cr. 1061 (DNE). United States District Court, S.D. New York. October 13, 1987. 1216 Rudolph W. Giuliani, U.S. Atty., S.D. N.Y., William B. Pollard III, Asst. U.S. Atty., of counsel, for the U.S. Stroock, Stroock & Lavan, New York City, Thomas Puccio, of counsel, for defendant Robert Guerrerio, Sr.; Joel Cohen, of counsel, for defendant Rosalie Guerrerio.[1] 1217 Schlam Stone & Dolan, New York City, Harvey M. Stone, of counsel, for defendant Robert Guerrerio, Jr. Gerald J. McMahon, New York City, for defendant John Guerrerio. Freeman, Nooter & Ginsberg, New York City, Louis M. Freeman, of counsel, for defendant Edward Lustig. OPINION AND ORDER EDELSTEIN, District Judge. The defendants, Robert Guerrerio Sr., Rosalie Guerrerio, John Guerrerio, Robert Guerrerio Jr., and Edward Lustig, are charged in a fifteen count indictment. Count one charges the five defendants with a conspiracy to defraud the Internal Revenue Service, in violation of 18 U.S.C. Section 371. Counts two and three charge John and Robert Jr. with signing false tax returns for Rey Caulking Co., Inc. ("Rey Caulking") in 1980 and 1981, in violation of 26 U.S.C. Section 7206(2). Counts four and five charge Robert Sr. with violating 26 U.S.C. Section 7206(2) by aiding and abetting the preparation of those false returns. Counts six through ten charge Robert Sr. and Rosalie with signing false personal income tax returns from 1980 through 1984, thereby violating 26 U.S.C. Section 7206(1). Counts eleven and twelve charge Robert Sr. with violations of 18 U.S.C. Section 1341, for mail fraud in connection with a scheme to fraudulently obtain disability payments from the Social Security Administration and Allstate Insurance Company. Counts thirteen and fourteen respectively charge Robert Sr. with obstruction of a proceeding before the Social Security Administration, in violation of 18 U.S.C. Section 1505 and obstruction of justice in the United States District Court for the Southern District of New York, in violation of 18 U.S.C. Section 1503. Count fifteen charges Edward Lustig with obstruction of justice in violation of 18 U.S.C. Section 1503 for ordering a witness not to produce business records for a grand jury. The defendants have made five motions requesting the court: 1. to compel the government to produce state grand jury material in the possession of the Bronx County District Attorney's Office; 2. to sever the charges against Robert Guerrerio Jr. and Edward Lustig; 3. to order a bill of particulars; 4. to strike from the indictment references to bribes and fraud; 5. to supress statements made by John Guerrerio. The court defers ruling on the motion to suppress the statements of John Guerrerio until after an evidentiary hearing has been conducted. The remaining four motions are denied. BACKGROUND This case centers on the activities of the Guerrerio family and the Rey Caulking Company, a small masonry firm in the Bronx. Robert Guerrerio Sr. is the co-founder of that firm, which he owned until 1977 when he allegedly suffered a disabling injury that rendered his arms useless. As a result of this injury, Robert Sr. applied for and eventually received disability income payments after appealing a denial of benefits to the United States District Court for the Southern District of New York. In 1977, Robert Sr. signed over control of Rey Caulking to his brother John. Between 1979 and 1981, Rey Caulking received substantial payments under a contract for masonry services with the Riverbay Corporation ("Co-op City"), a cooperative housing complex in the Bronx, New York. Throughout this period, during which he was receiving disability payments, Robert Sr. allegedly managed this project, as well as others, for Rey Caulking. John and Robert Sr. diverted some of the payments under this contract before they were ever recorded in Rey Caulking's books. Moreover, all of the defendants further diverted corporate funds from Rey Caulking by means of payments to two fictitious payees, Empire Caulking Company ("Empire") and Ajax Caulking Company ("Ajax"), that were characterized on Rey Caulking's books as business expenses. 1218 Consequently, Rey Caulking's tax returns for 1980 and 1981, which John and Robert Jr. signed and Robert Sr. allegedly assisted in preparing, falsely underreported the corporation's income by not reporting the diverted funds. Robert Sr. and Rosalie also failed to report the income generated by the diversions on their personal income tax returns. Finally, Edward Lustig attempted to thwart the investigation of this alleged conspiracy by ordering Dominic DiFebo not to produce Ajax business records for a federal grand jury. I. THE DISCOVERY MOTIONS Defendants have moved pursuant to Rule 16 of the Federal Rules of Criminal Procedure and Brady v. Maryland, 373 U.S. 83, 83 S. Ct. 1194, 10 L. Ed. 2d 215 (1963) for discovery of material "available to the government through a joint federal-state investigation with the Bronx County District Attorney's Office." Defendant's Notice of Motion at 1. In particular, defendants seek grand jury materials from the Bronx County investigation. Rule 16 of the Federal Rules of Criminal Procedure provides for the discovery of documents and tangible objects which are "within the possession, custody or control of the government." Fed.R.Crim.P. 16(a)(1)(C). Accordingly, this court must inquire whether the Bronx materials are within the possession, custody or control of the United States Attorney's Office for the Southern District of New York ("U.S. Attorney"). In answering this question, a review of the relationship between the offices of the U.S. Attorney and the Bronx District Attorney is appropriate. In March 1983, the New York State Investigation Commission referred a report on corruption at Co-op City to the U.S. Attorney and the Bronx District Attorney. Thereafter, both offices began separate and independent investigations. During December 1983, however, the two offices reached an agreement that it would be most efficient for the U.S. Attorney to prosecute the matter. Accordingly, while the Bronx investigation ceased, the federal investigation continued. See affidavit of William B. Pollard III, July 16, 1987. The federal investigation was originally conducted by Assistant United States Attorney Mary Lee Warren and Special Assistant United States Attorney Philip Foglia ("Foglia"). Although Foglia is also a Bronx County Assistant District Attorney, he had no knowledge of the Bronx investigation. This fact contributed to the U.S. Attorney's decision to recruit Foglia to work on the federal investigation. Foglia was sworn in as a Special Assistant on June 1, 1983. In December 1983, the U.S. Attorney assumed responsibility for the entire investigation and Assistant United States Attorney William B. Pollard III was designated principal Assistant. See id.; affidavit of Philip Foglia, May 4, 1987. Pursuant to New York State court order, in February 1984, the Bronx District Attorney's Office transferred to the U.S. Attorney various third party documents obtained by subpoena during the state investigation. All of these documents were made available to the defendants in the instant case. With one exception now under seal,[2] no Bronx grand jury transcripts have been seen by federal prosecutors. Similarly, Foglia and A.U.S.A Pollard have not obtained any information derived from Bronx grand jury witnesses nor have they seen the files of Paul Battiste, the Bronx District Attorney who conducted the state investigation. The federal investigation leading to the filing of the instant indictment was based on material from the New York State Investigation Commission, third party documents obtained from the Bronx District Attorney's Office, and the work of the 1219 federal grand jury. See affidavit of William B. Pollard III, July 16, 1987; affidavit of Philip Foglia, May 4, 1987. Defendants contend that the relationship between the U.S. Attorney and the Bronx District Attorney's office imposes a duty upon the federal government to obtain and make available to defendants the Bronx grand jury material. The existence of a close relationship between two prosecutor's offices is relevant to considerations of discovery responsibilities.[3] The relationship between the U.S. Attorney and the Bronx District Attorney's Office in regard to the investigation of corruption at Co-op City was previously addressed in the Southern District of New York in the case of United States v. Farrell, 86 Cr. 781 (JMW). In that case, the defendants moved for an order requiring the government to produce the same grand jury materials sought in the instant motion. Finding that there had been no joint investigation and that the U.S. Attorney had no control over the Bronx material, Judge Walker, without conducting an evidentiary hearing, denied the defendant's application. See United States v. Farrell, 86 Cr. 781 (JMW) Transcript of May 20, 1987 at 1-9. Similarly, this court finds that in the face of the affidavits submitted by the government, the defendants' claim that the government, through a joint investigation with the Bronx District Attorney, has control of the material sought is insufficient to prompt an evidentiary hearing.[4] Furthermore, as this court finds that there was no joint investigation, and that the government has no possession, custody, or control of the Bronx material, the defendants' motion pursuant to Fed.R.Crim.P. 16 is denied. Similarly, this court declines to order the production of the requested materials pursuant to Brady v. Maryland, 373 U.S. 83, 83 S. Ct. 1194, 10 L. Ed. 2d 215 (1963).[5]Brady does not require the 1220 government to search for exculpatory material not within its possession or control.[6]See Pina v. Henderson, 752 F.2d 47, 49-50 (2d Cir.1985); United States v. Walker, 559 F.2d 365, 373 (5th Cir.1977). Furthermore, even if the Bronx materials were indeed exculpatory and indeed within the control of the government, it does not necessarily follow that such material would fall within the ambit of Brady. Brady requires the disclosure of exculpatory evidence which, if suppressed, would deprive the defendant of a fair trial. United States v. Bagley, 473 U.S. 667, 105 S. Ct. 3375, 87 L. Ed. 2d 481 (1985). Under the Brady rule, however, the government has not "suppressed" evidence if the defendant "either knew ... or should have known ... of the essential facts permitting him to take advantage of any exculpatory evidence." United States v. LeRoy, 687 F.2d 610, 618 (2d Cir.1982), cert. denied, 459 U.S. 1174, 103 S. Ct. 823, 74 L. Ed. 2d 1019 (1983); see Williams v. United States, 503 F.2d 995, 998 (2d Cir. 1974). As the Second Circuit stated in United States v. LeRoy, 687 F.2d at 619, "the rationale underlying Brady is not to supply a defendant with all the evidence in the Government's possession which might conceivably assist the preparation of his defense, but to assure that the defendant will not be denied access to exculpatory evidence only known to the Government." In the instant case, the defendants are well aware of the existence of the Bronx grand jury materials. If they seek to obtain such material, they may apply for an order of the Bronx County Supreme Court allowing them access to the material in question.[7]See In re District Attorney, 58 N.Y.2d 436, 442-43, 448 N.E.2d 440, 443-44, 461 N.Y.S.2d 773, 776 (1983). The U.S. Attorney does not possess or control the documents sought. The documents played no role in the federal prosecution. Furthermore, like the defendants, the government would not be able to acquire the materials sought without a court order. Under the facts of this case, the court sees nothing in Brady that places the burden of acquiring the grand jury materials on the government. The defendants are aware of the material sought and may obtain it as readily as the government. Further, to place this burden on the government would needlessly and unfairly prejudice their case. See supra note 6. Accordingly, the defendants' motion pursuant to Brady is denied. 1221 II. MOTIONS TO SEVER A. Motions to sever the case against the defendants. Defendant Lustig has moved to have the case against him severed from the prosecution of the Guerrerios. The Guerrerios, in turn, have moved to have their case severed from the prosecution of Lustig. All of the defendants contend that such a severance is appropriate due to the danger of prejudicial spillover. Similarly, Robert Guerrerio, Jr., also raising the issue of prejudicial spillover, has moved to have the case against him tried separately. For the reasons stated below, the motions are denied. Rule 14 of the Federal Rules of Criminal Procedure provides that: [i]f it appears that a defendant or the government is prejudiced by a joinder of offenses or of defendants in an indictment or information or by such joinder for trial together, the court may order an election or separate trial of counts, grant a severance of defendants or provide whatever other relief justice requires. The decision to sever a case is left to the discretion of the district court. United States v. Abrams, 539 F. Supp. 378, 381 (S.D.N.Y.1982). To prompt severance, however, the moving party must demonstrate that a joint trial would not merely decrease the likelihood of acquittal, but rather would in effect deny him a fair trial. Id.; United States v. Aloi, 449 F. Supp. 698, 739 (E.D.N.Y.1977); see also United States v. Clemente, 494 F. Supp. 1310, 1324-25 (S.D.N.Y.1980), aff'd, 640 F.2d 1069 (2d Cir.), cert. denied, 454 U.S. 820, 102 S. Ct. 102, 70 L. Ed. 2d 91 (1981) (severance to be granted only upon showing of substantial prejudice). As a general rule, persons jointly indicted should be jointly tried. Such a rule "conserves judicial resources, alleviates the burdens on citizens serving as jurors, and avoids the necessity of having witnesses reiterate testimony in a series of trials." United States v. Lyles, 593 F.2d 182, 191 (2d Cir.)(quoting United States v. Borelli, 435 F.2d 500, 502 (2d Cir.1970), cert. denied, 401 U.S. 946, 91 S. Ct. 963, 28 L. Ed. 2d 229 (1971)), cert. denied, 440 U.S. 972, 99 S. Ct. 1537, 59 L. Ed. 2d 789 (1979). Given these standards and under the facts of the instant case, the risks of prejudice to the various defendants are not so great as to prompt a severance of the prosecution. Defendant Lustig is charged in count one of the indictment, the tax conspiracy count, with creating and using fictitious invoices to conceal income skimmed from Rey Caulking. In count one, Lustig is named in one overt act, giving false Ajax invoices to Dominic DeFebo in order to conceal money DeFebo laundered for Rey Caulking. Lustig is also named in count fifteen. Count fifteen charges the defendant obstructed justice by counseling DeFebo, then a witness before a federal grand jury, not to produce Ajax business records which Lustig had previously given him. This obstruction, however, was not listed as a goal of, or an overt act to the conspiracy charged in count one. The Guerrerios argue that they should be severed from Lustig because the charges against Lustig are remote from the offenses charged against them. The Guerrerios further profess that a joint trial would be prejudicial and would confuse the jury in its efforts to determine the facts of the case. In support of their claim of jury confusion, the Guerrerios refer to the July 1, 1985 conversation between Lustig and DeFebo. DeFebo tape recorded that conversation which included DeFebo's characterizations of the events leading to the filing of the instant indictment. The Guerrerios claim that these characterizations, although largely refuted by Lustig at the time of the conversation, build up to a prejudicial momentum which would cloud the jury's perception of the facts. The Guerrerio defendants further argue that the tape would be admissible as evidence only against Lustig.[8] These factors, 1222 it is contended, require severance of the case. The court, however, finds that no such severance is necessary. Even if the tape is ultimately found to be admissible only against Lustig, see supra note 8, that decision alone would not compel severance. See United States v. Rucker, 586 F.2d 899, 902 (2d Cir.1978). Purported differences in degree of guilt are not sufficient grounds for separate trials. United States v. Aloi, 511 F.2d 585, 598 (2d Cir.), cert. denied, 423 U.S. 1015, 96 S. Ct. 447, 46 L. Ed. 2d 386 (1975). Similarly, a properly joined defendant is not entitled to a separate trial merely because there would be testimony relating to other criminal activities of his co-defendants. See United States v. Weisman, 624 F.2d 1118, 1129-30 (2d Cir.), cert. denied, 449 U.S. 871, 101 S. Ct. 209, 66 L. Ed. 2d 91 (1980). At the close of trial in this case, the court will instruct the jury that the guilt or non-guilt of each defendant is to be determined individually. Further, instructions on the limited use of evidence, if appropriate, will be issued. Accordingly, the court is confident that the jury will be able to "`compartmentalize' the evidence presented to it, and distinguish among the various defendants in [this] multi-defendant suit." United States v. Abrams, 539 F. Supp. 378, 381 (S.D.N.Y.1982). Therefore, the risks of prejudice are not so great as to justify granting the Guerrerio defendants' motion to sever. Defendant Lustig has also moved to have the case against him severed from the case against the Guerrerios.[9] In moving for a severance, Lustig stresses his professed lesser degree of culpability and the fact that he is named in only two of the fifteen counts in the indictment. A lesser degree of involvement, however, does not in and of itself justify the severing of a prosecution. United States v. Aloi, 511 F.2d 585, 598 (2d Cir.), cert. denied, 423 U.S. 1015, 96 S. Ct. 447, 46 L. Ed. 2d 386 (1975). In the instant indictment, it is alleged that Lustig and his shell corporation Ajax aided Dominic DeFebo in laundering Rey Caulking money on behalf of Robert Guerrerio Sr. The indictment charges a single conspiracy and that Lustig participated in that conspiracy. Given the joint nature of the alleged conspiracy, it is entirely appropriate that the participants be jointly tried. See United States v. Ebner, 782 F.2d 1120, 1127 (2d Cir.1986). With appropriate instructions to the jury, there is no reason why Lustig should not be tried with his co-conspirators. Citing the danger of prejudicial spillover, defendant Robert Guerrerio Jr. has also moved pursuant to Fed.R.Crim.P. 14 for a severance of the prosecution against him. Robert Guerrerio Jr. is named as a co-conspirator in count one and is charged in count three with the substantive offense of subscribing a false and fraudulent corporate tax return. Like Lustig, Robert Guerrerio Jr. contends that compared to the other defendants, especially Robert Guerrerio Sr., his role in the crimes charged is minor. Robert Guerrerio Jr. also cites the danger of prejudical spillover due to his familial relationship with some of the other defendants. 1223 This court, however, finds that a severance is not warranted under the facts of this case. It is alleged that Robert Guerrerio Jr. was involved in the core criminal conduct concerning both corporate and personal tax fraud. See indictment, count 1(2); 1(3)(a); 1(3)(c); 1(3)(f); 1(13)(s). Robert Guerrerio Jr.'s alleged participation in the tax scheme is far from de minimis and best understood in the context of the acts of his co-conspirators. Consequently, this court finds it appropriate that Robert Guerrerio Jr. stand trial with his alleged co-conspirators. At the close of the trial, this court shall instruct the jury that the guilt or non-guilt of each defendant must be determined individually. Furthermore, limiting evidentiary instructions shall be made if appropriate. As the court is satisfied that the jurors will be able to keep the defendants and relevant testimony separate in their minds, the defendants' motions for severance are denied. B. Motion to sever the counts of the indictment. Defendant Lustig has asserted that the various counts of the indictment should be severed as being unrelated. Joinder of offenses is governed by by Rule 8 of the Federal Rules of Criminal Procedure. Rule 8 provides: (a) Joinder of offenses. Two or more offenses may be charged in the same indictment or information in a separate count for each offense if the offenses charged, whether felonies or misdemeanors or both, are of a similar character or are based on the same act or transaction or on two or more acts or transactions connected together or constituting parts of a common scheme or plan. (b) Joinder of defendants. Two or more defendants may be charged in the same indictment or information if they are alleged to have participated in the same act or transaction or in the same series of acts or transactions constituting an offense or offenses. Such defendants may be charged in one or more counts together or separately and all of the defendants need not be charged in each count. Like Rule 14, Rule 8 is "designed to promote economy and efficiency and avoid a multiplicity of trials, where these objectives can be achieved without substantial prejudice to the right of the defendants to a fair trial." Bruton v. United States, 391 U.S. 123, 131 n. 6, 88 S. Ct. 1620, 1625 n. 6, 20 L. Ed. 2d 476 (1968); but see United States v. Werner, 620 F.2d 922, (2d Cir. 1980)(Rule 8 joinder is a question of law, subject to full appellate review, Rule 14 severance is left to sound discretion of the district court). Although Lustig protests the joinder of the offenses in the instant indictment, the appropriateness of the joinder is to be determined by reference to Rule 8(b). See United States v. Turbide, 558 F.2d 1053, 1061 n. 7 (2d Cir.), cert. denied, 434 U.S. 934, 98 S. Ct. 421, 54 L. Ed. 2d 293 (1977); United States v. Papadakis, 510 F.2d 287, 299-300 (2d Cir.), cert. denied, 421 U.S. 950, 95 S. Ct. 1682, 44 L. Ed. 2d 104 (1975). When a defendant in a multiple defendant case challenges joinder of offenses, the proper inquiry is whether the co-defendants participated in the "same series of acts or transactions constituting an offense or offenses." Fed.R.Crim.P. 8(b); United States v. Ostrer, 460 F. Supp. 1388, 1390 (1978). In the instant case, the requirements of Rule 8(b) are met. All of the defendants are named as co-conspirators in count one of the indictment, the tax conspiracy. The offenses charged in counts two through fourteen clearly refer back to count one's enumeration of overt acts or means by which the conspiracy was carried out. Regarding count fifteen, the charge that Lustig obstructed justice by counseling Dominic DeFebo to withhold evidence from the grand jury, however, the connection of that count to the remainder of the indictment is less obvious. Lustig's alleged obstruction is not listed as an overt act to the conspiracy or a means by which the conspiracy was carried out.[10] Furthermore, 1224 the alleged obstruction took place in July 1985, over two and one half years after the date of the last overt act listed in count one. Nevertheless, this court finds that the joinder of count fifteen does meet the requirements of Rule 8(b). The obstruction of justice charged was calculated to conceal the tax conspiracy. Lustig's alleged instructions to DeFebo can only be understood in the context of the original conspiracy. See United States v. Colasurdo, 453 F.2d 585 (2d Cir.1971), cert. denied, 406 U.S. 917, 92 S. Ct. 1766, 32 L. Ed. 2d 116 (1972); see also Pacelli v. United States, 588 F.2d 360, 367 n. 20 (2d Cir.1978), cert. denied, 441 U.S. 908, 99 S. Ct. 2001, 60 L. Ed. 2d 378 (1979); United States v. Borelli, 336 F.2d 376, 387 (2d Cir.1964), cert. denied, 379 U.S. 960, 85 S. Ct. 647, 13 L. Ed. 2d 555 (1965) (conspiracy may supply nexus allowing joinder pursuant to Fed.R. Crim.P. 8). Thus, each of the counts of the indictment arises from a common scheme, the tax conspiracy. Accordingly, Lustig's motion to sever the counts of the indictment is denied.[11] III. MOTION FOR A BILL OF PARTICULARS The defendants have moved for an order directing the government to file a bill of particulars. By letters dated February 25, 1987, and April 30, 1987, the defendants informally requested that the government supply a bill of particulars. The government, by letter dated March 9, 1987, declined to supply any particulars with the exception of a list of known conspirators and the particular that the government was alleging that, under the facts of this case, disability payments are subject to taxation. Following the government's limited response, the defendants filed the instant motion. The purpose of a bill of particulars is to apprise defendants of the essential elements of the crimes with which they are charged. United States v. Leonelli, 428 F. Supp. 880, 882 (S.D.N.Y.1977); see United States v. Salazar, 485 F.2d 1272, 1278 (2d Cir.1973), cert. denied, 415 U.S. 985, 94 S. Ct. 1579, 39 L. Ed. 2d 882 (1974). Thus, ordering the filing of a bill of particulars is appropriate only when the indictment is cast so generally that it does not advise the defendants of the specific acts of which they are accused. United States v. Leonelli, 428 F. Supp. 880, 882 (S.D.N.Y. 1977). The test is not whether the particulars sought would be useful to the defense. Rather, a more appropriate inquiry is whether the information in question is necessary to the defense. See United States v. Leighton, 265 F. Supp. 27, 35 (S.D.N.Y. 1967). In the instant case, the particulars sought are not necessary to the defense. The government has provided the defendants with "voluminous discovery."[12] Defendants' Memo. at 32 n. 15. Furthermore, the indictment itself is sufficiently detailed to allow the defendants to adequately prepare a defense, avoid prejudicial surprise at trial, and raise any possible defense of double jeopardy. United States v. Remy, 658 F. Supp. 661, 669 (S.D.N.Y.1987). Perhaps, the particulars sought would be useful to the defendants. A bill 1225 of particulars, however, is not a discovery tool and is not intended to allow defendants a preview of the evidence or the theory of the government's case. See United States v. Culoso, 461 F. Supp. 128, 134 & n. 8 (S.D.N.Y.1978), aff'd mem., 607 F.2d 999 (2d Cir.1979). Further, the government is not obliged to disclose the precise manner in which the crimes alleged in the indictment were committed. See United States v. Andrews, 381 F.2d 377, 377-78 (2d Cir. 1967) (per curiam), cert. denied, 390 U.S. 960, 88 S. Ct. 1058, 19 L. Ed. 2d 1156 (1968); United States v. Remy, 658 F. Supp. 661, 670 (S.D.N.Y.1987). Accordingly, defendants' motion for an order directing the government to file a bill of particulars is denied. IV. MOTION TO STRIKE SURPLUSAGE FROM THE INDICTMENT The defendants have moved to strike from the indictment references that Robert Guerrerio Sr. paid "bribes" or "pay-offs" to Fernando Bragaglia, a New York State building inspector, and George DeMeo, a Co-op City employee.[13] Rather, defendants propose that the challenged terms be replaced by the word "payments." Similarly, defendant Robert Guerrerio Jr. has moved to delete from count one references to disability payment obtained through an allegedly false representation that Robert Guerrerio Sr. was unable to work.[14] In the alternative, the defendants move to have the court rule on this issue after trial, witholding the unedited indictment from the jury and forbidding any reading of the challenged terms during the government's opening statement.[15] A motion to strike surplusage from an indictment will be granted only when it is clear that the challenged terms are: 1) irrelevant to the crime charged, and 2) inflammatory and prejudicial. United States v. Louie, 625 F. Supp. 1327, 1341 (S.D.N.Y. 1985). Given this exacting standard, such motions are rarely granted. See United States v. DePalma, 461 F. Supp. 778, 797 (S.D.N.Y.1978). The defendants argue that the terms "bribes" and "pay-offs" are unduly prejudicial in that the payments in question were prompted by the extortionate acts of Bragaglia and DeMeo. As extortion is a defense to bribery, United States v. McPartlin, 595 F.2d 1321, 1338 (7th Cir.), cert. denied, 444 U.S. 833, 100 S. Ct. 65, 62 L. Ed. 2d 43 (1979); N.Y. Penal Law section 200.05 (McKinney 1975), defendants contend that it is unfair to prejudge the payments as "bribes" or "pay-offs." The government has conceded that at least regarding the payments to Bragaglia, there were indeed elements of extortion involved. The government, however, maintains that the extortion must be viewed in the context of the larger scheme to defraud Co-op City. If the payments were not made, that scheme would have collapsed. The court finds that in light of the government's argument, the terms "bribes" and "pay-offs" are relevant to the conspiracy charged in count one. Accordingly, the motion to strike those terms is denied. Regarding the reference in count one to Robert Guerrerio Sr.'s allegedly fraudulent claim of disability, Robert Guerrerio Jr. contends that the fraud was "designed simply to increase income, [and was] not necessarily part of a conspiracy to evade taxes." Memo. of Robert Guerrerio Jr. at 7. Consequently, this defendant argues that the reference to fraud should be stricken. The government, in response, contends that that the challenged term is not only relevant to the crime charged, but its presence is necessary to demonstrate the culpable nature of the act charged. The government must prove that the disability payments made to Robert Guerrerio *1226 Sr. and his family were obtained by fraud in order to include that money as taxable income. See I.R.C. section 61(a); James v. United States, 366 U.S. 213, 81 S. Ct. 1052, 6 L. Ed. 2d 246 (1961) (illegally obtained funds are included as gross income). Without such a showing, the payments would not be subject to income taxation. See I.R.C. section 104 (compensation for injuries or sickness not included as gross income). Thus, the allegation of fraudulent conduct is clearly relevant to the charge that the defendants conspired to violate the tax code. Accordingly, the motion to strike the reference to fraud is denied. CONCLUSION The court defers ruling on the motion to suppress statements of John Guerrerio until after an evidentiary hearing has been conducted. The remaining four motions are denied. SO ORDERED. NOTES [1] On March 11, 1987, and April 29, 1987, this court conducted hearings on the propriety of a single law firm, Stroock, Stroock & Lavan, representing two co-defendants. Joel Cohen and Thomas Puccio, then both partners in the Stroock firm, sought to continue their respective representation of Rosalie Guerrerio and Robert Guerrerio, Sr. The court concluded that the defendants' choice of counsel had been made knowingly and intelligently, and permitted the multiple representation. See United States v. Iorizzo, 786 F.2d 52 (2d Cir.1986); United States v. Curcio, 680 F.2d 881 (2d Cir.1982). Since the commencement of this action, however, Thomas Puccio has left Stroock, Stroock & Lavan to join the firm of Milbank, Tweed, Hadley & McCoy. Mr. Puccio still represents Robert Guerrerio, Sr. [2] On April 25, 1987, Assistant United States Attorney Pollard was reviewing materials obtained from the New York State Investigation Commission. Therein, he found a transcript from proceedings before the Bronx grand jury. As there had been no state court order permitting such a disclosure to the U.S. Attorney, A.U. S.A. Pollard, without reading the transcript, arranged to have the transcript sealed. See affidavit of William B. Pollard III at 10, n. 1., July 16, 1987. [3] In support of the proposition that the government possesses and must produce the Bronx materials, the defendants cite United States v. Paternina-Vergara, 749 F.2d 993 (2d Cir.1984), cert. denied, 469 U.S. 1217, 105 S. Ct. 1197, 84 L. Ed. 2d 342 (1985). In that case, the Second Circuit found that the existence of a joint investigation between the U.S. Drug Enforcement Agency and the Royal Canadian Mounted Police required the U.S. government to make good faith efforts to obtain Jencks Act statements possessed by the Canadians. Like Fed.R. Crim.P. 16, the Jencks Act applies to material in the possession of the United States. The Second Circuit found that even absent actual possession of the material sought, the close relationship between the two prosecutors' offices did place an added discovery obligation on the U.S. government. The Paternina-Vergara holding, however, is readily distinguishable from the case at bar. In Paternina-Vergara, there was extensive cooperation between U.S. and Canadian prosecutors. Further, the A.U.S.A. had reviewed, copied or summarized every document in the R.C.M.P.'s investigative file. In the instant case, however, the affidavits submitted by the government establish that there was no joint investigation and that the U.S. Attorney has no possession, custody or control of the material sought by the defendants. Unlike Paternina-Vergara, there was no close relationship requiring the government to seek documents possessed by another prosecutor's office. In the instant case, as there was no joint investigation, the government has no duty to seek the Bronx materials. Cf. id. at 997 (documents of local police not subject to Jencks Act absent a joint investigation). [4] The defendants base their claim on a government press release dated December 12, 1986. The release states that a "joint investigation is being conducted by the United States Attorney's Office, the District Attorney's Office of Bronx County, The Internal Revenue Service Criminal Investigation Division, Brooklyn and Manhattan Offices, the U.S. Department of Labor Inspector General's Office, the U.S. Department of Health and Human Services Inspector General's Office, and the Immigration and Naturalization Service Investigation Branch." Affidavit of Joel Cohen, Exhibit F, May 5, 1987. The government has now contested the press statement with the affidavits of two prosecutors with personal knowledge of the history of this case. The defendants' claim is not supported by affidavit of any person with personal knowledge of the nature of the relationship between the U.S. Attorney's and the Bronx District Attorney's office. Accordingly, this court denies defendants' request for a evidentiary hearing on the nature of that relationship. Cf. United States v. Gillette, 383 F.2d 843 (2d Cir.1967); United States v. Martinez, 634 F. Supp. 1144, 1147 (S.D.N.Y.1986). [5] The defendants have identified the testimony of Dominick Sabitini, a witness before the federal grand jury, as Brady material. Affidavit of Joel Cohen at 2-3, May 5, 1987. The government, acknowledging its Brady responsibilities, has advised the defendants of the nature of that testimony. [6] In United States v. Shakur, 543 F. Supp. 1059 (S.D.N.Y.1982) (memorandum and order), the district court required the federal government to search for Brady material possessed by the Rockland County District Attorney. The court found that the government's claim that it should not be required to obtain material not in its actual possession was "hypertechnical and unrealistic." Id. at 1060. In so ruling, the court stated the "United States Attorney does not dispute that there has been and still is cooperative activity between him and the District Attorney of Rockland County with respect to the alleged crime charged in this indictment. Consequently, there should be no difficulty in obtaining such Brady material in the possession of the District Attorney of Rockland County of which the United States Attorney himself does not have immediate physical possession." Id. In the instant case, the distinction drawn between the state and federal investigation is far from "hypertechnical and unrealistic." Here, there was no joint investigation. Furthermore, unlike in Shakur, the federal government does not have ready access to the material sought. The U.S. Attorney could obtain the grand jury material only upon issuance of a court order following a showing of a compelling and particularized need. In re District Attorney, 58 N.Y.2d 436, 448 N.E.2d 440, 461 N.Y.S.2d 773 (1983). Also arguing against having the government rather than the defendants seek the grand jury material is the danger of placing an onerous Kastigar burden on the government. In Kastigar v. United States, 406 U.S. 441, 92 S. Ct. 1653, 32 L. Ed. 2d 212 (1972), the Supreme Court held that the government has the burden in a subsequent criminal prosecution to prove that the evidence to be used is derived from a legitimate source completely independent of compelled immunized testimony. If the federal government is prosecuting or investigating a person who testified under grant of immunity in the Bronx, Kastigar taint issues could be needlessly raised. [7] Section 190.25(4)(a) of the New York Criminal Procedure Law provides that grand jury proceedings are secret. Such material can be disclosed only upon court order issued on a showing of a compelling and particularized need. In re District Attorney, 58 N.Y.2d 436, 444, 448 N.E.2d 440, 444, 461 N.Y.S.2d 773, 777 (1983). [8] The Guerrerio defendants contend that the tape is inadmissible hearsay against them because the statements "were not made during the course and in furtherance of the conspiracy which ended in 1982." Defendant's Memo. at 17; see Fed.R.Evid. 801(d)(2)(E); see also Grunewald v. United States, 353 U.S. 391, 77 S. Ct. 963, 1 L. Ed. 2d 931 (1957) (absent direct evidence of agreement, acts of concealment in and of themselves are insufficient to sustain a conviction for conspiracy to conceal). Contending that the conspiracy existed up and to the date of the filing of the indictment, the government maintains that the tape is admissible against all defendants as the act or statement of a co-conspirator. See Fed.R.Evid. 801(d)(2)(E); see also United States v. Colasurdo, 453 F.2d 585 (2d Cir.1971), cert. denied, 406 U.S. 917, 92 S. Ct. 1766, 32 L. Ed. 2d 116 (1972) (concealment phase is part of the conspiracy if concealment was the essence of the conspiracy). There is currently no suppression motion or motion in limine before this court. Accordingly, this court will rule on the admissibility of the tape when an appropriate motion is filed or when the tape is offered into evidence at trial. Regardless of the ultimate resolution of this issue, the dangers of prejudice presented by the tape are not so great as to prompt a severance. [9] Lustig has both joined in the Guerrerios' motion and filed a separate motion to sever in his own behalf. Similarly, Robert Guerrrio Jr. joins in the other motions to sever. [10] The indictment does charge, however, that the tax conspiracy continued up to the date of the filing of the indictment, December 12, 1987. Lustig's alleged obstruction of justice took place before that date. Further, the government now contends that Lustig's alleged act was made in furtherance of the tax conspiracy. See Government's Memo at 15. [11] As indicated by the earlier discussion of Lustig's motion for severance pursuant to Fed.R. Crim.P. 14, considerations of possible prejudice to the defendant do not justify severance of the indictment. At the close of trial in this case, the jury will be instructed that the guilt or non-guilt of each defendant for each count of the indictment must be decided individually. Under the facts of the instant case, this court does not doubt that the jury will be able to follow that instruction. [12] The defendants protest that the government has not offered any guidance in interpreting or characterizing the vast number of documents produced. There is, however, no requirement that the government allow the defendants a preview of the government's evidence or the theory of its case. See United States v. Culoso, 461 F. Supp. 128, 134 n. 9 (S.D.N.Y.1978), aff'd mem., 607 F.2d 999 (2d Cir.1979). Discovery alone may not obviate the need for a bill of particulars in some cases. In the instant case, however, the indictment itself is sufficiently detailed so as to make a bill of particulars unnecessary. [13] Indictment paragraphs 3(h) and (i) allege "cash pay-offs" to Bragaglia and DeMeo as a means by which the tax conspiracy was carried out. Paragraphs 13(b), (c), (f), (g), and (o), allege "cash bribes" to these individuals as overt acts in the tax conspiracy. [14] The alleged false representation is listed in count one as a means by which the tax conspiracy was carried out. [15] As this court has ruled on the motion to strike surplusage, defendants' motion in the alternative is denied.	01-03-2023	10-30-2013
https://www.courtlistener.com/api/rest/v3/opinions/2594092/	843 F. Supp. 424 (1994) PERHATS ASSOCIATES, INC., et al., Plaintiff, v. FASCO INDUSTRIES, INC., et al., Defendants. No. 94 C 684. United States District Court, N.D. Illinois, E.D. February 7, 1994. 425 Margaret Borcia, of Morrison & Morrison, Waukegan, IL, for plaintiff. Stephen J. Landes, David I. Herbst, Catherine A. Simmons of Holleb & Coff, Chicago, IL, for defendants. MEMORANDUM OPINION AND ORDER SHADUR, Senior District Judge. Codefendants Fasco Industries, Inc. ("Fasco") and von Weise Gear Company ("von Weise") have filed a Notice of Removal (the "Notice") of this diversity-of-citizenship action from the Circuit Court of the Nineteenth Judicial District, Lake County, Illinois. This is the second Fasco-von Weise attempt at removal on the first go-around this Court was compelled to remand the case sua sponte on October 19, 1992 because of a then-existing subject matter jurisdictional problem: the absence of a factual showing by Fasco and von Weise of the requisite more-than-$50,000 amount in controversy as to any of the 16 plaintiffs. Now Fasco and von Weise have set out the recently-derived information that, they contend in Notice ¶¶ 14 and 15 (together with accompanying Exhibits H, I & J), has first established the monetary predicate for federal jurisdiction. All of plaintiffs' claims as stated in their Complaint are unliquidated in amount, with no indication there as to how much any plaintiff is actually claiming (that was the problem that forced the original remand). Once the case was returned to the Circuit Court, Fasco and von Weise therefore served early interrogatories in an effort to ascertain the scope of plaintiffs' money claims. Whether in an effort to avoid removal or otherwise, plaintiffs continued to delay the disclosure of both (1) the identity of their expert witnesses (stating that the witnesses had not yet been selected) and (2) thus necessarily the opinions of any such witnesses.[1] Finally on January 10, 1994 plaintiffs did disclose the identity of their damages expert, coupled with a disclosure of his methodology for calculating damages (Notice Ex. H). Notice Exs. I and J then set out the Fasco-von Weise calculation of each plaintiff's claim based on that methodology and in every instance the claim far exceeds the $50,000 threshold.[2] Under the 1988 enactment of the Judicial Improvements and Access to Justice Act, the removal provisions of 28 U.S.C. § 1446(b)[3] were modified to deal in this fashion with the situation in which the potential for removal becomes apparent only at some time after a lawsuit is first filed in the state court: If the case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable, except that a case may not be removed on the basis of jurisdiction conferred by section 1332 of this title more than 1 year after commencement of the action. Fasco and von Weise have plainly met the 30-day test by acting just 23 days after the basis for plaintiffs' claims was first quantified for them but they are foreclosed from the current removal by the same provision's unequivocal prohibition on removal more than 426 one year after the action was first brought on September 3, 1992. It is quite true that Congress' no-exceptions enactment of that one-year time bar may lend itself to stonewalling or other delaying tactics by a plaintiff or plaintiffs who are bound and determined to stay clear of what they may view as the clutches of a federal court. But the statutory language is crystal-clear, and federal judges do not sit as superlegislators to amend or repeal the work of Congress. Professor David Siegel's commentary on the 1988 revision, which is reproduced at pages 3 and 4 of the 1993 pocket part to the United States Code Annotated volume containing Sections 1446 to 1650, contains an enlightening and useful discussion of the one-year time bar provision. In doing so, Professor Siegel specifically identifies the prospect of mandatory dismissals such as the one compelled here. In relevant part the Professor makes the point that Congress fully realized the risks built into such an unconditional time limitation but chose to enact the legislation in the current form anyway: The amendment puts a one-year cap on removal if the purported basis for the federal jurisdiction is the diversity of citizenship of the parties. * * * * * * The result in a given case is made to depend on the procedural variations and perhaps the procedural eccentricities of the particular state's practice. The amendment may sometimes give too much control to the state court plaintiff who wants to resist a removal to the federal court at all costs. * * * * * * The one-year cutoff therefore has an anti-diversity ring to it. Congress acknowledged this, but called it a "modest curtailment." To be sure, the result dictated by Section 1446(b) is regrettable. It puts a premium on a party's ability to devise what may well be characterized as dubious litigation tactics. But it should also be pointed out that counsel for Fasco and von Weise had ample opportunity to exercise some ingenuity of their own to avoid the current outcome. Even if a better way to smoke out plaintiffs' position had not occurred to defense counsel on their own, as far back as May of last year this Court expressly identified the way to do so in its dissent in Shaw v. Dow Brands, Inc., 994 F.2d 364, 376 (7th Cir.1993) (certain footnotes omitted) indeed anticipating exactly the situation in which Fasco and von Weise found themselves in the Circuit Court:[4] Any defendant who has not received a demand from plaintiff before suit is filed and who is then confronted with the indefinite "more than $15,000" recital in a complaint such as Shaw's, and who is therefore unable to know whether plaintiff is really seeking more than $50,000 (so that the 30-day clock of Section 1446(b) has not begun to tick), need only direct a few well-chosen interrogatories to plaintiff as specifically authorized by the last sentence of Section 2-604 [735 ILCS 5/2-604]. For example: 1. State the amount of the damages actually being sought in this action. 2. State whether you are prepared to agree that the damage award will in no event exceed $50,000. If both of those answers reflect a commitment on plaintiff's part that no more than $50,000 is in controversy, it must follow under the teaching of St. Paul Mercury Indemnity [303 U.S. 283, 58 S. Ct. 586, 82 L. Ed. 845 (1938)] that defendant has no right to remove the case (and plaintiff and defendant are thus placed on an equal footing in federal jurisdictional terms, as must be the case). But if plaintiff is unwilling to commit to the limitation requested in the second interrogatory, defendant then knows that plaintiff has acknowledged that more than $50,000 may be in dispute. And if defendant has the kind of information *427 to support a good faith belief to the same effect, defendant then has the full 30-day period within which to remove the case, for only then does the time clock begin to run under the express provisions of Section 1446(b): [Quotation of the statutory language omitted].8 8 No jeopardy is created for a defendant by that last clause's one-year limitation, which was added by the 1988 amendment to Section 1446(b). Defendant is free to transmit the appropriate interrogatories to plaintiff at the very outset of the case in the state court. But that was not done in time here,[5] so that the one-year iron curtain changed down, and the Fasco-von Weise Notice was therefore time-barred.[6] Although the one-year outside limit is certainly stated as an absolute prohibition, Section 1446(b) does not expressly identify it either as a nonwaivable condition of removal or as a provision that is subject to possible waiver (as is the case with the 30-day requirement). Accordingly counsel for plaintiffs are ordered to file in this Court's chambers on or before February 17, 1994 a statement as to whether their clients are or are not objecting to the Notice on timeliness grounds. This Court will then proceed to act in accordance with that filing. NOTES [1] Although the state trial judge had originally set a June 1, 1993 outside date for such disclosures, plaintiffs moved for and obtained two successive extensions of that deadline (Notice ¶¶ 11-12 and Exs. E and F). [2] That statement should be qualified a bit. This Court's threshold look at the Complaint has revealed no apparent basis for suit by any of the individual plaintiffs except for Jerry Singer all of the other individual plaintiffs were only officers of their respective corporations that had entered into sales agreements with von Weise. But if that is in fact the case, it would not taint the removal. Instead it would simply result in the dismissal of the claims asserted by those individual plaintiffs. [3] All further references to Title 28's provisions will simply take the form "Section ." [4] Although this Court parted company with the majority in Shaw on the outcome in that case, the majority opinion by Judge Cummings said this about what is about to be quoted in the text (994 F.2d at 367): Judge Shadur's suggestion is eminently sensible and we recommend it to removal-minded defendants in Illinois. [5] At some point the Fasco-von Weise counsel did serve a Request for Admissions asking plaintiffs to admit that their damages exceeded $50,000 (Notice ¶ 13), but each plaintiff responded on December 20, 1993 after the one-year bar date was already past by hedging (Notice Ex. G). [6] Notice ¶ 17 points to the court's refusal in Kite v. Richard Wolf Medical Instruments Corp., 761 F. Supp. 597 (S.D.Ind.1989) to apply Section 1446(b) as written. This Court makes no comment as to the exception judicially created in that case to the unambiguous statutory language under the circumstances posed there. But it will not "enact" any comparable special exception here.	01-03-2023	10-30-2013

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