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10,517,410 | William C. WARDLAW, Appellant, v. William R. PICKETT, Deputy United States Marshal, et al., Appellees | Wardlaw v. Pickett | 1993-09-10 | No. 91-5070 | United States Court of Appeals for the District of Columbia Circuit | {"judges": ["Before BUCKLEY, D.H. GINSBURG and HENDERSON, Circuit Judges."], "parties": ["William C. WARDLAW, Appellant, v. William R. PICKETT, Deputy United States Marshal, et al., Appellees."], "opinions": [{"text": "Opinion for the court filed by Circuit Judge KAREN LeCRAFT HENDERSON.\nKAREN LeCRAFT HENDERSON, Circuit Judge:\nWilliam Wardlaw brought a Bivens action in district court seeking damages and alleging that United States Deputy Marshals William Pickett and Albert Crew violated his constitutional rights by using excessive force against him, falsely arresting him and wrongfully prosecuting him. Relying in part on the defendants’ claims of qualified immunity, the district court granted them summary judgment. For the reasons explained below, we affirm the district court.\nI.\nWardlaw and the two deputies presented the district court with two very different accounts of the relevant events. Because we are reviewing the grant of summary judgment in favor of the defendants, we view “the facts in the record and all reasonable inferences derived therefrom in a light most favorable to the plaintiff.” Martin v. Malhoyt, 830 F.2d 237, 253-54 (D.C.Cir.1987). Accordingly, we consider Wardlaw’s version of events.\nA. Wardlaw’s Account\nOn June 7, 1988, Wardlaw and John Heid were watching a hearing in a courtroom on the sixth floor of the United States Courthouse in Washington D.C. The hearing related to a lawsuit challenging conditions in a women’s prison and, because the Marshal’s office had received information leading it to believe that a demonstration might occur, security around the courtroom was especially tight. Late in the afternoon, the judge called a recess. Deputy Marshal Donald Horton observed that Heid refused to stand as the judge left the room. As the judge re-entered the courtroom after the recess, Horton approached Heid and told him to stand, but Heid resisted, saying that he stood for no one but God.\nDeputy Horton then asked Heid to leave the courtroom but Heid again refused, telling Horton that he would leave only if carried out. Horton summoned Deputy Marshal Crew and together the two removed Heid, who went limp instead of resisting. Outside, Horton turned Heid over to Crew and Deputy Marshal Pickett, who had come to assist. Together, Pickett and Crew moved Heid to the stairwell to take him to the first floor and from there to eject him from the courthouse. Wardlaw, who had witnessed the events involving his friend, followed.\nWhen Wardlaw first entered the stairwell, he saw Pickett holding Heid “like a sack of potatoes” and dragging him down the steps from the sixth floor. Crew accompanied Pickett and Heid. On a landing halfway to the fifth floor, according to Wardlaw, Pickett punched and kicked Heid. Simultaneously, Wardlaw rushed down the stairs toward Pickett, shouting out “Don’t hurt him please. He is totally nonviolent.” Pickett turned and punched the approaching Wardlaw once in the jaw and two or three times in the chest.\nHeid attempted to move but Crew restrained him. Heid then told Wardlaw to get the deputies’ names. At that point, Wardlaw claims that Pickett said to Crew, “We better charge them with assault.” Both Wardlaw and Heid were arrested and tried for assault. Deputies Pickett and Crew testified at the trial, at the conclusion of which Heid was convicted and Wardlaw was acquitted. See United States v. Heid, 904 F.2d 69 (D.C.Cir.1990) (summarizing events at trial). Although Wardlaw acknowledges on appeal that he refused medical treatment for his injuries after the scuffle, he maintains that he experienced substantial pain in his chest and jaw over the next several months.\nB. District Court Proceedings\nIn district court, Wardlaw alleged that Pickett and Crew committed numerous torts including false arrest, wrongful prosecution and use of excessive force. In granting the deputies summary judgment on the false arrest and wrongful prosecution claims, the district court found that “there is simply no evidence of malice or bad faith on the part of the marshals.” Mem. at 8. In addition, the court concluded that the marshals had probable cause to arrest Wardlaw for his role in the altercation.\nThe district court also granted the defendants summary judgment on the excessive force claim because it concluded that the “plaintiffs fourth amendment excessive force claim does not overcome the defense of qualified immunity.” Mem. at 11. Qualified immunity protects a government official from suits for damages if the official’s conduct did not violate clearly established rights of which a reasonable person would have known. Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S.Ct. 2727, 2738, 73 L.Ed.2d 396 (1982). To support its result, the court decided that “the unlawfulness of defendants’ actions [was not] ‘so apparent’ that no reasonable officer could have believed in the lawfulness of his actions.” Mem. at 10.\nII.\nA. Excessive Force Claim Against Pickett\nWardlaw’s excessive force argument proceeds as follows. Wardlaw first asserts a common-law privilege to intervene in an arrest in which law enforcement officers use excessive force. Although we have not ruled on the existence or scope of that privilege, it has been recognized in other jurisdictions. In addition, Wardlaw argues that two Supreme Court decisions could be interpreted as creating an inference that the privilege exists. In lmbler v. Pachtman, 424 U.S. 409, 418, 96 S.Ct. 984, 989, 47 L.Ed.2d 128 (1976), the Supreme Court indicated that a claim pursued under 42 U.S.C. § 1983 should be interpreted in conformity with traditional tort defenses and immunities. And in Butz v. Economou, 438 U.S. 478, 500, 98 S.Ct. 2894, 2907, 57 L.Ed.2d 895 (1978), the Court stated that the law governing a Bivens action should mirror section 1983 law. Accordingly, Wardlaw asserts that the privilege was clearly established at the time the incident occurred.\nWardlaw next argues that he acted within the scope of the privilege in rushing down the stairs and shouting at the two deputies to desist. An intervenor, according to Ward-law, may use force against the officers in proportion to the excess force the officers use against the arrestee. Because Pickett allegedly hit and kicked Heid, Wardlaw claims he was entitled to accost Pickett. Instead, he simply rushed down the steps shouting at Pickett; thus, Wardlaw claims he was well within the scope of the privilege. He maintains that Pickett, as the aggressor, had no right to resist and, by doing so, violated Wardlaw’s clearly established right to intervene.\nWe find this argument unpersuasive for several reasons. First, we note that jurisdictions that have recognized the privilege to intervene in an arrest have recognized it as a defense to the intervenor’s criminal and civil liability, not as a means of imposing liability on law enforcement officers. In some jurisdictions the privilege grows out of the arres-tee’s right to defend himself from the use of excessive force without incurring criminal liability. By coming to the arrestee’s aid, an intervenor places himself in the arrestee’s shoes and is entitled to defend himself. See, e.g., State v. Anderson, 40 N.C.App. 318, 253 S.E.2d 48 (1979); State v. Wenger, 58 Ohio St.2d 336, 12 O.O.3d 309, 390 N.E.2d 801 (1979). These jurisdictions, then, recognize that “one who comes to the aid of an arrestee must do so at his own peril.” State v. Gelinas, 417 A.2d 1381, 1386 (R.I.1980). Other jurisdictions allow the intervenor to assert the privilege based on a reasonable but mistaken belief that excessive force was being used against the arrestee. See, e.g., Graves v. United States, 554 A.2d 1145 (D.C.App.1989); Commonwealth v. Martin, 369 Mass. 640, 341 N.E.2d 885 (1976). Even in these jurisdictions, however, the privilege constitutes no more than a recognition of a reluctance to impose liability on individuals who reasonably acted in an attempt to save others from what they perceived as serious, imminent danger. “[I]t is hardly conceivable that the law ... should mark as criminal those who intervene to protect others.... To the fear of involvement and of injury to oneself if one answered a call for help would be added the fear of possible criminal prosecution.” Commonwealth v. Martin, 341 N.E.2d at 891; cf. State v. Westlund, 13 Wash.App. 460, 536 P.2d 20, 25 (1975) (“in rare circumstances, the brutality may be so dangerous to the arrestee that his resistance or the intervention of others is necessary to prevent death or serious disability”); Commonwealth v. French, 531 Pa. 42, 611 A.2d 175, 179 (1992) (referring to privilege as “justification” for action that would otherwise be criminal).\nThat concern, however, must be balanced against the ability of law enforcement officers to perform their duties. They must be free to use the reasonable force necessary to effect an arrest. Giving the privilege too broad a scope might easily deter officers from using force when it is necessary and justified. In recognition of this concern, some jurisdictions extend the privilege only to situations in which an officer uses excessive force capable of causing death or serious bodily injury. See e.g., Commonwealth v. French, 611 A.2d at 175; State v. Smits, 58 Wash.App. 333, 792 P.2d 565, 569 (1990). Regardless of other distinctions among the jurisdictions that recognize the privilege, the privilege to intervene has uniformly been recognized as a shield, not a sword. It is applied to exempt from liability an intervenor who reasonably attempts to save another from real danger. This rationale for the application of the privilege supports its use as a defense against criminal or civil liability but it does not justify using the privilege to impose liability on the arresting officers.\nMoreover, using the privilege to assess a law enforcement officer’s liability would create a framework for excessive force claims that places unrealistic and unjustifiable burdens on the officer. “The general rule of qualified immunity is intended to provide government officials with the ability ‘reasonably [to] anticipate when their conduct may give rise to liability for damages.’ ” Anderson v. Creighton, 483 U.S. 635, 646, 107 S.Ct. 3034, 3042, 97 L.Ed.2d 523 (1987) (quoting Davis v. Scherer, 468 U.S. 183, 195, 104 S.Ct. 3012, 3019, 82 L.Ed.2d 139 (1984)). As the Supreme Court has recognized, “[t]hat security would be utterly defeated if officials were unable to determine whether they were protected by the rule without entangling themselves in the vagaries of the English and American common law.” Id. Under the analysis that Wardlaw urges on us, an officer in Pickett’s shoes would have to determine (1) whether he had used unreasonable force against Heid, (2) whether Wardlaw was rushing at him in order to intervene in the application of force or instead to attack him, (3) whether Wardlaw intended to use force against him, (4) whether the force Wardlaw was about to use was likely to be proportional to the force he had used on Heid and, finally, based on the officer’s earlier conclusions, (5) whether he had any right to resist. Law enforcement officers are routinely required to make split second decisions but the number of decisions Wardlaw’s analysis would mandate is troubling. Even more troubling, an officer would have no room for error in making his instantaneous assessments. Liability would result from any action that violated Wardlaw’s privilege to intervene. But whenever a bystander seeks to intervene in an arrest, all parties face a dangerous and potentially explosive situation and Wardlaw’s proposal would only heighten the danger and put both the officers and the arrestee in more precarious positions.\nInstead, we recognize that, whatever the circumstances prompting law enforcement officers to use force, whether it be self-defense, defense of another or resistance to arrest, where, as here, a fourth amendment violation is alleged, the inquiry remains whether the force applied was reasonable. Determining whether the force was reasonable requires us to balance the intrusion on the rights of the individual against the government interests at stake. United States v. Place, 462 U.S. 696, 103 S.Ct. 2637, 77 L.Ed.2d 110 (1983). In Graham v. Connor, 490 U.S. 386, 397, 109 S.Ct. 1865, 1872, 104 L.Ed.2d 443 (1989), the Supreme Court established the framework for the balancing, declaring that “the question is whether the officers’ actions are ‘objectively reasonable’ in light of the facts and circumstances confronting them, without regard to their underlying intent or motivation.” The objective reasonableness of the force used “must be judged from the perspective of a reasonable officer on the scene, rather than with 20/20 vision of hindsight.” Id. at 396, 109 S.Ct. at 1872. Accordingly, “[n]ot every push or shove, even if it may later seem unnecessary in the peace of a judge’s chambers, ... violates the Fourth Amendment.” Id. (internal cite omitted).\nIn Graham, however, the Supreme Court expressly reserved the question of the proper application of qualified immunity to a fourth amendment excessive force claim. Following Graham, several courts have found that qualified immunity does not require a second “objective reasonableness” analysis in the fourth amendment context. See, e.g., Jackson v. Hoylman, 933 F.2d 401, 402-03 (6th Cir.1991); Dixon v. Richer, 922 F.2d 1456, 1458 (10th Cir.1991). Although we have not previously answered the question, we have stated that “[w]e too doubt whether a substantively distinct qualified immunity defense would be available to an officer acting after Graham. ” Hunter v. District of Columbia, 943 F.2d 69, 77 (D.C.Cir.1991).\nIn general, qualified immunity extends to “government officials performing discretionary functions ... insofar as their conduct does not violate clearly established ... rights of which a reasonable person would have known.” Harlow, 457 U.S. at 818, 102 S.Ct. at 2738. Qualified immunity, therefore, depends on the “objective legal reasonableness of the [official’s] action.” Id. at 819, 102 S.Ct. at 2738. Thus, the scope of qualified immunity must be evaluated using the same “objective reasonableness” criteria with which Graham directs us to scrutinize an officer’s actions under the fourth amendment. We believe that standard provides the test for evaluating both the scope of the officer’s qualified immunity as well as the plaintiffs claim of excessive force under the fourth amendment. We therefore now conclude, as we did in Martin v. Malhoyt, that a defendant’s motion for summary judgment is to be denied only when, viewing the facts in the record and all reasonable inferences derived therefrom in the light most favorable to the plaintiff, a reasonable jury could conclude that the exeessiveness of the force is so apparent that no reasonable officer could have believed in the lawfulness of his actions. Martin, 830 F.2d at 253-54.\nIn applying this test to Ward-law’s account of events, we must consider all of the facts as well as the inferences arising from the facts. See Hunter, 943 F.2d at 76. Here, several factors suggest that Pickett’s use of force was not so excessive that no reasonable officer could have believed in the lawfulness of his actions. First, Wardlaw does not dispute that the Marshal’s office had taken additional security precautions the day of the hearing due to the nature of the claims being aired and the fact that the officers expected a demonstration of some sort. Pickett, having been warned of a demonstration, reasonably could have anticipated a confrontation, especially while removing an uncooperative spectator from the courthouse. More importantly, when Wardlaw rushed down the stairs toward them, Pickett and Crew were in a vulnerable position, caught in a stairwell and moving an uncooperative individual. Wardlaw admits that he shouted at the deputies as he approached them, thus, again reasonably, raising a fear that he was about to attack. Furthermore, as Wardlaw acknowledges, Pickett hit him no more than three or four times—all in rapid succession. Once Wardlaw sat down on the stairs and it became apparent that he was not going to attack, Pickett did not hit him. Finally, Wardlaw did not consider his injuries severe enough to require medical attention. Given these undisputed facts, we believe that no reasonable jury could find that Pickett’s use of force was so excessive that no reasonable officer could have believed it to be lawful.\nB. Excessive Force Claim against Crew\nWardlaw does not allege that Crew struck him or that Crew used any force against him at all. Instead, Wardlaw claims that Crew’s liability results from his failure to intervene to protect Heid from Pickett, which action would have prevented Ward-law’s having to go to Heid’s rescue. We find that no reasonable jury could conclude that Crew’s inaction was such that a reasonable officer could not have thought it lawful. The entire confrontation lasted approximately ten to fifteen seconds. Even if Crew had attempted to intervene, he might not have succeeded in separating Pickett and Heid any faster than their own actions and reactions did. Accordingly, we affirm the district court’s grant of summary judgment to Crew on this claim.\nC. False Arrest Claims against Crew,and Pickett\nWhere, as here, a false arrest claim is based on a warrantless arrest, the defendant officers must establish probable cause te arrest. Dellums v. Powell, 566 F.2d 167, 175 (D.C.Cir.1977). Pickett and Crew admit they had no warrant but they assert that they had probable cause to arrest Wardlaw for assault. They also assert their qualified immunity. In Malley v. Briggs, 475 U.S. 335, 341, 106 S.Ct. 1092, 1096, 89 L.Ed.2d 271 (1986), the Supreme Court held that an officer retains qualified immunity from suit if he had an objectively reasonable basis for believing that the facts and circumstances surrounding the arrest were sufficient to establish probable cause.\nHere, Wardlaw’s version of the facts supports the conclusion that probable cause existed. Wardlaw admits to bursting through the stairwell doors, rushing down a flight of steps toward the officers and shouting at them not to hurt Heid. These facts give rise to a reasonable inference that Wardlaw was about to assault the deputies. Pickett’s immediate confrontation with Ward-law did nothing to negate that inference. Accordingly, we conclude that the deputies had probable cause to arrest Wardlaw for assault.\nEven were we to conclude that probable cause did not exist, we would nonetheless find the deputies immune from suit. Qualified immunity shields Pickett and Crew “from suit for damages if ‘a reasonable officer could have believed [Wardlaw’s arrest] to be lawful, in light of clearly established law and the information the officers possessed.’ ” Hunter v. Bryant, — U.S. —, —, 112 S.Ct. 534, 536, 116 L.Ed.2d 589 (1991) (quoting Anderson v. Creighton, 483 U.S. 635, 641, 107 S.Ct. 3034, 3039, 97 L.Ed.2d 523 (1987)). Pickett and Crew are entitled to qualified immunity even if they “reasonably but mistakenly” concluded that probable cause existed. Id. Officials who make reasonable errors retain their immunity so that they do “not err always on the side of caution because they fear being sued.” Id. — U.S. at —, 112 S.Ct. at 537.\nWhen Wardlaw shouted and ran down the steps toward Pickett, the deputies were in the middle of a stairwell landing, fully occupied with attempting to remove a limp and uncooperative Heid. Wardlaw’s actions could have reasonably made him appear to be an aggressor seeking to secure Heid’s release. In this situation, an objectively reasonable officer could have believed that charging Wardlaw with assault was lawful. Thus, even assuming arguendo that Pickett and Crew (as well as the grand jury that subsequently indicted both Heid and Ward-law) erred in charging Wardlaw, the deputies would nonetheless be entitled to immunity from suit because their decision to arrest Wardlaw was reasonable.\nD. Wrongful Prosecution Claims Against Pickett and Crete\nA plaintiff may bring an action against officials who institute and pursue a prosecution without probable cause if the plaintiff can allege injury of a constitutional magnitude. See Goodwin v. Metts, 885 F.2d 157, 163 (4th Cir.1989). Here, we need not determine whether Wardlaw suffered such injury because we have already concluded (1) that the deputies had probable cause and (2) that even assuming arguendo that probable cause was lacking, the deputies’ conclusion that probable cause existed was objectively reasonable. These conclusions entitle Pickett and Crew to summary judgment on the wrongful prosecution claim because the absence of probable cause is an essential element of the claim.\nIII.\nWe reject Wardlaw’s contention that the privilege to intervene in an arrest to protect the arrestee may be used as a sword to impose liability on an officer who allegedly uses excessive force against the intervenor. To the extent that it exists at common law, the privilege merely shields the intervenor from criminal and civil liability. An intervenor’s excessive force claim, then, is more appropriately analyzed under the standard objective reasonableness rubric enunciated by the Supreme Court in Graham. We hold that no reasonable jury could conclude that the excessiveness of Pickett’s and Crew’s actions was so apparent that no reasonable officer could conclude they acted lawfully. Accordingly, we affirm the grant of summary judgment in their favor.\nWe also affirm the district court’s grant of summary judgment to the defendant officers on Wardlaw’s false arrest and wrongful prosecution claims. The facts, as Wardlaw alleges them, support a finding of probable cause to arrest him. Even if probable cause were lacking, we think the facts sufficient to support the finding that the officers acted on an objectively reasonable, even if mistaken, belief that probable cause existed, thus entitling them to qualified immunity. Accordingly, the judgment of the district court is\nAFFIRMED.\n. In Bivens v. Six Unknown Named Agents, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971), the plaintiff sought and recovered damages against federal employees for violation of his constitutional rights.\n. As stated earlier, we must view the facts in the light most favorable to the plaintiff. Nevertheless, to provide the complete picture at this stage in the litigation, we note that Pickett and Crew give a different account of what occurred after the parties left the courtroom. The deputies claim they dragged Heid in a sitting position from the courtroom to the stairs. At the top of the stairs, they turned Heid over to face forward so that only his feet dragged on the ground. They then started down the stairs to the first floor in order to remove Heid from the courthouse. As they descended, Pickett and Crew claim they heard Wardlaw crash through the doors and run toward them, shouting “Let my friend go.\" Wardlaw reached the deputies almost instantaneously, collided with Pickett and caused Pickett to lose his grip on Heid. Pickett then spun around to block Wardlaw from reaching Heid. Because Wardlaw continued to struggle, Pickett struck him several times, landing one punch on his jaw and several others on his chest and ribs.\nAs a result of the collision, Heid regained his footing and Crew tried to restrain him. Suddenly, Heid broke free, leapt toward Pickett and attempted to tackle him from behind. Pickett swung around and threw one punch, hitting Heid in the face. The deputies then placed Heid and Wardlaw under arrest for assault.\n. See, e.g., United States v. Grimes, 413 F.2d 1376 (7th Cir.1969) (prisoner may intervene in defense of fellow prisoner he reasonably thinks to be victim of unauthorized, unprovoked assault by prison officials); United States v. Ochoa, 526 F.2d 1278, 1281 (5th Cir.1976) (right to defend third person from attack is defense to charge of assaulting federal officer); Letson v. State, 805 S.W.2d 801 (Tex.App.-Houston [14th Dist.] 1990); State v. Smits, 58 Wash.App. 333, 792 P.2d 565 (1990); State v. Westland, 13 Wash.App. 460, 536 P.2d 20, 25 (1975) (bystander may come to aid of one being lawfully arrested by uniformed police officer if arrestee is in actual danger of serious physical injury); Strube v. State, 739 P.2d 1013 (Okla.Cr.1987); State v. Gelinas, 417 A.2d 1381, 1386 (R.I.1980); State v. Anderson, 40 N.C.App. 318, 253 S.E.2d 48 (1979); State v. Wenger, 58 Ohio St.2d 336, 12 O.O.3d 309, 390 N.E.2d 801 (1979); Coleman v. State, 320 A.2d 740 (Del.1974).\n. Many states have also distinguished between the privilege to intervene in an illegal arrest, which they have abolished, and the privilege to intervene when an officer uses excessive force, which they retain. The elimination of the right to intervene to prevent an illegal arrest is based on the recognition that an arrestee's liberty interest is now protected by safeguards which did not exist at common law, including prompt arraignment, reasonable bail, appointment of counsel, the exclusionary rule and the right to a speedy trial. On the other hand, these safeguards do not insulate an individual from the use of excessive force. See, e.g., Miller v. State, 462 P.2d 421 (Alaska 1969); State v. Hatton, 116 Ariz. 142, 568 P.2d 1040 (1977); State v. Richardson, 95 Idaho 446, 511 P.2d 263 (1973); State v. Thomas, 262 N.W.2d 607 (Iowa 1978); State v. Austin, 381 A.2d 652 (Me.1978); Glover v. State, 88 Md.App. 393, 594 A.2d 1224 (1991); In re Welfare of Burns, 284 N.W.2d 359 (Minn.1979); State v. Nunes, 546 S.W.2d 759 (Mo.Ct.App.1977); State v. Koonce, 89 N.J.Super. 169, 214 A.2d 428 (1965).\n. Even before Graham, we used an “objective reasonableness” standard to analyze excessive force claims. See Martin v. Malhoyt, 830 F.2d at 253.\n. By considering this factor, we do not suggest that an individual must suffer significant injuries in order for the force used to be unreasonable. Although the severity of Wardlaw's injuries is not by itself the basis for deciding whether the force used was excessive, it does provide some indication of the degree of force Pickett used. Thus, it is a relevant factor under a \"test of reasonableness ... not capable of precise definition or mechanical application.\" Bell v. Wolfish, 441 U.S. 520, 559, 99 S.Ct. 1861, 1884, 60 L.Ed.2d 447 (1979).", "type": "majority", "author": "KAREN LeCRAFT HENDERSON, Circuit Judge:"}], "attorneys": ["Daniel M. Schember, Washington, DC, argued the cause, for appellant.", "John R. Munich, Asst. U.S. Atty., Washington, DC, argued, for appellees. On brief were Jay B. Stephens, U.S. Atty. at the time the brief was filed, and John D. Bates and R. Craig Lawrence, Asst. U.S. Attys., Washington, DC. John C. Cleary, Asst. U.S. Atty., Washington, DC, also entered an appearance, for appellees."], "corrections": "", "head_matter": "William C. WARDLAW, Appellant, v. William R. PICKETT, Deputy United States Marshal, et al., Appellees.\nNo. 91-5070.\nUnited States Court of Appeals, District of Columbia Circuit.\nArgued Feb. 8, 1993.\nDecided Sept. 10, 1993.\nDaniel M. Schember, Washington, DC, argued the cause, for appellant.\nJohn R. Munich, Asst. U.S. Atty., Washington, DC, argued, for appellees. On brief were Jay B. Stephens, U.S. Atty. at the time the brief was filed, and John D. Bates and R. Craig Lawrence, Asst. U.S. Attys., Washington, DC. John C. Cleary, Asst. U.S. Atty., Washington, DC, also entered an appearance, for appellees.\nBefore BUCKLEY, D.H. GINSBURG and HENDERSON, Circuit Judges.\n. Wardlaw also alleged that Pickett and Crew committed the common-law torts of assault, battery and false imprisonment. Under the Federal Employees Liability Reform and Tort Compensation Act of 1988, 28 U.S.C. § 2679, the United States replaced Pickett and Crew as the defendant. Thus, no common-law tort claims now remain pending against any individual defendants. The district court denied the government's motion for summary judgment on the common-law claims and that denial is not before us on appeal."} | BUCKLEY | D.H. GINSBURG | HENDERSON | 1 | 1 | 1 | 0 | 0 | 0 | 1 F.3d 1297 | [
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"content": "You are an expert legal coding assistant trained to classify U.S. federal Courts of Appeals\ncases using an adaptation of the Supreme Court Database (SCDB_2023_01) codebook. You follow the coding procedure\nin the codebook step by step and use the precise definitions of terms presented in the code... |
10,517,445 | Richard A. McGUIRE, individually and derivatively on behalf of John P. Tilden, Ltd., Plaintiff-Appellee, Cross-Appellant, v. RUSSELL MILLER, INC. and Russell Miller, Inc. of New York, Defendants, J. Robert Wilson, Gerald I. Benson, John J. McGowan and John P. Tilden, Ltd., Defendants-Appellants, Cross-Appellees; RUSSELL MILLER, INC. OF NEW YORK, Counter-Claimant, v. RUSSELL MILLER, INC. and John P. Tilden, Ltd., Counter-Defendants | McGuire v. Russell Miller, Inc. | 1993-07-13 | Nos. 1478, 1647, Dockets 93-7011, 93-7031 | United States Court of Appeals for the Second Circuit | {"judges": ["Before: WINTER and JACOBS, Circuit Judges, and MUKASEY, District Judge."], "parties": ["Richard A. McGUIRE, individually and derivatively on behalf of John P. Tilden, Ltd., Plaintiff-Appellee, Cross-Appellant, v. RUSSELL MILLER, INC. and Russell Miller, Inc. of New York, Defendants, J. Robert Wilson, Gerald I. Benson, John J. McGowan and John P. Tilden, Ltd., Defendants-Appellants, Cross-Appellees. RUSSELL MILLER, INC. OF NEW YORK, Counter-Claimant, v. RUSSELL MILLER, INC. and John P. Tilden, Ltd., Counter-Defendants."], "opinions": [{"text": "MUKASEY, District Judge:\nDefendants appeal and plaintiff cross-appeals from a judgment of the United States District Court for the Southern District of New York (Sweet, J.) that awarded $313,807 to defendants on their counterclaims arising from misrepresentations by plaintiff during negotiation of a merger of two insurance companies — Richard A. McGuire Associates, Inc. (“McGuire”), owned by plaintiff Richard A. McGuire, and John P. Tilden, Ltd. (“Til-den”), one of the defendants. Defendants contend that the judgment does not accurately reflect, and is inconsistent with, the jury’s responses on a special verdict form to questions about damages and attorneys’ fees. For the reasons stated below, we find that the judgment is consistent with the jury’s answers as to damages, but inconsistent with the jury’s answer as to attorneys’ fees. Therefore, the judgment is affirmed in part, reversed in part, and remanded.\nI.\nMcGuire and Tilden merged on July 31, 1985. To effect the merger, plaintiff Richard A. McGuire received 30 shares — roughly 13 percent — of Tilden stock in return for his 100 percent interest in McGuire. The parties had agreed to this exchange rate based on each side’s representations as to the companies’ relative values.\nAfter the merger, plaintiff worked at Til-den until he was fired on September 18,1987. On November 16, 1987 plaintiff brought suit in the Southern District of New York, individually and derivatively on behalf of Tilden, to rescind the merger. He alleged that defendants had misrepresented the value of Tilden in violation of § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), as implemented by Rule 10b-5, 17 C.F.R. § 240.10b-5 (1992). Aso, plaintiff asserted state law claims for breach of contract, securities fraud, common law fraud, negligence, and breach of fiduciary duty.\nDefendants counterclaimed that plaintiff had misrepresented the value of McGuire in violation of § 10(b), and asserted state law counterclaims for breach of warranty, common law fraud, negligent misrepresentation, and breach of indemnity agreement. Judge Sweet dismissed plaintiffs complaint by summary judgment, but reserved defendants’ counterclaims for trial.\nDuring a six-day trial defendants presented evidence that they had overpaid plaintiff in the merger. On July 8, 1992 the jury awarded $313,807 to defendants. The jury recorded its verdict on a 25-question special verdict form. In response to questions 1-24, the jury computed defendants’ damages as follows: (1) no damages for breach of warranty; (2) $108,000 for violations of Rule 10b — 5; (3) $51,034 for common law fraud; (4) $24,773 for negligent misrepresentation; and (5) $130,000 for breach of indemnity agreement. The jury reported, as Judge Sweet had instructed, that each award was for damages not included in any other award.\nThe final question, number 25, asked the jury: “When the merger took place, how many shares of John P. Tilden stock was McGuire Associates worth?” The jury responded that McGuire was worth only 10 shares, not the value of 30 shares Tilden expected to receive. At the charging conference Judge Sweet had eliminated the second part of Question 25 — “At the time, what was the dollar value of these shares of stock?”— and the jury therefore made no finding with respect to the value of the 10 shares. On July 27, 1992 the district court approved a judgment for $313,807 but refused to award 20 shares of Tilden stock, or the dollar value of those shares. The court found that the jury’s award of $313,807 on four of the five counts constituted the entire verdict.\nQuestion 22 of the special verdict form asked the jury:\n“Did McGuire agree, in the Merger Agreement or in the surrounding facts and .circumstances, to indemnify Tilden for: the breach of any warranty in connection with the merger agreement; any claim brought against Tilden relating to the Premium Trust Account; or all costs, including attorneys’ fees, arising out of any claim arising out of the transaction?”\n(emphasis added). The indemnification provision of the merger agreement between the parties had provided as follows:\n8. Indemnification\n8.1 Indemnification by McGuire and the McGuire Shareholder. The McGuire Shareholder hereby agrees to indemnify, defend, and hold Tilden harmless after the Closing Date from and against any all of the following:\nA. The breach by McGuire of any warranty or representation made by McGuire pursuant to or in connection with this Agreement; ...\nE. All costs, assessments, judgments and demands (including costs of defense, settlement, compromise, and reasonable attorney’s fees) arising out of any claim, or the defense, settlement or compromise thereof, made with respect to paragraphs 8.1A through 8.1D.\nThe jury’s affirmative answer to question 22 meant that, based on the indemnification provision, defendants should recover their attorneys’ fees.\nThe verdict form did not include a question about the amount of such fees. Rather, question 24 asked: “For what amount, if any, exclusive of attorney’s fees must McGuire indemnify Tilden?” (emphasis added). Accordingly, the jury did not compute the amount of fees defendants were entitled to recover. Based on the jury’s findings, the district court refused to award attorneys’ fees. It held that\n[w]hile the indemnity provision [of the merger agreement] clearly contemplated inclusion of attorneys’ fees, and the jury so held, no proof as to the amount of any fees was presented. No basis, therefore, for such an award was presented.\nMcGuire v. Wilson, No. 87 Civ. 8156, slip op. at 2, 1992 WL 380497 (S.D.N.Y. Dec. 8, 1992).\nDefendants argue that, based on the jury’s response to question 25, they should recover the value on the merger date of 20 shares of Tilden stock — approximately $730,000 based on a valuation admitted into evidence at trial. They argue that the $313,807 award was either part of that value or compensation for separate and distinct losses. Defendants argue further that, based on the jury’s response to question 22, they should receive reasonable attorneys’ fees. Plaintiff argues that defendants are entitled only to the judgment of $313,807.\nII.\nThese facts and arguments present two questions: (1) should defendants recover more than the $313,807 judgment, so as to account for the value of the 20 shares of Tilden stock they overpaid for McGuire? and (2) should defendants receive attorneys’ fees? The answers to those questions depend upon the meaning of the jury’s answers to questions on the special verdict form. For the reasons stated below, we find that the district court correctly refused to award additional damages based on the jury’s response to question 25, but erred in denying attorneys’ fees.\nValue of Shares of Tilden Stock\nThe parties agree that, according to the law of this Circuit, defendants should recover the difference between what they paid for McGuire and what McGuire was actually worth at the time of merger. See, e.g., Sharma v. Skaarup Ship Management Corp., 916 F.2d 820, 825-26 (2d Cir.1990), cert. denied, 499 U.S. 907, 111 S.Ct. 1109, 113 L.Ed.2d 218 (1991). That difference can be computed in one of two ways—directly, based on the misrepresented and actual values of McGuire measured in dollars, or indirectly, based on the misrepresented and actual values of McGuire measured in shares of Tilden stock.\nThe indirect method would have been appropriate if defendants had sought return of Tilden’s shares rather than money damages; in that event defendants would have been entitled to the difference between 30 shares of Tilden and the number of shares of Tilden that McGuire was worth at the time of merger. However, defendants abandoned their rescission theory before trial and sought only money damages. The district court held that although “[t]he question of rescission recurred at various times during the trial, ... ultimately Tilden elected to receive damages,” McGuire v. Wilson, at 2, and counsel for defendants admitted as much at oral argument.\nConsequently, Judge Sweet attempted to free the jury from the difficulty of computing damages based solely on the value of shares of Tilden stock. First, he instructed the jury that for each of defendants’ five claims the jury should compute the difference between the misrepresented and actual values of McGuire at the time of merger. Second, the special verdict form asked the jury to record that difference for each claim. Third, Judge Sweet cautioned the jury to consider each claim separately and not to award double recovery for any misrepresentation by plaintiff.\nMoreover, the special verdict form specified an identical list of five misrepresentations for each of the claims for violations of Rule 10b-5, common law fraud, negligent misrepresentation, and breach of the indemnity agreement. For each of those claims, the form asked whether plaintiff had made any or all of the five misrepresentations. Also as to each claim, the form then asked a series of questions about the particular misrepresentation, if any, found to have been made, such as whether it was material and the like. That series of questions concluded with a question about whether the award for each misrepresentation also was compensated in an award for the same misrepresentation as part of another claim. The jury found that plaintiff had made one of the five misrepresentations with respect to each of the above claims, and awarded separate damages in different amounts for each claim. To each question that inquired whether the jury’s damage award for a particular claim was based on the same misrepresentation that had given rise to an award for another claim, the jury answered “no.”\nA district court “may require a jury to return only a special verdict in the form of a special written finding upon each issue of fact.” Fed.R.Civ.P. 49(a). The purpose of a Rule 49(a) special verdict is to identify the basis for the jury’s verdict, and thus to avoid confusion, appellate uncertainty, and the need for additional proceedings. Stewart & Stevenson Services, Inc. v. Pickard, 749 F.2d 635, 644 (11th Cir.1984). “The particular language to be used in written questions put to the jury for a special verdict lies within the discretion of the trial court.” Smith v. Lightning Bolt Productions, Inc., 861 F.2d 368, 370 (2d Cir.1988) (citing Cann v. Ford Motor Co., 658 F.2d 54, 58 (2d Cir.1981), cert. denied, 456 U.S. 960, 102 S.Ct. 2036, 72 L.Ed.2d 484 (1982)).\nDefendants contend that the district court erred by not considering the jury’s response to question 25 that at the time of merger McGuire was worth only 10 shares of Tilden stock, not 30. We disagree for two reasons. First, the district court found quite properly that question 25 was irrelevant— and the answer to that question superfluous—to the damages verdict, because defendants had abandoned their rescission claim. At the charging conference Judge Sweet eliminated the second half of question 25— relating to the value of Tilden’s shares—and he held later that “[i]n view of the absence of any comparative evaluation evidence, [the first half of question 25] became irrelevant in terms of relief and could have properly been stricken.” McGuire v. Wilson, at 2.\nDuring the charging conference the court and counsel discussed whether to strike question 25. Rule 49(a) provides that, before the jury retires, a party must demand that the special verdict form include any issue that the court omits, or else that party waives the right to a jury trial of that issue. Fed.R.Civ.P. 49(a). Defendants agreed to strike the second half of question 25 at that conference, and may not object now to the decision to strike that part. Having struck the second half of question 25, Judge Sweet properly found that the answer to the first half was irrelevant.\nSecond, even assuming that the first half of question 25 was relevant, the jury’s response to that question did not necessitate a judgment for more than $313,807. Although the . district court was required to accept the jury’s fact findings—-including their answer to question 25—and then make additional findings as necessary, see Quaker City Gear Works, Inc. v. Skil Corp., 747 F.2d 1446, 1452 (Fed.Cir.1984), cert. denied, 471 U.S. 1136, 105 S.Ct. 2676, 86 L.Ed.2d 694 (1985), it appears that the district court accepted the damages verdict in questions 1-24 and considered calculating damages based on the answer to question 25, but concluded that the evidence did not support a different award.\nIn evaluating a claim that a jury’s answers to questions on a special verdict form are inconsistent, a reviewing court must “ ‘adopt a view of the case, if there is one, that resolves any seeming inconsistency.’ ” Brooks v. Brattleboro Memorial Hosp., 958 F.2d 525, 529 (2d Cir.1992) (quoting Fiacco v. City of Rensselaer, New York, 783 F.2d 319, 325 (2d Cir.1986), cert. denied, 480 U.S. 922, 107 S.Ct. 1384, 94 L.Ed.2d 698 (1987), and citing cases). “If the jury’s answers cannot be harmonized rationally, the judgment must be vacated and a new trial ordered.” Brooks v. Brattleboro, 958 F.2d at 529 (citing cases).\nA district court has a duty to reconcile the jury’s answers on a special verdict form with any reasonable theory consistent with the evidence, and to attempt to harmonize the answers if possible under a fair reading of those answers. Gallick v. Baltimore & Ohio R.R., 372 U.S. 108, 119, 83 S.Ct. 659, 666, 9 L.Ed.2d 618 (1963); Pierce v. Southern Pacific Transp. Co., 823 F.2d 1366, 1370 (9th Cir.1987). The court must search for a reasonable way to read the verdicts as expressing a coherent view of the case, Toner v. Lederle Lab., 828 F.2d 510, 513 (9th Cir.1987), cert. denied, 485 U.S. 942, 108 S.Ct. 1122, 99 L.Ed.2d 282 (1988), and if there is any way to view a case that makes the jury’s answers to the special verdict form consistent with one another, the court must resolve the answers that way even if the interpretation is strained. 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 district court should refer to the entire case and not just the answers themselves. Royal Cup, Inc. v. Jenkins Coffee Service, Inc., 898 F.2d 1514, 1519 (11th Cir.1990).\nWe agree with the Eleventh Circuit that:\n[o]ur role as an appellate court is to review the record fully in order to ascertain whether the district court’s reconciliation of the apparently inconsistent verdict represents a fair and reasonable reading of the case.\nId. (citing cases). The district court has “considerable discretion” to dispose of inconsistent special verdicts, especially where, as here, the complaining party accedes to the special verdict form and does not object to the jury’s inconsistent responses until after the jury has been discharged. Kavanaugh v. Greenlee Tool Co., 944 F.2d 7, 10 (1st Cir.1991).\nDefendants assert that the jury, simply by answering “10” to the final question of the eight-page special verdict form, intended to supplement or supersede its detailed findings in the first 24 questions and award additional damages based on the value of Tilden shares. Defendants’ explanation of the jury’s answer to question 25 is no more likely than several others.\nBecause presumably the jury answered the questions in numerical order—as the special verdict form required—the last answer may well have been a reflection of previous findings in questions 1-24. In other words, the jury could have worked backward from the damages they computed for defendants’ five claims to determine that, based on evidence submitted at trial, McGuire was worth only 10 shares of Tilden stock at the time of merger.\nDefendants argue against such a conclusion, because Trial Exhibit BM—an opinion valuing Tilden—showed that 30 shares of Tilden stock were worth over $700,000 on December 31, 1984. However, Exhibit BM did not resolve the value of Tilden on the merger date, July 31, 1985, seven months later. There is no basis to assume that the value of Tilden stock did not fluctuate while the parties negotiated the merger, during the seven months after the Exhibit BM valuation. Moreover, Exhibit BM is evidence of the value only of Tilden, and the proper measure of damages—the difference between the misrepresented and actual values of McGuire at the time of merger—is based on the value of McGuire, not of Tilden. Therefore, the valuation evidence submitted at trial was inconclusive and not necessarily inconsistent with the judgment.\nAlthough defendants should recover the entire difference, at the time of the merger, between the misrepresented and actual values of McGuire, it would be duplicative to award Tilden damages and to order McGuire to return the value of 20 Tilden shares. The jury was told not to award double recovery and said on the verdict form that they did not. The jury’s response to question 25 may have been inconsistent with the remainder of the verdict, but the judgment accounts for inconsistencies in the special verdict form, and appears to be a fair and reasonable reading of the facts and the jury’s detailed responses to questions 1-24. It appears that the jury found that plaintiff had made one misrepresentation attributable to each claim, awarded damages for each claim based on that single misrepresentation, and stated that each separate award was for damages not compensated by any other award. The judgment is consistent with those findings.\nAttorneys’ Fees\nDefendants argue next that the district court erred by refusing to award attorneys’ fees simply because defendants did not submit proof at trial of the amount of such fees. McGuire v. Wilson, No. 87 Civ. 8156, at 2, 1992 WL 380497 Defendants argue that the judgment ignores the jury’s finding in question 22 that defendants were entitled to recover attorneys’ fees. Plaintiff argues that it was defendants’ burden to prove all its contractual damages, including attorneys’ fees, by the requisite degree of proof at trial, and that the district court found properly that defendants failed to prove at trial the amount of attorneys’ fees. Defendants respond that although plaintiff had the right to have a jury decide whether he was liable for attorneys’ fees, once the jury decided that plaintiff was liable, the amount and reasonableness of such fees were questions for the judge, not the jury. Defendants argue that it would have been impossible for them to prove the amount of attorneys’ fees at trial, because that amount was still accruing.\nIn federal practice the general rule—known as the “American Rule”—is that each party bears its own attorneys’ fees. See, e.g., Chambers v. NASCO, Inc., — U.S. —, —, 111 S.Ct. 2123, 2133, 115 L.Ed.2d 27 (1991); Hensley v. Eckerhart, 461 U.S. 424, 429, 103 S.Ct. 1933, 1937, 76 L.Ed.2d 40 (1983); Alyeska Pipeline Service Co. v. Wilderness Soc’y, 421 U.S. 240, 247; 95 S.Ct. 1612, 1616, 44 L.Ed.2d 141 (1975); 6 James W. Moore et al., Moore’s Federal Practice ¶ 54.78[1] (2d ed. 1993). However, parties may agree by contract to permit recovery of attorneys’ fees, and a federal court will enforce contractual rights to attorneys’ fees if the contract is valid under applicable state law. See Alland v. Consumers Credit Corp., 476 F.2d 951, 956 (2d Cir.1973); United States v. Carter, 217 U.S. 286, 322, 30 S.Ct. 515, 526, 54 L.Ed. 769 (1910). Although a district court has broad discretion in awarding attorneys’ fees, and an award of such fees may be set aside only for abuse of discretion, see, e.g., ARP Films, Inc. v. Marvel Entertainment Group, Inc., 952 F.2d 643, 651 (2d Cir.1991); Lerman v. Flynt Distributing Co., 789 F.2d 164, 166 (2d Cir.), cert. denied, 479 U.S. 932, 107 S.Ct. 404, 93 L.Ed.2d 357 (1986), where a contract authorizes an award of attorneys’ fees, such an award becomes the rule rather than the exception. See Engel v. Teleprompter Corp., 732 F.2d 1238, 1241 (5th Cir.1984) (reversing district court’s denial of attorneys’ fees with instructions to determine an appropriate award).\nAt the outset, we note that there was only one discussion at trial of whether defendants had submitted sufficient proof of the amount of their attorneys’ fees, or even of whether they were required to submit such proof. That occurred at the charging conference. The district court asked if the indemnity provision in the merger agreement included attorneys’ fees, and plaintiffs’ counsel admitted that it did. After a brief discussion, the court decided not to ask the jury in question 24 to determine the amount of attorneys’ fees. Defendants’ counsel said he assumed that if defendants were entitled to attorneys’ fees, the amount of fees “will be determined at a later hearing.” The district court left that issue unresolved, and said nothing inconsistent with counsel’s expressed assumption.\nTherefore, based on the charging conference, it was not unreasonable for defendants to assume that the court would decide the amount of attorneys’ fees at a post-trial hearing if the jury found that plaintiff was liable for attorneys’ fees. Defendants certainly were not on notice that they had failed to prove they were entitled to attorneys’ fees; neither did the colloquy. with the district court at the charging conference give defendants reason to move to reopen their case'to prove the amount of fees, as they might have if the discussion had suggested such an insufficiency. If plaintiff is correct that the amount of attorneys’ fees was an issue for the jury to determine, then defendants should have been made aware, when the issue arose at the charging conference, that they were required ,.to prove that amount. On the other hand, if the amount of attorneys’ fees was an issue to be determined after trial, then the district court should have initiated a procedure to determine that amount.\nThis Circuit has never decided what procedure a district judge should follow in deciding a contractual claim for attorneys’ fees. Counsel for both sides agreed at oral argument that the common practice in the district courts of this Circuit is for the judge to determine the amount of attorneys’ fees owed pursuant to an indemnification agreement after the liability for such fees is decided at a trial, whether bench or jury. See, e.g., Diamond D Enterprises USA, Inc. v. Steinsvaag, 979 F.2d 14, 18 (2d Cir.1992), cert. denied, - U.S. -, 113 S.Ct. 2442, 124 L.Ed.2d 660 (1993) (citing cases). Following common practice, today we make law out of what was previously common sense: when a contract provides for an award of attorneys’ fees, the jury is to decide at trial whether a party may recover such fees; if the jury decides that a party may recover attorneys’ fees, then the judge is to determine a reasonable amount of fees. For reasons discussed below, this rule would not apply to a contract for legal services between a client and a lawyer.\nThis rule follows from the Seventh Amendment’s provision that “[i]n Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved_” The right to a jury trial in federal court is a matter of federal law. Cutlass Productions, Inc. v. Bregman, 682 F.2d 323, 325 n. 5 (2d Cir.1982) (citing Simler v. Conner, 372 U.S. 221, 222, 83 S.Ct. 609, 610, 9 L.Ed.2d 691 (1963) (per curiam)). Although the right to a jury trial depends primarily on whether the action is “legal” or “equitable,” the Supreme Court has recognized that the right extends beyond the common-law forms of action recognized in 1791:\nBy common law, [the Framers of the Amendment] meant ... not merely suits, which the common law recognized among its old and settled proceedings, but suits in which legal rights were to be ascertained and determined, in contradistinction to those where equitable rights alone were recognized, and equitable remedies were administered....\nCurtis v. Loether, 415 U.S. 189, 193, 94 S.Ct. 1005, 1007-08, 39 L.Ed.2d 260 (1974) (quoting Parsons v. Bedford, 28 U.S. (3 Pet.) 433, 446-47, 7 L.Ed. 732 (1830) (Story, J.) (emphasis in original)).\nTherefore, whether plaintiff had a right to have a jury determine the amount of attorneys’ fees he owed to defendants depends on whether an action to recover attorneys’ fees is “legal” or “equitable.” In a 1991 case involving a contractual provision for payment of reasonable attorneys’ fees, the Fifth Circuit held that “[s]ince there is no common law right to recover attorneys fees, the Seventh Amendment does not guarantee a trial by jury to determine the amount of reasonable attorneys fees.” Resolution Trust Corp. v. Marshall, 939 F.2d 274, 279 (5th Cir.1991) (rejecting claim that district court improperly determined amount of attorneys’ fees owed under guaranty agreement rather than submitting question to jury).\nWe agree with the result reached in Resolution Trust Corp. v. Marshall, but disagree with that Court’s finding that within the meaning of the Seventh Amendment there is no common law right to recover attorneys’ fees pursuant to a contract. Id., 939 F.2d at 279; see Mt. Everest Ski Shops v. Ski Barn, Inc., 736 F.Supp. 531, 532 (D.Vt.1989). Rather, we hold that an action to recover attorneys’ fees pursuant to a contract presents traditional common-law contract issues which should be submitted to a jury— and which were properly submitted to the jury in this case—but that the subsequent determination of the amount of attorneys’ fees owed presents equitable issues of accounting which do not engage a Seventh Amendment right to a jury trial.\nThe Supreme Court has recognized the difference between the “legal” and “equitable” issues in actions to recover attorneys’ fees. In Simler v. Conner, 372 U.S. 221, 83 S.Ct. 609, 9 L.Ed.2d 691 (1963), the Supreme Court held that “a suit to determine and adjudicate the amount of fees owing to a lawyer by a client under a contingent fee retainer contract [is] a traditionally legal action.” Id., 372 U.S. at 223, 83 S.Ct. at 611. In that case, the client had admitted that he was obligated to pay his attorney a “reasonable” fee under a contingent fee retainer contract, but had sought a jury trial of the amount of his obligation. The attorney had claimed that a subsequent contract provided for a fee of 50 percent of the client’s ultimate recovery, and disputed the jury trial requirement. The Court ruled that the dispute about the terms of the contingent fee retainer contract depended on traditional common-law contract issues that should have been submitted to a jury.\nIn extending the jury trial right to the issue of the the amount of the fee, the Court relied on two eases—Stanton v. Embrey, 93 U.S. 548, 23 L.Ed. 983, 3 Otto 548 (1876) and Trist v. Child, 88 U.S. 441, 22 L.Ed. 623, 21 Wall. 441 (1874)—both of which also involved disputes about an attorney’s contingent fee contract. It appears that since Simler v. Conner, the Supreme Court has not extended the right to a jury trial as to the amount of attorneys’ fees beyond the limited context of a dispute about a contingent fee contract. Simler v. Conner stands principally for a rule not at issue in this case—that federal law controls availability of a jury trial even when state law controls the substance of the case—and can be distinguished as saying only that the dispute about a contingency fee contract in that case was the type of breach of contract suit, by one party to a services contract against another for damages, which was traditionally an action at law and thus triable to a jury under the Seventh Amendment.\nIn this case, plaintiff agreed to indemnify defendants for “reasonable attorneys’ fees ... arising out of any claim, or the defense, settlement or compromise thereof, made with respect to” misrepresentations by plaintiff in connection with the merger agreement. Accordingly, defendants’ counterclaim for attorneys’ fees was a claim for a contractual “legal right,” and plaintiff had the right to have a jury decide whether defendants should recover attorneys’ fees under the agreement. However, the subsequent action in this ease to determine a reasonable amount of attorneys’ fees owed was not an action to enforce “legal rights” pursuant to a contract; rather, such an action was equitable in nature. That action did not involve “a suit to determine the amount of fees owing to a lawyer by a client under a contingent fee retainer contract.” See Simler v. Conner, 372 U.S. at 223, 83 S.Ct. at 611.\nThe Supreme Court has held that in determining whether an issue is “legal” or “equitable” under the Seventh Amendment, a court should consider, among other things, “the practical abilities and limitations of juries.” Ross v. Bernhard, 396 U.S. 531, 538, 90 S.Ct. 733, 738, 24 L.Ed.2d 729 (1970). To compute a reasonable amount of attorneys’ fees in a particular case requires more than simply a report of the number of hours spent and the hourly rate. The calculation depends on an assessment of whether, those statistics are reasonable, based on, among other things, the time and labor reasonably required by the case, the skill demanded by the novelty or complexity of the issues, the burdensomeness of the fees, the incentive effects on future cases, and the fairness to the parties. Such collateral issues do not present the kind of common-law questions for which the Seventh Amendment preserves a jury trial right. In fact, in Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975), the Supreme Court refused to extend the American Rule that parties pay their own fees absent statutory authorization precisely because of the equitable considerations involved in computing a reasonable amount of attorneys’ fees.\nAccordingly, although plaintiff had the right to a jury decision on whether defendants should recover attorneys’ fees, plaintiff did not have the right to a jury decision on a reasonable amount of attorneys’ fees. Unlike the client in Simler v. Conner, no party here claimed that the contract directed the amount of attorneys’ fees to be awarded by specifying a percentage of an ascertainable sum. Therefore, the district court, in its equitable role, should have determined a reasonable fee.\nMoreover, the Supreme Court has held that a judgment is “final” even though the court has yet' to determine attorneys’ fees, and even if those fees are sought pursuant to a contract. Budinich v. Becton Dickinson and Co., 486 U.S. 196, 202-03, 108 S.Ct. 1717, 1722, 100 L.Ed.2d 178 (1988); see also First Nationwide Bank v. Summer House Joint Venture, 902 F.2d 1197, 1199 (5th Cir.1990). Therefore, Budinich supports the proposition that the amount of attorneys’ fees, even when awarded under a contract, is a post-judgment matter collateral to a decision on the merits. Accordingly, although a jury may determine the amount of attorneys’ fees owed pursuant to a contract—in fact, parties may agree explicitly that the amount of attorneys’ fees is an issue to be decided by a jury—there is no absolute right to have a jury determine the amount.\nThe utility of the above rule is illustrated by this appeal. First, the result of applying it here is fair. All the elements justifying an award of attorneys’ fees were before the district court here. The parties do not dispute that the indemnification clause in the merger agreement, which the parties arrived at through arm’s-length bargaining, gave defendants the right to collect reasonable attorneys’ fees. Compare Engel v. Teleprompter Corp., 732 F.2d at 1240. The merger agreement and the indemnification clause were in evidence, the district court instructed the jury on the award of attorneys’ fees, and the jury found that defendants should receive attorneys’ fees. It would be unfair to deny that award merely because defendants had decided, based on common practice and with no reason to do otherwise, to wait until after a verdict to submit proof of the amount of attorneys’ fees.\nSecond, the rule is efficient. District judges routinely compute the amount of attorneys’ fees owed after trial. Judges are better equipped than juries to make computations based on details about billing practices, including rates and hours charged on a particular case. In contrast, if the parties submitted evidence of the amount of attorneys’ fees to a jury at trial, the time spent acculturating the jury to the mysteries of attorneys’ hourly rates and incidental charges, and cross-examining about those matters, would likely increase fees and generate inconsistent awards. Moreover, the courts can streamline proof of the amount of attorneys’ fees by waiting until after a verdict when only prevailing parties will submit proof of the amount of attorneys’ fees; if the jury finds that a party is not entitled to fees, the amount need not be proved.\nThe concurring opinion suggests an additional practical difficulty that would exist if the jury that tried liability for fees also had to determine the amount of those fees; that jury would have to “look behind the curtain of a case” to examine motions, settlement efforts, and the like. That difficulty could be mitigated if not eliminated by bifurcating the issues of liability for fees and the amount of fees, the procedure followed in a case cited in the concurring opinion, F.H. Krear & Co. v. Nineteen Named Trustees, 776 F.2d 1563, 1563-64 (2d Cir.1985). Nonetheless, such a step does present an additional obstacle.\nFinally, although the judge can compute the amount of attorneys’ fees after a trial with perfect hindsight, the jury would have to keep a running total of fees as they accrued through summations and then predict future fees from post-trial proceedings and motions. The prospect of such a trial evokes images of an attorney struggling to prove the amount of fees to which he is entitled, but never being able to do so because he must prove the value of his last words even as he speaks them, and also the value of words yet unuttered and unwritten.\nOnce the jury decided that plaintiff was liable for attorneys’ fees, the district court should have determined the amount of such fees. The amount of attorneys’ fees owed was not an issue of fact that required proof at trial; it was an issue for the court to review after a finding of liability. Accordingly, we reinstate the jury’s award of attorneys’ fees to defendants, and remand to the district court the question of the amount of those fees.\nWe have considered the remaining arguments of the parties on this appeal and cross-appeal and find them without sufficient merit to warrant discussion.\nThe judgment of the district court is affirmed in part and reversed in part, and the case is remanded for further proceedings consistent with this opinion.\n. We do not hold that the amount of attorneys' fees is too complex for juries to decide; rather, we hold that the better practice is for the judge to determine the amount. This Circuit first discussed whether some actions were too complex to be tried to a jury in Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263, 279 n. 20 (2d Cir.1979), cert. denied, 444 U.S. 1093, 100 S.Ct. 1061, 62 L.Ed.2d 783 (1980), and since has refused to uphold the so-called \"complexity exception” to the Seventh Amendment. See City of New York v. Pullman Inc., 662 F.2d 910, 919 (2d Cir.1981). \"The framers of the Bill of Rights expected that juries would be capable of resolving disputed issues of fact in the federal courts. Even in civil litigation, where non-perspicuous issues and abstruse evidence proliferate, we have never acknowledged a ‘complexity exception' to the right to a jury trial.” United States v. DiDomenico, 985 F.2d 1159, 1170 (2d Cir.1993) (citing United States v. Torniero, 735 F.2d 725, 734 (2d Cir.1984), cert. denied, 469 U.S. 1110, 105 S.Ct. 788, 83 L.Ed.2d 782 (1985)). Therefore, if the parties agree, a jury may determine the amount of attorneys' fees, but no party has an absolute right to such a jury determination.", "type": "majority", "author": "MUKASEY, District Judge:"}, {"text": "JACOBS, Circuit Judge,\nconcurring:\nI agree with the Court’s opinion concerning the value of the shares of Tilden stock. I also agree that, because of “the practical abilities and limitations of juries,” see Ross v. Bernhard, 396 U.S. 531, 538, 90 S.Ct. 733, 738, 24 L.Ed.2d 729 (1970), the trial court rather than the jury should determine the reasonable attorney’s fees owing under the contract in this case. I concur separately because, in my view, the only limitation on the practical ability of the jury to decide reasonable attorney’s fees in this case is that jurors cannot be expected to look behind the curtain of a case presented to them on the merits in order to decide the reasonable compensation of counsel. For jurors, the attorney’s fee issue will almost always be a different and disconcerting way of looking at the merits. Prevailing counsel should not have to disclose to the jury the need for in limine motions, the protective efforts employed in discovery, the pursuit of settlement, or the toil and calculation required to build a case that may have been promoted to the same jury as simple or self-evident. For these reasons, I agree that the amount of attorney’s fees reasonably incurred in a case tried to a jury cannot practically be decided by the jury and therefore presents an equitable question.\nThe Court’s opinion proceeds along broader lines, however, and can be construed to foreclose a jury trial concerning attorney’s fees in other circumstances as well. Yet, as the Court’s opinion states, a lawyer’s fee claim against the lawyer’s client is undoubtedly a jury question. See Simler v. Conner, 372 U.S. 221, 83 S.Ct. 609, 9 L.Ed.2d 691 (1963). I think that the logic of Simler may require a jury trial in other kinds of freestanding claims for attorney’s fees as well.\nThis appeal does not require us to decide the availability of a jury trial for fees where all of the other aspects of the same case are disposed of by motion or by another jury, or where a claimant seeks contractual indemnification for fees incurred in a separate litigation against a third party. Compare F.H. Krear & Co. v. Nineteen Named Trustees, 776 F.2d 1563, 1564 (2d Cir.1985) (per curiam) (stating in dicta: “[W]e call the district court’s attention to the proposition that the parties have a right to a jury trial on the fees issue provided that such a trial is properly demanded and the right not waived”) and A. Kush & Associates v. American States Insurance Co., 927 F.2d 929, 933-34 (7th Cir.1991) (affirming jury’s dollar award of reasonable attorney’s fees) with Cheek v. McGowan Elec. Supply Co., 511 So.2d 977 (Fla.1987) (“[Contractually authorized attorney’s fees.... [are] ancillary to the claim for damages.... [and are] not part of the substantive claim ...”).", "type": "concurrence", "author": "JACOBS, Circuit Judge,"}], "attorneys": ["William D. Wall, Uniondale, NY (F. Judith Hepworth, Dina Talmor Miller, Farrell, Fritz, Caemmerer, Cleary, Barnosky & Ar-mentano, P.C., of counsel), for defendants-appellants, cross-appellees.", "Frank Ambrosino, Babylon, NY (Irving-Like, Reilly, Like, Tenety & Ambrosino, of counsel), for plaintiff-appellee, cross-appellant."], "corrections": "", "head_matter": "Richard A. McGUIRE, individually and derivatively on behalf of John P. Tilden, Ltd., Plaintiff-Appellee, Cross-Appellant, v. RUSSELL MILLER, INC. and Russell Miller, Inc. of New York, Defendants, J. Robert Wilson, Gerald I. Benson, John J. McGowan and John P. Tilden, Ltd., Defendants-Appellants, Cross-Appellees. RUSSELL MILLER, INC. OF NEW YORK, Counter-Claimant, v. RUSSELL MILLER, INC. and John P. Tilden, Ltd., Counter-Defendants.\nNos. 1478, 1647, Dockets 93-7011, 93-7031.\nUnited States Court of Appeals, Second Circuit.\nArgued May 18, 1993.\nDecided July 13, 1993.\nWilliam D. Wall, Uniondale, NY (F. Judith Hepworth, Dina Talmor Miller, Farrell, Fritz, Caemmerer, Cleary, Barnosky & Ar-mentano, P.C., of counsel), for defendants-appellants, cross-appellees.\nFrank Ambrosino, Babylon, NY (Irving-Like, Reilly, Like, Tenety & Ambrosino, of counsel), for plaintiff-appellee, cross-appellant.\nBefore: WINTER and JACOBS, Circuit Judges, and MUKASEY, District Judge.\n. Honorable Michael B. Mukasey, United States District Judge for the Southern District of New York, sitting by designation."} | WINTER | JACOBS | MUKASEY | 1 | 2 | 1 | 0 | 1 | 0 | 1 F.3d 1306 | [
{
"content": "You are an expert legal coding assistant trained to classify U.S. federal Courts of Appeals\ncases using an adaptation of the Supreme Court Database (SCDB_2023_01) codebook. You follow the coding procedure\nin the codebook step by step and use the precise definitions of terms presented in the code... |
10,517,477 | Melinda C. FRANK, Plaintiff-Appellant, v. Howard R. RELIN, Individually and in his official capacity as the Monroe County District Attorney, Defendant-Appellee | Frank v. Relin | 1993-07-28 | Nos. 1019, 1344, Dockets 92-9026, 93-7060 | United States Court of Appeals for the Second Circuit | {"judges": ["Before: NEWMAN, Chief Judge , FEINBERG and KEARSE, Circuit Judges."], "parties": ["Melinda C. FRANK, Plaintiff-Appellant, v. Howard R. RELIN, Individually and in his official capacity as the Monroe County District Attorney, Defendant-Appellee."], "opinions": [{"text": "KEARSE, Circuit Judge:\nPlaintiff Melinda C. Frank appeals from a final judgment of the United States District Court for the Western District of New York, David G. Larimer, Judge, dismissing her complaint seeking damages and other relief pursuant to 42 U.S.C. § 1983 (1988) against defendant Howard R. Relin for termination of her employment in violation of her rights under the First Amendment, and from an order of that court denying her motion to vacate the judgment pursuant to Fed. R.Civ.P. 60(b). Ruling that Frank had withdrawn her claim asserted against Relin in his official capacity, the district court dismissed the remainder of her complaint on the ground that Relin had qualified immunity with respect to the claim brought against him in his individual capacity. On appeal, Frank contends chiefly that the court erred (1) in ruling that she had withdrawn her claim against Relin in his official capacity, (2) in dismissing her complaint to the extent that it requested equitable relief, and (3) in granting summary judgment on Relin’s defense of qualified immunity. For the reasons below, we agree, and we vacate and remand for further proceedings.\nI. BACKGROUND\nFrom December 1981 until November 15, 1985, Frank was employed in the Office of the District Attorney (“DA”) for Monroe County, New York (the “County”), as a “victim-witness coordinator.” During the relevant period, Relin was the district attorney. His staff included a “First” assistant district attorney (“ADA”), whom we refer to as “A” and who was next in command after Relin; and Special ADA Louis P. Pilato, who ranked as a “Third” ADA and was in charge of the office’s investigative unit. Pilato, who had served in the DA’s office for some 11 years, was responsible for supervising several bureaus and 20-30 people who staffed those bureaus; he had no supervisory responsibility for the victim-witness bureau. Frank’s direct supervisor was the office administrator, ADA George Sofia. Affidavits and testimony received in the district court, construed in the light most favorable to Frank, reveal the following events preceding Relin’s termination of Frank’s employment.\nA. Frank’s Responsibilities and Her Concerns\nAs victim-witness coordinator, Frank was a liaison between the DA’s office and the victims of and witnesses to crimes. Her responsibilities included locating and contacting victims and witnesses, counseling them, participating in their interviews, and generally shepherding them through the trial process. Until the events in question, Frank -by all accounts performed her job well. She consistently received “exceptional” ratings in annual reviews and was described as a “very hard working and dedicated” employee.\nIf, in the course of a conversation, a witness mentioned something to Frank that was not known to the ADA assigned to the case, Frank was to relay that information to the ADA. In early 1985, Frank was assisting one Sam Tibone, a victim and witness in a criminal case being handled by an ADA to whom we refer as “B”. A police officer stopped Frank in the hallway outside the district attorney’s office and asked her why she was with Tibone. When Frank explained that Tibone was the victim in a case, the officer advised her to tell ADA “B” immediately that Tibone “‘has.a criminal record as long as your arm.’ ” (Hearing Transcript dated August 11, 1988 (“Aug. 11 Tr.”), at 10 (testimony of Frank).) Frank promptly attempted to relay the information to “B”. “B”, however, stated that he did not want to hear about Tibone’s criminal record until “ ‘after the trial is over.’ ” (Id. at 11.) Frank did not tell anyone about “B” ’s reaction at that time.\nIn the summer of 1985, Frank was working on the prosecution of one David Larson, who was accused of murdering a fourteen-year old girl while she was babysitting. Apparently the police had found Larson’s fingerprint at the crime scene, and “A”, who was assigned to the case, viewed the fingerprint as a particularly strong piece of evidence. However, when, as requested by “A”, Frank contacted two witnesses to determine whether they were still available for trial, the witnesses told Frank they had seen Larson at the crime scene prior to the date of the murder. The witnesses were willing to come to the DA’s office to be interviewed; but according to Frank, “A” told her\nnot to bother bringing them in for an interview, that he felt this would be very harmful to our case, that if we proved the defendant had been in the house prior to the night of the homicide, that this fingerprint would be thrown out.\n(Id. at 15-16.)\nThe next morning, Frank approached Pila-to and told him she was concerned about some information she had about a criminal case and was wondering what information the AD As wanted-withheld before trial. Pi-lato asked Frank what she meant, and she told him about her conversations with “B” concerning the Tibone matter and with “A” concerning the Larson matter. Pilato told Frank: “ T think that’s Brady [Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963)] material.’ ” (Aug. 11 Tr. at 19 (testimony of Frank).) He explained to Frank, who did not know what Brady material was, that that meant the information should be turned over to the defense. Pilato was clearly concerned, saying,\nI’m going to have to do something about this. I don’t know what it’s going to be, but ... if this should ever come out, ... I could be disbarred.\n(Id. at 20.) Frank asked Pilato to let her know what he intended to do before he took any action.\nSome time later, “A” asked Frank to contact another potential witness in the Larson ease. Frank spoke to the witness by telephone and learned that the witness knew Larson and had seen him at about 9:30 on the night of the murder. According to Frank, the witness\nsaid — her conversation with Larson was, “David, what are you on?” And his response to her was, “I’m on Black Velvet and acid.”\n(Id. at 22.)\nFrank told “A” about her telephone conversation with this witness and asked him if he wanted her to bring the witness in for an interview. “A” told Frank, “ ‘No, don’t bring her in. That will only help the defendant’s case.’ ” (Id. at 23.) Frank was concerned by this because normally “A” “followed up on every bit of information in order to avoid any surprises in the courtroom.” (Id.) She therefore wanted to discuss the matter with someone. However, “A” had rushed off to attend to other matters; Relin was out of the office, as was the ADA who ranked just behind “A”; and Sofia, Frank’s supervisor, had an office full of people. Frank therefore turned again to Pilato.\nFrank told Pilato that “A” had told her not to bring in a potential witness who had indicated a defendant had been drinking and was on drugs. Frank asked whether Pilato would normally interview such a witness in his own cases; he stated he would and that he was “ ‘going to ■ have to do something about this.’ ” (Id. at 25.) Frank asked him what he intended to do, to which he responded he did not know. Frank again asked Pilato to let .her know what he intended to do before he did anything.\nImmediately after that conversation, Pilato spoke to Justice Robert Kennedy, the supervisory judge of the Monroe County criminal courts, and reported on Frank’s statements about “A”’s handling of the Larson case, Later that day, Pilato told Frank he had discussed the matter with Justice Kennedy, and Frank became upset because Pilato had acted without first telling her. That evening, Frank called “A” and told him what Pilato had done.\nB. The Termination of Frank’s Employment\nOn September 13, 1985, Justice Kennedy summoned Relin and informed him that “A” might be mishandling potentially exculpatory material in the Larson case. Relin, apparently surprised by what he heard, returned to his office to investigate the matter. He learned that it was Pilato who had informed Justice Kennedy about the Larson matter and that Pilato’s impetus had been a conversation with Frank. Relin stated that he had confronted Frank and inquired why she had not followed proper office procedure (described by Relin at the hearing as an unwritten procedure) and expressed her concerns to her immediate supervisor or Relin, rather than discussing “A”’s case with Pilato. He told Frank “she had made the most serious type of error in judgment” and that he planned to discuss her performance with the members of his senior staff. (Hearing Transcript dated February 13, 1989 (“Feb. 13 Tr.”), at 30 (testimony of Relin).)\nRelin thereafter convened a meeting attended by, inter alios, Relin, Sofia, “A”, and “B” (Pilato apparently had been fired immediately) to discuss the matter, and their principal focus appears to have been whether or not Frank should be fired. According to the testimony of Sofia, “[i]t was arrived at through a consensus meeting of the administrative division heads of the District Attorney’s Office and the District Attorney” (id. at 15) “that Mrs. Frank could no longer be trusted; that her position was a key one, and she would be working with trial attorneys, and it was determined that she couldn’t — her position was too important, and she could no longer be trusted” (id. at 14).\nOn September 20, 1985, Relin relieved Frank of her duties and asked her to resign. Three days later, Frank was given letters of recommendation by “A”, Sofia, and Relin. “A” stated that the victim-witness program as initiated and expanded by Melinda (“Lynn”) Frank “now serves as a model for other district attorneys offices throughout the State. In this regard, Lynn’s dedication to this office, her work, and her attitude have, in my opinion, been excellent.” (“To Whom It May Concern” Letter from “A” dated September 23, 1985.) After stating that Frank had assisted him personally in numerous cases, including some 15 homicide trials, “A” concluded:\nI have every confidence in Lynn Frank’s abilities, and feel that her skills would translate well into any area of endeavor. I would certainly recommend Lynn most highly in whatever field she chooses.\n(Id.) Sofia’s letter was similar:\nAs her supervisor, I can say that her dedication and devotion to her duties, as well as to this office, remained at the highest levels. Her insights into various aspects of the job were astute and timely.\nLynn will be missed here, but, I am sure wherever she goes, she will be a valued asset. I recommend her for employment without reservation.\n(“To Whom It May Concern” Letter from Sofia dated September 23, 1985.) Relin wrote that in her four years’ work with the DA’s office, Frank had “demonstrated outstanding skills in dealing with people” and had “made trying felony cases a pleasure for many of the attorneys within the Monroe County District Attorney’s Office.” (“To Whom It May Concern” Letter from Relin dated February [sic] 23, 1985.) Relin continued:\nOn- a personal level, I have found Ms. Frank to be a person who seeks out assistance and advice and a person who has an overriding concern for her office, and for the reputation of that office. Ms. Frank has been a real asset to the Monroe County District Attorney’s Office, and we will miss her very much. She would be an extremely valuable employee for any occupation that I can think of that deals with people, and I would give her the highest recommendation for future employment.\n(Id.)\nC. The Present Lawsuit\nFrank commenced the present action in April 1986 against “Howard R. Relin, in his official capacity as'the Monroe County District Attorney,” naming no other defendants, and not purporting to assert any claims against Relin in his individual capacity. The complaint alleged principally that Relin (1) had violated Frank’s right to due process by depriving her of a property interest created by a state grant to the victim-witness program, and (2) had violated her First Amendment right to speak on matters of public concern; and it sought compensatory and punitive damages and attorney’s fees. A jury trial was demanded. Relin’s answer generally denied the allegations of the complaint, challenged the court’s subject matter jurisdiction, and asserted that Frank’s resignation had been the result of her own culpable conduct and had been voluntary.\nFollowing some two years of discovery, Relin moved for summary judgment principally on the grounds (1) that Frank had no property interest in her position, and (2) that her speech was not protected by the First Amendment. As to the latter ground, Relin contended chiefly that Frank had been concerned not with a matter of public importance but with her own performance in the DA’s office, and that she had complained to Pilato because she was disappointed that the ADAs with whom she worked did not embrace her suggested strategies for case management. He also contended that he had discharged Frank not because of the content of her statements to Pilato but because of her poor judgment in consulting with Pilato rather than her immediate supervisor or Re-lin.\nThe district court granted the motion to dismiss the due process claim on the ground that Frank lacked a property interest in her job, and it ordered an evidentiary hearing designed to permit it to' decide the issues of law relating to the First Amendment claim. Following that hearing, at which Frank, Re-lin, Sofia, and Pilato testified as to the events preceding Frank’s termination, the court, in a decision and order dated August 1, 1989 (“1989 Decision”), reported at 719 F.Supp. 138, denied Relin’s motion for summary judgment on the First Amendment claim. Without deciding whether or not ADAs “A” and “B” had made the statements Frank attributed to them, id. at 143 n. 2, the court found that “[t]his was not just a personal employment dispute,” id. at 142, and that Frank “was primarily concerned about what she perceived to be prosecutors’ seeming indifference to evidence which may have been favorable to the defense,” id. at 143. It concluded that\nFrank’s statements to Pilato, a senior, experienced assistant DA who served in a supervisory capacity, related to the efficient and effective functioning of the office and to assuring that relevant, material evidence is fully developed and made available to the prosecution and the defense to guarantee that defendants obtain a fair trial. Clearly, these issues are matters of legitimate public concern.\nId. at 142.\nStating that Relin had not cited any concern that Frank’s conduct would hinder the efficient operation of the DA’s office but instead “testified that the only reason for Frank’s discharge was that she spoke to Pilato rather than her immediate supervisor or someone else in the chain of command,” id. at 144 (emphasis in original), and that there was “no evidence that Frank violated an established office policy or procedure in consulting with Pilato,” id., the court concluded that there remained questions of fact as to whether Frank had been fired because of the content of her speech:\n[T]here may be questions of fact concerning whether the nature or content of Frank’s speech was a substantial or motivating factor in her discharge and, ultimately, whether she was discharged in retaliation for exercise of her constitutionally protected right of freedom of expression.\nId. at 145.\nIn November 1990, more than a year later, Relin sought to amend his answer in order to raise an affirmative defense of qualified immunity. Frank responded that if Relin were to amend his answer, Frank would wish to amend her complaint to add a claim against Relin in his individual capacity. The district court decided to allow Frank first to amend her complaint, following which Relin could file a new answer.\nFrank filed her amended complaint in April 1991, asserting claims against Relin in both his official and his individual capacities. In addition to seeking the monetary relief requested in the original • complaint, the amended complaint also requested equitable relief in the form of reinstatement, with backpay and full seniority rights. After moving unsuccessfully to dismiss the amended complaint’s individual-capacity claim on statute-of-limitations grounds, on the theory that that claim did not relate back to the date of the initial complaint, Relin filed his amended answer, again generally denying the allegations of the complaint, and asserting, in addition to his original defenses, the defense of qualified immunity.\nIn April 1992, Relin moved for summary judgment (1) dismissing the claim asserted against him in his individual capacity on the ground of qualified immunity, and (2) dismissing the claim for monetary damages asserted against him in his official capacity, on the ground that there was no basis for imposition of municipal liability. In connection with the former, Relin submitted an affidavit stating that\nFrank had a duty to inform me or her supervisor of her concerns about how prosecutions were being handled.\n14. It was Frank’s failure to tell me or her supervisor of her concerns, and not her conversations with Pilato, which resulted in her discharge.\n(Affidavit of Howard R. Relin dated April 7, 1992, ¶¶ 13, 14 (emphasis in original).)\nIn connection with the motion to dismiss the official-capacity claim, Relin asserted (a) that though he “ha[d] discretion to hire and fire his employees” (Memorandum of Law in Support of Defendant’s Motion for Summary Judgment filed May 1,1992, at 2), he was not a policymaker because Frank’s job was a civil service position and the final policymakers were the County Civil Service Commission or Director of Personnel Services, and (b) that Frank had not established, as required by Monell v. Department of Social Services, 436 U.S. 658, 98 S.Ct. 2018, 56 L.Ed.2d 611 (1978) (“Monell\"), that she had been fired pursuant to a municipal policy or custom. As discussed in greater detail in Part II.A. below, Frank responded that Monell was not relevant because she was not seeking monetary relief against the County but only against “Relin, in his individual and official capacities.” (Plaintiffs Memorandum of Law in Opposition to Defendant’s Final Motion for Summary Judgment dated May 7, 1992 (“Frank Summary Judgment Memorandum”), at 2.)\nIn an unreported Decision and Order dated August 24, 1992 (“1992 Decision”), the district court granted Relin’s motions for summary judgment and dismissed the complaint in its entirety. The court dismissed Frank’s official-capacity claim chiefly on the ground that, in responding to Relin’s summary judgment motion, Frank had withdrawn that claim. The court also stated that if Frank had not withdrawn the claim, it would have been dismissed on the ground that she “ha[d] offered no evidence to support a claim that the alleged constitutional violation was a result of municipal policy or that defendant is a policymaking official.” 1992 Decision-at 9 n. 4.\nAs to the individual-capacity claim, the court ruled that Relin was entitled to qualified immunity. It stated that\nthe qualified immunity inquiry in this case is whether, in light of the clearly established law in 1985 and the circumstances that confronted Relin when he fired plaintiff, a reasonable district attorney could have believed that plaintiffs speech did not touch on a matter of public concern, or that under the Pickering [v. Board of Education, 391 U.S. 563, 568, 88 S.Ct. 1731, 1734, 20 L.Ed.2d 811 (1968) ] balancing-of-interests analysis, plaintiffs interests in speaking out; as a citizen, were outweighed by the interests of the District Attorney’s Office, as an employer, in promoting the efficiency of its prosecutorial function.\nWhen he fired her, Relin knew that plaintiffs speech involved allegations that touched on issues relating to possible Brady material.\n1992 Decision at 13. But the court found it significant that plaintiffs speech raised, at most, only the specter of a possible Brady violation. Plaintiff made no allegations then, or now, to suggest that she believed that certain ADAs in the District Attorney’s Office were involved in an attempt to deprive criminal defendants of access to Brady material or an attempted cover-up of past wrong-doings. Thus, at most, plaintiffs speech concerned a dispute over the proper interpretation of the Brady doctrine, a legal issue over which reasonable minds could differ. As such Relin was reasonable in believing that the speech was not entitled to much weight in the Pickering balancing-of-interests analysis. See Giacalone [v. Abrams, 850 F.2d 79, 86 (2d Cir.1988) ] (speech which expressed differences of opinion on legal strategy was not entitled to much weight). It is also significant that plaintiff was not a lawyer, because even if I assume that plaintiff intended to allege that ADAs were failing to disclose Brady material, plaintiffs status as a nonlawyer made it reasonable for Relin to give plaintiffs opinion on a legal matter, and her First Amendment interests in expressing that opinion, little weight under the Pickering analysis.\nIn contrast, it was objectively reasonable for Relin to believe that the interests of the District Attorney’s Office in promoting the efficiency of its prosecutorial services were high, and that plaintiffs speech and conduct had an adverse impact on these interests.\nThe need for confidentiality and personal loyalty, as a foundation for establishing good working relationships, is especially critical to the proper functioning of a district attorney’s office. The nature of the work done in a prosecutor’s office is such that prosecutors must be able to trust each other and their staff in order to operate effectively. Breaches of confidentiality, loyalty, or trust, whether real or imagined, pose a serious threat to the efficient operation of a district attorney’s office, and can undermine the effectiveness of the prose-cutorial services it provides.\n1992 Decision at 15-17 (footnote omitted). The court found that Relin’s staff members felt that Frank could no longer be trusted, and it concluded that\n[i]n light of the concerns that were expressed to him, it was objectively reasonable for Relin to believe that interests of the District Attorney’s Office were in jeopardy, and, therefore, that he could lawfully discharge plaintiff under the Pickering balancing-of-interests analysis. Even if the staff member’s [sic] concerns were misguided — or even mistaken — the fact that Relin was confronting a situation in which members of his staff expressed concerns over plaintiffs trustworthiness made his own beliefs regarding the interests of the District Attorney’s Office reasonable.\n1992 Decision at 17.\nJudgment was entered dismissing the complaint, and Frank promptly appealed. Thereafter, she moved in the district court pursuant to Fed.R.Civ.P. 60(b) to set aside the judgment on the ground that her amended complaint sought two forms of equitable relief and that qualified immunity was not a defense to a claim for such relief. The district court denied the motion, and Frank has appealed that decision as well.\nII. DISCUSSION\nOn appeal, Frank contends principally (1) that she did not withdraw her official-capacity claim against Relin, (2) that the district court could not properly dismiss her claim for reinstatement and backpay because that was an equitable claim to which qualified immunity is not a defense, and (3) that Relin was not entitled to summary judgment on his qualified-immunity defense even against her claim for damages. Though some of Frank’s arguments confuse the principles and immunity defenses applicable to § 1983 actions, see generally Gan v. City of New York, 996 F.2d 522, 529-30 (2d Cir.1993), we conclude for several reasons that the district court erred in dismissing her official-capacity claim, and we conclude that the existence of fact issues made summary judgment inappropriate with respect to Relin’s qualified-immunity defense against the individual-capacity claim.\nA. The Official-Capacity Claim\nThe district court ruled that Frank had withdrawn her claim against Relin in his official capacity, and it dismissed that claim chiefly on that basis, noting its view also that Frank had presented no evidence of a municipal policy leading to her firing. We conclude that the court should not have dismissed the official-capacity claim for three reasons: (1) the memorandum on which the court relied for its conclusion that Frank had withdrawn this claim displayed a doctrinal confusion that should not have been automatically equated with a withdrawal of the claim; (2) the court did not explore the role of a district attorney as policymaker in the administration of his office; and (3) the court summarily dismissed Frank’s official-capacity claim in its entirety, notwithstanding the fact that Relin had sought summary dismissal of that claim only to the extent that it requested money damages.\n1. Frank’s Confusion\nThe Frank memorandum on which the district court relied in concluding that she had withdrawn her official-capacity claim was submitted in response to Relin’s motion to dismiss her monetary claims. Relin’s motion contended — correctly, as we discuss below — that a suit against him for monetary relief in his official capacity constituted, in effect, a suit against the County and that the principles governing municipal liability applied. Frank’s response to this argument was, in pertinent part, as follows:\nDefendant’s motion for summary judgment must be denied because the motion misconstrues applicable law regarding the impact of defendant’s decision-making authority. Defendant’s motion relies on Supreme Court cases that limit a municipality’s [emphasis in original] liability for the actions of a municipal official. In the instant case, however, plaintiff has not sued any municipality, but has'only sued the defendant Relin, in his individual and official capacities....\n[.Monell and its progeny] would raise difficult issues in the context of the present case, had plaintiff elected to sue the County of Monroe. In that instance, the court would have been called upon to determine whether District Attorney Relin was a municipal policy maker, and whether the particular decision made by Relin with respect to terminating plaintiffs employment represented official County policy. But it is unnecessary to decide these difficult issues in the instant case because of this simple fact: Plaintiff has not sued the municipality. She has not named the County of Monroe as a party defendant. Instead, plaintiff has sued only defendant Howard R. Relin, who is now named in his individual and official capacities. Accordingly, the issues raised by Monell ... are simply inapposite to the instant case.\nDefendant’s own argument in support of the instant motion for summary judgment seems to acknowledge the flaw in his reasoning. Defendant argues that he is required to comply with New York Civil Service Law and the rules and policies of the Monroe County Civil Service Commission. This contention is beside the point, because plaintiffs employment was not governed by New York Civil Service Law; at no time was her position a civil service position_ Furthermore, after making this argument, defendant states that “Monroe County cannot be held liable for Relin’s actions in matters of employment and personnel administration including his decision to [terminate plaintiff].” Without conceding the validity of this argument, plaintiff simply notes that she is not seeking to hold, the County of Monroe liable for Relin’s actions; rather, she is simply seeking to hold the defendant liable, in his official and individual capacities.\n(Frank Summary Judgment Memorandum at 2-4 (emphasis added, except where indicated).) The district court construed these statements as an “admission that she does not wish to sue Monroe County” and as a “withdrawal of her claim against defendant in his official capacity.” 1992 Decision at 9.\nFrank’s belief , that an official-capacity suit against an individual is not in effect a suit against the governmental entity of which he is an official was, of course, a misconception. “[T]he real party in interest in an official-capacity suit is the governmental entity and not the named official....” Hafer v. Melo, — U.S. —, —, 112 S.Ct. 358, 361, 116 L.Ed.2d 301 (1991). Thus, “an official-capacity suit is, in all respects other than name, to be treated as a suit against the entity.” Kentucky v. Graham, 473 U.S. 159, 166, 105 S.Ct. 3099, 3105, 87 L.Ed.2d 114 (1985). Consequently, Frank’s repeated statements that she was not suing the County and was not seeking to hold it liable for Relin’s actions were fallacious in light of her repeated statements that she sought to recover from Relin in his official capacity.\nSuch confusion is not uncommon, however, see, e.g., Gan v. City of New York, 996 F.2d at 529-30, and in order to avoid disadvantaging a party with a potentially viable claim solely on account of counsel’s misconceptions, courts afford plaintiffs more leeway than usual with respect to the characterizations of their § 1983 claims against government officials. For example, when the face of a complaint fails to state clearly whether a government official is being sued in his official capacity, or his individual capacity, or both, courts look to “ ‘[t]he course of proceedings’ ” to determine “the nature of the liability to be imposed.” Kentucky v. Graham, 473 U.S. at 167 n. 14, 105 S.Ct. at 3106 n. 14 (quoting Brandon v. Holt, 469 U.S. 464, 469, 105 S.Ct. 873, 876, 83 L.Ed.2d 878 (1985)). Thus, a plaintiff who has not clearly identified in her complaint the capacity in which the defendant is sued should not have the complaint automatically construed as focusing on one capacity to the exclusion of the other. By the same token, a party who is unclear in argument as to the capacity in which the defendant can be pursued should not lightly be deemed to have withdrawn a claim that was expressly stated. When the party’s defense of her stated claim bespeaks a doctrinal confusion, the court should not presume that there has been abandonment but should instead give her the opportunity either to abandon the claim or to pursue it with a corrected understanding as to what proof will be required to establish it.\nIn the present case, notwithstanding the doctrinal confusion displayed by Frank’s memorandum, one fact stands out clearly: Frank, who had expressly asserted a claim against Relin in his official capacity, had no thought whatever that she was abandoning her claim against Relin in that capacity. While no doubt a party could, in defending against a motion for summary judgment, concede that a claim lacked merit, Frank’s memorandum made no such concession. And whether Frank would actually have chosen to abandon her official-capacity claim if she had understood that the principles governing suits against a municipality were applicable to her official-capacity claim, see Hafer v. Melo, — U.S. at —-—, 112 S.Ct. at 361-62 (“Because the real party in interest in an official-capacity suit is the governmental entity and not the named official, ‘the entity’s “policy or custom” must have played a part in the violation of federal law.’ ”); see gener ally Gan v. City of New York, 996 F.2d at 529 is not answered in this record.\nOn remand, Frank should be given the opportunity to elect whether to pursue the official-capacity claim.\n2. District Attorney as Municipal Policymaker\nNor do we agree with the district court’s alternative view that Frank’s official-capacity claim was dismissable because she had “offered no evidence to support a claim that the alleged constitutional violation was a result of municipal policy or that defendant is a policy-making official.” 1992 Decision at 9 n. 4. The district court’s conclusion that there was no indication that Relin was a policymaking official within the meaning of Monell is, at best, premature. We have noted that generally, “[w]here a district attorney acts as the manager of the district attorney’s office, the district attorney acts as a county policymaker.” Walker v. City of New York, 974 F.2d 293, 301 (2d Cir.1992), cert. denied, — U.S. —, 113 S.Ct. 1387, 122 L.Ed.2d 762 (1993); see also Gan v. City of New York, 996 F.2d at 536 (same).\nConstrued in her favor, the record indicates that Frank was hired by Relin’s predecessor and was reappointed by Relin upon his election to district attorney. She was asked to resign by Relin after he had discussed the matter with “the top administrative personnel in the district attorney’s office” (Feb. 13 Tr. at 5 (testimony of Sofia)). Plainly Relin undertook his actions as manager of the Monroe County District Attorney’s Office.\nThough Relin contended that he was not a policymaker because Frank’s position was controlled by civil service laws and that his discretion to hire and fire was subject to review and regulation by the County Civil Service Commission, Frank denied that her position had ever been covered by civil service, and the district court declined to decide this issue. Nor has that issue, undeveloped below, been fully briefed on this appeal. We would note, however, that there is a good deal of tension between Relin’s contention that Frank’s position was governed by civil service and the proposition that he was permitted to fire her in the interest of improving office “efficiency” or morale.\nIn any event, the matter of whether Relin had final policymaking authority is a question of state law and is an issue to be decided by the court. See, e.g., Jett v. Dallas Independent School District, 491 U.S. 701, 737, 109 S.Ct. 2702, 2723, 105 L.Ed.2d 598 (1989). If Relin was not the final decisionmaker; of course, the decisionmaker cannot be held liable for Relin’s actions on a theory of re-spondeat superior, though it can be held liable if it approved of or acquiesced in his actions. See generally id. at 736-38, 109 S.Ct. at 2722-24.\n3. The Equitable Claim\nFinally, we note that Relin’s motion for summary judgment with respect to the official capacity claim sought dismissal only “with respect to Plaintiffs request for monetary damages.” (Motion for Summary Judgment dated April 30, 1992, at 1.) In her amended complaint, Frank requested not only monetary relief but also reinstatement, relief that was equitable. Relin made no effort to present grounds to support summary dismissal of Frank’s claim to the extent that it sought reinstatement. The coui’t apparently viewed the reinstatement claim, sua sponte,. as one to which Relin’s defense of qualified immunity was applicable. However, such equitable relief could be obtained against Relin only in his official, not his individual, capacity; and a defense of qualified immunity may properly be raised only with respect to claims asserted against a defendant in his individual capacity. Qualified immunity is not a defense to a claim against a municipal official in his official capacity. See Hafer v. Melo, — U.S. at —-—, 112 S.Ct. at 361-62; Kentucky v. Graham, 473 U.S. at 167, 105 S.Ct. at 3105-06; Gan v. City of New York, 996 F.2d at 529.\nAccordingly, the court’s summary dismissal of the official-capacity claim to the extent that it sought equitable relief was error.\nB. Qualified Immunity and the Individual-Capacity Claim .\nIn a § 1983 action, qualified immunity shields a defendant official sued in his individual capacity “from liability for civil damages insofar as [his] conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known,” Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S.Ct. 2727, 2738, 73 L.Ed.2d 396 (1982), or, even where the rights were clearly established, if it was objectively reasonable for the official to believe that his acts did not violate those rights, see Anderson v. Creighton, 483 U.S. 635, 638, 107 S.Ct. 3034, 3038, 97 L.Ed.2d 523 (1987); Robison v. Via, 821 F.2d 913, 921 (2d Cir.1987). In order to determine whether a particular right was clearly established at the time a defendant acted, a court should consider:\n(1) whether the right in question was defined with “reasonable specificity”; (2) whether the decisional law of the Supreme Court and the applicable circuit court support the existence of the right in question; and (3) whether under preexisting law a reasonable defendant official would have understood that his or her acts were unlawful.\nJermosen v. Smith, 945 F.2d 547, 550 (2d Cir.1991), cert. denied, — U.S. —, 112 S.Ct. 1565, 118 L.Ed.2d 211 (1992); see also Benitez v. Wolff, 985 F.2d 662, 666 (2d Cir.1993). Such immunity does not attach where the “contours of the right” were “sufficiently clear that a reasonable official would understand that what he is doing violates that right.” Anderson v. Creighton, 483 U.S. at 640, 107 S.Ct. at 3039; see, e.g., Piesco v. City of New York, 933 F.2d 1149, 1160 (2d Cir.), cert. denied, — U.S. —, 112 S.Ct. 331, 116 L.Ed.2d 272 (1991); Vasbinder v. Ambach, 926 F.2d 1333, 1341 (2d Cir.1991).\nAbsent extraordinary circumstances, if the law was clearly established, the defendant official is not entitled to summary judgment on his immunity defense “since a reasonably competent public official should know the law governing his conduct.” Harlow v. Fitzgerald, 457 U.S. at 819, 102 S.Ct. at 2738. Nonetheless, even where the contours of the plaintiffs federal rights and the official’s permissible actions were clearly delineated at the time of the acts complained of, the defendant may enjoy qualified immunity if it was objectively reasonable for him to believe that his acts did not violate those rights. See, e.g., Malley v. Briggs, 475 U.S. 335, 345-46, 106 S.Ct. 1092, 1098-99, 89 L.Ed.2d 271 (1986); Robison v. Via, 821 F.2d at 921. In such a case, the defense will turn on the particular facts, and summary judgment will be appropriate only if the defendant “adduce[s] sufficient facts [such] that no reasonable jury, looking at the evidence in the light most favorable to, and drawing all inferences most favorable to, the plaintiffs, could conclude that it was objectively unreasonable for the defendant! ]” to believe that he was acting in a fashion that did not clearly violate an established federally protected right. Halperin v. Kissinger, 807 F.2d 180, 189 (D.C.Cir.1986) (Scalia, J., sitting by designation); Robison v. Via, 821 F.2d at 921.\n1. The Clearly Established First Amendment Principles\nWith respect to the claim asserted by Frank, it was established prior to 1985 that government employees had a right under the First Amendment, though not an unlimited right, to speak on matters of public concern. See, e.g., Connick v. Myers, 461 U.S. 138, 146, 103 S.Ct. 1684, 1689-90, 75 L.Ed.2d 708 (1983); Pickering v. Board of Education, 391 U.S. 563, 568, 88 S.Ct. 1731, 1734-35, 20 L.Ed.2d 811 (1968). Where a government employer discharges an employee on account of the employee’s speech, the determination of whether the public employer has properly discharged the employee for engaging in speech requires “a balance between the interests of the [employee], as a citizen, in commenting upon matters of public concern and the interest of the [government], as an employer, in promoting the efficiency of the public services it performs through its employees.” Id.; see also Rankin v. McPherson, 483 U.S. 378, 384, 107 S.Ct. 2891, 2897, 97 L.Ed.2d 315 (1987).\nTo make out a prima facie case on such a claim, the employee must establish first that her speech can be “ ‘fairly characterized as constituting speech on a matter of public concern,’” id. (quoting Connick v. Myers, 461 U.S. at 146, 103 S.Ct. at 1690), and second “that that speech was at least a ‘substantial’ or ‘motivating’ factor in the discharge,” White Plains Towing Corp. v. Patterson, 991 F.2d 1049, 1058 (2d Cir.1993) (quoting Mt. Healthy City School District Board of Education v. Doyle, 429 U.S. 274, 287, 97 S.Ct. 568, 50 L.Ed.2d 471 (1977)). The first element is a question of law, the second a question of fact.\nIf the plaintiff establishes both elements, the employer may nonetheless escape liability in either of two ways. It may prevail if it can show that it would have made the same decision in the absence of the protected conduct, see Mt. Healthy City School District Board of Education v. Doyle, 429 U.S. at 286, 97 S.Ct. at 575, or if it can show that the employee’s conduct interfered with its “effective and efficient fulfillment of its responsibilities to the public,” Connick v. Myers, 461 U.S. at 150, 103 S.Ct. at 1692. With respect to the latter defense, “the [government’s burden in justifying a particular discharge varies depending upon the nature of the employee’s expression.” Id.\n2. The Record in the Present Case\nThe record in the present case did not permit summary judgment in favor of Relin on his qualified immunity defense for two reasons. First, Frank’s speech plainly centered on a matter of societal importance, i.e., “assuring that relevant, material evidence [wa]s fully developed and made available to the prosecution and the defense to guarantee that defendants obtain[ed] a fair trial,” 1989 Decision, 719 F.Supp. at 142. Second, there are questions of fact as to the reasons Relin fired Frank, and those questions affect both the merits and the qualified immunity defense.\nAs to the nature of Frank’s speech, we reject the district court’s 1992 view that that speech did not concern possible wrongdoing in the DA’s office but “at most, ... concerned a dispute over the proper interpretation of the Brady doctrine, a legal issue over which reasonable minds could differ,” and that Relin could reasonably have believed that this was merely an “opinion on a legal matter” that was entitled to little weight in the Pickering balancing-of-interests analysis. 1992 Decision at 15-16. In reaching this conclusion, the district court likened Frank’s concerns to those of the attorney-plaintiff in Giacalone v. Abrams, 850 F.2d 79, 87-88 (2d Cir.1988). The two cases are not parallel.\nIn Giacalone, the plaintiff disagreed with his superiors as to the proper interpretation of certain provisions of the federal tax laws and hence as to the appropriate steps to be taken with respect to certain administrative matters. Giacalone sought to make his own views known to members of the public and to belabor them within the office. Prior to being fired, he made no accusations as to any serious matters of potential impropriety.\nIn the present case, there is no indication in the record that Frank, a nonlawyer, sought to contest the meaning of Brady. Indeed, when she first questioned Pilato as to what information the ADAs wanted or did not want to receive, Frank did not even know what the Brady doctrine was. She merely understood (1) that she had certain information that had logical relevance (an understanding not' dependent on legal training); (2) that both “A” and “B” told her they did not want the information prior to trial; and (3) that “A” told her he did not want it because it would be helpful to the defendant. But whether or not Frank was aware of Brady, she, unlike the plaintiff in Giacalone, was plainly raising questions of serious public concern. See, e.g., Connick v. Myers, 461 U.S. at 148, 103 S.Ct. at 1691 (question of “actual or potential wrongdoing ... on the part of’ the district attorney’s staff is a matter of serious public concern); see also Dobosz v. Walsh, 892 F.2d 1135, 1141-42 (2d Cir.1989) (same re police officer’s cooperation with Federal Bureau of Investigation (“FBI”) and testimony against fellow officer as to possible planting of gun on person shot by latter officer); Vasbinder v. Ambach, 926 F.2d at 1341 (same re plaintiffs report to FBI of his suspicions of overbilling in federally funded program overseen by his agency); Rookard v. Health & Hospitals Corp., 710 F.2d 41, 46-47 (2d Cir.1983) (same re government employee’s private report of allegations of corrupt and wasteful practices outside chain of command to agency’s inspector general). In sum, as a matter of law, the district court erred in characterizing Frank’s conversations with Pilato as touching only insignificantly on a matter of public concern.\nNor could Relin reasonably have viewed Frank’s statements as not touching on a matter of public concern. Even if Relin were, on his own, inclined to view the matter as not significant, as the district court did in its 1992 Decision, the very fact that a New York Supreme Court Justice summoned him to chambers to broach the matter would have made it clear to any objectively reasonable official that the substance of Frank’s statements was a matter of serious public concern and hence could not be weighed lightly in the Pickering balancing-of-interests analysis.\nFurther, the issue of Relin’s motivation in firing Frank was one that clearly involved disputed questions of fact. The record would permit a rational factfinder to infer that Frank was fired because of the content of her speech, i.e., because she disclosed actual or potential wrongdoing by “A” and “B”. The district court found instead that Relin fired Frank because the ADAs he consulted felt Frank could no longer be trusted and Relin believed her continued presence would therefore be detrimental to the office’s interest of “efficiency,” and that such -a belief provided him with qualified immunity even if the ADAs’ views were “misguided.” This conclusion would be questionable even were there no issue of fact as to Relin’s motivation. Prosecutorial “efficiency” cannot outweigh the right of an employee to raise with a supervising attorney the question of nondisclosure of Brady material, especially when the main champions of that countervailing “efficiency” are thqse implicated in the suggestion of Brady derelictions. If the reason for the ADAs’ desire to be rid of Frank were a lack of trust in her ability or willingness to remain silent about Brady violations, office efficiency or morale grounded on such considerations could not outweigh Frank’s speech, and a competent public official could not reasonably, believe that it would.\nIn any event, the court’s attribution of Frank’s firing to a desire to maintain office efficiency constitutes a finding of fact as to Relin’s motivation. On a motion for summary judgment, the district court’s function is to identify questions of fact, not to decide them. Nor may the court make credibility assessments; those assessments are to be made by the finder of fact. As the district court seemed' to recognize in its 1989 Decision, the question of Relin’s motivation could not be decided as a matter of law. Indeed, we note that Relin’s positions in this litigation have presented something of a moving target. His initial answer to the complaint took the position that Frank had not been fired but had resigned voluntarily. At the February 13,1989 hearing, he suggested that Frank had been fired because her conversations with Pilato had impaired “the workings of the office and the functionings of the’office.” (Feb. 13 Tr. at 56.) In a 1992 affidavit, he stated that he had fired Frank because she had not brought her Brady concerns to him or Sofia, and not because she had spoken to Pilato. And one of Relin’s 1992 memoranda in support of summary judgment went so far as to intimate that Frank had been fired because,' by asking Pilato not to take any action with respect to the actions of “A” and “B” without first informing her, she had in fact sought to conceal the Brady derelictions. An assessment of the credibility of Relin’s denial that he fired Frank because of the content of her disclosures to Pilato may well be affected by the variety of positions he has taken.\nRelin’s contention that Frank’s conduct had impaired office relationships was supported by Sofia’s testimony that the top ADAs felt Frank could not be trusted. That testimony itself, however, assuming it were credited in the face of the glowing posttermi-nation letters of recommendation written for Frank by Sofia, Relin, and “A”, raises questions as to the focus of the mistrust. A rational factfinder could conclude that a mistrust based on Frank’s action in taking her Brady' concerns to “a senior, experienced assistant-DA who served in a supervisory capacity,” 1989 Decision, 719 F.Supp. at 142, was no more than an antipathy for the content of Frank’s statements, i.e., that the ADAs felt that they could not trust Frank not to disclose Brady violations. And the credibility of Relin’s suggestion that he fired Frank solely because she did not come to him with her Brady concerns, in order to permit Relin to investigate them, is suspect in light of the fact that his administrative response was to consult, as to whether Frank should be fired, with the very ADAs who may have been committing the Brady infractions.\nFinally, the court could not properly uphold Relin’s qualified immunity defense as a matter of law on the premise that he was entitled to believe that Frank’s First Amendment rights did not outweigh the countervailing interests, for the factual question as to Relin’s motivation in firing Frank raises a factual question of precisely what interests Relin was weighing against Frank’s First Amendment right. If Relin fired Frank because she “blew the whistle\" on Brady violations, that consideration could not outweigh her First Amendment right to speak up about those violations, no matter how piercing the whistle to the ears of the ADAs.\nCONCLUSION\nFor the above reasons, we conclude that the district court erred in summarily dismissing Frank’s claims against Relin in his official capacity and in his individual capacity. We have considered all of Relin’s arguments in opposition and have found them to be without merit. The judgment and Rule 60(b) order of the district court are vacated, and the matter is remanded for further proceedings not inconsistent with this opinion.", "type": "majority", "author": "KEARSE, Circuit Judge:"}], "attorneys": ["David Rothenberg, Rochester, NY (Geiger & Rothenberg, on the brief), for appellant.", "William G. Gandy, Buffalo, NY (Thomas S. Gill, Lawrence J. Fineberg, Saperston & Day, P.C., on the brief), for appellee."], "corrections": "", "head_matter": "Melinda C. FRANK, Plaintiff-Appellant, v. Howard R. RELIN, Individually and in his official capacity as the Monroe County District Attorney, Defendant-Appellee.\nNos. 1019, 1344, Dockets 92-9026, 93-7060.\nUnited States Court of Appeals, Second Circuit.\nArgued May 25, 1993.\nDecided July 28, 1993.\nDavid Rothenberg, Rochester, NY (Geiger & Rothenberg, on the brief), for appellant.\nWilliam G. Gandy, Buffalo, NY (Thomas S. Gill, Lawrence J. Fineberg, Saperston & Day, P.C., on the brief), for appellee.\nBefore: NEWMAN, Chief Judge , FEINBERG and KEARSE, Circuit Judges.\nJudge Newman became Chief Judge on July 1, 1 F.3d-30 1993."} | NEWMAN | FEINBERG | KEARSE | 1 | 1 | 1 | 0 | 0 | 0 | 1 F.3d 1317 | [
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"content": "You are an expert legal coding assistant trained to classify U.S. federal Courts of Appeals\ncases using an adaptation of the Supreme Court Database (SCDB_2023_01) codebook. You follow the coding procedure\nin the codebook step by step and use the precise definitions of terms presented in the code... |
10,517,508 | Greg R. BARRINGER and Judith M. Barringer, Plaintiffs-Appellants, v. Michael D. GRIFFES, Defendant-Appellee | Barringer v. Griffes | 1993-08-09 | No. 857, Docket 92-9062 | United States Court of Appeals for the Second Circuit | {"judges": ["Before: VAN GRAAFEILAND, KEARSE and CARDAMONE, Circuit Judges."], "parties": ["Greg R. BARRINGER and Judith M. Barringer, Plaintiffs-Appellants, v. Michael D. GRIFFES, Defendant-Appellee."], "opinions": [{"text": "CARDAMONE, Circuit Judge:\nAppellants on this appeal wanted to register and operate an automobile in Vermont that they had purchased in another state. Vermont’s motor vehicle tax scheme imposes a use tax on automobiles; at the same time it grants a credit against the use tax for any sales tax paid to Vermont. Due to the credit, most Vermonters never have to pay the use tax. Non-residents moving to Vermont find themselves in quite a different situation. They are not credited against the use tax for any sales tax they paid in their former state of residence. Instead, they might pay a sales tax in the state where they previously lived and, in addition, Vermont’s use tax. We are asked to decide whether Vermont’s attempt to tax the use of an automobile - brought from Connecticut, where a sales tax was paid on it, places such a burden on interstate commerce as to render Vermont’s use tax invalid as in contravention of the Commerce Clause.\nWhenever a court sets sail into the sea of the Interstate Commerce Clause, it should mind which way the wind blows. It was eai'ly believed that the Commerce Clause, by its own force, limited the state’s authority to tax commerce. Later it was thought the Clause only granted Congress authority to pass legislation in this field, and that the function of the Supreme Court was limited to invalidating state laws contrary to congressional enactments. See Walter Hellerstein, State Taxation of Interstate Business: Perspectives on Two Centuries of Constitutional Adjudication, 41 Tax Law. 37, 41 (1987) [Hellerstein, State Taxation]. Dealing with these competing approaches took the Supreme Court along one tack until in Cooley v. Board of Wardens, 53 U.S. (12 How.) 299, 13 L.Ed. 996 (1851), it came about, and began a different tack. There it ruled that those aspects of commerce inherently national in character were subject to Congress’ single, uniform law; those aspects of commerce that were local in character, demanding diverse approaches, were left to the states to legislate. Id. at 319.\nCarried along by these changing winds of doctrine, the Supreme Court then resolved Commerce Clause cases by drawing various distinctions. In different periods, for example, the Court has examined the “national” or “local” nature of a state’s tax, whether a state enacted a “direct” or “indirect” tax on interstate commerce, whether a state tax discriminated against interstate commerce in its practical operation, and whether the state tax simply made interstate commerce pay its fair share of the costs of state government or whether it exacted more than its fair share. These analytical tools were among those used to determine the constitutionality of a state tax on interstate transactions. The changes in direction evolving from the emphasis accorded these varying doctrines make plain that to set our sails safely for a favoring breeze in this sea, it is necessary to hug the shore closely, where the wind stands fair.\nPlaintiffs, Greg and Judith Barringer, appeal from a judgment entered on September 2, 1992 in the District Court for the District of Vermont by Chief Judge Fred I. Parker. Judge Parker denied their request for declaratory and injunctive relief based on their claim that the Vermont Motor Vehicle Purchase and Use Tax, Vt.Stat.Ann. tit. 32, ch. 219 (1981 and Supp.1992), violates the Commerce Clause of the United States Constitution. See Barringer v. Griffes, 801 F.Supp. 1282, 1289 (D.Vt.1992). The district court also refused to grant the Barringers leave to amend their complaint to include a claim based on the Privileges and Immunities Clause. See id. at 1284 n. 2. Because we hold the Vermont use tax violates the Commerce Clause we need not reach or decide the refusal to permit plaintiffs to amend their complaint to include the latter claim.\nBACKGROUND\nThe Barringers purchased a 1988 Mazda 626 LT for $14,769 from Partyka Chevrolet in Hamden, Connecticut on September 23, 1988. They were then Connecticut residents and, in compliance with Connecticut law, they paid an approximately 7.5 percent sales tax based on the price of the vehicle, and registered it in that state. The Connecticut sales tax cost them approximately $1,085.\nA little less than two years later, on August 25, 1990, the Barringers moved to Mid-dlebury, Vermont to permit Ms. Barringer to take up an assistant professorship in classical archaeology at Middlebury College. After arriving in their new home state they were told that under Vermont law they would have to pay a 4 percent use tax on the depreciated value of their automobile in order to register it there. (Vermont raised the use tax to 5 percent in 1991, though it will revert to 4 percent on July 1,1993. See Vt.Stat.Ann. tit. 32, § 8903 (Supp.1992). The Barringers also learned that no credit would be granted them for the sales tax they had paid to the State of Connecticut. Because the automobile had a depreciated value of about $7,000, the Vermont 4 percent use tax amounted to $280. They found the total taxes they would pay on their car to both Connecticut and Vermont unacceptable.\nIn June 1991 plaintiffs therefore brought an action in Vermont Superior Court for declaratory and injunctive relief against the Vermont Motor Vehicle Commissioner, Michael Griffes, defendant-appellee. The Commissioner moved to dismiss the action for lack of subject matter jurisdiction on the grounds that the Barringers had to pay the tax and then seek an administrative refund from the Commissioner. The Barringers withdrew their state complaint and filed in its place on August 27, 1991 the instant federal action seeking the same declaratory and injunctive relief. Plaintiffs claimed that the Vermont tax violated the Commerce Clause of the United States Constitution because it did not grant them a credit for the sales tax they had paid on then Mazda.in Connecticut.\nThe district court dismissed the action as soon as it was filed on the grounds that the case was barred by the Tax Injunction Act, 28 U.S.C. § 1341. On appeal we vacated the dismissal order and remanded the case to the district court, for further proceedings. See Barringer v. Griffes, 964 F.2d 1278, 1284 (2d Cir.1992). On remand the district court held a hearing on plaintiffs’ motion for a preliminary injunction, and at the hearing’s close suggested consolidating the preliminary and permanent injunction phases of the case, to which both parties agreed. The motion for a preliminary injunction was thereafter consolidated with a trial on the merits pursuant to Fed.R.Civ.P. 65(a)(2). The Barringers also informed the trial judge that they planned to assert an additional claim based on the Privileges and Immunities Clause, and filed a motion to amend that same day.\nThe district court issued an opinion and order on September 2, 1992, holding that the Vermont Motor Vehicle Purchase and Use Tax did not violate the Commerce Clause, and denying plaintiffs’ motion to amend their complaint because it was made too late. See Barringer, 801 F.Supp. at 1284 n. 2, 1289. This appeal followed.\nDISCUSSION\nI Vermont Motor Vehicle and Purchase and Usé Tax\nWe are aware that the issue of the constitutionality of a sales and use tax focuses on an unsettled question of law that the Supreme Court has explicitly declined to address. That Court once before actually considered the same Vermont vehicle tax at issue before us in the context of a different case, Williams v. Vermont, 472 U.S. 14, 105 S.Ct. 2465, 86 L.Ed.2d 11 (1985). Williams held the statute facially violated the Equal Protection Clause to the extent that it granted a use tax credit to Vermont residents who purchased and registered vehicles outside of Vermont and thus paid sales taxes to another state, but did not grant the same credit to non-residents in similar circumstances. See id. at 27, 105 S.Ct. at 2474; Vt.Stat.Ann., tit. 32, § 8911(9) (1981) (credit for Vermont residents purchasing out-of-state). Accordingly, the Supreme Court in Williams did not reach the Commerce Clause questions raised by the parties. See 472 U.S. at 27, 105 S.Ct. at 2474. Having decided the ease on other grounds, the Court explicitly noted, “[w]e again put to one side the question whether a State must in all circumstances credit sales or use taxes paid to another State against its own use tax.” Id. at 28, 105 S.Ct. at 2474.\nIn response to Williams, Vermont issued an administrative ruling narrowing- its statute. Under the regulations restricting § 8911(9) to comply with Williams, the sales tax credit is no longer available for Vermont residents who buy and register their automobiles in other states before registering them in Vermont. See Vt. Agency of Transp., Dep’t of Motor Vehicles, Rule 86-28-E (July 5, 1985) (but the rule still allows a credit for Vermonters who purchase but do not register a vehicle out-of-state).\nThe statute and. regulations currently operate as follows: § 8903(a) of Title 32 of the Vermont Statutes Annotated imposes a sales tax on the purchase of motor vehicles in Vermont; § 8903(b) of Title 32 imposes a use tax on motor vehicles that is payable upon registration of the vehicle with the Vermont Department of Motor Vehicles. Section 8903(b) further grants a credit against the Vermont use tax for any § 8903(a) Vermont sales tax paid. While a credit is thus available for any § 8903(a) sales tax paid to Vermont, no such credit is granted for a sales tax paid to any other state where the vehicle has been previously registered.\nThe administrative limitations adopted in response to Williams clarified this point and made apparent that no one, Vermonters or others, who purchases and registers a motor vehicle in another state will obtain the Vermont tax credit. Plaintiffs note, .with some justification, that this administrative narrowing of the statute alters the practical effect of the tax scheme very little. There is virtually no reason why a Vermont resident would ever want to purchase and register a vehicle out-of-state before registering the same vehicle in-státe.\nExamining the history of these taxes, it is evident that sales taxes first came into being in the depression years of the 1930s. Use taxes were enacted to stem the loss of revenue to non-sales tax states from those individuals who might not have paid the sales tax. Use taxes are functionally equivalent to sales taxes. See Walter Hellerstein, Complementary Taxes as a Defense to Unconstitutional State Tax Discrimination, 39 Tax Law. 405, 406-09 (1986) [Hellerstein, Complementary Taxes ] (describing sales and use tax schemes). Typically a use tax, as the one before us, is. levied upon the use, storage, or other consumption in the state of tangible personal property not already subjected to a sales tax. Vermont’s automobile purchase and use taxes operate together with the avowed purpose of “improving] and maintain[ing] the state and interstate highway systems.” Vt.Stat.Ann. tit. 32, § 8901.\nHere the State of Vermont designed its tax plans to grant a credit for taxes paid to Vermont so that a resident motorist either pays the sales tax or the use tax, but not both. Yet, under this system automobiles transported into the state become subject to a tax that is usually not levied on in-state vehicles; use taxes like Vermont’s fall most heavily on owners of out-of-state autos. See Walter Hellerstein, Is “Internal Consistency” Foolish?: Reflections on an Emerging Commerce Clause Restraint on State Taxation, 87 Mich.L.Rev. 138, 159 n. 112 (1988) [Hellerstein, Internal Consistency] (noting use taxes discriminate “on their face”).\nIn order to appreciate fully whether Vermont’s use tax contravenes the Commerce Clause, the state’s legislation must be examined in the context of the sales and use taxes together since they represent complementary and compensating taxes designed to operate in tandem. In considering the two taxes together, we turn to the issue left open by Williams and now raised by the Barringers: whether Vermont’s Motor Vehicle Purchase and Use Tax violates the Commerce Clause.\nII The Supreme Court’s Construction of the Commerce Clause\nThe sparse language of the Commerce Clause provides little guidance to its modern-day interpreters. That clause establishes simply that Congress shall have the power “[t]o regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” U.S. Const, art. I, § 8, cl. 3. Only in the late 19th century did- the Supreme Court first unequivocally hold that the Commerce Clause by its own force limited the authority of the states to tax interstate commerce. See Case of the State Freight Tax, 82 U.S. (15 Wall.) 232, 278-79, 21 L.Ed. 146 (1872); Hellerstein, State Taxa tion, supra, at 40. While the Court struggled for many years with the distinction between valid and invalid state taxes, see generally Hellerstein, State Taxation, supra, at 43-48, in the mid-1980s it developed as a test for constitutionality the multiple taxation doctrine. See id. at 48-49.\nThe multiple taxation doctrine formed the basis for recent developments in Commerce Clause case law. In Western Live Stock v. Bureau of Revenue, 303 U.S. 250, 258, 58 S.Ct. 546, 550, 82 L.Ed. 823 (1938), a case credited with establishing multiple taxation as the touchstone of constitutionality, Justice Stone explained, “under constitutional limitations, [a taxing system] must accommodate itself to the double demand that interstate business shall pay its way, and that at the same time it shall not be burdened with cumulative exactions which are not similarly laid on local business.” Those two concerns continued to surface in later cases, including the 1977 decision that initiated the four-part test now characterizing the current era of Commerce Clause jurisprudence.\nThe Supreme Court first laid out its current Commerce Clause test in Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 279, 97 S.Ct. 1076, 1079, 51 L.Ed.2d 326 (1977), where it upheld a tax on the privilege of doing business in-state as -applied to a corporation involved in interstate commerce. Complete Auto reiterated Western Live Stock’s acknowledgement that interstate commerce was not immune per se from state taxation. Id. at 288, 97 S.Ct. at 1083. In the years since Complete Auto, the Supreme Court has faithfully applied its test, see Hellerstein, State Taxation, supra, at 56; accord, e.g., Commonwealth Edison Co. v. Montana, 453 U.S. 609, 617, 101 S.Ct. 2946, 2953, 69 L.Ed.2d 884 (1981), though the test’s components have been the subject of elaboration, refinement and some dispute.\nThe four factors comprising the Complete Auto test may be succinctly stated: 1) whether the activity taxed has a substantial nexus with the state; 2) whether the tax is fairly apportioned; 3) whether the tax discriminates against interstate commerce; and 4) whether it is fairly related to benefits provided by the State. See 430 U.S. at 279, 97 S.Ct. at 1079. The opposing parties in the case before us agree that Complete Auto provides the relevant framework governing disposition of this case and that the first and fourth factors are satisfied by the Vermont motor vehicle tax scheme. Accordingly, only the second and third factors- — fair apportionment, and discrimination against interstate commerce — remain to be analyzed in order for us to adjudge the constitutionality of Vermont’s tax.\nIll Fair Apportionment\nPlaintiffs first insist the Vermont tax does not fairly apportion the tax burden. They complain that, during the useful life of a vehicle transported interstate, it will be taxed more than a vehicle that remains instate.\nAlthough the meaning of fair apportionment was not precisely defined by Complete Auto, the phrase encompasses whether a tax is fairly attributable to an activity carried on in the taxing state. See Hellerstein, State Taxation, supra, at 57. That is to say, to survive constitutional scrutiny, the Vermont tax must be fairly apportioned to the taxpayer’s activities in Vermont. In the present case, the district court passed over this issue too hastily, concluding that the use tax applied only to use in Vermont and that all vehicles were therefore taxed equally based on their presence in the state. The logic of this premise — and the State Commissioner’s assertions along the same line — does not withstand scrutiny. The flaw in the reasoning becomes clear when use and sales taxes are examined together in the broader context of their impact on out-of-state goods.\nA critical component in Vermont’s scheme, one that appears as well in Other compensating use taxes, is that use is only taxed through the surrogate of value. Although Vermont’s “use” tax purports to tax use, in reality it actually taxes the value of goods or property just as does a sales tax. A use tax on “depreciated value” represents a necessary but imperfect approximation of the taxpayer’s activities in the state. The perplexing question underlying this case — and for that matter all use tax cases — concerns the precise circumstances under which it will be fair for Vermont to apportion a tax on goods transported into the state based on the value of the goods. This question, into which the district court did not delve, requires closer examination.\nThe Supreme Court has begun to address the question of fair apportionment in greater detail in part through developing what is known as the internal consistency test. See Goldberg v. Sweet, 488 U.S. 252, 261, 109 S.Ct. 582, 589, 102 L.Ed.2d 607 (1989) (“[W]e determine whether a tax is fairly apportioned by examining whether it is internally and externally consistent.”). The internal consistency test, which was first propounded in Container Corp. of America v. Franchise Tax Bd., 463 U.S. 159, 169, 103 S.Ct. 2933, 2942, 77 L.Ed.2d 545 (1983), has been applied to measure fair apportionment in a number of contexts. When taxes are complementary, the test examines a taxing scheme as a whole rather than focusing on one of its isolated components.\nIn Goldberg, the Court explained the test as follows: “[t]o be internally consistent, a tax must be structured so that if every State were to impose an identical tax, no multiple taxation would result.” Goldberg, 488 U.S. at 261, 109 S.Ct. at 589. Applying the test in Goldberg it was found that an Illinois 5 percent tax on interstate telephone calls was fairly apportioned, in part because multiple taxation was precluded by Illinois’ credit for any taxes paid to other states. See id. at 265, 109 S.Ct. at 591. Although in one case the Court noted that internal consistency is a component of both fair apportionment and non-discrimination against interstate commerce (the third Complete Auto factor), see Armco, Inc. v. Hardesty, 467 U.S. 638, 644, 104 S.Ct. 2620, 2623, 81 L.Ed.2d 540 (1984), most of the cases discussing internal consistency do so in the context of fair apportionment. See, e.g., Goldberg, 488 U.S. at 260-61, 109 S.Ct. at 588-89. The leading commentator on the subject considers internal consistency a component of fair apportionment. See Hellerstein, Internal Consistency, supra, at 175-79.\nAs plaintiffs correctly note, where the Supreme Court examines compensating use taxes under the internal consistency test, such taxes have been upheld as fairly apportioned when they provided for a credit, but have been rejected where no credit was allowed for taxes paid to other states. Thus, in D.H. Holmes Co. v. McNamara, 486 U.S. 24, 31, 108 S.Ct. 1619, 1623, 100 L.Ed.2d 21 (1988), a 3 percent Louisiana use tax on out-of-state mail order catalogs shipped to customers instate was held not to violate the Commerce Clause because the state granted a tax credit for sales taxes paid to other states, making the tax fairly apportioned. Similarly the telecommunications tax in Goldberg, 488 U.S. at 265, 109 S.Ct. at 591, was upheld upon a finding that it was internally consistent and fairly apportioned because it provided for a credit upon proof that another state had taxed a call subject to Illinois’ tax.\nIn contrast, a manufacturing tax levied by the State of Washington that provided no such credit was struck down in Tyler Pipe Indus. v. Washington State Dep’t of Revenue, 483 U.S. 232, 248-49, 107 S.Ct. 2810, 2820-21, 97 L.Ed.2d 199 (1987), with the Court noting that an “exemption to provide out-of-state manufacturers with a credit for manufacturing taxes paid to other States would presumably cure the discrimination.” In an earlier case decided long before the internal consistency test was born, the Supreme Court upheld a 2 percent Washington State use tax on tangible personal property where the state gave a credit for taxes paid in anpther state. See Henneford v. Silas Mason Co., 300 U.S. 577, 587, 57 S.Ct. 524, 529, 81 L.Ed. 814 (1937).\nOutside the case law, the importance of credits in saving compensating use taxes was also recognized prior to the advent of the internal consistency test. See, e.g., Developments in the Law—Federal Limitations on State Taxation of Interstate Business, 75 Harv.L.Rev. 953, 999 (1962) (noting “the main objection to allowing a state to adopt .both [sales and use] taxes without a credit for previous sales taxes paid is that such combination tends to diminish interstate commerce whenever any other state has a sales or use tax”). Despite the key role credits have played in the constitutionality of state use taxes — before and after the internal consistency test came into favor — the Supreme Court has stopped short of declaring that credits are constitutionally required for all use taxes. Noting the Court’s reluctance to do so, we too decline to hold that a credit is constitutionally mandated in the instant ease.\nAt the same time we reject the Vermont Motor Vehicle Commissioner’s argument that the use tax must survive because it taxes only the depreciated value and not the purchase price value of the vehicle. Closer analysis demonstrates that multiple taxation still results and the internal consistency test is still violated even when the use tax only taxes the auto’s depreciated value on registration. A simple example illustrates the point. Consider two $10,000 cars on which two different states levy a 5 percent sales tax. If car A were purchased in state 1 and moved to state 2, it could then be subject to a use tax, at an assumed 5 percent of its depreciated value. If its depreciated value were $5,000, then car A would overall be subject to state l’s sales tax of $500 plus $250 in state 2’s use tax. Car A would thus be taxed a total of $750 while car B, if it remained in-state, would only be'subject to the initial $500 sales tax. Thus, multiple taxation of the interstate auto occurs even when a use tax is based on depreciated value. On the other hand, if a credit toward state 2’s use tax were granted on car A for the taxes paid to state 1, then car A would only be taxed a total of $500 and no multiple taxation would result. Cf. Hellerstein, Internal Consistency, supra, at 159 (concluding that without credit provision all compensating use taxes violate internal consistency test).\nConsequently, there are no obstacles to our determining that the Vermont motor vehicle tax fails the internal consistency test and thus is not fairly apportioned. Applying the test demonstrates that if all the states employed Vermont’s tax plan, an automobile registered in several states during its useful life would be taxed considerably more than a vehicle that spent its entire life in the same state. Absent a credit for taxes paid in other states, multiple taxation would heavily burden vehicles transported in interstate commerce, precisely the result the Commerce Clause was designed to prevent.\nAlthough plaintiffs ask us to hold that a credit is affirmatively required if the statute is to be ruled constitutional, we decline this invitation to rechart our course because to adopt their suggestion would take us further from shore and give our holding a broader reach than necessary to decide this appeal. Examining the statute reveals that as it stands it does not fairly apportion the taxes. What is to be done now is a matter confided to the Vermont legislature. It may perhaps want to reexamine its motor vehicle tax program, and may or may not chose to include a credit,- or it may decide to abandon its use tax altogether, or attempt to employ some' other innovative tax to maintain its scenic roadways. While we acknowledge that were the statute to provide a credit it would no longer run afoul of the Commerce Clause, what steps are to be taken by the State of Vermont is up to that state’s legislative body. We hold simply that as it stands, and for the reasons just given, Vermont’s use tax is not fairly apportioned and therefore violates the Commerce Clause.\nIV Discrimination Against Interstate Commerce\nAppellants additionally declare the tax violates the Commerce Clause because it discriminates against interstate commerce. While we need not decide this issue, we address it to highlight the negative effects of the tax. Essentially appellants assert that due to the threat of double taxation, newcomers to Vermont and Vermont residents “wintering” in other states are faced with an incentive to purchase a vehicle in Vermont. In that way, they aver, the tax skews business towards Vermont automobile dealers.\nThe district court admitted “[t]he tax can create an incentive to defer buying a car until after completing a move to Vermont,” but somehow concluded the tax “does not necessarily create an incentive to buy the car in Vermont.” Barringer, 801 F.Supp. at 1289. We think its conclusion incorrect. In the absence of a credit the Vermont tax discriminates against interstate commerce by providing an advantage to local producers whose products effectively will cost less and make out-of-state purchases disadvantageous. The Supreme Court has held repeatedly that “the Commerce Clause prohibits economic protectionism — that is, regulatory measures designed to benefit in-state economic interests by burdening out-of-state competitors.” New Energy Co. of Indiana v. Limbach, 486 U.S. 269, 273, 108 S.Ct. 1803, 1807, 100 L.Ed.2d 302 (1988). While the Vermont Motor Vehicle Purchase and Use Tax differs from more blatantly discriminatory taxes in which out-of-state producers are taxed directly, see Goldberg 488 U.S. at 265-66, 109 S.Ct. at 591-92 (discussing facially discriminatory taxes), it is still problematic.\nThe discrimination component of the Complete Auto test has perhaps received more attention than any other in the Supreme Court’s Commerce Clause jurisprudence involving facially discriminatory taxes. See, e.g., Chemical Waste Management, Inc. v. Hunt, — U.S. —, —-—, 112 S.Ct. 2009, 2012-14, 119 L.Ed.2d 121 (1992) (Alabama statute imposing additional fee on hazardous waste generated outside Alabama and disposed of at Alabama facilities held to violate Commerce Clause because it discriminated against interstate commerce on its face); Armco, 467 U.S. at 642, 104 S.Ct. at 2622 (West Virginia tax on gross receipts of businesses selling tangible personal property at wholesale, but granting exceptions from tax on sales by local manufacturers facially discriminated against interstate commerce). The question remains in this case as to whether a tax discriminates against interstate commerce when its secondary effects— not the operation of the tax on its face— create a bias towards in-state purchases.\nThe Motor Vehicle Commissioner ignores this aspect of the discrimination issue and wrongly asserts that the statute does not discriminate against interstate commerce because all motor vehicles are taxed at the same percent based on their purchase price or book value. Under the relevant case law, discrimination against interstate commerce certainly may be shown by the discriminatory effects of a tax that is facially-neutral. See, e.g., Westinghouse Elec. Corp. v. Tully, 466 U.S. 388, 406, 104 S.Ct. 1856, 1867, 80 L.Ed.2d 388 (1984) (New York tax credit granted to parent corporations whose subsidiaries shipped exports from a place of business in New York discriminated against interstate commerce by providing commercial advantage to local business and foreclosing tax-neutral decisions); Nippert v. City of Richmond, 327 U.S. 416, 429-31, 66 S.Ct. 586, 592-94, 90 L.Ed. 760 (1946) (municipal ordinance taxing traveling salesmen violated the Commerce Clause because its effects favored local merchants).\nNumerous taxes have been invalidated due to them secondary, discriminatory effects based on the Commerce Clause. For instance, in Bacchus Imports, Ltd. v. Dias, 468 U.S. 263, 270, 104 S.Ct. 3049, 3054, 82 L.Ed.2d 200 (1984), the Supreme Court noted no state may impose a tax that provides a direct commercial advantage to local businesses. It struck down Hawaii’s wholesale liquor tax that granted a tax exemption to wholesalers selling okolehao and other locally manufactured fruit wines. Id. at 273, 104 S.Ct. at 3056. Similarly, a Pennsylvania statute imposing lump-sum annual taxes on the operation of trucks on Pennsylvania highways was invalidated on the grounds that the taxes erected a financial barrier against interstate commerce. American Trucking Ass’ns v. Scheiner, 483 U.S. 266, 280-87, 107 S.Ct. 2829, 2838-42, 97 L.Ed.2d 226 (1987). The Supreme Court emphasized that a state may not tax an event more heavily for having crossed state lines, even when the tax is not discriminatory on its face, if that is its actual effect. See id. at 280-81, 107 S.Ct. at 2838-39. Such discrimination may not be characterized as merely incidental, which is what the appellee appears to argue in this case. See Halliburton Oil Well Cementing Co. v. Reily, 373 U.S. 64, 69-75, 83 S.Ct. 1201, 1203-07, 10 L.Ed.2d 202 (1963) (court looks not to theory but how statute operates in practice).\nAppellants rightly point out that the Vermont tax scheme tends to induce individuals moving to Vermont to purchase their motor vehicles in Vermont. For one moving to Vermont, the tax scheme effectively lessens the cost of acquiring a vehicle if it is purchased there. The Commerce Clause prohibits that sort of local.favoritism. Hence, we hold the Vermont Motor Vehicle Purchase and Use Tax violates the Commerce Clause of the United States Constitution. Vermont’s scheme fails to pass constitutional muster for two reasons: it does not fairly apportion the tax among interstate and intrastate commerce and the tax operates in such a way as to effectively discriminate against interstate commerce in favor of Vermont businesses. The tax unfairly burdens interstate commerce essentially by exacting a greater tax on vehicles transported into Vermont from other states than it does on Vermont-based vehicles not so transported.\nCONCLUSION\nThe judgment of the district court is accordingly reversed, and Vermont Motor Vehicle Purchase and Use Tax, Vt.Stat.Ann., title 32, ch. 219, is declared unconstitutional and void to the extent that the use tax is collected from out-of-state residents without crediting sales taxes they may have paid to other states.", "type": "majority", "author": "CARDAMONE, Circuit Judge:"}, {"text": "VAN GRAAFEILAND, Circuit Judge,\ndissenting:\nIf my colleagues had decided to affirm the judgment of the district court, I would have been content to rest my concurrence on the well-written opinion of Chief Judge Parker reported at 801 F.Supp. 1282. However, because my colleagues have opted to reverse and their troublesome interpretation of the concepts of apportionment and internal consistency may lead to further review, I believe that I should state briefly why I believe that Chief Judge Parker was correct.\nThe State of .Vermont operates on the practical theory that resident owners of vehicles registered and operated in Vermont should contribute to the cost of maintaining Vermont’s highways. To accomplish this, Vermont levies a tax on Vermont residents’ initial registration of pleasure vehicles in the State, which, in general, is equal to five percent of each vehicle’s value. If the vehicle was purchased in Vermont, the tax is called a “sales” tax; if the vehicle was purchased elsewhere, the tax is called a “use” tax. Regardless of nomenclature, the taxes are in the same amount, i.e., five percent. There is no claim that this amount is excessive or not fairly related to the benefits received.\nBecause of my colleagues’ emphasis on apportionment and internal consistency, it is important, I think, that we pinpoint exactly what is and what is not involved in this case. This case does not involve a tax levied on a so-called “unitary business,” the customary genre of the internal consistency rule. See Trinova Corp. v. Michigan Dep’t of Treasury, 498 U.S. 358, 373, 111 S.Ct. 818, 828, 112 L.Ed.2d 884 (1991); Exxon Corp. v. Department of Revenue of Wisconsin, 447 U.S. 207, 229, 100 S.Ct. 2109, 2123, 65 L.Ed.2d 66 (1980). It involves two individuals, each of whom purchased and operated a pleasure vehicle in Connecticut where he or she resided and thereafter moved with the vehicle to Vermont. It does not involve owners who are using their vehicles in an interstate commercial operation only part of which takes place in the State of Vermont. It involves Vermont residents who pay a five percent initial registration tax on their pleasure vehicles as their contribution to the cost of maintaining Vermont highways. Under the circumstances, I agree with Chief Judge Parker’s comments concerning the irrelevance of fair apportionment in the instant case. See 801 F.Supp. at 1285-86.\nThe mechanics of unitary business taxation is discussed in some detail in Container Corp. of Am. v. Franchise Tax Bd., 463 U.S. 159, 103 S.Ct. 2933, 77 L.Ed.2d 545 (1983), and more recently in Allied-Signal, Inc. v. Director, Div. of Taxation, — U.S. —, 112 S.Ct. 2251, 119 L.Ed.2d 533 (1992). For our purpose, the following excerpt from Container Corp. is illustrative:\nHaving determined that a certain set of activities constitute a “unitary business,” a State must then apply a formula apportioning the income of that business within and without the State. Such an apportionment formula must, under both the Due Process and Commerce Clauses, be fair. The first, and again obvious, component of fairness in an apportionment formula is what might be called internal consistency — that is, the formula must be such that, if applied by every jurisdiction, it would result in no more than all of the unitary business’ income being taxed.\n463 U.S. at 169, 103 S.Ct. at 2942 (citations omitted).\nThere is no issue of apportionment in the instant case. To apportion means to divide. Black’s Law Dictionary 128-29 (rev. 4th ed. 1968). The tax at issue is a charge levied on Vermont inhabitants for the use of Vermont highways. It “ ‘cannot be repeated by any other state.’ ” Quill Corp. v. North Dakota, — U.S. —, —, 112 S.Ct. 1904, 1919, 119 L.Ed.2d 91 (1992) (White, J., concurring in part, dissenting in part) (quoting Memphis Natural Gas Co. v. Stone, 335 U.S. 80, 96-97, 68 S.Ct. 1475, 1484, 92 L.Ed. 1832 (1948) (Rutledge, J., concurring)). Conceivably, if appellants moved from Vermont to another state, that state could impose a tax for the use of its highways. That, however, would be a tax by a different entity based on a different use. “[Cjlassification based upon residency is a rational way to assess for road use.” Williams v. Vermont, 472 U.S. 14, 36, 105 S.Ct. 2465, 2478, 86 L.Ed.2d 11 (1985) (Blackmun, J., dissenting). Moreover, we are not concerned here with phantom peripatetic owners who move with their cars from state to state to state. To the extent that appellants’ pleasure cars were involved in interstate commerce when appellants moved with the cars from Connecticut to Vermont, that involvement has ceased — apparently permanently. Although my colleagues discuss apportionment at some length, neither appellants nor my colleagues state what the Vermont tax should be apportioned with or against. Appellants’ actual contention is that anyone who pays a sales tax when purchasing a car in Connecticut is entitled to a free ride on the highways of Vermont if, one, two, three, four or five years following the purchase, he or she moves with the car to Vermont. I find nothing in the Constitution that entitles them to this benefit.\nAs the Supreme Court stated in Williams v. Vermont, supra, Vermont’s use tax is not typical of taxes bearing this name, because it was not designed to protect Vermont’s revenues by taking away the advantages of residents traveling out of the state to make purchases at lower costs than would be available in Vermont. Id. at 24-25, 105 S.Ct. at 2472-73. It was designed pursuant to the principle that “those using [Vermont’s] roads should pay for them.” Id. at 25, 105 S.Ct. at 2473. In order for Vermont to make fair charges for the use of its highways it had to adopt some means of measuring use that was practical in operation and possessed at least a modicum of accuracy. Because of their shorter life expectancy, older vehicles ordinarily will make-less use of highways than will newer and more highly valued cars. Accordingly, a tax that is based on-a car’s value bears at least a rough relationship to the benefits the car’s owner will receive. In Williams, supra, the Supreme Court found this relationship sufficient to withstand constitutional scrutiny:\n[D]espite the looseness of the fit, we would be hard pressed to say that this manner of funding highway maintenance and construction is irrational. “If the classification has some ‘reasonable basis,’ it does not offend the Constitution simply because the classification ‘is not made with mathematical nicety or because in practice it results in some inequality.’ ” Dandridge v. Williams, 397 U.S. 471, 485 [90 S.Ct. 1153, 1161, 25 L.Ed.2d 491] (1970), quoting Lindsley v. Natural Carbonic Gas Co., 220 U.S. 61, 78 [31 S.Ct. 337, 340, 55 L.Ed. 369] (1911).\nId., 472 U.S. at 25 n. 9, 105 S.Ct. at 2473 n. 9.\nIn United States v. City of Detroit, 355 U.S. 466, 78 S.Ct. 474, 2 L.Ed.2d 424 (1958), the Government, similarly to my colleagues herein, argued that since the tax involved was “measured by the value of the property used it should be treated as nothing but a contrivance to lay a tax on that property.” Id. at 470, 78 S.Ct. at 476. Rejecting this argument, the Court said:\nWe do not find this argument persuasive. A tax for the beneficial use of property,, as distinguished from a tax on the property itself, has long been a commonplace in this country.\nId.\nIn short, I am compelled to disagree with my colleagues’ assertion that, “[although Vermont’s ‘use’ tax purports to tax use, in reality it actually taxes the value of goods or property just as does a sales tax.” Supra, at 1335.\nVermont’s use tax on motor vehicles is based upon an estimated use of Vermont’s highways, in the same manner and in the same amount as is Vermont’s sales tax on motor vehicles. Because a similar calculation is made for both use and sales taxes, I am unmoved by my colleagues’ plaint that “use taxes like Vermont’s fall most heavily on owners of out-of-state autos.” Supra, at 1334. Of course they do. Owners of cars purchased in Vermont pay a sales tax which is for the same amount as the use tax and therefore falls with equal and off-setting weight on those owners. The fairness of a tax is determined by its effect, not by its name.\nIt is too late in the day to successfully contend that a state may not levy a tax such as Vermont’s use tax simply because it may have some adverse effect on interstate commerce. A state “ ‘is free to pursue its own fiscal policies, unembarrassed by the Constitution, if by the practical operation of a tax the state has exerted its power in relation to opportunities which it has given, to protection which it has afforded, to benefits which it has conferred by the fact of being an orderly, civilized society.’ ” Commonwealth Edison Co. v. Montana, 453 U.S. 609, 625, 101 S.Ct. 2946, 2957, 69 L.Ed.2d 884 (1981) (quoting Wisconsin v. J.C. Penney Co., 311 U.S. 435, 444, 61 S.Ct. 246, 249-50, 85 L.Ed. 267 (1940)); see Quill Corp. v. North Dakota, supra, — U.S. at — n. 5, 112 S.Ct. at 1912 n. 5. That, I believe, is precisely what Vermont is doing in this case.\nFairness, I suggest, is a two-way street. Those Vermont inhabitants who purchased their cars in Vermont get no benefit whatever from sales taxes paid by other residents who purchased their cars while residing in Connecticut. The latter, however, get the same benefits from highway improvements, traffic control, removal of snow and other debris as do the former. Vermont asks only that both pay a like amount for benefits equally received. I see nothing violative of the Constitution in this. I would affirm.\n. Because Norman Williams, the plaintiff in Williams v. United States, supra, and one of the counsel for appellants herein, has made somewhat of a career out of challenging the Vermont statute at issue herein, I cannot fault the district court for denying Williams’ last minute motion to amend the complaint to assert a cause of action under the Privileges and Immunities Clause of the Constitution. In any event, I believe the end result would be the same if the amendment had been granted.", "type": "dissent", "author": "VAN GRAAFEILAND, Circuit Judge,"}], "attorneys": ["Norman Williams, Burlington, VT (Gravel and Shea, Jerome F. O’Neill, O’Neill and Crawford, of counsel), for plaintiffs-appellants.", "William E. Griffin, Asst. Atty. Gen. for State of Vt., Montpelier, VT (Jeffrey L. Am-estoy, Atty. Gen. for State of Vt., of counsel), for defendant-appellee."], "corrections": "", "head_matter": "Greg R. BARRINGER and Judith M. Barringer, Plaintiffs-Appellants, v. Michael D. GRIFFES, Defendant-Appellee.\nNo. 857, Docket 92-9062.\nUnited States Court of Appeals, Second Circuit.\nArgued Feb. 10, 1993.\nDecided Aug. 9, 1993.\nNorman Williams, Burlington, VT (Gravel and Shea, Jerome F. O’Neill, O’Neill and Crawford, of counsel), for plaintiffs-appellants.\nWilliam E. Griffin, Asst. Atty. Gen. for State of Vt., Montpelier, VT (Jeffrey L. Am-estoy, Atty. Gen. for State of Vt., of counsel), for defendant-appellee.\nBefore: VAN GRAAFEILAND, KEARSE and CARDAMONE, Circuit Judges."} | VAN GRAAFEILAND | KEARSE | CARDAMONE | 1 | 2 | 1 | 1 | 0 | 0 | 1 F.3d 1331 | [
{
"content": "You are an expert legal coding assistant trained to classify U.S. federal Courts of Appeals\ncases using an adaptation of the Supreme Court Database (SCDB_2023_01) codebook. You follow the coding procedure\nin the codebook step by step and use the precise definitions of terms presented in the code... |
10,517,536 | John C. RODICK, Plaintiff-Appellee-Cross-Appellant, v. The CITY OF SCHENECTADY; Kevin Coker; Brian Carroll; Robert McHugh; Eric Yager; John Falvo, Jr., individually and as agents, servants and or employees and police officers of the City of Schenectady and the City of Schenectady Police Department, Defendants-Appellants-Cross-Appellees, Jane K. Finin, Esq., Appellant | Rodick v. City of Schenectady | 1993-08-23 | Nos. 1452-1454, 1641, Dockets 93-7010, 93-7012, 93-7020, 93-7156 | United States Court of Appeals for the Second Circuit | {"judges": ["Before MINER, McLAUGHLIN and FRIEDMAN, Circuit Judges."], "parties": ["John C. RODICK, Plaintiff-Appellee-Cross-Appellant, v. The CITY OF SCHENECTADY; Kevin Coker; Brian Carroll; Robert McHugh; Eric Yager; John Falvo, Jr., individually and as agents, servants and or employees and police officers of the City of Schenectady and the City of Schenectady Police Department, Defendants-Appellants-Cross-Appellees, Jane K. Finin, Esq., Appellant."], "opinions": [{"text": "McLAUGHLIN, Circuit Judge:\nAppellants are the City of Schenectady (the “City”), five of its police officers (the “officers”) and the officers’ attorney; they appeal from a judgment entered after a jury trial in the United States District Court for the Northern District of New York (Thomas J. McAvoy, Judge). The City assails a jury award of damages against it and the individual defendants for malicious prosecution. The officers contend that their representation by the same lawyer who represented the City was an improper conflict of interest. The lawyer appeals from Rule 11 sanctions imposed on her as a result of a post-trial motion advancing the conflict of interest argument. Plaintiff cross-appeals, arguing that certain post-trial motions granted by the district court were untimely. For the reasons set forth below, we affirm in part, reverse in part, and vacate and remand in part for a new trial .on the issue of damages for malicious prosecution.\nBACKGROUND\nOn February 27, 1989, Schenectady Police Officer Robert McHugh was investigating a hit-and-run accident. An eyewitness gave him a license plate number and this led him ultimately to Plaintiff Rodick’s house. There, he met with officers Coker, Carroll and Falvo, who had arrived at the house as back-ups. A radio dispatch indicated that there was an outstanding warrant in Florida for Rodick, including a request for extradition. As a result of that dispatch, patrol supervisor .Yager was called to the scene. Failing in their attempts to speak with Ro-dick from the outside, they entered and found Rodick naked in bed. There is some dispute as to what ensued, but it is clear that Rodick was beaten repeatedly and tumbled down a flight of stairs. He was then handcuffed and, still naked, was removed from the apartment, placed in a patrol car and taken to the police station, where he spent the night without clothes or medical attention. Rodick was arraigned the next morning and was charged with resisting arrest, leaving the scene of an accident, and was also held as a fugitive from justice on the Florida warrant.\nOn May .26, 1989, Rodick filed a Notice of Claim against the City citing the mistreatment he had suffered at the hands of the Schenectady constabulary. The resisting arrest charge was dismissed on July 10, 1989, by the local police court for insufficient evidence, but was re-filed in August 1989. The leaving-the-scene charge was dropped by the prosecutor. The fugitive-from-justice charge was referred to the Governor’s office, but apparently was never acted upon. A seven-day trial on the resisting arrest charge began on March 27,1990, and all the officers except Coker testified. At the close of the prosecution’s case, Rodick’s motion to dismiss the charge was granted, and the case was dismissed.\nOn August 27, 1990, Rodick filed a complaint in the Northern District of New York under 42 U.S.C. § 1983, arguing that all the defendants had violated his rights under the First, Fourth, Sixth and Fourteenth Amendments to the United States Constitution; he also appended a state law claim for malicious prosecution of the resisting arrest charge. At trial, both the City and the officers were represented by the same attorney, the City’s Assistant Corporation Counsel. At the close of Plaintiffs case, the district court granted the City’s motion for judgment as a matter of law dismissing the § 1983 claims against it because of Rodick’s failure to establish a municipal policy or procedure under which the officers were acting.\nAt the close of all the evidence, the district court submitted the case to the jury, instructing it to complete a .special verdict form. The jury returned a verdict against all five officers on the § 1983 claim, concluding that: (1) each officer had either used, or had failed to intervene while others were using, excessive force; (2) they had falsely arrested Rodick for resisting arrest, although they did have probable cause to arrest Rodick on other grounds; and (3) they had been indifferent to Rodick’s medical needs. The jury determined that all five officers were liable for $440,000 in damages on the §' 1983 claim, as follows: (1) $150,000 in compensatory damages and $20,000 in punitive damages for excessive force; (2) $60,000 in compensatory damages and $30,000 in punitive damages for false arrest; and (3) $150,000 in compensatory damages and $30,000 in punitive damages for indifference to medical needs.\nWith respect to the state law malicious prosecution claim, the jury concluded that four officers, but not Coker, were liable. Filling in the amounts on the verdict form provided by the court, the jury assessed compensatory damages on that claim as follows:\n5. What amount of damages, if any, do you find the plaintiff is entitled to recover from the defendant under consideration which was directly sustained as a result of the criminal prosecution?\nKevin Coker: 55,000 NA\nBrian Carroll: 55,000\nROBERT MoHUGH: 55,000\nEriC Yager: 55,000\nJack Falvo, Jr.: 55,000\nCity Of Soheneotady: 550,000\nThe jury further awarded punitive damages on the claim in the amount of $10,000 each against Carroll, McHugh, Yager, and Falvo.\nAfter this Delphic, if not bizarre, verdict was delivered, the jury was discharged and the following colloquy immediately ensued:\n[Defense Counsel]: Judge, with regard to the post-trial motions, I’ve already had some communications with the stenographer concerning the transcript and it is my intention to utilize parts of the transcript in support of the motion so that the Court does have the record in front of it when the motion is being made and I’ve been informed it’s going to take some time to produce a transcript. With the Court’s permission I would move at this point to move the 10 day period somewhat so that we can have some additional time to make that motion and adequately present it to the Court. I would like to ask the Court for 60 days which I think will provide the stenographer with ample time.\n[Plaintiff’s Counsel]: Judge, if I understand correctly, I haven’t spoken to the stenographer, there is [sic] only certain sections that he’s requested. There is [sic] not a great deal of sections that were requested. I think there is [sic] some aspects of testimony. There is not a whole transcript that we are waiting for.\nThe Court: Well—\n[Plaintiff’s Counsel]: 60 days seems like a good period of time.\nThe Court: Okay. Well, it is appropriate to move during the original 10 day period to expand the time and the Court will grant a period of hO days, in addition to the 10 days, to serve and file the motions.\n(emphasis added). On April 13, 1992, four days after this colloquy, the district court entered judgment on the jury’s verdict. Based on the jury’s response in the special verdict form, the court concluded that the jury had “awarded compensatory damages in the amount of $770,000” against the defendants on the malicious prosecution claim. The total judgment was $1,250,000.\nOn April 27, 1992, the officers, having now retained new counsel, moved, under Fed. R.Civ.P. 59 and 60(b), to set aside the judgment and for a new trial solely because of a conflict of interest allegedly caused by the joint representation of the City and the officer's by one lawyer. On May 20, 1992, the officers’ new counsel requested an extension of time to make a motion under Rule 50(b). On June 2, 1992, while that request was still pending, the officers’ counsel mailed a letter to the court asking it to “accept this as the on record request by the individual defendants to” make a Rule 50(b) motion. The district court agreed to treat that letter as the Rule 50(b) motion, and granted the individual officers an extension until August 30, 1992 to file papers in support of the motion. On June 19, 1992, 67 days after the entry of judgment, the City submitted papers moving for judgment as a matter of law under Fed. R.Civ.P. 50(b), a new trial under Rule 59, or remittitur of the damage verdict, and also challenging the finding of malicious prosecution against three of the officers.\nBy order dated August 18, 1992, the district court rejected the officers’ argument that the joint representation of them and the City constituted an improper conflict of interest. In addition, the court, finding that the motion had “no basis in law or fact,” imposed sanctions of $9,668.88 under Fed.R.Civ.P. 11 against the officers’ new attorney. On September 2, 1992, that same attorney filed papers on the Rule 50(b) motion for which she had been granted an extension until August 30. In the motion, the officers sought judgment as a matter of law, contending that the jury’s findings of false arrest, indifference to medical needs and malicious prosecution were not supported by the evidence.\nOn December 5, 1992, the district court entered an order addressing all the remaining post-trial motions made by defendants. At the threshold it noted that Rodick argued that such motions were untimely because they were filed outside of the ten-day time limits of Rules 50 and 59. The court rejected that argument, finding that because the colloquy quoted above occurred within those limits, the motions were timely. The court acknowledged that -it was “troubled with the question of whether [defense counsel’s statements to the court after the jury was excused constituted an oral motion-or merely an indication of future intent to make one,” but “[njonetheless, [found] that [defense counsel’s intent to file post-trial motions was evidenced by his statements.” Because both the City and the officers were represented by the Assistant Corporation Counsel when he made the statements', the. court concluded that all defense post-trial motions were timely. The court concluded, however, that the City could not challenge the damage award against it for malicious prosecution as inconsistent with the respondeat superior doctrine because it had failed to preserve this claim.\nMoving to the merits, the court rejected the City’s contention that the entire verdict should be set aside because it was against the weight of the credible evidence. The court, however, did grant, in part, its motion for remittitur, ordering that Rodick accept a reduction in compensatory damages for indifference to medical needs from $150,000 to $50,000 or a new trial. The court otherwise denied the request for remittitur, concluding that the damages awarded by the jury for malicious prosecution, excessive force, false arrest and the punitive damages awarded for indifference to medical needs were not excessive. It also rejected a challenge made by all defendants to the finding of liability for malicious prosecution against the four individual officers. Turning to the officers’ motion for judgment as a matter of law, the court vacated the jury’s finding of false arrest against them, concluding that because the jury had found that there was probable cause for arresting Rodick on one ground (thus conferring qualified immunity) but not on another, and because the propriety of such an arrest was an open legal question at the time of Rodick’s arrest, section 1983 liability could not attach. Finally, the court rejected the officers’ argument that the finding of indifference to medical needs should be vacated.\nDISCUSSION\nOn appeal, the City contends that the district court erred in failing to dismiss the malicious prosecution claim as a matter of law and, alternatively, that this court should order a reduction in the damages for that claim. The officers contend that the Assistant Corporation Counsel’s conflict of interest deprived them of a fair trial, and that the district court erred in denying their request for judgment as a matter of law on the claim of malicious prosecution and indifference to medical needs. Their counsel appeals from the imposition of sanctions against her on the conflict of interest motion. On his cross-appeal, Rodick contends that all the defendants’ post-trial motions except the conflict motion were untimely under Rules 50 and 59 and that the district court erred in entertaining them and thereafter in remitting the damage award and vacating the false arrest finding. He argues alternatively, that in any event these issues were resolved properly.\nI. Timeliness of Post-Trial Motions\nFed.R.Civ.P. 59 provides:\n(b) Time for Motion. A motion for a new trial shall be 'served not later than 10 days after the entry of the judgment.\n(e) Motion to Alter or Amend a Judgment. A motion to alter or amend the judgment shall be served not later than 10 days after entry of the judgment.\nFed.R.Civ.P. 50(b) likewise requires that a motion for judgment as a matter of law be made “not later than 10 days after entry of judgment.” Fed.R.Civ.P. 6(b) makes these ten-day time limitations jurisdictional so that the failure to make a timely motion divests the district court of power to modify the trial verdict. Lapiczak v. Zaist, 451 F.2d 79, 80 (2d Cir.1971). Rule 6(b) also denies to district courts the power to enlarge the ten-day limit under either rule. Id.; see also Browder v. Director, Dep’t of Corrections, 434 U.S. 257, 262 n. 5, 98 S.Ct. 556, 559 n. 5, 54 L.Ed.2d 521 (1978) (“Rule 6(b) prohibits enlargement of the time period prescribed in all of these Rules.”). As we recently noted:\n[T]he rule against the discretionary enlargement of certain time periods is “mandatory and jurisdictional and ... cannot be circumvented regardless of excuse.” ... A request for an extension of time to file a motion seeking j.n.o.v. [Rule 50(b)] or a new trial [Rule 59] is ineffective even if it is received without objection and granted by the court_ The question, then, is whether [counsel’s] statements [during the 10-day period] constituted an oral motion or an expression of desire to file a subsequent (and tardy) written motion.\nMeriwether v. Coughlin, 879 F.2d 1037, 1041 (2d Cir.1989) (citations omitted).\nIn Meriwether, we concluded that counsel’s statement that “I would, your Honor, like to at this time note that defendants, wish to move for a judgment notwithstanding the verdict,” although inartful, did constitute a motion under Rule 50(b), and was not a mere request for an extension of time to make the motion. Id. at 1040. In reaching that conclusion, we distinguished Hulson v. Atchison, T. & S.F. Ry., 289 F.2d 726 (7th Cir.), cert. denied, 368 U.S. 835, 82 S.Ct. 61, 7 L.Ed.2d 36 (1961), where the Seventh Circuit construed the statement, “L am merely- asking for an extension of time in which to file my motion” as an impermissible motion for an extension. Id..at 727, 729. We found that “[t]he language in Hudson was much clearer, and the trial court in [.Hulson ], unlike [Meriwether], had rejected the ... interpretation” that the language was the motion itself. 879 F.2d at 1041.\nHere, defense counsel spoke of the motion prospectively; he requested an extension of time so that the district court could “have the record in front of it when the motion is being made,” and stated that “I would move at this point to move the 10 day period somewhat so that we can have additional time to make the motion.” The district court responded that “it is appropriate to move during the original 10 day period to -expand the time and the Court will grant a period of 40 days, in addition to the 10 days, to serve and file the motions.” Under these circumstances, we reject the district court’s conclusion that defense counsel’s post-verdict statement was closer to Meriwether than to Hulson. Counsel’s language in making the motion, and the district court’s language in granting it, clearly indicate that they regarded the request as (an impermissible) one for an extension of time to make the motion.\nThe defendants also contend that because they relied on the district court’s representation that the time frame in which to make the post-trial motions had been extended, such reliance “constituted an adequate excuse” for their failure to comply with the time limits. The reliance argument is flawed, however, because it fails to recognize that the Rule 50(b) and 59 time limitations are jurisdictional and that excuses are therefore unavailing. See Lapiczak, 451 F.2d at 80 (the rules against enlargement of time frames are “mandatory and jurisdictional” and “cannot be circumvented regardless of excuse”).\nThe defendants final argument is that even if the district court erred in concluding that their motions were made within the 10-day limit, and even if their reliance on the court’s ruling is beside the point, we should nevertheless consider the questions raised in those motions under- our discretionary' power. See Reichman v. Bonsignore, Brignati & Mazzotta P.C., 818 F.2d 278, 281 (2d Cir.1987); Rebaldo v. Cuomo, 749 F.2d 133, 137 (2d Cir.1984), cert. denied, 472 U.S. 1008, 105 S.Ct. 2702, 86 L.Ed.2d 718 (1985). We largely reject this argument. While we do indeed have the power to consider arguments not properly raised below, we exercise that power only when “necessary to prevent a manifest injustice.” Reichman, 818 F.2d at 281; see also Rebaldo, 749 F.2d at 137 (exception to rule that “this Court will not consider an issue not passed upon below” was appropriate where “the district court examined the issue ... in some detail” and the “court’s decision ha[d] broad legal ramifications and concerned] the validity of a State statute”).\nJudging the issues raised here against the “manifest injustice” standard, we conclude that, except for the malicious prosecution damages of $770,000, none of them warrants such extraordinary consideration. Accordingly, we: (1) do not consider the argument made by all defendants that the malicious prosecution claim should never have reached the jury as a matter of law or the officers’ argument that the deliberate indifference to medical needs claim should likewise have been dismissed as a matter of law; (2) reverse the order vacating the jury’s determination of liability for false arrest because the motion was untimely; (3) and vacate the remittitur regarding damages for indifference to medical needs because the motion was untimely.\nII. Malicious Prosecution Damages\nAlthough the attack on the malicious prosecution award was just as untimely as the other motions, we conclude that our failure to address it would result in manifest injustice. We will therefore exercise our power to consider'it.\nThe City contends that the $550,000 verdict against it on the malicious prosecution claim was excessive because under ancient notions of respondeat superior liability it could not be liable in any greater amount than the police officers whose misconduct occasioned the City’s liability. It also contends that, because the officers were jointly and severally liable, a single award of $55,000 against all of them jointly and severally should have been made. The district court concluded that, by failing to object to the verdict sheets or to the charge, or to raise this issue in some other fashion before the case was submitted to the jury, the City waived this challenge. However, because the jury instructions accurately described the law as far as they went, because the verdict is so contrary to basic concepts of respondeat superior that it would be a miscarriage of justice to let it stand, and because the judgment entered on the verdict was inconsistent with New York state law of joint and several liability, we reject the waiver argument.\nMalicious prosecution, by definition, is an intentional tort. See Bittner v. Cummings, 188 A.D.2d 504, 506, 591 N.Y.S.2d 429, 431 (2d Dep’t 1992). Intentional tortfea-sors, such as the officers here, are jointly and severally liable for the damages they cause when a plaintiff has suffered a single injury. See Ravo v. Rogatnick, 70 N.Y.2d 305, 312, 514 N.E.2d 1104, 1108, 520 N.Y.S.2d 533, 537 (1987); see also In re Seagroatt Floral Co., 78 N.Y.2d 439, 448, 583 N.E.2d 287, 292, 576 N.Y.S.2d 831, 836 (1991) (“Joint and several liability ... imposes on each wrongdoer responsibility for the entire damages awarded, even though a particular wrongdoer’s conduct may have caused only a portion of the loss.”). The City’s liability, in turn, was based on respondeat superior and, as such, was limited to the amount assessed against the officers. Pangburn v. Buick Motor Co., 211 N.Y. 228, 105 N.E. 423 (1914); accord Norwalk v. Air-Way Elec. Appliance Corp., 87 F.2d 317, 319 (2d Cir.1937) (“[T]he liability of the master is derived from and is dependent upon the liability of the servant.”).\nThe jury was never instructed on the issue of joint and several liability. The district court did give the following instruction with respect to respondeat superior liability: ,\nNow, with respect to the City of Schenectady. If you should find that one or more of the 'defendants acted to maliciously prosecute the plaintiff as I’ve just defined it, you must then proceed to determine whether the City of Schenectady is also liable under that claim. I instruct you that an employer, such as the City of Schenectady, is liable for the wrongful acts of its employees that are done by the employee within the scope of that employee’s employment. His job. Thus, if you should find that one or more of the individual defendants acted to maliciously prosecute the plaintiff, you must then consider whether such action was taken by the defendant within the scope of his duties as a police officer for the City of Schenectady. If you should so find that the action was taken within the scope of his duties, then you will find that the City of Schenectady is also liable for the claim of malicious prosecution.\nThus, the instructions, while accurate and unobjectionable as far as they went, never advised the jury of two crucial factors relating to the damage calculation and apportionment: (1) that because they were jointly and severally liable, different amounts of liability could not be allocated to the individual officers; and (2) because the City’s liability was based on the doctrine of respondeat superior, it could not exceed, or be separate from, the officers’ liability.\nWithout instruction on these important rules of damage calculation, the verdict form was an invitation to the jury to come up with an erroneous damage calculation. By placing separate entries next to each officer’s name, the form suggested to the jury that it could assess separate damages against each of the defendants. As we stated in Aldrich v. Thomson McKinnon Sec., Inc., 756 F.2d 243, 248 (2d Cir.1985):\nWe reiterate, however, that this form of verdict should be avoided where defendants, if liable, are liable jointly and severally for a single injury. See Gagnon v. Ball, 696 F.2d 17, 19 n. 2 (2d Cir.1982). The jury should be asked, instead, what amount of damages the plaintiff has suffered. Damages in this amount can then be awarded, jointly and severally, against each defendant found liable.\nIn Gagnon, we noted the “inadvisability of’ submitting interrogatories to the jury that “explicitly invite[] [it] to answer separately as to each defendant the amount of compensatory damages to be recovered by the plaintiff.” Gagnon, 696 F.2d at 19 n. 2. We advised instead that “[w]here, as here, defendants, if liable at all, are liable for causing the same injury, a jury given special interrogatories should be asked what amount of damages the plaintiff has suffered” and “[a]ll defendants found liable for the injury are then jointly and severally liable for the single award of compensatory damages.” Id.\nWhile other factors in the Aldrich case led us to conclude that the verdict there could be reconciled fairly with joint and several liability, no such conclusion can be reached here. In Aldrich, the jury was confronted with only two defendants and no respondeat superior question; and those defendants had also been found liable for punitive damages (to which joint and several liability does not apply) in identical amounts. From this, we were able to assure ourselves that the jury intended that the damages allocated to each defendant should be added together, and the aggregate then entered as the judgment on the claim for which they were jointly and severally liable. Aldrich, 756 F.2d at 248.\nHere, by contrast, four individual defendants were found liable, and while there were, as in Aldrich, separate entries of identical punitive damages on the claim, there was a separate problem with the verdict form — the City was listed along with the individual defendants without any explanation, even though the City could be held liable only vicariously. This induced the jury to allocate to the City a damage amount ten times greater than the liability assessed against each of the individual defendants and 2.5 times greater than the damages assessed against the officers collectively. Combining the joint and several liability confusion with the fact that the verdict is plainly inconsistent with the theory of respondeat superior, it is clear that we cannot let it stand.\nOur inquiry does not end there, however. The City urges that we order damages reduced to $55,000 for which the individual officers should be held jointly and severally liable, with the City vicariously liable for only that amount. New York, whose law governs, applies the rule of de melioribus damnis to joint tortfeasors against whom the jury has assessed equal amounts of liability. See Farber v. Demino, 254 N.Y. 363, 365, 173 N.E. 223, 224 (1930). Under this rule, the $55,000 assessed against each defendant would be the entire verdict subject to joint and several liability and vicarious liability.\nImposing such a result would, however, be troubling under the circumstances of this case. In the damage interrogatories on Ro-dick’s other claims, the jury assessed different amounts of damages against the individual officers. Accordingly, it is a reasonable inference that with respect to malicious prosecution, the jury may have intended that the officers be held separately, but equally, liable. If so, then the total damages that the jury intended for Rodick to recover from the officers on the malicious prosecution claim would have been $220,000. Moreover, because the jury was never told that the City’s liability could not be assessed separately from that of the officers, and because it entered $550,000 as the damage amount against the City, it may very well have intended that Rodick receive $770,000.\nBecause we believe that appellate resolution of this question would require speculation as to the jury’s intention, we remand for a new trial limited to the issue of damages for malicious prosecution. Accordingly, we do not reach the City’s alternative argument that the malicious prosecution damages were excessive as a matter of law.\nIII. Conflict of Interest\nRelying on Dunton v. County of Suffolk, 729 F.2d 903 (2d Cir.), amended on other grounds, 748 F.2d 69 (2d Cir.1984), the police officers claim that the district court erred.in rejecting their (concededly timely) post-trial motion for a new trial because their lawyer was also representing the City, resulting in an improper conflict of interest. In Dunton, a police officer happened upon his wife and a co-worker (Dunton) apparently sharing an intimate moment in a car, dragged Dunton out of the car, and beat him. Subsequently, Dunton brought a § 1983 claim against the officer and the Suffolk County Police and, at trial, a county attorney represented both defendants. In considering the officer’s argument that this constituted an improper conflict, we noted that because municipalities may be held liable under § 1983, see Monell v. Dep’t of Social Servs., 436 U.S. 658, 98 S.Ct. 2018, 56 L.Ed.2d 611 (1978), joint representation of municipalities and their employees presents a possibility for conflict of interest because “[a] municipality may avoid liability by showing that the employee was not acting within the scope of his official duties” and “[t]he employee, by contrast, may partially or completely avoid liability by showing that he was acting within the scope of his official duties.” Dunton, 729 F.2d at 907. We found that the potential for conflict had become manifest because the county attorney had opened to the jury by saying that the officer “acted as a husband, not even as an officer,” and closed by saying that it was obvious that the officer .“was acting as an irate husband.” Because of this manifest, serious and direct conflict and because the officer was never advised that his attorney would take positions contrary to his own, the district court had a duty to warn the officer about the conflict and its failure to do so was error. Id. at 908.\nDunton is distinguishable. Here, both the City and the officers argued that the officers were acting in their official capacity. Furthermore, the officers concede that their trial counsel advanced and argued all possible defenses available to them, including the qualified immunity defense, but contend that counsel’s successful motion to dismiss the § 1983 claim against the City and his desire to please his employer led him to fail to “put in the proof required to support the qualified immunity defense.” Because the officers have pointed to no specific facts to support this claim, they can show no prejudice, and the district court’s rejection of their motion is affirmed. Moreover, the officers’ motion for counsel fees under N.Y.Pub.Off.Law § 18 (McKinney 1988) was properly rejected because the entitlement to such fees only arises when a conflict of interest has been found.\nIV. Rule 11 Sanctions\nCounsel representing the officers also contends that even if the conflict claim was properly rejected, Rule 11 sanctions should not have been imposed on her because there was a good faith factual and legal basis for the conflict motion. We review a district court’s Rule 11 determinations for abuse of discretion. N.A.S. Import, Corp. v. Chenson Enters., Inc., 968 F.2d 250, 254 (2d Cir.1992) (citing Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405, 110 S.Ct. 2447, 2460, 110 L.Ed.2d 359 (1990)). As we have repeatedly held, “Rule 11 ‘is targeted at situations “where it is patently clear that a claim has absolutely no chance of success under the existing precedents, and where no reasonable argument can be advanced to extend, modify or reverse the law as it stands.” ’ ” Associated Indem. Corp. v. Fairchild Indus., 961 F.2d 32, 34 (2d Cir.1992) (quoting Stern v. Leucadia Nat’l Corp., 844 F.2d 997, 1005 (2d Cir.) (quoting Eastway Constr. Corp. v. City of New York, 762 F.2d 243, 254 (2d Cir.1985), cert. denied, 484 U.S. 918, 108 S.Ct. 269, 98 L.Ed.2d 226 (1987)), cert. denied, 488 U.S. 852, 109 S.Ct. 137, 102 L.Ed.2d 109 (1988)). “When divining the point at which' an argument turns from merely losing to losing and sanctionable, ... we have instructed district courts to resolve all doubts in favor of the signer.” 961 F.2d at 34-35 (citations and internal quotations omitted) (emphasis in original).\nIn the instant case, the district court concluded “that there existed no basis in law or fact to bring the” conflict motion. In concluding that the motion was not well-grounded in fact, the court stated that “[c]ounsel for the individual defendants has made serious allegations against trial counsel, many of which are clearly contradicted by the facts” of the case. Specifically, it pointed to the allegation — made in the affidavits of the police officers in support of the motion — that trial counsel did not raise the qualified immunity defense and to a statement in one officer’s affidavit that he did not know he was a defendant until the eve of trial, both of which were inaccurate.\nThe court rejected the argument that these mistakes were the product of haste necessitated by the new counsel’s late entry into the case and the impending expiration of the time limit for post-trial motions, stating that “the court would have granted an extension of the time to file motions had counsel so requested.” As discussed above, the district court lacked jurisdiction to grant any such extension. While we do not suggest, and in fact affirmatively reject, the notion that filing deadlines can serve as an excuse for shoddy pleading, we are concerned that the district court’s misunderstanding of its ability to extend the time limits may have infected its determination of the quality of the motion. We also note that the flaws cited by the district court were contained in the affidavits of the individual officers. Where an attorney is forced to plead under exigent circumstances, her reliance on the affidavits of her clients should be sufficient to constitute reasonable investigation for purposes of Rule 11. Hamer v. Career College Ass’n, 979 F.2d 758, 759 (9th Cir.1992).\nWe note that the district court did not deny that the interests underlying Dun-ton were also implicated in this case, nor did it dispute that this case held the same potential for the type of conflict that actually occurred in Dunton. Rather, the court merely held “that any ‘potential’ for conflict which might have existed prior to trial [ultimately] proved non-existent.” While we agree with the district court that the officers failed to show any prejudice, the motion certainly alleged it. The affidavits in support of the motion are replete with allegations that, in addition to presenting the qualified immunity defense poorly, trial counsel had failed to listen to the officers regarding trial tactics and possible defenses. Although these contentions did not pan out, they were not so quixotic as to warrant sanctions. Because we reject its determination that the motion was not well-grounded in law or fact, we conclude that the district court abused its discretion in imposing sanctions and accordingly reverse.\nCONCLUSION\nBased on the foregoing, we: (1) reverse the district court’s vacatur of the false arrest verdict against the individual officers and its remittitur order; (2) vacate that part of the verdict awarding compensatory damages for malicious prosecution and remand for a new trial on that issue; and (3) reverse the order imposing Rule 11 sanctions. We have considered the remainder of the parties’ arguments, find them to be without merit, and accordingly affirm in all other respects.\n. While we recognize that Rodick subsequently accepted the remittitur, thereby waiving his right to appellate review of its propriety, see Fiacco v. City of Rensselaer, 783 F.2d 319, 333 (2d Cir.1986) (\"[W]hen a plaintiff has agreed to a remit-titur order, he cannot challenge it either on appeal, ... or on a cross-appeal.”) (citations omitted), cert. denied, 480 U.S. 922, 107 S.Ct. 1384, 94 L.Ed.2d 698 (1987), he did not, and could not, waive any objection to the district court’s jurisdiction over the motion. See EEOC v. Local 580, Int'l Ass’n of Bridge, Structural & Ornamental Ironworkers, 925 F.2d 588, 592 (2d Cir.1991) (\"Review of a court’s jurisdiction over the subject matter of a claim is appropriate at any time during legal proceedings.’’); Reale Int’l, Inc. v. Federal Republic of Nigeria, 647 F.2d 330, 331 (2d Cir.1981) (\"Graven in stone is the maxim that parties cannot confer jurisdiction on a federal court by consent or stipulation.”); see also Stone v. William Beaumont Hosp., 782 F.2d 609, 613 n. 3 (6th Cir.1986) (\"Subject matter jurisdiction may be contested at any and all stages of the proceedings, even after judgment and may be addressed by the court sua sponte.”).\n. This motion was timely because it was filed on April 27, 1992, ten business days after entry of the judgment. See Fed.R.Civ.P. 6(a).", "type": "majority", "author": "McLAUGHLIN, Circuit Judge:"}], "attorneys": ["Jane K. Finin, Schenectady, NY (Grasso & Grasso, of counsel), pro se, and for defendants-appellants-cross-appellees, Kevin Coker, Brian Carroll, Robert P. McHugh, Eric Yager, and John Falvo, Jr.", "Melissa J. Smallacombe, Albany, NY (Roemer and Featherstonhaugh, P.C., of counsel), for defendant-appellant-cross-appel-lee City of Schenectady.", "Kevin A. Luibrand, Albany, NY (John T. Mitchell, Raul N. Tabora, Tobin and Dempf, of counsel), for plaintiff-appellee-cross-appel-lant."], "corrections": "", "head_matter": "John C. RODICK, Plaintiff-Appellee-Cross-Appellant, v. The CITY OF SCHENECTADY; Kevin Coker; Brian Carroll; Robert McHugh; Eric Yager; John Falvo, Jr., individually and as agents, servants and or employees and police officers of the City of Schenectady and the City of Schenectady Police Department, Defendants-Appellants-Cross-Appellees, Jane K. Finin, Esq., Appellant.\nNos. 1452-1454, 1641, Dockets 93-7010, 93-7012, 93-7020, 93-7156.\nUnited States Court of Appeals, Second Circuit.\nArgued May 12, 1993.\nDecided Aug. 23, 1993.\nJane K. Finin, Schenectady, NY (Grasso & Grasso, of counsel), pro se, and for defendants-appellants-cross-appellees, Kevin Coker, Brian Carroll, Robert P. McHugh, Eric Yager, and John Falvo, Jr.\nMelissa J. Smallacombe, Albany, NY (Roemer and Featherstonhaugh, P.C., of counsel), for defendant-appellant-cross-appel-lee City of Schenectady.\nKevin A. Luibrand, Albany, NY (John T. Mitchell, Raul N. Tabora, Tobin and Dempf, of counsel), for plaintiff-appellee-cross-appel-lant.\nBefore MINER, McLAUGHLIN and FRIEDMAN, Circuit Judges.\nThe Honorable Daniel M. Friedman of the United States Court of Appeals for the Federal Circuit, sitting by designation."} | MINER | McLAUGHLIN | FRIEDMAN | 1 | 1 | 1 | 0 | 0 | 0 | 1 F.3d 1341 | [
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"content": "You are an expert legal coding assistant trained to classify U.S. federal Courts of Appeals\ncases using an adaptation of the Supreme Court Database (SCDB_2023_01) codebook. You follow the coding procedure\nin the codebook step by step and use the precise definitions of terms presented in the code... |
10,517,564 | In re ASSETS OF Myles MARTIN, et al., Gerald D. Ditursi, David Savage, Robert Self, Jr., Bruce Ebert, William Selvagn, Self Oil Heat, Inc., Global Enterprises, Inc., Bell Fuel Corporation, Bell Fuels T/A Asco, Inc., Atlantic Oil & Heat Co., Par Sales, Inc., Asca, Inc./Nova Petroleum and Omni Petroleum. Jacob Dobrer, Vyacheslav Dobrer, N.W.R. Enterprises, Inc., Grast, Inc., and American Enterprises, Inc., Appellants in No. 93-1189. Gerald D. DiTursi, Appellant in No. 93-1201 | In re Assets of Martin | 1993-07-26 | Nos. 93-1189, 93-1201 | United States Court of Appeals for the Third Circuit | {"judges": ["Before: GREENBERG, NYGAARD and ROSENN, Circuit Judges."], "parties": ["In re ASSETS OF Myles MARTIN, et al., Gerald D. Ditursi, David Savage, Robert Self, Jr., Bruce Ebert, William Selvagn, Self Oil Heat, Inc., Global Enterprises, Inc., Bell Fuel Corporation, Bell Fuels T/A Asco, Inc., Atlantic Oil & Heat Co., Par Sales, Inc., Asca, Inc./Nova Petroleum and Omni Petroleum. Jacob Dobrer, Vyacheslav Dobrer, N.W.R. Enterprises, Inc., Grast, Inc., and American Enterprises, Inc., Appellants in No. 93-1189. Gerald D. DiTursi, Appellant in No. 93-1201."], "opinions": [{"text": "OPINION OF THE COURT\nGREENBERG, Circuit Judge.\nThe penalty provisions of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961-1968, provide upon conviction for mandatory forfeiture of assets related to the criminal enterprise. 18 U.S.C. § 1963(a). The statute also provides, 18 U.S.C. § 1963(m), that certain substitute assets may be forfeitable upon conviction if assets related to the criminal enterprise are not available. The district,courts are authorized by 18 U.S.C. §§ 1963(d)(1)(A) and 1963(d)(1)(B) to impose, respectively, pre-conviction and pre-indictment restraints to preserve the availability of Section 1963(a) forfeitable assets. Here, we must determine whether the RICO forfeiture provisions also permit pre-conviction and pre-indictment restraints to preserve the availability of substitute assets. From the plain language of the statute, whose meaning is supported by legislative history, we conclude, contrary to the district court, that restraints to preserve the availability of substitute assets cannot be imposed prior to conviction. However, because of the district court’s understandably expedited treatment of this case, it is unclear whether restraints may be issued here on the basis of the assets’ connection to the alleged criminal enterprise rather than their status as substitute assets. We therefore 'will vacate the order of the district court and will remand the case for reconsideration of that issue and for further proceedings consistent with this opinion.\nI. BACKGROUND\nThis case arises from the government’s investigation of “daisy chain” schemes to evade federal and state excise taxes on diesel fuel. The same product, number 2 fuel oil, is used as home heating oil and diesel motor fuel. Number 2 fuel oil used as home heating oil is not subject to federal or state excise taxes; however, these taxes are imposed when it is sold as diesel motor fuel. This state of affairs encourages “daisy chain” operators to buy untaxed heating oil and pass it through various entities, some existing only on paper, to obscure responsibility for payment of excise taxes. The product eventually is sold to retailers as diesel fuel, without the payment of applicable excise taxes. The “daisy chain” operators can undercut legitimate wholesalers’ prices and make inordinate profits by pocketing the amounts that should have been paid as taxes.\nThese consolidated appeals were brought by Gerald DiTursi (No. 93-1201), and jointly by Jacob Dobrer, Vyacheslav Dobrer, N.W.R. Enterprises, Inc., Grast, Inc., and American Enterprises, Inc. (No. 93-1189). DiTursi, other individuals, and several companies in the wholesale and retail heating-oil and fuel-oil businesses, were investigated during 1991 and 1992 by the Federal Bureau of Investigation and Internal Revenue Service, on suspicion of operating a “daisy chain.” The investigation included extensive court-approved wiretaps of DiTursi’s conversations about fuel-oil transactions. By late November 19.92, the government was ready to execute search warrants on the oil businesses, the residences of DiTursi and other implicated persons, and the New York City offices shared by Grast, Inc. and American Enterprises, Inc., corporations implicated in the scheme. (The government was not yet aware -that a third corporation, N.W.R. Enterprises, Inc., was doing business out of the same offices as Grast and American Enterprises; it learned of N.W.R. when agents executed the warrants.)\nThe government did not want the targets of the investigation to dissipate or hide assets that might become forfeitable under RICO. Therefore, in anticipation of executing the search warrants, the government sought an ex parte temporary restraining order pursuant to RICO, 18 U.S.C. § 1963(d)(2), to preserve the availability of assets of DiTursi, five other individuals, and eight fuel companies. The district court granted the ex parte order on November 23, 1992; the search warrants were then executed on November 24, 1992. On November 25, the government obtained an amended ex parte order to preserve the availability of additional assets discovered during the searches. On December 3, 1992, the government obtained a further ex parte restraint directed to assets of Grast, American Enterprises, N.W.R., and certain principals and owners of those corporations, ie., Jacob Dobrer, Vyacheslav Dobrer, and David Shuster. The government then moved for a pre-indictment preliminary injunction pursuant to Section 1963(d)(1)(B). To preserve the existing ex parte restraints pending the preliminary injunction hearing, the government obtained an order of extension for good cause shown.\nThe court conducted the hearing on the Section 1963(d)(1)(B) pre-indictment injunction application on February 11, 1993. The government introduced as exhibits, inter alia, records of fuel-oil transactions seized at the New York offices of Grast, American Enterprises, and N.W.R.; bookkeeping records of those companies; and copies of newspaper articles concerning state law-enforcement agencies’ investigations of fuel-oil “daisy chains,” which had been found in a file at the Grast/NW.R./American Enterprises offices. The government also introduced affidavits of the investigating agents and presented oral testimony from FBI agent John J. Terry. The subjects of the restraints presented exhibits in support of their contention that Grast, N.W.R., and American Enterprises had bona fide sources of income from their legitimate businesses of exporting consumer goods to Russia and Europe generally. The attorneys for the subjects cross-examined Terry extensively, but did not present any witnesses.\nOn February 12, 1993, the district court, ruling from the bench, granted the government’s motion for an order enjoining removal, sale, or dissipation of the subjects’ assets. (J.A. 643-661). While recognizing that its authority to do so was not settled by any decision of the Supreme Court or of this court, the district court held that it could “restrain substitute assets [as defined in Section 1963(m) ] in the pre-indictment stage, so long as the property restrained does not exceed the profits from the enterprise.” (J.A. 646). The district court also rejected DiTursi’s argument that his Sixth Amendment right to counsel precluded restraint of his substitute assets. (J.A. 657). The court entered an order enumerating the restraints on February 17, 1993. (J.A. 662-670). Jacob Dobrer, Vyacheslav Dobrer, N.W.R., Grast, and American Enterprises jointly appealed from that order on February 24,1993, and DiTursi appealed on February 26, 1993. As a matter of convenience we will refer to the order of February 17, 1993, as having entered restraints, though it would be technically correct to consider it as having entered a preliminary injunction.\nThereafter on March 26, 1993, a grand jury in the Eastern District of Pennsylvania indicted two of the appellants, DiTursi and Jacob Dobrer, as well as numerous other persons and certain entities, by reason of the “daisy chain” scheme. (Government’s Supplemental App. at 1-169). Whereas the government had represented at the February 11th hearing, and the district court had found, that potential forfeitable profits from the alleged RICO scheme were in excess of $15 million (J.A. 646), the RICO forfeiture counts of the indictment allege the substantially smaller sum of $6,196,242.98 as forfeita-ble assets. (Government’s Supplemental App. at 112, 119, 126).\nII. JURISDICTION AND STANDARD OF REVIEW\na. Jurisdiction\nThe government has raised four challenges to our jurisdiction: (1) as to the appellants who have been indicted, DiTursi and Jacob Dobrer, the order of February 17, 1993, is interlocutory and thus non-appealable; (2) the order has expired as to the unindicted appellants, Vyacheslav Dobrer, American Enterprises, Inc., Grast Inc., and N.W.R. Enterprises, Inc., and their appeals are therefore moot; (3) because David Shuster, DiTursi, and Jacob Dobrer have been indicted, the restraints under Section 1963(d)(1)(B) on their assets have been continued pursuant to Section 1963(d)(1)(A), which provides for pre-conviction restraints, so that the appellants’ claims are moot; and (4) Jacob Dobrer is a fugitive and thus is precluded from appealing by the fugitive disentitlement doctrine. We find the first three objections to be without merit. However, we conclude that the government’s contention with respect to Jacob Dobrer is meritorious so we will dismiss his appeal.\nThe government’s argument that the order of February 17, 1993, is interlocutory as to the indicted appellants, and therefore is not appealable immediately by them is against the considerable weight of several decisions on point. As recently explained by the Court of Appeals for the Fifth Circuit, “pretrial asset restraining orders are appeal-able as ‘injunctions’ under [28 U.S.C.] § 1292(a)(1).” United States v. Floyd, 992 F.2d 498, 500 (1993), citing United States v. Jenkins, 974 F.2d 32, 34 (5th Cir.1992); United States v. All Assets of Statewide Auto Parts, Inc., 971 F.2d 896, 900-01 (2d Cir.1992); United States v. Roth, 912 F.2d 1131, 1132-33 (9th Cir.1990); United States v. Thier, 801 F.2d 1463 (5th Cir.1986). We find these decisions persuasive in their recognition that asset restraint orders are treated as injunctions immediately appealable under 28 U.S.C. § 1292(a)(1), and we therefore follow them.\nThe government’s argument that the restraints have expired as to the unindicted appellants is contradicted by the terms of the order imposing the restraints: “[t]his Order will expire 90 days from the date it is entered, unless an indictment ... has been filed against any of the Subjects, or unless the Order is extended for good cause shown. If ... an indictment ... is filed within 90 days of the date ... this Order is entered, the Order will remain in full force and effect.” (J.A. 670). The order was entered on February 17, 1993, and the indictment was filed within 90 days thereafter, on March 26, 1993. Therefore, the entire order, as to all subjects of the restraints, remains in effect; it has not expired as to any of the subjects and these appeals are not moot on that basis.\nWe also reject the government’s coh-tention that the indictment of Shuster, DiTursi, and Jacob Dobrer continues all the restraints to preserve the availability of the assets in question and therefore renders the appeals moot. While there might be substance to this argument if Section 1963(m) property were treated differently under Section 1963(d)(1)(A) than it is under Section 1963(d)(1)(B), we will hold that Section 1963(d)(1) limits the applicability of both pre-coirviction and pre-indictment restraints to Section 1963(a) forfeitable assets. Thus, neither a pre-indictment nor pre-conviction order may be entered to preserve the availability of Section 1963(m) substitute assets. Therefore, the government’s assertion that the district court’s- Section 1963(d)(1)(B) order has been converted to a Section 1963(d)(1)(A) order by the filing of the indictment, is irrelevant to the validity of the restraints in question. If, as we will conclude, the statute does not authorize either pre-conviction or pre-indictment restraints to preserve the availability of Section 1963(m) substitute assets, then it does not matter whether the restraints in the order -of February 17, 1993, are in place by reason of Section 1963(d)(1)(A) or Section 1963(d)(1)(B).\nWe do, however, grant the government’s request to dismiss Jacob Dobrer’s appeal pursuant to the'doctrine of fugitive disentitlement. As recognized in Molinaro v. New Jersey, 396 U.S. 365, 90 S.Ct. 498, 24 L.Ed.2d 586 (1970), that doctrine involves a discretionary refusal by an appellate court to entertain an appeal on behalf of a party who has been convicted of a crime but who has become a fugitive subsequent to conviction. The rationale for dismissing fugitives’ appeals usually is explained as a principle of mutuality—if a. defendant is not willing to suffer the penalties of the crime, then an appellate court should not afford the defendant an opportunity to improve his or her position by challenging the validity of the conviction. See Smith v. United States, 94 U.S. 97, 24 L.Ed. 32 (1876) (“[i]t is clearly within our discretion to refuse to hear a criminal case in error, unless the convicted party ... is where he can be made to respond to any judgment we render”); Williams v. Holbrook, 691 F.2d 3, 14 (1st Cir.1982) (courts give great weight to impropriety of allowing a fugitive to “opt in” only if the appeal is decided favorably to him); Lopez v. Malley, 552 F.2d 682, 683 (10th Cir.1977) (upon decision of an appeal, a fugitive would be likely to surrender only if it were in his interest).\nAlthough the fugitive disentitlement doctrine originally developed on appeals of criminal convictions, the government argues that it also should apply to this appeal from a restraining order to preserve the availability of assets. See, e.g., United Electrical, Radio and Machine Workers v. 163 Pleasant Street Corp., 960 F.2d 1080, 1097-98 (1st Cir.1992) (fugitive disentitlement may be applied in civil context as well as on appeal of conviction); United States v. Van Cauwenberghe, 934 F.2d 1048, 1055 (9th Cir.1991) (fugitive disentitlement doctrine may be applied in contexts other than appeal of conviction). The general applicability of the doctrine to asset restraints was accepted in United States v. Veliotis, 586 F.Supp. 1512 (S.D.N.Y.1984), although there the court refused to apply the doctrine because constitutional issues were presented and because the fugitive appellant would be bound by either a favorable or an unfavorable result concerning the restraint.\nHere, however, we think that the doctrine should be applied. Jacob Dobrer has been indicted and a bench warrant has been issued for him. He was mailed a notice to appear for arraignment but he did not do so. .When the government moved to dismiss his appeal, Jacob Dobrer’s attorneys in their responding papers did not claim that he was unaware of his indictment. Furthermore, they concede he is in Russia and they present no facts from which we could conclude that he is unable to return to answer the indictment. In these circumstances we only can regard him as a fugitive. As the court indicated in United States v. Catino, 735 F.2d 718, 722 (2d Cir.1984): “The intent to flee from prosecution or arrest may be inferred from a person’s failure to surrender to authorities once he learns that charges against him are pending. This is true whether the defendant leaves the jurisdiction intending to avoid prosecution, or, having learned of charges while legally outside the jurisdiction ‘con-stractively flees’ by deciding not to return.” Id. at 722. Indeed the Catino court concluded that a defendant imprisoned in France could be a fugitive because he actively resisted extradition to the United States. In this ease, we believe that inasmuch as Jacob Dobrer is unwilling to submit to the jurisdiction of the criminal court in which he has been indicted and to abide the consequences of the ultimate judgment of that court, we should not afford him the opportunity of challenging the validity of proceedings related to the criminal case.\nb. Standard of Review\nAs discussed earlier, we have jurisdiction because the district court’s order is an immediately appealable preliminary injunction. Therefore the standard governing our review is that accorded to grants or denials of preliminary injunctions, i.e., whether the district court abused its discretion, committed an obvious error in applying the law, or made a clear mistake in considering the proof. Philadelphia Marine Trade Ass’n v. Local 1291, 909 F.2d 754, 756 (3d Cir.1990), cert. denied, 498 U.S. 1083, 111 S.Ct. 953, 112 L.Ed.2d 1041 (1991); Loretangeli v. Critelli, 853 F.2d 186, 193 (3d Cir.1988). We review the district court’s factual determinations under a clearly erroneous standard and we give questions of law plenary review. John F. Harkins Co. v. Waldinger Corp., 796 F.2d 657, 658 (3d Cir.1986), cert. denied, 479 U.S. 1059, 107 S.Ct. 939, 93 L.Ed.2d 989 (1987). Inasmuch as our result depends upon a question of law, ie., whether Section 1963(m) substitute assets are subject to pre-conviction or pre-indictment restraints, we are exercising plenary review. See Kreimer v. Bureau of Police of Morristown, 958 F.2d 1242, 1250 n. 9 (3d Cir.1992).\nIII. RESTRAINT OF SUBSTITUTE ASSETS\nThe propriety of a restraint to preserve the availability of substitute assets depends upon the relationship among three subsections of the RICO forfeiture provision, 18 U.S.C. § 1963. Section 1963(a) defines three categories of assets related to RICO offenses that must be forfeited upon conviction:\n(a) Whoever violates any provision of section 1962 of this' chapter shall ... forfeit to the United States, irrespective of any provision of State law—\n(1) any interest the person has acquired or maintained in violation of section 1962;\n(2) any—\n(A) interest in;\n(B) security of;\n(C) claim against; or\n(D) property or contractual right of any kind affording a source of influence over;\nany enterprise which the person has established, operated, controlled, conducted, or participated in the conduct of in violation of section 1962; and\n(3) any property constituting, or derived from, any proceeds which the person obtained, directly or indirectly, from racketeering activity or unlawful debt collection in violation of section 1962.\nSection 1963(m) defines the substitute assets that may be forfeited if the forfeitable assets of Section 1963(a) are unavailable:\n(m) If any of the property described in subsection (a), .as a result of any act or omission of the defendant—\n(1) cannot be located upon the exercise of due diligence; .\n(2) has been transferred or sold to, or deposited with, a third party;\n(3) has been placed beyond the jurisdiction of the court;\n(4) has been substantially diminished in value; or\n(5) has been commingled with other property which cannot be divided without difficulty;\nthe court shall order the forfeiture of any other property of the defendant up to the value of any property described in paragraphs (1) through (5).\nSection 1963(d)(1) provides for pre-conviction and pre-indictment restraints to preserve the availability of assets that may be subject to forfeiture:\n(d)(1) Upon application of the United States, the court may enter a restraining order or injunction, require the execution of a satisfactory performance bond, or take any other action to preserve the availability of property described in subsection (a) for forfeiture under this section—\n(A) upon the filing of an indictment or information charging a violation of section 1962 of this chapter 'and alleging that the property with respect to which the order is sought would, in the event of conviction, be subject to forfeiture under this section; or\n(B) prior to the filing of such an indictment or information, if, after notice to persons appearing to have an interest in the property and opportunity for a hearing, the court determines that—\n(i) there is a substantial probability that the United States will prevail on the issue of forfeiture and that failure to enter the order will result in the property being destroyed, removed from the jurisdiction of the court, or otherwise made unavailable for forfeiture; and\n(ii) the need to preserve the availability of the property through the entry of the requested order outweighs the hardship on any party against whom the order is to be entered....\nThus, the restraints provision of Section 1963(d)(1) refers specifically to “subsection (a)” assets and does not mention subsection (m) substitute assets. The appellants therefore contend that subsection (m) assets simply cannot be subjected to a pre-indictment restraint. On the other hand, the government argues that a district court can issue pre-conviction or pre-indictment restraints on either subsection (a) or subsection (m) assets, so long as the value of the property restrained does not exceed the demonstrated amount of profits derived from the RICO enterprise.\nRestraints to preserve the availability of substitute assets have been reviewed recently by two other courts of appeals, with opposite results. The Court of Appeals for the Fifth Circuit determined that the Comprehensive Forfeiture Act of 1984, 21 U.S.C. § 853(e)(1), whose substantive terms are in material part identical to those of RICO, 18 U.S.C. § 1963(d)(1), did not permit a restraint to preserve substitute assets. United States v. Floyd, 992 F.2d 498 (1993). The Court of Appeals for the Fourth Circuit reached the opposite result when it concluded that RICO Section 1963(m) substitute assets can be preserved by a restraint under Section 1963(d)(1). In re Billman, 915 F.2d 916 (1990).\nIn Floyd the court determined on the basis of the clear limitations of the statute’s language that substitute assets were not subject to pretrial restraints:\nWe find that the statute controlling the restraint before us plainly states what property may be restrained before trial. Congress made specific reference to the property described in § 853(a) [equivalent to RICO Section 1963(a) ], and that description does not include substitute assets. Congress treated substitute assets in a different section, § 853(p) [equivalent to RICO Section 1963(m) ]. To allow the government to freeze Floyd’s untainted assets would require us to interpret the phrase ‘property described in subsection (a)’ to mean property, described in subsection (a) and (p).\nId. at 502. See also United States v. Chinn, 687 F.Supp. 125, 127 (S.D.N.Y.1988) (“[i]n the absence of any authority for pre-trial attachment of assets not specifically named in' Section 1963(a), and therefore not covered by [the restraint provisions of] Section 1963(d), I decline to order such an extension by judicial fiat”).\nThe Floyd court would not follow Billman. In Billman, the court reasoned that because RICO forfeitures constitute an in personam punishment, and because an ultimate forfeiture judgment could be satisfied from any of a defendant’s assets, the pre-conviction restraint provisions must be construed broadly to accomplish the purpose of preserving, before trial, all assets that might ultimately be subject to forfeiture, including substitute assets:\nAlthough reference is made in subsection (d)(1) to property described in subsection (a), we believe that when, as here, the defendant has placed the assets specified in subsection (a) beyond the jurisdiction of the court, subsection (d)(1)(A) must be read in conjunction with subsection ,(m) to preserve the availability of substitute assets pending trial. In this way the purpose of § 1963(d)(1)(A) can be attained.\n915 F.2d at 921. The Court of Appeals for the Second Circuit used similar reasoning in United States v. Regan, 858 F.2d 115, 121 (1988):\nAlthough this provision \\i.e., 18 U.S.C. § 1963(m)(5) ] concerns the ultimate forfeiture, it surely suggests that restraining orders entered before forfeiture should be concerned with preserving assets equivalent in value to the potentially forfeitable property, and not necessarily the precise property. We believe, therefore, that where the nature of the defendants’ forfei-table property makes the imposition of a restraining order burdensome on third parties, the district court should, as an alternative, restrain [substitute] assets of the defendant equal in value to that of the unrestrained forfeitable property.\nSee also In re Assets of Parent Industries, Inc., 739 F.Supp. 248, 255-56 (E.D.Pa.1990) (assuming that Section 1963(m) substitute assets can be subject to pretrial restraints).\nWe believe that Floyd correctly interpreted the statutory pretrial restraint provisions as applied to substitute property. We further believe that Billman did not explain adequately why the pretrial restraint provisions’ clear limitation to subsection (a) assets was furthered by treating subsection (m) substitute assets as though they were subsection (a) assets. In our view, Billman’s conclusion cannot be reconciled with the normal rule of statutory interpretation that a court does not look to the purpose of a statute when the meaning is clear on its face. See, e.g., United States v. Koyomejian, 946 F.2d 1450, 1453 (9th Cir.1991). As we have indicated frequently, when a statute.is plain on its face, we do not resort to legislative history to uncover its meaning. See, e.g., United States v. Alcan Aluminum Corp., 964 F.2d 252, 260 (3d Cir.1992). The restraints of Section 1963(d)(1) specifically are limited to the “property described in subsection (a)” and we therefore agree with the holding in Floyd that subsection (m) substitute assets simply may not be subject to pre-conviction or pre-indictment restraints.\nWe, like the Floyd court, find the plain language of the statute so clearly dispositive that ordinarily we would not consider legislative history. However, in light of the circumstance that our result conflicts with Billman, we have examined the legislative history, which demonstrates, were there any doubt, that the Floyd court’s reading of the statutory language is correct. Billman found, and Regan suggested, that the congressional purpose underlying asset forfeitures would demand that pre-conviction and pre-indictment restraints include subsection (m) substitute assets, as well as the subsection (a) assets specified in the statute. However, legislative history establishes the contrary—a clear congressional purpose to exempt subsection (m) substitute assets from any pre-conviction or pre-indictment restraints. •\nThe substitute assets provision, substantially in the form of the present subsection (m), was added to RICO by a 1986 amendment, Pub.L. No. 99-570, tit. I, § 1153(a), 100 Stat. 3207, 3207-13. Most of the present RICO forfeiture provisions had been adopted two years earlier, in the Comprehensive Crime Control Act of 1984, Pub.L. No. 98-473, tit. II, §§ 302, 2301(a)-(e), 98 Stat. 1976, 2040-44, 2192. Earlier versions of the amendments, including the substitute asset provision, had been under consideration for several years and one of those versions, the Comprehensive Criminal Forfeiture Act of 1982, was the subject of extensive commentary in Senate Report 97-520, 97th Cong., 2d Sess. (1982). That Report analyzed a proposed substitute asset provision substantially like the provision ultimately enacted:\nSubsection (d) [the present subsection (m) ] of the bill’s amended RICO forfeiture provision is new to the law, and authorizes the court to order the defendant to forfeit substitute assets when the property originally subject to forfeiture is no longer available at the time of the conviction. This subsection authorizes forfeiture of substitute assets in five circumstances: where property found subject to forfeiture under section [1963(a) ] ... (1) cannot be located; (2) has been transferred to or deposited with a third party; (3) has been placed beyond the jurisdiction of the court; (4) has been substantially diminished in value by the defendant; or (5) has been commingled with other property which cannot be divided without difficulty. The amount of substitute assets which may be forfeited under this subsection is limited to the value of property described in [present subsection (a) ] that is unavailable.\nSen.Rep. at 9. The Report then, in discussing the proposed provisions for pre-conviction and pre-indictment asset restraints, left no doubt that substitute assets are not to be subjected to such restraints:\nIt should also be noted that the restraining order provision applies only to [subsection (a) ] property.- It may not be applied with respect to other assets that may ultimately be ordered forfeited under the substitute assets provision.\nId. at 10 n. 18. This legislative history unequivocally establishes that Congress meant what it said in limiting pre-conviction and pre-indictment restraints to subsection (a) property. Contrary to the conclusions in Billman and Regan, Congress had no purpose of allowing pretrial restraints of all assets, including substitute assets, that ultimately might be forfeitable. Rather, Congress clearly intended to exclude substitute assets from property subject to preliminary restraints.\nIn addition to being dictated by the language of the statute and its legislative history, our result comports with the Supreme Court’s cautious interpretation of the scope of forfeiture provisions. See Austin v. United States, — U.S. —, —, 113 S.Ct. 2801, 2811, 125 L.Ed.2d 488 (1993) (Eighth Amendment’s Excessive Fines Clause may limit the amount of in rem forfeitures sought by government under 21 U.S.C. §§ 881(a)(4) and (a)(7)); Alexander v. United States, — U.S. —, —, 113 S.Ct. 2766, 2776, 125 L.Ed.2d 441 (1993) (Excessive Fines Clause applies to forfeiture of assets under RICO, 18 U.S.C. § 1963(a)). Although Alexander was remanded for reconsideration of whether the forfeitures resulted in an excessive penalty under the Excessive Fines Clause, the majority found that forfeiture of the defendant’s bookstore businesses did not offend the First Amendment as a prior restraint of speech, because the forfeiture order “only deprives him of specific assets that were found to be related to his previous racketeering violations.” — U.S. at —, 113 S.Ct. at 2771. However, that rationale would not support the forfeiture óf Section 1963(m) substitute assets if those assets were expressive materials. Indeed, consideration of forfeiture in the context of substitute assets, which was not required in Alexander, might well support the argument of the Alexander dissenters that, in some circumstances at least, forfeiture inappropriately is applied to expressive materials without some prior determination of obscenity. Further, the Supreme Court’s application of Eighth Amendment limitations to forfeitures suggests to us that we need to keep prosecutorial zeal for such remedies within particular boundaries. This case demonstrates the point, for here a statute obviously intended by Congress not to subject substitute assets to the effect of pretrial restraints-somehow was metamorphosed by the government into a medium for reaching the excluded assets.\nThe government has argued an alternative ground in support of the district court’s result. The government maintains that regardless of whether pretrial restraints can apply to substitute assets, the trial court found a “nexus” between the relevant assets and the alleged RICO violations, i.e., found that such assets were subsection (a) property, and therefore the restraints were proper. However, the record is confused on this point. The district court, in an understandable attempt to reach an expeditious yet thorough resolution of the government’s motion, did not issue any formal findings of fact to support its order. The ruling from the bench does not include findings sufficient for us to say that the district court properly determined the restrained assets to be subsection (a) property. Indeed, while the district court did conclude that some of the relevant assets were “nexus,” or subsection (a), property, it did not delineate underlying facts supporting the conclusions:\nI find that the Government has proved the necessary nexus with respect to the home of Gerald DiTursi in Hudson, Florida, as well as the assets seized of American Enterprises, Inc. and Grast, Inc.\nI also find that a sufficient nexus exists with respect to the property of NWR, Inc. Section 1963(a) subjects to forfeiture the interest—any interest a person has acquired or maintained in violation of Section 1962 or any interest in, security of, claim against or property of any kind affording a source of influence over any enterprise which the person has established, operated, controlled, conducted or participated in the conduct of, in violation of Section 1962. And also, any property constituting or derived from any proceeds [which] the person obtained' directly or indirectly from racketeering activity or in violation of Section 1962. The Government has made the necessary showing with respect to the property of NWR, Inc.\n(J.A. 645). Nevertheless the district court seemed uncertain about' the strength of the evidence that might support a finding of a “nexus” between the property restrained and the RICO enterprise; therefore, it ultimately based its entry of the restraints on the legal conclusion that substitute assets may be so restrained:\nTo the extent that the Government has not proven a nexus between the property in issue and the enterprise, I conclude that such a nexus is not required under RICO. The profits from the enterprise were in excess of $15 million, while the amount sought to be restrained for ultimate forfeiture is'only $5 million.\nWhile this issue has not been 'definitively settled by the United States' Supreme Court or by the Court of Appeals for the Third Circuit, I conclude that this Court may restrain substitute assets in the pre-indictment stage, so long as the property restrained does not exceed the profits from the enterprise.\n(J.A. 646).\nOur examination of the oral ruling of the district court leads us to conclude that it is not possible to determine on what underlying facts, and according to what standard, the district court may have determined that some of the relevant assets were subsection (a) property. Furthermore, the district court did not make any specific findings as to who owned interests in certain of the restrained properties, e.g., assets of NWR, Grast, and American Enterprises; and as we noted earlier, the district court at the time of the hearing assumed forfeitable RICO proceeds might exceed $15 million, whereas the later indictment asserted only slightly over $6 million in forfeitable assets. Therefore, in view of our conclusion that pretrial orders may not be entered to preserve the availability of substitute assets, it is necessary to vacate the district court’s order in its entirety with respect to the appellants’ property, except to the extent that it affects property of Jacob Dobrer, because we cannot determine from the record whether some of the assets properly may have been restrainable on alternative grounds.\nBecause of our conclusion concerning substitute assets, we need not reach two additional points raised by the appellants, ie., whether the trial court properly applied the statutory standards for a restraint under Section 1963(d)(1)(B), and whether the restraint of substitute assets might violate the Sixth Amendment right to counsel or Fifth Amendment due process. Due to the indictment of several of the subjects of the restraints after entry of the February 17, 1993 order, this case is now in a much different posture, both as to possible restraints against indicted defendants and possible restraints to preserve the availability of assets in the hands of unindicted third parties, than it was on that date. In the event that the government should renew its requests for similar or additional restraints, it will be within the discretion of the district court, in the first instance, to determine the proper standards and procedures to follow, including whether an additional evidentiary hearing may be necessary to establish a basis for any requested restraints.\nIV. CONCLUSION\nWe hold that substitute assets, as defined by Section 1963(m), cannot be restrained pre-conviction or pre-indictment under Section 1963(d)(1)(A) or Section 1963(d)(1)(B), respectively. Therefore, because the order of February 17, 1993, was based upon an erroneous legal conclusion that such assets were restrainable, we will vacate the order with respect to the appellants’ property except to the extent that it affects property of Jacob Dobrer. We will dismiss the appeal of Jacob Dobrer. We will remand the case for further proceedings consistent with this opinion.\n. Of course, the term \"pre-conviction restraints” would normally be understood to subsume \"pre-indictment” restraints. However, because the statute contains separate subsections setting forth differing standards for each of these types of restraints, we will refer to Section 1963(d)(1)(A) restraints as \"pre-conviction restraints” and to Section 1963(d)(1)(B) restraints as “pre-indictment restraints.” Sometimes we will refer to both types of restraints collectively as \"pretrial restraints.”\n. By any standard the indictment is a formidable document, at least in form, as it includes 89 counts and is 169 pages in length.\n. Shuster is not an appellant.\n. We do not consider whether we would have had jurisdiction if there had been appeals from the ex parte restraints as that issue is not before us. Ordinarily we would not have jurisdiction over appeals from temporary restraining orders. United States v. Spectro Foods Corp., 544 F.2d 1175, 1179 (3d Cir.1976).\n. We express no opinion as to the government's contention that a Section 1963(d)(1)(A) restraint automatically arises on indictment if a Section 1963(d)(1)(B) restraint is already in place. In United States v. Monsanto, 924 F.2d 1186 (2d Cir.1991), the-court required a hearing to continue an ex parte restraint pursuant to the pre-conviction injunction provisions of the Comprehensive Forfeiture Act of 1984, 21 U.S.C. § 853(e)(1)(A), whose substantive language is in material respects identical to that of 18 U.S.C. § 1963(d)(1)(A). Because of our resolution of the issue of restraints against substitute assets, we need not at present consider what process is due an indicted defendant before Section 1963(a) assets may be restrained.\n. We are aware that in some cases attorneys act without the consent and, indeed, without the knowledge of their clients. See Brewer v. Lewis, 989 F.2d 1021, 1023 (9th Cir.1993). But Jacob Dobrer's attorneys do not suggest that they are acting without his authority. Accordingly, he may even on the most personal basis be regarded as an active litigant in this court.\n. We also point out that' Jacob Dobrer has been indicted in the United States District Court for the District of New Jersey and is a fugitive on that indictment as well..\n. For the reader's convenience, we have substituted the equivalent section numbers of the present statute for the original section numbers.\n. Although Senate Report 97-520 predated the enactment of the substitute assets provision by some four years, it remains valid legislative history for determining the provision’s meaning. See, e.g., Judith Manion, Joseph Meringolo & Robert Oaks, A Research Guide to Congress 107-08 (1991).\n. In a civil in rem forfeiture case involving a claimant who advanced an \"innocent owner” defense the Court has indicated that in view of the substantive expansion of the statute involved and the congressional intention to protect innocent owners, it would \"approach the task of construing [the statute] with caution.” United States v. A Parcel of Land etc., Known as 92 Buena Vista Ave., — U.S. —, —, 113 S.Ct. 1126, 1134, 122 L.Ed.2d 469 (1993).\n.Consider, for example, the case of a RICO defendant who owned two separate bookstore businesses, one a RICO enterprise engaged in selling obscene literature, and a second engaged in selling legitimate books on current political topics. If the defendant were convicted of the RICO offense but had dissipated the proceeds of his sales of obscene books, the government would then have the power, under Section 1963(m), to seize the defendant’s books on political topics. The potential for abuse of fundamental First Amendment rights inherent in that scenario supports the Alexander dissenters' unease with permitting broad forfeitures of protected expressive materials.\n. We address the question before us from the approach of determining what Congress intended. While there might be good reason to allow a court to order pretrial restraints to preserve Section 1963(m) property, only Congress can do so.\n. It is clear that the district court was trying to determine this very difficult issue as expeditiously as possible, in light of the serious ramifications for all parties. We therefore certainly cannot fault its procedures and indeed commend that court for its thorough disposition in the circumstances. However, we would note that written findings of fact and conclusions of law arc often necessary for a proper review and can sometimes obviate the need for further proceedings.\n. While we cannot predict the future course of this litigation, it may well be that the district court will find it necessary to conduct a hearing to determine what assets are owned by Jacob Dobrer so as not to be affected by this appeal.", "type": "majority", "author": "GREENBERG, Circuit Judge."}], "attorneys": ["Morvillo, Abramowitz, Grand, Iason & Sil-berberg, Catherine M. Foti (argued), Robert B. Buehler, New York City, for appellants Jacob Dobrer, Vyacheslav Dobrer and N.W.R. Enterprises, Inc.", "Rose & Koerner, Ronald D. Rose (argued), Brooklyn, NY, for appellants Grast, Inc. and American Enterprises, Inc.", "Law Office of Barry A. Cohen, Barry A. Cohen, Martinez & Kessler, Victor D. Martinez (argued), Bruce J. Kessler, Tampa, FL, for appellant Gerald D. DiTursi.", "Michael J. Rotko, U.S. Atty., E.D.Pa., Sonia C. Jaipaul, Asst. U.S. Atty., Chief, Financial Litigation Div., Joel M. Friedman, Asst. U.S. Atty., Chief, Organized Crime Strike Force, Mary E. Crawley, Asst. U.S. Atty., Robert E. Courtney, Asst. U.S. Atty., Pamela Foa (argued), Asst. U.S. Atty., Philadelphia, PA, for appellee."], "corrections": "", "head_matter": "In re ASSETS OF Myles MARTIN, et al., Gerald D. Ditursi, David Savage, Robert Self, Jr., Bruce Ebert, William Selvagn, Self Oil Heat, Inc., Global Enterprises, Inc., Bell Fuel Corporation, Bell Fuels T/A Asco, Inc., Atlantic Oil & Heat Co., Par Sales, Inc., Asca, Inc./Nova Petroleum and Omni Petroleum. Jacob Dobrer, Vyacheslav Dobrer, N.W.R. Enterprises, Inc., Grast, Inc., and American Enterprises, Inc., Appellants in No. 93-1189. Gerald D. DiTursi, Appellant in No. 93-1201.\nNos. 93-1189, 93-1201.\nUnited States Court of Appeals, Third Circuit.\nArgued June 11, 1993.\nDecided July 26, 1993.\nAs Amended Aug. 27, 1993.\nMorvillo, Abramowitz, Grand, Iason & Sil-berberg, Catherine M. Foti (argued), Robert B. Buehler, New York City, for appellants Jacob Dobrer, Vyacheslav Dobrer and N.W.R. Enterprises, Inc.\nRose & Koerner, Ronald D. Rose (argued), Brooklyn, NY, for appellants Grast, Inc. and American Enterprises, Inc.\nLaw Office of Barry A. Cohen, Barry A. Cohen, Martinez & Kessler, Victor D. Martinez (argued), Bruce J. Kessler, Tampa, FL, for appellant Gerald D. DiTursi.\nMichael J. Rotko, U.S. Atty., E.D.Pa., Sonia C. Jaipaul, Asst. U.S. Atty., Chief, Financial Litigation Div., Joel M. Friedman, Asst. U.S. Atty., Chief, Organized Crime Strike Force, Mary E. Crawley, Asst. U.S. Atty., Robert E. Courtney, Asst. U.S. Atty., Pamela Foa (argued), Asst. U.S. Atty., Philadelphia, PA, for appellee.\nBefore: GREENBERG, NYGAARD and ROSENN, Circuit Judges."} | GREENBERG | NYGAARD | ROSENN | 1 | 1 | 1 | 0 | 0 | 0 | 1 F.3d 1351 | [
{
"content": "You are an expert legal coding assistant trained to classify U.S. federal Courts of Appeals\ncases using an adaptation of the Supreme Court Database (SCDB_2023_01) codebook. You follow the coding procedure\nin the codebook step by step and use the precise definitions of terms presented in the code... |
10,517,595 | William DUNN; Hess Oil Virgin Islands Corp. v. HOVIC; Amerada Hess Corp.; Keene Corporation v. The LITWIN CORPORATION; Litwin PanAmerican; Borinquen Insulation Co. Owens-Corning Fiberglas Corporation, Appellant | Dunn v. HOVIC | 1993-07-27 | No. 91-3837 | United States Court of Appeals for the Third Circuit | {"judges": ["Before: SLOVITER, Chief Judge, MANSMANN and WEIS, Circuit Judges."], "parties": ["William DUNN; Hess Oil Virgin Islands Corp. v. HOVIC; Amerada Hess Corp.; Keene Corporation v. The LITWIN CORPORATION; Litwin PanAmerican; Borinquen Insulation Co. Owens-Corning Fiberglas Corporation, Appellant."], "opinions": [{"text": "OPINION OF THE COURT\nSLOVITER, Chief Judge.\nPreliminary Note\nOn April 22, 1992 a panel of this court heard argument' on the appeal of Owens-Corning Fiberglas Corporation (OCF) from the judgment of the district court awarding William Dunn $500,000 in compensatory damages for asbestos-related injury and $2 million in punitive damages. The opinion of the panel, affirming the district court’s award of compensatory damages and ordering a remittitur of the punitive damages award to $1 million, was filed on September 18, 1992.\nThereafter, OCF filed a petition for rehearing in banc. On October 8, 1992, the court granted the petition and vacated the opinion of the panel. However, the petition was directed only to the punitive damages award and the court subsequently directed counsel to limit their arguments at the rehearing in banc to that issue. Accoi’dingly, the court in banc has amended its October 8, 1992 order to the extent that it vacated the panel opinion in its entirety, and the panel hereby reinstates the portion of its earlier opinion addressing the compensatory damages and evidentiary issues raised by OCF with only minor editorial changes. A separate opinion of the court in banc will be issued limited to the punitive damages award.\nI.\nPROCEDURAL POSTURE\nIn 1987 William Dunn, a former pipe installer at Hess Oil Virgin Islands Corporation (HOVIC), filed this action against OCF as well as other manufacturers of asbestos-containing products, alleging personal injuries caused by exposure to asbestos. Following a trial in which liability and compensatory damages were determined before the issue of punitive damages, the jury awarded Dunn $1.3 million in compensatory damages and $25 million in punitive damages against the sole remaining defendant, OCF, the distributor and later manufacturer of Kaylo, an asbestos-containing pipecovering.\nOCF filed post-trial motions pursuant to Federal Rules of Civil Procedure 50(b) and 59 requesting a Judgment Notwithstanding the Verdict or, in the alternative, a new trial. The district court denied the motion for JNOV, but conditioned the denial of the motion for a new trial on Dunn’s acceptance of a remittitur of the compensatory award to $500,000 and the punitive award to $2 million. Dunn v. Owens-Corning Fiberglass, 774 F.Supp. 929, 951-52 (D.V.I.1991). Dunn accepted the remittitur, and OCF appeals. We have jurisdiction under 28 U.S.C. § 1291 (1988).\nII.\nSTANDARD OF REVIEW\nIn ruling on a motion for JNOV, the district court must view the evidence, together with all reasonable inferences therefrom, in the light most favorable to the verdict winner. Rotondo v. Keene Corp., 956 F.2d 436, 438 (3d Cir.1992). We apply the same standard on appeal as the district court, id., and will affirm the denial of the motion “unless the record is critically deficient of that minimum quantum of evidence from which a jury might reasonably afford relief.” Dawson v. Chrysler Corp., 630 F.2d 950, 959 (3d Cir.1980) (internal quotations omitted), cert. denied, 450 U.S. 959, 101 S.Ct. 1418, 67 L.Ed.2d 383 (1981).\nWe review the denial of a motion for a new trial for abuse of discretion, Ford Motor Co. v. Summit Motor Prods., Inc., 930 F.2d 277, 290 (3d Cir.), cert. denied, — U.S. —, 112 S.Ct. 373, 116 L.Ed.2d 324 (1991), and note that “the district court ought to grant a new trial on the basis that the verdict was against the weight of the evidence only where a miscarriage of justice would result if the verdict were to stand.” Williamson v. Consolidated Rail Corp., 926 F.2d 1344, 1352 (3d Cir.1991). In addition, “we may disturb the district court’s determination with respect to a remittitur only for abuse of discretion, and reverse and grant a new trial only if the verdict is so grossly excessive as to shock the judicial conscience.” Gumbs v. Pueblo Int'l, Inc., 823 F.2d 768, 771 (3d Cir.1987) (internal quotations omitted).\nIII.\nDISCUSSION\nRather than focus its appeal on liability, OCF raises numerous issues going to damages. We address in subpart A the compensatory damages issues and in subpart B the evidentiary issues, which implicate both compensatory and punitive damages.\nA.\nCOMPENSATORY DAMAGES\n1. Sufficiency of the Evidence\nFrom the evidence presented at trial, the jury could reasonably have concluded the following. In 1950 Dunn went to work as a pipe installer’s helper for Dow Chemical in Texas. App. at 846-47. After working in various places in the United States and the Caribbean, Dunn began working at the Hess Oil refinery in St. Croix, Virgin Islands in 1966 as a pipe installer. App. at 859-64. He testified that as a result of his duties, which often required cutting, sawing or pounding of asbestos-containing insulation, he was covered from head to toe in dust from early morning until he left work. App. at 868-69. Dunn identified OCF’s Kaylo as the asbestos-containing insulation product he used most. App. at 870.\nBeginning in the mid-1980s, Dunn began to experience shortness of breath and weight loss. App. at 878-79, 888. He was diagnosed as suffering from “a lung condition ... caused by asbestos.” App. at 879. Prior to that time Dunn enjoyed a variety of athletic activities, including running, swimming, biking, and weight lifting. App. at 876. He claims that because of his lung disease, he can no longer engage in the athletic activities he enjoyed previously. App. at 889. Dunn testified about his great fear of contracting cancer in the future and his depression at seeing long-time friends die of asbestos-related disease. App. at 889-92.\nDunn asked for compensatory damages for present and future pain and suffering, including compensation for his fear of contracting cancer. OCF contends that Dunn did not adduce enough evidence at trial to show that he suffers from compensable injury. In particular, OCF claims that under the American Thoracic Society standards for diagnosing asbestosis, the evidence presented at trial demonstrates that Dunn does not exhibit the conditions necessary for a diagnosis of asbestosis.\nUnder the Virgin Islands Code, in the absence of local law to the contrary, the Restatements of the law approved by the American Law Institute control. V.I.Code Ann. tit. 1, § 4 (1967); see Berroyer v. Hertz, 672 F.2d 334, 340 (3d Cir.1982). OCF notes that Restatement (Second) of Torts sections 388 and 402A make “harm” an essential element of claims for negligence and strict liability. However, section 7(2) defines “harm” as “the existence of loss or detriment in fact of any kind to a person resulting from any cause.” Restatement (Second) of Torts § 7(2) (1965). Comment b explains that “ ‘[hjarm’ implies a loss or detriment to a person, and not a mere change or alteration in some physical person, object or thing.... In so far as these acts or conditions are detrimental to him, he suffers harm.” Id. cmt. b.\nIt is undisputed that Dunn has extensive pleural thickening on the exterior of his lungs. See App. at 661-62, 762-63. OCF nevertheless argues that the presence of pleural plaques does not constitute compen-sable injury, citing Purjet v. Hess Oil Virgin Islands Corp., 22 V.I. 147, 149, 1986 WL 1200 (D.V.I.1986), for the proposition that Dunn must prove “[ajctual injury or damage” to recover. In that case, plaintiffs, neither of whom suffered from any asbestos-related condition, brought a suit seeking, inter alia, damages for enhanced risk of developing asbestos-related diseases. In granting summary judgment for the defendants, the district court held that under Virgin Islands law, “a tort claim will not lie in the absence of a demonstrable injury [and] mere exposure to asbestos is insufficient to state a cause of action.” Id. at 154; see also Schweitzer v. Consolidated Rail Corp., 758 F.2d 936, 942 (3d Cir.) (for purposes of F.E.L.A. claim, “manifest injury [is] a necessary element of an asbestos-related tort action”), cert. denied, 474 U.S. 864, 106 S.Ct. 183, 88 L.Ed.2d 152 (1985).\nWe need not decide in this case whether the mere presence of pleural plaques constitutes the “harm” necessary to recover damages for tort under the Restatement. We note that more recent cases applying the law of states within this circuit have held that it is. Thus, in Marinari v. Asbestos Corp., 417 Pa.Super. 440, 612 A.2d 1021 (1992), the Pennsylvania Superior Court, sitting in banc, held that “pleural thickening, even when asymptomatic, is an injury which gives rise to a cause of action.” Id. at 1028.\nTwo medical experts testified on Dunn’s behalf. Dr. David Egilman, who is board certified in internal and occupational medicine with a specialty in occupational lung disease, see App. at 156, stated that Dunn had “the exact injuries that you would expect if someone was injured from breathing in the asbestos.” App. at 164. He also stated that he was “certain that [Dunn] has asbestos-related lung disease, both in the lung tissue and around the lung,” and concluded that Dunn suffers from asbestosis. App. at 297.\nDunn’s other expert witness, Dr. David Kern, also certified in occupational and internal medicine, concurred in this diagnosis, stating that Dunn “definitely did have asbestosis.” App. at 666. Both experts testified that when they examined Dunn’s lungs they heard rales, a velcro-like sound indicative of asbestosis. App. at 294-95, 680. These observations mirrored that of the first doctor to examine Dunn in 1985. App. at 294.\nDr. William Cole, OCF’s radiology expert, testified that the outer lining of Dunn’s lungs displayed pleural plaques and that asbestos exposure was probably the cause. App. at 762-68, 765. This same conclusion was reached by Dr. Kern who stated that Dunn’s pleural plaques were massive. App. at 662. Dr. Kern also testified that pleural plaques “have an effect on lung function.” App. at 661. Dr. Cole agreed that in an advanced stage, pleural plaques could affect lung functioning. App. at 818.\nThus, in this case, there is evidence, if believed, that Dunn suffers from more than mere pleural plaques. In the first place, Dunn’s plaques “are massive.” App. at 662. Dunn “ha[s] both scarring of the lining of the lung, both in front and on the muscle that’s under the lung. And he also has scarring in the lung tissue.” App. at 272. In the second place, and more important, Dunn’s experts testified that as a result' of his exposure to asbestos, Dunn has reduced lung capacity. Tests performed demonstrated that Dunn’s lung capacity decreased by about 20% between 1985 and 1989 and that a further decrease occurred between 1989 and 1990. App. at 277-78. Dr. Egilman testified that Dunn’s disease was progressing at a rapid rate and that his total lung capacity would continue to decrease. App. at 299. According to both Drs. Egilman and Kern, such a decrease is abnormal and consistent with a diagnosis of asbestosis. App. at 279-80, 668-70.\nFurthermore, in 1989, a small nodule was discovered on Dunn’s lower left lung. App. at 288-89, 890. Although Dr. Egilman did not believe it was malignant at that time, he recommended that it be examined and x-rayed every three to five months. App. at 290-91. Finally, Dr. Egilman testified that Dunn had a greater than fifty percent chance of dying from an asbestos-related disease and that Dunn’s fear of contracting cancer was reasonable. App. at 300.\nWhile OCF did present colorable evidence tending to contradict the conclusions of Dunn’s experts, it was not so overwhelming that the jury could not reasonably conclude that Dunn suffers from mild asbestosis which is likely to worsen. As the district court properly noted, “[i]t was well within the jury’s province to decide to credit the testimony of plaintiffs doctors while discounting that of defendant’s.” Dunn, 774 F.Supp. at 937. Dunn’s shortness of breath and inability to engage in the extent of physical activity he enjoyed previously are detrimental effects that constitute sufficient “loss or detriment” to justify an award of compensatory damages.\nIn Herber v. Johns-Manville Corp., 785 F.2d 79 (3d Cir.1986), a ease brought by a plaintiff with pleural thickening, we ruled that under New Jersey law a plaintiff need only demonstrate “slight impact and injury ... to warrant recovery for emotional distress caused by fear.” Id. at 85; see Sullivan v. Combustion Eng’g, 248 N.J.Super. 134, 590 A.2d 681, 683 (Ct.App.Div.) (citing Herber with approval), cert. denied, 126 N.J. 341, 598 A.2d 897 (1991). Thus, even assuming Dunn does not suffer from asbestosis, the jury was free to conclude that notwithstanding OCF’s evidence of Dunn’s physical activity, the physical impact of Dunn’s pleural plaques caused enough harm to warrant recovery, particularly when combined with the anxiety associated with the fear of cancer. See McCleary v. Armstrong World Indus., Inc., 913 F.2d 257, 258 (5th Cir.1990) (upholding under Texas law jury verdict in asbestos case where plaintiff suffered from “pleural fibrosis”); Dartez v. Fibreboard Corp., 765 F.2d 456, 468 (5th Cir.1985) (accumulation of asbestos fibers in lungs sufficient injury under Texas law to support claim for fear of cancer).\n2. Excessiveness of the Remitted Compensatory Damages Award\nOCF asks this court for further re-mittitur of the district court’s compensatory damages award, arguing that comparison to awards in similar cases and that lack of proof of special damages demonstrate the exces-siveness of the remitted $500,000 compensatory award. Admittedly, $500,000 is generous, but it certainly is not the highest award of its kind, see App. at 1842, 1843,1918, 1919, 1921, and does not shock our judicial conscience. Given our deferential scope of review, see Gumbs, 823 F.2d at 771, we con-elude that the district court did not abuse its discretion in granting a remittitur to $500,-000.\nB.\nEVIDENTIARY ISSUES\n1. Testimony of Dunn’s Expert Witness\nOCF argues that both the punitive and compensatory damages awards should be reversed because of the district court’s eviden-tiary rulings under Federal Rule of Evidence 702. This court reviews evidentiary rulings under Rule 702 for abuse of discretion. See United States v. Leo, 941 F.2d 181, 188 (3d Cir.1991). We have explained that “[ejrror may not be predicated upon a ruling which admits or excludes evidence unless a substantial right of the party is affected....” Fed.R.Evid. 103(a); see also Linkstrom v. Golden T. Farms, 883 F.2d 269, 269 (3d Cir.1989). We “will interpret possible helpfulness to the trier of fact broadly and will favor admissibility in doubtful cases.” Linkstrom, 883 F.2d at 270; see also American Technology Resources v. United States, 893 F.2d 651, 655 (3d Cir.) (helpfulness standard interpreted broadly), cert. denied, 495 U.S. 933, 110 S.Ct. 2176, 109 L.Ed.2d 505 (1990); Breidor v. Sears, Roebuck & Co., 722 F.2d 1134, 1139 (3d Cir.1984) (“Lhjelpfulness is the touchstone of Rule 702”).\nWe have previously expressed our view that in most cases “ ‘[t]he jury is intelligent enough, aided by counsel, to ignore what is unhelpful in its deliberations,’ ” and noted that “ ‘even when jurors are well equipped to make judgments on the basis of their common knowledge and experience, experts may have specialized knowledge to bring to bear on the same issue which would be helpful.’ ” In re Japanese Elec. Prods. Antitrust Litig., 723 F.2d 238, 279 (3d Cir.1983) (quoting 3 J. Weinstein & M. Berger, Weinstein’s Evidence ¶¶702[03], 702[02]), rev’d on other grounds, 475 U.S. 574 (1986). Finally, “to the extent that [OCF implies] that expressions of opinion on the ultimate fact in issue somehow impermissibly invade the province of the jury, it is inconsistent with the clear mandate of Rule 704.” Id. (citation omitted).\nWith these general principles in mind we address the issues raised by OCF. Dunn’s principal expert witness, Dr. Egilman, is an M.D. who specializes in occupational medicine, i.e., the diagnosis and treatment of problems related to exposure to chemicals or other substances. App. at 131. The record reveals that Dr. Egilman takes referrals from companies to evaluate workers for illnesses that have occurred in the workplace. App. at 138. Dr. Egilman also conducts medical surveillance for companies to determine whether employees may be unduly exposed to toxic substances. App. at 139. Finally, he assists companies in analyzing information to determine whether or not substances used are harmful. When harmful substances are encountered, he instructs these companies as to\nhow they should be properly handled, how workers should be educated about how to work with them so they won’t get hurt, how warnings should be put on them and, in some cases, how the community physicians need to be informed.\nApp. at 139.\nOCF claims that it was improper for Dr. Egilman to comment from his review of OCF’s corporate records that OCF knew of the risks associated with exposure to asbestos. App. at 619. In light of our broad view of the “helpfulness” standard of Rule 702 and Dr. Egilman’s particular experience in working directly with employers on issues of this general concern, we find no abuse of discretion as to the admission of this testimony under Rule 702.\nOCF also challenges the admission of Dr. Egilman’s testimony that\nbased on what they [OCF] knew in the 40’s and 50’s, what they could have known and didn’t know, they clearly did not meet the obligation of the standard that they knew and presented in this memo in 1941.\nApp. at 316.\nThe document referred to in Dr. Egil-man’s testimony is a 1941 OCF memorandum discussing whether “Fiberglas,” then a new material, could be safely offered to industry. The OCF memorandum states that “those who are engaged in the manufacture of Fiberglas [sic] necessarily must have reassured themselves about the health aspects of the material before offering it for sale—for two reasons”: first, from a “humanitarian point of view, no company can afford to subject its employees to an unknown hazard” and second, from “a cold business view,” because of concern about liability from users. App. at 2150A-E. The memo then discusses in depth research into the potential health hazards of fiberglass. Thus, Dr. Egilman’s testimony expressed his own belief that OCF’s conduct with respect to Kaylo did not meet its own self-imposed standard. Again, such commentary was not so inappropriate that we must hold that the district court abused its discretion in admitting this testimony.\nOCF also argues that it was improper for Dr. Egilman to state his conclusion that OCF was “the last company to put warnings” on its asbestos product and that those warnings did not appear on OCF materials until 1972. App. at 316. We agree with OCF. The jury did not need expert opinion to evaluate when OCF put warning labels on its Kaylo product.\nNevertheless, we conclude that such error was harmless. In particular, we note the testimony of Dunn, App. at 870-74, and his product identification witness, Mr. McComely Bully, App. at 6B1-32, that they did not recall seeing warning labels on the Kaylo boxes. In addition, OCF vigorously disputed Dr. Egilman’s contention during the trial, see App. at 1235-39, and was not substantially prejudiced by this isolated remark.\nThe admissibility of particular expert testimony must be evaluated on review in the context of the entire case. For that reason, cases from other circuits on which OCF relies are not very helpful. Thus, for example, in Andrews v. Metro N. Commuter R.R. Co., 882 F.2d 705, 708 (2d Cir.1989), cited by OCF, the court vacated the plaintiffs jury verdict in part because the expert testimony referred to facts that were not in evidence and expressed his belief that the railroad was negligent, a patently improper statement. See Fed.R.Evid. 704 advisory committee’s notes (improper for expert to tell jury what result to reach). In contrast, OCF does not contend that Dr. Egilman referred to facts not in evidence. Moreover, we do not view Egilman’s testimony as telling the jury the ultimate result to reach. Cf. McGowan v. Cooper Indus., Inc., 863 F.2d 1266, 1272 (6th Cir.1988) (approving district court’s exclusion of expert’s proposed testimony, which included conclusion that defendant was negligent). We will not reverse the verdict based on his testimony.\n2. The Hemeon Report\nOCF also contends that it was reversible error for the district court to admit the Asbestos Textile Institute’s unpublished He-meon Report. Specifically, OCF argues that the report was irrelevant under Federal Rule of Evidence 402 and that its prejudicial impact outweighed its probative value, warranting exclusion under Federal Rule of Evidence 403.\nRulings under Rule 403 are reviewed for abuse of discretion, see In re Japanese Elec. Prods. Litig., 723 F.2d at 260, and, as we noted in our recent opinions, so are relevancy determinations under Rule 402. See Pfeiffer v. Manion Center Area Sch. Dist., 917 F.2d 779, 781 (3d Cir.1990); Anderson v. Pittsburgh—Des Moines Corp., 893 F.2d 638, 641 (3d Cir.1990).\nThe Hemeon Report questioned whether the then-generally acknowledged threshold limit value for levels of exposure to asbestos provided assurances of safety. Pri- or to this report, both the 1938 Dreessen study, prepared under the direction of the Surgeon General, and the 1946 FleisherDrinker study indicated that asbestosis would not result if asbestos dust were kept below 5 million particles per cubic foot of air. In 1946, the American Conference of Government Industrial Hygienists promulgated a threshold limit value of 5 million particles per cubic foot, which became widely accepted.\nAccording to comment j of the Restatement section 402A, a manufacturer is liable for danger of which the manufacturer “has knowledge, or by application of reasonable, developed human skill and foresight, should have knowledge.\" Restatement (Second) of Torts § 402A cmt. j (1965) (emphasis added). The comment to section 12 of the Restatement further states, in relevant part:\n“[SJhould know” implies that the actor owes another the duty of ascertaining the fact in question_ “Should know” indicates that the actor is under a duty to another to use reasonable diligence to ascertain the existence or non-existence of the fact in question and that he would ascertain the existence thereof in the proper performance of that duty.\nId. at § 12 emt. a. Dunn argued that the Hemeon report was admissible as evidence of what OCF should have known concerning the dangers associated with exposure to asbestos.\nWe find persuasive the analysis of the Second Circuit in George v. Celotex Corp., 914 F.2d 26, 28-31 (2d Cir.1990), where the court held that the district court did not abuse its discretion in admitting the Hemeon Report in an asbestos case against Celotex Corporation, a company which, like OCF, was not a member of the Asbestos Textile Institute. As in this case, there was no evidence on the record in George to indicate that Celotex ever had access to the report. In applying New York strict liability law, which “ ‘generally follows the guidelines set forth in § 402A [of the Restatement],’ ” id. at 28 n. 1 (quoting Farina v. Niagara Mohawk Power Corp., 81 A.D.2d 700, 438 N.Y.S.2d 645, 646 (1981)), the court concluded that the report was relevant to show “what, if the jury so determined, Celotex reasonably should have known had it either conducted its own tests or been in contact with others in the industry ... that were testing.” Id. at 29. This rationale applies with equal strength here.\nWith respect to Celotex’s argument that the prejudicial impact of the report outweighed its probative value, the court concluded that “[a]ny prejudice to Celotex was derived from the Hemeon Report’s probative force and thus did not unfairly. prejudice Celotex.” Id. at 31. Once again, the same is true in this case. OCF argues that George is distinguishable because the court applied a “could have known” rather than a “should have known” standard in that case. However, we find no support for that subtle distinction in the George opinion.\nOCF refers us to Lohrmann v. Pittsburgh Corning Corp., 782 F.2d 1156 (4th Cir.1986) (applying Maryland law), and Murphy v. Owens-Illinois, Inc., 779 F.2d 340 (6th Cir.1985) (applying Tennessee law), cases in which the admissibility of the Hemeon report was not in issue. Instead, in these cases the courts merely upheld the respective district courts’ exclusion of certain other documents and testimony. Many of the asbestos cases are based on the same general body of industry documents, and the courts of appeals have tended to uphold the discretionary rulings, albeit different, of the trial courts. Compare Lohrmann, 782 F.2d at 1159-60 (holding that district court did not abuse its discretion in excluding documents gathered by Sumner Simpson, a former president of Raybestos Manhattan (now Raymark)), with King v. Armstrong World Indus., Inc., 906 F.2d 1022, 1025 (5th Cir.1990) (no abuse of discretion in admitting Sumner Simpson papers as they are “relevant to the issue of what knowledge was scientifically discoverable by the industry as a whole at a certain time”), cert. denied, - U.S. -, 111 S.Ct. 2236, 114 L.Ed.2d 478 (1991).-\nIn light of the relevance of the Hemeon Report to what OCF “should have known” concerning the dangers associated with asbestos, and the absence of unfair prejudice to OCF, we find no abuse of discretion in its admission.\nIV.\nCONCLUSION\nFor the foregoing' reasons we will affirm the district court’s order denying OCF’s motion for Judgment NOV and remitting the compensatory damage award to $500,000.\n. The parties stipulated that from 1953 through 1972, Kaylo contained an average of 15 percent asbestos. App. at 963, 1068.\n. In light of the evidence in this case we need not decide the effect of Marinari on our earlier decision in Howell v. Celotex Corp., 904 F.2d 3, 5 (3d Cir.1990), that under Pennsylvania law the determination of whether pleural thickening constitutes compensable injury is for the trier of fact.\n. In Jackson v. Johns-Manville Sales Corp., 781 F.2d 394 (5th Cir.) (in banc), cert. denied, 478 U.S. 1022, 106 S.Ct. 3339, 92 L.Ed.2d 743 (1986), the court stated:\n[Plaintiff's] fear is plainly a present injury. It is a fear which he experiences every day and every night. It is a fear which is exacerbated each time he learns that another victim of asbestos has died of lung cancer. It is fear which, regardless of whether [plaintiff] actually gets cancer, will haunt him for the rest of his life.\nId. at 414 (footnote omitted). These words are equally applicable to Dunn.\n. OCF argues that the size of the jury's initial $1.3 million award alone indicates passion or bias requiring a new trial. We disagree. Other juries have awarded such sums in similar cases, see, e.g., App. at 1843 ($1,091 million awarded to plaintiff with asbestosis), and we find nothing in the record suggesting bias or prejudice.\n. This rule permits expert testimony, \"[i]f scientific, technical or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue....” Fed.R.Evid. 702. The commentary to this rule further explains: “The rule ... recognizes that an expert on the stand may give a dissertation or exposition of scientific or other principles relevant to the case, leaving the trier of fact to apply them to the facts.\" Id. at advisory committee’s note.\n. Rule 704 states in pertinent part:\n(a) Except as provided in subsection (b), testimony in the form of an opinion or inference otherwise admissible is not objectionable because it embraces an ultimate issue to be decided by the trier of fact.\nFed.R.Evid. 704.\n. OCF also challenges Dunn's follow-up question, which asked whether that statement represented Dr. Egilman’s \"opinion to a reasonable medical probability as a health hazard consultant to industry.” App. at 316. We view this question as nothing more than Dunn's attempt to underscore Dr. Egilman's qualifications. Even assuming that the question was improper, OCF did not object to it, and we do not find it so prejudicial as to constitute plain error.\n. Under Rule 403,\n[although relevant, evidence may be excluded if its probative' value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence.\nFed.R.Evid. 403.\n. The Hemeon Report contains no prejudicial exhortations of the type that. characterized the testimony which the court of appeals found \"highly prejudicial” in Murphy. 779 F.2d at 344.", "type": "majority", "author": "SLOVITER, Chief Judge."}, {"text": "WEIS, Circuit Judge,\ndissenting.\nConcerns about a limited fund in some respects must color a court’s consideration of compensatory damage verdicts as well as punitive damage awards. Just as imposition of inequitable exemplary damages diminish the assets that should be available for future claimants, so do excessive compensatory awards. A sense of fairness requires that trial and appellate court reviews of jury verdicts incorporate some necessarily rough equality of treatment for similarly injured individuals. Absolute equality is impossible, but in a broad range some attempt to temper aberrations is appropriate.\nIt is apparent that in this case the compensatory verdict of $1.3 million was grossly excessive. Recognizing that the trial judge reduced the award, I would nevertheless reduce it somewhat further.\nThe plaintiff specifically disavowed any claims for present or future wage losses. Indeed, he relied on these limitations on recovery in objecting successfully to defense cross-examination about his current employment.\nThe extent of the plaintiffs disability was hotly contested and the expert testimony sharply conflicting. As might be expected, the medical experts disagreed on the state of the plaintiffs health. Lacking medical backgrounds, the jurors, therefore, were left to choose between the differing evaluations prepared in anticipation of trial.\nThere was, however, documentary evidence in the case that was not consciously prepared for use at the trial. That evidence provides an assessment of the plaintiffs health that does not support the existence of the extensive injury on which the jury must 'have rested its large award.\nThe plaintiff was admitted for surgeries on his knee and shoulder during the spring of 1990, approximately six months before the trial began in November of 1990. The records of the surgeon and hospital in Texas are not concerned with whether the plaintiff was suffering with asbestosis, but they do give a revealing picture of Mr. Dunn’s general health at the time.\nThe reports of the attending surgeon, Dr. Orth, describe the plaintiffs athletic activities including running, rowing, swimming, and weight lifting. The physician’s notes comment that “[h]e has had to give up running recently because of swelling in his left knee” and would “like to have arthroscopic evaluation to see how the interior of his knee stood in arthritic fashion, and to determine what his future athletic activities should include.”\nTwo months before the trial began, the doctor, in the last of his notes, wrote that the plaintiff had “been very busy in his work, doing a substantial amount of activities. He states that occasionally he will have to do some heavy work.”\nThe impression gained from these rather extensive records is of a man who was, and intends to be, more physically active than most men of his age. That picture is not one of an individual who has such a substantial injury and disability as to justify the large verdict awarded here.\nWhen this evidence is considered, along with testimony that the plaintiff was able to work, was gainfully employed at the time of trial, and made no claim for future loss of earnings, the excessiveness of the verdict becomes clear. On the record here, it seems to me that the trial judge’s reduction of the $1.3 million verdict to $500,000 was not enough. I would reduce the verdict even further to $100,000, a sum which is substantially in excess of the average jury award or settlement figure for injuries of the nature that the plaintiff claims.\nI, therefore, dissent from the majority’s affirmance of the judgment entered by the trial judge on the compensatory award.", "type": "dissent", "author": "WEIS, Circuit Judge,"}], "attorneys": ["Barry S. Simon (argued) and Paul Mogin, Williams & Connolly, Washington, DC, for appellant.", "Joel H. Holt (argued), Christiansted, VI and Paul S. Minor, Minor & Guice, Biloxi, MS, for appellee."], "corrections": "", "head_matter": "William DUNN; Hess Oil Virgin Islands Corp. v. HOVIC; Amerada Hess Corp.; Keene Corporation v. The LITWIN CORPORATION; Litwin PanAmerican; Borinquen Insulation Co. Owens-Corning Fiberglas Corporation, Appellant.\nNo. 91-3837.\nUnited States Court of Appeals, Third Circuit.\nArgued April 22, 1992.\nDecided July 27, 1993.\nBarry S. Simon (argued) and Paul Mogin, Williams & Connolly, Washington, DC, for appellant.\nJoel H. Holt (argued), Christiansted, VI and Paul S. Minor, Minor & Guice, Biloxi, MS, for appellee.\nBefore: SLOVITER, Chief Judge, MANSMANN and WEIS, Circuit Judges."} | SLOVITER | MANSMANN | WEIS | 1 | 2 | 1 | 1 | 0 | 0 | 1 F.3d 1362 | [
{
"content": "You are an expert legal coding assistant trained to classify U.S. federal Courts of Appeals\ncases using an adaptation of the Supreme Court Database (SCDB_2023_01) codebook. You follow the coding procedure\nin the codebook step by step and use the precise definitions of terms presented in the code... |
10,517,656 | William DUNN; Hess Oil Virgin Islands Corp. v. HOVIC; Amerada Hess Corp.; Keene Corporation v. The LITWIN CORPORATION; Litwin PanAmerican Corp.; Borinquen Insulation Co. Owens-Corning Fiberglas Corporation, Appellant | Dunn v. HOVIC | 1993-07-27 | No. 91-3837 | United States Court of Appeals for the Third Circuit | {"judges": ["Before: SLOVITER, Chief Judge, MANSMANN and WEIS, Circuit Judges.", "Before: SLOVITER, Chief Judge, BECKER, STAPLETON, MANSMANN GREENBERG, HUTCHINSON, SCIRICA, COWEN, NYGAARD, ALITO, ROTH, LEWIS and WEIS, Circuit Judges."], "parties": ["William DUNN; Hess Oil Virgin Islands Corp. v. HOVIC; Amerada Hess Corp.; Keene Corporation v. The LITWIN CORPORATION; Litwin PanAmerican Corp.; Borinquen Insulation Co. Owens-Corning Fiberglas Corporation, Appellant."], "opinions": [{"text": "OPINION OF THE COURT\nSLOVITER, Chief Judge.\nPreliminary Note\nBefore us is the appeal of Owens-Corning Fiberglas Corporation (OCF) from the judgment of the district court of the Virgin Islands awarding William Dunn $500,000 in compensatory damages and $2 million in punitive damages. A panel of this court heard argument on OCF’s appeal on April 22, 1992 and issued an opinion affirming the compensatory damages award and remitting the punitive damages award to $1 million. Thereafter, the court granted OCF’s petition for rehearing in banc, limited to the punitive damages issue. The panel’s original opinion on the compensatory damages issue, modified in minor respects to reflect the recent procedural events, is refiled contemporaneously with this opinion.\nIn its petition for rehearing and at oral argument before the in banc court, OCF directed its argument to its contention that multiple awards of punitive damages in asbestos-related injury cases should be prohibited as a matter of Virgin Islands law or federal due process. Accordingly, this opinion essentially restates the opinion of the panel on the issues of the sufficiency of the evidence, Dunn’s closing argument, and the jury charge, but contains a more extended discussion of OCF’s challenge to the exces-siveness of punitive damage awards in asbestos cases.\nI.\nSUFFICIENCY OF THE EVIDENCE FOR A PUNITIVE DAMAGES AWARD\nThe availability of punitive damages is ordinarily determined by the local law of the relevant jurisdiction, in some instances by statute and in other instances by legal principles developed by courts. Under the Virgin Islands Code:\nThe rules of the common law, as expressed in the restatements of the law approved by the 'American'Law Institute and to the extent -not so expressed, as generally understood and applied in the United States, shall be the rules of decision in the court of the Virgin Islands in cases to which they apply, in the absence of local laws to the contrary.\nV.I.Code Ann. tit. 1, § 4 (1967). Thus we turn to the Restatement for the prevailing standard.\nSection 908(2) of the Restatement (Second) of Torts provides that “[pjunitive damages may be awarded for conduct that is , outrageous, because of the defendant’s evil motive or his reckless indifference to the rights of others.” In applying this section, we have previously stated that such conduct must be shown by clear and convincing evidence. Acosta v. Honda Motor Co., 717 F.2d 828, 839 (3d Cir.1983). OCF argues that the evidence was insufficient to support the award of punitive damages or, in the alternative, that the verdict went against the clear weight of the evidence, requiring a new trial on whether punitive damages are appropriate.\nIn support of its argument, OCF points to evidence tending to show that prior to its decision to place warning labels on Kaylo boxes, the prevailing industry belief was that asbestos insulation products were safe. See App. at 1522-24. OCF argues that its Kaylo product was considered an improvement over prior insulation products because it contained a lower percentage of asbestos. It points to an independent study conducted by Union Carbide between 1961 and 1963 which concluded that Kaylo, unlike Johns-Manville and Philip Carey products, could be safely used within the 5 million particles per cubic foot threshold limit value (TLV) established by the American Conference of Governmental Industrial Hygienists in 1946. See App. at 1355-72, 2287-97.\nNevertheless, we conclude that Dunn presented more than sufficient evidence from which a jury could conclude that OCF acted “with reckless indifference” in failing to place adequate warnings on its Kaylo product. Dunn’s evidence revealed the following: In the early 1940s, insulation workers threatened to demand higher wages when using OCF’s fiberglass material because of perceived health threats. See App. at 725-26. In response to this threat, Edward Ames, OCF’s public relations officer and an assistant to its president, developed a plan to resolve this problem. As Ames explained, OCF had learned by this time that exposure to asbestos fibers could cause asbestosis. App. at 726.\nIn a memorandum to OCF’s president and executive vice-president dated January 7, 1942, Ames made the following recommendation to inform workers of the extent of the hazard posed by asbestos-containing materials:\nGather as a weapon-in-reserve an impressive file of photostats of medical literature on asbestosis. Available are two bibliographies covering medical literature to 1938, citing references to scores of publications in which the lung and skin hazards of asbestos are discussed. This file would cover five or six hundred pages....\nApp. at 2151. This memorandum suggested that if OCF was unsuccessful in convincing union officials of the benefits of fiberglass as opposed to other asbestos-containing insulation products, then this “asbestosis weapon-in-reserve” would be sent to union workers to “let them stew.” App. at 2152.\nWhen asked if OCF’s then-president, Harold Boeschenstein, knew that asbestos products might pose a hazard to the lungs, Ames answered, “Mr. Boeschenstein knew everything.” App. at 727. In addition, OCF’s attorney thought that Ames’s plan was “a germ of a major strategy” and approved compiling an asbestosis file. App. at 729.\nIn 1943 Ames wrote another memorandum in which he criticized a proposal for adding asbestos to fiberglass, see App. at 732-33, writing:\nIn formulating our policy on admixtures with asbestos, we should keep on the alert because otherwise we will run the risk of smearing fiberglas [sic] with the hazards of exposure to asbestos.\nFabrication of asbestos (in both textile and pre-textile form) is a dusty process, and exposure to asbestos fly involves the danger of asbestosis, a pathological lung condition ... minimized by the use of hoods and ... respirators.\nApp. at 2154.\nIn 1944 Ames received a letter from a physician informing OCF that a patient of his, who had worked as an insulator, had developed asbestosis from exposure to insulation products. The letter stated in pertinent part:\npipe coverer handling ... asbestos ... products on industrial insulation jobs [was] suffering from asbestosis, a condition that results from exposure to asbestos dust. The disease is a well recognized form of lung pathology that manifests itself in a diminution of lung capacity resulting in dyspnea or shortness of breath.\nApp. at 2155.\nOCF began distributing Kaylo products in 1953, and from 1958 until 1972 manufactured Kaylo insulation. App. at 1068. In the 1950s, Dr. Garret Schepers, head of the Sar-anac Laboratory in New York, warned OCF that Kaylo contained material that would be hazardous to human beings. App. at 1018. Dr. Schepers also wrote two letters to Dr. M.D. Burch, director of personnel and industrial relations at OCF at the time, advising him that “asbestos is fairly well incriminated as a carcinogen,” App. at 2198, and that asbestos dust caused fibrosis. App. at 2207. Despite these warnings, OCF published brochures which repeatedly represented Kaylo as “non-toxic.” App. at 2209, 2210, 2211, 2212, 2215. In addition, OCF touted Kaylo’s “ease of application,” see App. at 2211, and its “pleasant handling characteristics.” App. at 2212. These brochures contained no warning of potential hazards.\nA 1960 study of one of OCF’s Kaylo manufacturing plants revealed that excessive asbestos dust exposure resulted from simply packing Kaylo into boxes. App. at 220-22. In 1963 the head of OCF’s product development laboratory informed various corporate officers around the country that “[a]sbestos (as found in Kaylo) when breathed into the lungs causes asbestosis which often leads to lung cancer.” App. at 2221. In 1964 the National Insulation Manufacturers Association, of which OCF’s representative was a director, noted that Johns Manville had decided to place warnings on its asbestos prod-' ucts. App. at 2225. OCF, however, declined to do so, see App. at 2229, even though it knew that insulators had a six to seven times greater incidence of lung cancer than the general male population. App. at 2226.\nIn early 1965, Dr. F.H. Edwards of OCF wrote to OCF’s medical director as well as other corporate officials urging that serious consideration be given to labelling Kaylo products since “the amounts requested [by claimants] are usually sizeable.” App. at 2229. Dr. Edwards reiterated this suggestion in a memorandum dated August 6, 1966 in which he also acknowledged that “[i]t is impossible to guess the amount of dust created by the cutting, sawing, etc. of Kaylo. There are too many local factors involved.” App. at 2230-31. Although OCF claimed that by December 1966 it had placed warning labels on its products, see App. at 1230, Dunn testified that he did not see warning labels on any of the cartons holding Kaylo that he observed in the Virgin Islands. App. at 870, 873. This testimony was echoed by McComely Bully, one of Dunn’s co-workers at HOVIC. See App. at 623-34, 646. OCF did not offer the testimony of any HOVIC worker to the contrary.\nDr. Egilman testified about the medical literature available at the time concerning the potential harm of exposure to asbestos dust. He noted that in the 1930s medical literature questioned the health effects of exposure to asbestos by insulators, particularly if the dust could be seen. App. at 167-71. In 1947 the confidential Hemeon Report was issued to the Asbestos Textile Institute, of which OCF has never been a member. This report questioned whether the then-generally acknowledged TLV for levels of exposure to asbestos provided “complete assurance[s]” of “thorough! ] safefty].” App. at 2181. Finally, Dr. Egilman testified about a 1949 article in the Journal of the American Medical Association which recognized that asbestos workers were at risk of developing cancer. App. at 233. In his opinion, that article “established] that the general medical community was aware of the fact that asbestos caused cancer.” App. at 233.\nIn light of this evidence, we agree with the recent conclusion of the Virginia Supreme Court that\n[t]he jury may have concluded ... that Owens-Corning knew that inhalation of dust from its Kaylo product could cause lung disease in humans, that it actively concealed this danger, and it did not warn insulators of this hazard....\nOwens-Corning Fiberglas Corp. v. Watson, 243 Va. 128, 413 S.E.2d 630, 642 (1992). The jury could reasonably have found that OCF acted with “reckless indifference to the rights of others” in this case, Restatement (Second) of Torts § 908(2) (1977), and thus, the district court appropriately denied OCF’s motion for JNOV and did not abuse its discretion in refusing to grant unconditionally the motion for a new trial.\nII.\nDUNN’S CLOSING ARGUMENT\nOCF claims that it was denied a fair trial on the issue of punitive damages because of several remarks made by Dunn’s counsel during closing arguments to the jury. Specifically, OCF argues that the following remarks or actions were improper: (1) the argument that the jury should return a large punitive award to force OCF to stop defending asbestos cases, see App. at 1761; (2) the suggestion by Dunn’s counsel that counsel for OCF lied to the jury, see App. at 1755; (3) the argument that the jury should award punitive damages as a reward to Dunn for bringing this lawsuit, see App. at 1756; (4) the request that the jury draw an analogy to the criminal fine imposed on Michael Milken earlier that week, see App. at 1758-59; and (5) the appeal to the jury’s local prejudice against “this big multi-national company.” See App. at 1762.\nAt the outset, we note that there are aspects of the plaintiffs closing argument that we believe crossed the line between acceptable advocacy and imprudent zeal. However, our disapproval of portions of the closing is not enough to warrant reversal on that ground. We note that OCF failed to make a timely objection with respect to the statements referred to in (1), (3) and (5) above, and thus has waived its challenge to these statements on appeal. See Woods v. Burlington N.R.R., 768 F.2d 1287, 1292 (11th Cir.1985) (per curiam) (when party fails to object to improper closing argument, court of appeals only “retain[s] the authority to review for plain error[, the exercise of which] is seldom justified in reviewing argument of counsel in a civil case”), rev’d on other grounds, 480 U.S. 1, 107 S.Ct. 967, 94 L.Ed.2d 1 (1987); Hyman v. Life Ins. Co., 481 F.2d 441, 444 (5th Cir.1973) (same); see also DeRance, Inc. v. PaineWebber, Inc., 872 F.2d 1312, 1326 (7th Cir.1989) (motion for mistrial on grounds of improper closing argument did not preserve issue for appeal when motion lacked requisite specificity).\nAlthough OCF did preserve its claims with respect to points (2) and (4), in general “the trial judge is in a better position than an appellate court to determine whether remarks of counsel are prejudicial,” Herman v. Hess Oil Virgin Islands Corp., 524 F.2d 767, 772 (3d Cir.1975), and “at least for civil trials, ... improper comments during closing arguments rarely rise to the level of reversible error.” Littlefield v. McGuffey, 954 F.2d 1337, 1346 (7th Cir.1992) (internal quotation omitted); see Lewis v. Penn Cent. Co., 459 F.2d 468, 470 (3d Cir.1972), (trial judge has broad discretion in determining whether counsel’s closing remarks were proper).\nHere, the district court concluded that the remarks about corporate lies “are not improper in a summation regarding punitive damages,” Dunn v. Owens-Corning Fiberglass, 774 F.Supp. 929, 949, relying on the trial court’s statement in Herman that “[i]n attempting to convince a jury that a defendant’s conduct was outrageous and should be punished, an advocate must go beyond the kind of argument necessary to establish ordinary negligence.” 379 F.Supp. 1268, 1276 (D.V.I.1974) (footnote omitted), aff'd, 524 F.2d 767 (3d Cir.1975); see also Arnold v. Eastern Air Lines, Inc., 681 F.2d 186, 197-98 (4th Cir.1982) (permissible range in punitive damage arguments is wide and inescapably volatile), cert. denied, 460 U.S. 1102, 103 S.Ct. 1801, 76 L.Ed.2d 366 (1983), rev’d in part on other grounds, 712 F.2d 899 (4th Cir.1983) (in banc), cert. denied, 464 U.S. 1040, 104 S.Ct. 703, 79 L.Ed.2d 168 (1984).\nOCF relies on Draper v. Airco, Inc., 580 F.2d 91 (3d Cir.1978), to support its claim that Dunn’s reference to “corporate lies” constituted reversible error. However, that case is distinguishable. In Draper,\n[c]ounsel for the plaintiff ... committed the following improprieties: (1) he attempted to prejudice the jurors through repeated inappropriate references to the defendants’ wealth; (2) he asserted his personal opinion of the justness of his client’s cause; (3) he prejudicially referred to facts not in evidence; and (4) without provocation or basis in fact, he made several prejudicial, vituperative and insulting references to opposing counsel.\nId. at 95. The remarks of Dunn’s counsel, while arguably intemperate, did not approach the unprofessional and prejudicial conduct of the attorney in Draper; the reference to lies told in the courtroom hardly qualifies as a “vituperative and insulting”, reference to counsel for OCF. When read in context, Dunn’s counsel’s argument regarding'“corporate lies” referred to statements made by OCF and its witnesses, not its attorneys.\nOur review of Dunn’s closing argument reveals that his counsel referred to Milken to stress the point that OCF as a wrongdoer should be punished. Punishment is one of the goals of punitive damages. See Restatement (Second) of Torts § 908 cmt. a (1977). The district court was in the best position to assess any potential prejudicial impact of this reference. In light of the evidence presented as to OCF’s conduct and the closing argument as a whole, wé cannot conclude that the district court abused its discretion in not providing a curative instruction or in declining to order a mistrial.\nIII.\nJURY CHARGE\nOCF claims that the jury charge was defective both under Virgin Islands law and the federal constitution for failing adequately to explain how to determine the amount of the punitive damages.\nA. Virgin Islands Law\nOCF argues that the court’s instruction was inadequate under Virgin Islands law because it did not inform the jury of the relevance of plaintiffs actual injuries in calculating punitive damages. We need not decide whether Virgin Islands law requires such an instruction, because OCF failed to make a timely and specific objection challenging the charge as erroneous under Virgin Islands law. Thus, this issue was not properly preserved for appeal under Federal Rule of Civil Procedure 51. See Don Kemper Co. v. Beneficial Standard Life Ins. Co., 425 F.2d 221, 222 & n. 4 (3d Cir.1970); Bogacki v. American Mach. & Foundry Co., 417 F.2d 400, 407 (3d Cir.1969).\nOCF’s only suggestion that “[t]he amount of punitive damages must bear a reasonable relationship to the actual damages suffered by the plaintiff’ appeared in a proffered supplemental jury instruction, App. at 1497, which the district court did not consider because it was tendered after the cut-off for submitting instructions. See App. at 1592-94, 1605. In addition, despite being specifically informed by the district court at the time it proffered the supplemental instruction that “[ajfter [the] charge [to] the jury, you’ll have a chance to make any exceptions you want to the charge,” App. at 1594, OCF nevertheless failed to challenge the charge as deficient under Virgin Islands law after the charge was given. OCF’s post-charge objections were limited to constitutional grounds, see App. at 1778, 1779, 1783, and the district court responded to OCF’s objection on those grounds only. See App. at 1781, 1783; see also Hoffman v. Sterling Drug, Inc., 485 F.2d 132, 139 n. 22 (3d Cir.1973) (rejecting under Rule 51 appeal where defendant objected to charge on one ground but sought to appeal on another).\nAs we have noted in the past, the purpose of Rule 51 is to “ ‘afford the trial judge an opportunity to correct the error in h[er] charge before the jury retires to consider its verdict’ and to lessen the burden on appellate courts by diminishing the number of rulings at the trial which they may be called on to review.” McAdam v. Dean Witter Reynolds, Inc., 896 F.2d 750, 769 n. 29 (3d Cir.1990) (quoting Porter v. American Export Lines, Inc., 387 F.2d 409, 412 (3d Cir.1968)). In this ease, a curative instruction could have remedied any infirmity in the charge. OCF’s failure to make a specific objection to the court’s instruction under Virgin Islands law subverted the purpose of Rule 51, and we thus decline to review OCF’s objections to the charge on that ground. See United States v. Logan, 717 F.2d 84, 91 (3d Cir.1983) (absent objection, charge reviewed for plain error only); Trent v. Atlantic City Elec. Co., 334 F.2d 847, 859 (3d Cir.1964) (same).\nB. Constitutional Law\nOCF also argues that the charge was constitutionally infirm. It complains of the trial court’s alleged (1) inadequate instruction on the dual goals of punitive damages; (2) failure to instruct the jury that it must take into consideration the character and degree of the wrong as shown by the evidence; and (3) inadequate post-trial review.\nBefore turning to the merits of OCF’s constitutional challenge, we conclude that OCF failed to preserve the objection in (2) above under Rule 51. Following the jury charge, OCF objected that it was “unconstitutionally uninformed” because “it does not provide standards for the jury upon which to base an award of punitive damages.” App. at 1778. This general objection alone was not specific enough to inform the court how to provide clearer standards.\nOCF’s proposed jury instruction did hot contain language requiring the jury to consider the character and degree of the wrong to the plaintiff, see App. at 1636-38, and it never objected on that ground. The only objection we can find that remotely resembles the point now urged on appeal stems from OCF’s suggestion that the amount of punitive damages must bear a reasonable relationship to the amount of compensatory damages. See App. at 1783. This objection did not adequately -put the court on notice of the issue OCF now raises.\nAs the Court of Appeals for the Eighth Circuit recently stated in a similar case:\nAlthough [defendant] made a general objection that the court’s instructions on punitive damages violated the fourteenth amendment, [its] requested instruction did not elaborate any further on the standard for setting the amount of punitive damages. While we recognize that a party need not tender specific language if it has otherwise objected to an inadequacy in an instruction, we believe the overall record here shows that [defendant] did not comply with Fed.R.Civ.P. 51 by bringing to the court’s attention the need for the jury to consider the nature and degree of the wrong.\nRobertson Oil Co. v. Phillips Petroleum Co., 930 F.2d 1342, 1347 (8th Cir.1991) (footnote and citation omitted); see also McCleary v. Armstrong World Indus., Inc., 913 F.2d 257, 260 (5th Cir.1990). These words apply with equal force in this case, and thus we decline to review this point on appeal.\nTurning to the remainder of OCF’s constitutional objections to the charge, we look first to Pacific Mutual Life Insurance Co. v. Haslip, 499 U.S. 1, 111 S.Ct. 1032, 113 L.Ed.2d 1 (1991), where the Supreme Court held that the common-law method for assessing punitive damages is,not so inherently unfair as to deny due process and be per se unconstitutional. Id. at 15, 111 S.Ct. at 1043. The Court described the three-tier common-law method for assessing punitive damages as follows:\nUnder the traditional common-law approach, the amount of the punitive damage award is initially determined by a jury instructed to consider the gravity of the wrong and the need to deter similar wrongful conduct. The jury’s determination is then reviewed by trial and appellate courts to ensure that it is reasonable.\nId. at 15, 111 S.Ct. at 1042.\nIn its most recent pronouncement on punitive damages, TXO Production Corp. v. Alliance Resources Corp., — U.S. —, 113 S.Ct. 2711, 125 L.Ed.2d 366 (1993), the Court rejected the claim that “a $10 million punitive damages award—an award 526 times greater than the actual damages awarded by the jury—is so excessive that it must be deemed anarbitrary deprivation of property without due process of law.” Id. at —, 113 S.Ct. at 2718 (plurality opinion). As we interpret TXO, a plurality of the Court substantially adhered to the due process formulation first articulated in Haslip. Justices Scalia and Thomas, who concurred in the judgment, rejected the plurality’s position that there exists “a substantive due process right that punitive damages be reasonable,” — U.S. at —, 113 S.Ct. at 2726, and Justice Kennedy stated that the Constitution “does not concern itself with dollar amounts, ratios, or the quirks of juries in specific jurisdictions.” Id. at —, 113 S.Ct. at 2724 (Kennedy, J., concurring in part and concurring in the judgment). Absent further guidance from the Court, we will rely on Haslip’s majority opinion in assessing OCF’s due process challenge in this case. We note, however, that two of the concurring Justices characterized the procedures approved in TXO as “far less detailed and restrictive than those upheld in Haslip.” Id. — U.S. at —, 113 S.Ct. at 2727 (Scalia, J., with Thomas, J., concurring in the judgment).\nIn its analysis of the constitutionality of the punitive damages award in Haslip of more than $800,000, the Court eschewed drawing “a mathematical bright line between the constitutionally acceptable and the constitutionally unacceptable that would fit every case.” Id. at 15, 111 S.Ct. at 1043. The Court noted, however, that “general concerns of reasonableness and adequate guidance from the court when the case is tried to a jury properly enter into the constitutional calculus.” Id.\nThe Court looked first to the jury instruction and concluded that although it gave the jury “significant discretion,” the instruction nonetheless “enlightened the jury as to the punitive damages’ nature and purpose, identified the damages as punishment for civil wrongdoing of the kind involved, and explained that their imposition was not compulsory.” Id. at 16, 111 S.Ct. at 1044. Although the district court’s jury instruction in this case was not a word-for-word duplication of the charge in Haslip, it contained all of the elements identified by the Court in Has-lip. The instruction adequately conveyed that punitive damages are to punish the defendant and deter it and others from similar conduct in the future. See App. at 1777-78 (“it should be an award which stings [i.e., punishes] the defendant and will act as a deterrent to such conduct by the defendant in the future and a warning to others”). The district court also told the jury that it was not required to award punitive damages, and that such damages are “allowed only for wanton and reckless behavior ... [where] defendant’s conduct was outrageous because done with an evil motive or done with reckless indifference to the rights of others.” App. at 1776.,\nOther courts of appeals have approved similar jury charges as providing due process under Haslip. See Glasscock v. Armstrong Cork Co., 946 F.2d 1085, 1097 (5th Cir.1991), cert. denied, — U.S. —, 112 S.Ct. 1778, 118 L.Ed.2d 435 (1992); American Employers Ins. v. Southern Seeding Servs., Inc., 931 F.2d 1453, 1457-58 (11th Cir.1991). But see Mattison v. Dallas Carrier Corp., 947 F.2d 95, 105-06 (4th Cir.1991). While we acknowledge that the district court could have given the jury more guidance on the issue of punitive damages, we cannot conclude that the charge was constitutionally defective.\nThe second inquiry made by the Court in Haslip was whether the post-trial procedures ensure “meaningful and adequate review by the trial court whenever a jury has fixed the punitive damages.” 499 U.S. at 16, 111 S.Ct. at 1044. Of course, if a charge is fatally defective, it will not be cured by post-trial review. We have found no fatal defect. Nonetheless, the scope of both trial court and appellate review were significant features in the Court’s approval of the Haslip jury’s punitive damage award, and thus we consider those applicable here.\nIn Haslip, the Court noted that under the applicable Alabama precedent, the factors a trial court considers in scrutinizing a jury verdict for excessiveness of the damages are “the ‘culpability of the defendant’s conduct,’ the ‘desirability of discouraging others from similar conduct,’ the ‘impact upon the parties,’ and ‘other factors, such as the impact on innocent third parties.’ ” 499 U.S. at 16, 111 S.Ct. at 1044 (quoting Hammond v. City of Gadsden, 493 So.2d 1374, 1379 (Ala.1986)).\nUnder federal law as well, a district court reviews damages awards for excessiveness. See Kazan v. Wolinski, 721 F.2d 911, 914 (3d Cir.1983) (remittitur available only when “so large as to shock the conscience of the court”). The district court in this case appropriately applied this standard, see Dunn, 774 F.Supp. at 960, and indeed ordered a remittitur and provided reasons for that decision. OCF complains that the trial court did not review the jury award de novo, but only gave it substantial deference. The court stated that it would “ ‘remit the portion of the verdict in excess of the maximum amount supportable by the evidence.’ ” Id. (quoting Kazan, 721 F.2d at 914). Nothing in Haslip requires more.\nThe Court’s decision in TXO provides further support for our conclusion that the district court’s review of the jury verdict in this case satisfied due process. In that case, the Court rejected a due process challenge based on the alleged inadequacy of the trial judge’s review of the punitive damages award, even though the trial court failed to provide reasons for its denial of the petitioner’s JNOY and remittitur motions. See — U.S. at —, 113 S.Ct. at 2724.\nWe recognize that in Mattison v. Dallas Carrier Corp., 947 F.2d 95 (4th Cir.1991), the court held that the procedure applied under South Carolina law to punitive damages awards did not provide due process, and that Virgin Islands procedure is similar in that neither jurisdiction mandates a set of criteria-a jury must consider when calculating punitive damages. We are unpersuaded by Mattison. Instead, we agree with the holding in Glasscock, 946 F.2d at 1098-99, a diversity case involving Texas law, that federal post-trial review under Rules 50 and 59 and federal appellate review of a jury award provide sufficient constraint on a jury’s discretion to satisfy the requirements of due process. See also Eichenseer v. Reserve Life Ins. Co., 934 F.2d 1377, 1380-86 (5th Cir.1991) (same, in diversity case applying Missouri law).\nAlthough the court in Mattison concluded that the standards for calculating punitive damages awards were unconstitutionally vague, relying on Giaccio v. Pennsylvania, 382 U.S. 399, 86 S.Ct. 518, 15 L.Ed.2d 447 (1966), see Mattison, 947 F.2d at 102-03, this precise argument was rejected by the Court in Haslip, which distinguished Giaccio on the ground that it concerned the imposition of liability rather than the jury’s discretion in fixing the amount of damages or costs. 499 U.S. at 16 n. 12, 111 S.Ct. at 1046 n. 12. Furthermore, we deem it significant that under Virgin Islands law (as under South Carolina law) a plaintiff must establish liability for punitive damages by clear and convincing evidence, a higher burden than under the -Alabama scheme upheld in Haslip, which only required proof by a preponderance of the evidence. See id. at 19 n. 11, 111 S.Ct. at 1046 n. 11 (specifically declining to hold that due process required a greater standard of proof).\nFinally, we underscore the “fact intensive nature of the due process analysis articulated in Haslip.” Eichenseer, 934 F.2d at 1386; see also TXO, — U.S. at —, 113 S.Ct. at 2720 (“[Punitive damages] awards are the product of numerous, and sometimes intangible, factors; a jury imposing a punitive damages award must make a qualitative assessment based on a host of facts and circumstances unique to the particular case before it.”) (plurality opinion).\nIn this case, after the district court reviewed the record and determined that the evidence supported a finding of willfulness and wantonness on OCF’s part, see Dunn, 774 F.Supp. at 948-49, it considered OCF’s net worth, the relationship between the size of the compensatory award and its remitted punitive damages award, and the size of such awards in other eases in determining that remittitur was appropriate. See id. at 951. This independent review led the court to conclude that a $2 million dollar award would both act as an adequate punishment and deterrent. These factors considered in post-trial review were approvingly referred to in Haslip, and serve as an effective counterpoint to the wide discretion given the jury.\nThe third check referred to by the Haslip Court on the jury’s or trial court’s discretion was the Alabama Supreme Court’s review of punitive awards. We will perform an analogous function in the next section. The Constitution requires no more.\nIV.\nEXCESSIVENESS OF THE PUNITIVE DAMAGES AWARDED\nOCF’s remaining contentions are directed to the allegedly excessive amount of punitive damages awarded. OCF first argues that the jury award was the result of passion, prejudice, or bias, and that the district court should have ordered a new trial unconditionally rather than conditioning the grant of a new trial on Dunn’s acceptance of a remitted damages award. Of course, if OCF had shown that the jury verdict resulted from passion or prejudice, a new trial, rather than a remittitur, would have been the proper remedy. See Mason v. Texaco, Inc., 948 F.2d 1546, 1561 (10th Cir.1991), cert. denied, — U.S. —, 112 S.Ct. 1941, 118 L.Ed.2d 547 (1992); Westbrook v. General Tire & Rubber Co., 754 F.2d 1233, 1241 (5th Cir.1985); Brown v. McBro Planning & Dev. Co., 660 F.Supp. 1333, 1337 (D.V.I.1987); Schreffler v. Board of Educ., 506 F.Supp. 1300, 1308 (D.Del.1981); see also 6A James Wm. Moore et al., Moore’s Federal Practice ¶ 59.08[7], at 197-98 (2d ed. 1992).\nHowever, we do not accept OCF’s argument that in this case the size of the award alone was enough to prove prejudice and passion. Even if there were some level of award that would in itself evidence prejudice and passion, see Wells v. Dallas Indep. Sch. Dist., 793 F.2d 679, 684 (5th Cir.1986), we cannot hold that the $25 million award here, albeit large, necessarily indicates a verdict tainted by prejudice and passion in light of the evidence before the jury concerning OCF’s knowledge of the health hazards associated with asbestos, OCF’s net after-tax earnings for the three years prior to trial which averaged almost $200 million, and OCF’s net worth of approximately $2.2 billion. App. at 1743.\nIn Cash v. Beltmann North American Co., 900 F.2d 109, 111 n. 3 (7th Cir.1990), the court, after reviewing several punitive damage awards cases, concluded that “a typical ratio for a punitive damages award to a defendant’s net worth may be around one percent.” In this ease, the jury’s $25 million award (approximately 1% of OCF’s $2.2 billion net worth) certainly fell within this range. See also Gregg v. U.S. Indus., Inc., 887 F.2d 1462, 1477 (11th Cir.1989) (approving $2 million punitive damages award which represented “.4% of [defendant’s] net worth of $520 million”); Burke v. Deere & Co., 780 F.Supp. 1225, 1238 (S.D.Iowa 1991) (remitting $50 million punitive damages award to $28 million, approximately 1% of defendant’s $2.8 billion net worth).\nA multi-million dollar punitive damages award is not unique in products liability cases. See, e.g., Glasscock v. Armstrong Cork Co., 946 F.2d 1085 (5th Cir.1991) ($6.1 million in asbestos case); O’Gilvie v. International Playtex, Inc., 821 F.2d 1438 (10th Cir.1987) ($10 million in toxic shock syndrome case), cert. denied, 486 U.S. 1032, 108 S.Ct. 2014, 100 L.Ed.2d 601 (1988); Cathey v. Johns-Manville Sales Corp., 776 F.2d 1565 (6th Cir.1985) ($1.5 million in asbestos case), cert. denied, 478 U.S. 1021, 106 S.Ct. 3335, 92 L.Ed.2d 740 (1986); Kociemba v. G.D. Searle & Co., 707 F.Supp. 1517 (D.Minn.1989) ($7 million in I.U.D. case); Palmer v. A.H. Robins Co., 684 P.2d 187 (Colo.1984) ($6.2 million in Daikon Shield case).\nIf an excessive jury determination were per se proof of passion, prejudice, or bias, there would have been no reason for the Supreme Court to have said in Haslip that “[t]he Alabama Supreme Court’s post-verdict review ensures that punitive damages awards are not grossly out of proportion to the severity of the offense and have some understandable relationship to compensatory damages.” 499 U.S. at 16, 111 S.Ct. at 1045. We have held that “where no clear judicial error or ‘pernicious influence’ can be identified but where the. verdict is so large as to shock the conscience of the court,” the appropriate action for the court is to “order[ ] plaintiff to remit the portion of the verdict in excess of the maximum amount supportable by the evidence or, if the remittitur [is] refused, to submit to a new trial.” Kazan v. Wolinski, 721 F.2d 911, 914 (3d Cir.1983).\nMany courts have sustained or ordered remittiturs involving reductions to jury punitive damage awards comparable to that ordered here, thereby implicitly rejecting the argument that an excessive jury award in itself is a basis for a new trial. See, e.g., Grimshaw v. Ford Motor Co., 119 Cal.App.3d 757, 818-19, 174 Cal.Rptr. 348 (1981) ($125 million to $3.5 million; more than 30 to 1 ratio); State Farm Mut. Auto. Ins. Co. v. Zubiate, 808 S.W.2d 590, 605-06 (Tex.Ct. App.1991) ($15 million to $660,000; more than 20 to 1); West v. Johnson & Johnson Prods., Inc., 174 Cal.App.3d 831, 871-72, 220 Cal.Rptr. 437 (1985) ($10 million to $1 million; 10 to 1), cert. denied, 479 U.S. 824, 107 S.Ct. 96, 93 L.Ed.2d 47 (1986); Gregg v. U.S. Indus., Inc., 887 F.2d 1462, 1477 (11th Cir.1989) ($18.5 to $2 million; more than 9 to 1); Republic Ins. Co. v. Hires, 107 Nev. 317, 810 P.2d 790, 792-93 (1991) ($22.5 million to $5 million; more, than 4 to 1); Hodder v. Goodyear Tire & Rubber Co., 426 N.W.2d 826, 836-37 (Minn.1988) ($12.5 million to $4 million; more than 3 to 1), cert. denied, 492 U.S. 926, 109 S.Ct. 3265, 106 L.Ed.2d 610 (1989); Mason, 948 F.2d at 1561 ($25 million to $12.5 million; 2 to 1).\nIn Acosta v. Honda Motor Co., in considering the issue of punitive damages awards against a manufacturer of a harmful product, we noted that “a jury might decide that a defendant’s financial position, as a result of other awards of punitive damages for the same conduct, is so precarious that a sizeable award of punitive damages would be inappropriate.” 717 F.2d 828, 839 n. 17 (3d Cir.1983). In this case, OCF made the strategic decision not to introduce into evidence before the jury information concerning other punitive damages awards assessed against it. Had it done so, the jury might have made a smaller award. We thus conclude that OCF has failed to prove that the jury’s verdict, admittedly quite large, reflected such passion and prejudice as to mandate a new trial.\nOCF contends that when the trial court calculated its remitted punitive damages award, it refused to consider OCF’s submission regarding other awards against it because the court believed that evidence should have been presented to the jury. There is nothing in the district court’s opinion that supports OCF’s contention.\nNor does OCF point to anything in the record to support its contention that the trial court set the remitted damages figure by taking into account OCF’s conduct toward persons other than Dunn. Recently, several courts have rejected due process challenges by asbestos manufacturers, concluding in each case that “the evidence demonstrated that the punitive damage awards were only for the harm inflicted upon the specific plaintiffs .... ” in each case. Owens-Illinois v. Armstrong, 87 Md.App. 699, 591 A.2d 544, 557 (1991), aff'd in part & rev’d in part, 326 Md. 107, 604 A.2d 47 cert. denied, - U.S. -, 113 S.Ct. 204, 121 L.Ed.2d 145 (1992); see also King v. Armstrong World Indus., Inc., 906 F.2d 1022, 1030 (5th Cir.1990), cert. denied, — U.S. —, 111 S.Ct. 2236, 114 L.Ed.2d 478 (1991); Simpson v. Pittsburgh Corning Corp., 901 F.2d 277, 281 (2d Cir.), cert. dismissed, 497 U.S. 1057, 111 S.Ct. 27, 111 L.Ed.2d 840 (1990); Man v. Raymark Indus., 728 F.Supp. 1461, 1466 (D.Haw.1989); Eagle-Picher Indus., Inc. v. Balbos, 326 Md. 179, 604 A.2d 445, 472 (1992). In fact, in this case the district court explicitly referred to the amount of the compensatory damages awarded to Dunn when it calculated the amount of the remitted punitive damages award, thus demonstrating that the punitive damages award was intended to represent punishment for OCF’s conduct with respect to Dunn. The district court’s charge that the jury only award punitive damages if “plaintiff has clearly and convincingly established that the action of defendant which caused injury to the plaintiff was wanton and reckless,” App. at 1776 (emphasis added), further reveals the court’s awareness that punitive damages were to be assessed only with respect to the harm OCF caused Dunn.\nOCF argues that its “negative net worth” militates against a large punitive damages award. The ability to pay, as will be developed below, is a relevant factor in assessing punitive damages awards, but OCF is not well-situated to raise this issue. As Dunn’s expert witness testified, OCF’s large indebtedness was incurred to ward off a take-over attempt in 1986, App. at 1740-41, and it thus obscures the company’s true value. The expert estimated OCF’s value at the time of trial to be around $2.2 billion, App. at 1743, basing this figure on OCF’s annual average after-tax earnings of approximately $200 million for each of the three years prior to trial. Thus, the $2 million award fixed by the trial court was well within OCF’s ability to pay, and in itself would not require the further remittitur sought by OCF.\nWe turn next to our role in the assessment of punitive damages. We cannot leave the amount of punitive damages solely to the trial court because it is evident to us that the Supreme Court in.Haslip approved review by an appellate court to “determine] whether a particular award is greater than reasonably necessary to punish and deter.” 499 U.S. at 19, 111 S.Ct. at 1046. The principal issue impelling us to take this otherwise routine product liability ease in banc is the effect of successive punitive damages awards in mass tort cases arising from the. same course of conduct. We, as well as other courts, have expressed concerns in that regard. See In re School Asbestos Litig., 789 F.2d 996, 1005 (3d Cir.) (“powerful arguments have been made that, as a matter of constitutional law or of substantive tort law, the courts shoulder some responsibility for preventing repeated awards of punitive damages for the same acts or series of acts”), cert. denied, 479 U.S. 852, 107 S.Ct. 182, 93 L.Ed.2d 117, and cert. denied, 479 U.S. 915, 107 S.Ct. 318, 93 L.Ed.2d 291 (1986); Roginsky v. Richardson-Merrell, Inc., 378 F.2d 832, 838-42 (2d Cir.1967); see also In re Federal Skywalk Cases, 680 F.2d 1175, 1188 (8th Cir.) (Heaney, J., dissenting), cert. denied, 459 U.S. 988, 103 S.Ct. 342, 74 L.Ed.2d 383 (1982); Juzwin v. Amtorg Trading Corp., 705 F.Supp. 1053, 1056 (D.N.J.), as modified, 718 F.Supp. 1233, 1235 (D.N.J.1989); In re “Agent Orange” Prod. Liab. Litig., 100 F.R.D. 718, 728 (E.D.N.Y.1983), mandamus denied, 725 F.2d 858 (2d Cir.), cert. denied, 465 U.S. 1067, 104 S.Ct. 1417, 79 L.Ed.2d 743 (1984).\nNevertheless, the vast majority of courts that have addressed the issue have declined to strike punitive damages awards merely because they constituted repetitive punishment for the same conduct. See Solly v. Manville Asbestos Disease Fund, No. 91-3031, 1992 WL 125386, at *7-8, 1992 U.S.App. LEXIS 14030, at *21-22 (6th Cir. June 8,1992) (construing federal due process and Ohio law), cert. denied, — U.S. —, 113 S.Ct. 411, 121 L.Ed.2d 335 (1992); Simpson, 901 F.2d at 280-82 (construing federal due process); Jackson v. Johns-Manville Sales Corp., 781 F.2d 394, 402-07 (5th Cir.) (construing Mississippi law), cert. denied, 478 U.S. 1022, 106 S.Ct. 3339, 92 L.Ed.2d 743 (1986); Hansen v. Johns-Manville Prods. Corp., 734 F.2d 1036, 1041-42 (5th Cir.1984) (construing Texas law), cert. denied, 470 U.S. 1051, 105 S.Ct. 1749, 84 L.Ed.2d 814 (1985); Man, 728 F.Supp. at 1465-68 (construing federal due process and Hawaii law); Campbell v. ACandS, Inc., 704 F.Supp. 1020, 1021-23 (D.Mont.1989) (construing Montana law); Neal v. Carey Canadian Mines, Ltd., 548 F.Supp. 357, 376-77 (E.D.Pa.1982) (construing federal due process and Pennsylvania law), aff'd sub nom. Van Buskirk v. Carey Canadian Mines, Ltd., 760 F.2d 481 (3d Cir.1985).\nOCF seeks to have this court take the lead and strike the punitive damages award as repetitive, either under Virgin Islands law or on federal due process grounds. It argues that because of the volume of asbestos claims currently before the courts and likely to be filed in the future, the point of “overkill” has been reached with respect to punitive damages in asbestos litigation. OCF claims that asbestos manufacturers have been punished enough, and that the “avalanche” of compensatory claims is more than sufficient to serve the goals of deterrence and punishment. It urges .this court, as the “Supreme Court of the Virgin Islands,” Polius v. Clark Equip. Co., 802 F.2d 75, 80 (3d Cir.1986), to strike punitive damages claims in all asbestos cases tried in the territory.\nApparently OCF believes that our function as the highest reviewing court for the Virgin Islands affords us .an opportunity that is not available to other federal courts which are constrained by diversity jurisdiction to be circumspect in predicting state tort law. See Jackson, 781 F.2d at 406 (noting limited authority of federal court sitting in diversity to extend state law substantially in the absence of explicit guidance from state courts). Yet federal courts have not been alone in declining to strike punitive damages awards on the ground that they constitute repetitive punishment for the same conduct. States courts as well have rejected such a contention, both on due process and common law tort grounds. See, e.g., Palmer v. A.H. Robins Co., 684 P.2d 187, 215-16 (Colo.1984); Balbos, 604 A.2d at 472; Fischer v. Johns-Manville Corp., 103 N.J. 643, 512 A.2d 466, 475-80 (1986); Davis v. Celotex Corp., 187 W.Va. 566, 420 S.E.2d 557, 564-66 (1992); Wangen v. Ford Motor Co., 97 Wis.2d 260, 294 N.W.2d 437, 466 (1980); Froud v. Celotex Corp., 107 Ill.App.3d 654, 63 Ill.Dec. 261, 264, 437 N.E.2d 910, 913 (1982), rev’d on other grounds, 98 Ill.2d 324, 74 Ill.Dec. 629, 456 N.E.2d 131 (1983); Fibrehoard Corp. v. Pool, 813 S.W.2d 658, 687 (Tex.Ct.App.1991), cert. denied, — U.S. —, 113 S.Ct. 2339, 124 L.Ed.2d 250 (1993); see also Andrea G. Nadel, Annotation, Propriety of Awarding Punitive Damages to Separate Plaintiffs Bringing Successive Actions Arising Out of Common Incident or Circumstances Against Common Defendant or Defendants (“One Bite” or “First Comer” Doctrine), 11 A.L.R.4th 1261, 1262 (1982 & Supp.1992) (noting that courts “have generally held that no principle exists which prohibits a plaintiff from recovering punitive damages against a defendant or defendants simply because punitive damages have previously been awarded against the same defendant or defendants for the same conduct, or because other actions are pending against the defendant or defendants which could result in an award of punitive damages”). Indeed, OCF has brought no majority opinion from any court to our attention (and our research has not disclosed such a case) which holds that multiple punitive damages claims must be struck on either basis.\nIn concluding that multiple punitive damages awards are not inconsistent with the due process clause or substantive tort law principles, both state and federal courts have recognized that no single court can fashion an effective response to the national problem flowing from mass exposure to asbestos products. Indeed, these courts have noted the arbitrariness of imposing a cap on punitive damages awards in only a single jurisdiction. As the Supreme Court of Appeals of West Virginia recently stated:\nit seems highly illogical and unfair for courts to determine at what point punitive damage awards should cease. Obviously, those plaintiffs whose cases were heard first would gain the punitive monetary advantage. Certainly, it would be difficult to determine where the cutoff line should be drawn as between the first, tenth, or hundredth punitive damages award. Moreover, because asbestos trials are held nationwide, it is doubtful that one state’s ruling would necessarily bind other jurisdictions.\nDavis, 420 S.E.2d at 565-66; see also Fischer, 512 A.2d at 480 (“At the state court level we are powerless to implement solutions to the nation-wide problems created by asbestos exposure and litigation arising from that exposure.”); Jackson, 781 F.2d at 406 (“The relief sought by [the asbestos manufacturer] may be more properly granted by the state or federal legislature than by this Court.”) (quotation omitted).\nSimilar concerns were expressed by the American Law Institute, which in a 1991 Reporters’ Study, concluded that even state legislative efforts to limit punitive damages awards were an inappropriate and ineffective means for addressing the multiple punitive damages award problem.\nThis kind of single-state action, however, is an ineffectual response to the problem, because one state cannot control what happens in other jurisdictions. In fact, the state that acts alone may simply provide some relief to out-of-state manufacturers at the expense of its own citizen-victims, a situation that hardly provides much law reform incentive for state legislators. Moreover, these formulas, which give the lion’s share of the punitive award to the first victim able to win a judgment against a particular defendant, are unfair to subsequent plaintiffs and concomitantly risk providing too little deterrence to behavior of this type.\nII American Law Institute, Enterprise Responsibility for Personal Injury 261 (1991) (emphasis added). As an alternative to state action, the Study supported a federal legislative solution “to authorize mandatory class actions for multiple punitive damages arising out of large-scale mass torts.” Id. at 263.\nThese concerns are equally applicable to our role in reviewing punitive damages awards emanating from the Virgin Islands. Although we do not eschew our role as the final judicial voice on questions of law arising in the Virgin Islands, we are also cognizant that we have not been chosen for that role as directly as have the state supreme courts. This requires that we exercise restraint before imposing novel and/or experimental theories onto that territory’s body of law.\nWe note further that our review as the Virgin Islands’ highest court is not open-ended, but is guided by well-established principles. As we recognized in Government of the Virgin Islands v. Harris, 938 F.2d 401 (3d Cir.1991),\n[ajbsent governing statute or precedent, a “hierarchy of sources for Virgin Islands law” is found under 'V.I. Code Ann. tit. 1, § 4 (1967). Edwards v. Born, Inc., 792 F.2d 387, 389 (3d Cir.1986). Under § 4, we look first to the common law rules set forth in the various Restatements. If no rules are available, we look to common law rules “as generally understood and applied in the United States.” Id. See also Polius v. Clark Equipment Co., 802 F.2d 75, 77 (3d Cir.1986) (Where the Virgin Islands “has no governing statute ... [and] [w]here the Restatement is silent and a split of authority exists, courts should select the sounder rule.”).\nId. at 411 (footnote omitted).\nThe Restatement, which provides the most persuasive evidence of the common law “as generally understood and applied in the United States,” and which we are obliged to consult before exercising whatever common law authority we have in this case, does not preclude successive claims of punitive damages arising out of the same course of conduct, but instead permits consideration of the existence of multiple punitive damages claims against a defendant as a factor in assessing damages. See Restatement (Second) of Torts § 908 cmt. e (1977) (“Another factor that may affect the amount of punitive damages is the existence of multiple claims by numerous persons affected by the- wrongdoer’s conduct.”). When courts on the mainland, particularly from the other jurisdictions comprising the Third Circuit, have declined to strike repetitive punitive damage claims and awards in asbestos cases, we are unwilling to treat the similar awards to Virgin Islands plaintiffs as any less justified.\nAs we indicated in Polius, 802 F.2d at 77, it is only appropriate for us to select the sounder of several possible alternative rules for the Virgin Islands when a genuine split of authority exists among the other American common law jurisdictions. Even if we were convinced that the approach OCF advocates were the sounder one, OCF has not shown such a split of authority on the question of the propriety of successive punitive damages awards.\nWe do not disagree with the concerns that have been expressed about punitive damages awards, particularly in the asbestos cases. We differ instead with those who would have the judiciary resolve .the conflicting policy arguments. We refrain from adopting such an activist role on what is essentially a policy matter, and believe that insofar as OCF would have us enunciate a -prohibition of successive claims of punitive damages in mass tort litigation as a matter of Virgin Islands law, that decision is best left to the United States Congress or the legislature of the Virgin Islands.-\nTo the extent that OCF claims that punitive damages in asbestos cases are as a general matter unconstitutional, we are not persuaded by its arguments. Although we recognize that some courts and commentators have called for the abolition of punitive damages altogether, see, e.g., John Dwight Ingram, Punitive Damages Should Be Abolished, 17 Cap.U.L.Rev. 205 (1988); James B. Sales & Kenneth B. Cole, Jr., Punitive Damages: A Relic That Has Outlived Its Origins, 37 Vand.L.Rev. 1117 (1984), that position is not without its critics. In fact, the prevalent notion that we are facing skyrocketing or “runaway punitive awards,” E. Barrett Prettyman, Jr., Punitive Damages, in A Plan to Improve America’s System of Civil Justice From the President’s Council on Competitiveness 75, 83 (1992), has been challenged by several commentators. See Michael Rustad, Demystifying Punitive Damages in Products Liability Cases: A Survey of a Quarter Century of Trial Verdicts 28 (Papers of the Roscoe Pound Found. 1991) [hereinafter Demystifying Punitive Damages]; cf. Stephen Daniels & Joanne Martin, Myth and Reality in Punitive Damages, 75 Minn. L.Rev. 1, 13 (1990) [hereinafter Myth and Reality ]; Michael J. Saks, Do We Really Know Anything About the Behavior of the Tort Litigation System—And Why Not?, 140 U.Pa.L.Rev. 1147, 1256 (1992) [hereinafter Behavior of the Tort System ].\nOne study reported that in those relatively rare cases in which punitive damages are awarded at all, these awards are frequently reduced on appellate review. Demystifying Punitive Damages at 30-32; Behavior of the Tort System, 140 U.Pa.L.Rev. at 1258-62. Another study concluded that “[t]he difference between punitive damages awarded and punitive damages paid is often dramatic.” Demystifying Punitive Damages at 32. Finally, OCF itself candidly admits that in the vast majority of the asbestos cases against it which go to trial, plaintiffs come up empty. See Appellant’s Supplemental Brief at 11 (citing App. at 1943); see also App. at 1842-939. We, of course, take no position on the debate regarding the issue of punitive damages in mass tort eases, but merely obserye that the underlying facts appear to be far from clear, despite high-profile commentary in that connection.\nIn his powerful dissent, Judge Weis has set forth numerous arguments against punitive damages in mass tort cases in general and in asbestos cases in particular. We decline to respond in kind because we do not believe that a judicial opinion of an intermediate appellate court is the appropriate forum for a debate on the policies for and against punitive damages. Indeed, those members of the in banc court supporting the judgment of the court may themselves have differing views on whether and when punitive damages should be awarded.\nJudge Weis argues that a “national solution is needed,” and would have this court step in because Congress and the Virgin Islands legislature have failed to impose the solution he believes is needed. We believe, to the contrary, that unless a particular defendant has made the showing requisite to a finding of a due process violation as to it, the lower courts have an obligation to follow existing legal principles. In this connection, we note that while the debate on punitive damages has raged in commentary and even among judges, the Supreme Court of the United States has had various opportunities in recent years to restrict or redirect punitive damages awards, and it has pointedly failed to do so. In Haslip, the Supreme Court noted that punitive damages at common law were referred to by Blackstone, and that even early Supreme Court cases upheld such awards. 499 U.S. at 14-15, 111 S.Ct. at 1041-43. The Court had its most recent opportunity in TXO to overturn a punitive damages award that had received numerous adverse comments and publicity because of the exceedingly high ratio that the punitive damages bore to the compensatory damages (526 to 1), but it made no adverse comment on the award, reviewing only whether substantive due process principles compelled a reversal. In. their separate concurrences, Justice Kennedy referred to the .possibility of “legislative intervention that might prevent unjust punitive awards,” — U.S. at —, 113 S.Ct. at 2724, and Justice Scalia (with Justice Thomas) stated that “[sjtate legislatures and courts have ample authority to eliminate any perceived ‘unfairness’ in the common-law punitive damages regime.” Id. at —, 113 S.Ct. at 2724. Indeed, Justice Scalia reiterated his earlier position in Has-lip that “the Constitution gives federal courts no business in this area, except to assure that due process (ie., traditional procedure) has been observed.” Id. We would be intrepid indeed were we to use this case as a vehicle to iterate a blanket policy judgment against punitive damages in asbestos cases in light of the Supreme Court’s studied silence on the policy issue.\nWe do not preclude a particular defendant from invoking the due process clause as a basis for relieving it of punitive damages in a specific case. However, the evidence produced by OCF falls far short of demonstrating any due process violation here.\nIn Simpson, the Second Circuit rejected the contention of another asbestos defendant, Pittsburgh Corning Corp., that a $2.3 million punitive damages award was a substantive due process violation. The court posited that if “the factfinder making the first award understood its assignment to be the selection of that sum of money appropriate to punish the tort-feasor for the full extent of its wrongful conduct, not merely a sum appropriate as punishment for the injuries to the plaintiffs in the lawsuit,” 901 F.2d at 280, there might be a rationale for striking a subsequent award on due process grounds. Inasmuch as OCF has not argued that this is an appropriate case to apply this “single punitive award” rationale, nor has it made the requisite factual showing to support such a claim, we need not decide whether we would accept such a theory.\nThe second basis posited in Simpson on which a successive punitive damage award might be viewed as violating due process is that the aggregate of prior awards has reached the maximum amount tolerable under the Due Process Clause. This argument assumes that prior juries functioned in-the traditional manner, limiting their awards of punitive damages in light of the injury inflicted on the plaintiff in a particular case. •This is essentially the argument made by OCF in this case. However, we agree with the Second Circuit that such an argument can be evaluated only if the judge has been “provided with a factual basis sufficient for evaluating the entire scope of the defendant’s wrongful conduct_ Only with.such factual information can the judge- determine that the aggregate of prior awards punishes the entirety of the wrongful conduct to the limit of due process.” Id. at 281.\nAssuming arguendo that we would accept this analysis, the factual record made by the defendant must, as a prerequisite to relief on due process grounds, include evidence demonstrating the amount of punitive damages it has actually paid in the past. In this case, OCF has simply failed to make such a showing.\nAs noted above, OCF filed a post-trial affidavit listing other punitive damages jury verdicts entered against it. App. at 1941-49. Significantly, OCF also stated that post-trial motions or appeals were pending as to each and every non-settled verdict listed in its submission. It stated further that as to those verdicts which it settled, an unspecified albeit allegedly “substantial amount of the settlement reflect[ed] the punitive damages award[ed].” App. at 1946. As to the latter, Simpson stated that, “it is far from clear that sums paid in private settlements may validly be counted in determining when state-compelled punitive damages awards exceed the limits of the Fourteenth Amendment.” 901 F.2d at 282. The failure to designate particular amounts of the settlements as representing punitive damages makes inclusion of these amounts problematic. The same is true of OCF’s list of non-final awards of punitive damages. Thus, OCF has failed to prove that the aggregate award of punitive damages against it has been sufficient to meet the twin goals of punishment and deterrence underlying such awards.\nNor has OCF shown that it will not be able to pay futui'e awards of' either compensatory or punitive damages. OCF’s 1990 Annual Report filed with the district court post-trial stated that as of December 31, 1990, OCF had approximately $1.26 billion in unex-hausted insurance coverage under product liability insurance policies applicable to asbestos-related personal injury claims. App. at 2007. OCF charged to earnings $24 million in 1990 and $50 million in 1989 for the uninsured costs of asbestos claims and had related reserves of $115 million and $131 million as of December 31, 1989 and 1990, respectively. App. at 2008.\nIn addition, the Report stated that the “disease mix of asbestos personal injury claims against the Company appears to have declined in severity in recent years. Moreover, many of the newer claims involve workers from occupations with limited, if any, exposure to the Company’s asbestos products. Accordingly, the Company anticipates achieving a gradual reduction in its per case indemnity payments.” App. at 2006. Finally, the Report concluded that\n[although any opinion is necessarily judgmental and must be based on information now known to the Company, in the opinion of management, based on the Company’s experience with these claims to date, the Company’s assessment of the number, nature and severity of the pending claims and the trends in the filing of such claims, and the Company’s analysis of its available insurance coverage and existing reserves, and of the Company’s future business and financial prospects, the additional uninsured costs which may arise out of pending personal injury and property damage asbestos claims and additional similar asbestos claims filed in the future will not have a materially adverse effect on the Company’s financial position.\nApp. at 2008 (emphasis added).\nIn sum, OCF simply has not made a “showing that the total [amount of punitive damages assessed so far] is even close to whatever limit due process might impose on the total punitive damages that may be assessed ... for ... misconduct with respect to asbestos warnings.” Simpson, 901 F.2d at 281; see Restatement (Second) of Torts § 908 cmt. a (1977); cf. Campbell, 704 F.Supp. at 1023 (“the desired effect is to deter all individuals or entities involved in the manufacture and distribution of consumer products from placing the public at risk by engaging in similar conduct”). Nor has OCF shown on this record that it will be unable to satisfy current and future asbestos claims. Although the costs associated with asbestos litigation may have wiped out any profits OCF made from the sale of its Kaylo product, OCF failed to submit any evidence at trial concerning the profitability of its Kaylo product, or concerning the profits of the other manufacturers. In any event, neither Virgin Islands law nor due process requires striking all punitive damages claims simply because the harm caused by a defective product was so severe as to wipe out all profit.\nOf course, we do not decide whether another asbestos manufacturer might be able to satisfy this evidentiary hurdle with a different factual record. Nonetheless, we believe that the district courts in this circuit should determine whether a punitive award to a plaintiff in a particular case should be struck by carefully scrutinizing the “punitive damages overkill” evidence submitted to them, both with respect to past awards actually paid by the defendant and the defendant’s ability to satisfy future punitive damages awards. These courts should also consider whether the financial status of the defendant is such that future claimants will be unable to collect even compensatory damages because of the limited pool of resources available. It is the defendant’s burden to make this evidentiary showing, a burden OCF has not satisfied on the record before us.\nAlthough we reject OCF’s due process challenge, we nonetheless agree with OCF that further remittitur of the punitive damage award in this case is appropriate. See Gumbs v. Pueblo Int’l, Inc., 823 F.2d 768, 773-75 (3d Cir.1987); Williams v. Martin Marietta Alumina, Inc., 817 F.2d 1030, 1040-41 (3d Cir.1987). In reaching this conclusion, we take into consideration all the factors listed in comment e to Restatement of Torts (Second) § 908: the defendant’s wealth, its act, the extent of harm, the multiplicity of claims, and, as approved in Haslip, the awards of punitive damages in similar cases.\nOur review of the list of jury verdicts submitted by OCF to the district court indicates to us that even the $2 million dollar figure greatly exceeds the level of punitive damages awarded in other similar asbestos cases. While we commend the district court’s discipline in reducing the punitive damages from $25 million to $2 million, we believe that the district court gave insufficient consideration to the effect of successive punitive awards in asbestos litigation. This factor, above all, leads us to conclude that the maximum amount of punitive damages that could reasonably have been awarded in this case is $1 million.\nV.\nCONCLUSION\nFollowing the filing of the opinion of the panel of this court reaching the same conclusion, Dunn elected to file a remittitur of punitive damages awarded in excess of $1,000,000.\nFor the foregoing reasons, we will vacate the judgment of punitive damages and remand the case to the district court with instructions to enter a new judgment for punitive damages in the amount of $1,000,-000. OCF to bear all costs on appeal.\n. The order granting rehearing in banc vácated the original opinion pursuant to this court's Internal Operating Procedure 9.5.9.\n. In a memorandum dated December 19, 1966, it was stated that a warning label should be \"showfn] on all cartons in which we deliver Kaylo products.” App. at 2236.\n. Specifically, Dunn’s counsel stated:\nUnfortunately, ladies and gentlemen, you have heard a story here in this courtroom the last two weeks of corporate manipulation, of corporate suppression, and a word that I hate to use, of corporate lies.\nBut, what's so bad about that is just not things that occur over the last 40 or 50 years. But, it’s even occurred in this courtroom. It's occurred in this courtroom.\nApp. at 1755.\n.Specifically, Dunn's counsel argued: ''You've got to have courage to tell this big multi-national company, that it's not going to come into the Virgin Islands and hurt people and lie about it.” App. at 1762.\n. Comment e to the Restatement (Second) of Torts § 908 (1977), which discusses punitive damages, states in relevant part: “Included in the harm to the plaintiff may be considered the fact that the plaintiff has been put to trouble and expense in the protection of his interests, as by legal proceedings in this or in other suits.\" Thus, arguably statement (3) was not, in itself, inappropriate.\n. In Herman v. Hess Oil Virgin Islands Corp., 524 F.2d 767, 772 (3d Cir.1975), we concluded that a similar remark made in plaintiff’s closing argument on punitive damages was not \"so prejudicial ... as to constitute reversible error in the absence of any objection or request for a cautionary instruction.\" We also noted that “it is proper to assess punitive damages as a deterrent and an example to the community.” Id. (emphasis added).\n.During Dunn's closing argument, counsel for OCF objected to the analogy to Michael Milken and asked for a curative instruction, which the court declined to give. See App. at 1758-59. In addition, directly following Dunn’s closing arguments, counsel for OCF moved for a mistrial, specifically objecting to Dunn's argument that \"we came in here and lied.” App. at 1763.\n. We note that references to the defendant's wealth are not, in themselves, inappropriate in a closing argument on the issue of punitive damages. See Restatement (Second) of Torts § 908(2) (1977); Herman, 524 F.2d at 772 (\"the wealth of the defendant is .a factor which may properly be considered by the trier of fact in assessing punitive damages\").\n. Neither the language of the Restatement and the accompanying comments nor prior case law supports the proposition that punitive damages must be related to actual injuries. See Restatement (Second) of Torts § 908(2) (1977) (\"trier of fact can properly consider ... the nature and extent of the harm to the plaintiff”) (emphasis added); id. at § 908(2) cmt. c (while \"the extent of the harm may be considered in determining their amount, it is not essential to the recovery of punitive damages that the plaintiff should have suffered any harm, either pecuniary or physical”) (emphasis added); Hospital Auth. v. Jones, 261 Ga. 613, 409 S.E.2d 501, 503 (1991) (rejecting \"notion that punitive damages must necessarily bear some relationship to the actual damages awarded by the jury”), cert. denied, - U.S. -, 112 S.Ct. 1175, 117 L.Ed.2d 420 (1992); Kirkbride v. Lisbon Contractors, Inc., 521 Pa. 97, 555 A.2d 800, 803-04 (1989) (punitive damages need not bear reasonable relationship to compensatory damages under Restatement § 908; remittitur always available to reduce awards that shock the conscience).\n. This Rule states in pertinent part:\nNo party may assign as error the giving or the failure to give an instruction unless that party objects thereto before the jury retires to consider its verdict, stating distinctly the matter objected to and the grounds of the objection.\nFed.R.Civ.P. 51 (emphasis added).\n. In Levinson v. Prentice-Hall, Inc., 868 F.2d 558, 564 (3d Cir.1989), on which OCF relics, we found that the defendant had preserved its objection in accordance with Rule 51.\n. Under the Restatement, in determining the amount of punitive damages, the trier of fact can consider such factors as (1) the act itself, including the motives of the wrongdoer, the relations between the parties, and provocation or want of provocation; (2) the extent of harm to the injured person, including the expense to which plaintiff has been put in bringing a lawsuit; (3) the wealth of the defendant; and (4) the existence of multiple claims. Restatement (Second) of Torts § 908 cmt. e (1977).\n. The Court did state that \"it is always helpful for trial judges to explain the basis for their rulings as thoroughly as is consistent with the efficient despatch of their duties.” TXO, — U.S. at —, 113 S.Ct. at 2724. We emphasize for the trial judges in this circuit the importance this court places on reasoned explanations of discretionary decisions. See United States v. Criden, 648 F.2d 814, 819 (3d Cir.1981) (“[Ajrticulation of the reasons for the decision tends to provide a firm base for an appellate judgment that discretion was soundly exercised.”).\n. Specifically, the district court concluded that $2 million was an appropriate amount to offer in remittitur as \"th[is] sum is rationally related to the $500,000 in compensatory damages without having exceeded the multiple of four constitutionally permitted by the Supreme 'Court in lias-lip.\" Dunn, 774 F.Supp. at 951 (citation omitted). In Haslip the Court found the punitive damages award in that case to be reasonable even though it exceeded the compensatory award by four times because “it d[id] not cross the line into the area of constitutional impropriety.” 499 U.S. at 19, 111 S.Ct. at 1046. See also TXO, — U.S. at —, 113 S.Ct. at 2720 (indicating that a 10-to-l ratio between punitive damages awarded and the potential harm of defendant’s conduct would be constitutionally permissible) (plurality opinion).\n. We recommend that in the future district courts explicitly assess the amount of a punitive damages award in light of the factors set out in comment e of Restatement § 908. See supra note 12.\n. In Haslip, the Court listed the factors considered under Alabama law in post-trial and appellate review:\n(a) whether there is a reasonable relationship between the punitive damages award and the harm likely to result from the defendant’s conduct as well as the harm that actually has occurred; (b) the degree of reprehensibility of the defendant’s conduct, the duration of that conduct, the defendant’s awareness, any concealment, and the existence and frequency of similar past conduct; (c) the profitability to the defendant of the wrongful conduct and the desirability of removing that profit and of having the defendant also sustain a loss; (d) the \"financial position” of the defendant; (e) all the costs of litigation; (f) the imposition of criminal sanctions on the defendant for its conduct, these to be taken in mitigation; and (g) the existence of other civil awards against the defendant for the same conduct, these also to be taken in mitigation.\n499 U.S. at 17, 111 S.Ct. at 1045. In addition, the Alabama Supreme Court conducts a comparative analysis. Id.\nIn satisfying itself of the reckless character of OCF’s conduct, examining OCF's net worth, and considering the relationship between the size of the compensatory and punitive awards, the district court found evidence to support three of the factors listed above (i.e., factors (a), (b), and (d)). It also conducted a comparative analysis. This review was enough to support the award of punitive damages in this case. See Eichenseer, 934 F.2d at 1382-84 (evidence in record sufficient to satisfy three of seven Haslip factors, and thus \"the record in this case provides sufficient support for the award of punitive damages”).\n. The Reporters' Study noted that two states have taken legislative action in this area. A Georgia statute, applicable to product liability claims in Georgia courts, allows only a single punitive award (the first to be obtained) for all claims arising out of the same conduct. See Ga.Code Ann. § 51-12-5.1(e) (Michie 1990). A Missouri statute, which applies to most tort claims in the state, allows the defendant in a post-trial hearing to request credit for prior punitive damages awards arising from the same conduct. See Mo.Ann.Stat. § 510.263(4) (Vernon 1952 & Supp.1992).\n. In that regard, we find it telling that the Governor of the Virgin Islands recently transmitted a bill to the legislature concerning damages for personal injuries that proposed limiting punitive damages awards for economic and non-economic damages but expressly exempted \"defective product claims\" from its terms. See Bill No. 20-0041 to amend Tit. 5, Ch. 41, V.I.Code (introduced Feb. 1, 1993).\n. After conducting an exhaustive search of several sources, including published opinions, computer databases, law reviews and legal commentaries, court records, trial verdict reporters, and interviews with lawyers involved in products liability cases, see Demystifying Punitive Damages at 2-4. Rustad and his associates located a total of 355 products liability cases involving punitive damages awards throughout the country in the quarter century from 1965-1990. Id. at vi.\n. In a study of punitive damages verdicts in 47 counties in 11 states, the authors noted that only 8.9% of successful products liability plaintiffs were also awarded punitive damages. See Myth and Reality, 75 Minn.L.Rev. at 38; see also Demystifying Punitive Damages at 24 (noting that while approximately 200,000 American women were injured by Daikon Shield, there were only 11 punitive damages awards in the 51 cases that went to trial).\n. The court explained that this theory could only be applied where the defendant can demonstrate that the jury in the first case to reach final judgment \"had a complete record of the full extent of [the defendant’s] wrongful conduct in failing to warn all users of the dangers of its asbestos products, [] or that [the] jury was instructed to return a punitive award appropriate as punishment for the totality of such misconduct.\" Simpson, 901 F.2d at 281.\n. The court in Simpson concluded that all asbestos cases involving a single defendant cannot \"be lumped together for the purpose of testing punitive awards against the limits of due process.\" 901 F.2d at 281. \"The wrongfulness of a defendant’s conduct will normally be subject to varying assessments depending on the degree to which the dangers of its product were known at a particular time and the deliberateness of’ its . conduct in declining to warn or even concealing dangers of which it was aware.” Id.\n. In an appendix to its supplemental appellate brief, OCF submitted its 1991 Annual Report, which provides a further indication of the company’s ability to pay future punitive damages awards. In particular, the Report notes that \"the Company’s products liability insurance policies should cover virtually all of the Company's cash expenditures for indemnity and defense costs for asbestos personal injury claims through 1996 or 1997.... The cash expenditures ... for the unasserted claims covered by [an] $800 million [non-recurring, non-cash] charge to 1991 earnings are expected to be incurred over a period of approximately seven years, between 1996 and 1997 and 2003 and 2004.” Appellant’s Supplemental Brief, Appendix A, at 15.\nThe Report also noted that OCF’s unexhausted product liability insurance reserves totaled $1.13 billion at the end of 1991. Id.\n. It was only in its appendix to its supplemental brief to this court that OCF made any claim concerning the profitability of its Kaylo product. See Appellant's Supplemental Brief, Appendix D, at 3-4 (estimating total sales at $142.7 million with total profit ranging from $1.4 million to $7.7 million). We are unwilling to act on the basis of such evidence, which was not before the district court and which was not subject to challenge by appellee.", "type": "majority", "author": "SLOVITER, Chief Judge."}, {"text": "ALITO, Circuit Judge,\nconcurring:\nI concur in the judgment. I also join Parts I, II, III, and V of the opinion of the court. I do not fully agree with the analysis in Part IV of the court’s opinion, which discusses the question whether the punitive damage award in this case was excessive under Virgin Islands law or under the Due Process Clause. Hence, I write briefly to explain my disagreement with the court’s discussion of those questions.\nIn considering the propriety of the punitive damages award under Virgin Islands law, I begin with 1 V.I.C. § 4, which states:\nThe rules of the common law, as expressed in the restatements of the law approved by the American Law Institute and to the extent not so expressed, as generally understood and applied in the United States, shall be the rules of decision in the courts of the Virgin Islands in eases to which they apply, in the absence of local laws to the contrary.\nIn order to understand the meaning of this provision, I think it is helpful to examine its origins. Before 1917, the Virgin Islands were generally subject to “[t]he Common and Statute Law of Denmark.” Colonial Law of April 6, 1906, § 67. After the United States acquired the Virgin Islands, Congress, in the Act of March 3, 1917, ch. 171, § 2, 39 Stat. 1132, provided for this body of Danish law to remain in effect “insofar as compatible with the changed sovereignty and not in conflict with the provisions of [this] Act.” This provision was effectively abrogated, however, in 1920 and 1921, when the Colonial Councils of the Municipality of St. Croix and the Municipality of St. Thomas and St. John, acting pursuant to authority delegated by Congress in the 1917 Act, adopted comprehensive new Codes of Laws. Each of these Codes contained an identical provision stating that (tit. iv, ch. 13, § 6): “[t]he common law of England as adopted and understood in the United States shall be in force in this District, except as modified by this ordinance.”\nIn Callwood v. Virgin Islands Nat’l Bank, 221 F.2d 770, 775 (3d Cir.1955), our court, in an opinion by Judge Maris, interpreted this provision as follows:\n[T]he Virgin Islands have adopted the rules of the common law of England as followed and understood in the United States and we think that the district court in applying those rules is justified in considering the well considered expressions of them which the American Law Institute has incorporated in its Restatements of the Law.\nAt the time of the Callwood decision, a commission, which included Judge Maris as one of its members, was preparing what later became the Virgin Islands Code. This Code, including title 1, § 4, was enacted in 1957. The Revision Note for this provision states that the earlier provisions had been\nrewritten more accurately to express the concept of the Common Law as constituting a body of rules established by precedent, as distinguished from a body of statutory law, and to extend the application of the rules to the restatements of the law prepared and approved by the American Law Institute. See Callwood v. V.I. Nat. Bank, C.A.3d 1955, [3 V.I. 540] 221 F.2d 770.\nIn light of this history, I interpret 1 V.I.C. § 4 to mean that the law of the Virgin Islands, in the absence of a relevant statutory provision, is “the body of rules established by precedent” “as generally understood and applied in the United States” and that, as suggested in Callwood, the Restatements provide a presumptively authoritative summary of this body of precedent. I do not interpret 1 V.I.C. § 4 to mean that the Restatements, whether adopted before or after 1957, are tantamount to Virgin Islands statutes. On the contrary, I agree with the analysis of this question in Varlack v. SWC Caribbean Inc., 550 F.2d 171 (3d Cir.1977). Addressing a conflict between a provision of the Restatement (First) of Torts (issued in 1934) and a provision of a Tentative Draft of the Restatement (Second) of Torts, the court observed that “we read the statute as looking to the Restatements only as an expression of ‘the rules of common law.’ ” 550 F.2d at 180 (emphasis in original). Thus, 1 V.I.C. § 4 does not incorporate all of the Restatement provisions in effect in 1957 as if they were actual statutory text; nor does it delegate to the American Law Institute the authority to enact changes in the law of the Virgin Islands in all of the areas covered by the Restatements. While some of our opinions cite provisions of the Restatements as if they were statutory law, I respectfully submit that these references (which I take to be merely a form of shorthand) are potentially misleading.\nIt is also inaccurate, in my view, to suggest that we are free to do in this case whatever some state supreme court might feel free to do in a comparable ease before it. The role of the highest court of each state is defined by its own state’s constitution, statutes, and legal traditions, and many of these courts may have greater authority to contribute to the development of state common law than we have under 1 V.I.C. § 4.\nBecause of 1 V.I.C. § 4, our task, in considering whether the punitive damage award in this case is excessive under Virgin Islands law, is to determine whether the award is consistent with the general body of relevant precedents handed down by American courts. Working within this framework, I agree with the court that the award in this case, after remittitur, is permissible. To the extent that the court mounts a defense of the merits of these precedents, however, I disassociate myself from that analysis. When the common law as understood and applied in the United States provides a clear rule, 1 V.I.C. § 4 requires us to apply that rule regardless of our judgment as to the rule’s merits. Congress and the Virgin Islands Legislature have the authority and discretion to pass new statutes and thereby adopt for the Virgin Islands different rules contrary to and arguably superior to the common law approach, but, under current law, we do not hhve such authority. If we had such authority, however, I would find much in the existing precedents that merits critical reexamination.\nWith respect to OCF’s argument that the punitive damage'award in this case violates due process, I agree with the court’s conclusion that this argument is unsound. I am puzzled, however, by the fact that the court, in addressing this question, seems to place significant reliance on studies and articles that attempt to debunk the critics of punitive damages. Maj. Op. at 1387-88. I am at a loss to understand precisely what bearing these studies have on the constitutional question before us. I certainly do not think that the content of the Due Process Clause can be ascertained by tallying up the entries in the Index to Legal Periodicals. And I am not willing to appear to endorse the views op policy. questions expressed in the writings that the court cites or to vouch for the accuracy of their underlying empirical research.\nIn sum, while I do not entirely agree with the analysis in Part IV of the court’s opinion, I agree with its ultimate conclusion. I therefore concur in the judgment, and I join the portions of the court’s opinion that were previously noted.\n. 1 V.I.C. § 4, Revision Note.\n. 1 V.I.C. § 4.\n. See also Haize v. Hanover Insurance Co., 536 F.2d 576, 578 n. 1 (3d Cir.1976) (\"It could be argued that the 1942 Restatement of Judgments no longer expresses the rules of the common law to the extent it requires mutuality, and that therefore the common law 'as generally understood and applied in the United States' governs.”).\n. Two examples illustrate my point. The first is the court’s statement that \"[e]ven if there were some level of award that would itself evidence prejudice and passion” and thus warrant a new trial, \"we cannot hold that the $25 million award here, albeit large, necessarily indicates a verdict tainted by prejudice and passion.” Maj.Op. at 1383. The court goes on to hold, however, that this award was not only \"large” but 25 times too large. Thus, the court in effect holds that even if an award could be so big that it would show passion or prejudice, an award that is merely 25 times too big is not big enough. I must say that I do not find this reasoning compelling.\nThe second example is the court’s statement that \"a typical ratio for a punitive damages award to a defendant’s net worth may be around one percent.” Maj.Op. at 1383. This pronouncement is based on a footnote in Cash v. Beltmann North American Co., 900 F.2d 109, 111 n. 3 (7th Cir.1990), which in turn cited ,as support for this proposition six reported cases in which the average ratio was 0.49% and the median was 0.21%. The footnote also includes a \"but see” citation to two additional cases in which the ratios were 40% and 23.33%. To my mind, this extremely small and disparate sample does not show what the typical ratio is in fact. More important, this sample clearly does not show what ratio is needed to serve the purposes of punitive damages — to deter and punish.", "type": "concurrence", "author": "ALITO, Circuit Judge,"}, {"text": "WEIS, Circuit Judge,\ndissenting.\nI dissent from the judgment of the court permitting punitive damages in this case.\nAsbestos litigation is unique. The large number of persons exposed to asbestos has caused a proliferation of claims, the likes of which courts have never seen, causing serious concern that the traditional tort system cannot adequately process the litigation. As this Court said in In re School Asbestos Litigation, 789 F.2d 996, 1000 (3d Cir.1986), asbestos litigation presents “an unparalleled situation in American tort law.”\nIn 1986, an estimated 30,000 personal injury suits had been filed against asbestos manufacturers and producers. Id. That figure has since increased substantially. By 1990, 30,401 asbestos cases were pending in the federal courts alone, with about double that amount in the state courts, for a total of approximately 90,000 cases. Judicial Conference Ad Hoc Comm. on Asbestos Litig., Report to the Chief Justice of the United States and Members of the Judicial Conference of the United States (Mar. 1991), reprinted in Asbestos Litig. Rep., Mar. 14, 1991, at 22,-698, 22,702-03. A study completed by the National Center for State Courts reports that there may be as many as 129,000 cases pending in state courts alone, making the total of federal and state cases approximately 160,000. State Judges Asbestos Litig. Comm., Megatorts: The Lessons of Asbestos Litigation (July 21, 1992), reprinted in Mea-ley’s Litig. Rep. — Asbestos, Nov. 20, 1992, at B-l. Another report estimates that between 1990 and 2049 another 668,363 asbestos-related claims will be filed. Eric Stallard & Kenneth Mantón, Estimates and Projections of Asbestos-Related Mesothelioma and Exposures Among Manville Personal* Injury Settlement Trust Claimants, 1990-2049, at 42 (Draft Nov. 9, 1992).\nIt is not only claims for personal injuries and deaths resulting from asbestos that have inundated the courts. In addition, thousands and thousands of property damage cases further diminish the available pool of resources. See, e.g., In re School Asbestos Litig., 789 F.2d at 1005.\nAs might be expected, the flood of asbestos cases has taken its toll on the defendant asbestos manufacturers. The Ad Hoc Committee reported that of the twenty-five major asbestos companies, eleven had filed petitions in bankruptcy. Judicial Conference Ad Hoc Comm., supra, at 22,705. Later reports indicate that fifteen or sixteen companies have filed for bankruptcy. State Judges Asbestos Litig. Comm., supra, at B-2; Don J. DeBenedictis, Model for Asbestos Settlements, A.B.A.J., Apr. 1993, at 22. Moreover, that “number does not include the numerous smaller distributors that have been targeted in the wake of absent manufacturers and who have in turn become insolvent.” Peter H. Schuck, The Worst Should Go First: Deferral Registries in Asbestos Litigation, 15 Harv.J.L. & Pub.Pol’y 541, 555 (1992).\nThe first of the major asbestos manufacturers to enter bankruptcy was Johns-Man-ville, which sought to use Chapter 11 essentially as a giant interpleader action. As part of the Manville reorganization, a trust was created to settle pending and future asbestos claims. Although the trust concept had the potential for equitably distributing assets to present and future claimants, the bankruptcy proceeding was itself very expensive and the results ultimately proved to be unsatisfactory.\nEven though punitive damages were not allowed, the trust was essentially insolvent after operating for only a year and a half. In re Joint E. & S. Dist. Asbestos Litig., 129 B.R. 710, 754 (E. & S.D.N.Y.1991), vacated on procedural grounds, 982 F.2d 721 (2d Cir.1992). Reports indicate that the trust received 192,347 claims, Stefan Fatsis, Lower Sums for Victims of Asbestos, quoted in Phila. Inquirer, Mar. 18, 1992, at C8, and that the trust’s funds of approximately $2.6 billion were overshadowed by present and future liabilities estimated as high as $7 billion, see In re Joint E. & S. Dist. Asbestos Litig., 129 B.R. at 765. The swift depletion of assets was caused by high transaction costs, the failure to anticipate the magnitude of claims, and the fact that the average settlement was much higher than expected. Id. at 754-62. Additionally, the trust paid on a first come, first served basis, rather than on priority determined by the extent of injury.\nThe district court intervened to impose measures for a more equitable distribution of the funds and eventually approved an arrangement that altered the distribution process so that those most seriously injured were paid first. Id. at 768-70. In addition, a serious attempt was made to predict future claims so that present and future claimants would be paid an equitable percentage of their claims’ value. Id.\nIn commenting on the settlement, the district court noted the grim prospects for future asbestos claimants in the absence of a solution. The current defendants “do not have, and they probably will not have, assets to pay for their current and contingent asbestos liabilities given the present mode of disposing of asbestos claims.” Id. at 907. The Manville experience, thus, demonstrates that even purely compensatory payments for future claims are in jeopardy.\nSubsequent claims and bankruptcy filings have increased the likelihood that future claimants will not be able to recover for their injuries. As the Ad Hoe Committee said:\n“[A] large number of individuals have claims ... that are not yet ripe for adjudication. Because many of the defendants in these cases have limited assets that may be called upon to satisfy the judgments obtained under current common tort rules and remedies, there is a ‘real and present danger that the available assets will be exhausted before those later victims can seek compensation to which they are entitled.’ Jackson v. Johns-Manville Sales Corp., 750 F.2d 1314, 1330 (5th Cir.1985), cert. denied, 478 U.S. 1022, 106 S.Ct. 3339, 92 L.Ed.2d 743 (1986).”\nJudicial Conference Ad Hoc Comm., sttpra, at 22,715-16. As one of its recommendations to Congress, the Committee suggested legislation “requiring treatment of available assets to take into account future claimants.” Id. at 22,716.\nIt is within this setting of burgeoning litigation, corporate collapse, and future compensatory inadequacy that the present case involving punitive damages arises.\nThis Court is confronted for the first time with an asbestos case brought under Virgin Islands law where punitive damages have been awarded. We are in a position similar to that of state supreme courts in determining the common law and Restatements applicable within this jurisdiction. We write on a clean slate and shoulder a clear responsibility to resolve a difficult issue. We are .not bound, nor excused, by mistaken determinations in other jurisdictions in the past.\nThe desirability of permitting punitive awards has been subjected to vigorous assault in recent years, particularly in cases like the one before us. Whether the theories underlying exemplary damages hold true in the mass tort context has been questioned in such cases as: In re Bendectin Prod. Liab. Litig., 749 F.2d 300, 305-07 (6th Cir.1984); In re Northern Dist. of Cal., Dalkon Shield IUD Prod. Liab. Litig., 693 F.2d 847, 851-52 (9th Cir.1982); In re Federal Skywalk Cases, 680 F.2d 1175, 1179-83 (8th Cir.1982); and In re “Agent Orange” Prod. Liab. Litig., 100 F.R.D. 718, 725 (E.D.N.Y.1983). In none of those instances, however, did the problem match the magnitude of the asbestos litigation crisis. As the State Judges Litigation Committee reports, “There is no more controversial issue in mass tort litigation than punitive damages.” State Judges Asbestos Litig. Comm., supra, at B-9.\nI do not propose to enter the debate here over the merits of punitive damages in general. For purposes of this case, I accept the premise that in appropriate cases punitive damages may be assessed in the Virgin Islands. See Restatement (Second) of Torts § 908(2); Acosta v. Honda Motor Co., 717 F.2d 828, 833-41, (3d Cir.1983). However, it is necessary to discuss the justifications for punitive damages and whether those purposes are served in the mass tort area.\nI propose to meet head-on an issue presented here — that is, whether unfairness to injured persons whose claims will come due after available funds have been exhausted requires a common law bar on continuing punitive awards. I will also review punitive awards in terms of unfairness to asbestos defendants and due process. See TXO Prod. Corp. v. Alliance Resources Corp., — U.S. —, 113 S.Ct. 2711, 125 L.Ed.2d 366 (1993); Pacific Mut. Life Ins. v. Haslip, 499 U.S. 1, 26-27, 111 S.Ct. 1032, 1053, 113 L.Ed.2d 1 (1991). Although there are serious questions of bias, prejudice, and improper closing arguments to the jury present in this record, I will not discuss them here.\nI.\nCOMMON LAW PUNITIVE DAMAGES\nThe Restatement (Second) of Torts § 908(2) provides that “[pjunitive damages may be awarded for conduct that is outrageous, because of the defendant’s evil motive or his reckless indifference to the rights of others.” (emphasis supplied). Comment a explains that “[t]he purposes of awarding punitive damages ... are to punish the person doing the wrongful act and to discourage him and others from similar conduct in the future.”\nWhen considering punitive awards, several basic principles must be emphasized. First, punitive damages are designed for retribution and deterrence. “They are not compensation for injury. Instead, they are private fines levied by civil juries to punish reprehensible conduct and to deter its future occurrence.” Gertz v. Robert Welch, Inc., 418 U.S. 323, 350, 94 S.Ct. 2997, 3012, 41 L.Ed.2d 789 (1974). The fairness inherent in due process requires that punitive assessments not exceed those amounts necessary to inflict retribution and prevent reoccurrence. See, e.g., Vasbinder v. Scott, 976 F.2d 118, 121 (2d Cir.1992). When retribution and deterrence are accomplished without the imposition of punitive damages, use of that weapon is no longer justified.\nSecond, punitive damages are a windfall. They do not reimburse losses that plaintiffs have suffered, but provide an amount over and above that necessary for fair compensation. See, e.g., City of Newport v. Fact Concerts, Inc., 453 U.S. 247, 267, 101 S.Ct. 2748, 2759, 69 L.Ed.2d 616 (1981).\nThird, there is no compelling reason why injured but fully compensated plaintiffs should receive punitive awards. The aims of retribution and deterrence can be accomplished by making punitive damages payable to the state. Indeed, nine states have enacted statutes that designate that a portion of any punitive award goes to the state, ranging from 20% in New York to 75% in Iowa and Georgia. Colo.Rev.Stat. § 13-21-102(4); Fla.Stat.Ann. § 768.73; Ga.Code Ann. § 51-12 — 5.1(e)(2); Ill.Ann.Stat. ch. 110, para. 2-1207; Iowa Code Ann. § 668A.l(2)(b); Mo. Ann.Stat. § 537.675; N.Y.Civ.Prac.L. & R. § 8701; Or.Rev.Stat. § 18.540; Utah Code Ann. § 78-18-K3).\nIn the asbestos context, punitive awards are not needed for retribution and deterrence. Actually, there is little conduct to deter because few asbestos-containing products are still manufactured in the United States. Owens-Corning, the defendant in this case, ceased manufacturing asbestos-containing Kaylo in November 1972, more than twenty years 'ago, and no longer produces or distributes any asbestos-containing products. That being so, this punitive award cannot be justified by a concern that Owens-Corning will continue its challenged practice in the future. See Magallanes v. Superior Court, 167 Cal.App.3d 878, 213 Cal.Rptr. 547, 552 (Ct.App.1985) (“[T]he objective of deterrence has little relevance where the offending goods have long since been removed from the marketplace.”).\nMoreover, the avalanche of compensatory claims against asbestos manufacturers has surely served as more of a punishment and deterrent than individual punitive assessments in isolated cases against manufacturers of other types of products. As one judge has explained:\n“No manufacturer could engage consciously in wrongdoing that would expose it to such overwhelming strict liability with any reasonable expectation of doing so profitably. On the contrary, the prospect of exposure to massive litigation in strict liability provides the impetus for manufacturers to take affirmative steps to ensure the safety of their products, since mere non-negligent behavior is no guarantee against strict liability.\nThe significance of punitive damages as a deterrent depends upon the size of the penalty increase relative to the ‘base penalty’ exacted by strict liability compensatory awards. Because of the dimensionless character of the prospects for future litigation in this instance, the ‘base penalty,’ for all practical purposes, is illimitable. Correspondingly, the significance of punitive damages as a deterrent diminishes to the vanishing point.”\nJackson v. Johns-Manville Sales Corp., 727 F.2d 506, 527 (1984), vacated, 750 F.2d 1314 (5th Cir.1985) (en banc).\nThat point is illustrated strikingly by Owens-Corning’s experience. Compensatory awards have consumed all profits made from the sale of asbestos-containing products. Total gross sales of Kaylo were $142,720,000. As of May 31, 1991, defendant had paid claims for “hundreds of millions of dollars” in 62,588 cases and incurred litigation expenses in excess of $100 million. In 1990 alone, $117 million was paid on 12,300 claims. In addition, 86,192 cases are presently pending with hundreds more being filed each month. In these circumstances, punitive awards are certainly not necessary to provide an effective deterrent.\nSome courts and commentators have expressed concerns that the denial of punitive damages in a mass tort setting might in effect reward defendants because the harm caused was so extensive. However, such concerns have no validity here. It is disingenuous to speak of reaping a “reward” when compensatory damages dwarf any profits made from asbestos-containing products and those damages by themselves have forced manufacturers into bankruptcy.\nThe Ad Hoc Committee cited a 1984 Rand study reporting that in a sample period between 1980 and 1982, punitive damages total-ling $4,934,000 had been awarded in asbestos cases. Judicial Conference Ad Hoc Comm., supra, at 22,724 n. 54. More recent figures are substantially higher. In testimony before a House Subcommittee on February 26, 1992, Judge William Schwarzer, the Director of the Federal Judicial Center, said:\n“Punitive damages compete with compensatory damages for the increasingly scarce resources of asbestos defendants and their insurers. Until the claims of future claimants become liquidated, distribution of punitive damages to current claimants creates a risk of exhausting funds before potential claimants discover their injuries. Some mechanism to avoid this outcome, at least until more precise information becomes available about future claims, may be necessary for a national solution that has meaning for future claimants.”\nAsbestos Litigation Crisis in Federal and State Courts: Hearings Before the Subcomm. on Intellectual Property and Judicial Administration of the House Comm. on the Judiciary, 102d Cong., 2d Sess. 132-33 (1992) (statement of Hon. William W. Schwarzer).\nJudge Schwarzer also noted that less than 1% of asbestos cases proceed to judgment. Id. at 137. Thus, punitive damages as such are only available in that small percentage of cases. Moreover, they are not awarded in every trial even though the same defendant and the same conduct is at issue. Nevertheless, the potential for punitive awards is a weighty factor in settlement negotiations and inevitably results in a larger settlement agreement than would ordinarily be obtained. To the extent that this premium exceeds what would otherwise be a fair and reasonable settlement for compensatory damages, assets that could be available for satisfaction of future compensatory claims are dissipated. Id. at 137-38.\nRather early in the wave of asbestos litigation, a minority of the Court of Appeals for the Fifth Circuit forcefully questioned whether the industry’s resources would be adequate to compensate future claimants. Jackson v. Johns-Manville Sales Corp., 750 F.2d 1314, 1330 (5th Cir.1985) (en banc) (Clark, J., joined by four others dissenting), later appeal, 781 F.2d 394, 415-17 (5th Cir.1986) (en bane) (Clark, J., joined by four others dissenting). A majority of that Court decided to certify to a state court the question of whether plaintiffs could recover punitive damages in asbestos cases. The dissenting judges, arguing that the problem was national' in scope, advocated taking a more forceful stand. Noting that the “field of asbestos litigation [had] exploded,” they pointed out that an “already astronomical and still growing number of plaintiffs [are] seeking individual recoveries against a finite pool of assets belonging to a relatively small group of defendants.” Jackson, 750 F.2d at 1330.\nTaking issue with the decision to certify the question to the state court, the dissent observed that “[a] state seeking to protect its own citizens can only shape its law to maximize the recovery of its own early plaintiffs, so that at least those individuals will not be impeded in the legal scramble for. a share of insufficient assets.” Id. The situation has only worsened since the time of the Jackson opinions, and a panel of that same Court in 1990 conceded its “misgivings” over awarding punitive damages in asbestos cases, but found itself shackled by binding precedent. King v. Armstrong World Indus., 906 F.2d 1022, 1033 (5th Cir.1990). ‘\nAs the Jackson dissent commented and as we discussed in In re School Asbestos Litigation, 789 F.2d at 1001, parochial concerns tend to influence the decision to make punitive damages available in cases of this nature. That approach was apparent, for example, in Fischer v. Johns-Manville Corp., 103 N.J. 643, 512 A.2d 466 (1986). In discussing the suggestion that a limitation on punitive awards be imposed, the Fischer Court said: “Such a cap would be ineffective unless applied uniformly. To adopt such a cap in New Jersey would be to deprive our citizens of punitive damages without the concomitant benefit of assuring the availability of compensatory damages for later plaintiffs. This we decline to do.” Id. at 478. What that opinion failed to acknowledge was that giving windfall punitive awards to early plaintiffs poses the likely prospect that some future New Jersey plaintiffs will be unable to recover compensatory damages for their injuries.\nThe New Jersey Supreme Court also stated that it failed “to see the distinction, in the case of Johns-Manville [before its bankruptcy], between the effect of compensatory damages and that of punitive damages.” Id. at 477. To some extent, the Court was correct. Every dollar expended on punitive awards, as well as those expended in compensatory damages, will diminish, eventually to the point of exhaustion, resources available for paying future plaintiffs’ claims. There is, however, an important distinction. Compensatory damages are a remedy for injuries suffered. Punitive awards are not. A dissenting justice in Fischer posed an apt rhetorical question: “But why, for example, should a few Daikon Shield users receive several millions in punitive-damages awards, while others receive nothing from the bankrupt A.H. Robins Co.?” Id. at 488 n. 3 (O’Hern, J., dissenting).\nUnquestionably, a national solution is needed. Despite the deteriorating situation, Congress has declined to act, and class actions are an inadequate remedy. In the meantime, the drain on available resources continues. It is time — perhaps past due — to stop the hemorrhaging so as to protect future claimants.\nThe parochial concerns that have influenced some states to allow punitive damages would justify the majority’s decision here. But at some point, some jurisdiction must face up to the realities of the asbestos crisis and take a step that might, perhaps, lead others to adopt a broader view. Courts should no longer wait for congressional or legislative action to correct common law errors made by the courts themselves. Mistakes created by courts can be corrected by courts without engaging in judicial activism. It is judicial paralysis, not activism, that is the problem in this area. As we said in Frilette v. Kimberlin, 508 F.2d 205, 212 (3d Cir.1974) (en banc), it is not necessary to wait for legislative action when the error was judge made and it can be corrected in the same fashion. “We cannot escape the fact that what has been done is in the nature of what, in the words of Chief Justice Hughes, might be called a ‘self-inflicted wound.’ ” Id.\nI am persuaded that, at this point, the available resources of asbestos manufacturers will be exhausted before all deserving claimants have received compensatory damages. Predictions of future events, of course, always carry some risk of error. In this instance, however, the storm warnings are too foreboding to be brushed aside. Absolute certainty likely will appear only after disaster has struck — when the time for effective anticipatory action has vanished. If there is to be error in forecasting, I would prefer that it be in favor of redress for future claimants, rather than largesse for those who have received adequate relief.\nThe cruel reality underlying the issue in this case cannot be ignored. As Chief Judge Clark said in the Jackson case: “This seminal case concerns much more than [an] individual claim_ We know better. Our dockets tell us so_” 781 F.2d at 416. It is already late in the day, but we have an obligation to take what steps we can.\nIt should require no extended discussion to conclude that in establishing a proper priority, compensation for victims should rank first. Next must come necessary but reasonable administrative costs attributable to compensation. Far down the list — if not at the very bottom — should come punitive awards, which are by definition over and above adequate compensation. Exemplary awards are an element that can equitably and easily be eliminated.\nUnder current conditions, even if the purposes of punishment and deterrence were served, it is fanciful to believe that such factors are worthy of consideration in assessing priorities to limited funds. In this context, the benefits of punitive awards are outweighed by their costs to society. Cf. David G. Owen, The Moral Foundations of Punitive Damages, 40 Ala.L.Rev. 705, 724-25, 737-39 (1989). Punishment and deterrence cannot justify extra-compensatory awards when they penalize future claimants by depleting available funds.\nSociety’s interest in protecting future claimants demands that present plaintiffs— both those who go to trial and those who settle — forego the “bonus” offered by punitive damage verdicts or high settlements achieved by their threat. Courts must recognize that the public interest outweighs parochial concerns in having citizens within their jurisdictions “get theirs” now. Such a selfish approach, after all, is unjust, not only to future claimants in other parts of the country, but within the courts’ own jurisdictions as well.\nI have no doubt that this Court has the power to prohibit punitive awards in asbestos cases within the Virgin Islands and I am convinced that it has an obligation to do so in order to protect the interests of those whose claims for compensation will be jeopardized.\nII.\nDUE PROCESS\nSome of the same considerations that are important in deciding whether punitive awards are appropriate under local law also play a part in determining whether the assessment of such sums violates due process.\nAlthough plaintiff here asserts that Owens-Corning failed to provide a sufficient basis for a ruling on due process, the record establishes that pretrial motions to dismiss punitive damage claims were denied by the district court. After the jury had begun its deliberations on punitive damages in the bifurcated trial, the defense renewed its contention that they would be unconstitutional because of previous awards. Counsel stated that four punitive awards had been entered against Owens^Corning, but indicated that there might be others as well.\nThe district court concluded that a punitive award would not be unconstitutional because “even in view of [defendant’s] negative net worth [the amount] is certainly not enough to sting the company ... [a]nd it’s not unconstitutional because your client to this date has been subjected to a huge burden with respect to punitive damages.”\nIn post-trial proceedings, the district court directed both parties to furnish information on punitive awards in other asbestos cases during the preceding two years. In response, plaintiff listed thirty-eight cases— two of which included punitive awards against Owens-Corning of $4,150,000 and $5,000,000. In his statement, plaintiff admitted that “other juries had reached the same conclusion regarding OCF’s conduct and awarded punitive damages accordingly.”\nDefendant filed an extensive compilation, and an analysis of the thirty-eight cases listed by plaintiff, together with an affidavit detailing the punitive awards against Owens-Corning to that date. In its submission, defendant listed $19,975,000 awarded against it in punitive damages.\nOn this record, defendant adequately preserved its objections asserting a denial of due process.\nThe Supreme Court has indicated that punitive awards may violate substantive due process. In TXO, — U.S. at —, 113 S.Ct. at 2720, the Court concluded that as to the verdict at issue there, “we are not persuaded that the award was so ‘grossly excessive’ as to be beyond the power of the State to allow.” In Haslip, 499 U.S. at 35 n. 11, 111 S.Ct. at 1052 n. 11, the Court noted that punitive awards may be required to comport with “procedural and substantive [due process] protections.”\nDue process concerns are present in two aspects that have a correlation to the criminal field — proportionality and repetitiveness. The Supreme Court has made it clear that the Excessive Fines Clause of the Eighth Amendment and the Double Jeopardy Clause of the Fifth Amendment are not directly applicable to suits between private litigants. See Browning-Ferris Indus. v. Kelco Disposal, Inc., 492 U.S. 257, 260, 109 S.Ct. 2909, 2912, 106 L.Ed.2d 219 (1989); United States v. Halper, 490 U.S. 435, 451, 109 S.Ct. 1892, 1903, 104 L.Ed.2d 487 (1989); see also Hansen v. Johns-Manville Prod., 734 F.2d 1036, 1042 (5th Cir.1984). Nevertheless, the analogy between “punishment” in the criminal field and exemplary awards in civil litigation is strong enough that the rationale in the former area is useful in analyzing the scope of the latter.\nAs one commentator remarked, “[T]o punish the guilty beyond their guilt is not different from punishment of the innocent, and it cannot be done in a manner consistent with ordinary notions of justice.” Dan B. Dobbs, Ending Punishment in “Punitive” Damages: Deterrence-Measured Remedies, 40 Ala.L.Rev. 831, 854 (1989). “By definition, punitive damages are based upon the degree of defendant’s culpability.” Massachusetts Bonding & Ins. v. United States, 352 U.S. 128, 133, 77 S.Ct. 186, 189, 1 L.Ed.2d 189 (1956).\nNeither TXO nor Haslip provide much guidance in the mass tort area because the wrongful conduct in each case affected only the other party to the suit. Obviously, such limited disputes are quite unlike asbestos litigation, where literally thousands of plaintiffs have brought suits against a relatively small number of manufacturers and where punitive awards are sought on essentially the same basis — an alleged failure to warn.\nAs a.further complication in the asbestos field, sheer volume, varying state laws, and concerns for future, not-yet-identified, claimants make consolidation of all the asbestos claims impossible. Legal scholars have discussed this problem and proposed legislation to permit class actions and similar procedures to remedy the problem.\nSome commentators suggest that the first award of punitive damages arising from a course of conduct should preempt all subsequent punitive claims. Others point to the asserted unfairness of permitting early plaintiffs to receive all of the punitive damages that can rationally be sustained, thus depriving later claimants of a similar opportunity. Still others suggest that juries in later cases should be fully informed as to all of the punitive damages that have been previously awarded. Asbestos defendants object to this proposal because such information might prejudice jurors, convincing them that.punitive damages should be awarded in all cases.\nEach of those proposals present problems of their own. The formidable complications unique to the mass tort field have led most courts that have been presented with due process challenges to deflect the attack by deciding each case on a subsidiary factual or procedural issue and deferring to a later date the thorny question of due process. See, e.g., Johnson v. Celotex Corp., 899 F.2d 1281, 1287-88 (2d Cir.1990) (inadequate record); Racich v. Celotex Corp., 887 F.2d 393, 397 (2d Cir.1989) (same).\nEven the few opinions that have thoughtfully discussed due process objections have been deterred by governing law in their jurisdiction. For instance, in Juzwin v. Amtorg Trading Corp., 705 F.Supp. 1053 (D.N.J.), vacated, 718 F.Supp. 1233 (D.N.J.1989), the court was troubled by the serial'imposition of punitive damages in asbestos cases, but ultimately decided that it would be inequitable to deny them to one plaintiff when other plaintiffs in the same and other state jurisdictions would nevertheless still have the opportunity to seek such awards. That approach is understandable, but undesirable nevertheless. The rationale is faulty because it skews the scales by placing the emphasis on the wrong party.\nThe earlier part of this opinion weighed the rights of future claimants to compensation against the opportunity of current claimants to receive windfalls. That balancing did not rest on a concern for asbestos defendants, but rather was based on the assumption that they owed fair and reasonable compensation based on either negligence or strict liability — even to the extent of insolvency.\nHowever, because punitive awards are windfalls and not compensation, courts should place less emphasis on plaintiffs’ rights when evaluating due process arguments. Plaintiffs’ entitlements are, after all, met by compensatory damages. Instead, when considering the substantive due process limits on punitive awards, a court’s analysis should focus on the defendants. See Malcolm E. Wheeler, The Constitutional Case for Reforming Punitive Damages Procedures, 69 Va.L.Rev. 269, 292 (1983) (“As courts have uniformly held, no plaintiff has a right to punitive damages: the purpose of punitive damages is to vindicate the public interest, not that of a particular plaintiff.”).\nIf it were possible for a single jury to consider the extent of harm as well as the number of victims and then factor that data into a single punitive award against an asbestos manufacturer, there would be no basis for imposing punishment thereafter. See, e.g., In re “Agent Orange” Prod. Liab. Litig., 100 F.R.D. at 728 (“In theory, ... when a plaintiff recovers punitive damages against a defendant, that represents a finding by the jury that the defendant was sufficiently punished for the wrongful conduct. There must, therefore, be some limit, either as a matter of policy or as a matter of due process, to the amount of times defendants may be punished for a single transaction.”). The difficulty is that in asbestos litigation, no single jury can assess a punitive damage award that includes all victims. Thus, courts must confront the unavoidable and undeniable fact that defendants are being punished over and over again for the same general course of conduct. See Roginsky v. Richardson-Merrell, Inc., 378 F.2d 832, 839-41 (2d Cir.1967).\nAlthough Halper, 490 U.S. at 451, 109 S.Ct. at 1903, found that the “protections of the Double Jeopardy Clause are not triggered by litigation between private parties,” that opinion uses language that is quite instructive in a due process analysis. As the Court observed:\n“It is commonly understood that civil proceedings may advance punitive as well as remedial goals, and, conversely, that both punitive and remedial goals may be served by criminal penalties. The notion of punishment, as we commonly understand it, cuts across the division between the civil and the criminal law.... Simply put, a civil as well as a criminal sanction constitutes punishment when the sanction as applied in the individual case serves the goals of punishment.”\nId. at 447-48, 109 S.Ct. at 1901 (citations omitted). Those goals are retribution and deterrence. Id. at 448, 109 S.Ct. at 1901; see also Austin v. United States, — U.S. — , 113 S.Ct. 2801, 125 L.Ed.2d 488 (1993) (question is not whether statutory forfeiture is “civil or criminal, but rather whether it is punishment”).\nBecause punitive damage awards serve the same purposes as criminal sanctions, Courts of Appeals concede that, at some point, multiple punitive awards in mass tort cases violate due process. See, e.g., Simpson v. Pittsburgh Corning Corp., 901 F.2d 277, 281-82 (2d Cir.1990); Johnson, 899 F.2d at 1287-88; Racich, 887 F.2d at 398 (“We agree that the multiple imposition of, punitive damages for the same course of conduct may raise serious constitutional concerns, in the absence of any limiting principle.”); cf. In re School Asbestos Litig., 789 F.2d at 1004-05. Those opinions, however, have not extensively explored the dimensions of this constitutional argument.\nInitially, it is important to note the wrongful conduct charged to asbestos manufacturers — a failure to warn of the dangerous characteristics of the substance for years after those dangers became known to the industry. We also observe that asbestos was taken off the market in 1971. Punitive awards that are made today, therefore, punish corporate defendants over and over again for transgressions that occurred thirty to sixty years ago. Payment of those awards not only jeopardizes the ability to provide compensation for future plaintiffs, but also, by forcing companies into bankruptcy, injures employees, customers, and trade creditors who took no part in, and had no knowledge of, the wrong doing.\nMoreover, unlike the situation in TXO, these cases do not involve a scenario in which the incumbent corporate officials personally participated in fraudulent and malicious activity. Punitive awards in asbestos cases usually do not punish the individuals who were responsible for the offensive conduct. See American Law Inst., supra, at 254-55. Thus, in this field, punishment is not only repetitive, but is inflicted on. a vicarious basis. Basic notions of due process are offended by punishment that occurs over and over again as has happened in asbestos litigation.\nIt may be argued that it would be unfair to disallow punitive awards at this point' because current plaintiffs thus will not receive what earlier ones did. That is true. Nevertheless, such unevenness does not justify continued punishment of asbestos defendants. It would have been better had the matter of punitive damages been resolved at the beginning of the asbestos crisis, but it was not. Courts must grapple with the problem as it now exists. We are confronted with the alternative of permitting current plaintiffs to receive windfalls or stopping punishment that violates due process. The choice is obvious.\nThe other phase of substantive due process is proportionality. In its opinion, the Haslip majority noted that substantive due process “standards provide for a rational relationship in determining whether a particular award is greater than reasonably necessary to punish and deter.” 499 U.S. at 35, 111 S.Ct. at 1052. Similarly, in her dissent, Justice O’Connor recognized that whether an award is grossly excessive is an “important substantive due process concern.” Id. at 92, 111 S.Ct. at 2002 (O’Connor, J., dissenting). We may take from Haslip, therefore, that a punitive award that is greater than reasonably necessary to punish and deter violates substantive due process. See id. at 31-32, 111 S.Ct. at 1057.\nCourts must also remember that punitive damages are intended to “sting,” not to destroy. See In re Northern Dist. of Cal. “Dalkon Shield” IUD Prods. Liab. Litig., 526 F.Supp. 887, 899 (N.D.Cal.1981), vacated on other grounds, 693 F.2d 847 (9th Cir.1982). Indeed, in its early years the common law dictated that punitive awards should not be so large as to threaten the economic viability of defendants.\nBecause punitive damages are quasi-criminal, an analogy may be found in the early English practice of amercements. See John C. Jeffries, Jr., A Comment on the Constitutionality of Punitive Damages, 72 Va.L.Rev. 139, 154-58 (1986). A wrongdoer could buy “peace” through the payment of a fíne or amercement to the king. Id. at 154. Chapter 20 of the Magna Carta, 9 Hen. III, ch. 14 (1225), limited the king’s power to impose fines, providing that a freeman shall be amerced “saving always his position; and a merchant in the same way, saving his trade; and a villein shall be amerced in the same way, saving his tillage.” James Tait, Studies in Magna Carta: Waynagium and Contenementum, in 27 Eng.Hist.Rev. 720, 727 (Reginald L. Poole ed. 1912). Thus, the penalty inflicted should not, in any event, destroy the offender’s means of making a living in his particular trade or calling. Magna Carta guaranteed not just bare survival, but continued productive economic viability.\nHaving arrived at the principle that at some point further repetitive punitive damages are neither rational nor fair, the difficult question is how to determine when that point has been reached. Some assistance may be found in the approach that courts use to determine whether a traditional punitive award is excessive. Many of the same factors considered in the usual one-on-one case are helpful.\nFor example, in Haslip, 499 U.S. at 30-31, 111 S.Ct. at 1057, the Court approved Alabama’s judicial review that included such considerations as:\n(a) a reasonable relationship between the award and harm from defendant’s conduct;\n(b) the reprehensibility of defendant’s conduct, its duration, defendant’s awareness or concealment, and the existence and frequency of past misconduct;\n(c) the profitability to defendant of the conduct;\n(d) the financial position of defendant;\n(e) all the costs of litigation;\n(f) the imposition of criminal sanctions; and\n(g) the existence of other civil awards against defendant for the same conduct.\nIn TXO, — U.S. at —, 113 S.Ct. at 2719, the plurality opinion relied on a general concern of reasonableness. In general, these considerations give the courts some basis on which to decide whether punitive damages should be permitted. However, other matters unique to mass torts — other punitive awards, the effect of those awards on current and future claimants for compensation, and the adverse effect on settlement of pending claims — must also enter into the calculus. After taking all these factors into account to determine that a defendant has been adequately deterred and punished, a court must strike down all subsequent punitive awards in order to preserve due process.\nAs a practical matter, we note that those manufacturers that have become bankrupt may have already escaped from the burden of punitive damages. To the extent, however, that liability for exemplary awards may be joint and several in some jurisdictions, the inability of one defendant to pay punitives imposes an additional burden on those still solvent.\nThe amount of awards returned against Owens-Corning is ' more than enough for punishment. Although some verdicts may have been reduced on appeal and others compromised in later settlement agreements, that diminution is no doubt more than offset by the amount other settlements have been inflated because of the threat of punitive damages.\nThe fact that this company concedes that it would not be driven into bankruptcy by the punitive damage award here does not moot due process objections. If bankruptcy is the test, then due process relief will always come too late. In this case, punitive awards already assessed against Owens-Corning equal a substantial portion of the company’s total Kaylo sales. The sum of compensatory awards, punitive damages, and litigation expenses dwarf any profits.\nOwens-Corning has been able to remain solvent by producing goods not related to its ill-fated venture into asbestos products. That fact should have no bearing on whether defendant should be punished more than a company whose activities were limited to asbestos and has become bankrupt. Repetitious punishment should not depend on the wealth or poverty of the offender. Due process is the right of every citizen, corporate or individual, wealthy or impoverished. Moreover, and perhaps more importantly,' although the case before us only involves one defendant, the holding will apply to other asbestos litigation within this circuit.\nI am persuaded that the punitive damages award against Owens-Corning should be stricken. The amounts awarded in prior litigation have been more than adequate to meet the needs of punishment and deterrence. Thus, permitting an award to the plaintiff serves no rational purpose.\nI dissent.\nJudge GREENBERG, Judge HUTCHINSON, and Judge SCIRICA join in this dissent.\n. For a representative — but by no means complete — sample of articles, see Dennis N. Jones, et al., S. Brett Sutton & Barbara D. Greenwald, Multiple Punitive Damages Awards for a Single Course of Wrongful Conduct: The Need for a National Policy to Protect Due Process, 43 Ala.L.Rev. 1 (1991); Richard A. Seltzer, Punitive Damages in Mass Tort Litigation: Addressing the Problems of Fairness, Efficiency and Control, 52 Fordham L.Rev. 37 (1983); Special Project, An Analysis of the Legal, Social, and Political Issues Raised by Asbestos Litigation, 36 Vand.L.Rev. 573 (1983); Symposium, Punitive Damages, 40 Ala.L.Rev. 687 (1989); Symposium, Punitive Damages, 56 S.Cal.L.Rev. 1 (1982).\n. Professor Prosser, a Reporter for the Restatement (Second) of Torts, conceded that punitive damages in mass torts present a \"problem which has arisen to haunt the courts.” Noting the issue of multiple awards, he wrote: \"The question might well lead to a re-examination of the whole basis and policy of awarding punitive damages.” William L. Prosser, The Law of Torts § 2, at 13 (4th ed. 1971). Indeed, a recent report to the American Law Institute suggests major alterations in the law of punitive damages. 2 American Law Inst., Reporters' Study on Enterprise Responsibility for Personal Injury: Approaches to Legal and Institutional Change 256-64 (1991).\n. See E. Jeffrey Grube, Punitive Damages: A Misplaced Remedy, 66 S.Cal.L.Rev. 839, 850-55 (1993).\n. The constitutionality of such provisions has been challenged in three of those states. In Gordon v. State, 585 So.2d 1033, 1035-36 (Fla.App.1991), aff'd, 608 So.2d 800 (Fla.1992), cert. denied, - U.S. -, 113 S.Ct. 1647, 123 L.Ed.2d 268 (1993), the Court found the Florida provision constitutional because a claimant does not have a cognizable right to the recovery of punitive damages. However, in McBride v. General Motors Corp., 737 F.Supp. 1563 (M.D.Ga.1990), and Kirk v. Denver Pub. Co., 818 P.2d 262 (Colo. 1991), the courts found statutes unconstitutional. McBride held that the Georgia statute violated the Equal Protection Clause because it only applied to product liability claimants and allowed non-product liability claimants to recover 100% of their awards. 737 F.Supp. at 1569-70. Kirk ruled that a punitive damages judgment is a private property right and that the Colorado statute is an unconstitutional taking of property. 818 P.2d at 272.\n.Lester Brickman, The Asbestos Litigation Crisis: Is There a Need for an Administrative Alternative?, 13 Cardozo L.Rev. 1819, 1863-66 (1992).\n. \"[W]e do not believe that defendants should be relieved of liability for punitive damages merely because, through outrageous misconduct, they may have managed to seriously injure a large number of persons. Such a rule would encourage wrongdoers to continue their misconduct because, if they kept it up long enough to injure a large number of people, they could escape all liability for punitive damages.” Froud v. Celotex Corp., 107 Ill.App.3d 654, 63 Ill.Dec. 261, 264, 437 N.E.2d 910, 913 (Ill.App.1982), rev'd on other grounds, 98 Ill.2d 324, 74 Ill.Dec. 629, 456 N.E.2d 131 (Ill.1983).\n. As one commentator explained, punitive damages seek \"to deter a specific course of conduct by decreeing that a manufacturer already condemned to ‘death’ via bankruptcy for engaging in a course of conduct resulting in enormous compensatory liability, would again be condemned to extinction if the act were\" particularly heinous. 'Dying’ a second time is certainly inconvenient and while the prospect may accelerate the rate of the 'first' death, that hardly constitutes deterrence.” Lester Brickman, supra, at 1864.\n.The compilation of judgments that defendant provided to the court in this case lists a single punitive award for $150 million and other awards from 1989 and 1990 totaling approximately $113 million.\n. In his dissertation prepared for the LLM program for Judges at the University of Virginia Law School, Judge Surrick concludes that punitive damages have no place in asbestos litigation. He says that balancing social and economic consequences mandates that conclusion. He also refers to \"judge-made doctrines” of punitive damages in asbestos litigation and says that appellate courts should rise above parochial considerations. \"When the reasons for a rule no longer exist, the rule should be abolished.” Honorable R. Barclay Surrick, Punitive Damages and Asbestos Litigation in Pennsylvania: Punishment or Annihilation?, 87 Dick.L.Rev. 265, 301 (1983).\n. As Judge Weinstein has concluded: \"overhanging th[e] massive failure of the present system is the reality that there is not enough money available from traditional defendants to pay for current and future claims. Even the most conservative estimates of future claims, if realistically estimated on the books of many present defendants, would lead to a declaration of insolvency....\" In re Joint E. & S. Dist. Asbestos Litig., 129 B.R. at 751; see also Jack B. Weinstein & Eileen B. Hershenov, The Effect of Equity on Mass Tort Law, 1991 U.Ill.L.Rev. 269, 290 (“Our view is that from the beginning mass torts should be treated similarly to a bankruptcy proceeding. No matter how financially healthy the defendants in these huge cases, the sheer number of present and future victims means that we arc ultimately dealing with a limited compensation fund.”).\n. The high transaction costs of asbestos cases that diminish the pool of available assets have been authoritatively documented. They arc also a very serious problem, but one that cannot be addressed here.\n. Professor Owen, whose endorsement of punitive damages in products liability cases has been widely cited, see David G. Owen, Punitive Damages in Products Liability Litigation, 74 Mich.L.Rev. 1257, 1325 (1976), stated: \"[0]nce the bankruptcy of the defendant manufacturer appears to be a real and imminent possibility, punitive damages should no longer be available at all.” It is interesting that in a later law review article, Professor Owen substantially modified his endorsement of punitive damages and cautioned against excessive awards. See David G. Owen, Problems in Assessing Punitive Damages Against Manufacturers of Defective Products, 49 U.Chi.L.Rev. 1 (1982).\n. It is worth noting that two trial courts have recognized that punitive awards present a danger that available funds will be inadequate to pay compensatory damages.\nJudge Marshal A. Levin of the Maryland Circuit Court of Baltimore City ordered that payment of punitive awards for approximately 8,500 plaintiffs in a consolidated proceeding be deferred until compensatory damages have been satisfied. Abate v. A.C. & S., Inc., No. 89236704, slip op. at 26 (Md.Cir.Ct. Baltimore City Dec. 9, 1992).\nIn a somewhat similar action, Judge Charles Weiner of the United States District Court for the Eastern District of Pennsylvania (to whom the multi-district panel has assigned some 30,000 federal asbestos cases) severs punitive damages claims from the compensatory ones. In ordering cases back to transferor courts for trial, Judge Weiner provides that \"the issue of punitive damages must be resolved at a further date.” E.g., In re Asbestos Prods. Liab. Litig. (No. VI), No. MDL 875, slip op. at 2 (E.D.Pa. June 8, 1993) (order relating to No. 92-6377 from the Southern District of New York).\nIn reality, it is quite likely that in many instances the delay will result in payment of no punitive damages, or at a time so far in the future that many of the plaintiffs will no longer be alive.\n. Dennis N. Jones, S. Brett Sutton & Barbara D. Greenwald, supra, at 23-32; David G. Owen, supra, 74 Mich.L.Rev. at 1325; Richard A. Seltzer, supra, at 83-91; Comment, Mass Liability and Punitive Damages Overkill, 30 Hastings L.J. 1797, 1800-08 (1979).\n. See also Jim Fieweger, Note, The Need for Reform of Punitive Damages in Mass Tort Litigation: Juzwin v. Amtorg Trading Corp., 39 DePaul L.Rev. 775 (1990); N. Todd Leishman, Note, Juzwin v. Amtorg Trading Corp.: Toward Due Process Limitations on Multiple Awards of Punitive Damages in Mass Tort Litigation, 1990 Utah L.Rev. 439.\n. Arguments can be made for distributing punitive awards among all who suffered from the defendants’ conduct — but that proposition is irrelevant in determining that, at some point, due process demands an end to punishment.\n. See William W. Schwarzer, Punishment Ad Absurdum, 11 Cal.Law. 116 (1991) (“Surely allowing successive awards of punitive damages for the same conduct is offensive to the most basic notions of due process and to the spirit underlying the constitutional bar against double jeopardy. More important, it is poor public policy.”).\n. John C. Jeffries, Jr., supra, at 154-58. The Amercements Clause of Magna Carta is discussed in detail in Browning-Ferris, 492 U.S. at 268-73, 109 S.Ct. at 2916-19. The majority recognized that the Amercements Clause limited abuses \"by requiring that the amercement not be so large as to deprive him of his livelihood,” but concluded that such history did not justify the application of the Eighth Amendment to punitive awards in private suits. Id.\n. A punitive award is dischargeable in bankruptcy unless a plaintiff can show that the bankrupt maliciously or willfully caused the plaintiff's injury. 11 U.S.C. § 523(6). In strict liability cases, this standard is generally not met. 1 James D. Ghiardi & John J. Kircher, Punitive Damages: Law and Practice § 9.19 .(1983). Moreover, even if met, bankruptcy courts may exercise their equitable powers to deny such damages. See In re A.H. Robins Co., 89 B.R. 555 (E.D.Va.1988) (disallowing punitive damages because they would frustrate a successful reorganization of the company in this Daikon Shield case).\n. The ALI Reporters Study calling for punitive damages reform notes that corporate wealth is typically spread among various corporate subsidiaries. Thus, it often is only an accident of the corporate structure that places this wealth in the hands of the particular defendant entity. American Law Inst., supra, at 254; see Victor E. Schwartz & Mark A. Behrens, The American Law Institute Reporters' Study on Enterprise Responsibility for Personal Injury: A Timely Call for Punitive Damages Reform, 30 San Diego L.Rev. (Fall 1993).", "type": "dissent", "author": "WEIS, Circuit Judge,"}, {"text": "BECKER, Circuit Judge,\ndissenting.\nJudge Weis has demonstrated powerfully that the repetitive imposition of punitive damages upon Owens-Corning for failure to warn in connection with the same series of acts (the sale of asbestos products) has, in terms of the legal justification, for punitive damages, become so irrational as to offend the due process clause of the Fourteenth Amendment. I therefore join in Part II of his dissent. I note in this regard that the majority’s slicing of the punitive damages award from $2 million to $1 million in a single sentence on the grounds that “the district court gave insufficient consideration to the effects of successive punitive awards in asbestos litigation” is a testament to the force of Judge Weis’s argument.\nI do not, however, join in Part I of Judge Weis’s dissent. The majority has convincingly demonstrated why we should not, in the exercise of our powers as the final expositors of Virgin Islands law, declare the repetitive imposition of punitive damages unavailable as a matter of Virgin Islands common law.\nI respectfully dissent.", "type": "dissent", "author": "BECKER, Circuit Judge,"}], "attorneys": ["Barry S. Simon (argued), Paul Mogin, Williams & Connolly, Washington, DC, for appellant.", "Joel H. Holt (argued), Christiansted, VI, Paul S. Minor, Minor & Guice, Biloxi, MS, for appellee."], "corrections": "", "head_matter": "William DUNN; Hess Oil Virgin Islands Corp. v. HOVIC; Amerada Hess Corp.; Keene Corporation v. The LITWIN CORPORATION; Litwin PanAmerican Corp.; Borinquen Insulation Co. Owens-Corning Fiberglas Corporation, Appellant.\nNo. 91-3837.\nUnited States Court of Appeals, Third Circuit.\nArgued April 22, 1992.\nDecided July 27, 1993.\nBarry S. Simon (argued), Paul Mogin, Williams & Connolly, Washington, DC, for appellant.\nJoel H. Holt (argued), Christiansted, VI, Paul S. Minor, Minor & Guice, Biloxi, MS, for appellee.\nBefore: SLOVITER, Chief Judge, MANSMANN and WEIS, Circuit Judges.\nReargued In Banc February 2, 1993.\nBefore: SLOVITER, Chief Judge, BECKER, STAPLETON, MANSMANN GREENBERG, HUTCHINSON, SCIRICA, COWEN, NYGAARD, ALITO, ROTH, LEWIS and WEIS, Circuit Judges."} | SLOVITER | MANSMANN | WEIS | 2 | 4 | 1 | 2 | 1 | 0 | 1 F.3d 1371 | [
{
"content": "You are an expert legal coding assistant trained to classify U.S. federal Courts of Appeals\ncases using an adaptation of the Supreme Court Database (SCDB_2023_01) codebook. You follow the coding procedure\nin the codebook step by step and use the precise definitions of terms presented in the code... |
10,517,689 | William F. LORENZ and Karen M. Lorenz, his wife; Victor A. Czerny; John Schmidt and Janice J. Schmidt, his wife; Marjorie Slapin; Thaddeus E. Drake and Celia Drake, his wife; and Edith E. Berenkey; individually and on behalf of a class of former debentureholders similarly situated, Appellants in 92-3667, v. CSX CORPORATION (formerly Chessie Systems, Inc.); the Chesapeake and Ohio Railroad; the Baltimore and Ohio Railroad Company and the Chase Manhattan Bank, N.A.; Ethel B. SAVIN, individually and on behalf of a class of former debentureholders similarly situated, Appellant in 92-3694, v. CSX CORPORATION (formerly Chessie Systems, Inc.); the Chesapeake and Ohio Railroad; the Baltimore and Ohio Railroad Company and the Chase Manhattan Bank, N.A. | Lorenz v. CSX Corp. | 1993-08-06 | Nos. 92-3667, 92-3694 | United States Court of Appeals for the Third Circuit | {"judges": ["Before: SCIRICA, COWEN and WEIS, Circuit Judges."], "parties": ["William F. LORENZ and Karen M. Lorenz, his wife; Victor A. Czerny; John Schmidt and Janice J. Schmidt, his wife; Marjorie Slapin; Thaddeus E. Drake and Celia Drake, his wife; and Edith E. Berenkey; individually and on behalf of a class of former debentureholders similarly situated, Appellants in 92-3667, v. CSX CORPORATION (formerly Chessie Systems, Inc.); the Chesapeake and Ohio Railroad; the Baltimore and Ohio Railroad Company and the Chase Manhattan Bank, N.A. Ethel B. SAVIN, individually and on behalf of a class of former debentureholders similarly situated, Appellant in 92-3694, v. CSX CORPORATION (formerly Chessie Systems, Inc.); the Chesapeake and Ohio Railroad; the Baltimore and Ohio Railroad Company and the Chase Manhattan Bank, N.A."], "opinions": [{"text": "OPINION OF THE COURT\nCOWEN, Circuit Judge.\nPrior to December 13, 1977, the plaintiffs in these two related actions purchased convertible debentures issued by the defendant Baltimore and Ohio Railroad Company (“B & O”). At that time, 99.63% of the B & O’s shares were owned by defendant Chesapeake and Ohio Railroad Company, which in turn was a wholly-owned subsidiary of Chessie Systems, Inc., the corporate predecessor to defendant CSX Corporation (“CSX”). The indenture trustee was defendant Chase Manhattan Bank. Plaintiffs allege that the defendants defrauded them from 1977 to 1986 by failing to disclose material information which would have enabled them to convert their debentures into B & 0 common stock and receive a lucrative dividend. Plaintiffs appeal the dismissal of their claims for breach of fiduciary duty, breach of the implied covenant of good faith and fair dealing, civil RICO, and violations of section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 (“’34 Act”). We will affirm.\nI. FACTS AND PROCEDURAL HISTORY\nThe defendants have been involved in litigation against their debentureholders for the past fifteen years in a series of closely related actions. A detailed description of the facts and procedural history can be found in earlier district and circuit court opinions in the Pittsburgh Terminal Corp./Guttmann litigation. See, e.g., Pittsburgh Terminal Corp. v. Baltimore & Ohio R.R. Co., 509 F.Supp. 1002 (W.D.Pa.1981), aff'd in part, rev’d in part, 680 F.2d 933 (3d Cir.), cert. denied, 459 U.S. 1056, 103 S.Ct. 475, 74 L.Ed.2d 621 (1982); Pittsburgh Terminal Corp. v. Baltimore & Ohio R.R. Co., 824 F.2d 249 (3d Cir.1987) {PTC IV). We will recite only those facts which are relevant to these appeals.\nThe plaintiffs were holders of debentures in the B & O Railroad as of December 13, 1977. The debentures were convertible into B & O common stock at any time before maturing in the year 2010. To avoid Interstate Commerce Commission regulations hindering the development of non-rail assets owned by railroads, B & O devised a plan to segregate its rail and non-rail assets. Non-rail assets were transferred to a wholly owned subsidiary, Mid Allegheny Corporation (“MAC”), and MAC common stock was distributed as a dividend on a share-for-share basis to B & 0 shareholders. B & 0 sought to avoid the registration of its shares with . the Securities and Exchange Commission (“SEC”), a time-consuming process which would have required appraisals of the transferred assets. Because B & O had few shareholders, the company thought that the SEC would issue a “no-action” letter excusing the registration of MAC stock. This plan would have been foiled if large numbers of B & O debentureholders exercised their conversion option in order to receive the MAC dividend.\nTo avoid this occurrence, B & O transferred its non-rail assets to MAC on December 13, 1977 and declared the dividend in MAC stock on the same date, without prior notice. As a result, the debentureholders could not convert their shares in time to receive the MAC dividend. Some of the debentureholders brought actions, later consolidated, under section 10(b) of the ’34 Act against B & O, C & O, and Chessie Systems. This suit is known as the PTC/Guttmann litigation. In 1978 and 1979, B & O and Chase Manhattan Bank entered into a series of letter agreements, whereby B & O agreed that if the PTC/Guttmann plaintiffs prevailed or obtained a'settlement, debenture-holders would be allowed to participate equally in that judgment or settlement regardless of whether they had converted their debentures.\nThe PTC/Guttmann plaintiffs moved for class certification. The district court denied the motion, at least in part because Chessie Systems’ general counsel, • Robert F. Hoch-warth, filed an affidavit dated May 2, 1980 memorializing the earlier letter agreements with Chase Manhattan Bank. The affidavit, known as the “Hochwarth Stipulation,” states that if plaintiffs prevail or a settlement is reached, “all holders of debentures as of December 13,1977, whether or not they were subsequently converted, will be permitted to participate in the Court judgment or settlement on the same terms as the plaintiffs.” App. at 279.\nAfter a bench trial, the district court entered judgment in favor of the defendants. Pittsburgh Terminal Corp., 509 F.Supp. at 1017-18. We reversed. A divided panel agreed only that the failure to provide the debentureholders with advance notice of the dividend violated Rule 1 Ob-17 of the ’34 Act. Pittsburgh Terminal Corp. v. Baltimore & Ohio R.R. Co., 680 F.2d 933, 941-42 (3d Cir.) (PTC II), cert. denied, 459 U.S. 1056, 103 S.Ct. 475, 74 L.Ed.2d 621 (1982); id. at 945-46 (Garth, J., concurring in part and concurring in the judgment). We remanded to the district court to fashion an appropriate remedy. On May 8,1984, the district court granted plaintiffs the opportunity to convert their debentures into shares and receive the MAC dividend plus dividend income accruing since December 13, 1977. Pittsburgh Terminal Corp. v. Baltimore & Ohio R.R. Co., 586 F.Supp. 1297, 1304-05 (W.D.Pa.1984), aff'd, 760 F.2d 257 (3d Cir.), cert. denied, 474 U.S. 919, 106 S.Ct. 247, 88 L.Ed.2d 256 (1985). The district court, construing the Hochwarth Stipulation, described the scope of the remedy:\nThe remedy ordered here is limited to those persons who owned the subject debentures at the time of the violation, December 13, 1977, and who still own those debentures. Those persons who owned debentures on December 13,1977 and subsequently converted to B & O common stock may also elect to participate in this remedy, obtaining MAC and its dividends, offset by interest accruing on the debentures after December 13, 1977.... Those persons who owned B & O debentures on December 13, 1977 and subsequently sold their debentures are .not within the scope of ... this action-\nId. at 1305. The defendants were ordered to give notice to the debentureholders of the district court’s order. In December of 1986, after the denial of certiorari, defendants published notice of the remedy in the New York Times and Wall Street Journal. In a subsequent appeal, we held that under the terms of the Hochwarth Stipulation, the district court’s remedy also included persons who held B & O debentures on December 13, 1977, converted them to B & O common stock, and subsequently sold the stock. PTC IV, 824 F.2d at 256.\nThe plaintiffs in the present actions are those persons who are outside the scope of the PTC/Guttmann remedy. They held debentures on December 13, 1977 but subsequently sold them without having ever converted them into stock. On July 25, 1986, plaintiff Ethel B. Savin filed her complaint in the United States District Court for the Southern District of New York on behalf of a class of similarly situated former B & O debentureholders. The case was transferred to the Western District of Pennsylvania because of the related litigation there. On April 23, 1987, the Lorenz plaintiffs filed their complaint in the United States District Court for the Western District of Pennsylvania on behalf of a class of similarly situated former B & O debentureholders. The complaint alleged violations of section 10(b) and Rule 10b-5 of the ’34 Act, civil RICO, and breach of fiduciary duty. The RICO claim was directed only against defendants CSX and C & O. In May of 1987, plaintiff Savin amended her complaint to contain substantially the same allegations.\nIn July of 1987, the defendants moved to dismiss under Fed.R.Civ.P. 12(b)(6). In August of 1987, with the consent of both parties, plaintiff Savin amended her complaint to alter a paragraph which described when she received notice of the MAC dividend. In September of 1987, the plaintiffs filed their RICO case statement. On July 14, 1989, Savin filed her motion to amend her amended complaint in order to add factual allegations to her RICO claim.\nOn August 27, 1990, the district court denied the motion to amend, dismissed all claims against defendant Chase Manhattan Bank, and dismissed all claims against defendants CSX, C & O, and B & O except for the section 10(b) claims. Lorenz v. CSX Corp., 736 F.Supp. 650 (W.D.Pa.1990). Motions for reconsideration were filed by the plaintiffs and the defendant railroads. On August 8, 1991, the district court reinstated plaintiff Lorenz’s RICO claim and dismissed plaintiff Savin’s section 10(b) claim for exceeding the applicable statute of limitations. Savin appealed. While her appeal was pending, we remanded for reconsideration in light of the recent enactment of 15 U.S.C. § 78aa-l(a). On August 18, 1992, as amended October 7, 1992, the district court dismissed Lorenz’s section 10(b) and RICO claims. On November 3, 1992, the district court dismissed Sa-vin for the reasons stated in its Lorenz opinion of August 18. Plaintiffs filed these appeals.\nWe have jurisdiction under 28 U.S.C. § 1291. We exercise plenary review over the grant of a motion to dismiss. General Elec. Co. by Levit v. Cathcart, 980 F.2d 927, 931 (3d Cir.1992). We accept all factual allegations in the complaints and all reasonable inferences to be drawn therefrom in the light most favorable to the plaintiffs. We may affirm only if it is certain that no relief could be granted under any set of facts which could be proven. Id.\nII. RICO CLAIMS AGAINST DEFENDANTS CSX AND C & 0\nThe plaintiffs brought civil RICO claims under 18 U.S.C. § 1962(c) against defendants CSX and C & 0, alleging that they conducted them subsidiary B & O’s enterprise through a pattern of racketeering activity. The district court held that the plaintiffs’ amended complaints failed to state a RICO claim because the defendants were not sufficiently distinct from the enterprise.\nSection 1962(c) makes it unlawful “for any person employed by or associated with any enterprise ... to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity.” 18 U.S.C. § 1962(c) (1988). In B.F. Hirsch v. Enright Refining Co., 751 F.2d 628, 633 (3d Cir.1984), we held that the defendant “person” charged with violating that statute cannot be the same entity as the alleged “enterprise.” We observed that the statute, by its plain language, requires that the defendant be employed by or associated with an enterprise. The defendant Enright Refining Co. therefore could not simultaneously be both the defendant and the enterprise, because it would be illogical to say that a corporation was employed by or associated with itself. Id. at 633. We also observed that requiring the defendant and enterprise to be separate entities was consistent with the congressional purpose to punish criminals who infiltrate legitimate corporations, without punishing those corporations which may be the innocent victims of racketeering activity. Id. at 633-34.\nWe expanded the Enright rule in Brittingham v. Mobil Corp., 943 F.2d 297 (3d Cir.1991). Plaintiffs accused Mobil Oil Corp. and its wholly owned subsidiary Mobil Chemical Co. of participating in an association-in-fact enterprise consisting of both corporations, their advertising agents, and other agencies which helped to fraudulently market trash bags in violation of section 1962(c). We affirmed a grant of summary judgment in favor of both corporations because the alleged enterprise was not sufficiently distinct from the defendants. Id. at 301, 303. We reasoned that Enright’s requirement of distinctiveness would be eviscerated if a plaintiff could successfully plead that, an enterprise consists of a defendant corporation associated with the employees, agents, and affiliated entities acting on its behalf. Id. When a RICO defendant is a collective entity, such as a corporation, it is likely that the alleged enterprise is an association of individuals or entities that constitute the defendant or carry out its actions. Id. at 302. Thus,' we stated:\nWithout additional allegations, therefore, a subsidiary corporation cannot constitute the enterprise through which a defendant parent corporation conducts a racketeering enterprise.... [Cjlaims will be dismissed when the enterprise and defendant, although facially distinct, are in reality no different from each other.\nId. at 302-03. Relying on Petro-Tech, Inc. v. Western Co. of North America, 824 F.2d 1349, 1358-60 (3d Cir.1987), which upheld the dismissal of claims against a defendant corporation where its subsidiary was named alternatively as the enterprise, we concluded that the plaintiffs could not name Mobil Oil Corp. as the defendant and its subsidiary Mobil Chemical Co. as the enterprise. Brit- tingham, 943 F.2d at 303. We affirmed the grant of summary judgment because the plaintiffs failed to produce evidence indicating that the defendant corporations, in contrast to individuals or entities acting on their behalf, took a distinct role in the alleged racketeering activity. Id.\nWe followed Brittingham in Glessner v. Kenny, 952 F.2d 702 (3d Cir.1991), in which a parent corporation was the defendant and its subsidiary the alleged enterprise. We upheld the dismissal under Rule 12(b)(6) of the plaintiffs section 1962(c) claim. Neither the complaint nor RICO case statement alleged any basis by which the parent corporation and its subsidiary were sufficiently distinct for purposes of stating a RICO claim. Glessner, 952 F.2d at 710-11.\nAfter Brittingham and Glessner, it is still theoretically possible for a parent corporation to be the defendant and its subsidiary to be the enterprise under section 1962(c). However, the plaintiff must plead facts which, if assumed to be true, would clearly show that the parent corporation played a role in the racketeering activity which is distinct from the activities of its subsidiary. A RICO claim under section 1962(c) is not stated where the subsidiary merely acts on behalf of, or to the benefit of, its parent.\nIn the present case, the alleged enterprise is B & 0. The defendants are CSX and its wholly owned subsidiary C & 0. Defendant C & 0 owns 99.63% of B & O’s shares. The amended complaints allege that CSX and C & 0 actively managed B & 0 and caused B & 0 to declare the dividend in a manner that defrauded its debentureholders. However, stating that the parent directed the subsidiary’s fraudulent acts does not satisfy the distinctiveness requirement in Brittingham. Instead, it suggests that the subsidiary carried out the affairs of the parent.\nPlaintiffs contend that CSX and C & 0 played an active role in perpetrating a fraud that was not played by B & 0. Numerous allegations in the amended complaints, however, suggest that all three companies engaged in concerted action. See, e.g., App. at 347, 351, 360 (B & 0 and defendants fraudulently concealed material information); id. at 350 (Hochwarth Stipulation made on behalf of B & O, C & 0, and Chessie Systems); id. at 350-51 (B & 0 and defendants failed to provide notice of opportunity to receive dividend); id. at 352-53 (B & 0 and defendants falsely misrepresented scope of Hochwarth Stipulation); id. at 355 (through press release in December 1986, plaintiff discovered that she was injured by B & 0 and defendants’ fraudulent conduct); id. at 356 (B & 0 and defendants employed fraudulent or reckless scheme to deprive plaintiffs of the dividend,- to deprive plaintiffs of the same relief as the PTC/Guttmann plaintiffs, and to conceal their violations of securities laws). The alleged frauds which constitute the RICO predicate acts—e.g., nondisclosures of the MAC dividend, the letter agreements with Chase Manhattan Bank, the Hochwarth Stipulation, and the PTC/Guttmann litigation-are described as being committed by both the parent and subsidiary corporations. Thus, many of the pleaded facts undercut plaintiffs’ theory that the corporate defendants are distinct from the enterprise consisting of their subsidiary.\nPlaintiffs make the additional arguments to distinguish this case from Brittingham. They argue that in Brittingham, both the parent and subsidiary corporations were part of an association-in-fact enterprise under 18 U.S.C. § 1961(4), while in the present case, the alleged enterprise is not an association in fact and the defendants are not part of the enterprise. In Brittingham, however, we stated clearly that “this definition [of an enterprise, as an association in fact] does not affect the separate inquiry into whether the alleged enterprise is distinct from the defendant.” 943 F.2d at 300. . Our holding in Brittingham did not depend upon whether the enterprise was an association in fact, but upon whether it was a distinct entity from the defendant.\nPlaintiffs argue that the parent company in Brittingham passively benefitted from its subsidiary’s activities, while defendants CSX and C & 0 received a direct benefit (MAC stock) from B & O’s fraudulent conduct and caused B & O’s interests to decrease. A parent company normally can be expected to benefit from its subsidiary. For purposes of stating a section 1962(c) claim, it does not matter whether that benefit can be characterized as direct or indirect.\nPlaintiffs also argue that Brittingham involved a wholly-owned subsidiary, while B & 0 is not wholly owned. The mere fact that C & 0 owned 99.63% rather than 100% of B & O’s stock does not make them distinct entities for purposes of stating a RICO claim. The decision in Brittingham did not hinge upon whether the subsidiary was wholly or partially owned. Indeed, we concluded that the enterprise could not include advertising agencies retained by the defendant corporations, though none of those agencies were even partially owned by defendants. The advertisers were agents of the defendant corporations who conducted the corporations’ affairs. Id. at 303.\nAfter reviewing the amended complaints and RICO case statement, we conclude that the plaintiffs have failed to allege sufficient facts to show that defendants CSX and C & 0 are distinct entities from the alleged enterprise consisting of their subsidiary B & 0. The district court correctly dismissed the RICO claims.\nIII. DENIAL OF MOTION TO AMEND\nThe district court denied plaintiff Savin’s motion for leave to amend her amended complaint for the purpose of adding factual allegations to her RICO claim. We review the district court’s decision for an abuse of discretion. Bechtel v. Robinson, 886 F.2d 644, 647 (3d Cir.1989).\nFed.R.Civ.P. 15(a) provides that “a party may amend [its] pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires.” The Supreme Court has identified several factors to be considered when applying Rule 15(a):\nIf the underlying facts or circumstances relied upon by a plaintiff may be a proper subject of relief, he ought to be afforded an opportunity to test his claim on the merits. In the absence of any apparent or declared reason — such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc. — the leave sought should, as the rules require, be “freely given.” Of course, the grant or denial of an opportunity to amend is within the discretion of the District Court, but outright refusal to grant the leave without any justifying reason appearing for the denial is not an exercise of discretion; it is merely an abuse of that discretion and inconsistent with the spirit of the Federal Rules.\nFoman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1962). We have interpreted these factors to mean that “prejudice to the non-moving party is the touchstone for the denial of an amendment.” Cornell & Co. v. Occupational Safety & Health Review Comm’n, 573 F.2d 820, 823 (3d Cir.1978). In the absence of substantial or undue prejudice, denial instead must be based on bad faith or dilatory motives, truly undue or unexplained delay, repeated failures to cure the deficiency by amendments previously allowed, or futility of amendment. Heyl & Patterson Int’l, Inc. v. F.D. Rich Housing of the Virgin Islands, Inc., 663 F.2d 419, 425 (3d Cir.1981), cert. denied, 455 U.S. 1018, 102 S.Ct. 1714, 72 L.Ed.2d 136 (1982).\nIn denying Savin’s motion for leave to amend, the district court did not make any finding of prejudice, but instead based its decision on undue delay, previous failures to amend, and futility of amendment. The proposed amendment contains a long list of facts occurring in B & O’s history from 1961 to 1987. They include: B & O’s no-dividend policy from 1961 to 1978; B & O’s purchase of debentures at less than face value from 1974-77; the transfer of non-rail assets to MAC and declaration of the dividend in December 1977; the PTC/Guttmann litigation and the remedies awarded; alleged misrepresentation of the scope of the Hochwarth Stipulation during the course of that litigation; transfer of MAC’S assets to other CSX affiliates in 1983 to avoid participation in those assets by B & 0 minority security holders; the imposition of excessive costs on B & 0 in 1981-83 to defend civil and criminal anti-trust actions; and the attempted merger of B & 0 into C & 0 in 1986-87 to eliminate B & O’s minority shareholders.\nThis proposed amendment was requested three years after the action was filed and nearly two years after the complaint was amended for the second time. Most of the facts were available to plaintiff Savin before she filed her original complaint in 1986, and probably all of them were available when she amended her complaint in May and August of 1987 and when she filed her RICO case statement in September of 1987. Over the three-year period between the filing of her original complaint and the filing of her motion to amend, Savin had numerous opportunities to correct any deficiencies in her RICO claim but failed to take advantage of them. Her delay was unreasonable.\nFurthermore, even if they were pled, these additional facts would not breathe life into her RICO claim. Most of them either are repetitions of events already described in the amended complaint, or they have little or no relevance to the defendants’ defrauding the debentureholders out of the opportunity to receive the MAC dividend or participate in the PTC/Guttmann remedy. Because of Sa-vin’s unreasonable delay in requesting leave to amend, and because of the futility of her proposed amendment, we hold that the district court did not abuse its discretion in denying her Rule 15(a) motion.\nIV. BREACH OF IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING CLAIMS AGAINST DEFENDANT CHASE MANHATTAN BANK\nThe district court dismissed plaintiffs’ claims against the indenture trustee Chase Manhattan Bank for breach of the implied covenant of good faith and fair dealing, allegedly arising from the bank’s failure to inform them of the MAC dividend, the letter agreements with B & O, and the PTC/Guttmann judgment. Because the indenture specifies that the liability of the trustee shall be determined under New York law, we will apply New York law.\nThe courts of New York consistently have held that the duties of an indenture trustee, unlike those of a typical trustee, are defined exclusively by the terms of the indenture. Green v. Title Guar. & Trust Co., 223 A.D. 12, 15, 227 N.Y.S. 252, 256 (1st Dep’t), aff'd, 248 N.Y. 627, 162 N.E. 552 (1928); Hazzard v. Chase Nat’l Bank, 159 Misc. 57, 80-81, 83-84, 287 N.Y.S. 541, 566-67, 570 (Sup.Ct.N.Y. County 1936), aff'd, 257 A.D. 950, 14 N.Y.S.2d 147 (1st Dep’t 1939), aff'd, 282 N.Y. 652, 26 N.E.2d 801, cert. denied, 311 U.S. 708, 61 S.Ct. 319, 85 L.Ed. 460 (1940); AMBAC Indemnity Corp. v. Bankers Trust Co., 151 Misc.2d 334, 336, 338-39, 573 N.Y.S.2d 204, 206, 207 (Sup.Ct.N.Y. County 1991); Elliott Associates v. J. Henry Schroder Bank & Trust Co., 838 F.2d 66, 71 (2d Cir.1988); Meckel v. Continental Resources Co., 758 F.2d 811, 816 (2d Cir.1985). The sole exception to this rule is that the indenture trustee must avoid conflicts of interest with the debentureholders. See United States Trust Co. v. First Nat’l Bank, 57 A.D.2d 285, 295-96, 394 N.Y.S.2d 653, 660-61 (1st Dep’t 1977), aff'd, 45 N.Y.2d 869, 410 N.Y.S.2d 580, 382 N.E.2d 1355 (1978); Elliott Associates, 838 F.2d at 71, 73.\nThe plaintiffs specifically claim that Chase Manhattan Bank violated the implied covenant of good faith and fair dealing which, under New York law, is contained in every contract. Rowe v. Great Atl. & Pac. Tea Co., 46 N.Y.2d 62, 68, 412 N.Y.S.2d 827, 830, 385 N.E.2d 566, 569 (1978). The implied covenant prohibits either party from doing anything which would prevent the other party from receiving the fruits of the contract. Kirke La Shelle Co. v. Paul Armstrong Co., 263 N.Y. 79, 87, 188 N.E. 163, 167 (1933). The covenant, however, cannot be used to insert new terms that were not bargained for. A covenant is implied only when it is consistent with the express terms of the contract. Sabetay v. Sterling Drug, Inc., 69 N.Y.2d 329, 335, 514 N.Y.S.2d 209, 212, 506 N.E.2d 919, 922 (1987).\nAn indenture is, of course, a contract. Unless the indenture trustee has deprived the debentureholders of a right or benefit specifically provided to them in the indenture, there is no violation of the implied covenant of good faith and fair dealing. See Broad v. Rockwell Int’l Corp., 642 F.2d 929, 957-58 (5th Cir.) (in banc) (applying New York law), cert. denied, 454 U.S. 965, 102 S.Ct. 506, 70 L.Ed.2d 380 (1981); cf. Metropolitan Life Ins. Co. v. RJR Nabisco, Inc., 716 F.Supp. 1504, 1517-22 (S.D.N.Y.1989) (no breach of implied covenant under New York law where corporation’s incurrence of debt to fund leveraged buyout depleted the value of its debentures, as the indenture lacked any terms prohibiting the transaction). We therefore will consider whether the indenture in this case contains provisions which entitled the debentureholders to receive notice of the MAC dividend, the letter agreements with B & O, or any of the remedies in the PTC/Guttmann action.\nThe indenture contains no provisions which explicitly require the trustee to provide notice of any kind to the debentureholders. Plaintiffs cite two provisions which they claim implicitly require notice. First, the indenture states:\nThe Indenture permits the amendment thereof and the modification or alteration, in any respect, of the rights and obligations of the Company and the rights of the holders of the Debentures ... at any time by the concurrent action of the Company and of the holders of 66%% in principal amount of the Debentures then outstanding affected by such amendment, modification or alteration (including, in the case of a modification of the terms of conversion of this Debenture into common stock of the Company or of payment of the principal of, or the premium or interest on, this Debenture, the consent of the holder hereof), all as more fully provided in the Indenture.\nApp. at 380-81. Plaintiffs claim that the letter agreements between B & O and Chase Manhattan Bank altered their rights under the Indenture. Those agreements provided that the debentureholders would be allowed to participate equally in any judgment against B & O or any settlement regardless of whether they converted their debentures to common stock. Because the quoted language gives the debentureholders the right to vote regarding any change in their or the company’s rights and obligations under the indenture, the plaintiffs argue that they were entitled to notice of the letter agreements.\nSecond, the indenture provides:\nAt any meeting at which there shall be a quorum the holders of the Affected Debentures shall have the power by resolution adopted as hereinafter provided:\n(a) to authorize the Trustee to join with the Company in making any modification, alteration, repeal of or addition to any provision of this Indenture or of the Debentures, and any modification of or addition to the rights and obligations of the Company or the rights of the holders of the Debentures ... under this Indenture or under the Debentures....\nApp. at 440. The plaintiffs claim that the letter agreements between B & 0 and Chase Manhattan Bank were supplemental indentures which modified or added to their rights under the indenture. Because the deben-tureholders have the right to vote on whether to permit the indenture trustee and company to execute a supplemental indenture, the plaintiffs argue that they were entitled to notice.\nBoth provisions cited by plaintiffs provide debentureholders with the right to vote, and arguably therefore to receive notice, only if there is some modification of the debenture-holders’ rights or the company’s obligations under the indenture. We agree with the district court that the letter agreements did not affect their rights under the indenture and cannot be characterized as supplemental indentures. The agreements pertained only to the scope of a possible remedy under the federal securities laws in the PTC/Guttmann litigation, in the event of a judgment against the defendant corporations or a settlement. The plaintiffs’ contractual rights under the indenture itself, including rights regarding conversion of shares, were never modified.\nIt would have been advantageous for the plaintiffs to have b¿en informed of the letter agreements and thus of potential violations of securities laws committed by B & 0. They may have sued the defendant corporations years earlier. However, so long as an indenture trustee fulfills its obligations under the express terms of the indenture, it owes the debentureholders no additional, implicit duties or obligations, except to avoid conflicts of interest. Elliott Associates, 838 F.2d at 71. There is no provision in the indenture which obligated the trustee Chase Manhattan Bank to inform the debentureholders that they possibly had rights against B & O and its parent companies under the federal securities laws. Because the bank did not deprive the plaintiff of any right under the indenture, the bank could not have breached the implied covenant of good faith and fair dealing.\nPlaintiffs rely heavily on Van Gemert v. Boeing Co., 520 F.2d 1373 (2d Cir.) (Van Gemert I), cert. denied, 423 U.S. 947, 96 S.Ct. 364, 46 L.Ed.2d 282 (1975). In that case, debentures on their face required the company to provide notice before exercising its option to redeem them. The indenture provided that such notice could be by publication in a newspaper. The court concluded that because the debentures did not specify the kind of notice that would be provided, the debentureholders were entitled to expect reasonable notice of the redemption call. Id. at 1383-85. Though the company complied with the terms of the indenture by publishing notice in a newspaper, the court held that it failed to provide fair and reasonable notice to the debentureholders. Id. at 1383. In a subsequent opinion, the court stated that the defendant was liable because it violated the implied covenant of good faith and fair dealing. Van Gemert v. Boeing Co., 553 F.2d 812, 815 (2d Cir.1977) (Van Gemert II).\nVan Gemert indicates that when a debenture or indenture expressly requires notice, the implied covenant of good faith and fair dealing requires the defendant to provide notice which is reasonably calculated to enable the debentureholders to obtain the benefit of their contract. In the present case, however, the indenture does not have any provision which required the bank to provide notice regarding B & O’s alleged violations of securities laws and the resulting litigation. To infer such a requirement would, in effect, add a new term to the indenture, and the implied covenant can never be used for that purpose. The district court correctly dismissed the claims against Chase Manhattan Bank for breach of the implied covenant of good faith and fair dealing.\nV. BREACH OF FIDUCIARY DUTY CLAIMS AGAINST DEFENDANTS CSX AND C & 0\nPlaintiffs claim that defendants CSX and C & 0, as controlling shareholders of B & 0, breached a fiduciary duty to disclose material information. The district court concluded that the defendants owed no duties to the plaintiff debentureholders aside from those specified in the indenture. Finding no breach of the indenture, the district court dismissed the breach of fiduciary duty claims.\nIt is well-established that a corporation does not have a fiduciary relationship with its debt security holders, as with its shareholders. The relationship between a corporation and its debentureholders is contractual in nature. See Broad, 642 F.2d at 958-59 (applying New York law); Metropolitan Sec. v. Occidental Petroleum Corp., 705 F.Supp. 134, 141 (S.D.N.Y.1989) (same); Simons v. Cogan, 549 A.2d 300, 303 (Del.1988); American Bar Foundation, Commentaries on Indentures 2-3 (1971). Just as an indenture trustee’s duties are strictly defined by the indenture, see, e.g., Hazzard, 159 Misc. at 80-81, 287 N.Y.S. at 566-67, a corporation is under no duty to act for the benefit of its debentureholders, or to refrain from action which dilutes their interest, except as provided in the indenture. Parkinson v. West End St. Ry. Co., 173 Mass. 446, 448, 53 N.E. 891, 892 (1899) (Holmes, J.); Commentaries, supra, at 527. Even if the debentures are convertible, the debentureholder is merely a creditor who is owed no fiduciary duty until conversion takes place. In re Will of Migel, 71 Misc.2d 640, 642-43 336 N.Y.S.2d 376, 379 (Sur.Ct. Orange County 1972); Simons, 549 A.2d at 303-04.\nAs we stated in Part IV supra with respect to the indenture trustee’s liability, the indenture contains no provisions which entitled the debentureholders to receive notice of the Hochwarth Stipulation, the letter agreements between B & O and Chase Manhattan Bank, or events in the PTC/Guttmann litigation. Plaintiffs have not identified, nor have we found, any additional provisions which impose upon B & O or its controlling shareholders a duty to disclose such information. The district court, therefore, correctly dismissed the breach of fiduciary duty claims.\nVI. SECTION 10(b) CLAIMS AGAINST DEFENDANTS CSX, C & O, AND B & 0\nPlaintiffs claim that the defendant corporations violated section 10(b) and Rule 10b-5 of the ’34 Act by failing to disclose material information to the debentureholders. The district court dismissed these claims as untimely under the applicable statute of limitations.\nIn Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, — U.S. —, —, 111 S.Ct. 2773, 2782, 115 L.Ed.2d 321 (1991), the Supreme Court held that the statute of limitations under section 10(b) and Rule 10b-5 is one year after discovery of the fraud and within three years after such violation. By statute, the limitation period for any civil action commenced on or before June 19, 1991, the day before the issuance of the Lampf opinion, is determined by the law of the appropriate jurisdiction as it existed on that date. 15 U.S.C. § 78aa~l(a) (Supp. Ill 1991). The present actions were filed in 1986 and 1987. We therefore must apply pre-Lampf Third Circuit law.\nIn In re Data Access Systems Securities Litigation, 843 F.2d 1537, 1550 (3d Cir.) (in banc), cert. denied, 488 U.S. 849, 109 S.Ct. 131, 102 L.Ed.2d 103 (1988), we held that the statute of limitations for a'violation of section 10(b) and Rule 10b-5 is one year after the plaintiff discovers the violation and in no event more than three years after the violation. This limitations period (which is the same as Lampf) applied retroactively. Hill v. Equitable Trust Co., 851 F.2d 691, 692 (3d Cir.1988), cert. denied, 488 U.S. 1008, 109 S.Ct. 791, 102 L.Ed.2d 782 (1989).\nIn PTC II, we held that the defendants committed fraud on December 13, 1977 in violation of Rule 10b-17 by failing to provide the debentureholders with advance notice of the MAC dividend. 680 F.2d at 941-42; id. at 945-46 (Garth, J., concurring in part and concurring in the judgment). The question now is whether the defendants may have committed fraud after December 13, 1977.\nThe plaintiffs’ securities fraud claims are based on the defendant corporations’ alleged failure to disclose material information to the debentureholders regarding the MAC dividend, Hochwarth Stipulation, and PTC/Guttmann litigation, prior to the publication of notice in December of 1986. When an allegation of fraud under section 10(b) is based upon a nondisclosure, there can be no fraud absent a duty to speak. Chiarella v. United States, 445 U.S. 222, 235, 100 S.Ct. 1108, 1118, 63 L.Ed.2d 348 (1980).\nWe held in Part V supra that the defendants committed no breach of fiduciary under state law because they were under no duty to speak. The corporations complied with the terms of the indenture and did nothing to injure the plaintiffs’ rights thereunder. Where a corporation, by virtue of its compliance with the terms of an indenture, cannot be held liable under state law for fraud or breach of contract against its deben-tureholders, federal courts have refused to find any fraud in violation of section 10(b) or Rule 10b-5. See Broad, 642 F.2d at 963; Meckel, 758 F.2d at 814, 815-16; Metropolitan Sec., 705 F.Supp. at 141. A corporation’s obligations toward its debentureholders are defined by the terms of the indenture, and section 10(b) imposes no additional duties. Thus, the only fraud committed by the defendants which is actionable under section 10(b) is their failure to disclose the MAC dividend in December of 1977.\nUnder Data Access Systems, the maximum possible limitations period is three years. This time limit cannot be tolled. The plaintiffs’ claims under section 10(b) and Rule 10b-5 therefore expired no later than December of 1980. Because the plaintiffs did not file their complaints until 1986 and 1987, the district court properly dismissed their section 10(b) and Rule 10b-5 claims as untimely.\nVII. CONCLUSION\nFor the reasons stated, we will affirm the orders of the district court granting defendants’ motions to dismiss.\n. A \"debenture” is a long-term, unsecured debt security. An \"indenture” is a contract between the issuing corporation and indenture trustee pursuant to which debentures are issued. The \"indenture trustee\" is the person or institution named in the indenture who is responsible for carrying out its terms. Black’s Law Dictionary 401, 770 (6th ed. 1990).\n. Chessie Systems later merged into defendant CSX Corporation.\n. These allegations are taken from the Savin complaint, but the allegations in the Lorenz corn-plaint are substantially the same.\n. The plaintiffs rely on Petro-Tech, which involved a motion to dismiss. The plaintiff alleged that a defendant corporation participated in an association-in-fact enterprise consisting of itself and some of its employees. We reversed the dismissal of the claim, stating that ‘‘[b]ecause Western is alleged to have attempted to benefit from its employees' racketeering activity, it is appropriate to allow the victims of that activity to recover from Western.” 824 F.2d at 1361.\nWe have subsequently interpreted this language very narrowly as leaving open only the \"theoretical possibility\" that a corporation can take, a separate, active role in RICO violations also committed by its employees, in which case the corporation is the active perpetrator rather than passive victim of racketeering activity. Brittingham, 943 F.2d at 302. This theoretical possibility, however, does not save the plaintiffs’ RICO claim. As we explained, their allegations are insufficient to establish that the defendants played an active role in the alleged racketeering activity distinct from that of the subsidiary. Furthermore, in both Brittingham and Glessner, we instead followed another portion of Petro-Tech, more relevant to the present case, which dismissed aiding and abetting and vicarious liability claims where the defendant corporation and its subsidiary were alternatively pled as the enterprise. See Brittingham, 943 F.2d at 302-03; Glessner, 952 F.2d at 710-11; Petro-Tech, 824 F.2d at 1358-60. Such claims were the practical equivalent of alleging that' the defendant parent company was the “person” while its subsidiary was the \"enterprise.” Thus, Petro-Tech provides additional support for the principle that, except in extraordinary circumstances, a parent corporation cannot be the defendant and its subsidiary the enterprise under section 1962(c).\n. Plaintiff argues that she should have been allowed to amend her complaint in light of H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 239, 109 S.Ct. 2893, 2900, 106 L.Ed.2d 195 (1989), which held that a pattern of racketeering activity must satisfy the requirements of relationship and continuity. The deficiencies in plaintiff’s RICO claim in no way involve the \"pattern of racketeering” element. H.J. Inc. is inapposite.\n. Count V of the amended complaints specifically accuses the bank of breach of fiduciary duty. The bank contends that the plaintiffs failed to plead a breach of the implied covenant of good faith and fair dealing. In its opinion, the district court discussed both theories before it dismissed Count V. Lorenz, 736 F.Supp. at 655-57. We will assume that the plaintiffs attempted to plead a good faith and fair dealing claim and will now examine the sufficiency of that claim.\n. Plaintiffs also rely on Brass v. American Film Technologies, Inc., 987 F.2d 142 (2d Cir.1993), in which the defendant corporation sold warrants without informing the purchaser that the underlying shares were restricted. The court held that the purchaser stated a claim for fraudulent concealment based on New York’s “superior knowledge” rule. Id. at 151-52. Under that rule, a party to a contract is under a duty to speak when he possesses superior knowledge not readily available to the other party, and knows that the other party is acting on the basis of mistaken knowledge. Id. at 150.\nThe plaintiffs claim that Chase Manhattan Bank was under a duty to disclose the MAC dividend, the letter agreements, and the PTC/Guttmann litigation because of its superior knowledge of these events affecting the value of the debentures. We disagree. The plaintiffs have not alleged that the bank possessed superior knowledge, or that they acted upon mistaken knowledge, at the time they purchased their debentures prior to December of 1977. In other words, there is no claim of fraudulent concealment in the making of the contract. Instead, the plaintiffs invoke the \"superior knowledge” doctrine as a source of a duty to disclose events occurring months or years later. As we stated above, the indenture trustee’s duties arc defined by the terms of the indenture. The bank complied with those terms and therefore cannot be held liable, even if had greater knowledge than the debentureholders.\n. Plaintiff Savin’s action was transferred under 28 U.S.C. § 1407 from the Southern District of New York to the Western District of Pennsylvania. She contends that her claims are governed by the Second Circuit’s pre-Lampf statute of limitations, which allegedly is six years. Even if we applied a six-year time limit, her section 10(b) claim would have expired in December of 1983, more than two years before she filed her complaint.", "type": "majority", "author": "COWEN, Circuit Judge."}], "attorneys": ["Michael P. Malakoff (argued), Malakoff Doyle & Finberg, P.C., Pittsburgh, PA, for appellants.", "Anthony J. Basinski (argued), Reed Smith Shaw & McClay, Pittsburgh, PA, for appel-lees CSX Corp. (formerly Chessie Systems, Inc.), the Chesapeake and Ohio R. Co. and the Baltimore and Ohio R. Co.", "Robert C. Myers (argued), Karen A. Esti-lo, Dewey Ballantine, New York City, H. Woodruff Turner, Kirkpatrick & Lockhart, Pittsburgh, PA, for appellee the Chase Manhattan Bank."], "corrections": "", "head_matter": "William F. LORENZ and Karen M. Lorenz, his wife; Victor A. Czerny; John Schmidt and Janice J. Schmidt, his wife; Marjorie Slapin; Thaddeus E. Drake and Celia Drake, his wife; and Edith E. Berenkey; individually and on behalf of a class of former debentureholders similarly situated, Appellants in 92-3667, v. CSX CORPORATION (formerly Chessie Systems, Inc.); the Chesapeake and Ohio Railroad; the Baltimore and Ohio Railroad Company and the Chase Manhattan Bank, N.A. Ethel B. SAVIN, individually and on behalf of a class of former debentureholders similarly situated, Appellant in 92-3694, v. CSX CORPORATION (formerly Chessie Systems, Inc.); the Chesapeake and Ohio Railroad; the Baltimore and Ohio Railroad Company and the Chase Manhattan Bank, N.A.\nNos. 92-3667, 92-3694.\nUnited States Court of Appeals, Third Circuit.\nArgued June 15, 1993.\nDecided Aug. 6, 1993.\nMichael P. Malakoff (argued), Malakoff Doyle & Finberg, P.C., Pittsburgh, PA, for appellants.\nAnthony J. Basinski (argued), Reed Smith Shaw & McClay, Pittsburgh, PA, for appel-lees CSX Corp. (formerly Chessie Systems, Inc.), the Chesapeake and Ohio R. Co. and the Baltimore and Ohio R. Co.\nRobert C. Myers (argued), Karen A. Esti-lo, Dewey Ballantine, New York City, H. Woodruff Turner, Kirkpatrick & Lockhart, Pittsburgh, PA, for appellee the Chase Manhattan Bank.\nBefore: SCIRICA, COWEN and WEIS, Circuit Judges."} | SCIRICA | COWEN | WEIS | 1 | 1 | 1 | 0 | 0 | 0 | 1 F.3d 1406 | [
{
"content": "You are an expert legal coding assistant trained to classify U.S. federal Courts of Appeals\ncases using an adaptation of the Supreme Court Database (SCDB_2023_01) codebook. You follow the coding procedure\nin the codebook step by step and use the precise definitions of terms presented in the code... |
10,517,723 | LOCAL 30, UNITED SLATE, TILE AND COMPOSITION ROOFERS, DAMP AND WATERPROOF WORKERS ASSOCIATION, AFL-CIO, Petitioner in No. 92-3416, v. NATIONAL LABOR RELATIONS BOARD, Respondent, Gundle Lining Construction Corporation, Intervenor-Respondent; NATIONAL LABOR RELATIONS BOARD, Petitioner in No. 92-3498, v. LOCAL 30, UNITED SLATE, TILE AND COMPOSITION ROOFERS, DAMP AND WATERPROOF WORKERS ASSOCIATION, AFL-CIO, Respondent | Local 30, United Slate, Tile & Composition Roofers, Damp & Waterproof Workers Ass'n v. National Labor Relations Board | 1993-08-11 | Nos. 92-3416, 92-3498 | United States Court of Appeals for the Third Circuit | {"judges": ["Before: SLOVITER, Chief Judge, COWEN and NYGAARD, Circuit Judges."], "parties": ["LOCAL 30, UNITED SLATE, TILE AND COMPOSITION ROOFERS, DAMP AND WATERPROOF WORKERS ASSOCIATION, AFL-CIO, Petitioner in No. 92-3416, v. NATIONAL LABOR RELATIONS BOARD, Respondent, Gundle Lining Construction Corporation, Intervenor-Respondent. NATIONAL LABOR RELATIONS BOARD, Petitioner in No. 92-3498, v. LOCAL 30, UNITED SLATE, TILE AND COMPOSITION ROOFERS, DAMP AND WATERPROOF WORKERS ASSOCIATION, AFL-CIO, Respondent."], "opinions": [{"text": "OPINION OF THE COURT\nBefore: SLOVITER, Chief Judge, COWEN and NYGAARD, Circuit Judges.\nSLOVITER, Chief Judge.\nLocal 30, United Slate, Tile and Composition Roofers, Damp and Waterproof Workers Association, AFL-CIO (Local 30, the Union or Roofers) petitions this court for review of the decision and order of the National Labor Relations Board (the Board) of July 20, 1992 finding that Local 30 violated the National Labor Relations Act (the NLRA or the Act) by (1) picketing with an object of coercing Gundle Lining Construction Corporation (Gundle or the Employer) to reassign work being performed by another union, and (2) maintaining a section 301 suit against Gundle following the Board’s decision in a section 10(k) proceeding to assign the disputed work to Local 172, Laborers International Union of North America, AFL-CIO (Local 172 or Laborers). This appeal has been docketed here as No. 92-3416. The Board cross-applies for enforcement of its order, docketed at No. 92-3498. We consider these appeals together. In a separate appeal, Gundle appeals from the decision of a federal district court confirming an arbitration award in favor of Local 30 and against Gundle. This appeal, docketed at No. 92-1614, is considered in a separate opinion.\nI.\nFacts and Procedural History\nGundle is a manufacturer and installer of high-density polyethylene linings at landfills. After it was awarded the job of lining cells (particular areas of a landfill into which garbage is placed) at the Ocean County Landfill in Lakehurst, New Jersey, it entered into a Memorandum Agreement with Local 30 on November 18, 1988 providing that employees represented by Local 30 would perform the cell lining work at that landfill and that Gun-dle would abide by the terms of Local 30’s collective bargaining agreement with the Roofing and Sheet Metal Contractors’ Association of Philadelphia and Vicinity (RSMCA) “as of 11/18/88 through completion.” App. at 2269. This entailed hiring employees selected through Local 30’s hiring hall. Until the fall of 1989, Local 30 performed all of Gun-dle’s cell lining work at the Ocean County Landfill.\nIn the fall of 1989, Gundle bid for and was awarded another cell lining job at the Ocean County Landfill, which Gundle assigned to Local 172. According to Michael Sullivan, Gundle’s Project Manager at that time, Gun-dle had decided not to use Local 30 for any subsequent work at the Ocean County Landfill because the landfill’s developer expressed dissatisfaction with Local 30’s work. On November 6, 1989, Gundle and Local 172 executed a project agreement and Local 172 began work at the Ocean County Landfill.\nCoincidentally, also on November 6, 1989, there was a hearing at the RSMCA in Philadelphia on Local 30’s grievance regarding Gundle’s use of its own unrepresented employees to perform cell lining work at a landfill in Tullytown, Pennsylvania (the Tul-lytown Landfill). At that time, Thomas Pe-drick, President of Local 30, learned that Gundle was again working at the Ocean County Landfill. Pedrick questioned Sullivan, who confirmed that information. Because of the Tullytown Landfill situation, Pe-di'ick assumed that Gundle was using its own unrepresented employees at the Ocean County Landfill.\nTwo days later, on November 8, 1989, four persons wearing Roofers’ jackets picketed the Ocean County Landfill, carrying signs which stated that Gundle did not pay union and area wages. After several hours and at the request of the landfill owner, the Local 172 workers left the work site. Shortly thereafter, the picketing ceased and it never resumed. According to Pedrick, the picketing ceased once he discovered that employees represented by Local 172, not Gundle’s own unrepresented employees as he had previously assumed, were performing the work. He explained the cessation on the ground that, “[i]t wouldn’t have been an area wage and standard picket line” if Local 172 had been working at the site. App. at 1060-61. The Local 172 workers returned to the site approximately one week later and finished the project without interruption.\nTony Priesol, Gundle’s Vice-President of Construction, called Pedrick within the next two weeks and asked why Local 30 had picketed. Priesol testified that Pedrick responded by asking him why Gundle was using employees represented by Local 172 when “basically that was [Local 30’s] work.” App. at 2116-17.\nOn November 13, 1989, Gundle filed an unfair labor practice charge against Local 30, alleging that the picketing had the objective of seeking the reassignment of the work in violation of section 8(b)(4)(ii)(D) of the NLRA. After holding a hearing pursuant to section 10(k) of the Act, the Board determined on June 28, 1990 that both Local 30 and Local 172 had legitimate contractual claims to the work. It then considered other factors, including employer preference and past practice, area and industry practice, relative skills, and the economy and efficiency of operations, in reaching its decision to award the work to Local 172. See Local 30, United Slate, Tile & Composition Roofers, 298 N.L.R.B. 951, 953-54, 1990 WL 122489 (1990). This procedure followed the Supreme Court’s instruction to the Board in NLRB v. Radio & Television Broadcast Engineers Union, Local 1212, 364 U.S. 573, 578-80, 81 S.Ct. 330, 333-35, 5 L.Ed.2d 302 (1961), to decide on the merits jurisdictional disputes between unions with conflicting contractual claims and thereafter award the disputed work.\nMeanwhile, on November 14,1989, the day after Gundle filed its unfair labor practice charge, Local 30 informed Gundle that it believed that Gundle had violated the applicable RSMCA collective bargaining agreement. Gundle responded that its contract with Local 30 had expired on January 27, 1989 upon the completion of the job Local 30 was performing when the Memorandum Agreement was signed. On December 5, 1989, Local 30 filed a grievance alleging that Gundle breached the collective bargaining agreement by failing to hire through Local 30’s hiring hall and to pay the wages and fringe benefits required by the collective bargaining agreement. The RSMCA notified Gundle that its Joint Conference Board (JCB) would hear Local 30’s grievance on January 3, 1990. Gundle responded that because its contract with Local 30 expired before the disputed work commenced, the JCB lacked jurisdiction over Gundle and it would not participate in the hearing or recognize or be bound by the JCB’s decision\nOn January 17, 1990, the JCB sustained Local 30’s grievance, concluding that Gundle “continued to be bound by the labor contract at least until the completion of its work at the Ocean County Landfill.” App. at 2281. It directed Gundle to “make whole those individuals who were deprived of work opportunities, including the payment of dues, wage and benefit fund contributions required by the labor contract.” App. at 2281. On March 26, 1990, Local 30 filed a complaint in federal district court under section 301 of the Labor Management Relations Act (LMRA), 29 U.S.C. § 185 (1988), seeking an order requiring Gundle to comply with the arbitration award.\nAs noted above, the Board resolved the section 10(k) dispute in favor of Local 172 on June 28, 1990. On December 14, 1990, the Board issued a complaint against Local 30 alleging that its picketing of the Ocean County Landfill and its continued maintenance of the section 301 suit after the Board’s section 10(k) decision were unfair labor practices in violation of section 8(b)(4)(ii)(D) of the NLRA. After a hearing, the Administrative Law Judge (ALJ) ordered the complaint dismissed.\nOn June 30,1992, while the General Counsel’s appeal to the Board was still pending, the district court granted summary judgment for Local 30 in the section 301 suit, holding that Gundle’s failure to move to vacate the arbitration award within the applicable thirty-day statute of limitations barred it from raising any affirmative defenses to Local 30’s motion to confirm the award. See United Union of Roofers, Waterproofers, & Allied Workers, Local Union No. 30 v. Gundle Lining Constr. Corp., 1992 WL 164465, 1992 U.S.Dist. LEXIS 9153, 141 L.R.R.M. (BNA) 2377, 2380 (E.D.Pa.1992).\nOn July 20, 1992, the Board reversed the ALJ’s dismissal of the unfair labor practice complaint. See Local 30, Union Slate, Tile & Composition Roofers, 307 N.L.R.B. No. 234, 141 L.R.R.M. (BNA) 1047, 1992 WL 187060 (1992). The Board found that Local 30 had committed unfair labor practices by picketing and maintaining its section 301 suit, and it ordered Local 30 to withdraw its section 301 lawsuit and to reimburse Gundle for any payments it may have made to Local 30 for the disputed work.\nLocal 30 filed this petition for review of the Board’s decision and the Board filed a cross-application for enforcement of its decision. We have jurisdiction under 29 U.S.C. § 160(f) (1988).\nOur review of decisions of the Board is circumscribed. We review factual findings to determine whether they .are supported by substantial evidence on the record as a whole. See NLRB v. Rockwood Energy & Mineral Corp., 942 F.2d 169, 173 (3d Cir.1991). We must enforce a Board order that rests upon an interpretation of the Act that is not “an unreasonable or unprincipled construction of the statute.... ” Ford Motor Co. v. NLRB, 441 U.S. 488, 497, 99 S.Ct. 1842, 1849, 60 L.Ed.2d 420 (1979); Interna tional Bhd. of Elec. Workers, Local 803 v. NLRB, 826 F.2d 1283, 1287 (3d Cir.1987).\nII.\nDiscussion\nAt issue in this ease is whether and how the Board may enforce its section 10(k) determination that Local 172 rather than Local 30 was entitled to the work assignment at the Ocean County Landfill. The Board acquired section 10(k) jurisdiction after Gundle filed an unfair labor practice charge under section 8(b)(4)(ii)(D) because of Local 30’s picketing at the Ocean County Landfill site. It is the Board’s position that its section 10(k) determination took precedence over the contrary arbitration award granting Local 30 damages for Gundle’s failure to assign it the work that was assigned to Local 172 by the Board. Therefore, according to the Board’s opinion, Local 30’s continued maintenance of its section 301 suit against Gundle to enforce the arbitration award after the section 10(k) determination “directly underminefd] the 10(k) award which, under the congressional scheme, is supposed to provide a final resolution to the dispute over which group of employees are entitled to the work at issue.” Local 30, 141 L.R.R.M. at 1048, 1992 WL 187060.\nAs the Supreme Court explained in NLRB v. Plasterers’ Local Union No. 79, Operative Plasterers’ and Cement Masons’ International Association, 404 U.S. 116, 92 S.Ct. 360, 30 L.Ed.2d 312 (1971), an unfair labor charge under section 8(b)(4)(ii)(D) “must be read in light of § 10(k) with which it is interlocked.” Id. at 123, 92 S.Ct. at 365. Issuance of a complaint on a section 8(b)(4)(ii)(D) charge must be withheld until the Board acts pursuant to section 10(k) to “hear and determine” the underlying dispute. However, a section 10(k) decision is not itself enforceable; a decision under that section, “standing alone, binds no one.” Id. at 126, 92 S.Ct. at 367. Instead, “the impact of the § 10(k) decision is felt in the § 8(b)(4)(ii)(D) hearing because for all practical purposes the Board’s award determines who will prevail in the unfair labor practice proceeding.” Id. at 126-27, 92 S.Ct. at 367.\nA.\nThe Lawfulness of the Picketing\nLocal 30 concedes that if one object of the picketing is to coerce an employer to assign work to employees represented by the picketing union rather than to employees represented by another union, there has been a violation of section 8(b)(4)(ii)(D). Petitioner’s Br. at 18 (citing Teamsters, Chauffeurs & Helpers, Local Union No. 50 (Schnabel Found. Co.), 295 N.L.R.B. 68, 69 (1989)). It argues, however, that this rule is inapplicable here because it had no “advance notice” that the disputed work at the Ocean County Landfill was being performed by members of another union rather than unrepresented workers, as Pedriek testified he believed.\nThe Board did not consider this argument. Instead, the Board held that the picketing was an unfair labor practice. Although the ALJ concluded that the picketing was not unlawful because Local 30 “never sought through its picketing to claim the work from [Local 172] but only to cure the violation of its contract,” App. at 3008, in reaching a different conclusion the Board relied on the ALJ’s finding, inter alia, that Local 30 picketed because employees it represented were not assigned the disputed work and in order to advance its contractual claim to wages for employees not hired to perform the disputed work. Thus, the Board held that Local 30’s picketing violated sections 8(b)(4)(i) and (ii)(D) “[b]ecause an object of the ... picketing was to coerce the Employer to reassign the disputed work to employees the Roofers represent....” Local 30, 141 L.R.R.M. at 1048, 1992 WL 187060.\nLocal 30 argues that its sole objective in picketing the Ocean County Landfill was to publicize the fact that Gundle was not paying its employees in accordance with area standards — a lawful objective under the Act. It notes that its picket signs referred to the wages as being below area standards, that it ceased picketing immediately once it learned that the employees were represented by another union, and that it had a prior dispute with Gundle over Gundle’s hiring of its own employees for much lower wages to do work at the Tullytown Landfill.\nThe law is clear that a single unlawful objective, even if it accompanies other lawful objectives, is sufficient to make picketing unlawful under the Act. See NLRB v. Denver Bldg. & Constr. Trades Council, 341 U.S. 675, 689, 71 S.Ct. 943, 951, 95 L.Ed. 1284 (1951); NLRB v. Musicians Union, AFM Local 6, 960 F.2d 842, 845 (9th Cir.1992); Schnabel Found. Co., 295 N.L.R.B. at 70. Thus, the issue is not whether Local 30’s professed purpose of protesting the perceived area standards violation is supported by the evidence, but whether the Board’s finding that the picketing had an unlawful objective, even if not the sole objective, of seeking the reassignment of the work is supported by substantial evidence on the record as a whole.\nThe facts referenced by the Board to support its finding that Local 30’s picketing had an unlawful objective include: (1) two days before the picketing Pedrick protested Gun-dle’s failure to hire employees represented by Local 30 to perform the work that he believed was covered by Local 30’s contract with Gundle; and (2) Pedrick stated shortly after the picketing occurred that the work “basically ... was his [Roofers’] work.” Local 30, 141 L.R.R.M. at 1047, 1992 WL 187060. The Board also cited to the ALJ’s finding that Local 30 “was aggrieved that it was not given- the job and its workers were deprived of employment-” Id. at 1048, 1992 WL 187060.\nMaking the factual determination of a union’s intended objective in picketing is “inferential and fact-based ..., at times requiring the drawing of lines more nice than obvious.” NLRB v. International Longshoremen’s Ass’n, 473 U.S. 61, 81, 105 S.Ct. 3045, 3057, 87 L.Ed.2d 47 (1985) (internal quotation omitted). “[A] reviewing court may not displace the Board’s factual inferences even if the court would have reached a different conclusion on de novo review.” NLRB v. Omnitest Inspection Servs., Inc., 937 F.2d 112, 121 (3d Cir.1991). “If more than one inference may be drawn from a given set of facts, ... the conclusion of the Board will control unless it is unreasonable.” Hedstrom Co. v. NLRB, 629 F.2d 305, 316 (3d Cir.1980) (in bane), cert. denied, 450 U.S. 996, 101 S.Ct. 1699, 68 L.Ed.2d 196 (1981).\nAlthough none of the evidence cited by the Board specifically links the picketing to Local 30’s work assignment dispute, none of the evidence cited by the ALJ or Local 30 directly undermines the Board’s inference and conclusion that they were related. Essentially, the Board drew different inferences from the substance of the evidence than did the ALJ. As we stated in Hedstrom, “we have consistently held that the Board has the power to draw different conclusions from evidentiary facts presented to the ALJ, including conclusions that directly contradict those reached by the ALJ.” Id. We cannot conclude on-the basis of the record that the Board’s inferences are unreasonable or inconsistent with its own precedents. See, e.g., Painters & Drywall Finishers, Local No. 79 (O’Brien Plastering Co.), 213 N.L.R.B. 788, 1974 WL 5349 (1974) (finding reasonable cause to believe unfair labor practice committed where picketing followed union’s assertion that the work was theirs and led to work stoppages, even though union contended sole purpose was to protest substandard wages).\nPedrick’s assumption that the workers at the Ocean County Landfill were unrepresented by any union does not dictate a different result. The purpose of the Act is to protect employers and the public from the detrimental economic impact of work stoppages arising out of picketing over jurisdictional disputes. See Plasterers’ Local Union No. 79, 404 U.S. at 130, 92 S.Ct. at 369. It would subvert that purpose if a union could avoid the applicability of section 10(k) by picketing before making any inquiry, which in this case would have revealed that the workers were in fact represented by another union. See NLRB v. Building & Constr. Trades Council, 578 F.2d 55, 58 (3d Cir.1978) (failure to “make substantial efforts to obtain information as to whether the [employer’s] wages or benefits met area standards” undermines asserted area standards objective and supports Board’s finding of unlawful objective).\nRegardless of whether we would reach the same conclusion as the Board upon a de novo review of the record, we hold, after giving due deference to the Board’s expertise in drawing factual inferences, that the Board’s finding that the picketing had an unlawful objective is supported by substantial evidence.\nNor can we conclude that the Board erred in holding that the ALJ’s reliance on Teamsters Local 107, Highway Truck Drivers & Helpers (Safeway Stores, Inc.), 134 N.L.R.B. 1320 (1961), was misplaced. In Safeway Stores, the employer had transferred truck-driving jobs from the members of one union who had performed the work for over ten years to employees at a different plant who were represented by another union “which did not press Safeway for the work.” The Board held that section 8(b)(4)(ii)(D) and section 10(k) were not designed to find a jurisdictional dispute “every time an employer elected to reallocate work among his employees or supplant one group of employees with another_” Id. at 1322. The Supreme Court has interpreted the “Safeway rule” as applying only where “the employer no longer faces conflicting claims to the work,” see Plasterers’ Local Union No. 79, 404 U.S. at 135, 92 S.Ct. at 371: in that situation, there is no jurisdictional dispute.\nThe Board in this case found Safeway Stores inapplicable because Local 30 did not represent a stable force of Gundle’s employees but was only interested in securing work for hiring hall applicants on Gundle’s new cell project. In its brief, it distinguishes on the same basis the other eases Local 30 cites. See Seattle Bldg. & Constr. Trades Council (Seattle Olympic Hotel Co.), 204 N.L.R.B. 1126, 1973 WL 4836 (1973); Chauffeurs, Teamsters & Helpers, Local 331 (Bulletin Co.), 139 N.L.R.B. 1391 (1962). Both of those cases. concerned a union’s effort to regain employment for its members who had traditionally performed the work rather than, as here, “competing claims between rival groups of employees.” Safeway Stores, 134 N.L.R.B. at 1322.\nThe ALJ believed it was significant that the employer created the dispute by its work assignment decision. He suggested that\n[i]f the Board were to bar [Local 30’sJ activities and apply Section 10(k) standards to what is essentially a breach of contract, including the Board’s primary reliance on the employer’s preference, the Board would permit any employer to evade its collective-bargaining agreement by merely signing an agreement with another union and then assigning its work to that other union.\nApp. at 3010.\nAs the Board points out, the ALJ overstated the risk of invoking the Board’s section 10(k) jurisdiction in a situation where the employer of its own accord enters into conflicting collective bargaining agreements. Under the Act it is clear that if neither union pickets or otherwise tries to coerce the employer into assigning it the work, section 10(k) will not be implicated. In contrast, here Local 30’s picketing to obtain work assigned by the employer to another union triggered section 10(k) jurisdiction. We thus reject the union’s contention that the Board erred as a matter of law in holding that Local 30’s picketing was an unfair labor practice under section 8(b)(4)(ii)(D).\nB.\nMaintenance of the Section 301 Suit\nIn addition to finding that Local 30’s picketing of the Gundle worksite was an unfair labor practice under section 8(b)(4)(i) and (ii)(D), the Board found that Local 30 violated section 8(b)(4)(ii)(D) of the Act by refusing to withdraw its section 301 action previously filed in federal court to confirm the arbitration award that it had received in its favor. The Board found that by maintaining the section 301 suit after June 28, 1990, the date of the Board’s section 10(k) determination awarding the work to Local 172, Local 30 “sought to undermine the Board’s [section] 10(k) award and coerce the Employer into reassigning to [Local 30’s] members the work that the Board found had been properly assigned to employees represented by [Local 172].” Local 30, 141 L.R.R.M. at 1049, 1992 WL 187060. We review to determine whether the Board’s finding rests on a reasonable interpretation of the Act.\nIn Bill Johnson’s Restaurants, Inc. v. NLRB, 461 U.S. 731, 737 n. 5, 103 S.Ct. 2161, 2166 n. 5, 76 L.Ed.2d 277 (1983), the Supreme Court recognized that a lawsuit which “has an objective that is illegal under federal law” may be enjoined as an unfair labor practice. Since that decision, other courts of appeals and the Board have agreed that the pursuit of a section 301 breach of contract suit that directly conflicts with a section 10(k) determination has an illegal objective and is enjoinable as an unfair labor practice under section 8(b)(4)(ii)(D). See, e.g., International Longshoremen’s & Warehousemen’s Union v. NLRB (ILWU), 884 F.2d 1407, 1414 (D.C.Cir.1989) (unfair labor practice to seek damages for work previously awarded to another union in a section 10(k) proceeding); Northern California Dist. Council Laborers Local Union No. 261 (W.B. Skinner, Inc.), 292 N.L.R.B. 1035, 1039, 1989 WL 223855 (1989) (unfair labor practice to maintain state court suit to enforce arbitration award for damages after Board has awarded work to other employees in a section 10(k) proceeding). As the court stated in International Union, United Automobile, Aerospace & Agricultural Implement Workers (UAW) v. Rockwell International Corp., 619 F.2d 580, 583 (6th Cir.1980), “[o]nce the NLRB decides a work assignment dispute, its determination takes precedence over a contrary arbitrator’s award [of the work].”\nWe have applied the same principle in the representational context. In Chauffeurs, Teamsters, & Helpers Local 776 Affiliated with International Brotherhood of Teamsters v. NLRB, 973 F.2d 230, 236 (3d Cir.1992), cert. denied, — U.S. —, 113 S.Ct. 1383, 122 L.Ed.2d 758 (1993), the arbitrator found that the employer violated the union recognition clause in the collective bargaining agreement by failing to apply it to a particular group of employees. In a subsequent unit clarification proceeding initiated by the employer, the Board determined that the same group of employees was not part of the unit. Thereafter, the union sought to enforce the arbitration award in a section 301 suit filed in federal court.\nIn an unfair labor practice proceeding, the Board found that the union’s maintenance of the section 301 suit after the Board’s determination that the employees were excluded from the unit was an unfair labor practice in violation of section 8(b)(1)(A), (2) and (3) because the Board’s unit clarification proceeding superceded the arbitrator’s decision. We granted enforcement in reliance on the “illegal objective” test enunciated in Bill Johnson’s. We stated, “[i]n this case the suit to enforce the arbitration award was prosecuted to circumvent the primary jurisdiction of the Board in deciding representational issues. Accordingly, regardless of the union’s motivation, after [the Board’s determination of the representation issue], the suit was being pursued for an illegal objective -” Id. 973 F.2d at 236. Significantly, we also noted that the union’s “subjective good faith will not save it.” Id.\nThe crux of the issue before us is whether the arbitration award for Local 30 is inconsistent with or contrary to the Board’s assignment of the work to Local 172. The Board commented on the sequence of events, noting that Local 30 had “fil[ed] a contract grievance after it was faced with an unfair labor practice charge.” 141 L.R.R.M. at 1048, 1992 WL 187060. Local 30 emphasizes that by letter dated January 4, 1990, its counsel advised the Board that its “claim against [Gundle] under the provisions of its collective bargaining agreement is limited to a claim for monetary damages and does not involve any claim for the performance of the specific work set forth in the ... unfair labor practice proceeding.” App. at 2404. Local 30 argues that it is not inconsistent with the Board’s section 10(k). decision for it to seek payment for the disputed work by filing a grievance for breach of the collective bargaining agreement and seeking the enforcement of an arbitration award in court, so long as it is not seeking the work itself.\nThe distinction Local 30 seeks to draw between seeking the work and seeking payment for the work is ephemeral. In NLRB v. Local 1291, International Longshoremen’s Association, 368 F.2d 107 (3d Cir.1966), cert. denied, 386 U.S. 1033, 87 S.Ct. 1482, 18 L.Ed.2d 595 (1967), we held that a jurisdictional dispute governed by section 10(k) was created by two groups of employees claiming pay for the same work, irrespective of whether either group was seeking the work itself. We explained:\nthe valuable part of a right to a particular job is the right to be paid for it. Thus, a jurisdictional dispute between two groups of employees as to which is entitled to certain work is in essence a dispute as to which shall receive compensation for that work. The opportunity sought to perform labor is significant only as a means of obtaining compensation. It follows that if workmen, who are entitled to a job under the terms of the labor contract, agree to forego the obligation of working but not the concomitant right to payment, they have not disclaimed any significant right. When, as in this case, one group insists that work, for which another group has contracted and is being paid, be assigned it, the fact that both groups are claiming pay for the same work suffices to create a jurisdictional dispute, and it is irrelevant that either group, or both, may manifest a willingness to take the pay and forego the work.\nId. at 110 (emphasis added). Any other result would be inconsistent with Carey v. Westinghouse Electric Corp., 375 U.S. 261, 268, 84 S.Ct. 401, 407, 11 L.Ed.2d 320 (1964), where the Supreme Court held that a Board ruling on a representational issue would protect the employer from liability for damages for breach of a collective bargaining agreement as long as the employer’s actions were consistent with the Board’s decision.\nThe Board, whose construction of the Act is entitled to deference, also has held that there is no material difference between seeking work and seeking payment in lieu of work, and its decisions embodying this principle have been enforced by other courts of appeals. For example, in ILWU, the court upheld the Board’s conclusion that a union committed an unfair labor practice by filing and maintaining a grievance under its collective bargaining agreement seeking time-in-lieu payments for work that the Board had previously assigned to another union in a section 10(k) proceeding. 884 F.2d at 1413-14; see also International Longshoremen’s & Warehousemen’s Union, Local 32 v. Pacific Maritime Ass’n (Weyerhaeuser), 773 F.2d 1012, 1018-19 (9th Cir.1985) (upholding Board’s determination that union’s section 301 suit to enforce arbitrator’s award of payment-in-lieu of work awarded to another union in a section 10(k) decision was an unfair labor practice), cert. denied, 476 U.S. 1158, 106 S.Ct. 2277, 90 L.Ed.2d 720 (1986); Rockwell International, 619 F.2d at 584 (“[WJhen an employer has been acting in accord with an ultimate NLRB § 10(k) ruling, it is not liable for damages to the disappointed union.”).\nWe recognize that the language in Hutter Construction Co. v. International Union of Operating Engineers, Local 139, 862 F.2d 641 (7th Cir.1988), supports Local 30’s position. In Hutter, the Operators’ union filed a grievance against the employer for breaching a clause of the collective bargaining agreement limiting subcontracting to a signatory of the agreement. The arbitrator awarded backpay to the Operators but the Board, in a section 10(k) decision, awarded the disputed work to the Laborers, the union used by the subcontractor. The court concluded that the Operators’ subcontracting grievance was not a jurisdictional claim, and that the arbitrator’s award of pay for the disputed work was separable from the section 10(k) award of the work itself and not inconsistent therewith.\nWhether or not the holding in Hutter is distinguishable from the issue presented here, as the Board suggests, we do not accept the distinction made in that case between a section 10(k) award based on non-contractual factors and an arbitral award of damages based on a contractual claim to the work. See id. at 645. As we have already noted, section 10(k) proceedings are intended to resolve competing claims to work, even if both groups of employees claiming the work have legitimate contractual claims. In Radio & Television Broadcast Engineers, 364 U.S. at 578-79, 81 S.Ct. at 333-34, the seminal case on the effect of a section 10(k) award, the Supreme Court noted that “in most situations where jurisdictional strikes occur, the employer has contracted with two unions, both of which represent employees capable of doing the particular tasks involved.” Id. at 582, 81 S.Ct. at 335. If in every case where the section 10(k) decision was based on non-contractual factors the disappointed union could still seek a contractual remedy, the section 10(k) hearing would not be serving its intended purpose of preventing work disruption by quickly and finally resolving jurisdictional disputes. See id. at 576-77, 81 S.Ct. at 332-33.\nWe also agree with the Board that if a union is permitted to’ recover damages for work awarded to another union in a section 10(k) proceeding, the policy underlying section 8(b)(4)(ii)(D) of protecting employers from the detrimental economic impact of jurisdictional disputes would be severely undermined. See ILWU, 884 F.2d at 1414 (noting that Board’s interpretation “may even be inevitable” because otherwise “the very purpose of section 10(k) — to authorize the Board to resolve the jurisdictional dispute — would be totally frustrated”). Therefore, we conclude that the Board’s interpretation of the Act to treat maintenance of the section 301 lawsuit to enforce an arbitration award against Gundle for pay-in-lieu of work as an unfair labor practice was not erroneous as a matter of law.\nIII.\nConclusion\nFor the reasons set forth, we will grant enforcement of the Board’s order and deny Local 30’s petition for review.\n. Sullivan testified that in this conversation he told Pedrick that Gundle was using employees represented by Local 172. However, Pedrick testified to the contrary, and his testimony was credited by the ALJ. The Board accepted the ALJ’s credibility finding in its decision.\n. Although Priesol denied this, see App. at 1064, the ALJ never resolved that difference in the testimony as it did with the November 6, 1989 conversation. See supra note 1.\n. Section 8(b)(4)(ii)(D) makes it \"an unfair labor practice for a labor organization or its agents”\n(4)(i) to engage in, or to induce or encourage any individual employed by any person engaged in commerce or in an industry affecting commerce to engage in, a strike or a refusal in the course of his employment to use, manufacture, process, transport, or otherwise handle or work on any goods, articles, materials, or commodities or to perform any services; or (ii) to threaten, coerce, or restrain any person engaged in commerce or in an industry affecting commerce, where in either case an object thereof is—\n(D) forcing or requiring any employer to assign particular work to employees in a particular labor organization or in a particular trade, craft, or class rather than to employees in another labor organization or in another trade, craft, or class, unless such employer is failing to conform to an order or certification of the Board determining the bargaining representative for employees performing such work....\n29 U.S.C. § 158(b)(4)(ii)(D) (1988).\n.Under section 10(k) of the Act,\nWhenever it is charged that any person has engaged in an unfair labor practice within the meaning of [section 8(b)(4)(ii)(D) ], the Board is empowered and directed to hear and determine the dispute out of which such unfair labor practice shall have arisen, [unless the dispute is resolved by the parties within 10 days].\n29 U.S.C. § 160(k) (1988).\n. In a separate proceeding, the Board sought to enjoin the section 301 suit under the power given it in section 10(1) of the NLRA to seek \"appropriate injunctive relief pending the final adjudication of the Board” if the individual to whom the matter is referred has “reasonable cause to believe such charge is true_” See 29 U.S.C. § 160(7) (1988). The district court refused to issue the injunction, see Hoeber ex rel. NLRB v. Local 30, United Slate, Tile & Composition Roofers, 759 F.Supp. 212 (E.D.Pa.1991), and we affirmed on the ground that the district court “properly exercised its discretion in holding that a 10(1) injunction would not be just and proper in this case.” See Hoeber ex rel. NLRB v. Local 30, United Slate, Tile & Composition Roofers, 939 F.2d 118, 127 (3d Cir.1991).\n. The unfair labor practice charge is dismissed if the section 10(k) decision awards the disputed work to the union charged with an unfair labor practice or if the charged union complies with an adverse award. See International Tel. & Tel. Corp. v. Local 134, Int’l Bhd. of Elec. Workers, 419 U.S. 428, 446, 95 S.Ct. 600, 611, 42 L.Ed.2d 558 (1975).\n. The premise of Local 30’s argument, i.e., that section 10(k) and section 8(b)(4)(ii)(D) apply only to work assignment disputes between rival unions and not to disputes between a union and an unrepresented group of employees, is questionable. Although the Supreme Court has never directly addressed the issue, it has on two occasions expressed the view that section 10(k) and section 8(b)(ii)(4)(D) apply to jurisdictional disputes between a union and unrepresented employees. See NLRB v. Radio & Television Broadcast Eng'rs Union, Local 1212, 364 U.S. 573, 584, 81 S.Ct. 330, 337, 5 L.Ed.2d 302 (1961) (acknowledging \"the fact that § 10(k), like § 8(b)(4)[ii](D), extends to jurisdictional disputes between unions and unorganized groups as well as to disputes between two or more unions”); Plasterers' Local Union No. 79, 404 U.S. at 128 n. 22, 92 S.Ct. at 368 n. 22 (\"Section 10(k) protection was also extended to unorganized employees.”). Other courts of appeals considering this issue have reached similar conclusions. See, e.g., NLRB v. International Longshoremen’s Ass’n, 764 F.2d 234, 238 (4th Cir.1985) (“The essence of a jurisdictional dispute is that a union claims a right to work that is being performed by workers who may or may not be represented by another union.”); NLRB v. United Ass’n of Journeymen & Apprentices of Plumbing & Pipefitting Indus., Local No. 195, 574 F.2d 1215, 1218 (5th Cir.1978) (rejecting argument that section 8(b)(4)(ii)(D) applies only to jurisdictional disputes between rival unions). Local 30 cites no cases supporting its position that section 10(k) is limited to jurisdictional disputes between unionized employees, and we are aware of none.\n. Local 30 also argues that the Board erred by rejecting the ALJ’s finding, based on a credibility determination, that Local 30 did not know at the time it picketed that the work at the Ocean County Landfill was being done by a rival union and not by Gundle's own unrepresented employees. However, the Board did not disturb the ALJ’s credibility determination or his finding on this issue. See supra note 1.\n. We recognize that in Hoeber, where we affirmed the district court's exercise of discretion in refusing to enjoin the section 301 suit under section 10(1), we expressed doubt that Local 30's picketing constituted an unfair labor practice. 939 F.2d at 123 n. 7. However, a section 10(1) proceeding is independent of the proceeding on the merits and therefore any speculation expressed in that decision is not binding on us in the context of an appeal on the merits. See Denver Bldg. & Constr. Trades Council, 341 U.S. at 682-83, 71 S.Ct. at 948.\n. In contrast, the mere filing of a grievance by a union before the Board issues its section 10(k) decision is not an unfair labor practice. See Georgia-Pacific Corp. v. NLRB, 892 F.2d 130, 133 (D.C.Cir.1989).\n. Local 30 argues that pursuing its section 301 suit to enforce the arbitration award is not an unfair labor practice because under Bill Johnson's a section 301 suit must lack a reasonable basis in fact or law and be filed with an improper motivation to be enjoinable as an unfair labor practice. We need not consider the merits of Local 30's argument because, as noted in the text, in Bill Johnson's the Supreme Court also recognized the “illegal objective” test referred to in the text as an independent basis for enjoining a lawsuit as an unfair labor practice.\n. Nothing in our opinion in Eichleay Corp. v. International Association of Bridge, Structural & Ornamental Iron Workers, 944 F.2d 1047 (3d Cir.1991), cert. dismissed, - U.S. -, 112 S.Ct. 1285, 117 L.Ed.2d 510 (1992), relied on by Local 30, is to the contrary. Eichleay involved an employer’s attempt to vacate an adverse arbitration award determining that it breached its collective bargaining agreement. We held that the portion of the award which implicated the Board’s earlier representation determination was correctly vacated by the district court. That portion of the arbitration award that did not directly conflict with the Board’s unit clarification decision could stand. The case did not concern the issue here — whether maintenance of a section 301 action that undermines a Board section 10(k) decision is an unfair labor practice. There was also no direct conflict between the Board's section 10(k) decision and the arbitration award at issue in Associated General Contractors, Inc. v. International Union of Operating Engineers, Local 701, 529 F.2d 1395 (9th Cir.), cert. denied, 429 U.S. 822, 97 S.Ct. 72, 50 L.Ed.2d 84 (1976), another case cited by Local 30.\n. Again, our statement in Hoeber that because \"Local 30 has disavowed any claim to the landfill work,” and now seeks only damages for breach of contract, it did not have an improper motivation in filing the suit is not controlling, Hoeber, 939 F.2d at 124, especially because, as we clarified supra, we do not believe the improper motivation test is the only basis upon which a section 301 suit to enforce an arbitration award is en-joinable as an unfair labor practice.", "type": "majority", "author": "SLOVITER, Chief Judge."}], "attorneys": ["Thomas H. Kohn (argued), Sagot, Jennings & Sigmond, Philadelphia, PA, Attorney for Local 30, United Slate, Tile and Composition Roofers, Damp and Waterproof Workers Ass’n, AFL-CIO.", "Aileen A. Armstrong, Yvonne T. Dixon, John Fawley (argued), Jerry M. Hunter, Nicholas E. Karatinos, Howard E. Perlstein, N.L.R.B., Washington, DC, for N.L.R.B.", "Laurance E. Baccini, Wolf, Block, Schorr & Solis-Cohen, Philadelphia, PA, for Gundle Lining Const. Corp."], "corrections": "", "head_matter": "LOCAL 30, UNITED SLATE, TILE AND COMPOSITION ROOFERS, DAMP AND WATERPROOF WORKERS ASSOCIATION, AFL-CIO, Petitioner in No. 92-3416, v. NATIONAL LABOR RELATIONS BOARD, Respondent, Gundle Lining Construction Corporation, Intervenor-Respondent. NATIONAL LABOR RELATIONS BOARD, Petitioner in No. 92-3498, v. LOCAL 30, UNITED SLATE, TILE AND COMPOSITION ROOFERS, DAMP AND WATERPROOF WORKERS ASSOCIATION, AFL-CIO, Respondent.\nNos. 92-3416, 92-3498.\nUnited States Court of Appeals, Third Circuit.\nArgued March 29, 1993.\nDecided August 11, 1993.\nThomas H. Kohn (argued), Sagot, Jennings & Sigmond, Philadelphia, PA, Attorney for Local 30, United Slate, Tile and Composition Roofers, Damp and Waterproof Workers Ass’n, AFL-CIO.\nAileen A. Armstrong, Yvonne T. Dixon, John Fawley (argued), Jerry M. Hunter, Nicholas E. Karatinos, Howard E. Perlstein, N.L.R.B., Washington, DC, for N.L.R.B.\nLaurance E. Baccini, Wolf, Block, Schorr & Solis-Cohen, Philadelphia, PA, for Gundle Lining Const. Corp."} | SLOVITER | COWEN | NYGAARD | 1 | 1 | 1 | 0 | 0 | 0 | 1 F.3d 1419 | [
{
"content": "You are an expert legal coding assistant trained to classify U.S. federal Courts of Appeals\ncases using an adaptation of the Supreme Court Database (SCDB_2023_01) codebook. You follow the coding procedure\nin the codebook step by step and use the precise definitions of terms presented in the code... |
10,517,747 | UNITED UNION OF ROOFERS, WATERPROOFERS, AND ALLIED WORKERS, LOCAL UNION NO. 30 v. GUNDLE LINING CONSTRUCTION CORPORATION, Appellant | United Union of Roofers, Waterproofers, & Allied Workers v. Gundle Lining Construction Corp. | 1993-08-11 | No. 92-1614 | United States Court of Appeals for the Third Circuit | {"judges": ["Before: SLOVITER, Chief Judge, COWEN and NYGAARD, Circuit Judges."], "parties": ["UNITED UNION OF ROOFERS, WATERPROOFERS, AND ALLIED WORKERS, LOCAL UNION NO. 30 v. GUNDLE LINING CONSTRUCTION CORPORATION, Appellant."], "opinions": [{"text": "OPINION OF THE COURT\nSLOVITER, Chief Judge.\nGundle Lining Construction Corp. (Gundle or Employer) appeals from the final decision of the district court confirming an arbitration award in favor of Local 30, United Slate, Tile and Composition Roofers, Damp and Waterproof Workers Association, AFL-CIO (Local 30 or Union). Because an issue of law is dispositive, our review is plenary.\nOn December 5, 1989, Local 30 filed a grievance complaining that Gundle breached the collective bargaining agreement between them by assigning work to employees represented by another union, Local 172, Laborers International Union of North America, AFL-CIO (Laborers or Local 172), instead of to employees represented by Local 30. Gundle declined to participate in the arbitration on the ground that the work that was the subject of the agreement had ceased, and that the arbitral board had no jurisdiction. Local 30 received a favorable arbitration award, which directed Gundle to “make whole those individuals who were deprived of work opportunities, including the payment of dues, wage and benefit fund contributions required by the labor contract.” App. at 2281.\nLocal 30 then filed a complaint in district court under section 301 of the Labor Management Relations Act (LMRA), 29 U.S.C. § 185 (1988), seeking confirmation of the award. The district court initially ruled that there was a genuine issue of material fact which precluded granting Local 30 summary judgment on the merits. Thereafter, it entered the order at issue here confirming the award on the ground that Gundle’s failure to move to vacate the award within the applicable thirty-day statute of limitations (borrowed from the Pennsylvania Uniform Arbitration Act, 42 Pa.Cons.Stat.Ann. § 7314 (Purdon 1982)) barred Gundle from raising any affirmative defenses to Local 30’s confirmation action. See Service Employees Int’l Union, Local No. 36 v. Office Ctr. Servs., Inc., 670 F.2d 404, 412 (3d Cir.1982) (party opposing an arbitration award must move to vacate the award within the applicable statute of limitations period).\nA detailed summary of all of the relevant facts is included in our opinion in the companion appeals, also filed today, which enforces an order of the National Labor Relations Board (the Board). See Local 30, United Slate, Tile & Composition Roofers, Damp & Waterproof Workers Ass’n v. NLRB, 1 F.3d 1419 (3d Cir.1993). In that decision, we hold that Local 30 committed an unfair labor practice by maintaining this section 301 suit to enforce its arbitration award because the award, which ordered Gundle to pay Local 30 for the lost work, conflicted with a decision of the Board under section 10(k) of the National Labor Relations Act (NLRA), 29 U.S.C. § 160(k) (1988), awarding the disputed work to Local 172 (the Laborers) rather than Local 30 (the Roofers). We declined to adopt the distinction proposed by Local 30 between seeking payment for work and seeking the work itself.\nThe parties concede that our decision on the unfair labor practice issue controls disposition of this appeal. It follows from that decision enforcing the Board’s order that Local 30 is prohibited from the continued maintenance of this section 301 suit. For the foregoing reasons, we will vacate the decision of the district court confirming the arbitration award in favor of Local 30 and remand with directions to dismiss the complaint.\n. As the NLRB noted in its opinion holding that Local 30 had committed unfair labor practices, this grievance was filed shortly after Gundle filed an unfair labor practice charge against Local 30 for picketing at the site in question.\n. In light of our decision, we do not reach the merits of Gundle's argument that the district court erred by borrowing the Pennsylvania Uniform Arbitration Act’s thirty-day statute of limitations because the Act by its own terms docs not apply where the arbitration award for which confirmation is sought constitutes an unfair labor practice. See 42 Pa.Cons.Stat.Ann. § 7302(b) (Purdon 1982).", "type": "majority", "author": "SLOVITER, Chief Judge."}], "attorneys": ["Laurance E. Baccini, Steven H. Slutsky, Wolf, Block, Schorr & Solis-Cohen, Philadelphia, PA, for appellant.", "Thomas H. Kohn, Sagot, Jennings & Sig-mond, Philadelphia, PA, for appellee."], "corrections": "", "head_matter": "UNITED UNION OF ROOFERS, WATERPROOFERS, AND ALLIED WORKERS, LOCAL UNION NO. 30 v. GUNDLE LINING CONSTRUCTION CORPORATION, Appellant.\nNo. 92-1614.\nUnited States Court of Appeals, Third Circuit.\nSubmitted Under Third Circuit Rule 12(6) March 29, 1993.\nDecided Aug. 11, 1993.\nLaurance E. Baccini, Steven H. Slutsky, Wolf, Block, Schorr & Solis-Cohen, Philadelphia, PA, for appellant.\nThomas H. Kohn, Sagot, Jennings & Sig-mond, Philadelphia, PA, for appellee.\nBefore: SLOVITER, Chief Judge, COWEN and NYGAARD, Circuit Judges."} | SLOVITER | COWEN | NYGAARD | 1 | 1 | 1 | 0 | 0 | 0 | 1 F.3d 1429 | [
{
"content": "You are an expert legal coding assistant trained to classify U.S. federal Courts of Appeals\ncases using an adaptation of the Supreme Court Database (SCDB_2023_01) codebook. You follow the coding procedure\nin the codebook step by step and use the precise definitions of terms presented in the code... |
10,517,778 | UNITED STATES of America, Plaintiff-Appellee, v. Dennis Allen BREWER, Defendant-Appellant | United States v. Brewer | 1993-08-16 | No. 92-5118 | United States Court of Appeals for the Fourth Circuit | {"judges": ["Before WIDENER, PHILLIPS, and HAMILTON, Circuit Judges."], "parties": ["UNITED STATES of America, Plaintiff-Appellee, v. Dennis Allen BREWER, Defendant-Appellant."], "opinions": [{"text": "OPINION\nPHILLIPS, Circuit Judge:\nAppellant Dennis Brewer challenges his convictions on eight counts of possession with intent to distribute cocaine, 21 U.S.C. § 841(a)(1), pressing a number of claimed errors by the district court for our review. Finding no reversible error, we affirm.\nI\nActing on Arlington County Police Detective Samuel Dale’s testimony recounting-facts provided by his informants, a federal grand jury in the Eastern District of Virginia indicted Brewer on fourteen counts of possession with intent to distribute fifty or more grams of crack cocaine (21 U.S.C. § 841(a)(1)). Before trial, the government moved to dismiss six counts for improper venue because a witness interview revealed that they occurred in the District of Columbia rather than the Eastern District of Virginia. Brewer immediately sought dismissal of the entire indictment, contending that Dale necessarily had perjured himself to obtain Brewer’s indictment on the six counts in question and that this perjury had “infected” the grand jury’s decision to indict on the other eight counts. Finding no convincing evidence that Dale perjured himself, the district court granted the government’s motion and denied Brewer’s.\nAnother of Brewer’s pretrial motions met with more success. In the course of an earlier custodial interrogation concerning another individual, Brewer allegedly had admitted to federal marshals that he was a “drug dealer.” The government wanted to use the admission at trial, but the district court granted Brewer’s motion to suppress it because the marshals had failed to give him the Miranda warning before questioning.\nAt trial, the government relied principally on testimony by three members of a drug distribution ring centered in the Washington, DC metropolitan area and known as the “Rodriguez/Polaneo organization”: Francisco Perez, Romulo DeLeon, and Edwin Rodriguez.\nEach earlier had pled guilty to charges arising out of his participation in the ring and received a substantial sentence, and they testified against Brewer pursuant to plea agreements obligating the government to seek sentence reductions in exchange for substantial cooperation. Each testified that he had delivered drugs to Brewer during a period beginning “around March or April or so” of 1990 and ending in October of that year. DeLeon provided details of three deliveries, one in the District of Columbia and two in Virginia. Perez gave the specifics of two more in Virginia. Rodriguez said he’d made about ten deliveries to Brewer in the District and Virginia and testified to the details of five of them, four in Virginia and one in the District.\nThe government also put on Detective Dale, the lead investigator of the “Rodriguez/Polanco organization.” His testimony concerned the methods of communication used by the organization — pagers, cellular phones, extensive long distance calls — and what they meant to a narcotics investigator.\nThe government also called Waquesha Scott, Brewer’s fiancee, to testify about a statement she’d allegedly made to Deputy United States Marshal Martin Flynn that Brewer “dealt drugs.” On the stand, Scott denied making the statement and volunteered, without being asked, that the marshals had tried to induce her to make such a statement by telling her that Brewer had already admitted as much to them. She then denied that Brewer was a drug dealer or that she’d ever seen him with drugs. Called to rebut Scott’s denial of the prior statement, Flynn testified that Scott told him, in the course of another investigation, that Brewer dealt drugs but that she’d only seen Brewer with them once.\nBrewer called no witnesses. At the close of his ease he moved for a mistrial based on Scott’s revelation of the suppressed confession, but the district court denied the motion after noting the absence of contemporaneous objection or motion to strike and offering to provide a curative instruction at Brewer’s request.\nBrewer also sought a judgment of acquittal on Count Six of the original indictment, which alleged that Brewer possessed crack cocaine with intent to distribute it “on or about February 1990,” claiming that no one testified to a transaction at that time. Identifying the indicted transaction as the one Rodriguez conducted in “March or April or so” of 1990, the district court denied Brewer’s motion.\nThe jury found Brewer guilty on all eight counts, and the district court entered judgments of conviction accordingly, sentencing him to 360 months. He appealed.\nII\nWhen the six District of Columbia transactions in Brewer’s original indictment were dismissed on the government’s motion, Brewer unsuccessfully argued for dismissal of the entire indictment as improperly obtained. He renews the contention here, arguing that the district court’s refusal to exercise its supervisory authority and dismiss the whole indictment before trial constituted an abuse of discretion. We disagree.\nThe district court can exercise its supervisory authority to dismiss an indictment for errors in grand jury proceedings only where an irregularity prejudicing the defendant has been shown. Bank of Nova Scotia, 487 U.S. 250, 254, 108 S.Ct. 2369, 2373, 101 L.Ed.2d 228 (1988). Brewer characterizes the irregularity here as the presentation of perjured testimony to the grand jury, but we concur with the district court’s factual finding that no convincing evidence of perjury was adduced. The irregularity in question, then, is presentation to the grand jury of erroneous testimony about venue for the six counts of the indictment ultimately dismissed by the government.\nWhere, as here, a grand jury irregularity isn’t of constitutional dimension, prejudice justifying dismissal of an indictment exists only where (1) the irregularity substantially influences the decision to indict or (2) “there is grave doubt that the decision to indict was free from the substantial influence of such [irregularities].” Bank of Nova Scotia, 487 U.S. at 256, 108 S.Ct. at 2374 (internal quotation marks and citation omitted). Brewer can’t demonstrate either of these conditions with respect to the eight counts of his indictment on which he ultimately was convicted. Those counts are legally unrelated to the six charges ultimately dismissed because of Dale’s erroneous testimony, and the evidence Dale provided to support indictment on the former is independent of that he provided to secure indictment on the latter. Nothing in the record suggests that his erroneous grand jury testimony pertaining to the six dismissed counts substantially influenced the jury’s decision to indict Brewer on the other eight or induces grave doubt that the grand jury’s decision to do so was free from improper influence stemming from Dale’s erroneous testimony. The district court correctly refused to dismiss the remainder of Brewer’s indictment.\nIII\nBrewer also challenges four of the district court’s decisions on evidentiary matters. We review these challenges seriatim.\nA\nBrewer first contends that the district court erred in admitting the testimony of his fiancee, Waquesha Scott, because she was called solely to provide improper character evidence “for the purpose of proving action in conformity therewith on a particular occasion,” evidence generally forbidden by Fed. R.Evid. 404(a). The government argues (1) that Brewer failed to preserve this error and (2) that Scott was called to provide testimony that she’d told federal marshals Brewer was a “drug dealer,” which the government claims constituted evidence of “of other crimes, wrongs, or acts” admissible under Rule 404(b) to show Brewer’s intent to distribute and knowing possession. Both intent and knowledge are elements of the indicted offense put in issue by Brewer’s “not guilty” plea. See United States v. Sparks, 560 F.2d 1173, 1175 (4th Cir.1977).\nWe agree with the government that Brewer failed to preserve this error. Before Scott took the stand, Brewer’s counsel objected to the government’s request to treat Scott as a hostile witness. The district court sustained that objection, requiring the government to demonstrate adversity before it could treat Scott as hostile. Immediately thereafter followed this frequently interrupted examination of Scott by the government:\nQ. Were you interviewed by United States Marshals about Mr. Brewer?\nA. Yes, I was.\nQ. And did you tell the marshals-— [Brewer’s counsel]: Objection, Your Honor.\n[United States]: I’ll rephrase the question ...\n[District Court]: All right.\nQ. Does Dennis Brewer deal drugs?\nA. No.\n[Brewer’s counsel]: Objection.\n[District Court]: Overruled.\nA. No, he does not. They tried to make me say he did.\nQ. Has he ever dealt drugs?\nA. No, he has not.\nQ. Have you ever seen him with drugs?\nA. No ...\nQ. Do you remember when you were interviewed by the marshals?\nA. ... I remember ...\nQ. And isn’t it true that you told the marshals at that time that—\n[Brewer’s counsel]: Objection, Your Honor.\n[District Court]: Stand up and tell me what the objection is.\n[Brewer’s counsel]: It’s his witness. [District Court]: Overruled. You [the United States] may now lead [the witness].\nJ.A. at 262-63. While the transcript excerpt reveals that Brewer’s counsel objected to the question “Does Dennis Brewer deal drugs?” (after Scott had already answered it), he stated no basis for his objection. To preserve an objection to admissibility for appeal, Fed.R.Evid. 103(a) requires such a statement unless the specific ground was “apparent from the context.” The convoluted nature of the above questioning, in which Brewer’s counsel apparently focused on the form of the government’s questions rather than their content, reveals that was not the case.\nWhere counsel fails adequately to present and preserve an objection on the record, we review the admission of evidence solely for plain error. Fed.R.Evid. 103(a)(1), 103(d); Fed.R.Crim.P. 52(b). The Supreme Court’s recent decision in United States v. Olano, — U.S. —, 113 S.Ct. 1770, 123 L.Ed.2d 508 (1993), clarifies the role of appellate courts undertaking plain error review. To reverse for plain error the reviewing court must (1) identify an error, id. at -, 113 S.Ct. at 1777, (2) which is plain, id., (3) which affects substantial rights, id. at -, 113 S.Ct. at 1777-78, and (4) which “seriously affect[s] the fairness, integrity or public reputation of judicial proceedings.” Id. at -, 113 S.Ct. at 1779 (quoting United States v. Atkinson, 297 U.S. 157, 160, 56 S.Ct. 391, 405, 80 L.Ed. 555 (1936)).\nIt’s not clear whether the admission of this testimony was proper; we have some doubt whether evidence of an occupation or status like “drug dealer” falls within the realm of “other crimes, wrongs, or acts” admissible to show knowledge or intent under Rule 404(b). See United States v. Reed, 647 F.2d 678, 686 (6th Cir.) (Rule 404(b) doesn’t justify elicitation of testimony that defendants are known burglars or fences in trial on charges of receiving stolen goods.), cert. denied, 454 U.S. 837, 1037, 102 S.Ct. 142, 580, 70 L.Ed.2d 118, 483 (1981). On the surface, at least, it more closely resembles the forbidden character evidence suggested by Brewer.\nLaw on the latter question remains unsettled, however, see Charles A. Wright and Kenneth W. Graham, Jr., 22 Federal Practice and Procedure § 5233 n. 50 and accompanying text (1978 & 1992 Supp.) (identifying the problem), and we needn’t address this difficulty, because the claimed error certainly wasn’t “plain” by Olano’s standards. “ ‘[Pjlain’ is synonymous with ‘clear’ or, equivalently, ‘obvious.’ ... At a minimum, the Court of Appeals cannot correct an error pursuant to Rule 52(b) unless the error is clear under current law.” Olano, — U.S. at —, 113 S.Ct. at 1779 (emphasis added). That’s not so here. Accordingly, we find no plain error in the district court’s admission of the challenged evidence.\nB\nWhen Scott denied that Brewer was a drug dealer, then parried the government’s attempt to impeach her by denying that she told federal marshals he was, the government called Marshal Flynn to rebut her testimony, and Flynn did. Brewer now argues that the district court erred in failing to instruct the jury that Flynn’s testimony was admissible only to impeach Scott and not for its substance. Although Brewer was entitled to such an instruction at trial “upon request,” Fed.R.Evid. 105, he didn’t make such a request, and again we review for plain error. Fed.R.Crim.P. 30, 52(b).\nApplying Olano’s test for plain error to another case of forfeited rights, it’s once again clear that no plain error occurred. While our cases suggest that a limited purpose instruction need be given only upon request, United States v. Mark, 943 F.2d 444, 449 (4th Cir.1991); United States v. Echeverri-Jaramillo, 777 F.2d 933, 937 (4th Cir.1985), cert. denied, 475 U.S. 1031, 106 S.Ct. 1237, 89 L.Ed.2d 345 (1986), they leave open the possibility that the district court must provide one sua sponte in some circumstances. Id. (relying on both failure to request and nature of evidence admitted in declining to reverse). As the issue remains unsettled, however, Brewer’s claim once again founders on the second of Olano’s requirements, that a legal error be clear at least by the time of appellate review. Olano, - U.S. at -, 113 S.Ct. at 1779.\nC\nBrewer also attacks Detective Dale’s testimony at trial regarding the significance of extensive phone traffic between Brewer and members of the alleged drug ring, claiming that Dale wasn’t a qualified expert under Fed.R.Evid. 702. Because Brewer timely objected to the admission of this evidence, we review for abuse of discretion. United States v. Jones, 913 F.2d 174, 177 (4th Cir.1990), cert. denied, 498 U.S. 1052, 111 S.Ct. 766, 112 L.Ed.2d 785 (1991). Under the circumstances presented here, we find none.\nFed.R.Evid. 702 provides that\nif ... specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise.\nAmong other things, Dale authenticated a collage of evidence seized from Brewer’s apartment — including three pagers, a multichannel scanner, copies of nineteen checks from Brewer’s checkbook to about eight different cellular telephone and pager companies, a receipt from a cellular provider, and an invoice to install a car phone — and a bevy of cellular phone records for numbers assigned to Brewer, a Rodriguez/Polanco distribution center, and Elvis (sic) Rodriguez. Asked about the significance of the pagers, Dale testified that in, a drug operation they permitted distributors to contact their clients and employees and vice versa. Asked about the importance of the cellular phones, he stated that they were used for similar purposes and, unlike regular phones, were very difficult to wiretap. He also testified that most of the people he’d investigated cany cellular phones and pagers. Regarding the cellular phone records, he identified a series of calls proximate in time among the pagers and cellular phones linking Brewer to the Rodriguez/Polanco operation, testifying that the flurry of calls at the time in question likely indicated the staging of a transaction. All this, we think, was “specialized knowledge [that would] assist the trier of fact to understand the evidence or to determine a fact in issue” and not simply an expert’s recasting of common knowledge designed to deprive jurors of the exercise of independent judgment.\nTo have testified properly as an expert, Dale must, of course, have been qualified by “knowledge, skill, experience, training, or education,” Fed.R.Evid. 702, to discuss the significance of the phone traffic between cellular phones and beepers involving these suspected narcotics traffickers. He was. Dale testified that he’d worked vice narcotics for seven years, and tactical narcotics before that, participating in over 200 street arrests and investigations. The jury was properly instructed about its freedom to evaluate his qualifications as an expert, and we find no abuse of discretion in the district court’s determination that Dale was a qualified expert witness providing an opinion based on specialized knowledge that would be helpful to the trier of fact.\nD\nAlong with their testimony about the eight Virginia transactions with which Brewer was charged, the government’s three drug-ring witnesses also provided information concerning a number of transactions with or deliveries to Brewer in the District of Columbia. Brewer unsuccessfully objected to the admission of this evidence based on Rule 404(b), and now assigns the admission of this evidence as error.\nWhile Rule 404(b) forecloses admission of similar acts evidence simply to prove a defendant’s bad character, it permits such evidence where necessary to provide the context or res gestae of the charged offenses. United States v. Masters, 622 F.2d 83, 86 (4th Cir.1980). Such was the case here. Brewer’s conduct involved a series of related transactions among the same four parties (the three government witnesses and Brewer himself) in both the District of Columbia and Virginia. All three of the government’s witnesses delivered cocaine to Brewer in the District at the same time they were delivering to him in Virginia. It would have been difficult for the government to create a coherent story about the relationship between Brewer and the drug ring without some leeway to discuss the District of Columbia transactions as well as the Virginia ones.\nThe district court must still consider carefully whether the prejudicial impact of the res gestae evidence substantially outweighs its probative value, see Fed.R.Evid. 403, but we review that balancing exercise deferentially for abuse of discretion. Masters, 622 F.2d at 87-88. The prejudicial value of this very cumulative evidence is minimal and gives us no cause to find that the district court acted arbitrarily or irrationally by admitting it. We find no abuse of discretion.\nIV\nAt the close of the ease, Brewer sought a mistrial based on undue prejudice stemming from Waquesha Scott’s testimony that during her interview with federal marshals they told her Brewer had confessed to dealing drugs. This was tantamount, Brewer claimed, to circumventing his earlier-obtained exclusion of the confession because the government had failed to give him the Miranda warning before the questioning during which he confessed. The government opposed Brewer’s motion, contending that it hadn’t asked a question designed to elicit that response. After hearing both sides, the district court denied the motion.\nBrewer challenges that decision here. We review the district court’s denial of his mistrial motion for abuse of discretion. United States v. Thompson, 744 F.2d 1065, 1068 (4th Cir.1984). The testimony complained of was an unsolicited comment by a witness hostile to the questioner (albeit one also called by that questioner), reemphasized by another nonresponsive outburst on cross-examination by Brewer’s own attorney. Brewer’s counsel made no objection to or motion to strike the testimony in either case. Nor did he request a curative instruction, despite the district court’s offer to provide one if a request was made at the appropriate time. Under these circumstances, the district court didn’t abuse its discretion by denying Brewer a mistrial.\nV\nFinally, Brewer challenges the sufficiency of the evidence used to convict him on Count Six of his indictment, because that evidence showed that he first obtained cocaine from Rodriguez in March or April of 1990, while the indictment alleged that his possession with intent to distribute occurred “[i]n or about February 1990.” J.A. at 333. To sustain a conviction the evidence, when viewed in the light most favorable to the government, must be sufficient for a rational trier of fact to have found the essential elements of the crime beyond a reasonable doubt. United States v. Tresvant, 677 F.2d 1018, 1021 (4th Cir.1982). The question here, however, isn’t fact-bound; Brewer simply argues that because the transaction proved occurred two months after the “on or around” date specified in the indictment, his conviction cannot stand.\nThat’s a question of variance. The rule against variance protects defendants by insuring that the indictment provides them with adequate notice to prepare a defense and describes the crime with sufficient particularity to protect them from multiple prosecutions for the same offense. United States v. De Brouse, 652 F.2d 383, 389 (4th Cir.1981). Absent prejudice to one of those interests, variance is harmless error. Id.\nHere Brewer fails to allege prejudice, but such a contention would fail in any event. Proof that a crime occurred reasonably near the date charged in the indictment is sufficient unless time is a material element of the offense or the actual date of the offense implicates the statute of limitations or follows the indictment. Id. at 390-91. March or April was reasonably near the “on or about February” date specified in the indictment, time isn’t a material element of the possession with intent to distribute offense charged in Count Six, see e.g., United States v. Sanchez, 961 F.2d 1169 (5th Cir.) (Elements are (1) knowing (2) possession (3) with intent to distribute.), cert. denied, — U.S. —, 113 S.Ct. 330, 121 L.Ed.2d 248 (1992), the date of actual occurrence didn’t implicate the statute of limitations, see 18 U.S.C. § 3282 (statute of limitations is five years), and the transaction in question preceded Brewer’s indictment. The evidence was therefore sufficient to convict Brewer on this count, and the district court’s entry of a judgment of conviction was proper.\nVI\nBecause we find no reversible error in the conduct of Brewer’s prosecution and trial, each of his convictions is\nAFFIRMED.\n. DeLeon, Perez, and Edwin Rodriguez delivered \"crack” cocaine for the drug ring, which was led by Edwin’s brother Ozzie and Francisco Polanco.\n. Brewer's counsel timely objected to testimony by DeLeon and Rodriguez concerning Brewer’s uncharged conduct in DC.\n. Rule 404(a) has three exceptions, but none applies here.\n. Part of Scott's testimony also prompted Brewer to seek a mistrial. The district court’s handling of that issue is taken up below.\n. Brewer also challenges the district court's decision to admit Flynn’s testimony at all, but that claim rises and falls with the companion objection to Scott's, since Flynn's testimony was admissible only to impeach Scott with a prior inconsistent statement. Because we've already rejected Brewer's challenge to Scott's testimony, we don’t address separately this objection to Flynn’s.", "type": "majority", "author": "PHILLIPS, Circuit Judge:"}, {"text": "WIDENER, Circuit Judge,\ndissenting:\nI should say that I do not have occasion to disagree with any of the majority’s opinion except Part III-A. Because I believe that the error was preserved and that the prosecution attempted to set up its own witness as a straw man whom it could impeach by the use of inadmissible hearsay, I would reverse the conviction and remand for a new trial. I respectfully dissent.\nI\nThe majority finds that the defense did not preserve its error because its objection was not clear from the context or otherwise. However, the defense’s objections were made each time the prosecution attempted either to question Miss Scott about her hearsay statement to the United States Marshal or to have her comment on whether Brewer was a drug dealer. In fact, the transcript the majority quotes makes clear that the government did not begin by asking her whether Brewer was a drug dealer and then proceed to question her about the statement, but instead began its questioning by asking about what she had told the marshal. Op. at 1434. The prosecutor also knew that Miss Scott would deny that her fiance, Brewer, was drug dealer. This is shown from the fact that the government asked to treat Miss Scott as a hostile witness, which the majority notes in its opinion. Op. at 1434. There is no doubt that the prosecutor wanted the statement admitted, and this was the prosecutor’s intent from the outset.\nOf relevance both to the merits of this case and as to whether the objection was clear is our decision in United States v. Morlang, 531 F.2d 183 (4th Cir.1975), in which we stated that “it has never been the rule that a party may call a witness where his testimony is known to be adverse for the purpose of impeaching him. To so hold would permit the government, in the name of impeachment, to present testimony to the jury by indirection which would not otherwise be admissible.” 531 F.2d at 189. We further stated, “Despite the fact that impeachment of one’s own witness may be permitted, this does not go so far as to permit the use of the rule as a subterfuge to get to the jury evidence otherwise inadmissible.” 531 F.2d at 190. The government engaged in such subterfuge in this case. Miss Scott’s testimony was of no value other than the attempt to get into evidence her prior hearsay statement that Brewer’s occupation was drug dealing, which as the majority notes, was testimony of doubtful admissibility under Rule 404(b) in the first place. Op. at 1435. The government knew she would deny her statement, which is evident from its asking at the outset for permission to treat her as a hostile witness. Thus, we have exactly the situation in Morlang, and I would hold that the error was preserved. The government has known, at least since our decision in 1975, that such tactics are impermissible, and the rule is so well-settled that it can be said without hesitation that the objection was clear from the context.\nII\nBecause I believe the error was preserved, I also would reach the issue of whether the error was prejudicial to Brewer. I would find that it was prejudicial to admit Marshal Flynn’s testimony and reverse for a new trial.\nFlynn’s testimony about Miss Scott’s statement was rank hearsay and should not have been admitted. The fact that the testimony was offered to impeach Miss Scott does not, under the facts of this case, exempt the statement from the usual rule that the prior unsworn statement of a witness cannot be admitted. See Morlang, 531 F.2d at 190 (rioting, under similar facts, that juries often cannot distinguish between impeachment and substantive evidence and that such evidence therefore should be excluded); see also Martin v. United States, 528 F.2d 1157 (4th Cir.1975) (finding that prior statements used for impeachment purposes may not be used as substantive evidence).\nThe substance of the impeaching testimony was that Miss Scott had told the marshal that Brewer was a drug dealer. It clearly was offered to prove the truth of the matter asserted, and as such, may only create the impression that the government’s charges must, of course, be correct. Cf. Fed.R.Evid. 404(b) (prohibiting character evidence used to show that accused acted in conformity therewith on occasion in question). I see no reason to distinguish the impeachment evidence offered here from the evidence offered in Morlang. In Morlang the witness had given a statement to one Raymond Crist that implicated the defendant in the crime being tried, but he denied the defendant’s involvement in interviews with the government and on the witness stand. The government apparently knew he would deny the defendant’s involvement on the stand and had Crist standing ready to offer the impeaching statement. Even though the jury was given a limiting instruction, we reversed, based upon the government’s apparent subterfuge in calling the first witness solely for the purpose of having the witness’s otherwise inadmissible statement admitted as impeachment evidence. In finding that the statement was damaging, we reasoned: “To permit the government in this case to supply testimony which was a naked conclusion as to [the defendant’s] guilt in the name of impeachment would be tantamount to permitting the use of hearsay and would seriously undermine the important policies underlying Justice Douglas’ opinion in Bridges [v. Wixon, 326 U.S. 135, 65 S.Ct. 1443, 89 L.Ed. 2103 (1945)].” 531 F.2d at 190.\nI would find that Flynn’s testimony about Miss Scott’s prior statement was just as damaging to Brewer as Crist’s was to the defendant in Morlang. Although Miss Scott’s statement may not have expressly referred to the guilt of Brewer in the particular drug transactions with which Brewer was charged, the jury obviously would have believed that if his fiancee said he was a drug dealer, it must be so. This adds the additional concern that he was being convicted of being a drug dealer without regard to whether he committed the offenses charged. I think there is ample prejudice here.\nIll\nThe government simply should not be allowed to employ tactics of overkill that fly in the face of direct circuit precedent that has been established for more than fifteen years. Accordingly, I would reverse and remand for a new trial.\n. The majority does not address this point because it found that Brewer had not preserved his objection to the use of Miss Scott as a straw man through whom it could bring in the impeaching hearsay. See op. at 1435 n. 5. However, my views on this point are not a comment on the majority’s view in Part III-B that Brewer may have been entitled to a limiting instruction only if he asked for it or if the failure to give the instruction amounted to plain error. Op. at 1435. It was the admission of the testimony that gave rise to the error in the first place, so I would not reach the limiting instruction issue.\n. In Morlang we relied upon the Bridges decision in weighing the value to the truth-finding process of impeachment testimony that is hearsay. We reasoned that although witnesses occasionally may not testify as counsel had expected, which leads to the desire to have the jury consider prior statements, the principle that an accused should not be convicted on the basis of an unsworn statement outweighs the value which any hearsay impeachment testimony might have. Morlang, 531 F.2d at 190.", "type": "dissent", "author": "WIDENER, Circuit Judge,"}], "attorneys": ["Douglas James Wood, Roberts & Wood, Riverdale, MD, argued for defendant-appellant.", "Flora Amelia Francis, Sp. Asst., U.S. Atty., Alexandria, VA, argued (Richard Cullen, U.S. Atty., on the brief), for plaintiff-appellee."], "corrections": "", "head_matter": "UNITED STATES of America, Plaintiff-Appellee, v. Dennis Allen BREWER, Defendant-Appellant.\nNo. 92-5118.\nUnited States Court of Appeals, Fourth Circuit.\nArgued Feb. 5, 1993.\nDecided Aug. 16, 1993.\nDouglas James Wood, Roberts & Wood, Riverdale, MD, argued for defendant-appellant.\nFlora Amelia Francis, Sp. Asst., U.S. Atty., Alexandria, VA, argued (Richard Cullen, U.S. Atty., on the brief), for plaintiff-appellee.\nBefore WIDENER, PHILLIPS, and HAMILTON, Circuit Judges."} | WIDENER | PHILLIPS | HAMILTON | 1 | 2 | 1 | 1 | 0 | 0 | 1 F.3d 1430 | [
{
"content": "You are an expert legal coding assistant trained to classify U.S. federal Courts of Appeals\ncases using an adaptation of the Supreme Court Database (SCDB_2023_01) codebook. You follow the coding procedure\nin the codebook step by step and use the precise definitions of terms presented in the code... |
10,517,817 | MBANK HOUSTON, NATIONAL ASSOCIATION, Plaintiff, v. ARMCO, INC., Defendant; The DEPOSIT INSURANCE BRIDGE BANK, etc., et al., Plaintiffs, A.W.H., I, Ltd., Plaintiff-Appellant, v. ARMCO, INC., Defendant-Appellee | MBank Houston, National Ass'n v. Armco, Inc. | 1993-09-02 | Nos. 90-2723, 91-2884 and 92-2496 | United States Court of Appeals for the Fifth Circuit | {"judges": ["Before JOLLY and DAVIS, Circuit Judges, and LEE, District Judge."], "parties": ["MBANK HOUSTON, NATIONAL ASSOCIATION, Plaintiff, v. ARMCO, INC., Defendant. The DEPOSIT INSURANCE BRIDGE BANK, etc., et al., Plaintiffs, A.W.H., I, Ltd., Plaintiff-Appellant, v. ARMCO, INC., Defendant-Appellee."], "opinions": [{"text": "E. GRADY JOLLY, Circuit Judge:\nThese appeals arise from a “build-to-suit” transaction in which A.W.H.-I, Ltd. (“AWH”) constructed an office building complex in Houston, Texas (“the Enclave”), pursuant to the specifications of Armco, Inc., for the worldwide headquarters of its National Supply Company Division. Although Armco entered into a 15-year lease, it never moved in. It did pay rent for four months, but then returned the keys to the developer, AWH. The central issue that we must decide is whether AWH may recover damages for lost equity, cash flow, and a construction lender’s deficiency judgment, notwithstanding the fact that the lender, which foreclosed and stepped into AWH’s shoes as landlord, has already recovered from Armco, for rents due under the remainder of the lease term, an amount in excess of the deficiency judgment. After carefully considering the voluminous record, the briefs, and the arguments of counsel, we AFFIRM the judgment of the district court.\nI\nIn 1983, National Supply Company, a division of Armco, solicited bids for the construction of a new worldwide headquarters facility. After considering over 40 proposals, Armco chose AWH as the developer for the project. In March 1984, Armco and AWH signed an agreement to enter into a lease agreement. Capital Bank, N.A. (“the Bank”) approved an interim construction loan to AWH in the amount of $23,600,000, guaranteed by AWH’s principals, Ward and Hail. AWH acquired the land, which was pledged to the Bank as collateral, along with an adjacent 5.9-acre tract that AWH had acquired for itself in connection with the transaction. In addition, the Bank also took a lien on the planned buildings and an assignment of Armco’s lease in the event of a default by AWH. AWH planned to pay off the construction loan with a long-term non-recourse loan that would insulate its principals from personal liability.\nIn September 1984, the Teachers’ Retirement System of Texas (TRS) issued AWH a conditional Permanent Loan Commitment for a 30-year, non-recourse loan of $22,400,000. The Permanent Loan Commitment contemplated three disbursements. The first disbursement, $15,222,000, was to be made upon completion of the building shells, and TRS’ receipt of a sworn estoppel certificate from Armco in a form satisfactory to TRS, stating that:\n(i) ARMCO, Inc. accepts the lease shell without qualification; (ii) the Lease between [AWH] and ARMCO, Inc. is binding and is in full force and effect; (iii) ARM-CO, Inc. is unconditionally obligated to perform all obligations in accordance with the terms stated in the Lease; (iv) ARM-CO, Inc. is unconditionally obligated to pay all rentals as stated in the Lease beginning on a date certain not later than six (6) months after the date of this estoppel certificate regardless of whether ARMCO, Inc.’s tenant finish is completed; and (v) ARMCO, Inc. does not nor will it ever have a right to offset any rentals due and owing under the Lease because of any delinquency in the completion of ARMCO, Inc.’s tenant finish.\nThe second disbursement, approximately $6,100,000, was to be funded after completion by Armco of the tenant finish, and TRS’ receipt of a sworn estoppel certificate from Armco stating that:\n(i) ARMCO, Inc. accepts the lease premises and tenant finish without qualification; (ii) the lease between [AWH] and ARMCO, Inc. is binding and is in full force and effect; (iii) ARMCO, Inc. is unconditionally obligated to pay all rentals and to perform all other obligations as stated in the lease agreement; and (iv) ARMCO, Inc. is occupying the lease premises and paying rent in accordance with all terms and provisions of the Lease.\nThe third disbursement, up to a maximum of $1,000,000, was to be made upon completion of any additional shell construction work AWH agreed to provide to Armco.\nParagraph 15 of the Permanent Loan Commitment prohibited AWH from seeking other permanent financing during the term of the commitment:\nYou agree not to apply for, or accept, a commitment for or any other financing for the Property during the term of this commitment;. provided that you shall be entitled to obtain an interim construction loan from Capital Bank.\nThe expiration date for the permanent loan commitment was February 15, 1986, the same day that the Bank’s construction loan matured.\nOn September 26, 1984, Armco and AWH entered into a Lease agreement, for a term of 15 years, with options to renew the Lease for three additional 5-year terms. The Lease was an “absolute net lease,” which meant that Armco was responsible for paying the taxes, insurance, and operating costs for the leased premises. The Lease provided that AWH would be responsible for construction of the “shells” of the three buildings, and Armco would be responsible for completing the interior finish, for which it would be reimbursed by AWH out of proceeds from the construction loan. The Lease also provided that Armco would execute a subordination agreement to facilitate AWH’s mortgage financing.\nSection 20.08 of the Lease, which deals with estoppel certificates, provides:\nLandlord and Tenant hereby agree to execute and deliver to the other on forms prepared by the requesting party, at any time or times as either may reasonably request, and without further consideration being payable by the party requesting same:\n(a) a certificate or certificates evidencing whether (i) this Lease is in force and effect, (ii) this Lease has been modified or amended in any respect, and if so, submitting copies of such modifications or amendments, (iii) there are, within the knowledge of the party executing the certificate, any existing defaults hereunder, and, if so, specifying the nature of such default, and (iv) any other reasonable information relating to this Lease as the party receiving the request may practicably furnish....\nSection 17.02 of the Lease sets forth the landlord’s remedies in the event of a default by Armco.\nArmco and AWH also executed on September 26, 1984, a “Termination of Agreement to Enter into Lease Agreement,” providing that neither “shall have any further liability, obligation or responsibility to the other by reason or in consequence of the [Agreement to Enter Into Lease Agreement].” That same day, AWH, Armco, and the Bank signed a Subordination, Non-disturbance and Attornment Agreement (“Subordination Agreement”). In the Subordination Agreement, Armco agreed not to terminate the Lease without cause without the prior written consent of the Bank, and agreed, in the event of acquisition of the building through foreclosure or otherwise, to recognize the new owner as landlord under the Lease. The Subordination Agreement also provided that Armco would furnish estoppel certificates that conformed to the requirements of the Permanent Loan Commitment.\nThe final transactional document is a TriParty Agreement, executed on September 26, 1984, by the Bank, AWH, and TRS. In that document, TRS acknowledged that it had reviewed and approved the Lease between Armco and AWH.\nAWH completed its work on the building shells ahead of schedule and under budget. It turned the buildings over to Armco for the tenant finish work in the summer of 1985. Out of the proceeds of the construction loan, AWH was paid a developer’s fee of $900,000, and Hail received over $300,000 in real estate commissions for selling the land on which the buildings were constructed and an adjacent tract sold to Armco for expansion purposes.\nIn July 1985, AWH sent to Armco a draft of a first disbursement tenant estoppel certificate. One of Armco’s staff attorneys in Houston indicated that the estoppel certificate was acceptable and would be executed subject to the final punch list. However, that estoppel certificate was not executed, because AWH decided to close the permanent loan with a single disbursement after the tenant finish work was completed.\nIn October 1985, Armco informed AWH that it did not intend to move into the new facility, but assured AWH that it intended to honor its commitments under the Lease. A month later, at a meeting with AWH’s principals, R.M. Fletcher, Armco’s Corporate Director — Real Estate and Equipment Divest-ments, read a prepared position statement, which included the following:\n3. Armco NSC is not moving into the Enclave Building. You deserve to be advised of why- — on a non-public basis.\n(a) Armco NSC work force is drastically cut. A recent review of the building requirements of Armco make it clear that there is no need for the Enclave Building in our requirements.\n(b) Armco NSC will move to a new location by year end and will require approximately 80,000 square feet or less. They must fight for survival on the basis of their own efforts.\n(c) NSC is for sale and their new lease is a short term 3-year lease. This space requirement, type and term of lease did not fit the pattern of utilization or cost of the Enclave Building.\n(d) The Enclave is an Armco corporate responsibility for resolution.\n4. Purpose of meeting:\n(a) We do not now have the professional management personnel in Armco to market and manage the Enclave space for long term for the benefit of either Armco or [AWH]. This staff can be acquired, if necessary.\n(b) We do not have a landlord type of ownership interest. It would be difficult to perform as a landlord without an interest in the Enclave. There is no financial incentive to Armco so our position would likely be to get by at the least cost and take best pay tenants only, with no concern as to the building image.\n5. Armco is in a fight for survival in one of the most risky basic businesses in the world.... We cannot and will not offer your permanent lenders any additional security for payments. As a general creditor you must recognize the secured creditors have substantial prior claims on Armco assets.\n6. Armco does not want to manage and sublease the Enclave Building.\n7. We want out of the lease now and on a permanent basis.\nOn December 6, 1985, Armeo’s Board of Directors approved termination of the Enclave Lease.\nIn early December 1985, AWH sent to Armco the form of Tenant Estoppel Certificate requested by TRS pursuant to the Permanent Loan Commitment. Armco did not execute the form furnished by TRS, but instead drafted an estoppel certificate containing the following paragraphs:\n8. Tenant has provided Landlord written notice that due to changes in Tenant’s commercial conditions, Tenant has no use and does not intend to occupy the Leased Premises.\n9. Tenant has negotiated in good faith with Landlord to terminate the Lease and has made an offer of approximately $9,500,000 to Landlord.\nIn addition, the estoppel certificate stated that Armco’s obligations under the Lease were expressly conditioned upon AWH’s payment to Armco of approximately $6,100,000 (approximately $3,700,000 of which had already been paid). On December 30, AWH sent Armco a check for approximately $2,800,000, the balance of the $6,100,000 requested by Armco, plus approximately $400,-000 in interest savings under the construction loan. AWH requested that Armco delete paragraphs 8 and 9 from the estoppel certificate.\nOn January 3, 1986, Armco sent AWH another executed estoppel certificate, which contained the following paragraphs (similar to paragraphs 8 and 9 of the December 23 certificate):\n7. Tenant provided Landlord written notice on October 9, 1985 that Tenant had no use for and did not plan to occupy the Leased Premises.\n8. Tenant has negotiated in good faith with Landlord in an attempt to terminate the Lease and remove Tenant from any further involvement with the Leased Premises. Subject to approval by Tenant’s Board of Directors, Tenant has made an offer to Landlord to terminate the Lease on the following terms:\na. Tenant will refund the sum of $2,831,566.99 which Landlord has paid to Tenant under the terms of the Lease; and\nb. In addition, Tenant will pay Landlord approximately $9,500,000 in cash. Under the terms of this offer, Tenant’s total payment to Landlord will be $12,331,-566.99.\nAWH forwarded that certificate to TRS. On January 22, 1986, TRS sent AWH another estoppel certificate for submission to Armco.\nOn January 27, Armco sent AWH another estoppel certificate in which paragraphs 7 and 8 of the January 3 certificate had been deleted. Two days later, AWH’s counsel sent Armco the certificate that had been sent to AWH by TRS on January 22. On January 31, AWH’s counsel advised Armco that the January 27 estoppel certificate was not in a form acceptable to TRS. Armco responded on February 5, enclosing another executed estoppel certificate, including language identical to paragraphs 7 and 8 of the January 3 certificate. AWH immediately advised Arm-co that the February 5 estoppel certificate was unacceptable, and reminded it that the Permanent Loan Commitment would expire on February 15. On February 10, Armco responded, stating that it considered certain paragraphs of the estoppel certificate drafted by TRS to constitute unauthorized amendments to the lease, and offering to delete the other objectionable paragraphs upon receipt of certification that the information contained in them had been communicated to TRS.\nAWH requested an extension of the Permanent Loan Commitment, but TRS refused. On February 15, 1986, the construction loan matured and the TRS Permanent Loan Commitment expired. TRS refused to fund the loan because it knew that Armco did not intend to comply with its obligations under the Lease.\nAWH rejected Armco’s offers to buy its way out of the Lease for $9,500,000 to $12,-000,000, because its principals were still personally liable to the Bank for $23,600,000 on the interim construction loan.\nAlthough it did not move into the buildings, Armco paid rent, utilities, and maintenance for the first four months of 1986. On March 18, 1986, AWH and the Bank each notified Armco that they considered Armco to be in default under the Lease because it had failed to furnish acceptable estoppel certificates to TRS. On March 27, Armco sent AWH a check for the April rent, but returned the keys to the buildings and informed AWH and the Bank that it considered itself to have been constructively evicted and, therefore, would no longer pay rent, utilities, maintenance, or insurance on the building.\nWithout the permanent loan, AWH could not pay the interim construction loan. Accordingly, on August 6, 1986, the Bank foreclosed on the property. Pursuant to the Subordination Agreement, the Bank stepped into the shoes of the landlord, AWH. On August 15, 1986, the Bank declared the Lease terminated pursuant to Section 17.-02(a).\nII\nThe Bank sued Armco in federal court for breach of the Lease, seeking rent for the remainder of the Lease term. In a separate suit in state court, the Bank sued AWH for a deficiency on the construction loan, and sued Armco for breach of the Subordination Agreement. The state court suit was removed to federal court and consolidated with the Bank’s other lawsuit. AWH cross-claimed against Armco for breach of the Subordination Agreement, tortious interference with the Permanent Loan Commitment, and fraud for failure to disclose that it had decided to terminate the lease when it induced AWH to pay $2.8 million to it in December 1985. AWH was realigned as a plaintiff. Pursuant to a settlement agreement entered into prior to trial, AWH conditionally assigned its claims against Armco to the Bank, and the Bank agreed to satisfy the deficiency judgment out of the funds it recovered from Armco.\nAfter a nine-week trial, the jury, in response to special interrogatories, rejected Armco’s defenses to the Bank’s claim for rent pursuant to Section 17.02(a) of the Lease, and awarded the Bank damages of $19,793,265. With respect to AWH’s claims, the jury found that Armco breached the Subordination Agreement, and that such conduct was the proximate cause of the foreclosure of the Enclave and the deficiency judgment in favor of the Bank against AWH ($16,589,-028.75 plus interest at the rate of 10% per annum from December 19, 1988, until paid); AWH’s loss of equity damages of $8,157,-158.00; and AWH’s loss of cash flow damages of $4,059,966.00. The jury further found that Armco tortiously interfered with AWH’s Permanent Loan Commitment, that Armco’s interference was not privileged, and that Armco’s conduct was the proximate cause of the foreclosure of the Enclave and the deficiency judgment, loss of equity, and loss of cash flow. It found, however, that Armco’s tortious interference was not malicious. In addition, the jury found that Arm-co committed fraud when it failed to disclose that it intended to terminate the Lease when demanding cash payments from AWH under the terms of the Lease in December 1985, proximately causing AWH actual damages of $4,026,677.00. The jury awarded punitive damages of $8,000,000, based on its finding that Armco’s failure to disclose was committed with actual malice or with reckless disregard for the rights of AWH. Finally, the jury found that AWH was entitled to $1,750,-000 as reasonable and necessary attorney’s fees. The jury rejected Armco’s affirmative defenses and counterclaims.\nThe district court entered judgment for the Bank for over $27 million. It denied Armco’s motion for JNOV as to the Bank, but granted Armco’s motion for JNOV as to all of AWH’s claims. The district court also conditionally granted Armco’s motion for a new trial on AWH’s claims and, in a separate order, awarded Armco costs against AWH. AWH appeals from each of these rulings.\nThe Bank subsequently accepted $25,000,-000 from Armco in satisfaction of its judgment. Pursuant to an order of limited remand, the district court conducted a hearing and found that the deficiency judgment was satisfied on July 23, 1990, by Armco’s payment to the Bank, in accordance with the settlement agreement between AWH and the Bank. AWH also appeals from these findings.\nIll\nOur review of the judgment notwithstanding the verdict is governed by the standard set forth in Boeing Co. v. Shipman, 411 F.2d 365 (5th Cir.1969) (en banc):\nOn motions for directed verdict and for judgment notwithstanding the verdict the Court should consider all of the evidence— not just that evidence which supports the non-mover’s case — but in the light and with all reasonable inferences most favorable to the party opposed to the motion. If the facts and inferences point so strongly and overwhelmingly in favor of one party that the Court believes that reasonable men could not arrive at a contrary verdict, granting of the motions is proper. On the other hand, if there is substantial evidence opposed to the motions, that is, evidence of such quality and weight that reasonable and fair-minded men in the exercise of impartial judgment might reach different conclusions, the motions should be denied, and the case submitted to the jury.... A mere scintilla of evidence is insufficient to present a question for the jury.... However, it is the function of the jury as the traditional finder of the facts, and not the Court, to weigh conflicting evidence and inferences, and determine the credibility of witnesses.\nId. at 374-75.\nA\nThe jury found that Armco breached the Subordination Agreement by (1) failing to provide the estoppel certificates required by the Permanent Loan Commitment, and (2) by terminating the Lease without cause sometime between March 27, 1986 (the date on which Armco returned the keys to the Enclave) and August 15, 1986 (the date on which the Bank, following foreclosure, declared the Lease terminated pursuant to § 17.02(a) of the Lease); it also found that such breaches proximately caused the foreclosure and deficiency judgment, and AWH’s loss of equity and cash flow. It awarded damages of $8,157,158 for loss of equity, and $4,059,966 for loss of cash flow. The jury awarded identical damages based on its finding that Armco tortiously interfered with AWH’s Permanent Loan Commitment from TRS by failing to furnish acceptable estoppel certificates.\nIn granting JNOV, the district court held that there was insufficient evidence to support the jury’s findings with respect to breach of the Subordination Agreement and tortious interference claims, with the exception of the finding that Armco breached the Subordination Agreement by terminating the Lease without cause. The district court held that the damages sought by AWH were not caused by either a breach of the Subordination Agreement or by Armco’s tortious interference with the Permanent Loan Commitment, but by Armco’s failure to pay rent. Accordingly, it concluded that the damages awarded to AWH duplicated the Bank’s damages, and constituted an impermissible double recovery from Armco.\nFor purposes of this discussion, we will accept AWH’s argument that the evidence fully supports the finding that Armco, by failing to furnish the estoppel certificates, breached the Subordination Agreement and tortiously interfered with the Permanent Loan Commitment, which caused the loss of permanent financing and AWH’s inability to pay the Bank, resulting in the foreclosure and AWH’s loss of the Enclave.\nAWH primarily contends that the district court’s approach rejected the standard-expectancy measure of damages for breach of contract, ie., the damages that it argues flow from Armco’s failure to furnish acceptable estoppel certificates. AWH asserts that it is entitled to recover damages that would put it in the same financial position that it would have occupied had Armeo not prevented the funding of the permanent loan. AWH argues that, if the estoppel certificates had been furnished to TRS, which would have assured permanent financing, it reasonably could have expected that:\n1. There would have been no deficiency judgment against it;\n2. It would have retained its rights under the Lease, including the right to assert a cause of action against Armeo for damages under § 17.02 of the Lease;\n3. It would have been entitled to receive Lease rental payments from Armeo for 15 years;\n4. It would have been entitled to receive Lease rental payments for the years 16 through 30 (either from Armeo if it exercised its renewal options, or from another tenant), and for the years 31 through at least 45 (from another tenant);\n5. At the end of 30 years, it would have owned, free and clear of liens, the Enclave and the land upon which it sits; and\n6. It would have retained all benefits flowing from rental of the Enclave for 30 years, minus the cost of the long-term, fixed-interest TRS permanent loan.\nAt the outset, two points are absolutely clear. First, as AWH concedes, it is not entitled to recover damages from Armeo pursuant to § 17.02 of the Lease (item 2). Only the Bank, as substitute landlord, had the right to collect damages from Armeo pursuant to § 17.02 of the Lease. To the extent that AWH is arguing (its argument is vague and undeveloped on this point) that expectancy damages include damages from the right it would have enjoyed under § 17.02 if permanent financing had been obtained, its argument assumes that TRS, unlike the Bank, would not have foreclosed. This measure of damages is completely speculative on its face, because AWH presented no convincing evidence that, in the face of the loss of Armeo as a tenant, TRS, as an ordinary prudent lender, would not have exercised its right to foreclose, especially in the light of the market conditions we discuss hereinafter. Second, and similarly, AWH is not entitled to recover any damages that are dependent on the fulfillment of the Armeo Lease and rental payments by Armeo under the Lease (item 3), because such damages are based on the flawed assumption that Armeo would not have breached the Lease if TRS had funded the permanent loan. Items 3, 4, and 6 are the basis for AWH’s claim for damages for lost cash flow, and item 5 is the basis for its claim for lost equity.\nWe therefore turn to examine the remaining damages AWH argues flow from the loss of the permanent loan from TRS. Because the permanent loan was a non-recourse loan, we agree that there would have been no deficiency judgment against AWH and its principals if foreclosure had occurred after the permanent loan had closed. Accordingly, accepting AWH’s argument that its loss of permanent financing was the proximate cause of the foreclosure and the deficiency judgment entered against it, AWH should be entitled to recover the amount of the deficiency judgment from Armeo. Alas, however, there is the settlement agreement between AWH and the Bank that undermines this theory of recovery.\nIn their settlement agreement, the Bank and AWH agreed that “the amount of any sums received by [the Bank] from Armco as a result of any judgment or settlement of [the BankJ’s claims against Armco arising out of Armco’s breach of the Lease or Attornment Agreement shall be credited against the amount due under the Deficiency Judgment....” The Bank assigned its rights respecting the deficiency judgment to Armco on July 20,1990. Three days later, the Bank received $25,000,000 from Armco in settlement of the Bank’s judgment against Armco.\nAWH contends that the district court erred in finding that the deficiency judgment has been satisfied. It points out that the Bank assigned its rights respecting the deficiency judgment to Armco prior to the Bank’s receipt of the $25,000,000 payment from Armco, and that the Bank cannot release the deficiency judgment against AWH because it no longer owns it. AWH asks that we affirm the award of damages for the deficiency judgment so that AWH can then pay it to Armco, the current “owner,” when Armco seeks to enforce the judgment. We decline the invitation to engage in such a meaningless ritual. At oral argument, Arm-co’s counsel represented to the court that the deficiency judgment does not exist, and that Armco has no claim against AWH on the deficiency judgment. We thus affirm the district court’s finding that the deficiency judgment has been satisfied. Accordingly, AWH is not entitled to recover damages from Armco for the deficiency judgment.\nThe remaining components of damages claimed by AWH are consequential damages for lost cash flow (derived from the excess of rental payments — from Armco for 15 years and from Armco or another tenant for 15 more years — less amortization payments for 30 years) and for lost equity (the value of the land and buildings once the permanent loan was paid off at the end of the 30-year term). In order to establish these damages, AWH cannot rely solely on the loss of the TRS permanent loan and assume that acquiring the permanent loan would have reasonably assured the cash flow and equity that it claims to have lost. The stark fact is that the permanent loan would only have substituted a non-recourse debt to TRS for the debt to the Bank, guaranteed by AWH’s principals. Although the terms of the loans were different, AWH was no less obligated to repay the TRS loan than it was obligated to repay the Bank loan. And, yet, the fact remains: if the permanent loan had been funded by TRS as scheduled on February 15, 1986, AWH would still have had no tenant. Indeed, it was on March 27, 1986 that Armco announced its intention to quit paying rent. In August 1986, the Bank foreclosed.\nThe record shows that, during the relevant time period, the Houston real estate market was suffering. The Bank’s expert witness testified that it would take approximately one and one-half years to lease a building like the Enclave in that particular market. Even if a new tenant could have been located to replace Armco, AWH would have had to offer concessions in the form of free rent or tenant finish and move-in allowances. Furthermore, market rental rates at that time were far lower than the rates Armco had agreed to pay under the Lease, and far lower than necessary to service the debt with TRS.\nIn order to avoid loss of the building through foreclosure by TRS, and own the buildings free and clear of liens at the end of the 30-year loan term, AWH would have had to locate a new tenant or tenants, who would agree to pay above-market rent, in an amount sufficient to make the mortgage payments to TRS. Other than speculation and conjecture, there is no basis to assume that the buildings could have been leased at rental rates sufficient to pay the mortgage, or that TRS would not have foreclosed, just as the Bank did, with the same consequences to the rights of AWH. If TRS had foreclosed, AWH would have, as in the case of the Bank foreclosure, lost the land and buildings and the expectation of profits from future rental payments. The only difference between the two foreclosures is that there would have been no deficiency judgment against AWH if foreclosure had occurred after the permanent, non-recourse loan had closed. As we have already explained, however, because of its settlement with the Bank and Armco’s payment to the Bank, AWH has suffered no damages as the result of the deficiency judgment.\nEven if we assume, however, that TRS would not have foreclosed, we nevertheless would conclude that the damages awarded to AWH for loss of cash flow and lost equity are further based on speculative evidence offered by AWH’s economist. The economist’s opinion regarding the losses of cash flow and equity suffered by AWH is, first, based on the premise that the property would be leased to Armeo for 15 years at the rates specified in the Lease, second, assumes that the property would have been leased to another tenant at the end of the Armeo lease term, at the same rental rate specified in the Lease for years 11 through 15 of Armco’s term, and, finally, assumes no changes in the current tax laws through the year 2016. As we have already discussed, any calculation of damages based on the assumption that Arm-eo would be the tenant is unsupportable, because AWH, as the result of the foreclosure by the Bank, has no right to recover rent from Armeo under the terms of the Lease. It is further speculative to assume that any long-term lease could have been negotiated with another tenant on terms anywhere near as favorable as those provided for in the Armeo Lease. The final factor that, in our view, destroys any basis for the so-called expectation damages urged by AWH is that, at the end of the 15-year Armeo lease term, AWH would have still owed TRS over $25,000,000.\nFinally, with respect to the claim for damages for the 15-year period after the expiration of the Armeo lease, suffice it to say that, particularly in the light of our discussion above, only rank speculation supports AWH’s argument. We agree with the district court that the damages awarded for that period are simply not supported by any competent evidence.\nB\nThe jury found that Armeo knowingly failed to disclose material facts, i.e., that Armeo had no intention of fulfilling its obligations under the Lease, when it induced AWH to pay money to it in December 1985. The jury awarded damages of $4,026,677. It also found that Armco’s failure to disclose was committed with actual malice or with reckless disregard for AWH’s rights, and awarded punitive damages of $8,000,000. The district court granted Armco’s motion for JNOV on the fraud claim on the grounds of insufficient evidence and double recovery.\nWe need not consider the sufficiency of the evidence of fraud, because, even assuming that it is sufficient, AWH has suffered no damages from the alleged fraud. The money that Armeo induced AWH to pay came from the proceeds of the construction loan. Accordingly, that payment had the effect of increasing the amount of the deficiency judgment that was ultimately taken against AWH. Of course, this deficiency judgment ordinarily would serve as a basis for a damage claim. As we have fully explained, however, the deficiency judgment was satisfied by Armco’s payment to the Bank, pursuant to the settlement agreement between AWH and the Bank. In sum, the money AWH was induced to pay Armeo did not come out of AWH’s pocket, and the deficiency judgment was satisfied at no cost to AWH. Consequently, AWH has failed to prove that it suffered any loss as the result of its payment of $2.8 million to Armeo in December 1985. AWH has conceded that, in the absence of actual damages for fraud, the punitive damages award cannot stand.\nIV\nFor the foregoing reasons, the district court did not err in granting Armco’s motion for judgment notwithstanding the verdict as to the claims of AWH. Because the JNOV was proper, the district court did not abuse its discretion in awarding costs to Armeo. The judgment of the district court is therefore\nAFFIRMED.\n. “AWH” is an acronym for Armco, Ward and Hail. The \"1” designated that it was the first of what Ward and Hail hoped would be a series of ventures with Armco.\n.Capital Bank is MBank Houston's predecessor in interest by merger. MBank later was declared insolvent, and the Federal Deposit Insurance Corporation was appointed as receiver. The lease then was sold to Deposit Insurance Bridge Bank, which later changed its name to Bank One, Texas, N.A.\n. The useful life of the buildings was expected to be 45 years.\n. In the Lease, AWH and Armco agreed upon a formula pursuant to which Armco would receive a credit against rent if interest on the construction loan did not exceed a specified amount. AWH decided to pay the interest savings to Arm-co in cash instead of applying it in the form of rent concessions. The $2,800,000 payment is the basis of AWH’s fraud claim.\n. According to the terms of the settlement, AWH's assignment of its claims to the Bank was conditioned upon the Bank’s failure to recover from Armco an amount sufficient to satisfy the deficiency judgment. If its recovery from Armco was insufficient, the Bank agreed to satisfy the deficiency judgment out of any recovery that AWH might secure from Armco. The agreement between AWH and the Bank provided that the assignment was to be of no further force and effect in the event that the Bank recovered an amount from Armco sufficient to satisfy the deficiency judgment. As .we explain infra, that eventuality has occurred.\n. To the extent that the district court was referring to Lease rental payments as a remedy for breach of the Subordination Agreement, we agree that such payments cannot be recovered both by the Bank, for breach of the Lease, and by AWH, for breach of the Subordination Agreement.\n. AWH asserts that, if the permanent loan had closed, Armeo might have been willing to offer a more reasonable amount for termination of the Lease, because it would not have had the leverage created by the potential personal liability of AWH’s principals. This assertion is simply too speculative to survive scrutiny. AWH presented no evidence of how much more Armeo would have been willing to offer under such circumstances, how long it would have taken to consummate such a settlement, and whether any offer would have been sufficient to prevent foreclosure by TRS.\n. Although AWH’s claims for damages for lost cash flow and lost equity are purportedly based on breach of the Subordination Agreement and tortious interference with the Permanent Loan Commitment, its calculations of these damages are based on the rental payments provided for in the Armeo Lease. Despite its concession that it has no right to recover from Armeo under the Lease, AWH nevertheless is, in effect, seeking to recover rent due under the Lease.\n. The result we have reached, viewed superficially, may appear to be somewhat anomalous and even unjust. The Bank, which loaned AWH $23,600,000, sold the property for $8,000,000, and then recovered $25,000,000 from Armeo for breach of the lease. AWH will not receive the difference between Armco’s payment to the Bank and the amount of the deficiency judgment. It thus appears that the Bank made a profit that would have gone to the developers if Armeo had honored its obligations. Evaluation of the cquities, however, must take into account the fact that AWH financed 100% of the project through the Bank. As part of the bargain through which it obtained 100% construction financing, AWH pledged essentially its entire interest in the project as collateral. Out of these proceeds of the construction loan, AWH received a $900,000 developer's fee, and Hail earned over $300,000 in real estate commissions. Once AWH agreed to the mortgage terms and subordinated its rights as landlord to the Bank, it knew that if it could not repay the money it had borrowed, it would lose its ownership interest in the Enclave, as well as the right to sue Armeo for breach of the Lease. In short, AWH and the Bank entered into a fairly-negotiated, arm's length agreement that included risks and benefits for both parties.\nAnd finally, a review of the \"equities” shows that Armeo did not escape unscathed: it had to fork over $25,000,000 to the Bank as the result of its conduct with respect to the Enclave Lease.\n. Because we have affirmed the JNOV, it is unnecessary for us to address the conditional grant of a new trial.", "type": "majority", "author": "E. GRADY JOLLY, Circuit Judge:"}], "attorneys": ["Roger Townsend, Janice Kemp, Fulbright & Jaworski, B.J. Walter, Jr., Nathan, Wood & Sommers, Houston, TX, for plaintiff-appellant in No. 90-2723.", "Stephen D. Susman, E.L. Vincent, Susman Godfrey, L.L.P., Bradley Westmoreland, Westmoreland & Crain, Houston, TX, for defendant-appellee in Nos. 90-2723, 91-2884.", "Roger Townsend, Fulbright & Jaworski, B.J. Walter, Jr., Nathan, Wood & Sommers, Houston, TX, for plaintiff-appellant in No. 91-2884.", "Roger Townsend, Fulbright & Jaworski, Marvin D. Nathan, David Lee Crawford, B.J. Walter, Jr., Nathan, Wood & Sommers, Houston, TX, for plaintiff-appellant in No. 92-2496.", "Stephen D. Susman, Susman Godfrey, L.L.P., Bradley Westmoreland, Westmore-land & Crain, Houston, TX, for defendant-appellee in No. 92-2496."], "corrections": "", "head_matter": "MBANK HOUSTON, NATIONAL ASSOCIATION, Plaintiff, v. ARMCO, INC., Defendant. The DEPOSIT INSURANCE BRIDGE BANK, etc., et al., Plaintiffs, A.W.H., I, Ltd., Plaintiff-Appellant, v. ARMCO, INC., Defendant-Appellee.\nNos. 90-2723, 91-2884 and 92-2496.\nUnited States Court of Appeals, Fifth Circuit.\nSept. 2, 1993.\nRoger Townsend, Janice Kemp, Fulbright & Jaworski, B.J. Walter, Jr., Nathan, Wood & Sommers, Houston, TX, for plaintiff-appellant in No. 90-2723.\nStephen D. Susman, E.L. Vincent, Susman Godfrey, L.L.P., Bradley Westmoreland, Westmoreland & Crain, Houston, TX, for defendant-appellee in Nos. 90-2723, 91-2884.\nRoger Townsend, Fulbright & Jaworski, B.J. Walter, Jr., Nathan, Wood & Sommers, Houston, TX, for plaintiff-appellant in No. 91-2884.\nRoger Townsend, Fulbright & Jaworski, Marvin D. Nathan, David Lee Crawford, B.J. Walter, Jr., Nathan, Wood & Sommers, Houston, TX, for plaintiff-appellant in No. 92-2496.\nStephen D. Susman, Susman Godfrey, L.L.P., Bradley Westmoreland, Westmore-land & Crain, Houston, TX, for defendant-appellee in No. 92-2496.\nBefore JOLLY and DAVIS, Circuit Judges, and LEE, District Judge.\n. District Judge of the Southern District of Mississippi, sitting by designation."} | JOLLY | DAVIS | LEE | 1 | 1 | 1 | 0 | 0 | 0 | 1 F.3d 1439 | [
{
"content": "You are an expert legal coding assistant trained to classify U.S. federal Courts of Appeals\ncases using an adaptation of the Supreme Court Database (SCDB_2023_01) codebook. You follow the coding procedure\nin the codebook step by step and use the precise definitions of terms presented in the code... |
10,517,848 | HULL, Hopson, Richardson, Franklin, et al., Plaintiffs, Jonathan Hankins, by his father and next friend John Hankins, et al., Etc., Intervenors-Appellants, v. The QUITMAN COUNTY BOARD OF EDUCATION, et al., Defendants-Appellees | Hull v. Quitman County Board of Education | 1993-09-02 | No. 91-1903 | United States Court of Appeals for the Fifth Circuit | {"judges": ["Before JONES and BARKSDALE, Circuit Judges and JUSTICE , District Judge."], "parties": ["HULL, Hopson, Richardson, Franklin, et al., Plaintiffs, Jonathan Hankins, by his father and next friend John Hankins, et al., Etc., Intervenors-Appellants, v. The QUITMAN COUNTY BOARD OF EDUCATION, et al., Defendants-Appellees."], "opinions": [{"text": "EDITH H. JONES, Circuit Judge:\nWhen the school board of Quitman County, Mississippi, voted unanimously to close its only remaining public school with a significant white student population, both black and white parents of students at the school complained. Their school, Crowder Elementary and Junior High, was the most academically proficient and racially balanced school in the district at that time. It was also by far the smallest school in a district chafing from serious financial problems. The district court refused to enjoin Crowder from being closed. The question before us is whether the district court abused its discretion in holding that the school board could choose to close Crowder consistent with its duty under a federal desegregation order. Unpalatable as that choice seems from an educational standpoint, this court sits not to review the wisdom of a school board’s actions, but their constitutionality. We affirm the district court’s order.\nI.\nThe public schools of Quitman County have been operating under a federal court desegregation order since 1969. A 1986 court order permitted the school district to close three of its four formerly all-white schools, Lambert, Marks, and Sledge. Crowder, the fourth, remained open. The district continues to operate three other combined elementary and junior high schools, Southside, Westside, and Falcon, as well as Quitman County High School.\nNo doubt a major reason schools were closing is that the county’s total population fell from 15,888 in 1970 to 10,490 in 1990. The racial mix remained relatively stable. Of those aged 17 and under in 1970, 33% were white and 67% were black. In 1990, the proportions were 29% and 71%, respectively. But because disproportionately white private schools sprang up after the 1969 desegregation order, by 1990, whites comprised a bare 10% of the district’s 2,164 students.\nAt Crowder, whites remained a majority of the student population. In March, 1991, when the school board voted to close the school, it had 110 white students (73%) and 40 black students (27%). By contrast, the other three elementary and junior high schools in the district had much larger and overwhelmingly black student populations. At Southside there were 523 black students (90%) and 58 white students (10%); at West-side, 434 black (94%), 28 white (6%); and at Falcon, 436 black (98%), 9 white (2%). At Quitman County High School, 509 students were black (97%) and 17 were white (3%).\nCrowder’s enrollment was declining steadily, from 238 students in 1986 to 150 students by 1991. At the district court’s hearing on whether to close Crowder, parents attributed this decline in part to uncertainty over whether the district would keep the school open. The school board had first publicly considered closing Crowder after receiving a consultant’s recommendation in 1989.\nCrowder’s academic record is unmatched in Quitman County schools. Its students have fared better than all other students in the district on standardized tests. Its black students also scored significantly higher by standardized measures than other black students in the district.\nIn late 1990, faced with dire fiscal straits, the Quitman County School Board proposed closing Crowder and sending its students who chose to remain in the public schools elsewhere in the district. Ms. Sandra Biffle, the district’s secretary, testified at the hearing below that closing Crowder would save the district $325,860.00, including savings in teachers’ salaries, maintenance, insurance and repairs. Certain ambiguities and possible omissions from these calculations render uncertain the total amount saved. Nevertheless, the school district argued that its finances would be jeopardized unless it closed Crowder, and the district court agreed with this assessment.\nSome of the district’s savings from closing Crowder come from the expected loss of students who officials anticipated would choose to go to private school or would move to an adjoining public school district rather than transfer to one of the other public schools in Quitman County. Biffle stated that the district expected that Crowder’s forty black students would transfer to one of the other three elementary or junior high schools, and nearly all of the 110 white students would drop out of Quitman County schools.\nThe school board failed explicitly to consider the effect of its decision to close Crowder upon the district court’s longstanding desegregation order. Superintendent Wright testified that the district considered only the potential financial benefit of closing Crowder, not its effect on desegregation. It has never been asserted, however, that the board, three of whose five members are black, decided to close Crowder for the purpose of hindering desegregation.\nThe appellants, plaintiff-intervenor families of black children attending Crowder, challenged the school district’s decision in federal court, seeking a preliminary injunction barring closure of Crowder. On July 18, 1991, the district court denied the preliminary injunction. This appeal ensued.\nII.\nBefore a preliminary injunction may issue, the plaintiffs must show that (1) there is a substantial likelihood they will prevail ultimately on the merits, (2) there is a substantial danger they will suffer irreparable injury if an injunction does not issue, (3) the threatened injury outweighs any harm to the defendant resulting from the injunction, and (4) the injunction will not harm the public interest. Roho, Inc. v. Marquis, 902 F.2d 356, 358 (5th Cir.1990). The district court concluded that the appellants failed to meet any of these requirements. Whether the injunction was properly denied is tested under an abuse of discretion standard.\nThe district court held that the plaintiff-intervenors failed to state a relevant constitutional claim. One black parent who testified at the hearing stated that he wanted his child to continue attending school with white children. Other plaintiff parents stated only that they preferred their children to attend Crowder because it was closer to home and a good school. The court construed these parents’ position most generously as a request that it impose a duty on the school board to maintain a system that (a) reflects the racial population of Quitman County in each school and (b) discourages white flight from the schools that remain open. The district court correctly held that the first noted duty does not exist in desegregation law. Swann v. Charlotte-Mecklenburg Bd. of Educ., 402 U.S. 1, 24, 91 S.Ct. 1267, 1280, 28 L.Ed.2d 554 (1971). We agree that the second duty, which might also be characterized as a duty not to perpetuate or re-establish a dual system, was not violated on the facts of this case.\nThe Supreme Court has stated that as long as a school district remains under the superintendence of a federal desegregation order, it has a duty “to take all steps necessary to eliminate the vestiges of the unconstitutional de jure system.” Freeman v. Pitts, - U.S. -, -, 112 S.Ct. 1430, 1443, 118 L.Ed.2d 108 (1992). Eliminating unconstitutional separate student attendance patterns has been a keystone of this remedy. Freeman, — U.S. at —, 112 S.Ct. at 1445. The Supreme Court has recognized, however, that federal court injunctive power “may be exercised only on the basis of a constitutional violation,” and that the “nature of the violation determines the scope of the remedy.” Swann v. Charlotte-Mecklenburg Bd. of Educ., 402 U.S. at 16, 91 S.Ct. at 1276. Consequently, a district court may at some point decline to order “further remedies in the area of student assignments where racial imbalance is not traceable, in a proximate way, to constitutional violations.” Freeman, — U.S. at —, 112 S.Ct. at 1446. The Court also observed that “with the passage of time the degree to which racial imbalances continue to represent vestiges of a constitutional violation may diminish, ...” Id. Freeman placed the burden of proof on the school district to show that a “current imbalance is not traceable, in a proximate way,” to the prior constitutional violation. — U.S. at —, 112 S.Ct. at 1447. Freeman urged an intensely practical, fact-specific approach to these decisions, and it rejected the notion that “awkward,” “inconvenient,” or “even bizarre” measures must be employed to achieve racially balanced school assignments “in the late phases of carrying out a decree, when the imbalance is attributable neither to the prior de jure system nor to a later violation by the school district but rather to independent demographic forces.” — U.S. at —, 112 S.Ct. at 1447. Freeman reinforced the Court’s decision a year earlier to permit a district court to relinquish supervision under a desegregation decree if “the vestiges of discrimination [have] been eliminated to the extent practicable.” Board of Education of Oklahoma City v. Dowell, 498 U.S. 237, 249, 111 S.Ct. 630, 638, 112 L.Ed.2d 715 (1991).\nFreeman and Dowell might be technically distinguished from the case before us on the ground that those cases considered the circumstances under which federal court control of a school district may finally be relinquished. This appeal does not present exactly that issue, for Quitman County has not sought to terminate its desegregation case. This court used to evaluate termination of desegregation decrees under the global inquiry whether the school district had achieved “unitary” status. See, e.g., Mon-teilh, 848 F.2d at 629 and n. 7 (citing cases). Freeman and Dowell make clear, however, that there is no longer magic in the phrase unitary status, which had spawned much uncertainty and a conflict among the circuits. See Comment, 2 Seton Hall Const. L.J. 337 (1991). Following Freeman, the lower courts have discretion to terminate a desegregation ease if a school board has consistently complied with a court decree in good faith and has eliminated the vestiges of past discrimination to the extent “practicable.” Freeman created a framework in which equitable decrees will not remain in effect perpetually and school districts can be returned to local control. We believe the same considerations—good faith compliance, practicability of further desegregation, and local control— are also pertinent to determining whether a particular school board action, in a district that has long lived with a desegregation decree but failed to seek dismissal of the case, sufficiently comports with the goals of the decree. The tests of practicability and good faith should inform, as they did here, a district court’s exercise of its equitable powers where a desegregation decree has been in effect for some years. Indeed, it would be peculiar if a school district such as Quitman County’s could qualify for termination of its desegregation decree under Freeman and Dowell but, allegedly bowing to older precedents, could not adjust school boundaries to remedy a financial crisis.\nBut even if we rely upon caselaw that emphasized the duty to desegregate, there has been no hard and fast rule preventing legitimate school closings. The decision to open or close schools, like the reordering of student assignments in Freeman or Dowell, is often undertaken because of changing school populations. Facing this demographic problem in the context of school construction or consolidation decisions, our court has counselled that such decisions may not be used to perpetuate or reestablish the dual system, Monteilh, 848 F.2d at 631, quoting Swann, supra, 402 U.S. at 21, 91 S.Ct. at 1278; Davis v. East Baton Rouge Parish Sch. Bd., 721 F.2d 1425, 1435 (5th Cir.1983). On the other hand, there is no constitutional duty to achieve maximum desegregation or to achieve an ideal racial balance in the schools. Monteilh, 848 F.2d at 632. This court has also recognized limits imposed upon desegregation efforts by population changes and the reality of white flight, holding that “school officials who have taken effective action have no affirmative fourteenth-amendment duty to respond to the private actions of those who vote with their feet.” Ross v. Houston Independent Sch. District, 699 F.2d 218, 288 (5th Cir.1983), citing Pasadena City Bd. of Educ. v. Spangler, 427 U.S. 424, 96 S.Ct. 2697, 49 L.Ed.2d 599 (1976).\nBased on these principles, the Quit-man County School Board had no duty to keep Crowder open in order to maintain one partially integrated school housing fewer than 7% of the district’s students. Crowder’s racial mix was a statistical fluke: even if the entire white school-age population of Quit-man County had attended public school, they still made up only 29% of that population in 1990. No party has asserted that any of the Quitman County schools or their attendance zones were affected by deliberately discriminatory line-drawing at any time since the advent of the desegregation decree. No one has asserted either that the board ever violated the desegregation decree in any other way or that it was motivated by an intent to resegregate when it unanimously decided to close Crowder. Finally, appellants have not demonstrated that the district court’s finding of financial necessity to close Crowder was clearly erroneous.\nThe next question is whether the board had the duty to close another elementary-junior high school or to seek another remedy for its financial problems in such a way as to maximize the impact on the schools’ desegregation. While the duty to avoid actions that would deliberately reinvigorate segregation remains constant, a school board need not create financially impossible situations or engage in “heroic measures” to comply with that duty. See Freeman, — U.S. at —, 112 S.Ct. at 1447. Although the plaintiff-intervenors assert that the board could have moved more black children to Crowder, increasing its cost-effectiveness, they did not effectively challenge the board’s emphatic denial that it could operate four elementary schools. Yet to keep Crowder open would require either that result or a closure of one of the other three schools, which would precipitate massive student relocations. Crowder’s enrollment had been declining steadily for five years before the court’s hearing on closure. The school board would have been striking in the dark, at best, to order one of the other three, much larger schools closed and to transfer hundreds of children around the county in the hope that white children would continue to attend an expanded Crowder.\nQuitman County does not offer the prospect of alternative methods for desegregation that we have discussed in connection with approving the unitary status of school districts such as those in Houston and Fort Worth or in declaring dissatisfaction with the progress of desegregation in Baton Rouge. See, Ross, supra; Flax v. Potts, 915 F.2d 155 (5th Cir.1990); Davis v. East Baton Rouge, supra. The possibility of creating magnet schools, the existence of a more racially balanced overall population, a stable or growing population, a large tax base—none of those factors is present in Quitman County. White school-age pupils had declined to less than 10% of the Quitman County school population at the time of the district court hearing. If the 110 white children all left the public system after Crowder’s closing fewer than 5% white students would remain. The possible reduction from a 10% to 5% white student population, while regrettable, imposes no significant detriment to the pre-existing potential for desegregation. Conversely, taking costly steps to try to retain the additional 5% of white students at Crowder could achieve only a pyrrhic victory in a virtually all-black school system. Further desegregation of the district is not practicable at this time, while closing Crowder had but a minor impact on the racial balance of the district.\nFor these reasons, we conclude that plaintiff-intervenors did not establish a substantial likelihood that they could prevail on the merits of their case.\nAlthough their failure on this point is sufficient ground to affirm the district court’s denial of injunctive relief, we also rely upon the court’s assessment of the balance of hardships and the public interest. The court was not clearly erroneous in finding that closing Crowder would enable the district to conserve its scarce financial resources, while leaving the school open would jeopardize the district and thus penalize all of the non-Crowder students. The testimony underlying this finding was earlier noted and, although challenged on some points by plaintiff-intervenors, was not significantly rebutted. Quitman County could not afford to keep open a marginal population school. Doing so would come at the expense of over 90% of the district’s students who did not attend Crowder.\nThis case closely resembles the recent decision of the Eleventh Circuit that permitted closure of a marginally populated school and its consolidation with another school in the district over the objections that this action violated a desegregation decree. Harris v. Crenshaw County Bd. of Educ., 968 F.2d 1090 (11th Cir.1992). Neither there nor here was the board’s decision made in defiance of the decree, and in each case it was not economically or educationally sensible to keep a tiny school open.\nCONCLUSION\nFor the foregoing reasons, the judgment of the district court denying preliminary injunc-tive relief is AFFIRMED.\n. Apart from these orders, and another entered in 1972, the district court record is sparse. The 1986 order mandated the school board to submit annual reports to the district court to document its progress toward desegregation. The school board submitted its first — and last — report on October 8, 1986. At the hearing to consider closing Crowder, the district's attorney attributed this lapse to forgetfulness and a change of attorneys after 1986.\n. In another case dealing with the school board’s request for a district court order to consolidate schools, this court reviewed the order under the clearly erroneous standard. Monteilh v. St. Landry Parish Sch. Bd., 848 F.2d 625, 632 (5th Cir.1988). Monteilh is harmonious with previous decisions of our court, e.g. Copeland v. Lincoln Parish Sch. Bd., 598 F.2d 977, 981 (5th Cir.1979) and United States v. Hendry County Sch. Dist., 504 F.2d 550, 554 (5th Cir.1974), which together reviewed the desegregative impact of school opening or closing as a factual finding and the court’s decision to permit such actions under an abuse of discretion standard. See, also, Harris v. Crenshaw County Bd. of Educ., 968 F.2d 1090, 1098 (11th Cir.1992). The procedural posture of this case, hence our standard of review, is similar because the court’s order was denominated as an order (and opinion) denying the preliminary injunction request of the plaintiff-intervenors against the Quitman County School Board.\n. The court observed that white children do attend the other schools in the county, though in much smaller numbers.\n. The Court has also considered factors such as a school system’s faculty and staff make-up, transportation, extracurricular activities and facilities critical in determining whether the mandate of desegregation has been met. Green v. New Kent County Sch. Bd., 391 U.S. 430, 88 S.Ct. 1689, 20 L.Ed.2d 716 (1968); Freeman v. Pitts, supra, passim.\n. The dissent takes us to task for applying Freeman and Dowell in what it believes to be a distinguishable situation, that of the closure of a school during an ongoing, albeit petrified, desegregation process, as opposed to termination of the federal decree. We believe those cases state an approach to equitable desegregation decrees which does apply to this case to the extent and for reasons stated in the text. Inconsistently, the dissent eagerly cites concurring opinions from Freeman in support of its position.\n. The Ross formula for unitary status thus expresses a “practicability” test that the Supreme Court implicitly approved. See Price v. Austin Indep. Sch. Dist., 945 F.2d 1307, 1314 (5th Cir.1991), citing Ross and Dowell, 498 U.S. 237, 111 S.Ct. 630, 112 L.Ed.2d 715 (1991).\n. The dissent asserts that there was insufficient evidence in the record to permit the district court to ascertain the potential effects of closing Crowder upon the district's overall desegregation and to consider alternatives to closure. We disagree. The court took testimony from two district representatives and five witnesses offered by the plaintiffs, from which a very complete picture of the district emerges.\n. In Ross, for instance, this court approved termination of a desegregation decree when 55 out of 226 schools in Houston had a black population exceeding 90%; in Flax, this court held that the Fort Worth Independent School District, third largest in Texas, was unitary despite the existence of 14 out of 98 schools in which there were over 80% black students. 915 F.2d at 160-61. In Flax, as in this case, a large majority of students were minorities and white flight had been significant. 915 F.2d at 162.", "type": "majority", "author": "EDITH H. JONES, Circuit Judge:"}, {"text": "JUSTICE, District Judge,\ndissenting.\nEnforcement of school desegregation orders has proven among the most nettlesome controversies faced by the federal judiciary. On the one hand, comprehensive and systemic relief has been necessary to remedy school systems subject to generations of de jure segregation, and to bring the unlawful dual school systems into alignment with the equal protection guarantees of the Fourteenth Amendment. Yet, on the other hand, independent local control of school systems by school boards, responsive to parent and community needs, is a hallmark of our public education system. Any unnecessary intrusion by the judiciary can only enervate the local school board decision-making process.\nThe court’s majority, while apparently attempting to vindicate the integrity of local school board autonomy, has, notwithstanding, done so at the expense of the federal judiciary’s preeminent role: enforcement of constitutional guarantees. Even though the Quit-man County School Board’s decision to close Crowder Elementary and Junior High School was manifestly at odds with its duty under a 1969 federal desegregation order, neither the school board, nor the district court below, nor the majority’s opinion, has purported to reconcile such actions with the 1969 order. For these reasons, and because the district court failed to make mandatory findings of fact and conclusions of law, thereby preventing the appellate court from ascertaining the legal and factual bases for the district court’s decision to deny a motion for preliminary injunction, I respectfully dissent.\n1. Summary of the Facts\nOn July 24,1969, after a finding that Quit-man County local school authorities were operating an unconstitutional de jure segregated school system, the Honorable William C. Ready, United States District Judge for the Northern District of Mississippi, entered a desegregation order (the “desegregation order”), which has never been set aside. Thus, the United States District, Court for the Northern District of Mississippi (the “district court”) retains jurisdiction to this day to enforce the terms of, and supervise the Quitman County School Board’s compliance with, the desegregation order, including, inter alia, actions relating to student school assignments. Green v. New Kent County School Board, 391 U.S. 430, 437-38, 88 S.Ct. 1689, 1693-94, 20 L.Ed.2d 716 (1968); Swann v. Charlotte-Mecklenburg Board of Education, 402 U.S. 1, 26, 91 S.Ct. 1267, 1281, 28 L.Ed.2d 554 (1971); Davis v. East Baton Rouge Parish School Board, 721 F.2d 1425, 1435 (5th Cir.1983); Harris v. Crenshaw County Board of Education, 968 F.2d 1090, 1094-95 (11th Cir.1992).\nIn accordance with the obligation imposed on it by the terms of the desegregation order, the Quitman County School Board (the “school board”) “petitioned” the district court to close Crowder Elementary and Junior High School (“Crowder”), on March 27, 1991. When appellants, plaintiff-intervenor families of African-American school children attending Crowder, sought to enjoin the school board from closing it, the district court denied them relief, finding that they failed to state a constitutional claim, and that the school board’s felt economic pressures were adequate justification for abandoning Crow-der.\nIn March 1991, when the school board voted to close Crowder, the racial composition of the student body was seventy-three percent Caucasian, and twenty-seven percent African-American. Crowder was, by all standards, the most academically successful and racially balanced school in the district. A 1986 court order had already permitted the school district to close three of its four formerly all-white schools, leaving Crowder, the fourth, as the only remaining school with a significant white population. In contrast, African-American students made up greater than ninety-four percent of the student body at each of the three remaining schools in Quitman County, schools whose academic standing and racial balance fell far short of Crowder’s.\nThe school board admitted that its decision to close Crowder was based on purely economic factors. Sandra Biffle, the school district’s secretary, testified at the hearing below that closing Crowder would save the school district $325,860.00. School Superintendent Wright testified that continued operation of Crowder would financially jeopardize the entire school system. As the majority’s opinion notes, however, “certain ambiguities and possible omissions from these calculations render uncertain the total amount saved.” (Maj. opinion at p. 1452).\nBiffle also testified below that if Crowder were closed, nearly all of the 110 Caucasian students attending Crowder would leave the public school system, and that their parents, though remaining in the school district, would enroll them in private schools, rather than send them to one of the other public schools in Quitman County. According to Biffle, the remaining forty African-American students would transfer to one of the three remaining public schools in Quitman County. Moreover, the school board claimed that it had no constitutional obligation to remedy the evident racial imbalance, caused by a depleted white student population, since it was caused by independent demographic forces.\nII. Duties of School Board and District Court Under Desegregation Order\nLegally sanctioned school segregation is unconstitutional. Brown v. Board of Education, 347 U.S. 483, 495, 74 S.Ct. 686, 692, 98 L.Ed. 873 (1954) (racially “[separate educational facilities are inherently unequal.”). Where such unlawful segregation is found to exist, federal supervision through the imposition of a desegregation order will be used to remedy the constitutional violations of the local authorities. Board of Education of Oklahoma City v. Dowell, 498 U.S. 237, 248, 111 S.Ct. 630, 637, 112 L.Ed.2d 715 (1991). Until the desegregation order is dissolved, the district court has a constitutional duty to enforce the decree by scrutinizing all school board actions, to determine that the offending school district is fulfilling its “affirmative duty to take whatever steps might be necessary to convert to a unitary system in which racial discrimination would be eliminated root and branch.” Green, 391 U.S. at 437-38, 88 S.Ct. at 1694; Swann, 402 U.S. at 26, 91 S.Ct. at 1281; Davis, 721 F.2d at 1435; Harris, 968 F.2d at 1094-95. This supervisory “duty remains enforceable by the district court without any new proof of a constitutional violation.” Freeman v. Pitts, — U.S. —, —, 112 S.Ct. 1430, 1456, 118 L.Ed.2d 108 (1992) (Blackmun, J., concurring).\nThe location of new schools and the closure of existing schools require especially close scrutiny by the district court supervising the school district. Swann, 402 U.S. at 20-21, 91 S.Ct. at 1278-79. An historical perspective reveals the need for careful consideration, since school closure and school location have been used in the past, and may still be used, as “a potent weapon for creating or maintaining a state segregated school system.” Swann, 402 U.S. at 21, 91 S.Ct. at 1278. As the Supreme Court has recognized:\nThe construction of new schools and the closing of old schools are two of the most important functions of local school authorities and two of the most complex.... The result of this will be a decision which, when combined with one technique or another of student assignment, will determine the racial composition of the student body in each school in the system.\nId. at 20, 91 S.Ct. at 1278.\nThe efforts to desegregate a school system do not occur in a static environment, and the district court’s duty to supervise the desegregation order, and in particular proposals concerning school closure or location of new schools, must recognize any dynamic population shift which may occur in a school district. As early as the Swann case in 1971, the Supreme Court was sensitive to the in-terdigitation of school closure and demographic responses:\nOver the long run, the consequences of the choices [to close or open schools] will be far reaching. People gravitate toward school facilities, just as schools are located in response to the needs of people.... In ascertaining the existence of legally imposed school segregation, the existence of a pattern of school construction and abandonment is ... a factor of great weight. In devising remedies where legally imposed segregation has been established, it is the responsibility of local authorities and district courts to see to it that future school construction and abandonment are not used and do not serve to perpetuate or re-establish the dual system.\nId. at 20-21, 91 S.Ct. at 1278-79 (Emphasis added.).\nMore recently, in 1992, Justice Blackmun, joined by Justices O’Connor and Stevens, focused on the connection between the racial composition of neighborhoods and schools:\nThis interactive effect between schools and housing choices may occur because many families are concerned about the racial composition of a prospective school and will make residential decisions accordingly. Thus, schools that are demonstrably black or white provide a signal to these families, perpetuating and intensifying the residential movement.\nFreeman, — U.S. at —, 112 S.Ct. at 1457 (Blackmun, J., concurring) (citing Swann, 402 U.S. at 20-21, 91 S.Ct. at 1278-79); id. at -, 112 S.Ct. at 1458 (resegregation may occur, “as neighborhoods respond to racially identifiable schools.”); id. at -, 112 S.Ct. at 1454-55 (Souter, J., concurring) (“the vestige of discrimination in one factor [ie., identifiability of a school as “black”], will act as an incubator for resegregation in others.”). See also Keyes v. School District No. 1, Denver, Colorado, 413 U.S. 189, 202, 93 S.Ct. 2686, 2694, 37 L.Ed.2d 548 (1973); Columbus Board of Education v. Penick, 443 U.S. 449, 465 n. 13, 99 S.Ct. 2941, 2950 n. 13, 61 L.Ed.2d 666 (1979).\nWhile school officials have no affirmative Fourteenth Amendment duty to respond to the “purely private acts of those who choose to vote with their feet,” Pasadena County Board of Education v. Spangler, 427 U.S. 424, 435-37, 96 S.Ct. 2697, 2704-05, 49 L.Ed.2d 599 (1976), the district court and school board have a constitutionally imposed duty to determine whether the prior actions of the school board played a role in encouraging segregation. See Keyes, 413 U.S. at 211, 93 S.Ct. at 2699 (“a connection between past segregative acts and present segregation may be present even when not apparent and ... close examination is required before concluding that the connection does not exist.”); Freeman, — U.S. at —, 112 S.Ct. at 1457 (Blackmun, J., concurring) (“[c]lose examination is necessary because what might seem to be purely private preferences in housing may in fact have been created, in part, by actions of the school district.”).\nThe burden of proof is on the school board, before taking any action to close a school while under a desegregation order, to demonstrate (1) that its policies, in the past or present, did not contribute to any current racial imbalance, Freeman, — U.S. at —, 112 S.Ct. at 1457 (Blackmun, J., concurring); United States v. Fordice, — U.S. —, —, 112 S.Ct. 2727, 2735, 120 L.Ed.2d 575 (1992), and (2) that the remaining one-race schools are not vestiges of the prior system. Swann, 402 U.S. at 26, 91 S.Ct. at 1281; Fordice, — U.S. at —, 112 S.Ct. at 2735 (“a State does not discharge its constitutional obligations until it eradicates policies and practices traceable to its prior de jure dual system that continue to foster segregation. Thus we have consistently asked whether existing racial identifiability is attributable to the State.”).\nThe district court must, therefore, closely review any proposal to close a school in order to ascertain that school closure is “not used and does not serve to perpetuate or reestablish the dual system.” Swann, 402 U.S. at 20-21, 91 S.Ct. at 1278-79; Freeman, — U.S. at —, 112 S.Ct. at 1457 (Blackmun, J., concurring). See also Monroe v. Bd. of Comm’rs of City of Jackson, TN, 391 U.S. 450, 459, 88 S.Ct. 1700, 1705, 20 L.Ed.2d 733 (1968); Dayton, 443 U.S. at 538, 99 S.Ct. at 2838; Fordice, - U.S. at -, 112 S.Ct. at 2735.\nIII. Failure of School Board and District Court to Fulfill Constitutional Duties\n“[I]t is the responsibility of local authorities and district courts to see to it that future school construction and abandonment are not used and do not serve to perpetuate or reestablish the dual system.” Swann, 402 U.S. at 20-21, 91 S.Ct. at 1279. See also Keyes, 413 U.S. at 211, 93 S.Ct. at 2699; Freeman, — U.S. at —, 112 S.Ct. at 1457 (Blackmun, J., concurring). This responsibility demonstrably was not fulfilled by the school board or the district court below.\nGiven the facts, as described previously, and the affirmative obligations imposed by the Supreme Court on the school board and on the district court, where the board proposes a school closure while still under a desegregation order, the validity of the Quit-man County School Board’s decision to close Crowder is extremely dubious. The majority’s opinion, moreover, only compounds the errors below when it recites, with approval, the factors which the district court considered dispositive in denying to appellants preliminary injunctive relief. In this respect, the district court held that appellants never proved that the school board had an intent to discriminate against African-Americans in closing Crowder, that economic hardship alone could justify closing Crowder, and that racial imbalance and depletion of white students in the school district were caused by independent demographic forces which the school board had no duty to remedy.\nIt bears emphasis that this appeal does not present the issue of a school district seeking to terminate a desegregation order. Rather, this appeal concerns a school board’s proposal to close a school in a school district which is currently under a desegregation order. Although the majority’s opinion recognizes the posture of this case (Maj. opinion at pp. 1453-54), it inexplicably adopts the legal analysis governing whether a district court should be permitted to relinquish supervision of a desegregation order. See, e.g., Board of Education of Oklahoma City v. Dowell, 498 U.S. 237, 249-50, 111 S.Ct. 630, 637-38, 112 L.Ed.2d 715 (1991) (Factors a district court must consider before dissolving a desegregation order are: “whether the board had complied in good faith with the desegregation decree since it was entered, and whether the vestiges of past discrimination had been eliminated to the extent practicable.”); Freeman v. Pitts, — U.S. —, 112 S.Ct. 1430, 118 L.Ed.2d 108 (1992). The majority’s extension of the legal standard governing termination of a desegregation order to this action, involving a school board’s petition to close a school while the desegregation order is still extant, lacking, as it does, any foundation or support in precedent, amounts to an unwarranted ipse dixit.\nA. The School Board\nThe majority’s opinion mistakenly stresses that appellants proffered no evidence that the Board (three of whose five members were black (Maj. opinion at pp. 1453, 1456)), intended to discriminate in its decision to close Crowder or that it acted in bad faith under the desegregation order: “No party has asserted that any of the Quitman County schools or their attendance zones were affected by deliberately discriminatory line-drawing at any time since the advent of the desegregation decree ... [or] that the board ever violated the desegregation decree or that it was motivated by an intent to resegre-gate when it unanimously decided to close Crowder.” (Maj. opinion at p. 1455).\nIntent to discriminate is not a sine qua non for a district court’s determination that a school board violated a desegregation order in deciding to close a school. See Swann, 402 U.S. at 26, 91 S.Ct. at 1281; Green, 391 U.S. at 437-38, 88 S.Ct. at 1693-94; Davis, 721 F.2d at 1435. The indispensable determination, rather, is whether the school board’s proposed actions will perpetuate or recreate a segregated school system. Freeman, — U.S. at —, 112 S.Ct. at 1455 (Blackmun, J., concurring) (original emphasis) (“it is the operation of a racially segregated school system that must be remedied, not discriminatory policy in some discrete subpart of that system.”). See also Fordice, — U.S. at —, 112 S.Ct. at 2738 (remanding for consideration of effect on desegregation of admission’s standards, program duplication, institutional mission assignment, and continued operation of all eight public universities (five white, three black), “even though such policies may be race-neutral on their face.”).\nThe majority’s opinion cites a purportedly comparable Eleventh Circuit decision, in which the court affirmed closure of a marginally populated school and its consolidation with another school in the district, over the objections that the school board’s action violated a desegregation order. See Harris v. Crenshaw County Board of Education, 968 F.2d 1090 (11th Cir.1992). Drawing an inapt analogy, the majority’s opinion asserts that, “[njeither there nor here was the board’s decision made in defiance of the [desegregation] decree, and in each case it was not economically or educationally sensible to keep a tiny school open.” (Maj. opinion at p. 1456).\nThe Harris case is inapposite on several levels. First, the facts are dissimilar. In Harris, African-Americans made up seventy percent of the student body at the school which the Crenshaw County School Board sought to close. The student body at Crow-der, in contrast, was seventy-three percent white. Whether the school board had a discriminatory intent is a necessary inquiry in cases where the school being closed is composed of a predominantly minority student body, as in Harris, but not when the school consists of a predominantly white population, as in the case of Crowder. See Harris, 968 F.2d at 1095; Arvizu v. Waco Indep. School Dist., 495 F.2d 499, 505 (5th Cir.1974) (school board seeking to close school with predominantly minority population must “adduce evidence sufficient to support the conclusion that [its] actions were not in fact motivated by racial reasons.”).\nFurthermore, in Harris, the school board made an exhaustive inquiry regarding the potential ramifications of closure. The school board, in concluding that the school should be closed and consolidated with another school in the county, explicitly considered the following factors, as required by the outstanding desegregation order in the school district: (1) educational opportunities at both schools; (2) economics; (3) size of student enrollment; (4) the effect of the closure and consolidation on the outstanding federal desegregation order; (5) transportation; and (6) alternatives to closure. Harris, 968 F.2d at 1093. The Eleventh Circuit emphasized that consolidation of the schools would actually produce further desegregation. Id.\nIn contrast, closure of Crowder was premised purely on economic savings. The school board admitted that it never considered the impact of closure on the desegregation order. (Maj. opinion at p. 1453). The school board, as well, did not attempt to balance the constitutional importance of Crowder’s academic prestige and racially balanced student body, nor did it consider any alternatives to closure. Finally, Sandra Biffle, school district secretary, testified below that closure would exacerbate segregation, a per se violation of its affirmative duty under the desegregation order. See Swann, 402 U.S. at 26, 91 S.Ct. at 1281; Green, 391 U.S. at 437-38, 88 S.Ct. at 1693-94; Davis, 721 F.2d at 1435. See also Freeman, — U.S. at —, 112 S.Ct. at 1455 (Blackmun, J., concurring); Fordice, - U.S. at -, -, 112 S.Ct. at 2732, 2735.\nB. The District Court\nMore to the point, the district court erred in failing to scrutinize all school board actions, to determine whether the school district was fulfilling its “affirmative duty to take whatever steps might be necessary to convert to a unitary system in which racial discrimination would be eliminated root and branch,” a duty which, to reiterate, remains enforceable without a finding of a further constitutional violation. Green, 391 U.S. at 437-38, 88 S.Ct. at 1693-94; Swann, 402 U.S. at 20-21, 26, 91 S.Ct. at 1278-79; Davis, 721 F.2d at 1435; Harris, 968 F.2d at 1094-95; Freeman, — U.S. at -, 112 S.Ct. at 1456 (Blackmun, J., concurring).\nThe district court also erred in failing to establish whether the current racial imbalance was attributable to prior de jure segregation in Quitman County, or even to later violations by the school board. While the school board has no affirmative obligation to remedy a racial imbalance caused by independent demographic forces, ie., people “voting with their feet,” the district court and school board unquestionably do have a constitutionally imposed duty to make a threshold determination of whether the school board played a role in encouraging residential segregation. See Keyes, 413 U.S. at 211, 93 S.Ct. at 2699; Freeman, — U.S. at —, 112 S.Ct. at 1457 (Blackmun, J., concurring); id. — U.S. at —, 112 S.Ct. at 1454 (Souter, J., concurring); Swann, 402 U.S. at 20-21, 91 S.Ct. at 1278-79. Without a determinate answer to these inquiries, it is at best premature, and at worst disingenuous, to conclude that the racial imbalance in the Quitman County school district was caused solely by independent demographic forces, and thus that the appellants failed to state a constitutionally cognizable claim.\nIV. Standard of Review\nInasmuch as the district court unequivocally failed to address the relevant legal standard in evaluating the school board’s closure of Crowder, neglected to ascertain whether the school board met its burden of proof, relied on an incomplete factual record, and fell short of its duty to make adequate findings of fact and conclusions of law, as required by Rule 52(a), the opinion of the district court must be reversed.\nOn appeal, a preliminary injunction order may be set aside if based upon a clearly erroneous factual determination, an error of law, or an abuse of discretion. Roho, Inc. v. Marquis, 902 F.2d 356, 358 (5th Cir.1990); Hay v. Waldron, 834 F.2d 481, 484-85 (5th Cir.1987).\nThe majority’s opinion restricts its review to whether the district judge abused his discretion in denying preliminary injunctive relief. The district judge’s discretion, however, is not unbridled, and a preliminary injunction “must be the product of reasoned application of the four factors held to be necessary prerequisites [to a preliminary injunction].” Enterprise Int'l, Inc. v. Corporacion Estatal Petrolera Ecuatoriana (“C.E.P.E.”), 762 F.2d 464, 472 (5th Cir.1985) (quoting Florida Medical Ass’n v. H.E.W., 601 F.2d 199, 202 (5th Cir.1979)); Buchanan v. United States Postal Service, 508 F.2d 259 (5th Cir.1975) (findings on all four factors are mixed law-fact questions); Canal Authority v. Callaway, 489 F.2d 567, 572 (5th Cir.1974). See generally United States Steel Corp. v. Fraternal Ass’n of Steelhaulers, 431 F.2d 1046, 1048 (3d Cir.1970), quoted in 11 Wright & Miller, Federal Practice and Procedure: Civil § 2962, at 633 (1973 & West Supp.1992) (“Wright & Miller”).\nFindings of fact must ordinarily be upheld unless clearly erroneous. C.E.P.E., 762 F.2d at 472; 11 Wright & Miller § 2962, at 635-36. Fact-findings on constitutional questions, however, are sometimes left for independent appellate review, and not subject to the clearly erroneous standard. See, e.g., Bose Corp. v. Consumers Union of United States, Inc., 466 U.S. 485, 501-502, 104 S.Ct. 1949, 1959-60, 80 L.Ed.2d 502 (1984) (appellate courts maintain independent record review over district judge’s determination of “actual malice” in defamation cases involving assertions of First Amendment privilege). See also Stephen A. Childress & Martha S. Davis, Federal Standards of Review § 2.19 (2d ed. 1992) (“Childress & Davis”). (Citations omitted.).\nIn reviewing a preliminary injunction, a court’s conclusions of law “are subject to broad review and will be reversed if incorrect.” C.E.P.E., 762 F.2d at 473; Apple Barrel Productions, Inc. v. Beard, 730 F.2d 384, 386 (5th Cir.1984); Commonwealth Life Ins. Co. v. Neal, 669 F.2d 300, 304 (5th Cir.1982); 11 Wright & Miller § 2962, at 636-37. An adjudication respecting whether a likelihood of success on the merits exists, insofar as it rests on a conclusion regarding the existence vel non of a constitutionally cognizable claim, is usually reviewed freely by the appellate court. See Childress & Davis § 4.17 (“Reversal may be appropriate, for example, when the trial court used the wrong legal standard or misunderstood the substantive law on the underlying issues.”). (Citations omitted.).\nIt follows that the district court’s error, in failing to apply the proper legal standard to determine the constitutionality of closure of a school where the school district is under a desegregation order, necessitates that its decision be reversed on this ground.\nThe clearly erroneous determination of the district court that keeping Crowder open would harm the public is likewise reversible error, because of the district court’s failure (1) to clarify the ambiguities and omissions in the evidence presented by the school board regarding savings, (2) to take into account costs of closure, as well as alternatives to closure (such as alternative attendance zones, rezoning, or an increase in the tax rate), (3) to consider closure of one of the other schools, rather than Crowder, and (4) to weigh the impact of closure on the desegregation order.\nFinally, the district court’s neglect to make the requisite findings of fact and conclusions of law in denying preliminary injunctive relief, as required by Fed.R.Civ.P. 52(a), dictates, at the very least, vacation and remand of the judgment below.\nV. Conclusion\nThe constitutional rights of African-American school children pronounced by Broum permit no less than requiring the school board and the district court to fulfill their constitutional obligations under the desegregation order. Integrated schools are no less desirable because they are burdensome to achieve; and integrated schools remain a constitutional requirement, even though Brown’s thirty-nine year old mandate is still to be fulfilled. Brown, 347 U.S. 483, 74 S.Ct. 686, 98 L.Ed. 873 (1954).\nWhile courts may not be “in the business of enforcing useless measures” (Maj. opinion at p. 1455), courts are surely in the business of enforcing the Constitution. To the majority of this court, granting appellants injunc-tive relief to keep Crowder open would be a “pyrrhic victory,” a victory gained at too great a financial cost. (Maj. opinion at p. 1456). But closing Crowder, the most academically successful and racially balanced school in an otherwise predominantly African-American school system, would, in my opinion, be a much greater loss — a stripping away of the constitutionally protected rights of African-American school children, a grievous injury which would convey a message of “inferiority as to the status [of African-American school children] in the community that may affect their hearts and minds in a way unlikely to be undone.” Brown, 347 U.S. at 494, 74 S.Ct. at 691.\nThe judgment of the district court denying preliminary injunctive relief should be reversed, and this civil action remanded to the district court, in order that it may, in accordance with the proper legal and factual inquiry set forth above: (1) require the school board to consider the impact of closing Crow-der on the outstanding desegregation order; (2) determine whether closure would violate the outstanding federal desegregation order by recreating and perpetuating one-race schools; and (3) ascertain whether the residential segregation and predicted “white flight” are influenced by prior de jure segregation and the accompanying attitudes and patterns of thought accompanying this system. Finally, (4) the district court must be satisfied that the school board has adequately considered other remedial alternatives to closure.\nIn the alternative, the judgment of the district court should be vacated and remanded, in order that it may make the findings of fact and conclusions of law required by Fed. R.Civ.P. 52(a).\nFor the reasons stated above, I respectfully dissent.\n. See Milliken v. Bradley, 433 U.S. 267, 280-82, 97 S.Ct. 2749, 2757-58, 53 L.Ed.2d 745 (1977) (\"Milliken II”) (\"necessary concern for the important values of local control of public school systems dictates that a federal court’s regulatory control of such systems not extend beyond the time required to remedy the effects of past intentional discrimination.”); Board of Education of Oklahoma City v. Dowell, 498 U.S. 237, 248, 111 S.Ct. 630, 637, 112 L.Ed.2d 715 (1991) (\"Local control over the education of children allows citizens to participate in decisionmaking, and allows innovation so that school programs can fit local needs.”); Milliken v. Bradley, 418 U.S. 717, 742, 94 S.Ct. 3112, 3126, 41 L.Ed.2d 1069 (1974) (\"Milliken I”); San Antonio Independent School District v. Rodriguez, 411 U.S. 1, 50, 93 S.Ct. 1278, 1305-06, 36 L.Ed.2d 16 (1973). See also Freeman v. Pitts, - U.S. -, -, 112 S.Ct. 1430, 1454, 118 L.Ed.2d 108 (1992) (Scalia, J., concurring).\n. Additional desegregation orders were entered on August 28, 1972, and on September 9, 1986.\n. Justice Souter filed a separate concurrence in Freeman to stress the obligation of a school board and district court to ascertain whether demographic changes were, in fact, causally related to school segregation in the past. Freeman v. Pitts, - U.S. -, -, 112 S.Ct. 1430, 1454, 118 L.Ed.2d 108 (1992) (Souter, J., concurring) (“demographic change toward segregated residential patterns [can itself] be caused by past school segregation and the patterns of thinking that segregation creates. Such demographic change is not an independent, supervening cause of racial imbalance in the student body....”).\n. Where racial imbalances in student attendance zones persist within a school district, there is a presumption that in the \"former de jure segregated school district ... the board’s actions caused [the imbalance], and it is the school board's obligation to rebut that presumption.” Freeman v. Pitts, — U.S. —, — n. 1, 112 S.Ct. 1430, 1447-1448, 1457 n. 1, 118 L.Ed.2d 108 (1992) (citing Dayton Board of Education v. Brinkman, 443 U.S. 526, 537, 99 S.Ct. 2971, 2979, 61 L.Ed.2d 720 (1979)); Keyes v. School District No. 1, Denver, Colorado, 413 U.S. 189, 208-11, 93 S.Ct. 2686, 2697-99, 37 L.Ed.2d 548 (1973); Swann v. Charlotte-Mecklenburg Board of Education, 402 U.S. 1, 26, 91 S.Ct. 1267, 1281, 28 L.Ed.2d 554 (1971).\n. The majority opinion in Freeman addressed the circumstances under which a district court should be permitted to relinquish control of a school district, rather than the duties of a district court in the face of an outstanding desegregation order. — U.S. at —, 112 S.Ct. at 1445. However, the concurring Justices in Freeman remind the Court's majority that the legal standard governing the closure of a school in a district where a desegregation order remains in place — as in Quitman County — is governed by an extensive preexisting body of law. Freeman, — U.S. at —-—, 112 S.Ct. at 1456 (Blackmun J., concurring) (citing with approval Green, 391 U.S. at 437-439, 88 S.Ct. at 1693-95; Dayton Bd. of Education, 443 U.S. at 537, 99 S.Ct. at 2979; Keyes, 413 U.S. at 208-211, 93 S.Ct. at 2697-99; Swann, 402 U.S. at 26, 91 S.Ct. at 1281).\n. As set forth in the majority opinion: \"There is no dispute that the school board failed explicitly to consider the effect its decision to close Crow-der would have on the district court's desegregation order. Superintendent Wright testified that the district considered only the potential financial benefit of closing Crowder, not its effect on desegregation.\" (Maj. opinion at p. 1453).\n. The district court below made no findings of fact or conclusions of law with regard to the second and third prerequisites to preliminary injunctive relief, i.e., the risk of irreparable injury if the injunctive relief is not granted, and whether the threatened injury outweighs harm to defendant that may result from the injunction. See Roho Inc. v. Marquis, 902 F.2d 356, 358 (5th Cir.1990). In conformity with Fed.R.Civ.P. 52(a), a district judge is required to make findings of fact and conclusions of law when he or she \"grants or denies a preliminary injunction,” and normally the order is vacated and remanded for appropriate findings if the district judge fails to do so. See 5A, Moore’s Federal Practice para. 52.06[1], at 52-133 (1993) (\"Moore's\") (\"When the trial court fails to make findings, or to find on a material issue, the appellate court will normally vacate the judgment and remand the action for appropriate findings to be made. The same is true where the findings of fact and conclusions of law are mere conclusoty statements and do not fully address all the issues raised in the litigation.\"); Pt. 2—7 Moore's para. 65.21, at 65-174; 9 Wright & Miller § 2576, at 695-96; 11 Wright & Miller § 2962, at 637-38 and n. 45. See also Chandler v. City of Dallas, 958 F.2d 85, 88-89 (5th Cir.1992) (appeal from employment discrimination bench trial, vacating and remanding where district court failed to set forth in a sufficiently definite manner its findings of fact and conclusions of law, as required by Rule 52(a), thereby preventing the appellate court from ascertaining the factual and legal bases for the district court's opinion.); In re Incident Aboard the D/B Ocean King, 758 F.2d 1063, 1072 (5th Cir.1985) (vacating and remanding where district court failed to provide appellate court with findings of fact and conclusions of law sufficient to review the ultimate disposition of the case).\nThe order of the district court denying appellants’ injunctive relief should, at a minimum, be vacated and remanded for further factual findings and legal conclusions, specifically with reference to the risk of irreparable injury, and whether the threatened injury outweighs harm to defendant school district that may result from an injunction. Without conclusions of law and findings of fact regarding these material issues, mandatory under Rule 52(a), this court cannot properly review whether appellants satisfied the second and third prongs for preliminary injunctive relief.\n. One example of an alternative to closing Crowder is found in Missouri v. Jenkins, 495 U.S. 33, 57, 110 S.Ct. 1651, 1666, 109 L.Ed.2d 31 (1989), where the Court held that \"a local government with .taxing authority may be ordered to levy taxes in excess of the limit set by state statute where there is reason based in the Constitution [i.e., the Fourteenth Amendment duty to operate a unitary school system] for not observing the statutory limitation.”", "type": "dissent", "author": "JUSTICE, District Judge,"}], "attorneys": ["Ronald W. Lewis, Franklin Turner, Law Offices of Ronald W. Lewis, Oxford, MS, for Jonathan Hankins, et al.", "Azki Shah, Clarksdale, MS, for Bd. of Educ. of Quitman County, MS."], "corrections": "", "head_matter": "HULL, Hopson, Richardson, Franklin, et al., Plaintiffs, Jonathan Hankins, by his father and next friend John Hankins, et al., Etc., Intervenors-Appellants, v. The QUITMAN COUNTY BOARD OF EDUCATION, et al., Defendants-Appellees.\nNo. 91-1903.\nUnited States Court of Appeals, Fifth Circuit.\nSept. 2, 1993.\nRonald W. Lewis, Franklin Turner, Law Offices of Ronald W. Lewis, Oxford, MS, for Jonathan Hankins, et al.\nAzki Shah, Clarksdale, MS, for Bd. of Educ. of Quitman County, MS.\nBefore JONES and BARKSDALE, Circuit Judges and JUSTICE , District Judge.\nDistrict Judge of the Eastern District of Texas, sitting by designation."} | JONES | BARKSDALE | JUSTICE | 1 | 2 | 1 | 1 | 0 | 0 | 1 F.3d 1450 | [
{
"content": "You are an expert legal coding assistant trained to classify U.S. federal Courts of Appeals\ncases using an adaptation of the Supreme Court Database (SCDB_2023_01) codebook. You follow the coding procedure\nin the codebook step by step and use the precise definitions of terms presented in the code... |
10,517,877 | SHEET METAL WORKERS LOCAL UNION NO. 54, AFL-CIO, Plaintiff-Counter Defendant-Appellee, v. E.F. ETIE SHEET METAL CO., Defendant-Counter Plaintiff-Appellant, v. SHEET METAL WORKERS LOCAL UNION 54, AFL-CIO, et al., Counter-Defendants-Appellees | Sheet Metal Workers Local Union No. 54 v. E.F. Etie Sheet Metal Co. | 1993-09-03 | No. 92-2209 | United States Court of Appeals for the Fifth Circuit | {"judges": ["Before OARWOOD and HIGGINBOTHAM, Circuit Judges, and SCHWARTZ , District Judge."], "parties": ["SHEET METAL WORKERS LOCAL UNION NO. 54, AFL-CIO, Plaintiff-Counter Defendant-Appellee, v. E.F. ETIE SHEET METAL CO., Defendant-Counter Plaintiff-Appellant, v. SHEET METAL WORKERS LOCAL UNION 54, AFL-CIO, et al., Counter-Defendants-Appellees."], "opinions": [{"text": "PATRICK E. HIGGINBOTHAM, Circuit Judge:\nA former member of a multi-employer bargaining association sues the association and the union it dealt with for antitrust violations, breach of fiduciary duty, and common law fraud, all part of an asserted effort to drive the member out of business. The district court found that any concerted efforts were labor activity, freed from the antitrust laws, and that the company’s problems were of its own making, enforcing an arbitration award against it and dismissing its counterclaims. We agree with the district court, affirming its decisions as to the counterclaims and upholding in substantial part its enforcement of the arbitration award.\nI.\nSeveral different entities play roles in this case. The Sheet Metal and Air Conditioning-Contractors’ National Association, SMACNA, is a national trade association of employers in the sheet metal contracting industry. The Houston Sheet Metal Contractors’ Association, HSMCA, is a chapter of SMACNA that engages in collective bargaining with Local 54 of the Sheet Metal Workers’ International Union, SMWIA, to achieve a single contract between HSMCA members and the union. HSMCA’s Labor Committee, made up of large and small contractors specializing in various types of sheet metal work to ensure representation for different contractors, makes bargaining decisions on behalf of HSMCA members. Negotiations are often guided by the Standard Form of Union Agreement, SFUA, a form agreement drafted by the National Joint Adjustment Board, NJAB. The NJAB is an unincorporated panel of individuals, half of whom are appointed by SMACNA and the other half of whom are appointed by SMWIA. The SFUA is recommended as a pattern labor agreement which the local parties may adopt in whole, or in part.\nIn 1974, E.F. Etie Sheet Metal Co., a Houston sheet metal contractor, joined HSMCA and SMACNA and signed a written contract with HSMCA authorizing it to be Etie’s exclusive bargaining agent with Local 54. HSMCA then negotiated a labor agreement with Local 54 for 1982 through 1985.\n1983 brought a recession to south Texas and an accompanying infusion of nonunion contractors into the sheet metal business. Needing relief from the current contract, HSMCA negotiated with Local 54 for an extension of the labor agreement to March 31, 1986, in exchange for a reduction in wages and changes in the required composition of the workforce. Due to a continuing decline in the construction industry, HSMCA sought further wage reductions from Local 54 in August of 1984 which the union was unwilling to make. HSMCA and Local 54 then agreed to an “interest arbitration” provision allowing the NJAB to arbitrate disputed contract provisions. HSMCA and Local 54 bargained over more competitive provisions but deadlocked on several issues. They submitted these unresolved issues to the NJAB. The NJAB’s decision included a reduction in wages for certain employees and directed the parties to execute a new agreement effective October 1, 1984 through March 31, 1986 that would include SFUA’s interest arbitration clause.\nOn April 11, 1985, Etie terminated its membership in HSMCA and SMACNA, and gave notice that it “wishes to terminate such Union Agreement, if any, at the earliest possible date.” However, Etie continued to abide by the terms of their contract through the contract’s March 1986 expiration date. The contract provided that if no new agreement had been reached by the expiration date, the contract would continue to bind the parties from year to year.\nIn March and April of 1986, Etie negotiated directly with Local 54. In May, after three bargaining sessions, and over Etie’s objections, Local 54 submitted the contractual disputes. NJAB met on June 24, but Etie did not attend, and on June 27 issued a unanimous decision ordering Etie to execute an agreement on the same terms as the contract between Local 54 and HSMCA, except Etie’s contract need not contain the interest arbitration provision. Etie refused to abide by this decision, and on July 2, began operating a nonunion shop. On July 14, Local 54 filed this suit to enforce NJAB’s decision. Etie went out of business in October.\nOn March 27, 1987, Etie filed its Second Amended Counter-Claim claiming that all appellees had violated the Sherman Antitrust Act by conspiring to fix prices and drive Etie out of business and had engaged in a continuing fraud; that Local 54 and SMWIA had engaged in multiple unfair labor practices in violation of the National Labor Relations Act; and that HSMCA and SMACNA had breached Etie’s 1974 written exclusive bargaining agency contract and breached their fiduciary duty to Etie.\nIn December, the district court dismissed Etie’s antitrust counterclaim, ruling that it fell within an antitrust exemption. It also (i) dismissed Etie’s breach of fiduciary duty and fraud claims as preempted by the National Labor Relations Act and barred by the Texas two year statute of limitations; (ii) granted summary judgment to HSMCA on Etie’s breach of contract claims, finding that Etie implicitly authorized HSMCA to agree to interest arbitration before the NJAB; and (iii) denied Etie’s summary judgment motion and granted Local 54’s and SMWIA’s motion to dismiss on Etie’s unfair labor practices claim, because Etie was arguably bound under the 1984 contract to the interest arbitration provision.\nAfter disposing of all of Etie’s claims, Local 54’s original claim seeking enforcement of NJAB’s decision was tried to the bench. On February 28, 1992, the district court issued-its final judgment and findings of fact and conclusions of law, finding for Local 54 by determining that Etie was bound to the 1984 contract, and that NJAB had the power to decide the dispute.\nII.\nWe first address Etie’s state law claims for fraud, breach of fiduciary duty, and breach of contract. The district court erred in dismissing the fraud and breach of fiduciary duty claims as barred by limitations and,preempted by the National Labor Relations Act. The district court correctly found that HSMCA acted within authority of its contract with Etie, and we affirm its grant of summary judgment on the breach of contract claim. The finding that HSMCA acted within its authority leaves no fact issue on the other state law claims.\nThe district court dismissed the claims as barred by a two year statute of limitations under Coastal Distributing Co. v. NGK Spark Plug Co., 779 F.2d 1033 (5th Cir.1986). The Texas Supreme Court, interpreting the limitations statute at issue in Coastal Distributing, held that 1979 amendments to the Texas limitation statutes “make[ ] all fraud actions consistent, in that they have a four-year limitation period, regardless of the remedy sought.” Williams v. Khalaf, 802 S.W.2d 651, 658 (Tex.1990) (construing Tex.Civ.Prac. & Rem.Code § 16.051 (Vernon 1986)). That four year limitations period applies to breach of fiduciary duty claims as well. Spangler v. Jones, 797 S.W.2d 125, 132 (Tex.App.—Austin 1990, writ denied). The four year statute is not a bar since the earliest act Etie complains of occurred in October 1983 and the second amended counterclaim alleging fraud and breach 'of fiduciary duty was filed in March 1987.\nThe district court also concluded that Etie’s claims for fraud and breach of fiduciary duty involved areas arguably regulated by section 8 of the National Labor Relations Act as unfair labor practices and were preempted under San Diego Building Trades Council v. Garmon, 359 U.S. 236, 245, 79 S.Ct. 773, 779-80, 3 L.Ed.2d 775 (1959). The critical inquiry in examining that conclusion is whether the controversy, presented under state law to the courts is identical to or different from that which could have been, but was not, presented to the National Labor Relations Board, NLRB. Sears, Roebuck & Co. v. San Diego County District Council of Carpenters, 436 U.S. 180, 197-98, 98 S.Ct. 1745, 1757-58, 56 L.Ed.2d 209 (1978). That inquiry requires not only looking to the factual bases of each controversy, but also examining the interests protected by each claim and the relief requested. See Belknap, Inc. v. Hale, 463 U.S. 491, 510-11, 103 S.Ct. 3172, 3183-84, 77 L.Ed.2d 798 (1983); Sears, 436 U.S. at 188-89, 198, 98 S.Ct. at 1752-53, 1758.\nThe district court reasoned, and the appellees contend before us, that the substance of Etie’s fraud and breach of fiduciary duty claims is that HSMCA and Local 54 unlawfully collaborated to drive Etie out of business. The appellees cite two provisions of the NLRA as arguably implicated by Etie’s allegations. The first is section 8(a)(2) of the NLRA, making it an unfair labor practice for an employer to contribute financial or other support to any labor organization. 29 U.S.C. § 158(a)(2). Appellees contend that HSMCA’s agreement with Local 54 to include the arbitration clause arguably constituted unfair support. The second provision cited is section 8(a)(1), which prohibits employers from interfering with, restraining or coercing employees in the exercise of their right to refrain from collective bargaining through representatives of their own choosing. 29 U.S.C. § 158(a)(1). HSMCA, a coalition of employers, arguably reached an agreement with Local 54 to keep Etie’s employees in the union.\nThe focus of both allegations differs from the state law claims. The state law claims focus on the grant of authority Etie gave to HSMCA in 1974, and ask whether that grant included the power to agree to interest arbitration. The question under section 8 assumes away that issue. It takes place later in time, once the HSMCA and Local 54 entered into a binding interest arbitration agreement, and asks if that agreement violates federal standards. Both labor law questions presuppose the question of power to enter the agreement at issue in the state claims. An answer to those questions does not answer the state law questions.\nThe Supreme Court’s decision in Belknap v. Hale lends support to our position. The Court concluded that hiring replacements for striking workers raised a question for the NLRB as an arguable NLRA violation. But the terms of the employment contracts for the striking workers, and the liability of the company for misrepresenting those terms, raised distinct state law questions. 463 U.S. at 510, 103 S.Ct. at 3183. As in this case the labor question assumed the existence of an obligation under state law. Because the state had a strong interest in defining the scope of such obligations, the court found no preemption. See also Windfield v. Groen Div., Dover Corp., 890 F.2d 764, 770 (5th Cir.1989) (recognizing that a “personal guarantee” of employment created obligations for the employer independent of its obligations under federal labor law).\nLocal 926, International Union of Operating Engineers v. Jones, 460 U.S. 669, 103 S.Ct. 1453, 75 L.Ed.2d 368 (1983), illustrates preempted state law claims. In Jones the Court found that § 8(b)(1) of the NLRA, preempted a wrongful discharge claim, reasoning that the NLRA and state law claims shared a “fundamental” element. Both allegations required a finding that Jones’ discharge was “the result of Union influence.” Jones, 460 U.S. at 682, 103 S.Ct. at 1462. Both federal and state law presupposed the existence of a valid employment contract and both focused on the issue of breach. The Court saw that common ground as raising a sufficiently large risk of inconsistent decisions by the NLRB and the courts to justify preemption.\nEtie survives preemption to fail on the merits, however. Under Texas agency law a grant of authority to an agent includes the implied authority to do all things proper, usual, and necessary to exercise that authority. E.g., Polland & Cook v. Lehmann, 832 S.W.2d 729, 738 (Tex.App.—Houston [1st Dist.] 1992, writ denied). The district court correctly held that Etie implicitly authorized HSMCA to agree to Article X, section 8.\nSeveral facts about the relationship support this conclusion. The NJAB was no stranger to their original bargaining agreement. Article X, Section 4 of the agreement provides for an appeal to the NJAB after repeated failures to resolve grievances “arising out of interpretation or enforcement” of their agreement. Section 5 provides that the NJAB is “empowered to render such decisions and grant such relief to either party” as it deems “necessary and proper.” Section 6 gives the NJAB the power to cancel the agreement if one party refuses to comply with an arbitration agreement, and section 7 provides that “[e]xcept in case of deadlock, the decision of the National Joint Adjustment Board shall be final and binding.” These provisions belie Etie’s claim that HSMCA’s status as its “exclusive” bargaining agent foreclosed any reliance on the NJAB.\nNor is there anything surprising about the use of an interest arbitration clause. This court has recognized it as one of the “general ] types or categories of labor arbitration.” NLRB v. Columbus Printing Pressmen & Assistants’ Union No. 22, 543 F.2d 1161, 1163 n. 4 (5th Cir.1976). See also Winston-Salem Printing Press & Assistants’ Union v. Piedmont Publishing Co., 393 F.2d 221, 227 n. 10 (4th Cir.1968) (noting that the practice of arbitrating the terms of new contracts predates grievance arbitration and has a long record of success). Uncontroverted testimony in the record from Arthur Gowan of the HSMCA indicates that the identical interest arbitration clause is in about half of the sheet metal workers’ contracts nationwide.\nEtie contends that HSMCA added the clause in violation of its bylaws, which provide in part that “[m]ember firms may vote on all matters coming before the association.” But Etie offers no evidence as to the meaning of “coming before.” Arthur Gowan’s un-controyerted testimony shows that the membership had voted to give the Association’s Labor Committee the authority to negotiate such clauses, showing that Etie was not entitled to a vote as to this specific clause.\nBecause the contract authorized HSMCA to agree to the inclusion of the interest arbitration agreement, the district court properly denied Etie relief on its claims for breach of contract. Furthermore, since no evidence in the record shows that HSMCA abused its authorized power, this finding also disposes of the breach of fiduciary duty and fraud claims. We affirm the district court’s dismissal of the fraud and breach of fiduciary duty claims and its grant of summary judgment on the breach of contract claims.\nIII.\nThe district court correctly granted summary judgment on the unfair labor practices counterclaim. Etie’s second amended counterclaim alleges that appellees “forced and restrained ... Etie to join and maintain membership in HSMCA” in violation of Section 303(b) of the Labor Management Relations Act, 29 U.S.C. § 158(b)(4)(A). Etie argues that by bringing the disputed provisions to arbitration, Local 54 “coerced” Etie into a de facto membership in HSMCA because the arbitration provision “compels it to act as if it were a member and submit collective bargaining disputes it has with union locals to the adjustment board.” Mobile Mechanical Contractors Ass’n v. Carlough, 664 F.2d 481, 486 (5th Cir. Unit A Dec. 1981), cert. denied, 456 U.S. 975, 102 S.Ct. 2240, 72 L.Ed.2d 850 (1982). We find the analogy to Mobile Mechanical Contractors unpersuasive and affirm the district court’s grant of summary judgment.\nEtie contends that it was not bound by the interest arbitration agreement negotiated by HSMCA because, on April 11, 1985, it repudiated its prehire contract with Local 54, denying the union the right to invoke the interest arbitration clause or any other contractual provision against it. The Supreme Court has expressly left open the issue of how to repudiate a prehire agreement, stating that “it is not necessary to decide in this case what specific acts would effect the repudiation of a prehire agreement-sending notice to the union, engaging in activity overtly and completely inconsistent with contractual obligations, or, as respondents suggest, precipitating a representation election pursuant to the final proviso in § 8(f) that shows the union does not enjoy majority support.” Jim McNeff, Inc. v. Todd, 461 U.S. 260, 271 n. 11, 103 S.Ct. 1753, 1759 n. 11, 75 L.Ed.2d 830 (1983). We conclude that under the cases since Jim McNejf Etie failed to repudiate the agreement.\nEtie’s sole action that it claims constitutes a repudiation was a letter sent from Etie to HSMCA on April 11, 1985, retracting its assignment of bargaining authority to the association and expressing a desire to terminate its contract with Local 54 “at the earliest possible time.” Etie continued to pay until 1986 both the wages and industry funds required by its contract with Local 54. There is no evidence of acts inconsistent with the contract until after the interest arbitration clause had been invoked and the dispute sent to the NJAB in May of 1986, when a majority of Etie workers indicated to Etie that they no longer wished to be bound by Local 54.\nThe Seventh Circuit identified the incentives controlled by the rules in Gould v. Lambert Excavating, Inc., 870 F.2d 1214 (1989). In declining to find repudiation based on an employer giving notice and declining to follow certain contractual provisions, the court noted that when an employer “maintains that it repudiated the contract while at the same time admitting that, it continues to comply with certain provisions and to enjoy certain of the benefits of the contract” an “ambiguous” situation results. Id. at 1219. The employer can selectively repudiate disadvantageous provisions, or can later renege on a statement that it completely repudiated the contract. Because this danger appears in a case such as this one where an employer’s statements do not entirely match its actions, we hold that notice of a desire to terminate unaccompanied by any other actions inconsistent with the contract is not sufficient to repudiate the prehire contract.\nWe announce no recipe for repudiating a prehire agreement. The conduct we described in United Brotherhood of Carpenters and Joiners Local Union 953 v. Mar-Len of Louisiana, Inc., 906 F.2d 200, 201 (5th Cir.1990), where the employer refused to use the union’s hiring hall; stopped contributing to the union’s fringe benefit funds, refused to rehire laid-off workers, and sent notice to the union of its repudiation constitutes an effective repudiation. Less equivocal conduct requires a case-by-case inquiry given the differences between various prehire agreements and the different types of organizations that can bargain for a § 8(f) agreement. See Operating Engineers Pension Trust v. Beck Engineering & Surveying Co., 746 F.2d 557, 565 (9th Cir.1984).\nEtie contends that even if it did not repudiate its prehire agreement with Local 54, the interest arbitration agreement did not bind its individual negotiations with Local 54 after it withdrew from the contractors’ association. It is not so simple. An employer continues to be subject to an interest arbitration clause in its individual negotiations after withdrawing from an employer’s association if it is “arguably” bound by the clause. Sheet Metal Workers Int’l Ass’n, Local Union No. 9, 136 L.R.R.M. (301 N.L.R.B. No. 32) 1338, 1991 WL 12488 (January 15, 1991) [Graco]. The Board found in Graco that a withdrawing employer was arguably bound by an interest arbitration clause that referred to “the Local Contractors’ Association” rather than to individual employers. The agreement in this case contains even more specific language, referring to “employer(s) representatives.”\nBecause the agreement bound Etie, the analogy to Mobile Mechanical fails. Mobile Mechanical involved a strike called to force an employer to accept an interest arbitration clause, which would have forced the employer to act as if it was a member of a national employers association by forcing it to submit disputes to a group of arbitrators selected by the national association. The strike violated § 8(b)(4)(A) as the equivalent of an attempt to force an employer to join an employer organization. Mobile Mechanical, 664 F.2d at 484 (citing Frito-Lay, Inc. v. Teamsters, 401 F.Supp. 370 (N.D.Cal.1975)). While Etie was a member of an employer organization it became subject to an interest arbitration clause that bound it in later negotiations. Requiring an employer to honor obligations it incurred while an organization member forces no membership.\nEtie also contends that even if Local 54 had a right to submit their dispute to interest arbitration, that right could only be invoked under conditions not present. Etie claims that Local 54 bargained to impasse over several nonmandatory subjects so that it could wrongfully invoke the arbitration clause, leading to Etie being “forced and restrained” to remain a de facto contractors’ association member in violation of § 8(b)(4)(A).\nIt is true, as Etie argues, that an interest arbitration clause cannot be invoked solely because of an impasse over a nonmandatory subject of bargaining. See, e.g., NLRB v. Sheet Metal Workers Int’l Ass’n Local 38, 575 F.2d 394, 399 (2d Cir.1978). The gap between Etie and Local 54 in 1986, however, went beyond nonmandatory issues. Etie’s counsel wrote to Local 54 after three negotiation sessions to declare that “the existence of the impasse has been and is now clear and unmistakable” because “all important issues” including v?ages, benefits, and overtime remained unresolved. The NJAB’s 1986 award incorporated all terms of the agreement in effect at the time between HSMCA and Local 54. Given this broad gap between the parties on mandatory terms we find that Local 54 had the right to invoke interest arbitration even if their negotiations left some nonmandatory issues unresolved.\nCoercion did not bring Etie before the NJAB. The employer association it belonged to negotiated for the interest arbitration clause under a lawful grant'of authority from Etie. Etie remained bound by that clause when it maintained its contract with the local union. Local 54 subjected Etie to the NJAB because Etie agreed to be subjected to the NJAB. We affirm the grant of summary judgment on the unfair labor practices counterclaim.\nIV.\nEtie’s antitrust counterclaim charges that a combination of the local and national manufacturers’ associations, the local and national unions, and the NJAB conspired to insert the interest arbitration provision in the 1984 contract and to produce a NJAB award favorable to Local 54 in 1986. The combination sought to reduce competition for association members by keeping union employers from becoming nonunion contractor competitors. The district court found that the activity of the counterdefendants was protected from antitrust liability under a nonstatutory exception to the antitrust laws and granted summary judgment. We agree and affirm.\nThis well established nonstatutory exemption is a judicial implementation of the statutory policy favoring the association of employees to eliminate competition over wages and working conditions. Connell Co. v. Plumbers & Steamfitters Local 100, 421 U.S. 616, 622, 95 S.Ct. 1830, 1835, 44 L.Ed.2d 418 (1975). Strict enforcement of the antitrust laws and collective union activity are at odds. Compatibility of labor and antitrust rules require that employee organizations receive some exemption from the antitrust laws. Id. at 622, 95 S.Ct. at 1835; United Mine Workers v. Pennington, 381 U.S. 657, 666, 85 S.Ct. 1585, 1591, 14 L.Ed.2d 626 (1965) (White, J.); Local 189, Amalgamated Meat Cutters v. Jewel Tea Co., 381 U.S. 676, 85 S.Ct. 1596, 14 L.Ed.2d 640 (1965) (White, J.).\nThe required accommodation of conflicting policies dictates the scope of the exemption. Two themes recur. The first theme is that unions should focus on the labor market. “Direct” restraints on employers’ product markets are not within the exception. Connell, 421 U.S. at 622, 95 S.Ct. at 1835. Connell involved a union that represented workers in the plumbing and mechanical trades. In negotiating with a general building contractor, it required that the contractor only subcontract mechanical work to firms that had a current contract with the union. The Court found that this requirement violated the antitrust laws as a “direct restraint on the business market” with “substantial anticompetitive effects” that “would not follow naturally from the elimination of competition over wages and working conditions.” Id. at 625, 95 S.Ct. at 1836. See also Allen Bradley Co. v. Local 3, Int’l Brotherhood of Elec. Workers, 325 U.S. 797, 65 S.Ct. 1533, 89 L.Ed. 1939 (1945) (finding an antitrust violation when a union required that electrical contractors buy equipment only from local manufacturers with closed shop agreements with the union).\nThis arbitration clause only affected employers’ product markets to the extent it subjected employers to a union contract. The only alleged harm of that contract was that it represented successful union wage negotiation, which was proper union activity. See Local 189, Amalgamated Meat Cutters v. Jewel Tea Co., 381 U.S. 676, 689-90 & n. 5, 85 S.Ct. 1596, 1602 n. 5, 14 L.Ed.2d 640 (1965) (White, J.).\nThe clause was introduced as part of a wage reduction strategy. Both employers and the union recognized the need to cut wages to compete with growing nonunion employers, but the union had concerns about most-favored-nation agreements it had with other major area employers. Interest arbitration allowed wage reductions that did not trigger most-favored-nation clauses, as the wage reductions resulted from arbitration rather than agreement.\nThe clause itself is not a mandatory subject of bargaining. Past decisions have expressed concern about extending the exemption to nonmandatory subjects. Jewel Tea, 381 U.S. at 689, 85 S.Ct. at 1601-02 (White, J.) (noting that the union and employer could not agree to a product price scale and stay within the exemption); Id. at 710 & n. 18, 85 S.Ct. at 1614 & n. 18 (Goldberg, J.) (noting that the NLRB’s decisions about what subjects are mandatory topics are “very significant” in determining the scope of the exemption); Consolidated Express, Inc. v. New York Shipping Assoc., 602 F.2d 494, 517 (3d Cir.1979), vacated on other grounds, 448 U.S. 902, 100 S.Ct. 3040, 65 L.Ed.2d 1131 (1980). But these statements are just illustrations of the broader principle that unions should focus on the labor market rather than employers’ product markets. See Connell, 421 U.S. at 622-23, 95 S.Ct. at 1835. A nonmandatory procedural device can be used to facilitate substantive agreement about wages or working conditions without offending that principle.\nThe second theme in the nonstatutory exemption cases is that the agreement between the union and an employer have some effect on third parties who had no chance to affect the negotiation or implementation of the agreement. For example, in United Mine Workers v. Pennington a small coal operator alleged that large coal operators and the United Mine Workers had conspired to drive it out of business. The union and the large operators had agreed to a wage and hour schedule and also agreed that the union would force the same terms on small operators as well. Justice White, writing for a plurality of the Court, held that the exception did not apply as “[o]ne'group of employers may not conspire to eliminate competitors from the industry and the union is liable with the employers if it becomes a party to the conspiracy.” 381 U.S. at 665-66, 85 S.Ct. at 1591; See also Connell, 421 U.S. at 619-20, 95 S.Ct. at 1833-34 (union representing an employers’ association’s workers illegally tried to impose conditions on an independent employer); Embry-Riddle Aeronautical Univ. v. Ross Aviation, Inc., 504 F.2d 896, 904-05 (5th Cir.1974) (union conspired with an employer to impose forbidden conditions on another employer).\nThis case is distinguishable from Pennington because Etie cannot claim to be the victim of a labor contract it could not affect. This interest arbitration clause was negotiated while Etie was a member of the HSMCA. The association members got the tangible benefit of a no-strike clause in exchange for the interest arbitration provision, suggesting that the parties weighed the risks and benefits of their actions in the negotiations. Further, under the law at the time, Etie had the right to unequivocally repudiate its relationship with the union and be free of the clause completely. Given Etie’s status as a member of the association that negotiated the clause, coupled with its power to avoid the effect of the clause completely, the risks of allowing labor contracts to’ bind sectors of the economy that never had a chance to influence the contract are not present.\nViewed against the background of the negotiations between HSMCA and Local 54, the negotiation of the arbitration clause falls within the exemption. It was part of wage negotiations, Etie belonged to the association that negotiated it, and Etie had the chance to pull out of the agreement entirely.\nNo evidence suggests that a conspiracy infected any other stage of Etie’s dealings with Local 54. Local 54’s unilateral invocation of a legal remedy was within its rights. See Apex Hosiery Co. v. Leader, 310 U.S. 469, 503-04, 60 S.Ct. 982, 997-98, 84 L.Ed. 1311 (1940). And nothing suggests that a conspiracy orchestrated the NJAB’s award. Etie can only point to statements by national union officials that show their awareness of the need to cut wages. Those statements at best show that the clause was negotiated as part of an agreement about wages. Cf. Embry-Riddle, 504 F.2d at 903-04.\nV.\nThe final issue is the enforceability of the NJAB award. In reviewing arbitration awards in labor disputes this Circuit uses a three-part test. It requires: (1) an agreement to arbitrate and the parties must be covered by that agreement; (2) an award which draws its “essence” from the agreement and does not exceed the scope of the issues presented to the arbitrator; and (3) an award which is not “repugnant” to the NLRA. General Warehousemen & Helpers Local 767 v. Standard Brands, 579 F.2d 1282, 1292 (5th Cir.1978) (en banc), cert. dismissed, 441 U.S. 957, 99 S.Ct. 2420, 60 L.Ed.2d 1075 (1979). The district court erred by only analyzing the agreement under the first two parts of the test. We affirm the enforcement of the award in substantial part but strike two provisions as contrary to national labor policy.\nEtie contends that the award is void as an imposition against its will of a prehire agreement. See generally Limbach Co. v. Sheet Metal Workers Int’l Ass’n, 949 F.2d 1241, 1248 (3d Cir.1991) (noting that an 8(f) agreement must be voluntary). Etie’s contention might have force if the award were not based on any prior relationship between the parties. Etie was, however, already in a voluntary 8(f) relationship at the time of the NJAB award. Its failure to repudiate the contract, coupled with the wording of the interest arbitration clause, subjected it to the NJAB. See Sheet Metal Workers Int’l Ass’n Local 110 Pension Trust Fund v. Dane Sheet Metal, 932 F.2d 578, 581-82 (6th Cir.1991). The parties could not agree on mandatory issues. Local 54 had a right to invoke the NJAB and enforce its award in court. Sheet Metal Workers Int’l Ass’n, Local Union No. 9, 136 L.R.R.M. (301 N.L.R.B. No. 32) 1338, 1991 WL 12488 (Jan. 15, 1991).\nEtie then challenges specific provisions of the award as forcing it to agree to issues that it is not required to bargain over. In addressing Etie’s counterclaim for damages we explained that the arbitration proceeding was properly invoked to settle disputes over mandatory bargaining issues. The question now is whether nonmandatory provisions can be imposed after a party invokes interest arbitration. The Second Circuit addressed this issue in NLRB v. Sheet Metal Workers Int’l Ass’n Local Union No. 38, 575 F.2d 394 (1978). The court held an interest arbitration provision void as contrary to public policy insofar as it applied to nonmandatory subjects. It reasoned that preserving parties’ freedom to exclude non-mandatory subjects from labor agreements was an important goal of national labor policy. Id. at 399 (quoting and citing Chemical Workers Local 1 v. Pittsburgh Plate Glass Co., 404 U.S. 157, 187, 92 S.Ct. 383, 401-02, 30 L.Ed.2d 341 (1971)). Insofar as an interest arbitration proceeding forced a party to put nonmandatory issues on the table, it was unenforceable as contrary to that policy.\nOther courts have followed this rule. American Metal Prods., Inc. v. Sheet Metal Workers Int’l Ass’n, Local No. 104, 794 F.2d 1452, 1457 (9th Cir.1986); Sheet Metal Workers’ Int’l Ass’n, Local 14 v. Aldrich Air Conditioning, Inc., 717 F.2d 456, 459 (8th Cir.1983). Our own more limited precedent on the issue echoes the Second Circuit’s reasoning and states that using an interest arbitration clause to perpetuate itself is against national labor policy. NLRB v. Columbus Printing Pressmen & Assistants’ Union No. 252, 543 F.2d 1161 (5th Cir.1976). The NLRB recently held that Article X, Section 8 of the SFUA was valid and enforceable only as to mandatory subjects of bargaining. Sheet Metal Workers Int’l Ass’n, Local Union No. 9, 136 L.R.R.M. (301 N.L.R.B. No. 32) 1338, 1991 WL 12488 (Jan. 15, 1991). We follow these decisions and hold that nonman-datory provisions in this NJAB award are not enforceable because Local 54 did not have the power to bring them before the Board by use of the interest arbitration clause.\nEtie complains of four allegedly nonmandatory provisions that appear in the agreement ordered by the NJAB. It is proper to analyze them one-by-one. No provision presents the “extraordinary circumstances that would render severance inappropriate” and require invalidating the entire award. See Sheet Metal Workers’ Int’l Ass’n, Local 206 v. R.K. Burner Sheet Metal, Inc., 859 F.2d 758, 761 (9th Cir.1988); Sheet Metal Workers Int’l Ass’n, Local Union No. 9, 136 L.R.R.M. (301 N.L.R.B. No. 32) 1338, 1991 WL 12488 (Jan. 15, 1991) (both engaging in similar analyses).\nThe parties all agree, correctly, that the “Industry Fund” provision, requiring a contribution to the Sheet Metal Industry Fund of Houston based on hours worked by union members, is nonmandatory. Sheet Metal Workers Local 38, 575 F.2d at 397-98. It is a void provision of the award.\nThe second provision requires contributions to the Stabilization Agreement of the Sheet Metal and Air Conditioning Industry, SASMI, an unemployment insurance fund maintained by the national union. Participation in such a fund is a mandatory bargaining issue. Sheet Metal Workers’ Int’l Ass’n Local 493, 234 N.L.R.B. 1238, 1978 WL 7341 (1978). Etie’s concern that it will not be able to appoint a trustee of the fund do not affect that conclusion. See id.; Denver Metropolitan Ass’n of Plumbing, Heating, & Cooling Contractors v. Journeyman Plumbers & Gas Fitters Local No. 3, 586 F.2d 1367, 1374-75 (10th Cir.1978).\nThird is the exclusive union hiring hall. Its status as a bargaining provision depends on whether it presents a subject matter over which bargaining is mandatory. The test is whether the subject matter would settle any term or condition of employment, or would regulate the relations between the employer and employees. If so, in either event, bargaining is mandatory. NLRB v. Associated General Contractors, Inc., 349 F.2d 449, 452 (5th Cir.1965), cert. denied, 382 U.S. 1026, 86 S.Ct. 648, 15 L.Ed.2d 540 (1966) (citing NLRB v. Wooster Div. of Borg-Warner Corp., 356 U.S. 342, 350, 78 S.Ct. 718, 723, 2 L.Ed.2d 823 (1958)). This provision serves purposes similar to the one in Associated General Contractors, as it promotes job priority standards in an industry with many employers where employees move from job to job and employer to employer. We find that as applied to this industry the provision is mandatory.\nThe fourth contested provision is a subcontracting clause limiting Etie’s ability to subcontract to nonunion employees. The Supreme Court, in upholding the legality of such a “union signatory” subcontracting clause, withheld judgment on whether it was a mandatory bargaining subject. Woelke & Romero Framing, Inc. v. NLRB, 456 U.S. 645, 664-66, 664 n. 17, 102 S.Ct. 2071, 2082-83 & 2082 n. 17, 72 L.Ed.2d 398 (1982). The Ninth Circuit has examined a similar provision and held that while it was lawful under section 8(e) of the National Labor Relations Act, 29 U.S.C. § 158(e), it did not necessarily follow that the agreement was a mandatory subject of bargaining. NLRB v. Bricklayers & Masons Int'l Union, Local 3, 405 F.2d 469, 470 (9th Cir.1968). It reasoned that the provision directly benefitted the union “and only in a most attenuated sense, if at all” benefitted employees. We agree with the Ninth Circuit that the effect of the clause on wages and hours is too attenuated to constitute a mandatory subject under section 8(d), 29 U.S.C. § 158(d). Since the clause is non-mandatory the part of the award imposing it is unenforceable.\nLocal 54 properly invoked interest arbitration to settle the far-reaching disagreements between the parties. But it overstepped its authority by urging the award of nonmanda-tory provisions, and such provisions that found a place in the final award are void. We affirm the district court’s enforcement of the award in its substantial part except for the provisions regarding the industry fund and the subcontracting clause. Those two awards are unenforceable.\nAFFIRMED IN PART AND REVERSED IN PART.\n. This agreement was a prehire contract, or section 8(f) contract, which is a special exception for the construction industry to the general rules governing collective bargaining agreements. See 29 U.S.C. § 158(f). A construction union and an employer in the construction industry may enter a contract without the employees having designated the union as their bargaining representative. These agreements may require, as a condition of employment, that employees join the union within eight days of being hired. Id.\n. This provision is designated as Article X, Section 8 of the SFUA. It requires the negotiating parties to first attempt to agree on the substantive contract terms, but if they become \"deadlocked,” either party may submit the disputed term to NJAB for arbitration. The decision of NJAB is binding only if it is reached by unanimous vote of NJAB’s members.\n.The interest arbitration clause was modified by HSMCA and Local 54 in March of 1985. The clause formerly provided that: \"Should the negotiations for a renewal of this Agreement become deadlocked in the opinion of the Local Union or of the Local Contractors' Association, or both, notice to that effect shall be given to the - National Joint Adjustment Board.” The words \"Local Union or of the Local Contractors’ Association” were changed to \"Union representative(s) or of the employer(s) representatives.” Notice of this change was sent to all HSMCA members on March 28, 1985.\n. Appellees also contend that the entire area of multiemployer bargaining requires NLRB oversight because of its complexity and widespread effects. While those interests may weigh in favor of preemption in some cases, we decline to place every dispute about the conduct of employers' associations beyond the reach of state law.\n. Appellees cite Manges v. Guerra, 673 S.W.2d 180, 185 (Tex.1984), for the proposition that fiduciary duties arise from a relationship between two parties rather than the contract between them. This distinction does not matter for purposes of our preemption inquiry, as the focal point of all state law claims in this case differs from that of the labor laws with which they arguably overlap.\n. Etie characterizes the dispute as one about whether HSMCA could “delegate” its negotiating responsibilities to the NJAB. This mischaracter-izes the relationship between HSMCA, Local 54, and the NJAB. The Board was a tool used by HSMCA and Local 54 to resolve their negotiating disputes rather than an independent party to the negotiations. See Mobile Mechanical Contractors Ass’n v. Carlough, 664 F.2d 481, 486 (5th Cir. Unit A Dec.1981), cert. denied, 456 U.S. 975, 102 S.Ct. 2240, 72 L.Ed.2d 850 (1982) (noting that the NJAB was formed to resolve disputes between employers and union locals). Further, the law of implied authority remains the same no matter the label. Texas agency law allows powers entrusted to an agent to be delegated if the authority to delegate may be implied from the nature and circumstances of the transaction. Powell v. State, 82 Tex.Crim. 163, 198 S.W. 317, 319 (1917).\nEtie also distinguishes the act of delegation from the act of impermissible extending the agency relationship by invoking the arbitration clause. For purposes of these state law claims that distinction does not matter, as an agent's power to use an arbitration clause includes the power to enter and to invoke it.\n. Counsel for Etie conceded at oral argument that if the contract authorized the insertion of the interest arbitration clause then its other state law claims would fail.\n. Under John Deklewa & Sons, 282 N.L.R.B. 1375, 1987 WL 90249 (1987), an employer cannot repudiate a prehire contract. However, this court has held, without adopting the decision, that Deklewa is not retroactive. United Brotherhood of Carpenters & Joiners v. Mar-Len of Louisiana, Inc., 906 F.2d 200, 203-04 (5th Cir.1990). Prior to Deklewa an employer could repudiate a prehire contract under certain circumstances. Etie's alleged repudiation occurred before Dekle-wa.\n. We treat as dicta the Tenth Circuit’s statement that notice alone can constitute repudiation of a prehire contract in Trustees of Iron Workers Fund v. A & P Steel, 812 F.2d 1518, 1524 (10th Cir. 1987). That case involved a full collective bargaining agreement rather than a prehire agreement, and no contested legal issue in the case turned on deciding what acts constituted repudiation of a prehire agreement. The facts of Plumbers & Pipefitters Local Union No. 72 v. John Payne Co., 850 F.2d 1535 (11th Cir.1988), where the court found repudiation on the basis of a much more strongly-worded statement than Etie used, are not before us.\n. Wages, hours, and other terms and conditions of employment are considered mandatory subjects of collective bargaining, and either party may insist upon inclusion of a clause relating to those subjects. 29 U.S.C. § 158(d); Fibreboard Paper Products Corp. v. NLRB, 379 U.S. 203, 85 S.Ct. 398, 13 L.Ed.2d 233 (1964). However, it is unlawful to insist upon inclusion of clause relating to matters as to which collective bargaining is not mandatory. NLRB v. Wooster Div. of Borg-Warner Corp., 356 U.S. 342, 78 S.Ct. 718, 2 L.Ed.2d 823 (1958).\n. Our conclusion can also be phrased in terms of \"conditionality.” Insistence on a nonmanda-tory issue becomes unlawful when the issue becomes a condition for an agreement. NLRB v. Wooster Div. of Borg-Warner Corp., 356 U.S. 342, 349, 78 S.Ct. 718, 722-23, 2 L.Ed.2d 823 (1957). When the parties cannot reach an agreement for other reasons the dispute on the 'nonmandatory issue is not a condition of agreement.\n. Ordinarily allegations of unfair labor practices, such as bargaining to impasse over nonman-datory subjects, fall within the exclusive jurisdiction of the NLRB. Sheet Metal Workers' Int'l Ass'n v. Standard Sheet Metal, Inc., 699 F.2d 481 (9th Cir. 1983). But it is well-established that in actions to enforce arbitration awards brought under § 301 of the NLRA, federal courts have \"jurisdiction ... over enforcement suits even thought the conduct involved was arguably or would amount to an unfair labor practice within the jurisdiction of the National Labor Relations Board.\" General Warehousemen & Helpers Local 767 v. Standard Brands, 579 F.2d 1282, 1288-89 (5th Cir.1978) (enbanc), cert. dismissed, 441 U.S. 957, 99 S.Ct. 2420, 60 L.Ed.2d 1075 (1979) (citing Hines v. Anchor Motor Freight, 424 U.S. 554, 562, 96 S.Ct. 1048, 1055, 47 L.Ed.2d 231 (1976)).\n. Sheet Metal Workers Int'l Ass'n, Local No. 252 v. Standard Sheet Metal, Inc., 699 F.2d 481 (9th Cir.1983), is hot to the contrary. That case hinged on limitations issues that are not present here. American Metal Products shows that the Ninth Circuit does examine interest arbitration awards to determine their consistency with national labor policy.\n. Etie also complains of an \"Integrity Clause\" that would penalize it for doing business with nonunion contractors. This clause did not appear in the 1986-1989 HSMCA-Local 54 agreement so it was not in the NJAB award.\n. This provision appears in Article VIII, Section 12 of the SFUA and provides:\nThe Employer agrees to promote programs of industry education, training, administration of collective bargaining agreements, research and promotion, such programs serving to expand the market for the services of the Sheet Metal Industry, improve the technical and business skills of Employers, stabilize and improve Employer-Union relations, and promote, support and improve the training and employment opportunities for employees. No part of these payments shall be used for political or anti-union activities.\nEffective April 1, 1986, the Employer shall pay to the Sheet Metal Industry Fund of Houston $0.13 per hour for each hour worked by all foremen, journeymen and apprentices covered by this Agreement.\nPayment shall be made monthly in accordance with the terms of the Trust agreement as amended, in contribution agreement in Addendum 2, and shall be remitted to the Sheet Metal Workers Local 54 Trust Fund administration, for transmittal to the Sheet Metal Industry Fund of Houston.\n. This provision appears in Section 6 of Addendum # 2 to Article VIII and provides:\nEffective on April 1, 1986, and until the termination of this Agreement, it is agreed that each Employer shall contribute and pay into the Stabilization Agreement of Sheet Metal Industry Fund an amount equal to 3% of the gross earnings of each foreman, journeyman and apprentice subject to this Agreement. The gross earnings include all reportable wages paid to the employee for Federal Income Tax purposes plus the contributions, excluding Apprentice and Building Fund, National Training Fund and Industry Fund. The payments are to be made in accordance with the terms of the Agreement and Declaration of Trust, establishing such Fund, as amended.\n. Article IV, Section 2 of the SFUA requires in relevant part \"the following system of referral of applicants for employment: (a) The Union shall be the sole and exclusive source of referral of applicants for employment, (b) The Employer shall have the right to refuse any applicant for employment, (c) The Union shall select and refer applicants for employment without discrimination ... (d) The Union shall maintain a register of applicants for employment....”\n. Sections 1 and 2 of Article II of the SFUA provide:\nNo employer shall subcontract or assign any of the work described herein which is to be performed at a job site to any contractor, subcontractor or other person or party who fails to agree in writing to comply with the conditions of employment contained herein including, without limitations, those relating to union security, rates of pay and working conditions, hiring and other matters covered hereby for the duration of the project.\nSubject to other applicable provisions of this Agreement, the Employer agrees that when subcontracting for prefabrication of materials covered herein, such prefabrication shall be subcontracted to fabricators who pay their employees engaged in such fabrication not less than the prevailing wage for comparable sheet mctal fabrication, as established under provisions of this Agreement.", "type": "majority", "author": "PATRICK E. HIGGINBOTHAM, Circuit Judge:"}, {"text": "ON PETITION FOR REHEARING AND SUGGESTION FOR REHEARING EN BANC\nSept. 29, 1993.\nPER CURIAM:\nThe petition for rehearing en banc is denied, no member of the court having requested a poll. The petition for panel rehearing is denied except in one respect. In our original opinion we analyzed the “subcontracting clause” imposed by the arbitration award as a “union signatory” clause. On rehearing it is urged that the two sections of the subcontracting clause are more in the character of “union-standards clauses” designed to discourage subcontracting and to prevent the erosion of negotiated standards, without requiring subcontractors to actually join the local union. The NLRB has recognized that such clauses bear a sufficiently close relationship to wages and hours that they are mandatory bargaining subjects. Arizona Public Service Co., 247 N.L.R.B. 321, 1980 WL 11041 (1980). See generally Fibreboard Paper Prods. Corp. v. NLRB, 379 U.S. 203, 210-11, 85 S.Ct. 398, 402-03, 13 L.Ed.3d 1130 (1964). We modify our opinion striking the subcontracting clause from the arbitration award. We are now persuaded that as a mandatory bargaining subject the two sections of the subcontracting clause were properly included in the arbitration award and the district court properly chose to enforce them.\nPetition for rehearing en banc is denied. Petition for panel rehearing is granted in part and denied in part.", "type": "rehearing", "author": "PER CURIAM:"}], "attorneys": ["James J. Loeffler, Houston, TX,- for appellant.", "Stuart B. Johnston, Jr., Dallas, TX, for Houston Sheet Metal Contractors.", "Donald W. Fisher,' Toledo, OH, for Sheet Metal Workers Int. Ass’n.", "Patrick M. Flynn, Houston, TX, for Sheet Metal & Air Cond. Contractors Local Union.", "David R. Hols, Felhaber, Larson, Fenlon & Vogt, P.A., Minneapolis, MN, for Sheet Metal & Air Cond., et al."], "corrections": "", "head_matter": "SHEET METAL WORKERS LOCAL UNION NO. 54, AFL-CIO, Plaintiff-Counter Defendant-Appellee, v. E.F. ETIE SHEET METAL CO., Defendant-Counter Plaintiff-Appellant, v. SHEET METAL WORKERS LOCAL UNION 54, AFL-CIO, et al., Counter-Defendants-Appellees.\nNo. 92-2209.\nUnited States Court of Appeals, Fifth Circuit.\nSept. 3, 1993.\nOpinion Granting Rehearing in Part and Denying Rehearing in Part Sept. 29, 1993.\nJames J. Loeffler, Houston, TX,- for appellant.\nStuart B. Johnston, Jr., Dallas, TX, for Houston Sheet Metal Contractors.\nDonald W. Fisher,' Toledo, OH, for Sheet Metal Workers Int. Ass’n.\nPatrick M. Flynn, Houston, TX, for Sheet Metal & Air Cond. Contractors Local Union.\nDavid R. Hols, Felhaber, Larson, Fenlon & Vogt, P.A., Minneapolis, MN, for Sheet Metal & Air Cond., et al.\nBefore OARWOOD and HIGGINBOTHAM, Circuit Judges, and SCHWARTZ , District Judge.\nSenior District Judge of the Eastern District of Louisiana, sitting by designation."} | OARWOOD | HIGGINBOTHAM | SCHWARTZ | 1 | 2 | 1 | 0 | 0 | 1 | 1 F.3d 1464 | [
{
"content": "You are an expert legal coding assistant trained to classify U.S. federal Courts of Appeals\ncases using an adaptation of the Supreme Court Database (SCDB_2023_01) codebook. You follow the coding procedure\nin the codebook step by step and use the precise definitions of terms presented in the code... |
10,517,903 | CHEMICAL DISTRIBUTORS, INC., Plaintiff-Appellee, v. EXXON CORPORATION, Defendant-Appellant | Chemical Distributors, Inc. v. Exxon Corp. | 1993-09-22 | No. 92-3709 | United States Court of Appeals for the Fifth Circuit | {"judges": ["Before POLITZ, Chief Judge, REYNALDO G. GARZA and JOLLY, Circuit Judges."], "parties": ["CHEMICAL DISTRIBUTORS, INC., Plaintiff-Appellee, v. EXXON CORPORATION, Defendant-Appellant."], "opinions": [{"text": "REYNALDO G. GARZA, Circuit Judge:\nExxon Corporation appeals a final judgment of the district court awarding Chemical Distributors, Inc. (“CDI”) damages, attorneys’ fees and court costs for breach of contract and violations of the Louisiana Unfair Trade Practices and Consumer Protection Law, La.Rev.Stat.Ann. §§ 51:1401-:1418. (“LUTPA”). We find that the magistrate judge did not err in allowing the jury to construe the contract or in sending CDI’s unfair trade practices claim to the jury. However, we find the jury’s damage award excessive and order a.new trial on damages, unless Chemical Distributors, Inc. accepts the remittitur of damages.\nI. Background\nIn November of 1986, CDI and Exxon Chemical entered into a contract for the purchase, sale, delivery, and storage of a soap used by commercial and industrial customers as cleaning solutions and degreasers. Johnson Wax manufactured this commercial cleaner. CDI was Johnson Wax’s exclusive distributor for a thirteen-parish area in Southern Louisiana, including the industrial corridor along the Mississippi River between Baton Rouge and New Orleans.\nCDI agreed to purchase and sell to Exxon as many products from Johnson Wax as Exxon ordered. Exxon would then fill orders from certain designated accounts. The principal product under the contract was a diluted version of Johnson Wax’s heavy-duty water-based cleaner, labeled “J-SHOP 1000.” The contract required CDI to dilute the J-SHOP 1000 and re-label the product as Exxon’s “COREXIT-250” cleaner before CDI made sales and deliveries to the designated accounts.\nThe contract between Exxon and CDI consists of two documents. The first document is a three-page blanket purchase order dated November 11, 1986. The second is a three-page letter agreement dated November 19, 1986. The blanket purchase order estimated Exxon’s requirement as 500,000 gallons of cleaner per year. The purchase order permitted Exxon to purchase equivalent products from others, but CDI had the right to match any price offered by a third party. If CDI could not match the price, amounts purchased by Exxon from third parties would be deducted from quantities covered by the purchase order. The purchase order expressly incorporated the letter agreement, stating that the terms and conditions of “said contract” prevailed over any differences from the blanket purchase order.\nExxon bought only 38,000 gallons of cleaner during the first year of contract. On November 17, 1987, one year after entering into the contract, Exxon sent CDI its notice of termination and ceased placing orders for cleaner. According to Exxon, it terminated the contract because CDI had consistently failed to pay its Johnson Wax invoices, had only thirty gallons of cleaner left, and was no longer able to obtain- any cleaner from Johnson Wax to supply Exxon’s designated account. According to the contract, either party could terminate upon sixty-days’ written notice. CDI then initiated suit against Exxon, claiming breach of contract and violation of the Louisiana Unfair Trade Practice Act.\nCDI sued Exxon in state court, and Exxon removed to federal court; both parties agreed to trial by jury before a magistrate judge. The jury found Exxon liable for a bad faith breach of contract and for unfair trade practices and awarded CDI $900,000 in damages. The magistrate judge also awarded CDI $345,145.46 in pre-judgment interest, $106,843 in attorneys’ fees, and $12,042.94 in costs. Exxon filed motions for judgment notwithstanding the verdict, or alternatively for a new trial, or for a remittitur. Exxon also sought to have the judgment amended to exclude pre-judgment interest. The magistrate judge denied all motions. Exxon obtained a stay of judgment by posting a super-sedeas bond, and now appeals.\nII. Analysis\nExxon claims the magistrate judge erred in: (1) allowing the jury to construe its contract with CDI; (2) sending CDI’s unfair trade practices claim to the jury; and (3) upholding the jury’s damage award.\nWe find that the magistrate judge did not err in allowing the jury to construe the contract or in sending CDI’s unfair trade practices claim to the jury. However, we find the jury’s damage award excessive and order a new trial on damages, unless CDI accepts the remittitur of damages.\nA. Did the magistrate judge err in allowing the jury to construe the contract?\nExxon claims the magistrate judge erred in finding the contract ambiguous and in submitting it to the jury for resolution. Exxon argues that their contract with CDI is susceptible to only one reasonable interpretation; hence, the magistrate judge should have found it unambiguous and construed it as a matter of law.\nBoth the letter agreement and the blanket pürchase order state that Texas law applies to the contract. “Texas law has long accepted the rule that the question of whether a contract is ambiguous is a question of law for the court.” R & P Enters. v. LaGuarta, Gavrel & Kirk, Inc., 596 S.W.2d 517, 518 (Tex.1980). We review questions of law de novo. Jhaver v. Zapata Off-Shore Co., 903 F.2d 381, 383 (5th Cir.1990). Under Texas law, a contract is ambiguous only when the application of pertinent rules of construction leave it genuinely uncertain which one of two reasonable meanings is the proper one. Temple-Inland Forest Prods Corp. v. United States, 988 ,F.2d 1418, 1421 (5th Cir.1993) (quoting Prairie Producing Co. v. Schlachter, 786 S.W.2d 409, 413 (Tex.App.—Texarkana 1990, writ denied)).\n1. Who was the “buyer”?\nThe first ambiguity the magistrate judge found in the contract concerned the identity of the “buyer.” The magistrate judge noted that the purchase order identified the “buyer” as Exxon Chemical Company, a division of Exxon Corporation. The blanket purchase order, however, states that all of the terms and conditions on the reverse of the form are included in the purchase order. On the reverse of the form the term “buyer” includes Exxon Corporation, its divisions, subsidiaries, and affiliates. The magistrate judge found that CDI thought the two initial customer accounts were just that, initial accounts, and that other customer accounts would be added as Exxon’s sales staff marketed cleaner to other Exxon divisions and subsidiaries. Exxon, however, thought the contract stated that only Exxon Chemical was the buyer and not Exxon Corporation or any- of its divisions.\nTherefore, the magistrate judge concluded that “it was for the jury to determine whether the parties contemplated only purchases being made by Exxon Chemical for the two designated customer accounts, or expected the contract to include all of Exxon Corporation’s divisions and subsidiaries as purchasers.”\n2. Was Exxon required to purchase 500,000 gallons of cleaner per year?\nThe second ambiguity the magistrate judge found in the contract turned on whether Exxon was required to purchase 500,000 gallons of cleaner per year as estimated in the blanket purchase order. The magistrate judge again referred to the printed terms on the reverse side of the blanket purchase order. It states in pertinent part:\nIf [CDI] delays shipment or completion of shipment for more than thirty (30) days ..., [Exxon] may obtain substitute quantities of the goods from other sources; and the quantities obtained by [Exxon] shall be deducted from the amount [Exxon] is obligated to purchase under this order.\nThe magistrate judge reasoned that if the purchase order did not require Exxon to make any purchases, this condition made no sense. “The condition is only meaningful if the purchase order is construed to require purchases of about 500,000 gallons per year. Therefore, the 500,000-gallon estimate is another area of ambiguity in the contract.”\nExxon argues that their contract with CDI cannot be reasonably construed to require Exxon Chemical to buy 500,000 gallons of cleaner each year. Exxon claims that because of the integration clause found in the blanket purchase order, the letter agreement controls. That clause states, “[t]erms and conditions of said contract [iethe letter agreement] are to prevail over any differences from this blanket purchase order.” Exxon argues that the letter agreement, the controlling document, does not require Exxon Chemical to purchase any specific amount of cleaner from CDI.\nExxon argues that the pertinent part of the letter agreement reads as follows, “CDI agrees to make available to designated accounts surfactant product(s) as may be ordered by Exxon Chemical under the terms provided herein.” Exxon claims that this language does not obligate Exxon Chemical to purchase any specific amount of cleaner.\nExxon further argues that the blanket purchase order imposes no greater obligations on Exxon Chemical to buy cleaner than does the letter agreement. Exxon points out that the purchase order contained a retroactive pricing provision. At the end of the year, Exxon’s price for cleaner would be adjusted depending on the amount of cleaner it purchased. The provision begins with the category “0-250,000 gallons/year”; according to Exxon, this proves that both Exxon and CDI knew that sales could be as little as 0-250,000 gallons.\nFinally, Exxon argues that even if this is a traditional requirements contract, only the analysis would change but the result would be the same. Exxon argues that a requirements contract imposes a duty of good faith and fair dealing on the parties, but that failure to follow this duty does not state an independent cause of action. Exxon argues that CDI is seeking to “enlarge” its own rights under the contract and require Exxon to do something the contract does not require. According to Exxon, at most, it only had to try in good faith to sell cleaner to the designated accounts.\nIn contrast, CDI argues that the blanket purchase order was a requirements contract that required Exxon to purchase an estimated 500,000 gallons each year. CDI refers to the portion of the purchase order which states\nExxon Chemical Company ... agrees to purchase and [CDI] ... agrees to sell and supply such of [Exxon’s] estimated requirements of products listed below, as may be ordered from [CDI] during the term of this Agreement, under the terms and conditions set forth herein.\nCDI argues that if the contract does not obligate Exxon to purchase its requirements of cleaner from CDI, then it is completely illusory and unenforceable by either party.\nCDI further argues that the parties’ estimate of the buyer’s requirements under a requirements contract has legal significance. CDI refers to Texas Business and Commercial Code section 2-306, which provides,\na term which measures the quantity by the output of the seller or the requirements of the buyer means such actual output or requirements as may occur in good faith, except that no quantity unreasonably disproportionate to any stated estimate or in the absence of a stated estimate to any normal or otherwise comparable prior output or requirements may be tendered or demanded.\nCDI next addresses Exxon’s argument that the integration clause in the letter agreement nullifies any “different” requirements found in the purchase order. CDI argues that Exxon’s argument is predicated on the flawed assumption that additional obligations contained in the purchase order are necessarily “different” from the obligations stated in the market agreement. CDI asserts that the fact that the purchase order contained an estimate, whereas the letter agreement did not, does not render the terms “different.”\nThe magistrate judge correctly found the contract between Exxon and CDI susceptible to more than one reasonable interpretation. Therefore, he properly had the jury resolve whether the contract: (1) imposed a duty on Exxon to provide additional customer accounts; and (2) obligated Exxon to purchase 500,000 gallons each year.\nB. Was there sufficient evidence to support the jury’s verdict regarding the breach of contract claims?\nThe jury not only found that Exxon breached the contract, it found that Exxon did so in bad faith. The standard for appellate review of a jury’s verdict is exacting. It is the same as the common law standard applied in awarding a directed verdict or a judgment notwithstanding the verdict and is usually referred to as a “sufficiency of the evidence” standard. See Granberry v. O’Barr, 866 F.2d 112, 113 (5th Cir.1988).\nThe verdict must be upheld unless the facts and inferences point so strongly and overwhelmingly in favor of one party that reasonable men could not arrive . at any verdict to the contrary. If there is evidence of such quality and weight that reasonable and fair minded men in the exercise of impartial judgment might reach different conclusions, the jury function may not be invaded.\nId. (quoting Western Co. of N. Am. v. United States, 699 F.2d 264, 276 (5th Cir.), cert. denied, 464 U.S. 892, 104 S.Ct. 237, 78 L.Ed.2d 228 (1983)).\nThe evidence shows that Exxon purchased only 38,000 gallons of cleaner during the first year of the contract. Exxon offered evidence to explain the amount of cleaner it purchased. Exxon claimed that it was necessary to first get environmental approval for the cleaner and that this did not occur until March 1987. CDI, however, offered testimony that before the contract was executed, Exxon did not tell CDI that environmental approval was necessary. Exxon did not purchase any cleaner during the second or third year because it had already terminated the contract.\nThe contract provided for 60 days notice before termination. At trial, Exxon took the position that it properly terminated the contract. Exxon sent CDI .a letter dated November 18, 1987, stating, “Exxon Chemical Company hereby terminates its November 19, 1986 agreement and Blanket Purchase Order with Chemical Distributors, Inc., effective sixty days from the date you receive this letter.” CDI introduced evidence that Exxon in fact terminated the contract the same day it sent notice. Two CDI employees testified that on November 19, 1987, they tried to go onto an Exxon plant site where CDI on-site storage tanks were located, but were refused admittance.\nExxon offered testimony to explain their decision to bar CDI’s- employees from the plant site. David Chesire, Exxon Baton Rouge’s representative, testified that the ongoing dispute between Garry Strawhun and David Peek over the ownership of the on-site storage tanks put Exxon in an awkward position. Peek had notified Chesire that he held a chattel mortgage on the tanks, as well as, an assignment of CDI’s accounts receivable. According to Chesire, Exxon did not want to do anything that might have been construed as interfering with ownership interests either party might have in the tanks.\nThere was also testimony that prior to November 19, 1987, Exxon had ordered directly from Johnson Wax a truckload of J~ Shop 1000 and had it delivered to Exxon’s Baytown, Texas facility. From there it was shipped to Baton Rouge for distribution to Exxon’s customer accounts. This occurred prior to January 18, 1988, which would have been approximately 60 days from when CDI received notice of Exxon’s termination.\nFurthermore, evidence was offered to show that Exxon attempted to negotiate directly with Johnson Wax for the purchase of the same products covered by its contract with CDI. Billy J. Biddy, the Johnson Wax representative who dealt with CDI and Exxon in 1986 and 1987, met with a representative of Exxon Chemical in Baytown, Texas on December 23, 1986. Following that meeting, Johnson Wax shipped 30 gallons of J-Shop 1000 concentrate to Exxon’s Baytown, Texas, facility. Biddy planned to follow up on this meeting the week of January 12, 1987, to set up a meeting date to discuss the bulk program in detail.\nBiddy compared Exxon’s profit potential of purchasing from CDI with directly purchasing from Johnson Wax through the Exxon, Baytown facility. In his view, direct purchases through the Baytown facility would result in larger profit margins for Exxon. Evidence was presented that after Exxon realized the financial advantage of buying directly from Johnson Wax, Exxon also realized that if CDI lost its Johnson Wax distributorship, Exxon would have a free hand in the cleaner market.\nBy June 22, 1987, a draft agreement between Johnson Wax and Exxon had been prepared and sent to Exxon Chemical, Houston, with comments from Chesire. Biddy’s August 1, 1987 monthly activity report states that proposed contracts between Exxon and Johnson Wax had been delivered to Chesire and others at Exxon for their review. This report also states that Biddy had been to Los Angeles demonstrating the cleaner to Exxon refineries located there. Moreover, the report indicates that he was working with Exxon Chemical, Texaco, and another company on marine environment applications of the cleaner. By the end of August 1987, Biddy expected the contract with Exxon, Baytown to be signed within two weeks. Biddy’s October 31, 1987 report noted that Exxon, Baton Rouge would be purchasing directly from Johnson Wax.\nFinally, evidence was presented that Exxon took advantage of circumstances it did not create in order to hasten CDI’s downfall. When the orders for COREXIT-250 did not materialize, CDI began experiencing cash flow problems. Exxon agreed to purchase CDI’s on-site equipment, apparently to help CDI’s cash flow problems. However, evidence was presented that Exxon actually purchased the on-site equipment because it wanted to obtain the equipment and completely eliminate CDI.\nThe jury could reasonably conclude on this proof that Exxon not only breached its contract with CDI, but that it did so in bad faith. We, therefore, do not disturb the jury’s verdict.\nC. Did the magistrate jitdge err in submitting CDI’s unfair trade practices claim to the jury?\nExxon asserts that the magistrate judge committed reversible error by submitting CDI’s unfair trade practices claim to the jury. Exxon argues that CDI asserts the same facts to support its unfair trade practices claim as it did to support its breach of contract claim. Exxon argues that since CDI’s breach of contract claim is deficient as a matter of law, so too, is its unfair trade practices claim.\nOn the other hand, CDI argues that Exxon intentionally destroyed it through means that included the making of false and misleading statements, conspiring with CDI’s supplier to eliminate CDI, refusing in bad faith to pay CDI’s invoices, and unlawfully seizing CDI’s equipment. CDI points out that Exxon marked up the price of the cleaner-by 60$ per gallon, which was 30<f per gallon more than CDI’s list price. CDI also argues that Exxon and Johnson Wax agreed to a proposed nationwide distribution to capture a share of the industrial cleaner market.\nWe review motions for judgment notwithstanding the verdict under the test established by Boeing Co. v. Shipman, 411 F.2d 365 (5th Cir.1969) (en banc). In considering whether there was sufficient evidence to submit this case to the jury, we examine all of the evidence in the light and with all reasonable inferences most favorable to the non-movant. Id. at 374. A motion for judgment notwithstanding the verdict is proper only if,\nthe facts and inferences point so strongly and overwhelmingly in favor of one party that the Court believes that reasonable men could not arrive at a contrary verdict ... On the other hand, if there is substantial evidence opposed to the motion[ ], that is, evidence of such quality and weight that reasonable and fair-minded men in the exercise of impartial judgment might reach different conclusions, the motion[] should be denied, and the case submitted to the jury-\nId.\nCDI’s unfair trade practice claim is governed by Louisiana law. The Louisiana Unfair Trade Practices and Consumer Protection Law (LUTPA) declares that “[ujnfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce” are illegal. La.Rev.Stat. § 51:1409. Louisiana has left the determination of what is an “unfair trade practice” to the courts to decide on a case-by-case basis. Marshall v. Citicorp Mortg., Inc., 601 So.2d 669, 670 (La.App.1992). Bolanos v. Madary, 609 So.2d 972, 977 (La.App.1992), writ denied, 615 So.2d 339 (1993), defined an “unfair trade practice” as one that is “unethical, oppressive, unscrupulous, or substantially injurious.” While mere negligence is not prohibited, fraud, misrepresentation, deception, and similar conduct are. Marshall, 601 So.2d at 670.\nAt first glance, the facts of this case are similar to those in Turner v. Purina Mills, Inc., 989 F.2d 1419 (5th Cir.1993). In that case, Turner was a Purina dealer. In the mid-1980s, Turner’s sales began to fall, and in 1990 Purina terminated his dealerships. Turner then filed suit against Purina under the Louisiana Unfair Trade Practices Act. Turner introduced evidence to support his argument that Purina was abusive toward its dealers. Turner also introduced an internal Purina memorandum, written after he was terminated, which stated that Purina planned to eliminate his business as a major competitor in the relevant markets. Based on this evidence, the jury returned a verdict in favor, of Turner.\nOn appeal, this court reversed and held that Purina did not violate LUTPA as a matter of law. The court specifically stated that “an intent to eliminate the competition does not by itself violate LUTPA. Rather, the statute forbids, businesses to destroy each other through improper means.” Id. at 1423 (emphasis added).\nThis case, however, can be distinguished from Purina on several grounds. First, in Purina the - suit was between Turner, the dealer, and Purina Mills, the supplier. Part of the Purina decision rests on its analysis of the relationship between a supplier and its dealer. In contrast, this case involves a suit between CDI, a supplier and Exxon, its customer. This case revolves significantly around Exxon’s actions and not those of Johnson Wax. Granted, part of CDI’s breach of contract and unfair trade practices claims involve Exxon’s direct dealings with CDI’s supplier, Johnson Wax. These claims, however, only involve Johnson Wax indirectly. '\nSecond, in Purina, the claimant did not have a breach of contract claim, nor- did he press one. In this case, the jury not only found that Exxon breached the contract, it found that Exxon did so in bad faith. Third, in Purina, there was no fraud, misrepresentation, or deception. In contrast, Exxon’s direct dealings with Johnson Wax were at the very least deceptive. Finally, in Purina, the internal memorandum promising to eliminate Turner as a major competitor was written only after Purina had cancelled his dealership contract. In this case, however, the internal Johnson Wax memoranda outlining Exxon’s direct dealings with Johnson Wax were written before Exxon and Johnson Wax terminated their contracts with CDI.\nWe find, therefore, that CDI’s unfair trade practices claim is not deficient as a matter of law and that it was properly submitted to the jury.\nD. Was there sufficient evidence to support the jury’s verdict?\nFinding that CDI’s unfair trade practices claim is not deficient as a matter of law, we next review whether sufficient evidence exists to support the jury’s verdict in favor of CDI. We apply the same standard outlined above. See Granberry, 866 F.2d at 113.\nThe facts with respect to CDI’s LUTPA claim are the same as those that were before the jury on the breach of contract claim. The jury could reasonably conclude, based on the evidence before it, that Exxon acted in an unethical, oppressive, unscrupulous or substantially injurious manner, thereby violating LUTPA. See Bolanos, 609 So.2d at 977. We, therefore, do not disturb the jury’s verdict.\nE. Did the magistrate judge err in upholding the jury’s damage award?\nExxon argues that the jury’s damage award for CDI’s lost profits is in error for two reasons. First, Exxon claims that CDI’s claim for damages is speculative as a matter of law. Second, Exxon claims that CDI’s damage award is excessive since the termination provision in the contract allowed Exxon to terminate upon sixty-days’ written notice; therefore, CDI should have been barred from recovering any damages sustained after the termination. According to Exxon, the record contains no evidence that CDI sustained anywhere close to $900,000 in damages prior to termination.\nAs to its speculative argument, Exxon notes that the only two people affiliated with CDI who testified at trial about lost profits were Strawhun and Peek. According to Exxon, neither produced any documentary evidence to corroborate his testimony. Exxon argues that this alone requires the damage award to be vacated, since uncorroborated testimony of lost profits is not an adequate substitute for a corporation’s extant books and records.\nAs to its second point, Exxon argues that under no circumstances should CDI recover any damages it allegedly sustained after January 18, 1988, sixty days after the termination notice was given to CDI by Exxon.\nCDI, in contrast, argues that the jury’s award of damages is supported by the evidence. CDI admits that the testimony of Peek requires certain assumptions of expected future sales volume, but claims it was sufficient to support a jury verdict. CDI further argues that even if Exxon is correct on its contract theory, CDI can still recover its lost profits on account of Exxon’s unfair trade practices violation.\nIt cannot be determined whether the jury’s verdict is based on CDI’s breach of contract claim, CDI’s unfair trade practices claim or a combination of the two. As addressed above, Texas substantive law applies to the breach of contract of claim and Louisiana substantive law applies to the unfair practices claim. Both Texas and Louisiana apply similar standards in reviewing lost profits. Neither state allows damage awards for lost profits that are merely speculative in nature, rather lost profits must be proven with reasonable certainty. See Fiberlok, Inc. v. LMS Enters., Inc., 976 F.2d 958, 962 (5th Cir.1992) (analyzing Texas law); J.B.N. Morris v. Homco Int’l, Inc., 853 F.2d 337, 343 (5th Cir.1988) (analyzing Louisiana law).\nAs to Exxon’s claim that the jury award is excessive,\nbefore a court of appeals may set aside an award of damages as being excessive, it must make a detailed appraisal of the evidence bearing on damages and find that, in light of such detailed evidence, the amount of the jury’s award is so high that it would be a denial of justice to permit it to stand.\nWood v. Diamond M. Drilling Co., 691 F.2d 1165 (5th Cir.1982), cert. denied, 460 U.S. 1069, 103 S.Ct. 1523, 75 L.Ed.2d 947 (1983).\nA review of the record indicates that Peek did a pro forma analysis of CDI’s income and profit potential based on existing sales volumes, anticipated Exxon sales, product costs, overhead, operating expenses, and other costs. Peek’s pro forma income statement was admitted into evidence at trial. Peek testified that he included in the revenue calculations CDI’s existing 40,000-gallon per year sales of J-Shop 1000, and for 1987 another 41,000 gallons sold through Exxon. For 1988 and 1989, Peek estimated total sales of 540,000 gallons, at $1.80 per gallon, arriving at $972,000 total revenue each year. For each year, Peek deducted the cost of the product, arriving at gross profit figures of $347,000 in 1987, and $405,000 for 1988 and 1989. From the gross profit figures he deducted various expenses and rent. Peek testified, based on his analysis, that CDI would earn profits of $167,000 during 1987 and $225,000 in 1988 and 1989.\nExxon had the opportunity to cross-examine Peek regarding his analysis. Furthermore, Exxon presented testimony through an accountant to challenge Peek’s assumptions and calculations. Exxon’s accountant questioned whether Peek’s calculations should have taken into account repayment of his investment in CDI. Peek, however, testified that he did not anticipate immediate repayment of his investment in CDI.\nWe find that CDI’s lost profits were proven with a reasonable degree of certainty and are not speculative as a matter of either Texas or Louisiana law. However, “[wjhen a jury’s award exceeds the bounds of any reasonable recovery, we must suggest a remitti-tur ourselves or direct the district court to do so.” Gough v. Natural Gas Pipeline Co. of America, 996 F.2d 763, 767 (5th Cir.1993) (citing Caldarera v. Eastern Airlines, Inc., 705 F.2d 778, 784 (5th Cir.1983)).\nEven if we assume that Peek’s testimony, regarding CDI’s lost profits and repayment of his investment is accurate, the most the jury could have reasonably awarded CDI is the sum of lost profits for 1987 through 1989. The sum of lost profits for those years is $617,000. Therefore, we order a new trial on damages unless CDI accepts a remittitur amending the judgment from $900,000 to $617,000, with the district court making the appropriate changes in pre-judgment and post-judgment interest; and court costs and attorneys fees, if needed.\nIII.\nWe affirm the district court in all respects except we remand with instruction to grant a new trial on damages only, unless CDI accepts the remittitur we order today.\nAFFIRMED in part and REMANDED.\n. Johnson Wax approved this process.\n. The two accounts initially designated in the contract were Exxon's Baton Rouge Refinery and Exxon’s Baton Rouge Chemical Plant.\n. Exxon argues, in a footnote, that there are \"compelling” reasons to find that the contract is not a requirements contract; Exxon, however, does not state what these compelling reasons are.\n. Exxon also argues that no reasonable person could conclude that Exxon Chemical failed to comply with its marketing obligations under the contract. Exxon's argument is meritless. The magistrate correctly found the contract silent with regard to Exxon's marketing responsibilities; therefore, Exxon's obligations were merely those imposed by Texas state law.\nFurthermore, Exxon argues that no reasonable person, could conclude that Exxon Chemical failed to comply with the termination provision in the contract or that it terminated the contract prematurely. Again, Exxon's argument is merit-less. The magistrate correctly found that since the blanket purchase order did not contain a specific termination clausé, the termination clause in the letter agreement controlled.\n. Strawhun was CDI’s president and Peek was an investor in CDI.\n. As stated earlier, CDI’s contract with Exxon required CDI to dilute the J-Shop 1000 and relabel it as COREXIT-250.", "type": "majority", "author": "REYNALDO G. GARZA, Circuit Judge:"}], "attorneys": ["Robert B. McNeal, George C. Freeman, Stone, Pigman, Walther, Wittmann & Hutchinson, New Orleans, LA, for defendant-appellant.", "Frederick R. Tulley, Kathleen C. Mason, Taylor, Porter, Brooks & Phillips, Baton Rouge, LA, for plaintiff-appellee."], "corrections": "", "head_matter": "CHEMICAL DISTRIBUTORS, INC., Plaintiff-Appellee, v. EXXON CORPORATION, Defendant-Appellant.\nNo. 92-3709.\nUnited States Court of Appeals, Fifth Circuit.\nSept. 22, 1993.\nRobert B. McNeal, George C. Freeman, Stone, Pigman, Walther, Wittmann & Hutchinson, New Orleans, LA, for defendant-appellant.\nFrederick R. Tulley, Kathleen C. Mason, Taylor, Porter, Brooks & Phillips, Baton Rouge, LA, for plaintiff-appellee.\nBefore POLITZ, Chief Judge, REYNALDO G. GARZA and JOLLY, Circuit Judges."} | POLITZ | REYNALDO G. GARZA | JOLLY | 1 | 1 | 1 | 0 | 0 | 0 | 1 F.3d 1478 | [
{
"content": "You are an expert legal coding assistant trained to classify U.S. federal Courts of Appeals\ncases using an adaptation of the Supreme Court Database (SCDB_2023_01) codebook. You follow the coding procedure\nin the codebook step by step and use the precise definitions of terms presented in the code... |
10,517,938 | Ed PLAUT; his wife, Nancy McHardy Plaut; John Grady, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants, v. SPENDTHRIFT FARM, INC.; Bateman Eichler, Hill Richards, Inc.; Francis M. Wheat; Gibson, Dunn & Crutcher; Deloitte, Haskins & Sells; Norman D. Owens; American International Bloodstock Agency, Inc., Defendants-Appellees | Plaut v. Spendthrift Farm, Inc. | 1993-08-03 | No. 92-5591 | United States Court of Appeals for the Sixth Circuit | {"judges": ["Before: KEITH and BATCHELDER, Circuit Judges; and CHURCHILL, Senior District Judge."], "parties": ["Ed PLAUT; his wife, Nancy McHardy Plaut; John Grady, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants, v. SPENDTHRIFT FARM, INC.; Bateman Eichler, Hill Richards, Inc.; Francis M. Wheat; Gibson, Dunn & Crutcher; Deloitte, Haskins & Sells; Norman D. Owens; American International Bloodstock Agency, Inc., Defendants-Appellees."], "opinions": [{"text": "BATCHELDER, Circuit Judge.\nI.\nAppellants, the plaintiffs before the District Court, representing a large number of sometime investors, originally sued defendants on November 25, 1987, alleging violations of the securities laws, namely fraud and deceit in the sale of stock under Section 10(b) of the Securities Exchange Act of 1934 (“1934 Act”) and Securities and Exchange Commission Rule 10b-5. Defendants owned “one of the Commonwealth’s premier thoroughbred horse farms” (the District Court’s characterization, to which we owe every deference) and issued stock in the enterprise in order to raise some thirty million dollars in cash; others of the named defendants were various legal and financial advisers to the venture. The appellants (or “shareholders”) originally purchased their stock when defendants offered it for public sale in 1983.\nFor over three years, the pretrial litigation in the District Court proceeded apace. On June 20, 1991, however, the Supreme Court handed down Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, — U.S. —, 111 S.Ct. 2773, 115 L.Ed.2d 321 (1991), which applied a uniform Federal time limit from another section of the 1934 Act to that action and all private § 10(b) actions. Lampf provided a three year period of repose, running from the date of a fraudulent securities contract of sale, or a one year limitation period, running from the date of discovery of the fraud.\nThe District Court, applying Lampf retroactively on the authority of Beam Distilling Corp. v. Georgia, — U.S. -, 111 S.Ct. 2439, 115 L.Ed.2d 481 (1991), which was announced the same day as Lampf dismissed the shareholders’ claims with prejudice on August 13, 1991. The shareholders did not file what they believed (correctly) would have been a meritless and indeed sanctionable appeal.\nIn November 1991, Congress passed the FDIC Improvement Act of 1991, (“1991 Act”) which, on a plaintiffs motion made within sixty days of the effective date of the statute, December 19, 1991, required the District Courts to reinstate claims which had been dismissed as a result of the application of the Federal statute of limitations announced in Lamvpf. The shareholders filed such a motion on February 11, 1992. While finding that under the statute the shareholders were entitled to have their claims reinstated, the District Court held the statute unconstitutional as applied and denied the motion 789 F.Supp. 231. Since the portion of the 1991 Act which commands the District Court to reinstate the shareholders’ dismissed cause of action violates the doctrine of separation of powers and deprives the defendants of their vested rights in the court’s final judgment, we affirm.\nII.\nThe disputed statutory provision of the 1991 Act provides:\n(b) Effect on dismissed causes of action\nAny private civil action implied under section 78j(b) of this title that was commenced on or before June 19, 1991\n(1) which was dismissed as time barred subsequent to June 19, 1991,[] and\n(2) which would have been timely filed under the limitation period provided by the laws applicable in the jurisdiction, including principles of retroactivity, as such law existed on June 19, 1991,\nshall be reinstated on motion by the plaintiff not later than 60 days after Dec. 19, 1991.\n15 U.S.C. § 78aa-l. The statute’s language is plain and unambiguous. It applies only to the claims of the parties in Lamp/ and to those lawsuits which were dismissed as a result of Lavvpfs retroactive application. The statute commands the Federal courts to reinstate cases which those courts have dismissed. Where the word “shall” appears in a statutory directive, “Congress could not have chosen stronger words to express its intent that [the specified action] be mandatory....” United States v. Monsanto, 491 U.S. 600, 607, 109 S.Ct. 2657, 2662, 105 L.Ed.2d 512 (1989).\nRefreshingly, none of the litigants at our bar has suggested that § 27A means anything other than what it plainly says. This is certainly not a case in which the issue of separation of powers\ncomes before the [cjourt clad, so to speak, in sheep’s clothing: [where] the potential of the asserted principle to effect important change in the equilibrium of power is not immediately evident, and must be discerned by a careful and perceptive analysis.\nMorrison v. Olson, 487 U.S. 654, 699, 108 S.Ct. 2597, 2623, 101 L.Ed.2d 569 (1988) (Scalia, J., dissenting). If Justice Scalia, the lone dissenter in Morrison, thought that the challenged independent counsel law was a wolf which came “as a wolf,” id., we think that § 27A comes as a camel, one that has forcibly and quite unapologetically thrust its nose into the tent of the judicial branch.\nA. A brief historical background.\nTo answer the question upon which the constitutionality of § 27A hinges, we must reach far back into American legal history. During the first century or so of colonial government, legislative edicts requiring courts to reopen, vacate, rehear, or even reverse settled decisions upon the petition of the aggrieved losing party were not uncommon. Noting the apparent prevalence of legislative adjudication of private disputes and grievances in the early colonial period, historians have concluded that such action did not offend the legal or political sensibilities of the time. However, these sensibilities changed considerably during the years following the outbreak of the Revolutionary War, particularly with the escalation of legislative interference in private disputes which occurred during the time of the Articles of Confederation, notably and most frequently to grant debtors “relief” from creditors. “Once legislative interference in judicial matters had intensified as never before in the eighteenth century, a new appreciation of the role of the judiciary in American politics [began] to emerge.” Id. at 454.\nThe transformation of the legislature from its occasional role as an informal court of last resort, dishing out equitable relief to particularly aggrieved citizens, to a “department [which] is everywhere extending the sphere of its activity and drawing all power into its impetuous vortex,” as James Madison described the legislative element of government in The Federalist 48, deeply concerned the fledgling Nation’s leaders, most notably those who met in Philadelphia in 1787 to revise the Articles of Confederation. Their concern translated into many of the Constitution’s specific enumerations of and limitations on power, as well as the “political truth” embodied in the document that “[t]he accumulation of all powers, legislative, executive, and judiciary, in the same hands ... may justly be pronounced the very definition of tyranny” and that “the preservation of liberty requires that the three great departments of power should be separate and distinct.” The Federalist 47 (James Madison).\nDefending the Constitution against charges that its provisions did not ensure adequate separation among the branches, Madison explained that good government did not require its departments to be “totally separate and distinct from one another.” The nature of the power exerted, not the person or body exerting it, mattered: “[W]here the whole power of one department is exercised by the same hands which possess the whole power of another department, the fundamental principles of a free constitution are subverted.” Federalist 4,7. In the specific context of the separation between legislature and judiciary, he noted, “[t]he entire legislature can perform no judiciary act”; pursuing the point, he quoted Montesquieu: “Were the power of judging joined with the legislative, the life and liberty of the subject would be exposed to arbitrary control, for the judge would then be the legislator.” Id.\nIn illustrating the dangers of the “encroaching spirit of power,” Madison emphasized the dynamic counterbalancing the Constitution envisioned among the branches of government, which he immortalized concisely in declaring that “[a]mbition must be made to counteract ambition.” Federalist 48, 50. He cited first the example of Virginia, where that Commonwealth’s constitution prescribed the separation of powers, but where Jefferson had complained that “no barrier was provided between these several powers.” Federalist 48 (quoting Thomas Jefferson, Notes on the State of Virginia (1784)). Madison noted that Jefferson had observed, with concern, that the Virginia legislature had “in many instances, decided rights which should have been left to judiciary controversy.... ” Id. Madison pointed out the same dangerous trend in Pennsylvania, where “the [State] Constitution had been flagrantly violated by the legislature in a variety of important instances,” including where “cases belonging to the judiciary department [had been] frequently drawn within legislative cognizance and determination.” Id. “The conclusion,” Madison summarized,\nwhich I am warranted in drawing from these observations is that a mere demarcation on parchment of the constitutional limits of the several departments is not a sufficient guard against those encroachments which lead to a tyrannical concentration of all the powers of government in the same hands.\nId.\nB. The Separation of Powers Applied and Enforced.\nAfter the States ratified the Constitution, it did not take long for fears of legislative encroachment on the judiciary’s sphere of action to be realized. In 1791, Congress enacted a scheme by which disabled Revolutionary War veterans could apply for pensions. Veterans were to make application to the Federal Circuit Courts, which would then accept (or reject) their assertions that they were actually veterans, and render judgment as to the amount of pension appropriate to their disabilities. However, Congress gave the Secretary of War the final say; he could deny pensions where he suspected “imposition or mistake.” Hayburn’s Case, 2 U.S. (2 Dall.) 409, 1 L.Ed. 436 (1792), as described in 13 Charles A. Wright et al., Federal Practice and Procedure § 3529.1 at 302 (1984).\nAt that time, the Justices of the Supreme Court “rode circuit” and comprised the Federal Circuit Courts, sitting with District Court judges. The (then) five Justices of the Supreme Court were confronted with the pension act while sitting with three District Court judges on separate Circuit Court panels convened in New York, Pennsylvania, and North Carolina. Each panel independently and unanimously declined to hear the veterans’ petitions, reasoning that for the courts to render judgments subject to review by the Congress was violative of the separation of powers. This result was in essence the Court’s first invalidation of an act of Congress. No doubt recognizing the gravity of this situation, both the Pennsylvania and North Carolina panels sent letters, jointly authored by the sitting judges, to President Washington informing him directly of their respective decisions and explaining the reasoning behind their objections.\nThe Justices sitting in New York noted\n[t]hat by the Constitution of the United States, the government thereof is divided into three distinct and independent branches, and that it is the duty of each to abstain from, and to oppose, encroachments on either.... [The Act] subjects the decisions of these courts, made pursuant to those [judicial] duties, first to the consideration and suspension of the secretary of war, and then to the revision of the Legislature; whereas, by the constitution, neither the secretary of war, nor any other executive officer, nor even the Legislature, are authorized to sit as a court of errors on the judicial acts or opinions of this court.\nHayburn’s Case, 2 U.S. at 409-10 n. 2.\nSimilarly, the Justices sitting in Pennsylvania went straight to the heart of the matter. They noted that “the people of the United States have vested in Congress all legislative powers granted in the constitution” and have vested in the courts “the judicial power of the United States.” Hayburn’s Case, 2 U.S. at 410 n. 2.\nIt is a principle important to freedom, that in government, the judicial should be distinct from, and independent of, the legislative department.... [The people] have placed their judicial power not in Congress, but in “courts.”\nId. Holding that the Act required judges to carry out “business ... not of a judicial nature,” the Justices went on to explain how the Act, if executed as Congress prescribed, offended the separation of powers:\n[I]f ... the court had proceeded, its judgments (for its opinions are its judgments) might, under the same act, have been revised and controled by the legislature, and by an officer in the executive department. Such revision and control we deemed radically inconsistent with the independence of that judicial power which is vested in the courts; and, consequently, with that important principle which is so strictly observed by the constitution of the United States.\nId. The North Carolina court echoed this interpretation:\n[N]o decision of any court of the United States can, under any circumstances, in our opinion, agreeable to the constitution, be liable to a reversion, or even suspension, by the legislature itself, in whom no judicial power of any kind appears to be vested....\nId. With this unprecedented, “painful” ruling, the Justices, some of whom had been at the Philadelphia Convention, made it clear that the Federal judiciary power, while defined in its reach by the Congress, could not be exercised by that body. The Court anchored its holding in the Constitution’s succinct sentences vesting the legislative and judicial powers in their respective branches, and, necessarily, in the historical and theoretical understanding of the nature of the judicial power which had been incorporated into the Constitution.\nIII.\nWe have devoted several pages to Hay-bum’s Case and the background of the constitutional separation between the legislature and the judiciary, not to kill trees, but to illustrate that the Supreme Court has from the beginning maintained the rule that Congress may not retroactively disturb final judgments of the Federal courts, and to explain the Court’s adherence to that rule as a protection of the separation of powers. We search in vain for an instance where the courts have permitted Congress retroactively to disturb final judgments rendered in cases between private litigants. If the statute which gave rise to Haybum’s Case violated the Constitution, then § 27A(b) cannot stand, a fortiori. Reserving to Congress the power to “suspen[d]” and “revis[e]” decisions of the Supreme Court which had interpreted and applied valid Federal law would enable the Congress to sit as a “court of errors.” In enacting § 27A, Congress has not simply reserved such power, as in Haybum’s Case, but actually exercised it. Since we cannot say that the fundamental natures of the legislative and judicial powers have somehow changed since 1792, we cannot square § 27A(b) with Haybum’s Case. The dangers to judicial independence in a system of separate powers remain; we are no more willing to ratify a legislative usurpation of the judicial power today than the Court was in 1792.\nThe shareholders cite several cases they believe illustrate exceptions to this longstanding rule. They argue, in essence, that because Congress has the power in certain circumstances to affect the application or effect of judicial actions, this power necessarily extends to all judgments, including the final judgments of the Federal courts. Intervening on behalf of the shareholders, the United States argues that in fact no such rule has survived at all. However, we believe the rule to be not only alive but vital to the continuing integrity of the independent Federal judiciary; further, we believe no true exceptions to the rule exist. Not only is each case cited by shareholders and the Government distinguishable, but the Supreme Court has taken great pains to reinforce the final judgment rule in every instance where it has been invoked.\nThe Government completely mischaracter-izes the cases it cites in support of its argument that “the Supreme Court has explicitly upheld a wide range of federal and state statutes that have divested litigants of final judgments.” For example, the Government cites Pennsylvania v. Wheeling and Belmont Bridge Co. (the Wheeling Bridge Case), 59 U.S. (18 How.) 421, 15 L.Ed. 435 (1856), which involved a bridge that defendants had built at the behest of the Commonwealth of Virginia spanning the Ohio River. In an earlier action, Pennsylvania had succeeded in getting the Supreme Court to declare the bridge an “obstruction of the free navigation of the ... river” which harmed commerce in Pennsylvania; the Court granted injunctive relief requiring that the bridge be torn down or rebuilt with sufficient height to permit riverboat traffic. Id. at 429. The Court also awarded costs to the plaintiff. Id. In response, an act of Congress was passed declaring the bridge to be a “lawful structure,” declaring the bridge and the roads it connected to be a Federal post road, and requiring riverboat operators not to interfere with the construction or operation of the bridge. Id. Pennsylvania nonetheless moved the Court to enjoin the rebuilding of the bridge (which a storm had since destroyed), arguing both that the new act of Congress was inconsistent with the free navigation of the river which Congress had guaranteed by previous enactment, id. at 430, and that the new act of Congress could not have the effect and operation of annulling the prior judgment of the Court, id. at 431.\nCongress has the power “to regulate the navigation of the river,” the Court noted; it similarly has the power “to regulate commerce among the several States.” Wheeling Bridge, 59 U.S. at 430, 431. Since Congress ultimately controls both these powers, its retroactive legalization of the bridge “modifies” its previous enactments ensuring free navigation; “although it still may be an obstruction in fact, [it] is not so in contemplation of law.” Id. at 430. Thus, Pennsylvania’s injunctive relief, which entitled it to demand that the builders alter or destroy the bridge as necessary to preserve Congress’s mandate that there be unhindered navigation of the Ohio River, had no force once Congress had redefined the river’s navigability to include the presence of the bridge.\nSince injunctive relief necessarily depends on a continuing affront to one’s legal rights, while legal relief depends only on a judicial determination that one’s legal rights have been violated with resulting cognizable damage to the claimant, Congress could permissibly change the law so as to deprive a party of its right to injunctive relief. However, the Wheeling Bridge Case does not, as the Government would have us believe, therefore hold that Congress may act to deprive all parties of final judgments rendered in their favor. The Wheeling Bridge Court not only recognized but stressed this distinction, and took the opportunity to restate, in the strongest terms, the general rule against legislative modification of settled judgments:\nBut it is urged that the Act of Congress cannot have the effect and operation to annul the judgment of the court already rendered, or the rights determined thereby in favor of the plaintiff. This, as a general proposition, is certainly not to be denied, especially, as it respects adjudication upon the private rights of parties. When they have passed into judgment, the right becomes absolute, and it is the duty of the court to enforce it....\n... [I]f the remedy in this case had been an action at law, and a judgment rendered in favor of the plaintiff for damages, the right to these would have passed beyond the reach of the power of Congress. It would have depended, not upon the public right of the free navigation of the river, but upon the judgment of the court.\nWheeling Bridge, 59 U.S. at 431.\nIn other words, had Pennsylvania claimed that it had lost,' say, a million dollars in tax revenues as a result of the obstruction, and had the Court affirmed a judgment against the bridge company in that amount prior to the Congress’s taking any further action, Congress could not permissibly enact a bill which vacated, reversed, or otherwise disturbed that money judgment. Indeed, the Court noted that the costs it had granted Pennsylvania “st[ood] upon the same principles” and were not affected by the subsequent legislation. Id. The “judgment of the court” results from the court’s exercise of judicial power to apply the law in existence at the time of judgment to the facts presented, and to reassign property rights as necessary to satisfy the law. Disputed property rights, such as claims for damages, thus become settled, and are entitled to the judiciary’s protection and enforcement.\nThe continuing vitality of the rule against disturbing final judgments notwithstanding, shareholders and the Government nonetheless attempt in the alternative to distinguish the present case, arguing that a judgment rendered in favor of defendants on the basis of a time bar does not have the same finality as a judgment rendered “on the merits.” We do not question the traditional legislative power to amend, repeal, or even extend statutory time limits. Where Congress changes or supersedes such time limits, no litigant can properly assert a continuing or vested “right” to the old time limit. See United States v. The Schooner Peggy, 5 U.S. (1 Cranch) 103, 2 L.Ed. 49 (1801); Campbell v. Holt, 115 U.S. 620, 6 S.Ct. 209, 29 L.Ed. 483 (1885); Chase Securities Corp. v. Donaldson, 325 U.S. 304, 65 S.Ct. 1137, 89 L.Ed. 1628 (1945). However, we reject the Government’s argument, based on Congress’s power to amend statutes of limitation, that “[a] judgment resting on a statute of limitations is no more ‘fundamental,’ and no more immune from legislative revision, than the statute of limitations itself.” Perhaps vaguely aware of the enormous consequences which would result to our system of government were the Congress’s undisputed power to change the existing laws extended to allow it retroactively to change the prior application of those laws by the courts, the Government attempts to limit its argument to “technical, non-substantive” laws such as statutes of limitation and repose.\nTo repeat, we fail to-identify a single case (besides the ones holding § 27A to be constitutional) which has held that the decision of a Federal court adjudging a claim to be time-barred is not a final judgment. Again, the cases cited by appellant and the Government hold only that statutes of limitation are “arbitrary enactments by the law-making power,” “good only by legislative grace” and may be changed by Congress and applied retroactively to pending cases. Campbell, 115 U.S. at 628, 6 S.Ct. at 213; Chase Securities, 325 U.S. at 314, 65 S.Ct. at 1142. In Chase Securities, for example, the Court noted that the Minnesota courts (whence the appeal arose) had not finally determined whether the plaintiffs ease was time-barred, thus the case was\nnot one where a defendant’s statutory immunity from suit had been fully adjudged so that legislative action deprived it of a final judgment in its favor.\nChase Securities, 325 U.S. at 310, 65 S.Ct. at 1140. While the Chase Securities decision’s description of the legislature’s power to change statutes of limitations retroactively is indeed sweeping, this language conclusively shows both that, the Court believed dismissals of time-barred claims to be “final judgments” and that the Court did not view this legislative power as extending to require that courts substitute a new limitation period in cases finally decided under a previously applicable one. See also Campbell, 115 U.S. at 628, 6 S.Ct. at 213 (“[Sjtatutes, shortening the [limitation] period.or making it longer, which is necessary to its operation, have always been held to be within the legislative power until the bar is complete.\") (emphasis added).\nThus, there is no principled basis on which to defend either the Government’s proposed rule or, for that matter, its proposed limitation. Congress may change an established time bar, even with the effect of reviving claims that would otherwise remain “dead” due to the lapse of time. But where the courts have adjudged a claim to be time-barred, Congress cannot compel the courts to reopen a settled judgment and apply the subsequent change in place of the time bar that originally resolved the ease, even by giving the new provision retroactive effect. Where a Federal court enters judgment in a case on the basis of a time bar, it confers upon the prevailing party a right based on the protections that the time bar provides. Applying the general principles of existing law to specific circumstances, and enforcing the rights between parties created thereby constitute the essence of the judicial power.\nIV.\nIn only one context has the Supreme Court ratified acts of Congress which specifically required the courts to reconsider issues which had been previously adjudicated and upon which the courts had rendered a final judgment. The shareholders and the Government argue that these cases instruct our present situation; we read them as applying very narrowly, and as standing on a distinct and specifically enumerated constitutional power of Congress. Where the United States has been party to a lawsuit, and the court has rendered judgment in favor of the United States, the Supreme Court has recognized Congress’s power to authorize relit-igation of the same issues, and have the courts apply such new law as Congress passes retroactively to the same case. While such legislation erases the effects of judgments of the Federal courts, it does not trespass upon the power of the judiciary; the Court has viewed such an act as tantamount to a waiver of liability by the Government, and has ratified such an act as a permissible exercise of Congress’s explicit Article I power to pay the debts of the United States.\nThe shareholders and the Government cite the recent Supreme Court decision in Robertson v. Seattle Audubon Society, — U.S. —, 112 S.Ct. 1407, 118 L.Ed.2d 73 (1992), and its decision in United States v. Sioux Nation of Indians, 448 U.S. 371, 100 S.Ct. 2716, 65 L.Ed 2d 844 (1980), to show that the Constitution does not prohibit Congress from reopening final judgments of the Federal courts. In Seattle Audubon, the Court approved an act of Congress which had amended laws specifying what areas of the Northwest national forests, eco-realm of the elusive northern spotted owl, could be logged. As part of this provision, Congress “deter-min[ed] and directed]” that the new specifications apply to two cases which the statute noted by name. Seattle Audubon, — U.S. at —-—, nn. 1-3, 112 S.Ct. at 1411-12, nn. 1-3. In Sioux Nation, Congress acted to permit the plaintiff Indians, who had been pressing their claims in court for nearly a century, and who had lost appeals before the Supreme Court twice before, to relitigate before the Court of Claims; the statute directed the Court of Claims to review the case anew without regard to the prior judgments that the claims court and the Supreme Court had previously rendered in favor of the Government. Sioux Nation, 448 U.S. at 389, 100 S.Ct. at 2727. The Supreme Court upheld that statute as well.\nNeither case stands in opposition to the Court’s longstanding rule against Congressional interference with the settled judgments of the Federal courts. In neither instance did Congress compel the Federal courts to vacate, revise, or reconsider final judgments rendered in cases between private parties. The cases Congress named specifically in the statute considered in Seattle Audubon were pending cases, not decided cases. Indeed, the petitioners challenged the statute on the grounds that Congress had infringed on the judiciary power by prescribing the rule of decision in those cases in contravention of the Klein doctrine, not that Congress had interfered with settled judgments. Seattle Audubon, — U.S. —, 112 S.Ct. at 1414-15.\nSioux Nation answered directly the objection that Congress could not “disturb[] the finality of a judicial decree” under the longstanding rule set out in Hayburn’s Case. Sioux Nation, 448 U.S. at 391-92, 100 S.Ct. at 2728-29. The Court disposed of the objection by framing the issue in terms of Congress’s recognized power “to waive the res judicata effect of a prior judgment entered in the Government’s favor on a claim against the United States.” Id. at 396-97, 100 S.Ct. at 2731-32 (citing United States v. Cherokee Nation, 202 U.S. 101, 26 S.Ct. 588, 50 L.Ed. 949 (1906)). In approving this action, the Court in no way cast doubt on the continuing vitality of the rule in Haybum’s Case. The Court noted that it had in previous cases “affirm[ed] the broad constitutional power of Congress to define and ‘to pay the Debts ... of the United States.’ ” Id. at 397, 100 S.Ct. at 2732 (quoting U.S. Const., Art. I, § 8, cl. 1). Where Congress acts to allow litigants to reassert failed claims against the Government, it does not\ninterfere with the administration of justice. Congress are here to all intents and purposes the defendants, and as such they come into court through this resolution and say that they will not plead the former trial in bar, nor interpose the legal objection which defeated a recovery before.\nNock v. United States, 2 Ct.Cl. 451, 457-58, 1800 WL 490 (1867) (approving a joint resolution of Congress authorizing the Court of Claims to reconsider a ciaim against the United States previously decided in favor of the Government, and to decide the claim “in accordance with the principles of equity and justice”) (quoted in Sioux Nation, 448 U.S. at 398, 100 S.Ct. at 2732). Since waiving the defense of res judicata does not “reverse[ ] a decree of [a] court,” Sioux Nation, 448 U.S. at 398, 100 S.Ct. at 2732 (quoting Nock, 2 Ct.Cl. at 457-58), statutes in which Congress imposes upon itself “a legal, in recognition of a moral, obligation to pay” claims against it do not “encroach upon the judicial function which ... had previously [been] exercised in adjudicating that the obligation was not legal” and are therefore permissible. Id. at 401, 100 S.Ct. at 2734 (quoting Pope v. United States, 323 U.S. 1, 9-10, 65 S.Ct. 16, 21, 89 L.Ed. 3 (1944)). We do not see this recognition of a constitutionally enumerated power of Congress as creating an exception to the longstanding rule against disturbing judgments rendered in favor of private parties, much less as a rejection of that rule, as the Government suggests. Indeed, the Sioux Nation case allows Congress the power only to ratchet the Government’s liability to claimants in favor of private parties; Congress may not disturb final judgments rendered against the United States, since to allow this power would be to permit Congress to act as a judge in its own case to decide a dispute in its favor. Id. at 404-05, 100 S.Ct. at 2735-36 (citing Klein).\nNeedless to say, the very existence of this appeal suggests that defendants have not chosen to waive their defenses of res judicata with which the District Court vested them in dismissing the shareholders’ case with prejudice as time barred. Appellants here simply fail to draw a defensible constitutional paral-lei between judgments rendered in favor of the United States and judgments rendered in favor of private parties.\nV.\nWe strongly object to the idea put forth by the Government that the judgment rendered in favor of the defendants by the District Court was not truly “final” because of the speed with which Congress acted to undo that judgment. Some final judgments are less final than others only to the extent that some pregnant women are less pregnant than others. The vesting of rights in parties to judgments does not depend upon the consent of Congress, tacit or explicit. And a subsequent act of Congress purporting to divest those rights violates the Constitution regardless of the haste with which the vote is taken and the act signed into law.\nThe shareholders and the Government argue that Congress could properly remedy the “windfall” that Lampf bestowed upon the defendants here and in similar actions. True, the litigants had proceeded under the assumption that the Kentucky Blue Sky law would apply, but the Supreme Court read the Federal securities laws differently. Once the Court had determined the rights of the parties in Lampf, those parties’ rights were fixed; similarly, once the District Court applied Lampf to dismiss with prejudice the present litigation, and that decision was not appealed, the rights of these parties were fixed, and the shareholders’ claims forever precluded. Without a doubt, certain members, and presumably a majority, of Congress believed these results to be unfair, and, as the Government argues, a “windfall” for the respective defendants. However, Congress may not retrospectively vacate decided cases, regardless of how compelling the perceived injustice visited upon the parties by a valid exercise of the judicial power.\nVI.\nOur system of Federal government vests in the Congress the legislative power, and in the Article III courts the judicial power. The Constitution makes this allocation of powers explicit, and there is nothing equivocal in its language. It is true that some recent decisions of the Supreme Court have evidenced a willingness to find that the separation of powers so “essential to the preservation of liberty,” Mistretta v. United States, 488 U.S. 361, 380, 109 S.Ct. 647, 659, 102 L.Ed.2d 714 (1989), is not offended so long as the actions of one branch do not involve an attempt to increase the powers of that branch at the expense of the powers of another branch, or usmp or impermissibly undermine the powers properly belonging to another branch. See generally Mistretta, 488 U.S. 361, 109 S.Ct. 647; Morrison v. Olson, 487 U.S. 654, 108 S.Ct. 2597 (1988).\nHowever, we believe that even if this trend by the Supreme Court may be said to vindicate the “a little separation is enough” view of this essential doctrine, the case at bar clearly represents the irreducible minimum of the separation required to preserve the system’s last vestiges of federalism. For if Congress may by legislation reverse or vacate the final judgments of the Federal courts, then Congress has rendered the whole function of the judiciary futile: whether “the whole power of one department is exercised by the same hands which possess the whole power of another department,” Mistretta, 488 U.S. at 381, 109 S.Ct. at 659 (quoting The Federalist No. 47 (Madison)) is left subject only to the self-restraint of the legislature. As Jefferson wrote,\nNor should our assembly be deluded by the integrity of their own purposes, and conclude that these unlimited powers will never be abused, because themselves are not disposed to abuse them.... The time to guard against corruption and tyranny, is before they shall have gotten hold on us. It is better to keep the wolf out of the fold, than to trust to drawing his teeth and talons after he shall have entered.\nThomas Jefferson, Notes on the State of Virginia, Query 13, 121 (1784) (reprinted in Ralph Lerner and Philip B. Kurland, eds., 1 The Founders’ Constitution 320 (1987)). Were the validity of the judgments of the judicial branch to depend on the approval of the legislative branch, how much more fully could the legislature increase its own powers at the expense of the judiciary, or usurp or undermine the powers properly belonging to the judicial branch? What part of the camel would then remain outside the tent?\nWhere Congress disagrees with the manner in which the judiciary has interpreted a statute, it may amend that statute so as to effect the proper congressional intent, and thus render the faulty judicial interpretation moot. But Congress may not require the Federal courts to nullify or vacate their properly rendered judgments, regardless of what injustice Congress believes those judgments have visited upon private parties. As the judges writing to George Washington - in Haybum’s Case sagely reflected,\n[I]t is as much our inclination, as it is our duty, to receive with all possible respect every act of the Legislature, and that we never can find ourselves in a more painful situation than to be obliged to object to the execution of any, more especially to the execution of one founded on the purest principles, of humanity and justice, which the act in question undoubtedly is. But, however lamentable a difference in opinion really may be, or with whatever difficulty we may have formed an opinion, we are under the indispensable necessity of acting according to the best dictates of our own judgment, after duly weighing every consideration that can occur to us; which we have done on the present occasion.\n2 U.S. at 409-10 n. 2 (1792). Since § 27A(b) unambiguously requires courts to do so, we hold that subsection to be an unconstitutional usurpation of the judiciary power. We accordingly AFFIRM the judgment of the District Court denying the shareholders’ motion to reinstate their lawsuit.\n. 15 U.S.C. § 78j.\n. 17 C.F.R. § 240.1 Ob-5.\n. Prior to Lampf, the Kentucky Blue Sky law provided a three year limitation period for this type of Federal securities action, running from the date of discovery. Ky.Rev.Stat.Ann. § 292.-480. Two Circuits had already adopted the Federal one year/three year period adopted in Lampf; others had applied State limitations periods. See Lampf, — U.S. at — n. 1, 111 S.Ct. at 2777 n. 1, (citing cases).\n. The Supreme Court announced its decision in Lampf on June 20, 1991.\n. Also known as \"Section 27A.” Subsection (a) of this provision retroactively applies the previously applicable statute of limitations to those cases filed before June 19, 1991 which remained pending in the courts. The parties do not dispute this subsection; we therefore do not address it.\n. See Gordon S. Wood, Creation of the American Republic 154-55 (1969); Judicial Action by the Provincial Legislature of Massachusetts, 15 Harv. L.Rev. 208 (1901-02).\n. See, for example, Creation, supra note 6 at 154 (\"[T]he assemblies in the eighteenth century still saw themselves ... as a kind of medieval court making private judgments as well as public law.... Such assumptions of traditional gubernatorial and judicial authority ... did not seem to be usurpations....\"); see also E.S. Corwin, 1 Corwin on the Constitution 59-60 (1981).\n. Wood, supra note 6 at 404-07, 454. As an example, Professor Wood describes the problem which persisted in Vermont at this time:\nThe legislature, charged the Vermont Council of Censors, was reaching for \"uncontrolled dominion” in the administration of justice: becoming a court of chancery in all cases over £4,000, interfering in causes between parties, reversing court judgments, staying executions after judgments, and even prohibiting court actions involving bonds or debts, consequently stopping nine-tenths of all causes in the state. In their assumption of judicial power the legislators had determined every cause, said the Council, guided by no rules of law but only by their crude notions of equity, \"or in other words, according to their sovereign will and pleasure.”\nId. at 407 (quoting Address of the Council of Censors, Feb. 14, 1786, in Slade, ed., Vermont State Papers at 537).\n. The U.S. Attorney General then brought a motion for a writ of mandamus before the Supreme Court at its next term, which the Court denied since the motion was made ex officio rather than on behalf of an actual petitioner. Unfazed, the Attorney General subsequently brought another motion for a writ of mandamus, this time on behalf of a particular applicant, William Hay-burn, and asked the Supreme Court to order the courts to entertain the veterans’ applications. The Court issued an opinion declaring that it would hold the motion under advisement until the next term; by that time, however, Congress had enacted an alternative system for providing the pensions. See Hayburn's Case, 2 U.S. at 409.\n. These letters, along with the opinion of the New York circuit panel, were published as a note to the Supreme Court's opinion issued in response to the Attorney General’s second mandamus motion. While the Court did not specifically pass on the constitutionality of the act, as explained in note 9, the opinions rendered in Haybum's Case “have since been taken to reflect a proper understanding of the role of the Judiciary under the Constitution.\" Morrison v. Olson, 487 U.S. 654, 677 n. 15, 108 S.Ct. 2597, 2612 n. 15, 101 L.Ed.2d 569 (1988).\n. Excepting, of course, the various courts which have found § 27A constitutional. See, e.g., TGX Corp. v. Simmons, 997 F.2d 39 (5th Cir.1993); Cooke v. Manufactured Homes, Inc., 998 F.2d 1256 (4th Cir.1993); Cooperativa de Ahorro y Credito Aguada v. Kidder, Peabody & Co., 993 F.2d 269 (1st Cir.1993); Berning v. A.G. Edward & Sons, Inc., 990 F.2d 272 (7th Cir.1993); Gray v. First Winthrop Corp., 989 F.2d 1564 (9th Cir.1993); Anixter v. Home-Stake Production Co., 977 F.2d 1533 (10th Cir.1992), cert. denied, - U.S. -, 113 S.Ct. 1841, 123 L.Ed.2d 467 (1993); Henderson v. Scientific-Atlanta, 971 F.2d 1567 (11th Cir.1992), petition for cert. filed, June 25, 1993. Insofar as these courts have specifically addressed § 27A(b) rather than placing a blanket imprimatur on § 27A in its entirety, these opinions generally reflect the view that in enacting subsection (b), Congress simply acted within its powers to \"change the underlying law\" and apply the change retrospectively. We strongly disagree with the rationale behind these decisions, but we will refrain from critiquing each of them point by point; we believe our reasoning speaks for itself. Of course, we arc also well aware of the multitude of District Court opinions on the subject.\n. See also McCullough v. Commonwealth of Virginia, 172 U.S. 102, 19 S.Ct. 134, 43 L.Ed. 382 (1898), in which the Court reviewed a Virginia statute which effectively nullified bonds issued by the Commonwealth. State and Federal courts had previously adjudged the bonds to be fully negotiable. The Court held, among other things, that\n[i]t is not within the power of a legislature to take away rights which have been once vested by judgment. Legislation may act on subsequent proceedings, may abate actions pending, but when those actions have passed into judgment the power of the legislature to disturb the rights created thereby ceases.\nMcCullough, 172 U.S. at 123-24, 19 S.Ct. at 142. The Government asserts that McCullough, which the District Court cited in holding § 27A(b) to be unconstitutional, was the only occasion where the Supreme Court held a statute unconstitutional under the \"vested rights doctrine.” Even if this be the case, we confess ignorance of the rule implied in the Government’s argument that a single, unreversed decision of the Supreme Court is not binding on the District Court, or on us. We do not base our decision primarily on this so-called “vested rights doctrine,” despite its prominent separation of powers component, because the asserted ability of Congress to disturb rendered final judgments does not hinge on the nature of the judgment and its property value to the prevailing litigant, a central rationale of the vested rights doctrine. However, we note that McCullough remains good law, including the holding quoted above, even if the Supreme Court has not ruled on a similar case since. See Georgia Ass'n of Retarded Citizens v. McDaniel, 855 F.2d 805, 810 (11th Cir.1988); Daylo v. Administrator of Veterans’ Affairs, 501 F.2d 811, 816 (D.C.Cir.1974).\n. As proof that no judgments are truly \"final,” shareholders and the Government point to Fed. R.Civ.P. 60(b), which allows a court the discretion to \"relieve a party ... from [a] final judgment” it has previously rendered, on motion from a party, where any or all of a number of factors, such as mistake, fraud, or new evidence, show that the original judgment was somehow tainted or unfair. This argument completely misses the crucial point that Rule 60(b) in no way threatens judicial autonomy or implicates the separation of powers. The question is not whether the courts may disturb final judgments, but whether Congress may disturb them. See Treiber v. Katz, 796 F.Supp. 1054, 1062 n. 7 (E.D.Mich.1992) (\"[T]he Court’s authority to set aside its own final judgment ... is profoundly different from a legislative decree requiring courts to set aside final judgments.”). To put this irresponsible argument in proper perspective, surely the Government would not argue that just because the Supreme Court can nullify legislation by declaring it to be violative of the Constitution, so can the President.\n. United States v. Klein, 80 U.S. (13 Wall.) 128, 20 L.Ed. 519 (1871) established the rule that Congress cannot ‘‘prescribe a rule for the decision of a cause in a particular way.” Klein, 80 U.S. at 146. After the Civil War, citizens of the former Confederacy could petition the Court of Claims under a 1863 law for a return of property, or proceeds therefrom, confiscated by Federal troops. The petitioners had to prove that they had not fought in the war, and had to prove their loyalty to the Union. Lincoln had issued a general pardon to any Southerner who swore loyalty to the Union. The Supreme Court held that a pardon served as sufficient proof of loyalty and noncombatant status. United States v. Padelford, 76 U.S. (9 Wall.) 531, 19 L.Ed. 788 (1869). In response to Padelford, Congress passed a new law which directed the Court of Claims to hold all such pardons inadmissible on behalf of the claimants for the purposes of these petitions; the possession of such a pardon would instead be deemed proof of disloyalty. Klein held the new law unconstitutional as a legislative subversion of the judicial function. While the Klein doctrine similarly protects the judiciary power from legislative encroachment, we believe § 27A(b) forces the courts to rule again on cases they have dismissed with prejudice, not that it forces the courts to rule on those cases (or any cases) in a particular way. But see Henderson v. Scientific-Atlanta, 971 F.2d 1567, 1576 (Wellford, L, dissenting) (Section 27A violates Klein doctrine).\n. And, we note, correctly, according to Congress. In enacting § 27A, Congress did not “change the underlying law” by repealing, amending or replacing the one year/three year time bar the Lampf Court derived from the securities laws, but eliminated only the applicability of that time bar, both to the claims asserted in Lampf itself and to all cases dismissed by the retroactive application of Lampf. This act of Congress does nothing more than command the courts to ignore (for a while) a valid judgment of the Supreme Court, adding salt to an already grievous wound.\n. See, for example, the comments of Senator Bryan in support of § 27A:\nThe Supreme Court’s decision in Lampf, June 20, 1991, in effect frees Michael Milken and scores of other felons and defendants of responsibility to pay back the people they have swindled. It would be a monstrous injustice that the icons of [gjreed in effect escape responsibility by reason of a Supreme Court decision that is given retroactive application. AH we seek is to give the victims a fair day in court.\n137 Cong.Rec. S18.624 (daily ed. Nov. 27, 1991).", "type": "majority", "author": "BATCHELDER, Circuit Judge."}, {"text": "KEITH, Circuit Judge,\nconcurring in part and dissenting in part.\nThe crux of the majority’s argument is that section 27A(b) violates the constitutional principle of separation of powers by asking courts to reverse final judgments. The majority essentially argues that section 27A(b) allows an impermissible reopening of adjudicated cases. Although I agree that section 27A(b) cannot be constitutionally applied to the plaintiffs in the instant case, I write separately because I do not believe that section 27A(b) violates separation of powers principles in all contexts. To the contrary, section 27A(b) is an example of Congress permissibly overriding a judicial interpretation of a statute, without violating principles of separation of powers.\nThe issue of finality is only relevant in this case because the -plaintiffs did not appeal the district court’s initial dismissal of their claim. If the plaintiffs had appealed that ruling, the judgment could not be considered “final” under any analysis, but instead “pending” until it had completed its way through the appellate process. In Gray v. First Winthrop Corp., 989 F.2d 1564 (9th Cir.1993), the Ninth Circuit held that section 27A(b) did not violate principles of finality for cases which had been appealed. The court stated that:\nThese cases are properly construed as “pending” cases for separation of powers purposes. See Griffith v. Kentucky, 479 U.S. 314, 321 n. 6, 107 S.Ct. 708, 712 n. 6, 93 L.Ed.2d 649 (1987) (judgment is “final” and case is no longer pending only after “the availability of appeal [is] exhausted, and the time for a petition for certiorari [has] elapsed or a petition for certiorari finally [has been] denied”); see also Georgia Ass’n of Retarded Citizens v. McDaniel, 855 F.2d 805, 813 (11th Cir.1988) (“When it so intends, [Congress’] ability to affect the content of a nonfinal judgment in a civil case, through retroactive legislation ceases only when a case’s journey through the courts comes to an end.”), cert. denied, 490 U.S. 1090, 109 S.Ct. 2431, 104 L.Ed.2d 988 (1989); de Rodulfa v. United States, 461 F.2d 1240, 1253 (D.C.Cir.) (“[T]he suit is pending until the appeal is disposed of, and until disposition any judgment appealed from it is still sub judice.”) (internal quotations omitted)), cert. denied, 409 U.S. 949, 93 S.Ct. 270, 34 L.Ed.2d 220 (1972).\nId. at 1571.\nThe Seventh Circuit reached the same conclusion in Berning v. A.G. Edward & Sons, Inc., 990 F.2d 272 (7th Cir.1993). The court reasoned that, because the case was pending on appeal at the time that section 27A was passed, there was no final judgment to be upset. The court stated that:\nThe principle that Congress may impose new legal rules applicable in pending cases was recognized by the Supreme Court almost two hundred years ago in United States v. Schooner Peggy, 5 U.S. (1 Cranch) 103, 110, 2 L.Ed. 49 (1801). Because Congress is free to make changes in the law applicable to pending civil cases, “[t]he legislature may change a statute of limitations at the last instant, extending or abrogating the remedy for an established wrong.” Tonya K. ex rel. Diane K. v. Board of Education, 847 F.2d 1243, 1247 (7th Cir.1988).\nId. at 277.\nIn the case at hand, Congress was unable to protect these litigants under section 27A(b), because by the time 27A(b) was enacted, the time period for filing an appeal had passed. Nevertheless, for those litigants who did appeal the district court’s initial dismissal of their claim, section 27A(b) does not disturb final judgments, and is therefore consistent with separation of powers requirements.\nCourts are under a duty to impose a saving interpretation of an otherwise unconstitutional statute so long as it is “fairly possible to interpret the statute in a manner that renders it constitutionally valid.” Robertson v. Seattle Audubon Society, — U.S. —, 112 S.Ct. 1407, 118 L.Ed.2d 73 (1992); Communications Workers of Am. v. Beck, 487 U.S. 735, 762, 108 S.Ct. 2641, 2657, 101 L.Ed.2d 634 (1988). Accordingly, I would AFFIRM the judgment of the district court on the grounds that section 27A(b) cannot be constitutionally applied to the litigants in the instant case, but I would not find section 27A(b) unconstitutional as applied to litigants who appealed the initial dismissal of their claims.", "type": "concurring-in-part-and-dissenting-in-part", "author": "KEITH, Circuit Judge,"}], "attorneys": ["J. Montjoy Trimble (argued and briefed), Trimble & Bowling, Lexington, KY, for plaintiffs-appellants.", "Richard C. Ward, David C. Long, Barbara Edleman (briefed), Glenn C. Van Bever (argued), Wyatt, Tarrant & Combs, Lexington, KY, for Spendthrift Farm, Inc.", "Guy R. Colson, Sr. Partner, Fowler, Mea-sle & Bell, Elizabeth S. Feamster, Lexington, KY, James E. Burns, Jr., John Missing, Kevin P. Muck (briefed), Brobeck, Phleger & Harrison, San Francisco, CA, for Bateman Eichler, Hill Richards Inc.", "Robert M. Watt, III (briefed), J. David Smith, Jr., Stoll, Keenon & Park, Lexington, KY, William E. Johnson, Stoll, Keenon & Park, Frankfort, KY, for Francis M. Wheat, and Gibson, Dunn & Crutcher.", "L. Clifford Craig (argued and briefed), Taft, Stettinius & Hollister, Cincinnati, OH, Peter L. Eeabert, Deloitte, Haskins & Sells, New York City, Robert B. Craig (briefed), Taft, Stettinius & Hollister, Crestview Hills, KY, for Deloitte, Haskins & Sells.", "Michael D. Meuser, Frank T. Becker, Harry B. Miller, Jr., Robert S. Miller (argued and briefed), Miller, Griffin & Marks, Lexington, KY, for Norman D. Owens and American Intern. Bloodstock Agency, Inc.", "Scott R. McIntosh (briefed), U.S. Dept, of Justice, Appellate Div., Washington, DC, Barbara C. Biddle, U.S. Dept, of Justice, Appellate Staff, Civ. Div., Mark B. Stern (argued), U.S. Dept, of Justice, Civ. Div., Washington, DC, for amicus curiae U.S. and Securities and Exchange Com’n.", "Kathryn Oberly (briefed), Washington, DC, for amicus curiae Arthur Andersen & Co., Ernst & Young, KPMG Peat Marwick and Price Waterhouse."], "corrections": "", "head_matter": "Ed PLAUT; his wife, Nancy McHardy Plaut; John Grady, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants, v. SPENDTHRIFT FARM, INC.; Bateman Eichler, Hill Richards, Inc.; Francis M. Wheat; Gibson, Dunn & Crutcher; Deloitte, Haskins & Sells; Norman D. Owens; American International Bloodstock Agency, Inc., Defendants-Appellees.\nNo. 92-5591.\nUnited States Court of Appeals, Sixth Circuit.\nArgued March 1, 1993.\nDecided Aug. 3, 1993.\nRehearing and Suggestion for Rehearing En Banc Denied Oct. 14, 1993.\nJ. Montjoy Trimble (argued and briefed), Trimble & Bowling, Lexington, KY, for plaintiffs-appellants.\nRichard C. Ward, David C. Long, Barbara Edleman (briefed), Glenn C. Van Bever (argued), Wyatt, Tarrant & Combs, Lexington, KY, for Spendthrift Farm, Inc.\nGuy R. Colson, Sr. Partner, Fowler, Mea-sle & Bell, Elizabeth S. Feamster, Lexington, KY, James E. Burns, Jr., John Missing, Kevin P. Muck (briefed), Brobeck, Phleger & Harrison, San Francisco, CA, for Bateman Eichler, Hill Richards Inc.\nRobert M. Watt, III (briefed), J. David Smith, Jr., Stoll, Keenon & Park, Lexington, KY, William E. Johnson, Stoll, Keenon & Park, Frankfort, KY, for Francis M. Wheat, and Gibson, Dunn & Crutcher.\nL. Clifford Craig (argued and briefed), Taft, Stettinius & Hollister, Cincinnati, OH, Peter L. Eeabert, Deloitte, Haskins & Sells, New York City, Robert B. Craig (briefed), Taft, Stettinius & Hollister, Crestview Hills, KY, for Deloitte, Haskins & Sells.\nMichael D. Meuser, Frank T. Becker, Harry B. Miller, Jr., Robert S. Miller (argued and briefed), Miller, Griffin & Marks, Lexington, KY, for Norman D. Owens and American Intern. Bloodstock Agency, Inc.\nScott R. McIntosh (briefed), U.S. Dept, of Justice, Appellate Div., Washington, DC, Barbara C. Biddle, U.S. Dept, of Justice, Appellate Staff, Civ. Div., Mark B. Stern (argued), U.S. Dept, of Justice, Civ. Div., Washington, DC, for amicus curiae U.S. and Securities and Exchange Com’n.\nKathryn Oberly (briefed), Washington, DC, for amicus curiae Arthur Andersen & Co., Ernst & Young, KPMG Peat Marwick and Price Waterhouse.\nBefore: KEITH and BATCHELDER, Circuit Judges; and CHURCHILL, Senior District Judge.\nThe Honorable James P. Churchill, Senior United States District Judge for the Eastern District of Michigan, sitting by designation."} | KEITH | BATCHELDER | CHURCHILL | 1 | 2 | 1 | 1 | 0 | 0 | 1 F.3d 1487 | [
{
"content": "You are an expert legal coding assistant trained to classify U.S. federal Courts of Appeals\ncases using an adaptation of the Supreme Court Database (SCDB_2023_01) codebook. You follow the coding procedure\nin the codebook step by step and use the precise definitions of terms presented in the code... |
10,517,969 | UNITED STATES of America, Plaintiff-Appellee, v. Patricia S. CHICHY (92-3481); Shelton Galloway, Jr. (92-3497), Defendants-Appellants | United States v. Chichy | 1993-08-06 | Nos. 92-3481, 92-3497 | United States Court of Appeals for the Sixth Circuit | {"judges": ["Before: MILBURN and BOGGS, Circuit Judges; and CONTIE, Senior Circuit Judge."], "parties": ["UNITED STATES of America, Plaintiff-Appellee, v. Patricia S. CHICHY (92-3481); Shelton Galloway, Jr. (92-3497), Defendants-Appellants."], "opinions": [{"text": "CONTIE, Senior Circuit Judge.\nDefendants-appellants, Patricia S. Chichy and Shelton Galloway, appeal their convictions and sentences for conspiracy to commit an offense against the United States in violation of 18 U.S.C. § 371 and for making false, fictitious, or fraudulent statements to an agency of the United States in violation of 18 U.S.C. §§ 1001 arid 2. For the following reasons, we reverse in part and affirm in part.\nI.\nThis case arose from a Federal Bureau of Investigation (FBI) investigation of fraudulent loan applications made by clients of Beachwood Realty in order to obtain FHA insured mortgage loans. Specifically, defendant Galloway was charged with attracting potential home buyers to his employer Beachwood Realty, promising applicants that they could obtain a loan by creating nonexistent employment or artificially increasing the salary of existing employments, steering applicants to a co-conspirator loan officer at a mortgage company for loan applications and qualifications, and creating false and fraudulent income and employment documentation.\nSpecifically, defendant Chichy, a mortgage loan officer at the Centrust Mortgage Corp., was indicted because she knew or should have known of the false and fraudulent income and employment for numerous FHA loan applicants when she accepted loan applications signed by applicants while said forms were blank, failed to question applicants about employment and income during face-to-face loan application interviews in violation of HUD-FHA regulations, failed to verify income and employment documentation received from Beachwood Realty in violation of Centrust’s regulations, and ignored truthful and accurate information provided to her by the loan applicants.\nThe procedure used by the United States Departments of Housing and Urban Development (HUD) and Federal Housing Administration (FHA) in offering a program of mortgage insurance for single-family housing for qualified buyer/applicants is as follows. A purchaser seeking an FHA-insured mortgage loan selects a residence and executes a binding purchase agreement, specifying FHA financing for that property. Once the purchase agreement is executed, the realtor refers the purchaser to a mortgage company that is qualified as a direct endorser on behalf of HUD-FHA in order that the purchaser may make application for FHA financing. In offering mortgage insurance, HUD-FHA relies upon “direct endorsement” of mortgage loans by qualified mortgage companies, which take loan applications, document and verify those applications, and approve loans for FHA insurance. In so doing, a direct-endorsing company acts as an agent for HUD-FHA.\nIn the present case, it' was alleged that Beachwood Realty, which was owned and operated by co-conspirators Earsie and Olin Walker, would direct its clients wishing to obtain HUD-FHA insured financing to either Centrust or Cornerstone Mortgage Company, which acted as direct endorsers of FHA mortgage loans from 1988 through 1990. Beachwood Realty directed the loan applicant to a specific “loan officer” or “loan originator” at the mortgage company, whose function in the scheme was to take the purchaser’s application using fraudulent information that would be acceptable for FHA insurance purposes in assembling a loan package. From 1987 through October 1991, defendant Chichy was employed as a loan officer at Centrust Mortgage Corp. Co-conspirator John Storey was employed as the loan officer at Cornerstone Mortgage Co.\nA standardized residential loan application form for an FHA insured loan requires the loan officer to certify that the loan officer took the loan application in a face-to-face interview with the borrower-applicant. HUD-FHA regulations require that the mortgage company obtain from, and verify with, the loan applicant the documents submitted to establish income and employment. Centrust therefore required verification of these documents, such as Forms W-2 and pay stubs, by the loan officer directly with the applicant at the time of the loan application, and also required the applicant to sign the loan application form at the time of the “face-to-face” loan application interview.\nThe FBI investigation of Beachwood Realty uncovered evidence of numerous fraudulent loan applications made by its clients between April 1988 and March 1990. The client-loan applicant would be provided by Beachwood Realty with false documentation of jobs that did not exist, such as false Forms W-2 and pay stubs, or the applicant’s salary would be drastically inflated for jobs the applicants actually held. Affordable Alarms, which was owned by defendant Galloway and operated on the premises of Beachwood Realty, was one of the front companies used to create false jobs and incomes which did not exist for the loan applicants. Other companies included Boyd Construction Company, Todd Moving Company and Joe’s Place. Clients of Beachwood Realty would be directed to either defendant Chichy at Centrust or co-conspirator John Storey at Cornerstone, who would assist in the preparation of a loan application which contained false employment information or contained income and employment figures not verified or provided by the loan applicant.\nThe FBI investigation led to the return of a 27-count indictment on October 1, 1991, against Olin and Earsie Walker, Galloway, Storey, and Chichy. Trial was set for December 16, 1991, but on December 7, 1991, Olin Walker died. On December 19, 1991, a superseding indictment was returned against the remaining four defendants. The superseding indictment contained in count 1 a conspiracy charge against Earsie Walker, Galloway, Storey, and Chichy, which encompassed 25 fraudulent mortgage loans. The superseding indictment also included 20 substantive counts of making and causing to be made false statements in connection with FHA and VA loans.\nOn January 21, 1992, co-conspirators Sto-rey and Earsie Walker pled guilty to two . substantive counts pursuant to an agreement that the remaining counts against them would be dismissed at the time of sentencing. Trial then commenced on January 21, 1992 for defendants Galloway and Chichy.\nOn February 10, 1992, the jury returned verdicts of guilty against defendant Chichy on counts 1 (the conspiracy), 3 (the Jasper loan), 4 (the Brown loan), 5 (the Austin loan), 16 (the Saafir loan), 18 (the Warren loan), and 21 (the Allen loan). On the same day, the jury found Shelton Galloway guilty on counts 1 (the conspiracy), 2 (the Hubbard loan), 9 (his own loan), 11 (the Shahid loan), 19 (the Samuels loan) and 20 (the Summers loan).\nAt a sentencing hearing conducted for both defendants on May 12, 1992, the United States presented evidence that HUD-FHA had already paid a claim of $57,150 on the Brown loan (count 4), and that the Austin loan (count 5), the Hubbard loan (count 7), as well as the Brooks loan (included in count 1, but not charged as a substantive count) had gone into default, a step immediately prior to foreclosure.\nThe district court, at the conclusion of the sentencing hearing, enhanced each defendant’s base offense level by two levels for role in the offense under U.S.S.G. § 3Bl.l(c) and two levels for more than minimal planning under U.S.S.G. § 2Fl.l(b)(2). The base offense level for fraud and deceit under U.S.S.G. § 2F1.1 is 6. An enhancement is to be made according to a table based on the amount of loss. In the present case, the total overall adjustment based on the calculation of the loss was a six-level enhancement based on an estimate by the district court that the actual loss incurred by HUD-FHA would be in the range of $70,000-$120,000. With a total base offense level of 16 and a Criminal History Category of I, the sentencing range for each defendant was 21-27 months. The district court then sentenced defendant Chichy to 21 months imprisonment and defendant Galloway to 24 months imprisonment with two years’ supervised release to follow each sentence.\nBoth defendants timely filed an appeal.\nII.\nDefendants’ first assignment of error is that there is insufficient evidence to sustain them convictions on each count. The standard for reviewing a claim of insufficient evidence “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 crimes beyond a reasonable doubt.” United States v. Martin, 897 F.2d 1368, 1373 (6th Cir.1990). United States v. Glasser, 315 U.S. 60, 66, 62 S.Ct. 457, 463, 86 L.Ed. 680 (1942); United States v. Faymore, 736 F.2d 328, 334 (6th Cir.), cert. denied, 469 U.S. 868, 105 S.Ct. 213, 83 L.Ed.2d 143 (1984). This is a very difficult burden to overcome. In the present case, there is substantial evidence on the record from which the jury could have inferred each defendant’s guilt.\nNumerous witnesses who had been involved in the investigation of the fraudulent loan application scheme testified against defendants Chichy and Galloway at trial. The United States presented in its case-in-chief the testimony of official representatives of HUD-FHA and VA, and of representatives for Centrust and Cornerstone. Lee Federle of BRI, Business Risks International, who had been hired by Centrust Mortgage Corp., testified about his investigation of the Saafir loan, which triggered the FBI investigation. All of the loan applicants for the loans charged in the conspiracy count of the superseding indictment testified, except for the two applicants who could not be located for trial, Arlena Dixon, and Shelton Galloway (the defendant). Peter Washington, James Todd, and Leroy Boyd testified to their respective ownerships of Joe’s Place, Todd Moving Company, and Boyd Construction about their dealings (or lack thereof) with Olin Walker and Shelton Galloway in connection with using businesses as fronts for false employment and about the attempts to verify income and employment for various loan applicants. Representatives of the U.S. Social Security Administration and the Internal Revenue Service also* testified. FBI Special Agent Babetta D. Chiarito testified about her investigation of Beachwood Realty and about admissions made by defendant Chichy in the course of two interviews.\nMore specifically, in regard to defendant Chichy, the testimony of loan applicants Nathaniel Brown, Patricia Austin, and Linda Warren indicated that false information, which was contrary to the true information they provided during their face-to-face interview with defendant Chichy, was placed on their loan applications after their face-to-face interviews with her. Their testimony indicated that although correct pay stubs and income statements were provided to defendant Chichy, this information was not shown on their loan applications, but instead their applications were supported by fraudulent Foims W-2 and pay stubs or other false information, such as the amount of child support or a “gift affidavit” from a boy friend, not provided by the loan applicants. In other instances the income for existing jobs had been vastly inflated. When all reasonable inferences of this testimony are construed in favor of the government, a reasonable juror could conclude that defendant Chichy knowingly falsified and approved the 'loans with false income and employment information, signed these applications, and then submitted them to Centrust’s underwriting department.\nThe testimony of Rodney Jasper, Olivia Saafir, and Herman Allen indicated that they knowingly presented fraudulent loan applications supported by false Forms W-2 and pay stubs, containing various irregularities and discrepancies, which defendant Chichy failed to question them about in their face-to-face interviews with her and which she failed to verify as required. Because these documents contained the same deficiencies such as flaws in the copying of documents, irregularities in the typing of the false Forms W-2, bold face type on what was supposed to have been employee copies of actual Forms W-2, different references in two separate years to the name of the employer, and incorrect social security computations, and each loan applicant testified that defendant Chichy did not ask the required questions, a reasonable juror could infer that defendant Chichy knew the income and employment information was false and had been fabricated by Beachwood Realty, but approved the loan anyway.\nIn regard to defendant Galloway, witness Abdul Shahid testified that Galloway told him he would concoct a false job and income statement for him which was presented on his loan application, and that he never met with Olin Walker, the owner of Beachwood Realty, but dealt exclusively with defendant Galloway in making a fraudulent loan application. Roshell Samuels testified that Galloway told her that Beachwood Realty would come up with “some type of job for her” and income verification forms in order to obtain a FHA-insured loan. Angela Summers testified that Galloway told her he would help her get a house by giving her a false job as a cook at Joe’s Place and then showed her a loan application, which falsely reported her employment and income as a chef at Joe’s Place earning $28,000 per year, even though she had never worked at Joe’s Place and even though she had given her true pay stubs from her true employment to Galloway. In regard to his own loan application, Galloway submitted Forms W-2 from Beachwood Realty for 1987 and 1988 and copies of federal income tax returns for those years which were false, as neither the Forms W-2 nor tax returns had been filed with the IRS. This evidence .supports a conclusion that defendant Galloway tried to obtain for himself an FHA-insured loan with false and fraudulent documentation. Finally, in regard to the application of Russell Hubbard, which falsely listed as his employer Affordable Alarms, there was sufficient evidence to establish that Affordable Alarms and Beachwood Realty were joint enterprises of Olin and Earsie Walker and defendant Galloway, and that defendant Galloway knew or should have known that Affordable Alarms was being used as a front for Hubbard’s employment.\nBased on this testimony and other evidence that was produced with regard to the operation of the fraudulent loan scheme, the jury could conclude that defendants Chichy and Galloway were both guilty on the conspiracy count and that each defendant was guilty of the substantive counts for which he or she was convicted. The district court is affirmed on this issue.\nIII.\nDefendants next contend that the district court erred in increasing each defendant’s offense level two levels for more than minimal planning . under U.S.S.G. § 2F1.1(b)(2) in addition to a two level enhancement for aggravating role in the offense under U.S.S.G. § 3Bl.l(c).\nIn the present case, the district court enhanced each defendant’s offense level under U.S.S.G. § 2F1.1(b)(2), which states that “if the offense involved (A) more than minimal planning, or (B) a scheme to defraud more than one victim, increase by 2 levels.” Application Note 2 states that “More than minimal planning” is defined in the commentary to § 1B1.1, which states that more than minimal planning is “deemed present in any ease involving repeated acts over a period of time.” Because both defendants were involved in repeated false loan applications over a two-year period of time, the district court applied this adjustment to both defendants.\nThe district court also enhanced each defendant’s offense level by two levels under U.S.S.G. § 3Bl.l(c), which provides:\n§ 3B1.1. Aggravating Role\nBased on the defendant’s role in the offense, increase the offense level as follows:\n(a) if the defendant was an organizer or leader of a criminal activity that involved five or more participants or was otherwise extensive, increase by 4 levels.\n(b) If the defendant was a manager or supervisor (but not an organizer or leader) and the criminal activity involved five or more participants or was otherwise extensive, increase by 3 levels.\n(c) If the defendant was an organizer, leader, manager, or supervisor in any criminal activity other than described in (a) or (b), increase by 2 levels.\nDefendants contend that enhancements under both these guidelines constitutes impermissible double counting for the same conduct, relying on United States v. Romano, 970 F.2d 164, 167 (6th Cir.1992), in which this court stated that “if certain conduct is used to enhance a defendant’s sentence under one enhancement provision, the defendant should not be penalized for the same conduct under a separate provision.” In Romano, this court found improper separate enhancements for role in the offense as an organizer or leader under § 3Bl.l(a) and more than minimal planning under § 2Fl.l(b)(2), because more than minimal planning,-the conduct that is taken into account under § 2Fl.l(b)(2), is also required to qualify as an organizer under § 3Bl.l(a). Id. The rationale behind Romano is that a defendant should not be penalized for the same conduct under two different guideline provisions.\nThe government argues that Romano is distinguishable from the present case because the present case was decided under subsection (c) of § 3B1.1 rather than under subsection (a), and the district court, in applying the more than minimal planning provision of § 2F1.1(b)(2), focused on the fact that the scheme involved repeated acts over a period of time. We find it difficult to distinguish Romano for the following reasons. Although we recognize that an argument can be made that an enhancement for aggravating role in the offense as an organizer, leader, manager, or supervisor under § 3B1.1 requires additional actions on the part of a defendant other than “more than minimal planning” and that giving people orders is not the same as planning, we believe the Romano court took this argument into consideration and rejected it, and we feel we are bound by Romano. This court in Romano held that to be considered an organizer or leader under subsection (a) of § 3B1.1, a defendant would necessarily have to engage in more than minimal planning and that “[njothing in the Guidelines or its commentary indicates the Sentencing Commission intended cumulative punishment” for the same conduct. Id. We believe the same reasoning applies to subsection (c) of § 3B1.1. The primary difference between subsection (a) and subsection (c) is the number of people involved in the conspiracy, and the role of “organizer” and “leader” is considered under both subsections. An enhancement for the role of “manager” and “supervisor” is also provided for under subsection (c), but under the reasoning of Romano, it also necessarily requires that the defendant be engaged in more than minimal planning, which in the present case has already been taken into account by the enhancement under § 2Fl.l(b)(2). Under the logic of Romano, this results in impermissible double counting for the same conduct. Although it is possible for a defendant to receive an enhancement under § 2F1.1(b)(2) for more than minimal planning without being an organizer, leader, manager, or supervisor under § 3Bl.l(c), the converse is not true. A defendant cannot receive an enhancement for role in the offense under § 3Bl.l(c) unless he has engaged in more than minimal planning. Because we believe this case is governed by Romano, we reverse the district court and remand for resentencing. A two-level enhancement is warranted under either U.S.S.G. § 3Bl.l(c) or § 2Fl.l(b)(2), but not under both guidelines.\nIV.\nFinally, defendants contend that the district court erred in determining the enhancement for the amount of loss under U.S.S.G. §§ 2X1.1 and 2Fl.l(b).\nIn the present case, both defendants Chichy and Galloway were convicted of the conspiracy count and of various substantive counts involving specific fraudulent loan applications. Under U.S.S.G. § 3D1.2(b), the substantive counts of conviction for each defendant were properly grouped with the conspiracy count. See U.S.S.G. § 3D1.2, Application Note 4. Accordingly, the sentencing court was required only to consider conduct relevant to the conspiracy convictions in determining the defendants’ sentences. The guideline for conspiracies, attempts, and solicitations (§ 2X1.1) states in relevant part that the base offense level should be “the base offense level from the guideline for the substantive offense, plus any adjustments from such guideline for any intended offense conduct that can be established with reasonable certainty.” Application Note 2 to this guideline states that “substantive offense” means the “offense that the defendant was convicted of ... conspiring to commit.”\nThe United States argues that the guideline for the underlying substantive offense in the present case is found at U.S.S.G. § 2F1.1, the guideline for fraud and deceit. In considering the specific offense characteristic for the amount of the loss under U.S.S.G. § 2F1.1(b)(1), Application Note 7 provides that “consistent with the provisions of § 2X1.1 ..., if an intended loss that the defendant was attempting to inflict can be determined, that figure will be used if it is greater than the actual loss.” The government argues that in the present case, the intended loss was the total amount of the fraudulent loans “attempted, caused, or otherwise carried out,” in other words, the face value of the total proceeds of all the mortgage loans charged in the conspiracy count, which amounted to $1,563,000. The government argues that therefore each defendant’s base offense level should be increased by 12 levels pursuant to the table found at U.S.S.G. § 2Fl.l(b)(l)(M).\nA twelve-level increase based on the face value of all the mortgage loans charged in the conspiracy count is clearly erroneous in the present case because of an amendment to Application Note 7, which the government ignores. As of November 1, 1991, U.S.S.G. § 2F1.1 was amended to provide for exceptions to the statement relied on by the gov-eminent in Application Note 7 that “consistent with the provisions of § 2X1.1 , if an intended loss that the defendant was attempting to inflict can be determined, this figure will be used if it is greater than the actual loss.” One of the exceptions to this statement deals with fraudulent loan application cases such as the present case. The amendment to Application Note 7 states in relevant part:\n(b) Fraudulent Loan Application and Contract Procurement Cases\nIn fraudulent loan application cases and contract procurement cases where the defendant’s capabilities are fraudulently represented, the loss is the actual loss to the victim (or if the loss has not yet come about, the expected loss). For example, if a defendant fraudulently obtains a loan by misrepresenting the value of his assets, the loss is the amount of the loan not repaid at the time the offense is discovered, reduced by the amount the lending institution has recovered, or can expect to recover, from any assets pledged to secure the loan.\nBased on this amendment, defendant Chichy’s and Galloway’s base offense levels should have been increased based on the actual or expected loss to HUD-FHA ($70,-000-$120,000), and should not have been increased based on the total mortgage proceeds of all the loans charged in the conspiracy count ($1,563,000). The amendment to Application Note 7 of § 2F1.1 became effective November 1, 1991. Defendants were sentenced on May 14, 1992, and the amendment was thus applicable to their sentences as the sentencing court is to apply the guideline in effect at the time of sentencing. See Stinson v. United States, — U.S. -, 113 S.Ct. 1913, 123 L.Ed.2d 598 (1993) (U.S. Sentencing Commission’s commentary in federal sentencing guidelines is binding authority). Case law subsequent to the adoption of the amendment indicates that the loss calculation of U.S.S.G. § 2Fl.l(b) in cases of fraudulently induced bank loans should be based on the “actual” or “expected” loss rather than on the face value of the total amount of the loan proceeds. See United States v. Khan, 969 F.2d 218, 222 (6th Cir.1992) (the Sentencing Code does not provide for an automatic increase based on an estimate of fraud loss when there is an impossibility of any actual loss); United States v. Baum, 974 F.2d 496, 498-99 (4th Cir.1992) (in case where defendant plead guilty to making false statement to financial institution to obtain loan, lender’s “loss” is to be determined by potential consequences of default, not by total amount of loan proceeds); United States v. Mount, 966 F.2d 262, 265 (7th Cir.1992) (The Sentencing Commission’s notes defining “loss” in § 2F1.1 calls for the court to determine the net detriment to the victim rather than the gross amount of money that changes hands); United States v. Rothberg, 954 F.2d 217, 219 (4th Cir.1992) (defendant, who was convicted of making a false statement on a loan application and obtaining credit from a financial institution by fraudulent means, is to be sentenced based on “a reasonable estimate of the range of the [actual] loss”); United States v. Smith, 951 F.2d 1164, 1168-69 (10th Cir.1991) (commentary to Guideline 2F1.1 indicates sentencing court should focus on net loss in regard to defendant convicted of aiding and abetting false statements to a federally insured lending institution, and net loss must reflect value of property securing the loans); United States v. Kopp, 951 F.2d 521, 527 n. 9 (3rd Cir.1991) (noting that the court’s reasoning anticipates the amendment to U.S.S.G. § 2F1.1).\nIn the present case, the net result of the district court’s action was to comply with the dictates of U.S.S.G. § 2Fl.l(b) and the new amendment. Although the district court did not at first apply the amendment to Application Note 7, he anticipated its rationale. After initially increasing each defendant’s offense level by twelve based on the face value of the total proceeds of all the mortgage loans charged in the conspiracy count ($1,563,000), the district court then reduced the base offense level by six levels by downward departure based on what he considered to be the estimated actual loss. The district court stated that the actual or expected loss was not over $120,000. The table at § 2Fl.l(b)(l)(G) (see footnote 4) indicates that there should be a six-level enhancement based on a loss of $70,000-$120,000. By reducing the initial enhancement of twelve levels by six levels through downward departure, the district court achieved the same result (12 - 6 = 6) as specified by the table at § 2Fl.l(b)(l)(G) for a loss of between $70,000-$120,000. Thus the actual result of the district court’s overall decision was to increase each defendant’s offense level by only six levels, based on a loss determination of between $70,000 and $120,000.\nEven though under the guideline in effect at the time of sentencing, the district court should have increased each defendant’s offense level by six levels based on the “actual” or “estimated” loss to HUD-FHA of $70,-000-$120,000, rather than initially increasing the offense level by twelve based on the total of the mortgage loan proceeds ($1,563,000) and then subtracting six levels based on the actual or expected loss, the district court actually sentenced each defendant based on his estimate that the actual loss was $70,000-$120,000 in compliance with the guideline in effect at the time of sentencing. Because the district court corrected his initial error and reached the correct result, a remand in regard to this issue is not necessary. Under United States v. Rothberg, 954 F.2d at 219, the only issue this court must now determine is whether the district court’s loss calculation was a reasonable estimate of the actual loss.\nThe district court grappled with the complexity of determining actual loss in the present case. As the district court pointed out, it could be years before the actual loss to HUD-FHA on the fraudulently obtained loans is able to be determined. After a HUD-FHA loan goes into default, the actual loss cannot be determined until after a claim is paid by HUD-FHA, the property is sold in foreclosure proceedings, and the proceeds of the sale are applied against the claim. Costs which HUD-FHA could incur in retaking a property in a foreclosure proceeding figure directly into the loss and include payments for unpaid interest, taxes, repairs, maintenance, and sales expenses.\nThe government in the present ease introduced statistics indicating that HUD-FHA lost an average $18,032 on the 1,104 houses in the Cleveland area it had acquired through default in 1991. The United States also presented evidence that for any loan that could go into default through foreclosure, payment of a claim by HUD-FHA, and subsequent sale, the average loss to HUD-FHA was $18,558 during 1991, $19,748 in 1990, and $18,690 in 1989.\nIn the present case, at the time of sentencing, none of the loans had proceeded through the full cycle of default, foreclosure, claim payment, and subsequent sale in which HUD-FHA paid a claim to the mortgage company and then sold the property and applied the sale proceeds against the claims paid, which is what is required by Application Note 7 in order to calculate loss in fraudulent loan application cases. The Nathaniel Brown loan was the farthest along in the process. As of April 10,1992, HUD-FHA paid a claim of $57,150 on the Brown loan. To date, the government has not been able to sell the property, and no part of the claim paid on the Brown loan has been recouped by the United States. So at the time of sentencing, the United States had lost $57,150 on the Brown loan. In addition, three other loans involved in the conspiracy have gone into default (the Austin, Brooks, and Hubbard loans). The district court concluded that the actual loss to the government could be estimated to be between $70,000-$120,000 and ultimately adjusted both defendant Chichy’s and Galloway’s base offense levels based on that amount. If the average 1991 loss figure for loans in default for houses in the Cleveland area ($18,032) is multiplied by four (the number of loans in default), it is clear that the district court’s estimate has a reasonable basis, especially in light of the fact that a further estimate of additional loss would be in the court’s discretion for the likelihood that the loans which are presently current may go into default in the foreseeable future. Alternatively, it can be argued that if the court had taken the entire claim paid in the Brown loan of $57,150, used an average estimated expected loss for the other loans in default (Austin, Brooks, and Hubbard), and a reasonable estimate of expected loss for other current loans fraudulently obtained, the estimated loss would well exceed $120,000.\nDefendants’ contention that the actual loss should be determined to be 0 has no merit. Application Note 8 to U.S.S.G. § 2F1.1 states:\nFor the purposes of subsection (b)(1), the loss need not be determined with precision. The court need only make a reasonable estimate of the loss, given the available information. This estimate, for example, may be based on the approximate number of victims and an estimate of the average loss to each victim, or on more general factors, such as the nature and duration of the fraud and the revenues generated by similar operations.\nMoreover, Application Note 10 to § 2F1.1 provides that the dollar loss often “does not fully capture the harmfulness and seriousness of the conduct.” In the present case, the current dollar loss of $57,150 on the Brown loan (even though it may not be the final dollar loss on that loan) does not fully capture the harmfulness of the conduct in which over twenty-six loan applications were made using fraudulent information. In a case such as this when it may be years before the final actual loss to HUD-FHA is known, it was reasonable for the district court to use the method described for calculating an estimated loss (multiplying the average loss figure by the number of loans currently in default).\nIt was proper to assess the amount of loss for the loans in default against both defendants Galloway and Chichy, whether or not he or she was charged in regard to that loan in a substantive count, because under U.S.S.G. § lB1.3(a)(2), all acts that were part of the same course of conduct or common scheme or plan as the offense of conviction for which the defendant would be otherwise accountable are to be considered relevant conduct for sentencing purposes. Application Note 1 to § 1B1.3 states that “[i]n the case of criminal activity undertaken in concert with others, whether or not charged as a conspiracy, the conduct for which the defendant ‘would be otherwise accountable’ also includes conduct of others in furtherance of the execution of the jointly-undertaken criminal activity that was reasonably foreseeable by the defendant.” In the present case, the fraudulent loan applications of all the loans charged in the substantive counts were made in furtherance of the execution of a jointly-undertaken criminal activity that was reasonably foreseeable to defendants Galloway and Chichy. Contrary to defendant Galloway’s contention, the district court did not include in the “estimated” loss calculation the proceeds from the fraudulent loans where no actual loss was possible because the loans were subsequently disqualified by the underwriting department. Because the loans which had been denied in underwriting were not used to calculate the estimated actual loss of $70,000-$120,000, the prohibition of this court’s decision in United States v. Khan, 969 F.2d 218 (6th Cir.1992) does not apply.\nTo conclude, because the actual result of the district court’s decision was to increase the defendants’ offense levels based on the “actual” or “estimated” loss of $70,000-$120,-000, and the initial error of basing the loss on the face value of the total amount of the mortgage loan proceeds ($1,563,000) was harmless, the district court is affirmed on this issue.\nV.\nTo conclude, the district court is AFFIRMED in part and REVERSED in part. The district court’s denial of defendants’ motions for acquittal due to insufficient evidence is AFFIRMED. The district court’s enhancement of each defendant’s base offense level by six levels based on an estimated actual loss of $70,000-$120,000 is AFFIRMED. The district court’s two level enhancement under § 2F1.1(b)(2) in addition to a two level enhancement under § 3Bl.l(c) is prohibited by this court’s decision in Romano. Therefore, the district court is REVERSED in regard to this issue and the case is REMANDED for proceedings consistent with this opinion.\n. A similar procedure is used by the Veterans Administration (VA). One of the loans charged in the conspiracy was a VA loan.\n. The district court first increased the base offense level by 12 based on the face value of the total amount of the mortgage loans at issue in the conspiracy—$1,563,000. However, the district court then departed downward six levels on the ground that the actual \"loss here will not be anything approaching $1,563,000.” The district court estimated that the actual loss would not be more than $120,000 and departed downward accordingly. The net effect of the district court's actions was to increase each defendant’s base level for fraud and deceit under U.S.S.G. § 2F1.1 by 6 levels based on an estimated actual loss of $70,000-$ 120,000.\n. Defendant Chichy's argument that the indictment was insufficient has no merit. An indictment as drafted is presumed sufficient if it tracks the statutory language, cites the elements of the crimes charged, and provides approximate dates and times. United States v. American Waste Fibers Co., 809 F.2d 1044, 1046 (4th Cir.1987) (per curiam); United States v. Beebe, 792 F.2d 1363, 1366, n. 4 (5th Cir.1986); United States v. Love, 815 F.2d 53, 55 (8th Cir.), cert. denied, 484 U.S. 861, 108 S.Ct. 177, 98 L.Ed.2d 130 (1987); United States v. Largent, 545 F.2d 1039, 1043 (6th Cir.1976), cert. denied, 429 U.S. 1098, 97 S.Ct. 1117, 51 L.Ed.2d 546 (1977). The indictments in the present case are clearly sufficient based on these criteria.\n. The table at § 2F1.1 states:\n(b) Specific Offense Characteristics\n(1)If the loss exceeded $2,000, increase the offense level as follows:\nLoss (Apply the Greatest) Increase in Level\n(A) $2,000 or less no increase\n(B) More than $2,000 add 1\n(C) More than $5,000 add 2\n(D) More than $10,000 add 3\n(E) More than $20,000 add 4\n(F) More than $40,000 add 5\n(G) More than $70,000 add 6\n(H) More than $120,000 add 7\n(I) More than $200,000 add 8\n(J) More than $350,000 add 9\n(K) More than $500,000 add 10\n(L) More than $800,000 add 11\n(M) More than $1,500,000 add 12\n(N) More than $2,500,000 add 13\n(O) More than $5,000,000 add 14\n(P) More than $10,000,000 add 15\n(Q) More than $20,000,000 add 16\n(R) More than $40,000,000 add 17\n(S) More than $80,000,000 add 18.\n. This amendment is contrary to the holdings of the cases relied on by the government (See Brief of Appellee, p. 42), which were decided before the amendment became effective on November 1, 1991.\n. The district court departed downward pursuant to § 5K2.0, which directs the court to consider whether there exists an aggravating or mitigating circumstance of a kind not adequately taken into consideration by the Sentencing Commission.\n. The evidence indicated that the conspiracy involving the operators of Beachwood Realty and loan officers Storey at Cornerstone and defendant Chichy at Centrust involved 26 separate loan applications from February 1988, through March 1990. Of these loan applications, 16 were processed through Centrust and 10 through Cornerstone. Of the 26 loan applications, five were denied in underwriting at Centrust, and six were denied in underwriting at Cornerstone. Thus, of the '26 applications, 11 were denied in underwriting at the mortgage companies after they had been approved by defendant Chichy or co-conspirator Storey for various reasons such as poor credit, prior bankruptcies, inability to document a down payment, or inability to verify employment.\n. This court in Khan held that when no dollar loss is possible for reasons entirely unrelated to the fraud or its discovery, the court does not have available to it increases in sentencing based on fraud loss. In Khan, a fraudulent social security claim was denied because the applicant had not worked a sufficient number of quarters to obtain benefits. Thus, no actual loss was possible.", "type": "majority", "author": "CONTIE, Senior Circuit Judge."}], "attorneys": ["James V. Moroney, Asst. U.S. Atty. (argued and briefed), Cleveland, OH, for plaintiff-appellee.", "Richard G. Lillie (argued and briefed), Corso, Lillie & Kelly, Cleveland, OH, for defendant-appellant."], "corrections": "", "head_matter": "UNITED STATES of America, Plaintiff-Appellee, v. Patricia S. CHICHY (92-3481); Shelton Galloway, Jr. (92-3497), Defendants-Appellants.\nNos. 92-3481, 92-3497.\nUnited States Court of Appeals, Sixth Circuit.\nArgued June 21, 1993.\nDecided Aug. 6, 1993.\nJames V. Moroney, Asst. U.S. Atty. (argued and briefed), Cleveland, OH, for plaintiff-appellee.\nRichard G. Lillie (argued and briefed), Corso, Lillie & Kelly, Cleveland, OH, for defendant-appellant.\nBefore: MILBURN and BOGGS, Circuit Judges; and CONTIE, Senior Circuit Judge."} | MILBURN | BOGGS | CONTIE | 1 | 1 | 1 | 0 | 0 | 0 | 1 F.3d 1501 | [
{
"content": "You are an expert legal coding assistant trained to classify U.S. federal Courts of Appeals\ncases using an adaptation of the Supreme Court Database (SCDB_2023_01) codebook. You follow the coding procedure\nin the codebook step by step and use the precise definitions of terms presented in the code... |
10,518,009 | UNITED STATES of America, Plaintiff-Appellee, v. F.J. VOLLMER & COMPANY, INC., and Kenneth L. Nevius, Defendants-Appellants | United States v. F.J. Vollmer & Co. | 1993-07-30 | Nos. 92-2713, 92-2322 | United States Court of Appeals for the Seventh Circuit | {"judges": ["Before CUMMINGS and CUDAHY, Circuit Judges, and ESCHBACH, Senior Circuit Judge."], "parties": ["UNITED STATES of America, Plaintiff-Appellee, v. F.J. VOLLMER & COMPANY, INC., and Kenneth L. Nevius, Defendants-Appellants."], "opinions": [{"text": "ESCHBACH, Senior Circuit Judge.\nIn this direct criminal appeal, the corporate defendant and individual defendant challenge their convictions for conspiracy to defraud the United States and for mail fraud. The individual defendant also appeals his conviction for false statement. We have jurisdiction pursuant to 28 U.S.C. § 1291. We affirm in part, reverse in part, and reverse and remand in part.\nI.\nA.\nF.J. Vollmer & Company (“F.J. Vollmer”) holds a federal firearms license, and eighty percent of its business is buying and selling firearms. Kenneth L. Nevius (“Nevius”), a Captain on full-time active duty in the Illinois National Guard, and F.J. Vollmer were charged by indictment with conspiracy to defraud the United States in violation of 18 U.S.C. § 371 (Count 1), and mail fraud in violation of 18 U.S.C. § 1341 (Counts 14, 15, 16, 17 and 18). Nevius was also charged with making a false statement in violation of 18 U.S.C. § 1001 (Count 5). All of the charges arose from the defendants’ participation in the purchase and resale of Steyr AUG-SA rifles from Gun South, Inc. (“GSI”), a firearms importer.\nNevius entered a conditional plea of guilty to Counts 1, 5, and 18, reserving the right to appeal the district court’s denial of his motion to dismiss the indictment. Following a jury trial, Robert Vollmer was acquitted of all counts against him. F.J. Vollmer was acquitted of two counts of mail fraud, but found guilty of three counts of mail fraud and one count of conspiracy. F.J. Vollmer filed motions for judgment of acquittal or, in the alternative, for a new trial. The district court denied these motions. 792 F.Supp. 616.\nB.\nThe Secretary of the Treasury, Nicholas Brady, acting through the Bureau of Alcohol, Tobacco and Firearms (“BATF”), imposed a temporary ban on the importation of various semi-automatic rifles, including the Steyr AUG-SA. At that time, GSI held valid BATF permits for the importation of Steyr AUG-SA rifles and had already remitted payment to the manufacturer for over 1,000 rifles. When the Steyr AUG-SA rifles arrived in the United States, however, they were seized by the United States Customs Service.\nGSI filed suit against the Secretary of the Treasury in the Northern District of Alabama, seeking to enjoin the government from interfering with the delivery of the firearms. The district court granted the injunctions. Gun South, Inc. v. Brady, 711 F.Supp. 1054 (N.D.Ala.1989). On appeal, the United States Court of Appeals for the Eleventh Circuit reversed the district court’s order, finding that BATF was acting within its authority in imposing the temporary import ban. Gun South, Inc. v. Brady, 877 F.2d 858 (11th Cir.1989).\nFollowing the Eleventh Circuit’s decision, the import ban on Steyr AUG-SA rifles became permanent. The ban bars private parties from importing Steyr AUG-SA rifles. Government agencies such as the National Guard remain free to import the rifles for their official use. 18 U.S.C. § 925(a)(1). Once a government agency lawfully imports a firearm under section 925(a)(1), the agency is not required to retain the firearm for any specific period of time, and the agency remains free to resell it to third parties.\nOn remand from the Eleventh Circuit, GSI and BATF entered into a voluntary settlement agreement pursuant to Fed.R.Civ.P. 41(a)(l)(ii). This agreement was reduced to a “Stipulation and Order” entered by the Alabama district court. Under the terms of the agreement, GSI took possession of the rifles and agreed to sell the firearms only to law enforcement officers or agencies after it obtained advanced written permission from BATF for each sale. To obtain that approval, each prospective purchaser had to submit a purchase order certifying that the rifle would be used in the officer’s official duties and that the rifle was not being purchased for purposes of transfer or resale. A supervisory official also had to certify that the law enforcement officer could use the rifle in connection with his or her official duties and that the agency’s policies allowed officers to carry and use personally owned firearms.\nC.\nIn the summer of 1990, Nevius saw a GSI advertisement in the Shotgun News, offering Steyr AUG-SA rifles for sale to law enforcement personnel at a price of $1,380. He also saw F.J. Vollmer’s advertisement, which stated that it would pay $2,200 for new Steyr AUG-SA rifles. Nevius then contacted GSI and confirmed that as a military officer he was eligible to purchase a Steyr AUG-SA rifle.\nNevius obtained an information packet from GSI setting forth formats for the various documents required to accompany a purchase order. Nevius prepared the necessary correspondence on his National Guard unit’s stationery to purchase two Steyr AUG-SA rifles, including a signed statement that the firearms were being purchased in connection with his official duties and not for the purpose of resale. He then obtained the required supervisory certification from a superior officer and ordered the rifles using funds from his savings account. Upon receiving the rifles, Nevius took them to F.J. Vollmer and sold them.\nA few weeks later, Nevius put together a second transaction, again for two rifles. Nevius asked Sergeant James McCabe, one of his subordinates, to sign the necessary purchase order. Nevius signed the supervisory certification himself and again withdrew money from his savings account to finance the purchase.\nSeveral months later, Nevius arranged another purchase, this time for eight rifles. Because there was a limit of two rifles per purchaser, Nevius approached four subordinates to sign the purchase orders. All four agreed and signed statements that the firearms were being purchased in connection with their official duties and not for resale. In exchange for their signatures, Nevius agreed to pay each of them either $100 or $200. (Tr. 345). To finance the transaction,' Nevius borrowed money from the First National Bank of Taylorville, using an automobile as collateral.\nOver the next seven months, Nevius put together the documentation for five more transactions, following the same format. In all, Nevius acquired a total of 60 Steyr AUG-SA assault rifles and 11 Steyr AUG-SA rifle components known as special receivers. The receivers were classified as assault rifles and were also subject to the ban. All the assault rifles and receivers, save one Steyr AUG-SA rifle that Nevius retained for his personal collection, were delivered to F.J. Vollmer.\nIn the final transaction, Nevius ordered fourteen rifles. After Nevius picked up the packages at the United Parcel Service (“UPS”) office, he was approached by BATF agents. The agents questioned him first at the UPS office and then at his home. They seized the rifles and receivers just delivered as well as the Steyr AUG-SA rifle from Nevius’ personal collection.\nTwo days later, a BATF agent came to Nevius’ home, and Nevius agreed to cooperate with BATF. While the agent was with him at his home, Nevius called Robert Vollmer and made arrangements to deliver the fourteen rifles and seven receivers. Both the telephone conversation and the subsequent delivery were recorded by BATF agents. This delivery took place during regular business hours and the tape recording reflects conversation between Nevius and F.J. Vollmer employees about the possibility of “getting into trouble”.\nNevius and F.J. Vollmer both filed motions to dismiss the indictment (R. 29, 32), which the district court denied. Nevius then entered a conditional plea of guilty to Count 1 (conspiracy), Count 5 (false statement) and Count 18 (mail fraud) under which Nevius reserved the right to appeal the denial of his motion to dismiss the indictment.\nThe jury acquitted Robert Vollmer, the only agent of F.J. Vollmer prosecuted, of all six counts against him and acquitted the corporation of the mail fraud counts arising from two of the transactions. F.J. Vollmer was found guilty of mail fraud on three counts and of conspiracy to defraud the United States. Following the return of the verdicts, the court did not immediately accept them, and counsel for F.J. Vollmer requested that the jury be polled. However, after an exchange regarding a motion for acquittal, the district court dismissed the jury without polling it.\nOn appeal, F.J. Vollmer raises seven issues, the first three of which Nevius adopts. F.J. Vollmer argues: (1) that the district court erred in imposing criminal liability solely on the basis of a civil settlement agreement; (2) that the BATF exceeded its authority when it entered the settlement agreement; (3) that the convictions are based on a de facto agency rule that was not promulgated in compliance with the Administrative Procedures Act (APA); (4) that the government failed to allege or prove that the conspiracy interfered with a lawful government function; (5) that the government failed to allege or prove that the mail fraud deprived the government of a property right; (6) that the district court deprived F.J. Vollmer of its Sixth Amendment right to a unanimous verdict by failing to poll the jury; and (7) that the district court erred in excluding evidence under Federal Rule of Evidence 608(b). In addition, Nevius argues that his conviction must be reversed because the indictment was insufficient as a matter of law to allege conspiracy to defraud the United States, mail fraud and false statement. We affirm in part, reverse in part, and reverse and remand in part.\nII.\nWe may easily dispose of the arguments that the convictions are based on the violation of a settlement agreement and that the convictions are based on rules promulgated in violation of the APA. F.J. Vollmer and Nevius were not convicted of violating a settlement agreement. They were both charged with and convicted of violating 18 U.S.C. §§ 371 and 1341, which prohibit conspiring to defraud the United States or an agency thereof and mail fraud. In addition, Nevius was charged with and convicted of making a false statement in violation of 18 U.S.C. § 1001. The indictment and jury instructions specifically stated the elements of these federal crimes. At no time did the government allege or argue that F.J. Vollmer and Nevius should be convicted for violating a settlement agreement. Further, because the convictions are not based on the violation of the settlement agreement, the defendants’ argument that the settlement agreement constitutes an improperly promulgated de facto substantive agency rule is irrelevant. Accordingly, we need not consider whether the settlement agreement was promulgated in accordance with the Administrative Procedures Act (APA), 5 U.S.C. § 551 et seq. Thus, we consider the next argument; whether BATF had authority to regulate the transfer of an assault rifle from GSI to Nevi-us.\nThis is apparently a question of first impression in this circuit, and we conclude that the BATF’s exercise of authority was properly within its purview. F.J. Vollmer and Nevius argue that Congress has given BATF no authority to regulate domestic sales of firearms. They conclude that the rifles were imported once GSI took possession of them; thus, the settlement agreement regulates the domestic sale of firearms. Under this argument, therefore, both the settlement agreement and BATF’s limitations on the sales of Steyr AUG-SA rifles by GSI exceed the authority granted BATF by Congress. Although the defendants’ argument seems persuasive on its face, we agree with other courts that have considered the issue that BATF’s authority extends to the first domestic sale of a firearm imported for government use.\nThe importation of firearms into the United States is governed by §§ 922 and 925 of the Gun Control Act of 1968, 18 U.S.C. §§ 921-929. Section 922(i) broadly prohibits the importation of all firearms into the United States except as provided in § 925(d). However, federal, state or local agencies may import firearms pursuant to § 925(a)(1) which provides that the prohibition of § 922(i):\nshall not apply with respect to the transportation, shipment, receipt, possession, or importation of any firearm or ammunition imported for, sold or shipped to, or issued for the use of, the United States or any department or agency thereof or any state or any department, agency or political subdivision thereof.\n18 U.S.C. § 925(a)(1). We conclude that this language grants BATF authority to regulate the transfer of a firearm from an importer to the law enforcement agency for which the firearm was imported. For purposes of this opinion, we refer to this as a “first sale.”\nA common maxim of statutory construction is that statutes are to be construed so as to give meaning to every word in them. Indianapolis Power and Light Co. v. Interstate Commerce Comm’n., 687 F.2d 1098, 1101 (7th Cir.1982). Further, as the Third Circuit so aptly noted, “[w]e agree to all the generalities about not supplying criminal laws with what they omit, but there is no canon against using common sense in construing laws as saying what they obviously mean.” United States v. Lanni, 466 F.2d 1102, 1109 (3rd Cir.1972). In order for § 925(a)(1) to have meaning, some authority must exist to ensure that the exception to § 922(i) is employed only by governments or their agencies. Thus, BATF must have the authority to require truthful statements about the purpose for the purchase of weapons. As we cannot impute to Congress the intent to allow firearms purchasers to lie, we conclude that BATF has the authority to regulate “first sales” pursuant to § 925(a)(1).\nThis conclusion is supported by the importation regulations set forth at 27 C.F.R. § 178. All importations of firearms into the United States must be approved by the Director of BATF. 27 C.F.R. § 178.112. Furthermore, firearms may be imported for a governmental department or agency and “may be released from Customs custody upon a showing that the firearm ... is being imported or brought into the United States by or for such a governmental entity.” 27 C.F.R. § 178.115(b). Likewise, the BATF notes in ATF Ruling 80-8 that “[§ 925(a)(1) | was not intended and may not be used as a vehicle by which unimportable firearms can be introduced into ordinary commercial channels in the United States.” 1980-2 Algohol, Tobacco and Fireasms Quarterly Bulletin 20. These regulations indicate that BATF relies upon truthful statements when allowing importation for a governmental entity or agency. Finally, we note that other courts support our conclusion that BATF has the authority to ensure that firearms imported for governmental agencies are truly used for official purposes. See United States v. Goodman, 639 F.Supp. 802 (M.D.Pa.1986); United States v. Mastro, 570 F.Supp. 1388 (E.D.Pa.1983).\nF.J. Vollmer and Nevius contend that our determination that BATF has authority to regulate first sales does not end our inquiry regarding the proper scope of BATF’s authority. They contend that GSI did not import the Steyr AUG-SA rifles pursuant to § 925(a)(1); it imported them pursuant to a voluntary settlement agreement. They argue that the Secretary of Treasury had no authority to circumvent the normal procedures for importing firearms. Century Arms, Inc. v. Kennedy, 323 F.Supp. 1002, 1011 (D.Vt.1971) (district court held that by barring importation of the firearms, the Secretary was “refusing to grant an exemption ivhich, he had no authority to grant.\") (emphasis added). This leads the defendants to conclude that the settlement agreement, because it allowed importation of firearms in a manner outside the normal procedures, is illegal and of no effect. Since BATF thus acted outside its authority to regulate the sale, defendants argue that their convictions should be reversed.\nThe government points out that regulations promulgated under 18 U.S.C. § 926 allow alternate methods for gaining BATF approval for the importation of firearms under § 925.\nThe Director may approve an alternate method or procedure, subject to stated conditions, when it is found that:\n(1) Good cause is shown for the use of an alternate method or procedure;\n(2) The alternate method or procedure is within the purpose of, and consistent with the effect intended by, the specifically prescribed method or procedure and that the alternate method or procedure is substantially equivalent to that specifically prescribed method or procedure; and\n(3) The alternate method or procedure will not be contrary to any provision of law and will not result in an increase in cost to the Government or hinder the effective administration of [this import regulation].\n27 C.F.R. § 178.22.\nF.J. Vollmer in its reply brief then argues that BATF did not follow this alternate procedure. It concludes that because BATF did not follow its own procedure, the settlement agreement is illegal and of no effect. Even if it were appropriate for us to do so, we could not decide this issue because we do not have a record before us to make this determination. This narrow issue was not discussed in the motions to dismiss the indictment, nor was it brought up before the district court by either party. It is clear from the Stipulation and Order entered pursuant to the settlement agreement (R. 29, Ex. 2) that BATF believed that it was acting within its authority under § 925(a)(1) in entering the settlement agreement, and it believed that this statutory provision controlled these sales. F.J. Vollmer did not contend that BATF was acting outside its own regulations for alternate procedures until this appeal. We will not, therefore, decide this question, and we conclude that for purposes of this case, BATF was' acting within its legislative gTant of authority.\nIII.\nNevius entered a conditional plea of guilty, reserving the right to appeal the denial of his motion to dismiss the indictment. He alleges that the indictment is insufficient to charge conspiracy to defraud the United States, mail fraud, and false statement. He argues that the conspiracy conviction must be reversed because the indictment failed to allege that the conspiracy interfered with a lawful government function as required by Dennis v. United States, 384 U.S. 855, 861, 86 S.Ct. 1840, 1844, 16 L.Ed.2d 973 (1966). He next argues that the mail fraud count failed to allege that the scheme to defraud deprived the government of a property right as required by McNally v. United States, 483 U.S. 350, 360, 107 S.Ct. 2875, 2881, 97 L.Ed.2d 292 (1987). Finally, Nevius argues that the indictment was insufficient to charge false statement because the statements did not pertain to a matter “within the jurisdiction” of the Bureau of Alcohol, Tobacco & Firearms. An indictment is sufficient if it: (1) states all the elements of the offense charged; (2) informs the defendant of the nature of the charge, enabling the defendant to prepare a defense; and (3) enables the defendant to plead the judgment as a bar to later prosecution for the same offense. United States v. James, 923 F.2d 1261, 1265 (7th Cir.1991) (citing cases).\nWe address Nevius’ claim with regard to the false statement charges first. Nevius contends that the statements did not pertain to a matter “within the jurisdiction” of the Bureau of Alcohol, Tobacco & Firearms. The false statement statute, 18 U.S.C. § 1001, imposes penalties on one who makes a statement that was false, was material, was made knowingly and willfully and was made in a matter within the jurisdiction of any department or agency of the United States. The issue of jurisdiction in the context of a violation of § 1001 is a question of law, and a department or agency has jurisdiction only when it has the power to exercise authority in a particular situation. United States v. Rodgers, 466 U.S. 475, 479, 104 S.Ct. 1942, 1946, 80 L.Ed.2d 492 (1984).\nNevius argues that BATF lacked the power to regulate the sales of Steyr AUG-SA rifles from GSI to Nevius because BATF does not have the authority to regulate domestic sales of firearms. However, we resolved this issue in our earlier discussion, when we concluded that BATF was acting within its proper jurisdiction in regulating “first sales”. Therefore, Nevius’ conviction for false statement is affirmed.\nFederal Rule of Criminal Procedure 12(b)(2) requires that a defendant must raise any objection to the indictment prior to trial. Without objection, the “indictment should ‘be upheld unless it is so defective that it does not, by any reasonable construction, charge an offense for which the defendant is convicted.’ ” James, 923 F.2d at 1266 (quoting United States v. Gironda, 758 F.2d 1201, 1210 (7th Cir.), cert. denied, 474 U.S. 1004, 106 S.Ct. 523, 88 L.Ed.2d 456 (1985)).\nNevius objected to the sufficiency of the indictment to charge conspiracy and mail fraud, but he did not do so on all the grounds alleged here. In his motion to the district court, he argued that the indictment was insufficient because BATF acted without authority and because the settlement agreement between BATF and GSI was a rule promulgated in violation of the APA. He did not argue that the indictment was insufficient on the basis of Dennis or McNally. Therefore, we will reverse as to Nevius only if the indictment is so defective that no reasonable construction charges conspiracy to defraud or mail fraud.\nF.J. Vollmer did object to the indictment on the basis of Dennis and McNally. Therefore, we will uphold the indictment with regard to F.J. Vollmer if it stated the elements, informed F.J. Vollmer of the nature of the charge and enabled F.J. Vollmer to plead the judgment as a bar to later prosecution. James, 923 F.2d at 1265. Also, because F.J. Vollmer’s conviction rests upon a jury verdict, F.J. Vollmer challenges both the sufficiency of the indictment and the sufficiency of the evidence on the conspiracy count and the mail fraud counts. When considering a sufficiency of the evidence challenge, we “review all the evidence and all the reasonable inferences that can be drawn from the evidence in the light most favorable to the government.... We will overturn a verdict only when the record is devoid of any evidence, regardless of how it is weighed, from which a jury could find guilt beyond a reasonable doubt.” United States v. Durrive, 902 F.2d 1221, 1223 (7th Cir.1990) (quotations and citations omitted).\nKeeping in mind the standards set forth above, we first consider whether the indictment was sufficient to allege a conspiracy to defraud the United States. The defendants were charged under 18 U.S.C. § 371, which is a broad criminal statute that prohibits conspiracies to “defraud the United States, or any agency thereof in any manner or for any purpose.” The Supreme Court has held that the conspiracy to defraud element of 18 U.S.C. § 371 encompasses only conspiracies in which the defendants intended either to cause the government property or pecuniary loss or interfere with or obstruct a lawful government function. Hammerschmidt v. United States, 265 U.S. 182, 185, 44 S.Ct. 511, 511, 68 L.Ed. 968 (1924); Dennis v. United States, 384 U.S. 855, 861, 86 S.Ct. 1840, 1844, 16 L.Ed.2d 973 (1966). It is conceded that the government did not pursue conspiracy convictions on the basis of property or pecuniary loss. Therefore, the conspiracy convictions can stand only if the conspiracy interfered with a lawful government function.\nThe defendants argue first that BATF was not performing a legitimate government function. As we discussed fully earlier in this opinion, BATF was acting within its authority in regulating the first sale by GSI. Therefore, we move on to the defendants’ second argument; which is that the indictment did not state and the government did not prove interference with a lawful government function. We conclude after reviewing the indictment and the record as a whole that the government alleged and proved interference with a lawful government function.\nIn Dennis, the defendants, officers of the International Union of Mine, Mill and Smelter Workers, were prosecuted for conspiring to fraudulently obtain the services of the National Labor Relations Board (NLRB) on behalf of a union by filing false non-Communist affidavits. On review, the Supreme Court considered whether the indictment was sufficient to state the offense of conspiracy to defraud the United States. The defendants argued that on the basis of Hammerschmidt v. United States, 265 U.S. 182, 44 S.Ct. 511, 68 L.Ed. 968 (1924), the indictment was insufficient because it did not allege interference with a lawful government function. The basis for this argument was that the NLRB was required to certify any union whose officers filed non-Communist affidavits without regard to the veracity of the affidavits. The Court decided that if the indictment reflects the essence of the alleged offense, the indictment will be upheld. The Court stated:\nThe facts are, according to the indictment, that petitioners and their co-conspirators could not have obtained the Board’s services and facilities without filing non-Communist affidavits; that the affidavits were submitted as part of a scheme to induce the Board to act; that the Board acted in reliance upon the fact that affidavits were filed; and that these affidavits were false. Within the meaning of § 371, this was a conspiracy to defraud the United States or an agency thereof.\nDennis, 384 U.S. at 862, 86 S.Ct. at 1844.\nIn United States v. Haga, 821 F.2d 1036, 1041 (5th Cir.1987), the Fifth Circuit noted that it is “not altogether clear whether a ‘conspiracy to defraud’ indictment must specifically allege that the conspiracy had as its object interfering with a particular, specific governmental function_” Fortunately, we need not decide this difficult question because the indictment at issue in this case included language expressly naming the governmental agency. The indictment indicated that the conspiracy actively interfered with the agency’s specific function in a definite manner by contravening the normal requirements for the procurement of Steyr AUG-SA rifles. In Count I, the indictment alleged that:\nBeginning about June 1990 and continuing through September 1991, in the Central District of Illinois, Kenneth L. Nevius, F.J. Vollmer and Company, Inc., Robert W. Vollmer, James B. McCabe and other persons known to the grand jury conspired together and with each other to defraud the United States of America and the Bureau of Alcohol, Tobacco and Firearms (ATF) by providing false and fraudulent documents to the Bureau of Alcohol, Tobacco and Firearms for the purpose of obtaining Steyr AUG-SA assault rifles in contravention of the requirements for sale of such weapons and for the purpose of resale in general commerce.\nIndictment, R. 17 at 3. As long as the indictment charges a conspiracy “showing ... more than inadvertent contact with a governmental agency or incidental infringement of government regulations,” it is sufficient to charge the essence of the criminal offense. Haga, 821 F.2d at 1041. That test is met in this case. The indictment stated that false documents were given to BATF in contravention of the normal requirement. The indictment also made clear that BATF would not release the weapons unless it received certification that the weapons were not being purchased for purposes of resale. Further, the indictment stated that GSI could not sell the weapons without BATF’s express written permission. The facts as stated in the indictment accordingly indicate more than inadvertent contact with a government agency and more than incidental infringement of that agency’s function. Therefore, we hold that the indictment was sufficient as a matter of law to charge a conspiracy to defraud the United States.\nF.J. Vollmer also challenges the sufficiency of the evidence on the basis that the government did not prove that the conspiracy interfered with a lawful government function. We affirm on this issue as well. Carmen Lewis, chief of the firearm and explosive imports branch of BATF, testified that BATF would not approve these sales without the proper certification, and that BATF relied on the veracity of the certifications in approving the sales of Steyr AUG-SA assault rifles by GSI. (Tr. 259-70). Furthermore, the jury was instructed that the government had to prove beyond a reasonable doubt each element alleged in the indictment. Therefore, the jury must have concluded that the government proved beyond a reasonable doubt that F.J. Vollmer conspired to provide false and fraudulent statements to BATF in contravention of the requirements for purchasing Steyr AUG-SA assault rifles. The evidence shows interference with a lawful government function and was sufficient for the jury to find guilt beyond a reasonable doubt.\nNevius and F.J. Vollmer argue that the indictment was also insufficient to charge mail fraud because it did not allege that the government had a property interest in the guns as is required by McNally v. United States, 483 U.S. 350, 360, 107 S.Ct. 2875, 2881, 97 L.Ed.2d 292 (1987). On the same basis, F.J. Vollmer argues further that even if the indictment was sufficient, the evidence was insufficient to prove guilt beyond a reasonable doubt of mail fraud.\nMcNally requires that the government allege and prove as an element of the offense of mail fraud that the defendant deprived the victim of a property right. Id. at 359-61, 107 S.Ct. at 2881-82. This principle holds true when the government is the victim of the alleged scheme to defraud because “any benefit which the Government derives from the [mail fraud] statute must be limited to the Government’s interests as property holder”. McNally, 483 U.S. at 358-59 n. 8, 107 S.Ct. at 2880-81 n. 8.\nIn this case, the government did not allege in the indictment, present evidence at trial, nor was the jury instructed on the deprivation of a property right. On appeal, the government argues that it held a joint ownership interest in the Steyr AUG-SA rifles with GSI. The government argues that its right to control the disposition of the firearms is a property interest and that it was deprived of this interest by Nevius’ and F.J. Vollmer’s mail fraud. This argument fails.\nIt is well established that the government’s regulatory interests are not protected by the mail fraud statute. United States v. Bruchhausen, 977 F.2d 464 (9th Cir.1992); United States v. Schwartz, 924 F.2d 410 (2nd Cir.1991) (government’s interest in issuing licenses is regulatory and licenses are not property for purposes of McNally); United States v. Granberry, 908 F.2d 278, 280 (8th Cir.1990) (government has no property interest in licenses and permits); Toulabi v. United States, 875 F.2d 122, 125 (7th Cir.1989) (government has no property interest in licenses); United States v. Dadanian, 856 F.2d 1391, 1392 (9th Cir.1988) (same); United States v. Evans, 844 F.2d 36, (2nd Cir.1988) (government’s interest in regulation of foreign resales of firearms is regulatory interest, not property interest); United States v. Murphy, 836 F.2d 248, 251 (6th Cir.1988), cert. denied, 488 U.S. 924, 109 S.Ct. 307, 102 L.Ed.2d 325 (1988) (government has no property interest in licenses and certifications). In Bruchhausen, the alleged victims were manufacturers of military equipment and technology. They sold technology to Bruch-hausen on his representation that it would remain in the United States, when in fact, Bruchhausen was selling the technology to Soviet bloc countries. The government argued that the manufacturer’s interest in controlling the ultimate disposition of its property was a property interest for purposes of the statute. The Ninth Circuit held that this interest could not be characterized as a property interest for purposes of the wire fraud statute. Bruchhausen, 977 F.2d at 468.\nThe property interest alleged here is quite similar to that alleged in Bruchhausen, and we conclude that the government’s interest in the Steyr AUG-SA rifles is not one that can be characterized as a property interest for purposes of McNally. In Bruchhausen, the manufacturer’s interest in property it no longer owned was not a sufficient property interest for purposes of convicting for mail or wire fraud. In this ease, the government contends that its interest in property it never owned is a property interest because it has a degree of “control” over the disposition of that property. BATF “controls” the importation of all firearms to a certain extent because firearms cannot be imported without a license from BATF. 18 U.S.C. § 922. However, one would hardly say that BATF therefore has a property interest in all firearms imported into the United States. BATF’s right to control the disposition of the Steyr AUG-SA rifles derives from its legislative grant of authority. Thus, BATF has a regulatory interest in the disposition of firearms, but its legislative grant of authority conveys no property interest. The indictment is insufficient, and it does not by any reasonable construction charge mail fraud. Therefore, despite Nevius’ failure to object on these grounds specifically, we reverse his conviction for mail fraud. Likewise, we reverse F.J. Vollmer’s mail fraud convictions because the indictment was insufficient and because the government’s evidence was also insufficient to prove a property interest.\nIV.\nFinally, F.J. Vollmer argues that certain trial errors also merit reversal of its conviction. The corporation urges that the district court erred when it refused to admit testimony from Nevius’ banker that Nevius told him his loans were for business equipment. Furthermore, F.J. Vollmer argues that the district court did not poll the jury as requested and therefore, the conviction must be reversed and remanded for a new trial.\nFirst, we consider the evidentiary question. Decisions regarding the admission of evidence are left to the district court’s discretion, and we will reverse a ruling on the admissibility of evidence only upon an abuse of that discretion. United States v. Allen, 930 F.2d 1270, 1273 (7th Cir.1991). Here, the district court determined that the defendants could not question Tom Bolfing, the loan officer at Nevius’ bank, about the reason Nevius gave for needing the loans. Nevius had said during his testimony that no one asked for the purpose of the loans, and that he did not know why the loan applications stated that the purpose of the loans was for business equipment. The district court reasoned that for purposes of Federal Rule of Evidence 608(b), this was extrinsic evidence of a specific instance of bad conduct designed to attack the credibility of Nevius. Therefore the district court did not allow the testimony.\nOn appeal, F.J. Vollmer contends that this evidence was material and relevant to the corporation’s guilt because it showed that Nevius went to the bank for loans instead of borrowing the money from the corporation. It argues that this evidence tends to prove that F.J. Vollmer did not enter into an agreement with Nevius and that Nevius was acting independently.\nThe district court’s ruling was not an abuse of discretion. F.J. Vollmer was permitted to question Nevius regarding his statements to Bolfing about the purposes for the loans. Further, F.J. Vollmer was permitted to ask questions of Bolfing regarding the loans themselves. F.J. Vollmer made its point before the jury because Nevius testified that he did not ask F.J. Vollmer for an advance but rather went to the bank for a loan. During closing arguments counsel for F.J. Vollmer argued that this showed Nevius was acting independently. Because it had already made its point, the only other purpose F.J. Vollmer could have had for this evidence would have been to attack Nevius’ credibility. Therefore, FRE 608(b) applies, and the evidence was properly excluded as a specific instance of misconduct offered to attack credibility.\nThe second trial error that F.J. Vollmer alleges was that, despite its timely request that the jury be polled, the district court dismissed the jury without polling it. The government urges, however, that F.J. Vollmer waived its right to poll the jury because it did not pursue its motion.\nA defendant has an “absolute right” to poll the jury to ensure the unanimity of the verdict against him. Mackett v. United States, 90 F.2d 462, 466 (7th Cir.1937). Federal Rule of Criminal Procedure 31(d) codifies this right and provides:\n[w]hen a verdict is returned and before it is recorded the jury shall be polled at the request of any party or upon the court’s own motion. If upon the poll there is not unanimous concurrence, the jury may be directed to retire for further deliberations or may be discharged.\nThe right to poll the jury is a substantial right. United States v. Randle, 966 F.2d 1209, 1214 (7th Cir.1992). Failure to poll the jury upon a timely request is “per se error requiring reversal.” Government of Virgin Islands v. Hercules, 875 F.2d 414, 418 (3rd Cir.1989).\nAfter the jury returned its verdicts, the district court asked if counsel wanted to be heard. Counsel for F.J. Vollmer asked that the jury be polled and the court inquired why counsel wanted a poll. At sidebar, the district court indicated that it thought the verdict of guilty was defective against F.J. Vollmer because the corporation could not be guilty if the corporate agent was acquitted. Counsel for F.J. Vollmer then moved for a judgment of acquittal or a judgment notwithstanding the verdict. The court reserved ruling on that motion. Immediately after the reservation of ruling, the court dismissed the jury.\nThe government argues that by making and pursuing a motion for judgment of acquittal without pursuing the jury poll motion, F.J. Vollmer waived its right to poll the jury. The government relies on cases where courts have found waiver when pre-trial motions were not pursued at trial. United States v. Wilson, 962 F.2d 621 (7th Cir.1992) (pre-trial motion to suppress evidence); United States v. Taglia, 922 F.2d 413, 416 (7th Cir.), cert. denied, - U.S. -, 111 S.Ct. 2040, 114 L.Ed.2d 125 (1991) (pre-trial motion to sever). However, the government’s reliance on these cases is misplaced because the transcript here does not indicate that F.J. Vollmer ever abandoned the motion to poll the jury. It simply requested another motion as well. The district court reserved ruling on the motion for acquittal but did nothing with the motion to poll the jury. The very next thing the district court did after reserving ruling was dismiss the jury. The record indicates no opportunity for F.J. Vollmer to pursue its motion. The cases cited by the government involve pre-trial motions which were not renewed at trial. This situation is hardly comparable, and F.J. Vollmer cannot be said to have waived its motion when there was no opportunity to raise the issue again. Because the motion was timely and defendants enjoy an absolute “right to poll the jury ... unless it has been expressly ivaived, ” Mackett v. United States, 90 F.2d at 465, we must reverse F.J. Vollmer’s conviction for conspiracy to defraud the United States and remand for a new trial.\nV.\nFor the foregoing reasons, Nevius’ convictions for conspiracy to defraud the United States and false statement are Affirmed. Nevius’ and F.J. Vollmer’s convictions for mail fraud are Reversed, and F.J. Vollmer’s conviction for conspiracy to defraud the United States is Reversed and Remanded for a new trial.\n. The original indictment was filed on November 6, 1991. R. 1. A superseding indictment was filed on December 4, 1991. R. 17. For purposes of this opinion, we refer to the superseding indictment simply as the \"indictment.”\n. The defendants were also charged in other counts in the indictment, but those counts are not at issue in this appeal. The other counts that charged Nevius with federal crimes were dismissed pursuant to a plea agreement, and F.J. Vollmer was acquitted of the other charges against it. The indictment also charged Robert W. Vollmer, a corporate agent of F.J. Vollmer, with conspiracy and mail fraud. However, the jury acquitted him of all counts, and this appeal raises no issue with regard to him.\n. Control over the importation of firearms vests in the Secretary of the Treasury, who has delegated the authority to the Director of BATF. See Treasury Department Order No. 120-01 (formerly No. 221), 37 Fed.Reg. 11,696 (June 10, 1972), and 27 C.F.R. § 178.112.\n. Section 925(d)(3) permits importation of firearms that are particularly suitable for or readily adaptable to sporting purposes. Prior to March 14, 1989, Steyr AUG-SA rifles were importable pursuant to this exception. After this date, the Director of BATF declared that Steyr AUG-SA rifles were no longer considered suitable for sporting purposes.\n. See, United States v. Nixon, 418 U.S. 683, 695-96, 94 S.Ct. 3090, 3101, 41 L.Ed.2d 1039 (1974); Vitarelli v. Seaton, 359 U.S. 535, 545, 79 S.Ct. 968, 975, 3 L.Ed.2d 1012 (1959); Frisby v. United States Dept. of Housing & Urban Dev., 755 F.2d 1052, 1055 (3rd Cir.1985); Kelly v. Railroad Retirement Board, 625 F.2d 486, 492 (3rd Cir.1980); United States v. Jones, 368 F.2d 795 (2nd Cir.1966).\n. The closest that Nevius came to arguing that the indictment was insufficient on the grounds of Dennis and McNally was at page 12 of his motion to dismiss. There he argued that a prosecution for conspiracy to defraud the government would lie only if the purpose of the conspiracy was to defeat the lawful function of the government. However, instead of arguing that the indictment was legally insufficient because it did not allege interference with a lawful government function, Nevius argued that the BATF was not acting lawfully in regulating the weapons in this case. R. 29 at 12.\n. Federal Rule of Evidence 608(b) provides in relevant part that, “[slpecific instances of the conduct of a witness, for the purpose of attacking or supporting the witness’ credibility, other than conviction of a crime as provided in Rule 609, may not be proved by extrinsic evidence.”", "type": "majority", "author": "ESCHBACH, Senior Circuit Judge."}], "attorneys": ["Frances C. Hulin, Asst. U.S. Atty. (argued), Danville, IL, for U.S. in No. 92-2322.", "Tom Schanzle-Haskins (argued), Nathan P. Maddox, Giffin, Winning, Cohen & Bo-dewes, Springfield, IL, for Kenneth L. Nevi-us.", "Frances C. Hulin, Asst. U.S. Atty. (argued), Danville, IL, Rodger A. Heaton, Asst. U.S. Atty. (argued), Springfield, IL, for U.S. in No. 92-2713.", "Steven F. Molo (argued), Bruce R. Braun, Winston & Strawn, Chicago, IL, Rex L. Reu, Bloomington, IL, for F.J. Vollmer & Co."], "corrections": "", "head_matter": "UNITED STATES of America, Plaintiff-Appellee, v. F.J. VOLLMER & COMPANY, INC., and Kenneth L. Nevius, Defendants-Appellants.\nNos. 92-2713, 92-2322.\nUnited States Court of Appeals, Seventh Circuit.\nArgued April 8, 1993.\nDecided July 30, 1993.\nFrances C. Hulin, Asst. U.S. Atty. (argued), Danville, IL, for U.S. in No. 92-2322.\nTom Schanzle-Haskins (argued), Nathan P. Maddox, Giffin, Winning, Cohen & Bo-dewes, Springfield, IL, for Kenneth L. Nevi-us.\nFrances C. Hulin, Asst. U.S. Atty. (argued), Danville, IL, Rodger A. Heaton, Asst. U.S. Atty. (argued), Springfield, IL, for U.S. in No. 92-2713.\nSteven F. Molo (argued), Bruce R. Braun, Winston & Strawn, Chicago, IL, Rex L. Reu, Bloomington, IL, for F.J. Vollmer & Co.\nBefore CUMMINGS and CUDAHY, Circuit Judges, and ESCHBACH, Senior Circuit Judge."} | CUMMINGS | CUDAHY | ESCHBACH | 1 | 1 | 1 | 0 | 0 | 0 | 1 F.3d 1511 | [
{
"content": "You are an expert legal coding assistant trained to classify U.S. federal Courts of Appeals\ncases using an adaptation of the Supreme Court Database (SCDB_2023_01) codebook. You follow the coding procedure\nin the codebook step by step and use the precise definitions of terms presented in the code... |
10,518,037 | UNITED STATES of America, Plaintiff-Appellee, v. Michael H. WEITZENHOFF and Thomas W. Mariani, Defendants-Appellants | United States v. Weitzenhoff | 1993-08-03 | Nos. 92-10105, 92-10108 | United States Court of Appeals for the Ninth Circuit | {"judges": ["Before: GOODWIN and FLETCHER, Circuit Judges, and HUFF, District Judge."], "parties": ["UNITED STATES of America, Plaintiff-Appellee, v. Michael H. WEITZENHOFF and Thomas W. Mariani, Defendants-Appellants."], "opinions": [{"text": "FLETCHER, Circuit Judge:\nMichael H. Weitzenhoff and Thomas W. Mariani, who managed the East Honolulu Community Services Sewage Treatment Plant, appeal their convictions for violations of the Clean Water Act (“CWA”), 33 U.S.C. §§ 1251 et seq., contending that 1) the district court misconstrued the word “knowingly” under section 1319(c)(2) of the CWA; 2) the court improperly permitted witnesses to testify as to the meaning of the terms and provisions of the permit issued to the East Honolulu plant; 3) the court erred in concluding that the permit was not unconstitutionally vague; 4) evidence they sought to introduce concerning a regulation proposed by the EPA was improperly excluded; 5) the court erred in refusing their proposed instruction on entrapment by estoppel; and 6) the court should have granted a mistrial due to prosecutorial misconduct. In addition, Mariani contends that his sentence was improperly adjusted upward for obstruction of justice based on his testimony at trial.\nWe affirm the convictions and sentence.\nFACTS AND PROCEDURAL HISTORY\nIn 1988 and 1989 Weitzenhoff was the manager and Mariani the assistant manager of the East Honolulu Community Services Sewage Treatment Plant (“the plant”), located not far from Sandy Beach, a popular swimming and surfing beach on Oahu. The plant is designed to treat some 4 million gallons of residential wastewater each day by removing the solids and other harmful pollutants from the sewage so that the resulting effluent can be safely discharged into the ocean. The plant operates under a permit issued pursuant to the National Pollution Discharge Elimination System (“NPDES”), which established the limits on the Total Suspended Solids (“TSS”) and Biochemical Oxygen Demand (“BOD”) — indicators of the solid and organic matter, respectively, in the effluent discharged at Sandy Beach. During the period in question, the permit limited the discharge of both the TSS and BOD to an average of 976 pounds per day over a 30-day period. It also imposed monitoring and sampling requirements on the plant’s management.\nThe sewage treatment process that was overseen by Weitzenhoff and Mariam began with the removal of large inorganic items such as rags and coffee grounds from the incoming wastewater as it flowed through metal screens and a grit chamber at the head of the plant. The wastewater then entered large tanks known as primary clarifiers, where a portion of the organic solids settled to the bottom of the tanks. The solid material which settled in the primary clarifiers, known as primary sludge, was pumped to separate tanks, known as anaerobic diges-ters, to be further processed. Those solids that did not settle continued on to aeration basins, which contained microorganisms to feed on and remove the solids and other organic pollutants in the waste stream.\nFrom the aeration basins the mixture flowed into final clarifiers, where the microorganisms settled out, producing a mixture that sank to the bottom of the clarifiers called activated sludge. The clarified stream then passed through a chlorine contact chamber, where the plant’s sampling apparatus was, and emptied into the plant’s outfall, a long underground pipe which discharged the plant’s effluent into the ocean through diffusers 1,100 to 1,400 feet from shore (the “Sandy Beach outfall”).\nMeanwhile, the activated sludge that had settled in the final clarifiers was pumped from the bottom of the clarifiers. A certain portion was returned to the aeration basins, while the remainder, known as waste activated sludge (“WAS”), was pumped to WAS holding tanks. From the holding tanks, the WAS could either be returned to other phases of the treatment process or hauled away to a different sewage treatment facility.\nFrom March 1987 through March 1988, the excess WAS generated by the plant was hauled away to another treatment plant, the Sand Island Facility. In March 1988, certain improvements were made to the East Honolulu plant and the hauling was discontinued. Within a few weeks, however, the plant began experiencing a buildup of excess WAS. Rather than have the excess WAS hauled away as before, however, Weitzenhoff and Mariani instructed two employees at the plant to dispose of it on a regular basis by pumping it from the storage tanks directly into the outfall, that is, directly into the ocean. The WAS thereby bypassed the plant’s effluent sampler so that the samples taken and reported to Hawaii’s Department of Health (“DOH”) and the EPA did not reflect its discharge.\nThe evidence produced by the government at trial showed that WAS was discharged directly into the ocean from the plant on about 40 separate occasions from April 1988 to June 1989, resulting in some 436,000 pounds of pollutant solids being discharged into the ocean, and that the discharges violated the plant’s 30-day average effluent limit under the permit for most of the months during which they occurred. Most of the WAS discharges occurred during the night, and none was reported to the DOH or EPA. DOH inspectors contacted the plant on several occasions in 1988 in response to complaints by lifeguards at Sandy Beach that sewage was being emitted from the outfall, but Weitzenhoff and Mariani repeatedly denied that there was any problem at the plant. In one letter responding to a DOH inquiry in October 1988, Mariani stated that “the debris that was reported could not have been from the East Honolulu Wastewater Treatment facility, as our records of effluent quality up to this time will substantiate.” (U.S. Excerpts of Record (“U.S.E.R.”) at 37.) One of the plant employees who participated in the dumping operation testified that Weitzenhoff instructed him not to say anything about the discharges, because if they all stuck together and did not reveal anything, “they [couldn’tj do anything to us.” (2 R.T. at 66-67.)\nFollowing an FBI investigation, Weitzen-hoff and Mariani were charged in a thirty-one-count indictment with conspiracy and substantive violations of the Clean Water Act (“CWA”), 33 U.S.C. §§ 1251 et seq. At trial, Weitzenhoff and Mariani admitted having authorized the discharges, but claimed that them actions were justified under their interpretation of the NPDES permit. The jury found them guilty of six of the thirty-one counts.\nWeitzenhoff was sentenced to twenty-one months and Mariani thirty-three months imprisonment. Each filed a timely notice of appeal.\nDISCUSSION\nA. Intent Requirement\nSection 1311(a) of the CWA prohibits the discharge of pollutants into navigable waters without an NPDES permit. 33 U.S.C. § 1311(a). Section 1319(c)(2) makes it a felony offense to “knowingly violate! ] section 1311, 1312, 1316, 1317, 1318, 1321(b)(3), 1328, or 1345 ..., or any permit condition or limitation implementing any of such sections in a permit issued under section 1342.”\nPrior to trial, the district court construed “knowingly” in section 1319(c)(2) as requiring only that Weitzenhoff and Mariani were aware that they were discharging the pollutants in question, not that they knew they were violating the terms of the statute or permit. According to appellants, the district court erred in its interpretation of the CWA and in instructing the jury that “the government is not required to prove that the defendant knew that his act or omissions were unlawful,” (14 R.T. at 117), as well as in rejecting their proposed instruction based on the defense that they mistakenly believed their conduct was authorized by the permit. Apparently, no court of appeals has confronted the issue raised by appellants.\nWe review a question of statutory construction de novo. United States v. Richison, 901 F.2d 778, 780 (9th Cir.1990). “In construing statutes in a case of first impression, we first look to the language of the controlling statutes, and second to legislative history.” Central Mont. Elec. Power Coop., Inc. v. Administrator of Bonneville Power Admin., 840 F.2d 1472, 1477 (9th Cir.1988). Whether a jury instruction misstates elements of a statutory crime is also a question of law reviewed de novo. United States v. Johnson, 956 F.2d 197,199 (9th Cir.1992). If the district court was correct in its interpretation of the statute, then it did not err in giving the instruction it did or refusing to submit appellants’ mistake of law defense to the jury.\nAs with certain other criminal statutes that employ the term “knowingly,” it is not apparent from the face of the statute whether “knowingly” means a knowing violation of the law or simply -knowing conduct that is viola-tive of the law. We turn, then, to the legisla-five history of the provision at issue to ascertain what Congress intended.\nIn 1987, Congress substantially amended the CWA, elevating the penalties for violations of the Act. See H.R.Conf.Rep. No. 1004, 99th Cong., 2d Sess. 138 (1986). Increased penalties were considered necessary to deter would-be polluters. S.Rep. No. 50, 99th Cong., 1st Sess. 29 (1985). With the 1987 amendments, Congress substituted “knowingly” for the earlier intent requirement of “willfully” that appeared in the predecessor to section 1319(e)(2). The Senate report accompanying the legislation explains that the changes in the penalty provisions were to ensure that “[cjriminal liability shall ... attach to any person who is not in compliance with all applicable Federal, State and local requirements and permits and causes a POTW [publicly owned treatment works] to violate any effluent limitation or condition in any permit issued to the treatment works.” Id. (emphasis added). Similarly, the report accompanying the House version of the bill, which contained parallel provisions for enhancement of penalties, states that the proposed amendments were to “provide penalties for dischargers or individuals who knowingly or negligently violate or cause the violation of certain of the Act’s requirements.” H.R.Rep. No. 189, 99th Cong., 1st Sess. 29-30 (1985) (emphasis added). Because they speak in terms of “causing” a violation, the congressional explanations of the new penalty provisions strongly suggest that criminal sanctions are to be imposed on an individual who knowingly engages in conduct that results in a permit violation, regardless of whether the polluter is cognizant of the requirements or even the existence of the permit.\nOur conclusion that “knowingly” does not refer to the legal violation is fortified by decisions interpreting analogous public welfare statutes. The leading case in this area is United States v. International Minerals & Chem. Corp., 402 U.S. 558, 91 S.Ct. 1697, 29 L.Ed.2d 178 (1971). In International Minerals, the Supreme Court construed a statute which made it a crime to “knowingly violate[ ] any ... regulation” promulgated by the ICC pursuant to 18 U.S.C. § 834(a), a provision authorizing the agency to formulate regulations for the safe transport of corrosive liquids. Id. at 559, 91 S.Ct. at 1699. The Court held that the term “knowingly” referred to the acts made criminal rather than a violation of the regulation, and that “regulation” was a shorthand designation for the specific acts or omissions contemplated by the act. Id. at 560-62, 91 S.Ct. at 1699-1700. “[W]here ... dangerous or deleterious devices or products or obnoxious waste materials are involved, the probability of regulation is so great that anyone who is aware that he is in possession of them or dealing with them must be presumed to be aware of the regulation.” Id. at 565, 91 S.Ct. at 1701.\nThis court followed International Minerals in United States v. Hoflin, 880 F.2d 1033 (9th Cir.1989), cert. denied, 493 U.S. 1083, 110 S.Ct. 1143, 107 L.Ed.2d 1047 (1990), when it held that knowledge of the absence of a permit is not an element of the offense defined by 42 U.S.C. § 6928(d)(2)(A), part of the Resource Conservation and Recovery Act (“RCRA”). Id. at 1039. “There can be little question that RCRA’s purposes, like those of the Food and Drug Act, ‘... touch phases of the lives and health of people which, in the circumstances of modern industrialism, are largely beyond self-protection.’ ” Id. at 1038 (quoting United States v. Dotterweich, 320 U.S. 277, 280, 64 S.Ct. 134, 136, 88 L.Ed. 48 (1943) (construing Food, Drug and Cosmetic Act)); see also United States v. Sherbondy, 865 F.2d 996, 1001-03 (9th Cir.1988) (use of word “knowingly” in 18 U.S.C. § 922(g), part of Firearms Owners’ Protection Act, does not require proof that defendant knew he was violating law). But see United States v. Speach, 968 F.2d 795 (9th Cir.1992) (distinguishing Hoflin and holding that different subsection of RCRA uses word “knowingly” in different manner so as to require showing that transporter of hazardous wastes knew that receiving facility lacked storage permit).\nAppellants seek to rely on the Supreme Court’s decision in Liparota v. United States, 471 U.S. 419, 105 S.Ct. 2084, 85 L.Ed.2d 434 (1985), to support their alternative reading of the intent requirement. Liparota concerned 7 U.S.C. § 2024(b)(1), which provides that anyone who “knowingly uses, transfers, acquires, alters, or possesses [food stamp] coupons or authorization cards in any manner not authorized by [the statute] or regulations” is subject to a fine or imprisonment. Id. at 420, 105 S.Ct. at 2085. The Court, noting that the conduct at issue did not constitute a public welfare offense, distinguished the International Minerals line of cases and held that the government must prove the defendant knew that his acquisition or possession of food stamps was in a manner unauthorized by statute or regulations. Id. at 432-33, 105 S.Ct. at 2091-92.\nThe criminal provisions of the CWA are clearly designed to protect the public at large from the potentially dire consequences of water pollution, see S.Rep. No. 99-50, 99th Cong., 1st Sess. 29 (1985), and as such fall within the category of public welfare legislation. International Minerals rather than Liparota controls the case at hand. The government did not need to prove that Weitzenhoff and Mariani knew that their acts violated the permit or the CWA.\nB. Expei’t Testimony\nThe essence of Weitzenhoff and Mariam’s defense was that their clandestine dumping of thousands of gallons of toxic sludge into the ocean at Sandy Beach was an effort to restore the plant’s biological balance so as to avoid a complete plant shutdown and avert environmental disaster. They claim that the discharges of WAS were fully consistent with the NPDES permit. The central issue at trial, therefore, was the meaning of the permit.\nIn addition to establishing TSS and BOD limits for the effluent discharged at Sandy Beach and imposing monitoring requirements, the permit issued to the East Honolulu plant provided that substances removed from the wastewater could only be disposed of “in a manner such as to prevent any pollutant from such materials from entering navigable water.” (Mariam Excerpts of Record (“M.E.R.”) at 68) (NPDES permit).) “Removed substances,” according to the permit, include “[s]olids, sludges, filter backwash, or other pollutants removed in the course of treatment or control of wastewa-ters.” (Id.)\nThe permit also regulates “bypass,” defined as “the intentional diversion of waste streams from any portion of a treatment facility.” (Id. at 66.) Under the permit, bypass is generally prohibited, except to “prevent loss of life, personal injury, or severe property damage” and in the absence of feasible alternatives. (Id.) The permit provides, however, that where it will not cause effluent limitations to be exceeded, “[t]he permittee may allow any bypass to occur, but only if it ... is for essential maintenance to assure efficient operation.” (Id.)\nWeitzenhoff and Mariani assert that the discharges were permissible bypasses. They claim that WAS is not a “removed substance,” that the discharges they oversaw were for the purpose of “essential maintenance,” and that, because they are properly considered “bypasses,” the discharges were not required to be reflected in the monitoring reports submitted to government authorities.\nThe trial judge — concerned that were he to construe the permit, “we [wouldn’t] have a case.... [w]e would just have a bench trial,” (4 R.T. at 168) — treated the interpretation of the permit as a question for the jury. Consistent with this approach, the court permitted witnesses familiar with the wastewater management field to testify about the various technical terms within and obligations imposed by the permit. Since both sides presented witnesses on these issues, the explications of the permit were, as might be expected, contradictory. For example, one government witness testified that a discharge of WAS from a WAS holding tank to an outfall would constitute the disposal of a removed substance in violation of the permit. But he was contradicted by a defense witness who testified that WAS was not a “removed substance” and therefore did not come under the prohibition. While the same government witness defined “essential maintenance” as pertaining only to the maintenance of the plant’s “physical facilities,” the defense expert stated that the term could apply to maintenance of the plant’s biological process as well as its physical facilities. The court did not resolve these conflicts in its jury charge but instead instructed the jury to “construe” the permit based on “the plain meaning of the language therein” and the testimony of the expert and other witnesses. (14 R.T. at 122.)\nWeitzenhoff and Mariani argue that the testimony defining key terms of the permit and explaining its prohibitions amounted to an impermissible delegation of the district judge’s duties because, in effect, it was witnesses who instructed the jury on the law rather than the judge. We agree with appellants in this assessment.\nThe admission of expert testimony is within the discretion of the trial court and reversible only for abuse of discretion or manifest error. United States v. Arvin, 900 F.2d 1385, 1388-89 (9th Cir.1990), cert. denied, 498 U.S. 1024, 111 S.Ct. 672, 112 L.Ed.2d 664 (1991). Expert testimony is properly admissible when it serves to assist the trier of fact to understand the evidence or determine a fact in issue. United States v. Brodie, 858 F.2d 492, 496 (9th Cir.1988). It is well settled, however, that the judge instructs the jury in the law. Id. “Resolving doubtful questions of law is the distinct and exclusive province of the trial judge.” Id. at 497.\nHere the district court did not decide the issues of law raised by the parties. Instead of applying the court’s interpretation of the law to the facts, then, the jurors applied their own rendition(s) of the law, presumably derived to some degree from the conflicting expert testimony, to the facts. Although the testimony of the witnesses regarding technical terms in the permit might have been permissible had the judge proceeded properly to instruct the jury, see Fed.R.Evid. 702 (expert testimony admissible if it will assist the trier of fact), 704 (opinion on ultimate issue to be decided by factfinder not necessarily objectionable), in this case it compounded the error of consigning the interpretation of the law to the jury. The court’s admission of expert testimony on contested issues of law in lieu of instructing the jury was manifestly erroneous.\nNonetheless, we hold that the error was harmless because, under a proper interpretation of the permit, the discharges admitted to by Weitzenhoff and Mariam necessarily violated the permit. Since construction of the permit is a matter of law, we are in a position to interpret the permit provisions at issue. Hemlani v. Guerrero, 902 F.2d 1412, 1415 (9th Cir.1990) (“The interpretation of this statute is purely a question of law, the issue has been fully briefed, and we are in as good a position as the [district] court to decide if the statute means what it says.”). We note that in deciding what the provisions mean, we need not choose between the conflicting expert opinions; the critical terms are either defined in the permit itself or their meaning is apparent from EPA’s commentary on its permitting guidelines. As we are able to accomplish the task of permit interpretation without turning to the experts, we are not hampered by questions of witness credibility, which of course could not be resolved by us on appeal. United States v. Gordon, 844 F.2d 1397, 1405 (9th Cir.1988) (“Questions of credibility are for the jury to decide and are generally immune from appellate review.”)\nWe begin by observing that, notwithstanding the “expert” testimony to the contrary, the excess WAS that was separated out from the plant’s treatment process to be stored and eventually disposed of clearly falls within the permit’s definition of a “removed substance” because it was a “sludgef ] ... removed in the course of treatment or control of wastewáters.” (M.E.R. at 68.) As such, it could not be discharged into the ocean unless the discharge constituted a permissible bypass of the treatment system.\nEven assuming that the oceanic dumping of WAS at Sandy Beach did not violate the East Honolulu facility’s effluent standards, a doubtful proposition, we hold that the discharges were not permissible bypasses because they were not for “essential maintenance to assure efficient operation.” (Id. at 66.) An NPDES permit must conform to EPA regulations. See 40 C.F.R. § 122.1 et seq. (permitting requirements). In establishing the guideline prohibiting bypass except where necessary for essential maintenance, 40 C.F.R. § 122.41(m), the EPA explained that “[generally, maintenance is that which is necessary to maintain the performance, removal efficiency and effluent quality of the pollution control equipment. However, for the purposes of this section, it is necessary to distinguish between maintenance that is ‘essential’ and that which is routine.” 49 Fed.Reg. 38,037 (1984) (emphasis added). The discussion in the Federal Register focuses on necessary repairs and upkeep of plant equipment and emphasizes that if it is feasible to perform the maintenance “with no loss in treatment plant performance,” the maintenance is not considered “essential” for the purposes of the bypass exception. Id. There is no indication that the EPA considered anything other than unavoidable measures to ensure the continuing operation of plant equipment to be “essential maintenance.”\nThe EPA’s interpretation of its bypass regulation is entitled to considerable weight. Force v. Director, Office of Workers’ Compensation Programs, 938 F.2d 981, 983 (9th Cir.1991); Natural Resources Defense Council, Inc. v. U.S. Environmental Protection Agency, 822 F.2d 104, 122 (D.C.Cir.1987) (upholding bypass provision). We therefore reject appellants’ interpretation of the bypass exception as authorizing their wholesale dumping of WAS into the ocean and circumvention of the plant’s monitoring apparatus. The discharges they directed were not for the purpose of maintaining plant equipment. Nor were they essential, for the record establishes that a ready alternative existed: Weitzenhoff and Mariani could have had the excess WAS hauled away.\nFinally, we note that appellants’ attempt to construe the permit as allowing these discharges turns the entire statutory scheme on its head. In keeping with the goal of the CWA, the EPA’s bypass rule was devised to ensure “that the applicable treatment technology, implemented for the purpose of achieving pollution reduction equivalent to the ‘best technology,’ be operated as designed.” Natural Resources Defense Council, 822 F.2d at 124. To endorse appellants’ interpretation would be to grant permit holders carte blanche to pollute whenever the slightest managerial inconvenience presented itself. We are certain that this is not what Congress intended.\nC. Vagueness\nWeitzenhoff and Mariani contend that, especially in the absence of a requirement that they knew they were violating the law, the NPDES permit is unconstitutionally vague. They assert that key provisions of the permit, in particular those that were debated at trial, have no established meaning. The district court declined to rule on defendants’ vagueness claim at a pretrial hearing but denied a motion for acquittal based on the ambiguity of the permit after the close of the government’s ease.\nWhether the permit was unconstitutionally vague is a question of law which we review de novo. United States v. Christopher, 700 F.2d 1253, 1258 (9th Cir.), cert. denied, 461 U.S. 960, 103 S.Ct. 2436, 77 L.Ed.2d 1321 (1983). “A defendant is deemed to have fair notice of an offense if a reasonable person of ordinary intelligence would understand that his or her conduct is prohibited by the law in question.” United States v. Fitzgerald, 882 F.2d 397, 398 (9th Cir.1989). In evaluating a question of vagueness, we ordinarily look to the common understanding of the terms of a statute. Id. However, if the statutory prohibition “involves conduct of a select group of persons having specialized knowledge, and the challenged phraseology is indigenous to the idiom of that class, the standard is lowered and a court may uphold a statute which ‘uses words or phrases having a technical or other special meaning, well enough known to enable those within its reach to correctly apply them.’” Precious Metals Assocs., Inc. v. Commodity Futures Trading Commission, 620 F.2d 900, 907 (1st Cir.1980) (quoting Connally v. General Constr. Co., 269 U.S. 385, 391, 46 S.Ct. 126, 127, 70 L.Ed. 322 (1926)).\nPursuant to the preceding analysis of the permit’s terms, which, as we have demonstrated, have meaning in the context of the EPA regulatory scheme, we have no trouble in upholding the permit against appellants’ vagueness challenge. Weitzenhoff and Mar-iani were knowledgeable in the wastewater field and can be expected to have understood what the permit meant. In particular, they should have known that it did not give them license to dump thousands of gallons of partially treated sewage into the ocean on a regular basis.\nWe are further persuaded that appellants had adequate notice of the illegality of their dumping by the -considerable pains they took to conceal their activities. The discharges were effected mainly at night; plant personnel were not to discuss them; and Weitzen-hoff and Mariani consistently repeatedly denied the illicit operation when questioned by health authorities. These are not the ways of conscientious managers seeking to safeguard the environment.\nAlthough we affirm the convictions on the basis of Weitzenhoff and Mariani’s factual admissions and our interpretation of the permit rather than attempting to divine the facts upon which the jury based its verdict, we nonetheless address the additional concerns raised by appellants relating to the presentation of the case to the jury. We do this because had the court erroneously deprived the jury of an opportunity to acquit or wrongly refused to grant a mistrial, we might not be in a position to affirm. That is, had the jury acquitted or a mistrial been declared, there would be no convictions to uphold.\nD. Exclusion of Evidence\nAt trial, defendants sought to introduce an excerpt from the Federal Register describing a regulation proposed in 1984 by the EPA but never adopted. As explained in 49 Federal Register 38,036 (1984), the regulation would have permitted bypass of effluent from a wastewater treatment facility\nwhere the resultant effluent is in compliance with permit limitations. The proposal would allow any bypass which does not cause a violation of permit limitations or other permit conditions. However, to ensure that permit limitations are, in fact, not exceeded during the bypass, the proposed amendment would require permit-tees to monitor all affected discharge points at the time of any bypass.\n(Weitzenhoff Excerpts of Record at 74.) Weitzenhoff and Mariani claim this should have been admitted as evidence because, combined with the fact that it was never adopted, it suggests that the EPA did not require them to monitor the discharges they characterize as bypasses. The district court held the excerpt inadmissible since the regulation was never adopted, the language cited by the defense was of dubious significance, and such “evidence” would confuse the jury.\nWe review the exclusion of the evidence for abuse of discretion. United States v. Kessi 868 F.2d 1097, 1107 (9th Cir.1989); United States v. Soulard, 730 F.2d 1292, 1296 (9th Cir.1984). Although the explanation of the proposed regulation might properly have been considered (or disregarded) by the court in ruling on the legal issues in the case, it was not relevant to the jury’s determination of the facts. Thus, notwithstanding the fact that the jury was impermissibly assigned the task of interpreting the permit, the district court did not abuse its discretion in excluding the Federal Register excerpt from the jury’s consideration.\nE. Entrapment by Estoppel Defense\nThe district court ruled after the close of evidence that it would not give Weitzenhoff and Mariam’s proposed jury instruction on the elements of an entrapment by estoppel defense because the defense was not warranted by the law or the facts of the case. Appellants claim the court’s refusal to give the instruction warrants reversal.\n“A defendant is entitled to an instruction covering a theory of defense if it has a basis in law and there is some foundation for it in the evidence.” United States v. Ibarra-Alcarez, 830 F.2d 968, 973 (9th Cir.1987). A trial court’s determination that the evidence was insufficient to justify the giving of an instruction on a theory of defense is a question of law which we review de novo. Id.\nEntrapment by estoppel applies when an authorized government official tells the defendant that certain conduct is legal and the defendant believes the official. United States v. Brebner, 951 F.2d 1017, 1024 (9th Cir.1991). To invoke the entrapment by estoppel defense, the defendant must show that he relied on the official’s statement and that his reliance was reasonable in that a person sincerely desirous of obeying the law would have accepted the information as true and would not have been put on notice to make further inquiries. United States v. Lansing, 424 F.2d 225, 227 (9th Cir.1970).\nWeitzenhoff and Mariani contend that the jury should have been permitted to consider whether they were entrapped by the government, for two reasons: because they were entitled to rely upon the “plain language” of the permit as a “comprehensive official statement of the law” — at the same time, of course, claiming that they abided by the permit; and because of the fact that regulatory authorities had previously permitted them to haul excess WAS to the Sand Island waste treatment facility where it only underwent a primary treatment process before being discharged into the ocean. According to Weit-zenhoff and Mariani, the authorization to haul the WAS to the another facility that lacked a secondary treatment process somehow implies that it was acceptable to discharge the WAS from the East Honolulu plant without additional treatment.\nThe first of appellants’ theories is flawed because it merely begs the critical inquiry in this case, that is, the correct interpretation of the permit. It would have been entirely superfluous to have the jury decide whether appellants properly relied on the permit since no one disputes that they were bound by it.\nThe second asserted rationale is a tortured one that does not make out a claim of entrapment by estoppel. Even if disposing of the WAS by hauling it to the Sand Island facility could somehow plausibly be equated with dumping it into the Sandy Beach outfall, appellants do not point to a statement on the part of a government official upon which they relied in reaching this conclusion. Moreover, the fact that it was lawful to discharge WAS at Sand Island without secondary treatment has no bearing on the discharge limitations at the East Honolulu plant, which operated under its own permit. If Weitzenhoff and Mariani had had a genuine desire to obey the law, they would have sought advice from the appropriate authorities as to how properly to dispose of the excess WAS.\nF. Prosecutorial Misconduct\nWeitzenhoff and Mariani object to what they characterize as the prosecutor’s deliberate attempts to elicit irrelevant and inflammatory testimony regarding the potential health effects of the WAS discharges despite the trial court’s ruling limiting such testimony. “A claim of prosecutorial misconduct must be viewed in the entire context of the trial.” United States v. Christophe, 833 F.2d 1296, 1300 (9th Cir.1987). Reversal is justified only if the alleged misconduct materially affected the verdict or deprived the defendant of a fair trial. Id. at 1301; see also United States v. Simtob, 901 F.2d 799, 806 (9th Cir.1990) (“[PJrosecutorial misconduct invites reversal if it appears more probable than not that the alleged misconduct affected the jury’s verdict.”). Depending upon the circumstances, a prompt and effective admonishment of counsel or curative instruction from the trial judge may effectively “neutralize the damage.” Simtob, 901 F.2d at 806.\nDuring the first part of the trial, the government introduced evidence about the health concerns associated with sewage through three witnesses who testified about the waste treatment process and its goal of ridding wastewater of disease-causing microorganisms to the extent possible. One of these witnesses, Ken Greenberg, noted that the discharge from a treatment facility could have adverse effects on the receiving waters and harm swimmers. Defendants failed to object to any of this testimony.\nLater on in the trial, however, when the government asked a question of another witness concerning the length of the outfall at Sandy Beach, defendants objected on relevance grounds. The government argued that the testimony was relevant to show defendants’ motive in concealing their activities. The court, while expressing initial concern about the lack of relevance and prejudicial effects of injecting “gruesome” testimony about “viruses floating in the water,” ruled that testimony regarding the potential health risks of discharging WAS into the water could come in, so long as the prosecutor stayed away from detailed accounts of “viruses and AIDS and all other kinds of stuff.” (8 R.T. at 36.)\nEdmund Pestaña, a lifeguard at Sandy Beach, subsequently testified for the government about the plumes of brown water he had observed coming out of the outfall. The prosecutor asked whether Pestaña was aware of people getting sick at the beach, to which the lifeguard answered “yes.” The court sustained defendants’ objection and instructed the jury to disregard the response. Later, Pestaña was asked what he noticed during an incident in which he had windsurfed through discolored water. Pestaña stated that he knew he was going through sewage water: “It smelled of it, and it looked of it, and it’s nothing less than what your imagination can conjure up. I was seared to fall off my board and into it and get my face wet or anything like that in my mouth or my ears or my nose.” (8 R.T. at 126.) The judge ordered the quoted testimony stricken and instructed the jury to disregard it.\nAt the conclusion of Pestana’s testimony, defendants moved for a mistrial, alleging that the prosecutor had deliberately violated the court’s ruling regarding the limitations on such testimony. The court denied the motion, noting its curative instructions and the fact that it was common knowledge that WAS, if ingested, would pose a health risk.\nAppellants also point to the prosecutor’s cross-examination of their wastewater expert regarding the length of the Sandy Beach versus the Sand Island outfall. In the course of this exchange, the court sustained the defendants’ objections to two questions regarding whether there were many swimmers near these outfalls.\nFinally, in his closing argument, the prosecutor drew attention to the public health hazard engendered by defendants’ activities, stating that Weitzenhoff and Mariani “placed at risk the hundreds of people, surfers, body boarders, swimmers, divers, fishermen, people who use Sandy Beach every day.” (14 R.T. at 9-10.) The court did not respond to these remarks as defendants did not object to them.\nAlthough the challenged testimony and prosecutorial remarks were of questionable relevance and indeed conveyed repugnant images, considered in the context of the entire proceeding, we do not believe they could have materially affected the verdict or rendered the trial unfair. A substantial amount of testimony regarding the health risks associated with WAS — indeed, the most specific references to viruses, bacteria, and so forth — came in without objection prior to the testimony appellants claim was so prejudicial. As for the most exceptionable testimony, that of the lifeguard, the court sustained objections and issued prompt curative instructions.\nMost significant to our analysis, though, is that throughout the trial, Weitzenhoff and Mariani attempted to portray their discharging of WAS into the ocean as a responsible tactic to forestall environmental disaster, thus putting the safety of the public at issue. Both defendants made this point in their opening statements. Later on, Mariani testified that in ordering the discharges, the public health was “first and foremost” in his mind. (11 R.T. at 23, 25.) Against this backdrop, the prosecutor’s few additional questions touching upon the health issue and the comments in his summation cannot be considered misconduct.\nG. Upward Adjustment of Mariani’s Sentence\nMariani contends that the court’s two-point upward adjustment of his offense level pursuant to U.S.S.G. § 3C1.1 for obstruction of justice based on the court’s finding that he perjured himself was not warranted by his conduct at trial and represents an unconstitutional interference with his right to testify. We review the court’s interpretation of the sentencing guidelines de novo, and the factual findings underlying the upward adjustment for clear error. United States v. McAninch, 994 F.2d 1380, 1384 (9th Cir.1993).\nIn sentencing Mariani, the court expressly adopted the determination of the presentence report that Mariani had lied in his testimony at trial. The presentence report notes, with support in the record, that Mariani perjured himself on several occasions when he stated that he believed that the discharges of WAS did not violate the permit. The record shows, for example, that at trial, Mariani consciously underrepresented the size of a WAS holding tank, thus underrepresenting the potential size and impact of the discharges from it. His testimony that he believed that his activities were within the scope of the permit is belied by his efforts to conceal them. The district court’s findings in support of the upward adjustment were not clearly erroneous.\nMariani’s constitutional challenge to the obstruction of justice enhancement is unavailing. The Supreme Court recently rejected the contention, as had this court, that a sentencing increase based on false testimony unconstitutionally burdens a defendant’s right to testify. United States v. Dunnigan, — U.S. -, -, 113 S.Ct. 1111, 1117, 122 L.Ed.2d 445 (1993); see also United States v. Torres-Rodriguez, 930 F.2d 1375, 1389-90 (9th Cir.1991); United States v. Barbosa, 906 F.2d 1366, 1369-40 (9th Cir.), cert. denied, 498 U.S. 961, 111 S.Ct. 394, 112 L.Ed.2d 403 (1990). “[A] defendant’s right to testify does not include a right to commit perjury.” Dunnigan, — U.S. at -, 113 S.Ct. at 1117. Mariani’s sentence was justly enhanced.\n, We AFFIRM both the convictions and Mariani’s sentence.\n. Weitzenhoff and Mariani were found guilty of count 1, conspiracy to discharge the WAS in violation of the NPDES permit and the Clean Water Act, a violation of 18 U.S.C. § 371; count 9, knowingly discharging WAS in violation of the permit between March and October 1988, a violation of 33 U.S.C. §§ 1311(a) and 1319(c)(2) and 18 U.S.C. § 2; count 10, knowingly rendering inaccurate the plant's monitoring method by discharging WAS beyond the plant’s effluent sampler during a period in 1988, a violation of 33 U.S.C. § 1319(c)(4) and 18 U.S.C. § 2; count 22, knowingly making false representations in monthly discharge monitoring reports filed with government regulators by failing to report their discharges of WAS, a violation of 33 U.S.C. § 1319(c)(4) and 18 U.S.C. § 2; count 30, knowingly discharging WAS in violation of the permit between January and July 1989, a violation of 33 U.S.C. §§ 1311(a) and 1319(c)(2) and 18 U.S.C. § 2; and count 31, knowingly rendering inaccurate the plant's monitoring method by discharging WAS beyond the plant's effluent sampler during a period in 1989, a violation of 33 U.S.C. § 1319(c)(4) and 18 U.S.C. § 2.\nOn appeal, most of appellants' energies are directed against the section 1319(c)(2) violations, which are premised on the language of the NPDES permit. Section 1319(c)(4) criminalizes the making of false statements in any document or rendering inaccurate of any monitoring device or method required to be maintained under the CWA.\n. Appellants do not challenge the court's giving of the same instruction with respect to the section 1319(c)(4) reporting and monitoring violations charged in the indictment.\n. This defense is mistakenly labeled \"mistake of fact” in Weitzenhoff's brief on appeal.\n. At least two courts held that specific intent was not required for conviction under the earlier version of section 1319, which imposed penalties for \"willful or negligent\" violations of the CWA without distinction. The current statute imposes harsher penalties for knowing violations than for negligent ones. United States v. Baytank (Houston) Inc., 934 F.2d 599, 618-19 & n. 32 (5th Cir.1991); United States v. Frezzo Bros., Inc., 546 F.Supp. 713, 720-21 (E.D.Pa.1982), aff'd, 703 F.2d 62 (3d Cir,), cert. denied, 464 U.S. 829, 104 S.Ct. 106, 78 L.Ed.2d 109 (1983).\n.We note that the defense contributed to this error by insisting that the court not define any of the permit’s terms for the jury in its charge, but merely instruct the jury to \"follow the plain meaning of the language\" in the permit. (U.S.E.R. at 74.) The defendants, however, had initially objected to the admission of any expert testimony concerning permit terms. After the court ruled such testimony admissible, defendants presented their own expert testimony to counter that of the government witnesses. Under these circumstances, we decline to hold that appellants invited the error.\n. The government presented evidence and arguments indicating that the permit was violated in more than one way. There was no special verdict in the case, however, and consequently, there is no means for us to ascertain which theory or theories the jury adopted. Even though the government presented compelling evidence that the discharges caused the plant's effluent limitations to be exceeded, we assume for the purposes of this analysis that the jury rejected this evidence, as it was entitled to, and rely only on appellants' admissions to support our conclusion that the permit was violated.\n. See supra note.6.\n. The government points out that the outfall for the Sand Island facility is many times longer than the one at Sandy Beach, which accounts for the stricter waste handling requirements imposed on the East Honolulu plant.\n. Weitzenhoff elected not to testify at trial.", "type": "majority", "author": "FLETCHER, Circuit Judge:"}], "attorneys": ["Philip H. Lowenthal, Wailuku, HI, for defendant-appellant Weitzenhoff.", "Peter C. Wolff, Jr., Honolulu, HI, for defendant-appellant Mariani.", "Craig H. Nakamura, Asst. U.S. Atty., Honolulu, HI, for plaintiff-appellee."], "corrections": "", "head_matter": "UNITED STATES of America, Plaintiff-Appellee, v. Michael H. WEITZENHOFF and Thomas W. Mariani, Defendants-Appellants.\nNos. 92-10105, 92-10108.\nUnited States Court of Appeals, Ninth Circuit.\nArgued and Submitted Jan. 11, 1993.\nDecided Aug. 3, 1993.\nPhilip H. Lowenthal, Wailuku, HI, for defendant-appellant Weitzenhoff.\nPeter C. Wolff, Jr., Honolulu, HI, for defendant-appellant Mariani.\nCraig H. Nakamura, Asst. U.S. Atty., Honolulu, HI, for plaintiff-appellee.\nBefore: GOODWIN and FLETCHER, Circuit Judges, and HUFF, District Judge.\nThe Honorable Marilyn L. Huff, United States District Judge for the Southern District of California, sitting by designation."} | GOODWIN | FLETCHER | HUFF | 1 | 1 | 1 | 0 | 0 | 0 | 1 F.3d 1523 | [
{
"content": "You are an expert legal coding assistant trained to classify U.S. federal Courts of Appeals\ncases using an adaptation of the Supreme Court Database (SCDB_2023_01) codebook. You follow the coding procedure\nin the codebook step by step and use the precise definitions of terms presented in the code... |
10,518,069 | William BIGGS, et al., Plaintiffs-Appellants-Cross-Appellees, v. Pete WILSON, Governor; Kathleen Brown, Treasurer; Gray Davis, Controller, et al., Defendants-Appellees-Cross-Appellants | Biggs v. Wilson | 1993-08-12 | Nos. 92-15334, 92-15936 | United States Court of Appeals for the Ninth Circuit | {"judges": ["Before: REINHARDT, TROTT, and RYMER, Circuit Judges."], "parties": ["William BIGGS, et al., Plaintiffs-Appellants-Cross-Appellees, v. Pete WILSON, Governor; Kathleen Brown, Treasurer; Gray Davis, Controller, et al., Defendants-Appellees-Cross-Appellants."], "opinions": [{"text": "RYMER, Circuit Judge:\nThis appeal requires us to decide whether California violated the minimum wage provisions of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201-19, by paying wages 14-15 days late because there was no state budget, and thus no funds appropriated for the payment of salaries, on payday. The district court granted a summary judgment declaring that the failure to issue paychecks promptly when due violated the FLSA. We agree, and hold that under the FLSA wages are “unpaid” unless they are paid on the employees’ regular payday.\nI\nPayday in this case — July 16,1990 — came and went without highway maintenance workers employed by the State of California Department of Transportation being issued their pay checks. California was undergoing one of its perennial rites, the budget impasse. In 1990, State law prohibited the release of paychecks until a budget was approved by the Legislature and signed by the Governor. That didn’t happen until July 28, when the budget passed the Legislature, and July 31, when then-Governor Deukmejian signed it into law. The payroll was met on July 30 and 31, 14-15 days late.\nWilliam Biggs represents a class of highway maintenance workers who brought suit against the Governor, Treasurer, Controller, and Transportation Director (collectively “state officials”). The class seeks injunctive and declaratory relief, liquidated damages, and prejudgment interest on account of the delay in receiving wages.\nBoth sides moved for summary judgment. The district court filed a memorandum and order on October 3, 1991 in which it denied injunctive relief but declared that the state officials’ failure to issue paychecks to the class promptly when due violated the Fair Labor Standards Act. It refused to award liquidated damages pursuant to 29 U.S.C. § 216(b) for two reasons: because the liability under § 216(b) extends to an employer and the employer in this case, the State of California, was not named as a party; and because the state acted in good faith. Biggs’s request for prejudgment interest was granted.\nState officials now appeal the district court’s October 3, 1991 order, raising two issues: whether the FLSA contains an implicit requirement that wages be paid promptly, and if so, does it violate the State of California’s Tenth Amendment sovereignty. No appeal is taken from the award of prejudgment interest. Both sides agree that there are no material factual disputes, and that our review is de novo. We have jurisdiction pursuant to 28 U.S.C. § 1291.\nII\nThe FLSA requires that an employer pay each employee a minimum wage set by the Act. 29 U.S.C. § 206. Section 206(b) mandates that “every employer shall pay” employees the minimum wage if “in any workweek [the employee] is engaged in commerce.”\nState officials contend that the district court erred by concluding that the FLSA contains an implicit requirement that wages be paid promptly when due. Without arguing that payment in this case was in fact “prompt,” they urge that the district court’s conclusion is not supported by case law, and that the absence of a body of case law regarding prompt payment demonstrates that there is no implied prompt payment requirement. State officials also argue that since full compensation was never in doubt, and California was merely late in paying its employees, there was no violation of the FLSA. In effect, them position is that only nonpayment, not late payment, is prohibited by the Act.\nBiggs and amici, on the other hand, argue that the FLSA requires paychecks to be paid on regular paydays. Therefore, in their view, late payment, as well as nonpayment, violates the Act.\nA\nState officials correctly point out that the FLSA does not in terms say that a minimum wage must be paid promptly. It simply says that employers “shall pay” a minimum wage. However, in construing the FLSA, we must be mindful of the directive that it is to be liberally construed to apply to the furthest reaches consistent with Congressional direction. Mitchell v. Lublin, McGaughy & Assoc., 358 U.S. 207, 211, 79 S.Ct. 260, 264, 3 L.Ed.2d 243 (1959).\nThis case requires us to consider the obligation to pay in light of the statutory scheme as a whole. The FLSA provides for the recovery of unpaid minimum wages, unpaid overtime compensation, and liquidated damages; and has its own statute of limitations for private enforcement. These provisions necessarily assume that wages are due at some point, and thereafter become unpaid.\nWe start with § 206(b). It directs every employer to pay the minimum wage. The obligation kicks in once an employee has done covered work in any workweek. To us, “shall pay” plainly connotes shall make a payment. If a payday has passed without payment, the employer cannot have met his obligation to “pay.”\nSection 216(b) then provides that an employer who violates § 206 is liable to the affected employees “in the amount of their unpaid minimum wages, or their unpaid overtime compensation ... and in an additional equal amount as liquidated damages.” 29 U.S.C. § 216(b). Unless there is a due date after which minimum wages become unpaid, imposing liability for both unpaid minimum wages and liquidated damages would be meaningless.\nThe statute must therefore contemplate a time at which § 206 is violated, or, put another way, when minimum wages become “unpaid.” “Unpaid minimum wages” have to be “unpaid” as of some distinct point, otherwise courts could not compute either the amount of wages which are unpaid, or the additional “equal” amount of liquidated damages. The only logical point that wages become “unpaid” is when they are not paid at the time work has been done, the minimum wage is due, and wages are ordinarily paid — on payday. Cf. Olson v. Superior Pontiac-GMC, Inc., 765 F.2d 1570, 1579 (11th Cir.1985) (“the employee must actually receive the minimum wage each pay period,” emphasis original), modified, 776 F.2d 265 (11th Cir.1985).\nSimilarly, employers violating the FLSA must pay prejudgment interest on the overdue wages. Ford v. Alfaro, 785 F.2d 835, 842 (9th Cir.1986) (“in the absence of a liquidated damages award, prejudgment interest is necessary to fully compensate employees for the losses they have suffered.”). Prejudgment interest cannot be calculated without an amount certain owing from a day certain. As with “unpaid wages” and liquidated damages on “unpaid wages,” the only logical point from which to compute the amount of interest is the day the employee’s paycheck is ordinarily due. Any other time would be inconsistent with the purpose of prejudgment interest, to make it unattractive for the employer to take advantage of cash flow at the employees’ expense, and to make up for the employees’ loss of use of funds during the period they were due but unpaid.\nFinally, the FLSA contains its own statute of limitations for an action for unpaid minimum wages and for liquidated damages. 29 U.S.C. § 255(a). Statutes of limitation have to start running from some point, and the most logical point a cause of action for unpaid minimum wages or liquidated damages (which are merely double the amount unpaid) accrues is the day the employee’s paycheck is normally issued, but isn’t. See Beebe v. United States, 640 F.2d 1283, 1293, 226 Ct.Cl. 308 (1981) (FLSA claims are continuing claims and a separate cause of action “accrues” every payday that overtime is not paid); McIntyre v. Dir. of Youth Rehab., 795 F.Supp. 668, 674 (D.Del.1992) (courts have adopted uniform approach under Beebe that cause of action accrues each paycheck); see also Cook v. United States, 855 F.2d 848, 851 (Fed.Cir.1988) (general rule is that FLSA claims accrue at the end of each pay period); Mid-Continent Petroleum Corp. v. Keen, 157 F.2d 310, 316 (8th Cir.1946) (accrues each payday); accord Aronsen v. Crown Zellerbach, 662 F.2d 584, 593 (9th Cir.1981) (statute of limitations for Title VII and Age Discrimination suits runs from day employee should know employer violated law), cert. denied, 459 U.S. 1200, 103 S.Ct. 1183, 75 L.Ed.2d 431 (1983).\nState officials urge us to distinguish between late payment and nonpayment, but offer us no principled way to make such a distinction. We cannot come up with one either. We could try to create a balancing test, as the district court did when it wrote that the FLSA “require[s] payment which is reasonably prompt under the totality of the circumstances in the individual case.” Any kind of sliding scale we can think of, however, would be contrary to the statute’s direction that employers shall “pay” the minimum wage and that employees are entitled to recover “unpaid” minimum wages. It also would force employees, employers, and courts alike to guess when “late payment” becomes “nonpayment” in order to determine whether the statute of limitations has begun to run, the amount of unpaid wages and liquidated damages to be awarded, and how much prejudgment interest has been accrued. The due date, and with it when the employee actually gets paid, would become a moving target. Such a framework would contravene our obligation to construe the FLSA to the furthest reaches consistent with Congress’s intent to protect employees, Mitchell, 358 U.S. at 211, 79 S.Ct. at 264, and run counter to the purpose of the FLSA to “protect certain groups ... from substandard wages and excessive hours.” Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 706, 65 S.Ct. 895, 902, 89 L.Ed. 1296 (1945).\nState officials nevertheless argue that the statute of limitations, prejudgment interest, and liquidated damages provisions do not need to begin on the same day at which a violation occurs. We do not see how. If employees had a right to recover only at the point of nonpayment (as opposed to late payment), but the period of limitations began running as of the employee’s payday, the statute would start running before an employee had a right to recover. That cannot be correct.\nState officials do not explain when or how “late payment” metamorphoses into “nonpayment” such that the Act is violated and the employer is exposed to liability for unpaid minimum wages and additional compensation by way of liquidated damages. Likewise, it is unclear on their theory how many paychecks an employee has to miss before filing suit, being able to show a violation, and recovering liquidated damages or prejudgment interest. Nor do we agree with their suggestion that a rule that paychecks are due on payday unfairly penalizes employers who happen to be late in paying their employees. An employer who acts in good faith is not subject to liquidated damages, 29 U.S.C. § 260. While the employer remains obligated to pay overdue wages and is subject to prejudgment interest on the unpaid wages in the event of litigation, this result properly deters employers from “gamb[ling] on evading the Act” as they could if the remedy were only liability of the amount originally due. O’Neil, 324 U.S. at 709, 65 S.Ct. at 903.\nThus, state officials’ argument for why the absence of an explicit prompt payment obligation means that wages need not be paid promptly, without enhanced compensation by way of liquidated damages or prejudgment interest, is unpersuasive.\nB\nHolding that the FLSA is violated unless the minimum wage is paid on the employee’s regular payday also comports with such case law as there is. Although not directly on point, we find it difficult to read Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 65 S.Ct. 895, 89 L.Ed. 1296 (1945) without concluding that an employer violates the Act if payments are late. In O’Neil, an employee accepted a delayed payment of wages from his employer, and waived the right to receive liquidated damages. The Supreme Court held that claims for liquidated damages could not be waived. It rejected the employer’s argument — similar to state officials’ here' — that the right to liquidated damages arises only if the employee is compelled to sue for minimum wages due, holding instead that the employer is liable for liquidated damages in an amount equal to minimum wages “overdue” whether the employer is in default at the time suit is begun or not. 324 U.S. at 711, 65 S.Ct. at 904.\nO’Neil repeatedly referred to the employer’s obligation to pay employees on time. For example, the court wrote that the liquidated damages provision “constitutes a Congressional recognition that failure to pay the statutory minimum on time may be so detrimental to maintenance of the minimum standard of living ‘necessary for health, efficiency, and general well-being of workers’ and to the free flow of commerce, 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.” Id. at 707, 65 S.Ct. at 902 (emphasis added). See also id. (reparations are necessary for “failure to pay on time,\" emphasis added); id. at 709, 65 S.Ct. at 903 (employee has right to “recover damages from delay in payment,” emphasis added); id. at 707 n. 20, 65 S.Ct. at 902 n. 20 (“prompt payment to workers has long been recognized by Congress”).\nIf, as state officials argue, late payment does not violate the FLSA, then there should have been no liquidated damages in O’Neil because the late payment there, through settlement, made up the difference. That the employee was entitled to recover liquidated damages even after being reimbursed to meet the minimum wage indicates that the minimum wage must be paid promptly. See also D.A. Schulte, Inc. v. Gangi, 328 U.S. 108, 116, 66 S.Ct. 925, 929, 90 L.Ed. 1114 (1946) (“the public policy of minimum wages, promptly paid, [is] embodied in the Wage-Hour Act”).\nState officials seek to distinguish O’Neil on the footing that the delay there was a long time (years), whereas here it was only a couple of weeks. O’Neil, however, did not rest its holding on the length of the delay. In any event, long versus short strikes us as an unworkable standard.\nThe Eleventh Circuit echoed O’Neil’s holding in Olson v. Superior Pontiac-GMC, Inc., 765 F.2d 1570 (11th Cir.1985), modified, 776 F.2d 265 (11th Cir.1985). Olson was a used car salesman who received weekly cash bonuses for each sale, and a sum at the end of the month also based on sales. Over five months, Olson received less than the minimum wage in three months, and more than the minimum in two. Since these two months were highly profitable, Olson’s total for the five months was more than the minimum wage. Nevertheless, he argued that he deserved the difference between the minimum wage and what he received for the three months in which he was under the minimum wage.\nThe court adopted the government’s Wage and Hour Field Operations Handbook rule, which stated that the FLSA requires “that the employee receive ‘prompt payment’ of the minimum wage covering all hours worked during the pay period.” Id. at 1578. As the court wrote, “[w]e think the Act clearly requires an employee to be paid the minimum wage for each hour worked during the pay period.” Id. (emphasis original). “[E]xcess commissions earned by salesmen during one pay period may be carried forward and applied to the minimum wage for the next period so long as the employee actually received the minimum wage for each hour worked within each separate pay period.\" Id. at 1579 (emphasis supplied). Consequently,\n[t]his places a duty on the employer to ensure that the employee receives payment of the minimum wage. A mere alteration of the employer’s records that reflects excess commissions earned in the preceding period being applied toward the minimum wage for the current period will not suffice. The employee must actually receive the minimum wage each pay period.\nId. (emphasis original).\nSeveral other courts have also indicated that employees must be paid on payday under the FLSA. For example, in United States v. Klinghoffer Bros. Realty Corp., 285 F.2d 487, 491 (2d Cir.1961), the court stated that “[wjhile the FLSA does not expressly set forth a requirement of prompt payment, such a requirement is clearly established by the authorities.” Similarly, in Donovan v. Kaszycki & Sons Contractors, Inc., 599 F.Supp. 860, 869 (S.D.N.Y.1984) the court wrote that “the fact that defendants may have intended to pay the employees at some future date, or that some employees might have acquiesced, albeit grudgingly, to deferred payment, has no bearing on the fact that the statute was violated.” See also Birbalas v. Cuneo Printing Industries, Inc., 140 F.2d 826, 828 (7th Cir.1944) (past due payment for overtime wages did not foreclose a suit for liquidated damages); Rigopoulos v. Kervan, 140 F.2d 506, 507 (2d Cir.1943) (overtime compensation “shall be paid in the course of employment and not accumulated beyond regular payday.”); Seneca Coal & Coke v. Lofton, 136 F.2d 359, 363 (10th Cir.), cert. denied, 320 U.S. 772, 64 S.Ct. 77, 88 L.Ed. 462 (1943) (FLSA violated if overtime payments not made “when due in the regular course of employment”); accord Martin v. Selker Bros., Inc., 949 F.2d 1286, 1299 (3d Cir.1991) (“liquidated damages ... compensate employees for the losses they may have suffered by reason of not receiving their proper wages at the time they were due,\" emphasis supplied); Atlantic Co. v. Broughton, 146 F.2d 480, 482 (5th Cir.1944), cert. denied, 324 U.S. 883, 65 S.Ct. 1021, 89 L.Ed. 1433 (1945), (obligation to pay liquidated damages “immediately arises” when “an employer on any regular payment date fails to pay the full amount” due).\nWe are therefore satisfied that our conclusion, that payment of minimum wages is late if not done on payday, is in line with the view of other courts.\nC\nThe Department of Labor’s opinion of the statute ’ further buttresses our holding. When faced with a problem of statutory construction, federal courts should show “great deference to the interpretation given the statute by the officers or agency charged with its enforcement.” Udall v. Tollman, 380 U.S. 1, 16, 85 S.Ct. 792, 801, 13 L.Ed.2d 616 (1965).\nAs Opinion Letter, No. 63 (Nov. 30, 1961) reflects, an employer sought to pay an employee less than the minimum wage during the week, and make up the difference at the end of the month. The Department opined that this violated the FLSA. “[Wjhile the Act does not require that the employee’s compensation must be paid weekly, it does require the employer to pay minimum wages due for the particular work week on the regular payday for the period such work week ends.” See also Opinion Letter, No. 1296 (Nov. 27, 1973) (employee must receive minimum wage at each paycheck); W.H. Admin.Op. (Jan. 27, 1969) (“The Act requires that employees must be paid on the regular payday.”).\nOur construction is also consistent with applicable federal regulations. 29 C.F.R. § 531.27(a) requires that “payments of the prescribed wages, including overtime compensation, [be made] in cash or negotiable instrument payable at par.” 29 C.F.R. § 778.106 requires that overtime compensation be paid on the employee’s regular payday. If overtime wages must be paid in cash or negotiable instruments on the employee’s regular payday, then certainly the minimum wage must also be paid on the employee’s regular payday. See Klinghoffer, 285 F.2d at 491.\nIll\nState officials argue that the district court’s finding that the FLSA contains a requirement that employees be paid promptly upon the end of their pay period, coupled with the order directing that the State of California must comply with such an implied requirement, is in derogation of the state’s constitutional and statutory budget provisions. As the district court granted no in-junctive relief, we do not understand that the state has been ordered to comply with any requirement of the FLSA. Like any other employer, however, if it does not do so the state is exposed to liability for “unpaid minimum wages,” liquidated damages or prejudgment interest. To the extent state officials contend that this exposure to damages infringes on the state’s sovereignty under the Tenth Amendment, we disagree.\nIn Garcia v. San Antonio Metro. Transit Authority, 469 U.S. 528, 105 S.Ct. 1005, 83 L.Ed.2d 1016 (1985) the Supreme Court held that states are subject to the FLSA, overruling National League of Cities v. Usery, 426 U.S. 833, 96 S.Ct. 2465, 49 L.Ed.2d 245 (1976). And we have recently held that “Congress has made unmistakably clear its intention to apply the FLSA to the states.” Hale v. Arizona, 993 F.2d 1387, 1391 (9th Cir.1993) (en banc).\nState officials argue that Garcia is distinguishable on its facts because applying the FLSA in that case only forced the state agency to pay its employees a minimum wage as other employers are required to do, but to apply it here would require California to pass a budget on time, a much more serious infringement of state sovereignty. Assuming state officials are correct that in the absence of a budget, the state was not legally able to pay its employees, we nevertheless find that the application of the FLSA is not preempted by the Tenth Amendment. To the extent compliance with the FLSA interferes with the state budgetary process, that interference is caused by state law, not federal law. The FLSA does not require California to pass a budget on time; it only requires California to do what all employers must do — pay its employees the minimum wage on payday. That California has made its federal obligation dependent upon the operation of state law does not render the federal law unconstitutional.\nState officials also argue that Gregory v. Ashcroft, - U.S. -, 111 S.Ct. 2395, 115 L.Ed.2d 410 (1991) and New York v. United States, — U.S. -, 112 S.Ct. 2408, 120 L.Ed.2d 120 (1992) prohibit application of the FLSA to California. Gregory applied an axiom of legislative interpretation called the plain statement rule: if a Congressional statute intends to preempt the historic powers of the States, its intention must be unmistakably clear in the language of the statute. — U.S. at —, 111 S.Ct. at 2401 (quoting Will v. Michigan Dept. of State Police, 491 U.S. 58, 65, 109 S.Ct. 2304, 2308, 105 L.Ed.2d 45 (1989)). Gregory’s plain statement rule is satisfied here since the FLSA clearly applies to state employees such as Biggs. Hale, 993 F.2d at 1391; 29 U.S.C. §§ 203(d)-(e).\nNew York held that the federal government cannot force the State of New York to regulate nuclear waste in a certain way because in doing so, Congress exceeded its Article I powers. — U.S. at -, 112 S.Ct. at 2428-29. Here, there is no dispute that the FLSA was an appropriate exercise of federal power.\nIV\nWe therefore hold that state officials’ failure to issue the class’s paychecks promptly when due violates the FLSA. Paychecks are due on payday. After that, the minimum wage is “unpaid.”\nAFFIRMED.\n. Both sides concede that this was the employees' payday. Therefore, we do not comment on how to define an employee’s payday.\n. We assume that the declaratory relief granted is, as stated in the order portion of the district court’s memorandum and order, as follows: \"It is therefore declared that defendants’ failure to issue plaintiffs' paychecks when due violates the Fair Labor Standards Act.\"\n. The district court ruled against Biggs on several procedural matters. Biggs’s appeal from these rulings is resolved in a separate, unpublished memorandum disposition (No. 92-15334). This appeal concerns only No. 92-15936.\n.The California Correctional Peace Officers Association, the California Union of Safety Employees, and the California Department of Property Employees Association; and the Service Employees International Union, AFL-CIO have appeared as amici curiae in support of Biggs.\n. No separate judgment was entered on the district court's October 3, 1991 order, which would have been helpful because it is not entirely clear against whom the order runs. However, neither party complains and the fact that an appeal is taken prematurely from an order, rather than a judgment, is not fatal to our jurisdiction. Banker’s Trust Co. v. Mallis, 435 U.S. 381, 98 S.Ct. 1117, 55 L.Ed.2d 357 (1978).\n. 29 U.S.C. § 206(b) provides:\nEvery employer shall pay to each of his employees (other than an employee to whom subsection (a)(5) of this section applies) who in any workweek is engaged in commerce or in the production of goods for commerce ... wages at the following rate: ... not less than the minimum wage.\n.The Act also requires employers to pay overtime compensation, 29 U.S.C. § 207(a)(1), and the provisions for liability apply to overtime as well as to a minimum wage.\n. Section 255(a) provides: \"Any action ... to enforce any cause of action for unpaid minimum wages, unpaid overtime, or liquidated damages ... shall be forever barred unless commenced within two years after the cause of action accrued, except that a cause of action arising out of a willful violation may be commenced within three years.” 29 U.S.C. § 255(a).\n. At the time O’Neil was decided, liquidated damages were mandatory. 324 U.S. at 710. Since then, however, the statute has been amended to make liquidated damages discretionary. 29 U.S.C. § 216(b). That change, however, does not affect O’Neil's analysis or ours.\n. Olson was modified on rehearing, but this language remained intact. In its modification to the opinion, the court reaffirmed the \"prompt payment” ruling, noting that the \"employer has yet to furnish ... any law or regulation which would permit an employer to pay an employee less than the minimum wage during a pay period.” Olson, 776 F.2d at 267.", "type": "majority", "author": "RYMER, Circuit Judge:"}, {"text": "TROTT, Circuit Judge,\ndissenting and concurring:\nAs I write this opinion, major cities and towns in four Midwestern states are under water. From Montevideo, Minnesota through Minneapolis and St. Paul, from Du-buque, Des Moines, and Davenport, Iowa through Hannibal and St. Louis, Missouri, the waters of the Mississippi River and its tributaries have disrupted the lives of almost everyone living and working in the area. According to.the Associated Press, 250,000 people in Des Moines are without drinking water, and 30,000 people have been flooded out of their homes in Iowa, Illinois, and Missouri. Businesses everywhere are closed. The interruption to everyday life caused by this natural disaster is similar in many respects to recent hurricanes in Florida, earthquakes in California, and drought in South Carolina: virtually everything stops except heroic efforts to survive and recover. I use this to illustrate the fact that unpredictable forces beyond anyone’s control frequently invade our lives and disrupt the orderly course of everything, including the normal operation of business and commerce. These forces do not respect the calendar, payday, or the Fair Labor Standards Act. On a lesser scale, people get sick, customers declare bankruptcy, computers crash, the mail is sometimes late, and yes, states required to live by rules designed to ensure fiscal responsibility prohibit by law the release of paychecks until a budget is passed. Even federal employees are not always paid on payday. Meeting a payroll on time is not always easy or possible.\nThe real world notwithstanding, we now impose from the cocoon of a federal appeals court a new peril on people struggling to provide jobs for others: pay your employees before the clock strikes midnight, or you just bought yourself a lawsuit in federal court. Floods and the like provide the rock, we now provide the hard place.\nCongress has not spoken on this precise issue. All the law says is that employers shall pay their employees the minimum wage, period. Congress has not uttered a word about when this payment must be made. Yet, driven by a search for a “bright line,” we read into the law an impractical requirement that creates a cause of action against an employer at midnight plus one second after the expiration of payday. The majority’s holding says to employers, we don’t care why you were late, we don’t care what your reason was, the only issue now is whether liquidated damages shall be awarded. Judge Rymer says this rule does not unfairly penalize employers “who happen to be late in paying their employees.” I thoroughly disagree. So will many employers. I do not dispute the idea that payment must be made in a reasonable time given the circumstances, but I do disagree with the notion that payment must be made on payday, no excuses accepted. Surely most employees of flood-ravaged employers would not take them to court to take advantage of their instant cause of action. Why? Because they too would recognize the unfairness of requiring someone to pay on time when they reasonably cannot. But it makes no sense to leave all employees at the mercy of the good will of their employers. The instant case demonstrates what can happen. Labor unrest is not uncommon.\nIn this respect, I believe the district court fashioned a workable rule for determining when a violation of the FLSA occurs, a rule I would adopt for this Circuit:\nThe requirement of prompt payment should not be construed to impose strict liability on an employer for every delay in payment, however slight or for whatever reason. Indeed, such a result would threaten to bring about the financial ruin of many employers, seriously impair the capital resources of many others, provide a windfall to employees, and burden the court with excessive and needless litigation, all in direct contravention to the expressed intent of Congress. See 29 U.S.C. § 251(a)(1), (4) and (7). Instead, it must be interpreted to require payment which is reasonably prompt under the totality of the circumstances in the individual case. This interpretation is consistent with the long-established customs, practices, and contracts between employees and employers which Congress sought to revive in enacting the amendment to the statute. See Id. at § 251(a). For it has long been recognized that in the absence of a provision indicating that time is of the essence, a party is entitled reasonable time to perform. John D. Calamari & Joseph M. Perillo, Contracts § 11-22 at 410. (2nd ed. 1977).\nJudge Rymer relies on “logic,” but logic used in this sense means judgment, and judgment means reason and choice. I respectfully believe she has made the wrong choice. We don’t need bright lines for everything. Sometimes they work mischief. It is ironic that we impose this bright line on employers at a time when most federal judges are publicly railing against the rigidity of federal sentencing guidelines. There is a place for bright lines, but this is not it. This is essentially a policy choice. Because Congress has left it to us, I would choose a more comprehensive approach that recognizes the problems of the real world.\nThose of us who live surrounded by lawsuits may not be scared of them, but well-meaning and conscientious employers — including sovereign states and their political subdivisions — are not so sanguine about mandatory costs and attorneys’ fees, See 29 U.S.C. § 216(b), and the hassle of being hauled into court. For everyone, being a defendant in federal court is a disaster of its own kind. To the detriment of all of us, the litigation explosion continues.\nThe parade of litigation horribles conjured up by the majority to discredit reasonable flexibility is simply false. Trial courts and judges are well equipped to deal with yielding rules. We do it all the time. For example, the statute of limitations clock does not start to tick against an injured employee eligible for a disability award under the Longshoremen’s and Harbor Workers Compensation Act, 33 U.S.C. § 901 et seq., until the employee becomes “aware of the full character, extent and impact of the harm done to him.” Todd Shipyards v. Allan, 666 F.2d 399, 401 (9th Cir.) (emphasis omitted), cert. denied, 459 U.S. 1034, 103 S.Ct. 444, 74 L.Ed.2d 600 (1982). No bright line here. This is just a matter of fairness and common sense. See also Abel v. Director, OWCP, 932 F.2d 819 (9th Cir.1991). Ironically, one of the cases cited by the majority cuts against its reasoning. In Aronsen v. Crown Zellerbach, 662 F.2d 584 (9th Cir.1981), we rejected the use of a bright-line statute of limitations formula in favor of a test based on when an employee “knows or should know that an unlawful employment practice has been committed.” Id. at 593. We said, “Judicial review in each case cannot be facilitated by bright-line approaches because, as the court has indicated, such formulae tend to obscure and even distort congressional intent.” Id. The only congressional intent I can readily discern from the FLSA is the intent to insure the payment of minimum wages, not that payment be made on payday come hell or high water, or else. I quote the Supreme Court:\nThe legislative history of the Fair Labor Standards Act shows an intent on the part of Congress to protect certain groups of the population from substandard wages and excessive hours which endangered the national health and well-being and the free flow of goods in interstate commerce. The statute was a recognition of the fact that due to the unequal bargaining power as between employer and employee, certain segments of the population required Federal compulsory legislation to prevent private contracts on their part which endangered national health and efficiency and as a result the free movement of goods in interstate commerce.\nBrooklyn Savings Bank v. O’Neil, 324 U.S. 697, 706-07, 65 S.Ct. 895, 902, 89 L.Ed. 1296 (1945) (footnotes omitted).\nI disagree with the majority that the district court’s test would require us to “guess” when late payment becomes nonpayment and when the statute of limitations starts to run. Trial courts would no more “guess” at this than anything else they decide. I have no doubt that we easily could apply the district court’s test in FLSA cases without damaging the purpose of Congress in enacting this law.\nThe majority’s holding also undercuts 29 U.S.C. § 260, which allows an employer to escape the clutches of liquidated damages “if the 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 [FLSA]. Id. (emphasis added). If payment must be made on payday, period, no excuses allowed, how could a flooded-out employer ever show he had reasonable grounds to believe his failure to pay on payday “was not a violation” of the Act? The majority’s failure to appreciate the ramifications of its bright-line rule on this issue and likewise to provide guidance to district courts is lamentable.\nSo, to employers in the Ninth Circuit, beware. No matter what your excuse, good or not, the next earthquake, fire, drought, death or illness, bankruptcy, flood, computer failure, or fiscal crisis may land you without a defense in federal court, especially if you are not on friendly terms with your employees.\nNevertheless, I concur in the outcome in this case because California understandably passed up its opportunity to demonstrate to the district court that its delay in payment was reasonable, preferring instead to argue that the statute only prohibits nonpayment, not late payment. I characterize California’s litigation position as “understandable” because it is true that the statute we construe says absolutely nothing about the timing of payments. Thus, although I disagree with the majority’s draconian rule, I concur in the result of this appeal.", "type": "concurring-in-part-and-dissenting-in-part", "author": "TROTT, Circuit Judge,"}], "attorneys": ["Joe R. McCray and Roberta D. Perkins, Joe R. McCray, a Law Corp., San Francisco, CA and Cathy A. Neff, Deputy Atty. Gen., Sacramento, CA, for plaintiffs-appellants-cross-appellees.", "Christopher W. Waddell, Chief Counsel, Dept, of Personnel Admin., Sacramento, CA, for defendants-appellees-cross-appellants.", "Gary M. Messing and Cathleen Williams, Carroll, Burdick & McDonough, Sacramento, CA, for amicus curiae California Correctional Peace Officers Ass’n, et al.", "Craig Becker, U.C.L.A. Law School, Los Angeles, CA, for amicus curiae Service Employees Intern. Union, AFL-CIO."], "corrections": "", "head_matter": "William BIGGS, et al., Plaintiffs-Appellants-Cross-Appellees, v. Pete WILSON, Governor; Kathleen Brown, Treasurer; Gray Davis, Controller, et al., Defendants-Appellees-Cross-Appellants.\nNos. 92-15334, 92-15936.\nUnited States Court of Appeals, Ninth Circuit.\nArgued and Submitted May 11, 1993.\nDecided Aug. 12, 1993.\nJoe R. McCray and Roberta D. Perkins, Joe R. McCray, a Law Corp., San Francisco, CA and Cathy A. Neff, Deputy Atty. Gen., Sacramento, CA, for plaintiffs-appellants-cross-appellees.\nChristopher W. Waddell, Chief Counsel, Dept, of Personnel Admin., Sacramento, CA, for defendants-appellees-cross-appellants.\nGary M. Messing and Cathleen Williams, Carroll, Burdick & McDonough, Sacramento, CA, for amicus curiae California Correctional Peace Officers Ass’n, et al.\nCraig Becker, U.C.L.A. Law School, Los Angeles, CA, for amicus curiae Service Employees Intern. Union, AFL-CIO.\nBefore: REINHARDT, TROTT, and RYMER, Circuit Judges."} | REINHARDT | TROTT | RYMER | 1 | 2 | 1 | 1 | 0 | 0 | 1 F.3d 1537 | [
{
"content": "You are an expert legal coding assistant trained to classify U.S. federal Courts of Appeals\ncases using an adaptation of the Supreme Court Database (SCDB_2023_01) codebook. You follow the coding procedure\nin the codebook step by step and use the precise definitions of terms presented in the code... |
10,518,102 | UNITED STATES of America, Plaintiff-Appellant, v. Christopher P. DROGOUL, Defendant-Appellee | United States v. Drogoul | 1993-09-02 | No. 93-8964 | United States Court of Appeals for the Eleventh Circuit | {"judges": ["Before TJOFLAT, Chief Judge, KRAVITCH and HATCHETT, Circuit Judges."], "parties": ["UNITED STATES of America, Plaintiff-Appellant, v. Christopher P. DROGOUL, Defendant-Appellee."], "opinions": [{"text": "KRAVITCH, Circuit Judge:\nThis interlocutory appeal stems from a pretrial dispute in the government’s prosecution of appellee Christopher Drogoul. The sole question before us is whether the district court abused its discretion in denying the government’s motion to take the depositions of several foreign nationals in Italy. We hold that it did and, accordingly, reverse.\nI.\nA.\nDrogoul was manager of the Atlanta branch of Banca Nazionale del Lavoro (BNL), a bank headquartered in Rome, Italy and owned largely by the Italian government. He is charged in a multicount indictment with, inter alia, wire fraud, conspiracy, and making false statements to government agencies. The crux of the government’s allegations is that Drogoul defrauded BNL by making and concealing unauthorized loans and credit extensions totalling several billion dollars to agencies and instrumentalities of the Republic of Iraq.\nDrogoul pled guilty in June 1992 to sixty counts of a 347-count original indictment. The current trial-preparation phase of the litigation began on October 1,1992, when the district court granted Drogoul’s request to withdraw his guilty plea. Trial initially was set for April 5, 1993, but subsequently was rescheduled for September 8, 1993.\nB.\nIn April 1993, the government moved the district court for an order authorizing it to take the video and audiotaped depositions of thirteen Italian nationals before an Italian judicial officer in Rome, for potential use at trial in the United States. The government averred that the prospective deponents’ testimony is material to the prosecution, that the deponents are unwilling to testify in the United States, and that they cannot be compelled to do so. In a written order entered on April 30, 1993, the district court denied the government’s request. The court found that the government had shown neither that the witnesses are unavailable to testify in the United States nor that the procedures for taking the depositions would comport with due process. The court noted in particular that “the government has failed to procure the affidavits of any of the witnesses themselves indicating that they are unwilling to travel to the United States for Drogoul’s trial.” Accordingly, the court concluded that the government failed to demonstrate exceptional circumstances justifying the taking of foreign depositions. In addition, the court expressed concern that the government had approached Italian authorities as early as February 1993 to arrange for the possible taking of the depositions, but did not inform either the court or the defendant about its intentions until April 1993 when it filed its original motion to take the depositions.\nIn response to the district court’s concerns regarding the prospective deponents’ availability, the government enlisted the assistance of the Government of Italy to ascertain more conclusively the witnesses’ willingness to testify in the United States. Pursuant to a treaty request lodged with the Italian government, an Italian judicial officer interviewed the thirteen potential witnesses as to whether they would travel to the United States to testify at Drogoul’s trial. Six of the witnesses declared they would be willing to testify in the United States; seven declared they would not.\nBased on the witnesses’ declarations — particularly those of the seven who indicated they would not testify in this country — the government moved for reconsideration of the order denying its motion to take foreign depositions. Supporting this motion was a letter from the Italian magistrate who had interviewed the thirteen witnesses. The letter certified that the seven witnesses had announced they would not testify at Dro-goul’s trial. Despite this new information, in an oral ruling rendered June 10, 1993, the district court refused to reconsider its earlier decision, apparently because the government’s request was untimely under local court rules. See N.D.Ga.R. 220-6 (providing that motion for reconsideration must be filed within ten days after entry of order).\nThe government appealed, and we reversed. Because the government’s “Motion for Reconsideration” was based in part on significant new information not contained in its original motion — the letter from the Italian magistrate reporting the witnesses’ in-court declarations — we held that the district court should have construed the motion as a timely renewed motion to take foreign depositions. United States v. Drogoul, No. 93-8840, 998 F.2d 1023 (11th Cir. July 16, 1993) (table). Accordingly, we remanded the case to the district court to consider the merits of the government’s motion.\nOn remand, the district court denied the government’s motion once more. This time the court did not focus on the availability of the witnesses or the materiality of their testimony: It “assum[ed] that the government has finally shown unavailability and materiality as required by Rule 15 [of the Federal Rules of Criminal Procedure].” Rather the court held that the government “has not shown that the procedures surrounding the taking of the deposition testimony will meet constitutional standards.” In particular, the court had misgivings about the potential accuracy of the translation of the Italian testimony and about the provisions for Dro-goul to engage in meaningful cross-examination. The court also reiterated its earlier displeasure with the government’s delay in notifying both the court and Drogoul of its intention to take the foreign depositions.\nThe government’s appeal from this order of the district court is what is at issue here. In view of the impending trial date (the district court’s written order was entered on August 4,1993; trial is scheduled to begin September 8,1993), and the inordinate amount of time already spent litigating this narrow, pretrial issue, we granted the government’s motion to expedite the appeal. Interlocutory appellate jurisdiction lies pursuant to 18 U.S.C. § 3731, because the district court’s order has the practical effect of excluding evidence. We now reverse.\nII.\nDepositions generally are disfavored in criminal eases. United States v. Milian-Rodriguez, 828 F.2d 679, 686 (11th Cir.1987), cert. denied, 486 U.S. 1054, 108 S.Ct. 2820, 100 L.Ed.2d 921 (1988). Their “only authorized purpose is to preserve evidence, not to afford discovery.” Simon v. United States, 644 F.2d 490, 498 n. 12 (5th Cir.1981). In particular, because of the absence of procedural protections afforded parties in the United States, foreign depositions are suspect and, consequently, not favored. United States v. Alvarez, 837 F.2d 1024, 1029 (11th Cir.), cert. denied, 486 U.S. 1026, 108 S.Ct. 2003, 100 L.Ed.2d 234, and cert. denied, 486 U.S. 1026, 108 S.Ct. 2004, 100 L.Ed.2d 235 (1988); Milian-Rodriguez, 828 F.2d at 686. Nevertheless, the Federal Rules of Criminal Procedure expressly authorize parties to take depositions and use them at trial, when doing so is necessary to achieve justice and may be done consistent with the defendant’s constitutional rights.\nWhenever due to exceptional circumstances of the case it is in the interest of justice that the testimony of a prospective witness of a party be taken and preserved for use at trial, the court may upon motion of such party and notice to the parties order that testimony of such witness be taken by deposition....\nFed.R.Crim.P. 15(a).\nAt the trial ... a part or all of a deposition, so far as otherwise admissible under the rules of evidence, may be used as substantive evidence if the witness is unavailable, as unavailability is defined in Rule 804(a) of the Federal Rules of Evidence, or the witness gives testimony at the trial or hearing inconsistent with that witness’ deposition.\nFed.R.Crim.P. 15(e).\nThe burden is on the moving party to establish exceptional circumstances justifying the taking of depositions. See United States v. Fuentes-Galindo, 929 F.2d 1507, 1510 (10th Cir.1991). Whether to authorize depositions is a decision committed to the discretion of the district court which will be disturbed only for an abuse of discretion. United States v. Mills, 760 F.2d 1116, 1120 (11th Cir.1985). For purposes of analysis, we divide the prospective deponents into two groups: the seven who have declared they will not testify at Drogoul’s trial and the six who have declared they would. In Part III of the opinion, we discuss the district court’s order ,as it relates to the former group. In Part IV we discuss it in relation to the latter.\nIII.\nA.\nThe primary reasons for the law’s normal antipathy toward depositions in criminal cases are the factfinder’s usual inability to observe the demeanor of deposition witnesses, and the threat that poses to the defendant’s Sixth Amendment confrontation rights. Milian-Rodriguez, 828 F.2d at 686; United States v. Wilson, 601 F.2d 95, 97 (3d Cir.1979); United States v. Mann, 590 F.2d 361, 365 (1st Cir.1978). On the other hand, it is well established that when a witness is unavailable to testify at trial, former testimony given by that witness may be introduced consistent with the defendant’s constitutional rights. See, e.g., White v. Illinois, — U.S. -, -, 112 S.Ct. 736, 741, 116 L.Ed.2d 848 (1992); Ohio v. Roberts, 448 U.S. 56, 67-68, 100 S.Ct. 2531, 2540, 65 L.Ed.2d 597 (1980); Fed.R.Evid. 804(b)(1). Thus, ordinarily, exceptional circumstances exist within the meaning of Rule 15(a) when the prospective deponent is unavailable for trial and the absence of his or her testimony would result in an injustice. See Alvarez, 837 F.2d at 1029. The principal consideration guiding whether the absence of a particular witness’s testimony would produce injustice is the materiality of that testimony to the case. See United States v. Ismaili, 828 F.2d 153, 159 (3d Cir.1987), cert. denied, 485 U.S. 935, 108 S.Ct. 1110, 99 L.Ed.2d 271 (1988); United States v. Johnpoll, 739 F.2d 702, 709 (2d Cir.), cert. denied, 469 U.S. 1075, 105 S.Ct. 571, 83 L.Ed.2d 511 (1984). When a prospective witness is unlikely to appear at trial and his or her testimony is critical to the case, simple fairness requires permitting the moving party to preserve that testimony — by deposing the witness — absent significant countervailing factors which would render the taking of the deposition unjust.\nB.\nIn denying the government’s motion to take foreign depositions the district court assumed that the government established the unavailability of the prospective deponents and the materiality of their expected testimony. The court held nonetheless that those factors were outweighed by countervailing considerations: the lack of guaranteed procedures protecting the defendant’s due process rights and the government’s supposed dilatory conduct in providing notice of its intent to seek the depositions. To determine whether these factors offset the unavailability of the witnesses and the materiality of their testimony, we must review the evidence regarding the prospective deponents’ willingness to testify at trial and the importance of the deponents’ testimony to the case. Accordingly, notwithstanding the district court’s assumption that they were minimally satisfied, we elaborate on these two paramount considerations.\n1.\nThe moving party may demonstrate the probable unavailability of a prospective deponent “through affidavits or otherwise.” See Alvarez, 837 F.2d at 1029. Significantly, that showing need not be conclusive before a deposition can be taken. United States v. Sines, 761 F.2d 1434, 1439 (9th Cir.1985). “It would be unreasonable and undesirable to require the government to assert with certainty that a witness will be unavailable for trial months ahead of time, simply to obtain authorization to take his deposition.” Id. A more concrete showing of unavailability, of course, may be required at the time of trial before a deposition will be admitted in evidence. See Fed.R.Crim.P. 15(e). A potential witness is unavailable for purposes of Rule 15(a), however, whenever a substantial likelihood exists that the proposed deponent will not testify at trial. In that situation, justice usually will be served by allowing the moving party to take the deposition, thereby preserving the party’s ability to utilize the testimony at trial, if necessary. Id.\nThe government has made a strong showing that seven of the thirteen potential deponents are substantially unlikely to be available to testify at Drogoul’s trial. Because the witnesses are foreign nationals located outside the United States, they are beyond the subpoena power of the district court. See 28 U.S.C. § 1783; United States v. Farfan-Carreon, 935 F.2d 678, 680 (5th Cir.1991); United States v. Sindona, 636 F.2d 792, 803 (2d Cir.1980), cert. denied, 451 U.S. 912, 101 S.Ct. 1984, 68 L.Ed.2d 302 (1981). Under a treaty between the United States and Italy, potential witnesses may be ordered by the Italian government to testify in the United States, but one who refuses to do so may not be removed to this country. Treaty on Mutual Assistance in Criminal Matters, Nov. 9, 1985, U.S.-Italy, art. 15, 24 I.L.M. 1539, 1541. Thus, the prospective deponents cannot be compelled to testify at Drogoul’s trial. The government has proffered a letter from an Italian judicial officer (the authenticity of which Drogoul has not challenged) certifying that the seven witnesses have declared in open court their unwillingness to testify in the United States. This evidence is potent proof of unavailability for purposes of Rule 15(a). See, e.g., Sindona, 636 F.2d at 803 (noting that prospective witnesses specifically refused to come to the United States).\n2.\nThe government also has made a strong showing of materiality. Indeed, the expected testimony of all thirteen prospective deponents is highly material to this case. At a sentencing hearing prior to the withdrawal of his guilty plea, Drogoul asserted that his former BNL superiors in Rome were fully aware of his loan activities regarding Iraq. Several pleadings which Drogoul has filed in the district court indicate strongly that this contention will be a central defense theory at trial. This defense goes to the very heart of the government’s allegations that Drogoul went beyond the scope of his lending authority in extending credit to agencies of Iraq. The government expects the testimony of the prospective Italian deponents directly to refute Drogoul on this issue.\nPerhaps Drogoul expressed it best when he acknowledged in his brief to this court: “The testimony of these thirteen witnesses lies at the very core of the charges in the indictment, and its refutation the heart of the defense.” Brief for the Defendant-Appellee at 5. We can hardly imagine testimony more critical to this case.\nC.\nBecause the government established the key factors of probable unavailability and materiality (in this case, substantial materiality), the question becomes whether the district court acted within its discretion when it' held that these considerations were, in this case, outweighed by certain countervailing factors.\n1.\nOf “primary concern” to the district court were the potential accuracy of the translation from Italian of the deposition testimony and the availability (or unavailability) to Drogoul of meaningful cross-examination. We believe these concerns to be largely premature and speculative. To the extent they are valid, they are insufficient to counterbalance the government’s need to preserve for possible use at trial testimony which Drogoul concedes goes to the very core of this case.\nNothing in the record suggests that a correct translation cannot be obtained in this case, or that Drogoul even will object to the translation. Translations are an established part of practice in the federal courts. See, e.g., Fed.R.Crim.P. 28 (providing for appointment of interpreters). Moreover, the depositions in this case are to be both audio and videotaped. If a question does arise with respect to the translation, an appropriate translator may be appointed to review the tapes and help resolve the dispute. Until the depositions are taken and translated, and an objection lodged, it is sheer speculation that the translation will pose a problem in this case.\nSimilarly, the district court’s concerns regarding Drogoul’s right of cross-examination are premature. To be sure, the defendant’s right to confront witnesses is “the most important factor to be taken into account in determining whether to allow the use of a deposition at a criminal trial.” United States v. Keithan, 751 F.2d 9, 12 (1st Cir.1984). We fail to see, however, how the mere talcing of depositions threatens that right. Only when deposition testimony is sought to be introduced in evidence are the defendant’s confrontation rights truly implicated. Before then the process is simply one of preserving testimony for possible subsequent use. At trial, if admission of the deposition would violate the Sixth Amendment, the court could — indeed should — exclude the deposition. See Fed.R.Crim.P. 15(d) (“[T]he scope and manner of ... cross-examination shall be such as would be allowed in the trial itself.”). At that time, the district court will be in a superior position to analyze the confrontation issue, because it will be able to review the actual deposition transcripts, audiotapes, and/or videotapes to determine whether in fact introducing the depositions would be inconsistent with the defendant’s constitutional rights. See United States v. Salim, 855 F.2d 944, 952 (2d Cir.1988). “This approach comports with both the purpose and language of Rule 15, which concentrates first on preservation of testimony and only thereafter focuses on admissibility.” Id.\nIt might have been within the district court’s discretion to deny the government’s deposition request — notwithstanding the unavailability of the prospective deponents and the crucial nature of their testimony — were it abundantly clear that the depositions could not possibly be admitted at trial. The court need not, at the cost of time and money, engage in an act of futility by authorizing depositions that clearly will be inadmissible at trial. But such is not the case here. Although oral questioning by counsel generally is not permitted in Italian courts, the government apparently has received assurances that oral examination will be allowed. Even if it is not, defense counsel will be able to submit questions for the Italian court to ask. In addition, the depositions will be videotaped, enabling a jury to observe the demeanor of the witnesses. See Milian-Rodriguez, 828 F.2d at 686 (noting that depositions are disfavored in criminal eases because factfinder generally cannot observe witnesses’ demeanor). Both Drogoul and his counsel may travel to the depositions at the government’s expense. Fed.R.Crim.P. 15(c). Several courts of appeals have affirmed the use at trial of deposition testimony obtained pursuant to procedures akin to those proposed in this case. See, e.g., United States v. Sturman, 951 F.2d 1466, 1480-81 (6th Cir.1991) (Swiss magistrate instructed defendants to object to proceeding in writing and disallowed verbatim transcription), cert. denied, — U.S. -, 112 S.Ct. 2964, 119 L.Ed.2d 586 (1992); Salim, 855 F.2d at 951 (cross-examination conducted by French magistrate pursuant to submitted written questions). Thus, the likelihood that the Confrontation Clause would preclude admission of the highly material deposition testimony in this case is not so absolute as to warrant forbidding the government from at least preserving that testimony.\nLikewise, the possibility that irremediable problems will develop with respect to translation of the depositions is too remote for one to conclude that taking the depositions would be a mere exercise in futility. If irreconcilable differences arise after the depositions have been taken and the translations made, then the depositions might properly be excluded from evidence at that time. See Mann, 590 F.2d at 366 (“When the question is close a court may allow a deposition in order to preserve a witness’ testimony, leaving until trial the question of whether the deposition will be admitted as evidence.”).\nIn refusing to allow the government to depose the Italian witnesses, the district court failed to recognize the crucial distinction that exists between the propriety of taking depositions versus the propriety of using the depositions at trial. See, e.g., Keithan, 751 F.2d at 12. The court’s concerns about the procedures surrounding the depositions are best addressed if and when the government seeks to introduce the depositions in evidence.\n2.\nThe district court’s second main reason for denying the request for foreign depositions was the government’s purported delay in seeking the depositions and in notifying both Drogoul and the court as to its intentions. In a hearing shortly preceding the written order denying the government’s request, the district court firmly announced that it “will not approve any such foreign depositions that will delay or interfere with the trial simply on that basis alone.” In its subsequent written order the court complained further that “the government waited until April of 1993 to seek leave of court to take the depositions of the Italian witnesses keeping silent all the while about the possibility of foreign depositions.”\nThere can be no question that both the moving party’s diligence and the timing of the prospective depositions are relevant considerations to be weighed under Rule 15(a). See, e.g., Milian-Rodriguez, 828 F.2d at 686. “An obviously important factor is whether a deposition will expedite, rather than delay, the administration of criminal justice.” Fed.R.Crim.P. 15 advisory committee’s note on 1974 amendment. By the same token, it is error rigidly to adhere to a trial schedule regardless of the all-important factors of unavailability and materiality. The ultimate inquiry is whether exceptional circumstances exist and whether it is in the interest of justice to allow the depositions to be taken. Fed.R.Crim.P. 15(a). When a substantial likelihood exists that the prospective deponents will be unavailable for trial and their testimony is highly relevant to a central issue in the case, justice generally requires preservation of that testimony. Absent a serious lack of due diligence by the moving party, therefore, precluding the taking of depositions under those circumstances is likely to frustrate, not expedite, the administration of criminal justice.\nWe hold that the district court erred to the extent that it denied the request for depositions solely on the ground that taking the depositions would delay the trial. As Drogoul has conceded, the expected deposition testimony goes to the heart of the issues in this case. Setting forth a per se rule against delay in the face of this crucial testimony is an abuse of discretion. Cf. Mills, 760 F.2d at 1120 (holding that district court erred in failing to exercise its discretion when it adopted absolute rule that deposition of a fugitive would be an injustice).\nFurthermore, the district court grossly overweighed the government’s dilatoriness in informing both it and Drogoul regarding the plan to depose the Italian witnesses. Rule 15(b) provides merely that the party taking the deposition “shall give to every party reasonable written notice of the time and place for taking the deposition.” The reasonableness of the notice is a function of the time necessary for the opposing party to prepare for the deposition and thereby protect his rights. Here, the government filed its original motion on' April 21, 1993. The motion requested that the depositions be taken May 25-28, 1993, more than a month later. This would have afforded Drogoul ample time to prepare. Rule 15 does not require a moving party to consult with the opposing party in advance regarding the scheduling of a deposition.\nWe do have some concerns about the fact that the government, which apparently was in contact with the Italian authorities as early as February 1993, did not move to take the depositions until late April 1993. We are also aware that allowing the depositions at this point might necessitate delaying the trial, and that Drogoul already has been in jail for sixteen months. Nevertheless, when the government filed its original motion the rescheduled trial was almost five months away. The government then acted diligently in responding to the district court’s original concerns regarding the unavailability of the witnesses, working with the Italian judiciary to obtain the in-court declarations of the prospective deponents regarding their willingness to testify in the United States. Immediately upon receiving the letter from the Italian magistrate, on June 4, 1993' — still more than three months before trial — the government filed its renewed request to take depositions. The district court erred in holding that the government’s lack of due diligence outweighed the strong showing of unavailability and materiality in this case. Accordingly, the district court should have allowed the government to depose the seven prospective witnesses who declared they would not testify in the United States.\nIV.\nExceptional circumstances and the interests of justice also warrant allowing the government to take the depositions of the six prospective witnesses who announced they would be willing to testify at Drogoul’s trial. Whether to allow the depositions of these witnesses is, admittedly, a more difficult question than whether to allow the depositions of the other seven, because the government’s showing as to the unavailability of these witnesses is obviously not as strong. We must remember, however, that unavailability is not the focus per se of Rule 15(a). Unavailability is required for use of the depositions at trial. Fed.R.Crim.P. 15(e). All that is necessary to take depositions is a showing that “exceptional circumstances” exist and that justice would be served by preserving the deposition testimony.\nIn the ordinary case, exceptional circumstances do not exist when the prospective deponent has declared that he or she is willing to testify at trial. This is because the only proper use of a deposition in a criminal case is as substitute testimony when a material witness is unavailable for trial. As mentioned above, if there is very little chance that a deposition will be admissible — if the witnesses are available to testify live, for example — the district court need not engage in the wasteful practice of authorizing useless depositions. The instant case, however, is not ordinary.\nFor the reasons explained in Part III of this opinion, the government must be allowed to depose the seven witnesses who have stated they will not testify in the United States. Consequently, the par-ties will have to spend the time, money, and energy to take depositions in Italy. Far from being a substantial waste of time and resources, therefore, allowing the depositions of the six additional witnesses would involve the expenditure of only marginally more time, money, and effort. Furthermore, although the six prospective deponents stated in May 1993 that they were willing to come to the United States, they too are beyond the subpoena power of the United States courts. The possibility remains that they could change their minds, in which case it would be impossible for the government to present their testimony. This would be a serious consequence, because, as discussed in Part III.B.2., the expected testimony of the witnesses is highly material to the central issue of whether Dro-goul was authorized to make the loans to Iraq.\nOf course, before the depositions of the six could be used at trial the government would have to establish the deponents’ unavailability. Fed.R.Crim.P. 15(e). This might be a difficult task in view of the witnesses’ previous declarations. Nevertheless, we believe that three factors together — the significance to the ease of the deponents’ expected testimony; the fact that the deponents are beyond the reach of any American subpoena, and, critically, the fact that the parties already must take depositions in Italy — provide sufficiently exceptional circumstances to satisfy Rule 15(a). Cf. Sindona, 636 F.2d at 803 (allowing depositions of four witnesses, all of whom were beyond court’s subpoena power, and two of whom specifically refused to come to the United States). The district court should have allowed the depositions of these prospective witnesses as well.\nV.\n• Rule 15 was designed to facilitate the preservation of testimony which may be needed to guarantee the deposing party a fair trial. Salim, 855 F.2d at 949. Seven of the prospective deponents have declared in open court that they will not testify at Drogoul’s trial in the United States, and they cannot be compelled to do so. Although the other six have stated they intend to testify at trial, they too are beyond the subpoena power of the federal courts and could, at a later date, refuse to testify; judicial economy weighs in favor of allowing the government to depose them at the same time it deposes the other seven. As noted above, the prospective deposition testimony, in Drogoul’s own words, “lies at the very core of the charges in the indictment.” It should be preserved so that the government may have a fair opportunity to prosecute this case.\nThe August 4, 1993 order of the district court denying the government’s renewed motion to take the depositions of thirteen Italian witnesses in Italy is REVERSED. The case is REMANDED to the district court for further proceedings consistent with this opinion.\n. The charges to which Drogoul pled guilty were specified in an indictment returned against him in 1991. He originally pled not guilty, R. 1-7, but changed his plea in June 1992. He withdrew his guilty plea in October 1992, and a superseding indictment was returned in July 1993.\n. In its original motion on April 21, 1993, the government requested permission to depose ten witnesses. It amended its request on April 29, 1993, adding three prospective witnesses to the list.\n. R. 1-248 at 6.\n. R. 1-248 at 2-3.\n. R. 1-248 at 3.\n. R. 1-248 at 3-4.\n. The six who would testify were Edmondo Alvi-si, Lucio Costantini, Franco De Plano, Pierdo-menico Gallo, Teodoro Monaco, and Gian Maria Sartorelli. The seven who would not testify were Angelo Florio, Nero Nesi, Giacomo Pedde, Giovanni D'Ercole, Marco Lunazzi, Francesco Big-nardi, and Gerardo Ruggero.\n. R. 1-281.\n. R. 1-281 (attachment) (Letter from Prof. Giuseppe Morsillo, President, Court of Appeals of Rome, IV Penal Section, to Michael A. De Feo, Senior Counsel for International Law Enforcement, U.S. Dep't of Justice (May 31, 1993)).\n. R. 2-364 at 3.\n. R. 2-364 at 3.\n. R. 2-364 at 4.\n. In criminal cases, the government may take interlocutory appeals from orders \"suppressing or excluding evidence,” up until the time the jury is sworn. 18 U.S.C. § 3731 (1988). Congress has directed the courts to construe this section liberally to effectuate its purpose of freely allowing interlocutory appeal by the government, while acknowledging and protecting the defendant’s constitutional rights. Id.; United States v. Posner, 764 F.2d 1535, 1538 (11th Cir.1985). Thus, district court orders are deemed to exclude evidence for the purposes of this section whenever they have the practical effect of excluding evidence at trial. In re Grand Jury Empanelled, 597 F.2d 851, 856 (3d Cir.1979); see In re Grand Jury Subpoena, 646 F.2d 963, 968 (5th Cir. Unit B 1981) (allowing interlocutory appeal under § 3731 from order quashing grand jury subpoena).\nHere, accepting the government’s statements as true for purposes of the jurisdictional analysis, seven foreign nationals refuse to testify at Dro-goul's trial. Those witnesses are, of course, beyond the subpoena power of the federal courts. Thus, precluding the government from taking the witnesses’ depositions would have the practical effect of excluding their testimony. As such, section 3731 is satisfied, and appellate jurisdiction lies.\n.In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.1981) (en banc), the Eleventh Circuit adopted as circuit precedent all decisions of the former Fifth Circuit rendered prior to October 1, 1981.\n. “In all criminal prosecutions, the accused shall enjoy the right to ... be confronted with the witnesses against him....\" U.S. Const, amend. VI.\n. “Although this concern has been alleviated to a marked degree by the advent of modern audiovisual technology, the policy in favor of having the witness personally present persists.” Wilson, 601 F.2d at 97.\n. This assumes of course, that the deponent’s expected testimony is material.\n. The treaty provides, in pertinent part:\n1. The Requested State, upon request that a person in that State appear and testify in connection with a criminal investigation or proceeding in the Requesting State, shall compel that person to appear and testify in the Requesting State by means of the procedures for compelling the appearance and testimony of witnesses in the Requested State if:\na.the Requested State has no reasonable basis to deny the request;\nb. the person could be compelled to appear and testify in similar circumstances in the Requested State; and\nc. the Central Authority of the Requesting State certifies that the person’s testimony is relevant and material.\n2. A person who fails to appear as directed shall be subject to sanctions under the laws of the Requested State as if that person had failed to appear in similar circumstances in that State. Such sanctions shall not include removal of the person to the Requesting State.\nTreaty on Mutual Assistance in Criminal Matters, art. 15., 24 I.L.M. at 1541 (emphasis added).\n.R. 15 at 1705-18.\n.See, e.g., R. 1-306 at 4 (Defendant's Memorandum of Law In Opposition To The Government’s Motion In Limine To Preclude The Defendant From Offering Evidence of \"Italian Scandals”); R. 1-327 at 6-7 (Defendant’s Memorandum In Opposition to the Motion to Quash the Subpoena to Kissinger Associates); see also R. 1-176 at 4 (District court order of October 5, 1992, stating, in relation to Drogoul’s withdrawal of his prior guilty plea, that defendant named several BNL superiors who knew of his activities). Indeed, Judge Shoob, the district judge originally assigned to this case, recused himself from further participation after the withdrawal of Drogoul's guilty plea in light of his \"conclusion] that officials at BNL-Rome were aware of and approved Mr. Drogoul’s activities.” R. 1-176 at 6.\n. For example, three of the proposed deponents — Giacomo Pedde, Teodoro Monaco, and Angelo Florio — are the BNL officials who Dro-goul asserts provided those authorizations. The government expects all three to deny that they approved the loans and credit extensions and to refute Drogoul’s claims regarding the content of their conversations. Pedde and Florio were among the seven witnesses who declared they would not testify in the United States. Monaco was one of the six who said they would.\n. Similarly, at oral argument counsel for Dro-goul conceded that the thirteen prospective deponents are as significant a group of witnesses as there will be in this case.\n. R. 2-364 at 4.\n. R. 20 at 110.\n. R. 2-364 at 5.\n. Whether in fact to postpone the trial is not properly before us, however, and we decline specifically to address this question. See infra note 29.\n.Indeed, had the district court properly addressed the merits of the government's June 4 motion, there likely would be no question of delay of the trial.\n. Alvarez, 837 F.2d 1024, the Eleventh Circuit case which discusses unavailability in the context of Rule 15, is not to the contrary. That case states only that the \"use [of deposition testimony] is appropriate only in exceptional circumstances where the moving party has demonstrated ... that the witness is unavailable for trial.\" Id. at 1029 (emphasis added).\n. In its brief, the government asks not only that we reverse on the foreign depositions issue, but also that we stay the trial until the depositions have been taken, a pretrial ruling on their admissibility has been made, and, if necessary, the government has had a reasonable opportunity to seek review by this court. Brief for the United States at 33. The government has not, however, asked the district court for a continuance. We generally require the district court to rule on the question of a stay in the first instance. See, e.g., Fed.R.App.P. 8(a). Accordingly, we decline to address this issue at the present time.", "type": "majority", "author": "KRAVITCH, Circuit Judge:"}], "attorneys": ["David T. Shelledy, Asst. U.S. Atty., Crim. Div., U.S. Dept, of Justice, BNL Task Force, Atlanta, GA, Sara Criscitelli, Crim. Div., U.S. Dept, of Justice, Washington, DC, for plaintiff-appellant.", "Robert M. Siméis, New York City, for defendant-appellee."], "corrections": "", "head_matter": "UNITED STATES of America, Plaintiff-Appellant, v. Christopher P. DROGOUL, Defendant-Appellee.\nNo. 93-8964.\nUnited States Court of Appeals, Eleventh Circuit.\nSept. 2, 1993.\nDavid T. Shelledy, Asst. U.S. Atty., Crim. Div., U.S. Dept, of Justice, BNL Task Force, Atlanta, GA, Sara Criscitelli, Crim. Div., U.S. Dept, of Justice, Washington, DC, for plaintiff-appellant.\nRobert M. Siméis, New York City, for defendant-appellee.\nBefore TJOFLAT, Chief Judge, KRAVITCH and HATCHETT, Circuit Judges."} | TJOFLAT | KRAVITCH | HATCHETT | 1 | 1 | 1 | 0 | 0 | 0 | 1 F.3d 1546 | [
{
"content": "You are an expert legal coding assistant trained to classify U.S. federal Courts of Appeals\ncases using an adaptation of the Supreme Court Database (SCDB_2023_01) codebook. You follow the coding procedure\nin the codebook step by step and use the precise definitions of terms presented in the code... |
10,518,122 | Mary CANNON, Plaintiff-Appellant, v. MACON COUNTY, a political subdivision of the State of Alabama; Robin Collins; Elbert Dawson, Mike Knowles, individually, and Macon County, a political subdivision of the State of Alabama, Defendants-Appellees | Cannon v. Macon County | 1993-09-17 | No. 92-6200 | United States Court of Appeals for the Eleventh Circuit | {"judges": ["Before FAY and ANDERSON, Circuit Judges, and RONEY, Senior Circuit Judge."], "parties": ["Mary CANNON, Plaintiff-Appellant, v. MACON COUNTY, a political subdivision of the State of Alabama; Robin Collins; Elbert Dawson, Mike Knowles, individually, and Macon County, a political subdivision of the State of Alabama, Defendants-Appellees."], "opinions": [{"text": "RONEY, Senior Circuit Judge:\nIn this § 1983 action where an arrest and incarceration resulted from misidentification, we affirm the district court’s dismissal of defendant Macon County, but reverse the judgment notwithstanding the verdict in favor of defendant Robin Collins.\nIn March 1989 plaintiff Mary Cannon, whose name was then Mary Rene Parrott, was driving with her three children and her boyfriend, Randy Cannon, to her mother’s home in Georgia. When they ran out of funds, they stopped at a rest area and contacted some local relatives to borrow some money. They spent the night in the rest area waiting for the financial help to arrive. The next day, they were questioned by Macon County Sheriffs Deputy Mike Knowles, who offered to try to get aid for them from the Department of Human Resources.\nKnowles radioed the name “Mary Parrott” to the Macon County Sheriffs office, and got back a “hit” from the National Crime Information Center (NCIC), informing him that a Mary E. Mann, a.k.a. Mary E. Parrott, was wanted for theft by deception in Kentucky. Knowles placed Cannon under arrest and transported her to the Macon County jail. As soon as Knowles arrived at the jail, Deputy Robin Collins, the officer in charge of the jail, sent Knowles out on another assignment. Knowles left the arrest report for Collins to complete. Cannon testified that from the time of her initial detention at the rest area, she repeatedly maintained that she was not Mary E. Mann.\nCollins initially testified that he obtained information necessary for completing the arrest report directly from Cannon. Collins testified that he identified the plaintiff as Mary E. Mann based on the match in social security numbers and birth dates and the fact that Mann used the alias Mary E. Parr rott. He further testified that had there not been a match in the social security numbers and birth dates, then Cannon would not have been arrested and held in the Macon County jail. The critical data Collins wrote on Cannon’s arrest report included the following:\nLast, First, Alias AKA: Middle Name: Mary E. Parrott Mary E. Mann\nSex: F\nRace: W\nHgt: 5'5\"\nWgt 120\nBye Bro\nHair Bro\nSkin Med\nSSN: [ XXX-XX-XXXX ]\nDate of Birth: 12-27-51\nAge: 38\nThis data does not accurately describe the plaintiff. Cannon’s driver’s license, which the Sheriffs office apparently had in its files shortly after her arrest, indicates that the plaintiffs name was “Mary Rene Parrott,” that she was only 5'1\" tall, that her eyes were blue, that her social security number was [ XXX-XX-XXXX ], and that her date of birth was 12-15-63, making her 12 years younger than Mary E. Mann.\nThere was substantial evidence that Collins did not obtain the identifying information from Cannon, but copied it directly from the NCIC report. With one exception, all of the above information that Collins wrote on the arrest report is identical to the NCIC printout on Mary E. Mann. The one exception is the social security number, which belongs to neither Mann nor Cannon. Instead, the social security number provided by Deputy Collins matches the number of another fugitive listed on the same page of the NCIC report containing information on Mary E. Mann.\nCollins also completed and presented to the Macon County District Judge a “Fugitive Warrant,” attesting that he believed Cannon to be the wanted Mary E. Mann. Based on this affidavit, the judge issued a fugitive warrant for Cannon’s arrest on March 6, 1989.\nCannon testified that on Tuesday, March 7th, she was taken before a Macon County District Judge. At this hearing, Cannon’s mother attempted to offer evidence to the judge to show that Cannon was not Mary E. Mann. The judge refused to hear any such evidence, stating that the only purpose of the hearing was to determine if Cannon would waive extradition to Kentucky. Cannon refused to sign a waiver of extradition, and was returned to the Macon County jail.\nCannon further testified that, once they were back at the jail, Collins advised her to sign the waiver of extradition or face the possibility of being “played back and forth like on a baseball field.” After this conversation, Cannon told Collins that she would waive extradition. She was then taken back before the judge, where she signed the waiver. After spending three more days in the Macon County jail, she was transported to Kentucky. Upon her arrival in Kentucky, Cannon was promptly released when it became evident that Cannon was not Mary E. Mann.\nCannon filed a complaint against Macon County, Deputy Robin Collins in his individual capacity, and Macon County Sheriff Elbert Dawson in his official capacity, seeking damages pursuant to 42 U.S.C. § 1983, and asserting pendent state claims of false imprisonment and false arrest. After the district court entered an order dismissing defendants Dawson and Macon County, Cannon amended her complaint, adding Deputy Mike Knowles as an individual capacity defendant, and again asserting a claim against Macon County.\nThe district court then dismissed Macon County with prejudice, and denied Cannon’s request for leave to amend her complaint. After a trial against the two individual capacity defendants, the jury returned a verdict in favor of Knowles and against Collins, with a judgment against Collins for $50,000.\nThe district court then granted Collins’ motion for judgment notwithstanding the verdict and entered judgment for Collins. Cannon appeals the district court’s dismissal of Macon County and the grant of judgment notwithstanding the verdict for Collins.\nJudgment notwithstanding the verdict for Deputy Collins\nCannon’s § 1983 claim against Collins was based on an asserted deprivation of liberty without due process, and went to the jury on three theories: (1) that Cannon was incarcerated by Collins under circumstances that Collins knew or should have known that Cannon had been arrested without probable cause, (2) that Collins held Cannon in jail for seven days without making any effort to attempt to determine Cannon’s identity, and (3) that Collins represented to the district court of Macon County that Cannon was the person wanted in Kentucky without having any reasonable basis for believing that Cannon was Mary E. Mann.\nThe trial court found that judgment notwithstanding the verdict was warranted because Cannon failed to show that Collins violated clearly established law and acted with deliberate indifference. The court also held that Cannon failed to establish her state claims.\nWhen reviewing a district court’s decision to grant or deny judgment notwithstanding the verdict, we apply the same standard used by the district court. Boeing Co. v. Shipman, 411 F.2d 365, 374 (5th Cir.1969). If the facts and inferences point so strongly and overwhelmingly in favor of one party that the court believes that reasonable jurors could not arrive at a contrary verdict, granting of the motion is proper. On the other hand, if there is substantial evidence opposed to the motion, the motion should be denied. A mere scintilla of evidence is insufficient to present a question for the jury. The substantial evidence standard requires evidence of such quality and weight that reasonable and fair-minded jurors might reach different conclusions. Von Stein v. Brescher, 904 F.2d 572, 578 (11th Cir.1990). A court determining whether the record contains substantial evidence supporting the jury verdict must view the evidence, and all logical inferences therefrom, in the light most favorable to the non-moving party. Smith v. PAPP Clinic, P.A., 808 F.2d 1449, 1452 (11th Cir.1987). We may not weigh the evidence, pass on the credibility of witnesses, nor substitute our judgment for that of the jury.\nOur inquiry into the propriety of the trial court’s grant of judgment notwithstanding the verdict to Collins is two-fold: First, did Cannon present substantial evidence of a cognizable § 1983 claim, and second, does the qualified immunity doctrine shield Collins from liability?\nCannon’s § 1983 claim against Collins is essentially a claim of false imprisonment rising to the level of a liberty deprivation. The trial court found that Cannon suffered no actionable deprivation of constitutional rights, because under Baker v. McCollan, 443 U.S. 137, 99 S.Ct. 2689, 61 L.Ed.2d 433 (1979), she had no due process right to have an officer investigate her claims of innocence and mistaken identity.\nIn Baker, the Supreme Court dismissed a fourteenth amendment action brought by a claimant who had been mistakenly incarcerated. The police were actually seeking the claimant’s brother, who had previously been booked under the claimant’s name because he carried an altered driver’s license with his own picture but with the name and other identifying information of the claimant. After being transferred to the county seeking his arrest, the claimant was held for three additional days before it was discovered, based on a file photo of the brother, that they had detained the wrong person.\nThe court held that detention pursuant to a valid warrant but in the face of protests of innocence does not necessarily deprive one of liberty without due process. Arresting officers and those responsible for maintaining custody of detainees are not constitutionally required “to investigate independently every claim of innocence, whether the claim is based on mistaken identity or a defense such as lack of requisite intent.” Id. at 146, 99 S.Ct. at 2695.\nUnder certain circumstances, however, detention on the basis of misidentification may present a viable § 1983 claim. The Baker Court recognized, for example, that after the lapse of a certain amount of time, continued detention in the face of repeated protests will deprive the accused of liberty without due process. Id. at 144, 99 S.Ct. at 2694.\nThe Baker decision has not been read to preclude all § 1983 claims based on false imprisonment. In Douthit v. Jones, 619 F.2d 527 (5th Cir.1980), we stated that a § 1983 false imprisonment claim must meet the elements of common law false imprisonment and establish that the imprisonment worked a violation of fourteenth amendment due process rights. Id. at 532. We held in that case that the plaintiffs claim based on detention for 30 days beyond the expiration of the plaintiffs sentence without a valid court order or warrant was not precluded by Baker.\nThe constitutional right to be free from continued detention after it was or should have been known that the detainee was entitled to release has been recognized in other circuits as well. See Sivard v. Pulaski County, 959 F.2d 662 (7th Cir.1992) (continued detention where sheriff knew it was wrongful states claim under § 1983 for due process violation); Sanders v. English, 950 F.2d 1152 (5th Cir.1992) (failure to release after officer knew or should have known that plaintiff had been misidentified gives rise to cause of action under § 1983).\nThe defendant’s state of mind is also relevant to a § 1983 claim for substantive due process violations. The Supreme Court has stated that negligent conduct does not give rise to § 1983 liability for resulting unintended loss of or injury to life, liberty, or property. Davidson v. Cannon, 474 U.S. 344, 347, 106 S.Ct. 668, 670, 88 L.Ed.2d 677 (1986); Daniels v. Williams, 474 U.S. 327, 328, 106 S.Ct. 662, 663, 88 L.Ed.2d 662 (1986). Neither the Davidson nor the Daniels decision, however, articulated the precise level of culpability necessary to give rise to § 1983 liability for deprivations of due process rights.\nThis court has, in eases dealing with prisoners and other persons in state custody, held that a showing of deliberate indifference is required to establish a violation of substantive due process rights protected by the fourteenth amendment. The deliberate indifference requirement was adopted based on analogies to eighth amendment situations where the defendant’s state of mind was relevant to the issue of whether a constitutional violation has occurred in the first place. See Estelle v. Gamble, 429 U.S. 97, 97 S.Ct. 285, 50 L.Ed.2d 251 (1976) (deliberate indifference to prisoner’s serious illness or injury violates eighth amendment prohibition against cruel and unusual punishment); Edwards v. Gilbert, 867 F.2d 1271 (11th Cir.1989) (deliberate indifference showing necessary in prisoner suicide ease alleging § 1983 cause of action for violation of substantive rights protected by eighth and fourteenth amendments); Taylor v. Ledbetter, 818 F.2d 791 (11th Cir.1987), cert. denied, 489 U.S. 1065, 109 S.Ct. 1337, 103 L.Ed.2d 808 (1989) (child abused by foster care parent must show deliberate indifference or gross negligence to establish § 1983 liability in action brought against state officials for violation of substantive due process rights protected by fourteenth amendment). See also Baker v. McCollan, 443 U.S. 137, 140 n. 1, 99 S.Ct. 2689, 2692 n. 1, 61 L.Ed.2d 433 (1979) (discussing state of mind necessary to establish certain constitutional violations as separate and distinct from the state of mind sometimes necessary to establish § 1983 liability).\nWe held in Taylor v. Ledbetter that a complaint alleging gross negligence or deliberate indifference to the welfare of a child placed in a foster home was sufficient to overcome the Daniels and Davidson bar on liability for negligent conduct causing due process violations. 818 F.2d at 793. The jury in the instant case was instructed on the deliberate indifference standard, and found that Collins’ conduct met that standard. Based on the following evidence that was presented to the jury, we conclude that the jury finding that. Collins acted with deliberate indifference to Cannon’s due process rights is supported by substantial evidence:\n1. Cannon testified that she gave her driver’s license and other forms of identification to the authorities upon her arrival at the jail.\n2. A copy of Cannon’s driver’s license was in the files of the Macon County Sheriffs Office.\n3. The information on Cannon’s driver’s license differed significantly from the description provided for Mary E. Mann on the NCIC computer printout.\n4. Cannon’s physical makeup did not match the physical description for Mary E. Mann.\n5. Collins testified that he completed the arrest procedure upon Cannon’s arrival at the jail. Although he originally testified that he obtained all of the information he used to fill out the arrest report directly from Cannon, he later conceded that it was possible that he obtained some of the information from the NCIC report rather than from Cannon.\n6. Cannon testified that Monday, March 6, was the first time she saw Collins.\n7. Collins signed the arrest report as the arresting officer.\n8. Collins testified that he would not have arrested Cannon and held her in jail if he had known that her Social Security Number and date of birth were different from the Social Security Number and date of birth of Mary E. Mann.\n9. In an affidavit presented to the Macon County judge, Collins swore that he believed Cannon to be the wanted Mary E. Mann.\nCollins’ failure to take any steps to identify Cannon as the wanted fugitive was sufficient to raise a question of fact as to his deliberate indifference toward the plaintiffs due process rights. Cannon presented sufficient evidence from which a jury could find that Collins acted with deliberate indifference when he completed the arrest procedure and obtained a fugitive warrant for her arrest without speaking to Cannon and without making any attempt to identify her as the person wanted in Kentucky. The evidence does not point so strongly in favor of Collins that reasonable jurors could not come to a different conclusion. Judgment notwithstanding the verdict based on failure to prove deliberate indifference was not warranted.\nThe district court also found that judgment notwithstanding the verdict was warranted based on the qualified immunity doctrine. The court concluded that Collins was immune from suit because Cannon had no clearly established right to have an officer investigate her claims of innocence.\nThe test for determining whether a public official can claim qualified immunity was established by the Supreme Court in Harlow v. Fitzgerald, 457 U.S. 800, 102 S.Ct. 2727, 73 L.Ed.2d 396 (1982). “[Gjovernment officials ... generally are shielded from liability for civil damages insofar as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known.” Id. at 818, 102 S.Ct. at 2738. The official’s conduct is evaluated under an objective, reasonable official standard. Anderson v. Creighton, 483 U.S. 635, 638, 107 S.Ct. 3034, 3038, 97 L.Ed.2d 523 (1987). A government official performing discretionary functions is protected if “a reasonable official could have believed his or her conduct to be lawful in light of clearly established law and the information possessed by the official at the time the conduct occurred.” Hardin v. Hayes, 957 F.2d 845, 848 (11th Cir.1992).\nCollins is shielded from personal liability for conduct that is within the discretion conferred by his employment, unless the legal norms allegedly violated were clearly established at the time of the challenged actions. Dartland v. Metropolitan Dade County, 866 F.2d 1321 (11th Cir.1989), citing Mitchell v. Forsyth, 472 U.S. 511, 105 S.Ct. 2806, 86 L.Ed.2d 411 (1985). If a reasonable official in Collins’ position could have believed his actions were lawful in light of clearly established law at the time the conduct occurred, immunity applies. Stewart v. Baldwin County Bd. of Educ., 908 F.2d 1499 (11th Cir.1990).\nAt the time of the relevant conduct, Cannon had a clearly established right against false imprisonment without due process. See Douthit v. Jones, 619 F.2d 527 (5th Cir.1980). We are mindful of the admonition against reliance on broad legal generalities when considering whether certain conduct crosses the line from the lawful to the unlawful. See Anderson v. Creighton, 483 U.S. 635, 640, 107 S.Ct. 3034, 3039, 97 L.Ed.2d 523 (1987). We have in the past, however, rejected the argument that a claimant has no clearly established right where no . precedent held that the official’s specific action (discontinuing administration of psychotropic drugs) in materially similar circumstances had created § 1983 liability. Greason v. Kemp, 891 F.2d 829, 834 n. 10 (11th Cir.1990). An approach recognizing the constitutional right yet finding no violation “unless some prior court has expressly so held on ‘materially similar’ facts ... would add an unwarranted degree of rigidity to the law of qualified immunity.” Id. Accordingly, we hold that at the time of Cannon’s incarceration, and considering all the evidence in the light most favorable to Cannon, a reasonable official in Collins’ position would have known that Collins’ conduct could violate Cannon’s fourteenth amendment right not to be falsely imprisoned. A reasonably well trained officer would have at least attempted to obtain information from Cannon for purposes of filling out Cannon’s arrest report, rather than copying data from an NCIC computer printout. A reasonable official also would be unlikely, in the face of Cannon’s assertions of mistaken identity, to sign an affidavit swearing to a belief that Cannon was a wanted fugitive without taking any steps to verify that belief.\nCannon introduced substantial evidence showing that her fourteenth amendment due process rights were violated by Collins, who was responsible for completing the arrest procedure, and who presented to the judge the affidavit that served as the basis for the issuance of the fugitive warrant for Cannon’s arrest. Because the jury was presented with substantial evidence that Collins unreasonably violated Cannon’s clearly established right, judgment notwithstanding the verdict based on failure to prove a violation of clearly established law was not warranted.\nDismissal of Macon County\nIn her first amended complaint, Cannon set forth the basis for County liability as follows:\nIt is the standard policy, practice and procedure of the Macon County Sheriffs Department to arrest fugitives wanted by other states based upon information obtained through the NCIC computer network rather than upon a valid warrant of arrest as required by § 15-9-35, Code of Alabama (1975). The policy, practice, and procedure of the Macon County Sheriffs Department in this regard is tantamount to the policy, practice and procedure of Macon County itself.\nIn granting the County’s motion to dismiss, the trial court recognized that, under Parker v. Williams, 862 F.2d 1471 (11th Cir.1989), a county may be held liable for customs established by a Sheriff with ultimate county authority over such matters. The court concluded, however, that liability did not attach in this case because “it is difficult to see how the Sheriff would have final authority over who each deputy arrests and whether a deputy has probable cause to arrest and/or hold arrestee.” Cannon v. Macon County, 90V-1132-E (Dec. 19, 1990).\nA 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” which would entitle her to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957). In considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the averments of the complaint should be construed in the light most favorable to the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974).\nCannon’s first amended complaint alleges facts supporting her contention that she was arrested in violation of Alabama law and in violation of her due process rights. It fails, however, to allege any facts whatsoever to indicate that the alleged violation was a result of a County policy or practice that would give rise to County liability. The district court properly granted the County’s motion to dismiss.\nCannon also asserts that the district court abused its discretion in denying her motion to file a second amendment to her complaint. After the County’s first motion to dismiss was granted, Cannon requested leave to amend to state a claim against the County. The motion was apparently granted. Cannon’s amended claim against Macon County was then dismissed with prejudice, and her request for leave to amend a second time was denied.\nFederal Rule of Civil Procedure 15(a) provides that after a responsive pleading has been filed, subsequent amendments are permitted only with leave of the court. The decision whether to grant leave to amend is committed to the sound discretion of the district court. Although that discretion is restricted by the policy of Rule 15, requiring that leave to amend be freely given when justice so requires, see Shipner v. Eastern Air Lines, 868 F.2d 401 (11th Cir.1989), we find no reason to conclude that the district court abused its limited discretion in denying leave to amend.\nAccordingly, we affirm the district court’s grant of dismissal to Macon County and denial of Cannon’s request for leave to amend, but reverse the judgment notwithstanding the verdict in favor of Collins.\nAFFIRMED in part, REVERSED in part, and REMANDED.\n. The warrant signed by Collins stated:\nBefore me, Auburey Ford, Jr., Judge of the District Court of Macon County, State of Alabama, personally appeared Officer Robin Collins, who being first sworn, deposes and says on oath that _ a credible person in the State of_has made an affidavit that the crime of 5 counts of Theft by Deception has been committed in such State; and that Mary E. Mann has been charged in said State with the commission of said crime and has fled from justice there. Affiant further says and deposes that Mary E. Mann is believed to have been found in Macon County, Alabama.\n. 42 U.S.C. § 1983 provides:\nEvery person who, under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory or the District of Columbia, 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, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress. For the purposes of this section, any Act of Congress applicable exclusively to the District of Columbia shall be considered to be a statute of the District of Columbia.\n. The elements of common law false imprisonment are \" '(1) intent to confine, (2) acts resulting in confinement, and (3) consciousness of the victim of confinement or resulting harm.'\" Douthit v. Jones, 619 F.2d 527, 532 (5th Cir.1980) (citations omitted).", "type": "majority", "author": "RONEY, Senior Circuit Judge:"}], "attorneys": ["John L. Cottle, III, Bowles & Cottle, Tal-lassee, AL, for plaintiff-appellant.", "Jock M. Smith, Tuskegee Institute, AL, for defendants-appellees."], "corrections": "", "head_matter": "Mary CANNON, Plaintiff-Appellant, v. MACON COUNTY, a political subdivision of the State of Alabama; Robin Collins; Elbert Dawson, Mike Knowles, individually, and Macon County, a political subdivision of the State of Alabama, Defendants-Appellees.\nNo. 92-6200.\nUnited States Court of Appeals, Eleventh Circuit.\nSept. 17, 1993.\nJohn L. Cottle, III, Bowles & Cottle, Tal-lassee, AL, for plaintiff-appellant.\nJock M. Smith, Tuskegee Institute, AL, for defendants-appellees.\nBefore FAY and ANDERSON, Circuit Judges, and RONEY, Senior Circuit Judge."} | FAY | ANDERSON | RONEY | 1 | 1 | 1 | 0 | 0 | 0 | 1 F.3d 1558 | [
{
"content": "You are an expert legal coding assistant trained to classify U.S. federal Courts of Appeals\ncases using an adaptation of the Supreme Court Database (SCDB_2023_01) codebook. You follow the coding procedure\nin the codebook step by step and use the precise definitions of terms presented in the code... |
10,518,149 | UNITED STATES of America, Plaintiff-Appellee, v. James A. ADAMS, Defendant-Appellant; UNITED STATES of America, Plaintiff-Appellee, v. Otto J. RUNKEL, Defendant-Appellant; UNITED STATES of America, Plaintiff-Appellee, v. Buddy DAVIS a/k/a Indian; Philip Cohron; Joe Wayne Jones; and James A. Adams, Defendants-Appellants | United States v. Adams | 1993-09-22 | Nos. 91-3356, 91-3680 and 91-3691 | United States Court of Appeals for the Eleventh Circuit | {"judges": ["Before TJOFLAT, Chief Judge, CARNES, Circuit Judge, and BRIGHT , Senior Circuit Judge."], "parties": ["UNITED STATES of America, Plaintiff-Appellee, v. James A. ADAMS, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Otto J. RUNKEL, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Buddy DAVIS a/k/a Indian; Philip Cohron; Joe Wayne Jones; and James A. Adams, Defendants-Appellants."], "opinions": [{"text": "CARNES, Circuit Judge:\nThis is an appeal by five defendants who were convicted and sentenced on four counts of importing and distributing large quantities of marijuana. The defendants appeal various aspects of their trial and sentences. We conclude that the district court erred in sentencing one of the defendants, James Adams, and we vacate and remand the relevant portion of that sentence. In all other respects, the district court committed no error, and we affirm the convictions and sentences.\nI. INTRODUCTION\nThis case involves the importation of marijuana in small aircraft. There are numerous characters in the plot and a large number of transactions. The defendants were in the practice of using their own airplanes, or leasing, stealing or borrowing other planes to fly to Belize, pick up loads of marijuana and fly them back to the United States. The marijuana would be dropped to waiting accomplices while the plane was airborne, a practice referred to by the parties as “kicking,” or it would be unloaded after landing at remote, sometimes homemade, airstrips in Florida and Alabama.\nThe smuggling ring was organized and managed by Glen Munro, a conspirator who was convicted for his drug smuggling activities in a separate proceeding and is serving a sentence. By his own estimates he had personally made about seven million dollars from his smuggling operations. Munro established a relationship with Johnny Crawford as a source for marijuana. Crawford was living in Belize and, in addition to securing marijuana, he operated a runway and marijuana loading operation there. Munro and his partners recruited pilots and organized their flights, arranged landing sites and recruited individuals to retrieve kicked bundles of marijuana or to unload airplanes that had landed at remote airstrips. The marijuana was sold for further distribution. From the revenue generated by these sales the conspiracy’s ringleaders would pay their expenses and their helpers and keep the resulting profit.\nThe appellants in this case are each participants in this highly organized drug smuggling operation. Appellant Joe Jones owned farm land on which a homemade airstrip was constructed for the planes to land and unload their illegal cargo. Jones and appellant Philip Cohron were implicated in securing airstrips. Cohron and appellant Buddy Davis were implicated as members of the operation’s ground crew who retrieved kicks and unloaded planes. Appellant Otto Runkel was involved as a pilot for one aborted smuggling trip to Belize, and appellant James Adams was his co-pilot and helper for this trip.\nFourteen defendants, including the five defendants who bring this appeal, were indicted in a four-count sealed indictment. Count 1 of the indictment charged a conspiracy to knowingly and intentionally import 1000 or more kilograms of marijuana into the United States. Count 2 charged a conspiracy to possess with intent to distribute 1000 or more kilograms of marijuana. Counts 3 and 4 respectively charged each defendant with the substantive crimes of importing and possessing with intent to distribute 1000 or more kilograms of marijuana. In addition to the fourteen defendants, the indictment listed nine other co-conspirators who were not charged therein, as well as “others known and unknown.” All the defendants initially pleaded not guilty.\nJames Adams filed a motion to dismiss the indictment on double jeopardy grounds arguing that he and co-defendant Otto Runkel had been prosecuted for crimes arising from the same facts at issue here in a prior proceeding in the Southern District of Florida. Runkel joined in Adams’ motion, which was denied. Adams filed an interlocutory appeal of the trial court’s denial of his double jeopardy motion, No. 91-3356, and that appeal has been consolidated with the present one. Subsequently, Runkel withdrew his plea of not guilty and entered one of guilty to all four counts, but he reserved his right to appeal the court’s ruling on his double jeopardy motion. Runkel’s appeal of the denial of the double jeopardy motion, No. 91-3680, is also consolidated with the main appeal by the other defendants, No. 91-3691. All of the defendants, other than Runkel, maintained their pleas of not guilty. After a lengthy trial where many co-conspirators testified against the defendants, each remaining defendant was convicted on all four counts. The defendants were sentenced and they are all presently incarcerated, with the exception of James Adams. Adams, Cohron, Davis, Jones, and Runkel appeal various aspects of their convictions and sentences.\nII. ISSUES PRESENTED\nA. Whether the prosecutions of Adams and Runkel were violations of double jeopardy.\nB. Whether the district court erred by refusing to suppress statements made by Adams upon confrontation with Customs agents.\nC. Whether the district court erred by refusing to suppress evidence seized from the aircraft in which Adams and Runkel were riding.\nD. Whether the district court erred by refusing to sever Adams and Cohron from the main trial. ,\nE. Whether the district court correctly determined the quantity of contraband for the sentences of Adams and Davis.\nF. Whether the evidence was sufficient to convict Cohron.\nG. Whether the district court erred by applying the mandatory minimum sentence to Cohron.\nH. Whether Davis and Jones were denied a fair trial by the district court’s allowing witnesses to testify in prison garb.\nI. Whether the evidence established multiple conspiracies instead of only one.\nIII. DISCUSSION\nA. DOUBLE JEOPARDY\nJames Adams and Otto Runkel argue that earlier proceedings against them constitute a double jeopardy bar to the present prosecution. In February of 1987, Runkel and Adams, acting as pilot and co-pilot, took off from an uncontrolled airstrip in Avon Park Florida in a twin-engined Piper airplane. Information from an informant had led agents to obtain a court order to secretly equip the aircraft with a transponder so that it could be tracked. The aircraft was tracked flying south and west for approximately 100 miles until the signal faded. At this point the aircraft had left United States airspace. Agents picked up the same aircraft returning in an easterly direction nine or ten hours after it had taken off. Realizing that the aircraft was headed for the same strip from which it left, agents intercepted the plane as soon as it landed. Testimony from co-conspirators later revealed that the plane had been flown to Belize, but it did not stop because Runkel did not see his connections waiting on the ground. The plane returned without the intended load of marijuana.\nAs a result of their flight to Belize, Runkel and Adams were prosecuted in the Southern District of Florida for knowingly and willfully displaying and causing to have displayed false and misleading registration marks on the Piper aircraft with the intent to commit crimes relating to a controlled substance. 49 U.S.C.App. § 1472(b). Although an intent to commit a controlled substance crime affects only the punishment for a violation of the false aircraft markings statute, the indictment returned in the Southern District of Florida in 1988 explicitly referred to the very crimes for which Adams and Runkel were indicted in the Northern District of Florida in 1991 in the present case. Runkel pleaded guilty to the offense charged in the 1988 Southern District of Florida indictment, but Adams went to trial and was acquitted. After Runkel’s guilty plea conviction and Adams’ acquittal of the Southern District indictment charges relating to the airplane markings offense, both defendants were charged in the Northern District indictment in the present case with the controlled substances offenses.\nThe statutes averred as the punishment-enhancing controlled substance offenses in Adams’ and Runkel’s Southern District airplane markings indictment are the same statutory sections for which Adams and Runkel were subsequently indicted in Count 1, the conspiracy to import count, and Count 3, the importation count, in the present Northern District case. The evidence presented to prove those two counts against Adams and proffered against Runkel in this Northern District case is virtually the same as that presented against Adams and proffered against Runkel in their Southern District prosecutions. It is unclear why the Government did not indict Adams and Runkel on the Count 1 and Count 3 charges in this case at the time it obtained the false aircraft markings indictment against them in the Southern District. Its failure to do so forms the basis of the double jeopardy contentions of Adams and Runkel about Counts 1 and 3 of the indictment in this case.\nWhether double jeopardy bars a subsequent prosecution is an issue for plenary review. Mars v. Mounts, 895 F.2d 1348, 1351 (11th Cir.1990). The Supreme Court has recently expressly overruled its decision in Grady v. Corbin, 495 U.S. 508, 110 S.Ct. 2084, 109 L.Ed.2d 548 (1990), and returned double jeopardy analysis to the traditional Blockburger test. United States v. Dixon, - U.S. -, 113 S.Ct. 2849, 125 L.Ed.2d 556 (1993). Because of Dixon, we will restrict our analysis to the Blockburger test and cases construing it. Under Blockburger, the double jeopardy inquiry turns on whether there are two offenses, or only one, and:\n[T]he test to be applied to determine whether there are two offenses or only one, is whether each provision requires proof of a fact which the other does not.... “A single act may be an offense against two statutes; and if each statute requires proof of an additional fact which the other does not, an acquittal or conviction under either statute does not exempt the defendant from prosecution and punishment under the other.”\nBlockburger v. United States, 284 U.S. 299, 304, 52 S.Ct. 180, 182, 76 L.Ed. 306 (1932) (quoting Morey v. Commonwealth, 108 Mass. 433, 434 (1871)). Blockburger was a case of simultaneous multiple punishment, but “[t]he Double Jeopardy Clause ‘protects against a second prosecution for the same offense after acquittal. It protects against a second prosecution for the same offense after conviction. And it protects against multiple punishments for the same offense.’ ” Brown v. Ohio, 432 U.S. 161, 165, 97 S.Ct. 2221, 2225, 53 L.Ed.2d 187 (1977) (citation omitted). Thus, the Supreme Court has determined that the Block-burger test is to be applied to cases of consecutive prosecutions, id. 432 U.S. at 166, 97 S.Ct. at 2225-26, and it is the test we apply today.\nThe Government argues that the controlled substance counts only affect the punishment for the offense of carrying false or misleading markings on an aircraft. See footnote 2, above. It argues that, viewed in this light, the aircraft markings offense is an entirely separate offense requiring proof of elements not related to the subsequent drug prosecutions. From a review of the aircraft markings statute it appears the controlled substance counts are only factors to be taken into consideration at sentencing, not elements of the offense itself. From the indictment alone, however, it might appear that the controlled substance crimes are part of the aircraft markings offense and necessary elements to be proved. Thus, a comparison of the averments contained in the statutory offenses for each prosecution reveals that there is at least one element of each not required for proof of the other, because the statutory definition of the aircraft markings offense does not include the narcotics offenses. A comparison of the averments contained in the two indictments, on the other hand, suggests a double jeopardy violation, because the actual aircraft markings indictment appears to charge the controlled substance crimes as part of that offense. Thus, we are presented with the issue of whether the “elements” of an offense in a Blockburger analysis are to be drawn from the indictment or from the statute codifying the offense.\nOther courts appear to be split on this issue. Compare United States v. Benton, 852 F.2d 1456, 1465 (6th Cir.1988) (“We fundamentally disagree that the Supreme Court has necessarily changed the focus of Block-burger analysis from the statutory elements of the offenses argued to be the ‘same,’ to the particular facts alleged in the indictment, or proffered as proof at trial(footnote omitted), cert. denied, 488 U.S. 993, 109 S.Ct. 555, 102 L.Ed.2d 582 (1988) with United States v. Sampol, 636 F.2d 621, 652 (D.C.Cir.1980) (“[T]he prohibition in the Constitution against placing an accused twice in jeopardy ‘for the same offense ’ is directed at the actual ‘offense ’ with which he is charged and not only at the violated statutes.”). The Supreme Court has not issued a definitive ruling on the issue. Compare Whalen v. United States, 445 U.S. 684, 711, 100 S.Ct. 1432, 1448, 63 L.Ed.2d 715 (1980) (Rehnquist, J., dissenting) (characterizing the majority’s opinion as applying the Blockburger test to the indictment instead of the statute) with id. at 694 n. 8, 100 S.Ct. at 1439 n. 8 (refuting the dissent’s characterization).\nOur opinion in Mars v. Mounts, 895 F.2d 1348 (11th Cir.1990), although not dispositive of the question, provides considerable guidance. Mars had been prosecuted for first degree murder and acquitted. Based on questions posed to the judge by the jury, the acquittal was apparently due to a variance between the day the murder was alleged to have occurred and the day on which it was proved to have occurred. After his acquittal, Mars was reprosecuted and convicted under an indictment alleging the correct day of the murder. The State conceded that the second prosecution would have been impermissible as a double jeopardy violation except for the change in the day of the murder alleged in the second indictment. Relying on a “variance theory,” the Florida state courts upheld the conviction, because Florida law permitted reprosecution under an indictment or bill of particulars charging different facts if the defendant had been acquitted solely because of a variance.\nThis Court held that the two successive prosecutions in Mars violated double jeopardy notwithstanding the different factual allegations about the date of the crime. The State argued that the two indictments satisfied the Blockburger test under the State’s variance theory. We noted that “Florida’s variance theory differs from the Blockburger test in that it focuses on the facts alleged in the indictments rather than the statutory elements of the crimes.” Id. at 1355. We held that “under a strict application of the Blockburger test, which looks only to the statutory elements of the indictments, the prosecution of Mars for second-degree murder after his acquittal of first-degree murder violates double jeopardy.” Id. at 1358. Therefore, this Court has said that in applying the Blockburger test a court must look to the statutory elements of an offense and not to indictment allegations that are not statutory elements of the offense.\nThe Supreme Court has also suggested that the focus of the inquiry in a Blockburger application is the statutory elements: “We recognized [in Brown v. Ohio, 432 U.S. 161, 97 S.Ct. 2221, 53 L.Ed.2d 187 (1977)] that the Blockburger test focuses on the proof necessary to prove the statutory elements of each offense, rather than on the actual evidence to be presented at trial.” Illinois v. Vitale, 447 U.S. 410, 416, 100 S.Ct. 2260, 2265, 65 L.Ed.2d 228 (1980) (emphasis added). We are persuaded by the statements of then-justice Rehnquist in his dissenting opinion in Whalen v. United States:\nBecause this Court has never been forced to apply Blockburger in the context of compound and predicate offenses, we have not had to decide whether Blockbur-ger should be applied abstractly to the statutes in question or specifically to the indictment as framed in a particular case. Our past decisions seem to have assumed, however, that Blockburger’s analysis stands or falls on the wording of the statutes alone. Thus, in Blockburger itself the Court stated that “The applicable rule is that where the same act or transaction constitutes a violation of two distinct statutory provisions, the test to be applied to determine whether there are two offenses or only one, is whether each provision requires proof of a fact which the other does not.” 284 U.S., at 304, 52 S.Ct., at 182 (emphasis added). More recently, we framed the test as whether “ ‘each statute requires proof of an additional fact which the other does not....’” Brown v. Ohio, [432 U.S. 161,] 166, 97 S.Ct. [2221], at 2226 [53 L.Ed.2d 187] quoting Morey v. Commonwealth, 108 Mass. 433, 434 (1871) (emphasis added). See also Iannelli v. United States, 420 U.S. [770], at 785 n. 17, 95 S.Ct. [1284], at 1294 n. 17 [43 L.Ed.2d 616 (1975)] (“[T]he Court’s application of the [Blockburger] test focuses on the statutory elements of the offense”); M. Friedland, Double Jeopardy 212-213 (1969) (noting the two possible interpretations and pointing out that “the word ‘provision’ is specifically used in the test” as stated in Block-burger).\nWhalen v. United States, 445 U.S. 684, 710-11, 100 S.Ct. 1432, 1447-48, 63 L.Ed.2d 715 (1980) (Rehnquist, J., dissenting) (emphasis in original) (footnote omitted). Justice Rehnquist continued with this theme, stating:\nIndeed, the Blockburger test itself could be viewed as nothing but a rough proxy for [determining whether separate societal interests are protected by the different statutes], since, by asking whether two separate statutes each include an element the other does not, a court is really asking whether the legislature manifested an intention to serve two different interests in enacting the two statutes.\nId. at 713-14, 100 S.Ct. at 1449. The majority in Whalen did not disagree with the observations of Justice Rehnquist that we have quoted. Instead, the majority stated that it was not applying Blockburger to the facts alleged in the indictment as opposed to the statutory elements. Id. at 694 n. 8, 100 S.Ct. at 1439 n. 8. The dispute was over the result of the test in that case, not how to apply it.\nWe hold that in consecutive prosecution double jeopardy analysis, the Blockburger test is to be applied to the statutory elements underlying each indictment, or count, not to the averments that go beyond the statutory elements. Looking only to the statutory elements, it is readily apparent that no double jeopardy violation exists in this case. A conviction for displaying false markings on an aircraft under 49 U.S.C.App. § 1472 has no statutory elements that overlap with any of the controlled substance crimes charged against Adams and Runkel in the indictment in this case.\nB. REFUSAL TO SUPPRESS ADAMS’ STATEMENTS\nAdams complains of the district court’s refusal to suppress statements made by him to Customs agents after the Piper aircraft in which he and Runkel were travelling had returned to Florida and landed. Customs agents had been using a Blackhawk helicopter and another airplane to track Runkel and Adams as they were returning. After Runk-el, the pilot, touched the plane down and stopped it, agents on the ground pulled a ear in front of the airplane preventing it from rolling further. Adams was forced at gunpoint to lay down on the tarmac. He was searched and then made to sit on the tarmac near the airplane. One agent trained a shotgun on Adams and Runkel while the other searched the airplane. Agents spilled the contents of Adams’ suitcase out in order to search it. They searched Adams’ wallet and took possession of an airline ticket he was carrying. The agents did not return Adams’ suitcase and ticket to him until they were ready to release him. When Adams asked to walk over and view the Blackhawk helicopter, an agent told him that he could not and that he must remain where he was. Adams was eventually put into the rear seat of an agent’s car and the agents questioned him about the flight. Adams responded by saying that, because he was considering a purchase of the plane, he took advantage of an opportunity to go for a ride in it and had spent the day touring Florida in it. Runkel underwent similar interrogation. After finishing the questioning of Adams and Runkel, Customs agents seized the airplane and other evidence and allowed Adams and Runkel to walk away into the dark of night. It is conceded by the Government that Miranda warnings were not given at all during this encounter which lasted for between an hour and an hour and a half.\nThe court ruled that Adams’ statement concerning the purpose of the flight was admissible, because Adams was not in custody when he made it. Adams claims that he was in custody and interrogated and that, therefore, the statement made by him without having been given Miranda warnings was inadmissible. The Government responds that, as the district court found, Adams was not in custody when he was questioned, and, as such, Miranda warnings were not required.\nMiranda “warnings are required before any statement may be admitted into evidence at trial which was elicited from a person in custody through interrogation.” Endress v. Dugger, 880 F.2d 1244, 1248 (11th Cir.1989), cert. denied, 495 U.S. 904, 110 S.Ct. 1923, 109 L.Ed.2d 287 (1990). “Since the warnings are required only in the situation of a custodial interrogation, many courts have addressed the issues of when a person is in ‘custody’ or has been ‘interrogated’ for the purposes of Miranda. ” Id. The district court’s findings of fact regarding the motion to suppress are to be respected unless clearly erroneous, but the application of law to those facts is reviewed de novo. Jacobs v. Singletary, 952 F.2d 1282, 1291 (11th Cir.1992); United States v. Nash, 910 F.2d 749, 752 (11th Cir.1990). The district court found that Adams was not in custody when he made the statement in response to questioning by the agents, and that Miranda warnings were, therefore, not required.\nWe start our analysis by noting that Adams was clearly subjected to interrogation. He was expressly questioned about the flight; he was interrogated. Next, we turn to whether Adams was in custody when the statement in question was elicited from him. “[I]n order for a court to conclude that a suspect is in custody, it must be evident that, under the totality of the circumstances, a reasonable man in the suspect’s position would feel a restraint on his freedom of movement fairly characterized [so that] he would not feel free to leave.” Jacobs v. Singletary, 952 F.2d at 1291 (quoting United States v. Phillips, 812 F.2d 1355, 1360 (11th Cir.1987)). After a review of the transcript of the suppression hearing conducted in the district court, we conclude that a reasonable man in Adams’ position would not have felt free to leave or move at the time the statement in question was elicited. Before Adams made the statement, Customs agents had prevented the plane from moving by parking a car in front of it, forced Adams to lie on his stomach at gunpoint, kept a shotgun trained on him while searching the plane, and took possession of Adams’ suitcase and plane ticket. At no time during the encounter did the agents say or even suggest that Adams was free to leave. Therefore, Adams was in custody; custodial interrogation without Miranda warnings occurred, and it produced a statement used against Adams at trial.\nThe Government argues that even if there was custodial interrogation, no Miranda warnings were required because this was a border stop. It relies on language from this Court’s opinion in United States v. Lueck, 678 F.2d 895 (11th Cir.1982):\nInterrogation at the border constitutes one notable exception to the constitutional protection of Miranda. Because of the overriding power and responsibility of the sovereign to police national borders, the fifth amendment guarantee against self-incrimination is not offended by routine questioning of those seeking entry to the United States. Hence, individuals arriving in this country are not entitled to Miranda warnings.\nId. at 899. It is not altogether clear, however, that Lueck will bear the weight the Government would place upon it. After the statements quoted, the opinion proceeds to an evaluation of whether the border interrogation in that case occurred while the inter-rogatee was in custody. Id. at 900-01. The Lueck Court eventually concluded that because no custodial interrogation had occurred, “the appellant was subjected to no more than a proper border inquiry, meriting no entitlement to Miranda warnings.” Id. at 902. This reasoning is somewhat problematical, because Miranda warnings are not required absent custodial interrogation, at the border or elsewhere. If a border exception to Miranda requires the absence of custodial interrogation, it is no exception at all. We need not delve deeper into this apparent anomaly, because any error in the admission of the statement was harmless error.\nThe Government did not argue harmless error in its brief on appeal, but this Court may consider the harmlessness of a trial court’s error where it has not been briefed by the Government. See United States v. Ellis, 971 F.2d 701, 706 (11th Cir.1992). Other circuits have also held that harmless error can be addressed sua sponte in eases where the harmlessness is obvious. See Lufkins v. Leapley, 965 F.2d 1477, 1481 (8th Cir.), cert. denied, — U.S. -, 113 S.Ct. 271, 121 L.Ed.2d 200 (1992); United States v. Pryce, 938 F.2d 1343, 1347-52 (D.C.Cir.1991), cert. denied, — U.S. -, 112 S.Ct. 1488, 117 L.Ed.2d 629, and cert. denied, — U.S. -, 112 S.Ct. 1679, 118 L.Ed.2d 396 (1992); United States v. Rodriguez Cortes, 949 F.2d 532, 542-43 (1st Cir.1991); United States v. Giovannetti, 928 F.2d 225, 226-27 (7th Cir.1991). Here, it is patently obvious.\n“The failure to suppress statements obtained in violation of Miranda can be harmless error.” Owen v. Alabama, 849 F.2d 536, 540 (11th Cir.1988); see also Parker v. Singletary, 974 F.2d 1562, 1574 (11th Cir.1992). “To qualify as harmless, an error must not contribute to the defendant’s conviction.” Owen, 849 F.2d at 540. “If, upon its reading of the trial record, the appellate court is firmly convinced that the evidence of guilt was so overwhelming that the trier of fact would have reached the same result without the tainted evidence, then there is insufficient prejudice to mandate the invalidation of the conviction.” Cape v. Francis, 741 F.2d 1287, 1294-95 (11th Cir.1984), cert. denied, 474 U.S. 911, 106 S.Ct. 281, 88 L.Ed.2d 245 (1985); see also Owen, 849 F.2d at 540. After a thorough review of the record we conclude that the district court’s failure to exclude Adams’ statement from evidence was harmless error.\nIn this case the Government offered overwhelming evidence of Adams’ guilt. A witness for the Government, David Poole, testified that he was acquainted with Runkel and with the airplane Runkel and Adams had been flying. He testified that Runkel approached him to install an illegal fuel bladder in the aircraft to increase its fuel storage capacity so that it would be capable of reaching Belize and returning without refueling. Runkel told him that the trip was to pick up drugs. Poole testified that he had met Runkel’s “friend” who would be accompanying Runkel on the smuggling trip. That friend was originally introduced to Poole as “Jay,” but Poole identified Adams in court when asked if Jay was present. Many conspirators used aliases to minimize the knowledge of the other participants. Poole, Runk-el and Adams had discussed the amount of fuel needed and tested the plane’s new fuel storage system. Poole testified that Adams was present during the preparations for the trip spanning several hours over two evenings. Poole was present when the bladder was filled with fuel and Runkel and Adams took off.\nPoole had also acted as an informant, and based on an affidavit from him, Customs had obtained a court order to place a transponder on the airplane before Runkel and Adams took off. A Customs agent testified that the airplane was tracked taking off from an airport in Florida at approximately 7:30 in the morning and returning to U.S. airspace at approximately 5:00 in the evening. The airplane was intercepted by Customs agents when it landed at the airport from which it had left. The plane was searched and it yielded incriminating evidence.\nThe Government offered photographs of the interior of the plane which showed how seats had been removed to make room for the fuel bladder and cargo. A Customs agent identified navigation charts found in the airplane depicting Belize in both general and local detail, and a chart depicting the southern portion of the United States. The agents found a two-way radio for air-to-ground communication. Also contained in the aircraft were disposable gloves. A Customs agent, as well as one of the conspirators, testified that gloves were used by smugglers to avoid leaving fingerprints. The agent testified that he found in the airplane visqueen plastic sheeting that had been balled up. Plastic sheeting is used by smugglers to line the interior of an airplane to prevent marijuana residue from being left behind. Also found in the plane was an electronic “bug” detector “used to perhaps find out if someone is wearing a body wire.” Runkel’s address book was found in the aircraft, and it contained the telephone number of Johnny Crawford, the conspiracy’s source for marijuana in Belize. Also found in the aircraft was a hand-held portable vacuum, commercial grade air freshener (marijuana has a distinctive odor), and a High Times magazine. Each of these items was received into evidence.\nGlen Munro testified that Runkel told him he was planning to bring a friend from Wisconsin on the trip to Belize; Adams was from Wisconsin. Munro also testified that the “bug” detector found in the airplane was the kind he used to detect electronic surveillance devices. Additionally, there was much testimony from the other conspirators regarding the nature of Adams’ and Runkel’s flight and how the other conspirators reacted when it did not show up as planned at the airstrip where they were waiting to unload it.\nIn contrast to the extent of the other evidence offered against him, the Government only once alluded to the statement taken from Adams, and the Government did not invite the Customs agent to speculate on its relevance. The statement itself was not directly incriminating. We are convinced beyond a reasonable doubt that admission of the statement did not contribute to Adams’ conviction, because even without consideration of it there was overwhelming evidence of Adams’ guilt. We therefore hold that any error in admission of the statement was harmless error.\nC. WARRANTLESS SEARCH OF AIRPLANE\nAdams next complains that the evidence discovered in the Piper aircraft after it landed with he and Runkel aboard should have been suppressed because it was the product of an illegal warrantless search. The Government’s position is that no warrant is necessary for the border search of an aircraft. The district court’s findings of fact about this issue are not to be overturned unless clearly erroneous, but the application of law to those facts is reviewed de novo. United States v. Nash, 910 F.2d 749, 752 (11th Cir.1990).\nIt is clear that the search was a valid border search, one for which a warrant was not required. “The fact that one is in the process of crossing an international boundary provides sufficient reason in itself to permit a search for aliens or contraband, without the presence of any other circumstance that would normally have to attend the requirements of the Fourth Amendment.” United States v. Moreno, 778 F.2d 719, 721 (11th Cir.1985) (quoting United States v. McDaniel, 463 F.2d 129, 132 (5th Cir.1972)). “Such a search is reasonable for Fourth Amendment purposes simply because a border has been crossed. The mere fact that in this case the search did not technically occur at the border is irrelevant; the point where [the defendant] ultimately landed his aircraft is construed as the functional equivalent of the border.” United States v. Hewitt, 724 F.2d 117, 119 (11th Cir.1984); see also United States v. Ramsey, 431 U.S. 606, 616-19, 97 S.Ct. 1972, 1978-80, 52 L.Ed.2d 617 (1977).\nWe reject Adams’ argument that the search could not have been a border search because he was in a U.S. registered airplane having taken off from an airstrip in the United States and never having landed in a foreign country. In United States v. Haley, 743 F.2d 862, 865 (11th Cir.1984), we held that there is no requirement that the Government prove that a flight originated in a foreign land for a border search to be valid. Customs agents tracked the Adams and Runkel plane well out of American airspace and tracked it coming back into American airspace. In United States v. Stone, 659 F.2d 569, 573 (5th Cir. Unit B Oct. 1981), we held that the mere sighting of an airplane passing into United States airspace satisfied the requirements of a border crossing for search and seizure purposes. Id. See also United States v. Garcia, 672 F.2d 1349, 1357 (11th Cir.1982). Where an aircraft has crossed a United States border, the Government need not prove at trial that the flight originated in a foreign land, and, indeed, a flight need not in fact have originated in a foreign land, for a border search of the aircraft to be upheld. Ml that is required is that “the information, including the fact of the actual border crossing, possessed by the Customs agents prior to the search of [the defendant’s] airplane was sufficient to reasonably support an inference that there was a substantial likelihood that the airplane had come from a foreign location.” Haley, 743 F.2d at 866.\nThe Customs agents in this case were following up on information from a reliable informant; they had tracked the plane in the direction of Belize, a country the informant said was the destination and one known for being a source of narcotics. Adams and Runkel had been gone between nine and ten hours before the agents observed them returning to United States airspace. This interval of time is sufficient for the plane to have reached a foreign country, landed, loaded whatever it was seeking, and taken off again. The information possessed by the Customs agents amply supported an inference that the plane had come from a foreign land. Therefore, the search of the Piper aircraft involved in this case was a valid border search and no warrant was required.\nD. DENIAL OF SEVERANCE FOR ADAMS AND COHRON\nDefendants Adams and Cohron made pre-trial motions to sever their cases from the others. The district court denied both motions and now the defendants each claim that that denial constitutes reversible error. We may reverse a district court’s denial of a severance motion only if we find that the court abused its discretion. United States v. Hernandez, 921 F.2d 1669, 1678 (11th Cir.), cert. denied, — U.S. -, 111 S.Ct. 2271, 114 L.Ed.2d 722 (1991). We will treat each defendant’s argument separately.\n1. ADAMS\nAdams argues that the district court’s refusal to sever his trial from that of his co-defendants was error because he was not implicated in the majority of evidence presented against his co-defendants. The Government offered evidence of numerous drug transactions and extensive smuggling activities. The only evidence concerning Adams was in regard to the one unsuccessful trip to Belize we have discussed. Adams claims that this disparity in evidence was prejudicial.\nJoinder of defendants is proper “if they are alleged to have participated in the same ... series of acts or transactions constituting an offense or offenses.” Fed.R.Crim.P. 8(b). “If the jury cannot keep separate the evidence that is relevant to each defendant and render a fair and impartial verdict as to each, severance should be granted.” United States v. Carrazana, 921 F.2d 1557, 1567 (11th Cir.), cert. denied, — U.S. -, 112 S.Ct. 191, 116 L.Ed.2d 152, and cert. denied, — U.S. -, 112 S.Ct. 269, 116 L.Ed.2d 221 (1991). We have held:\nIn conspiracy cases like this one, the general principle is well-settled that “persons who are charged together should also be tried together.” In evaluating a motion for severance, this court must determine whether the prejudice inherent in a joint trial outweighs the interests in judicial economy. To establish that the district court’s balancing of interests was an abuse of discretion, [the defendant] must “demonstrate that a joint trial resulted in specific and compelling prejudice to the conduct of his defense.” “Compelling prejudice” is demonstrated by a showing that the jury was unable to make an individualized determination as to each defendant.\nUnited States v. Saget, 991 F.2d 702, 707 (11th Cir.1993) (citations omitted). “This is a heavy burden, and one which mere concluso-ry allegations cannot carry.” United States v. Hogan, 986 F.2d 1364, 1375 (11th Cir.1993). “[C]autionary instructions to the jury to consider the evidence as to each defendant separately are presumed to guard adequately against prejudice.” United States v. Gonzalez, 940 F.2d 1413, 1428 (11th Cir.1991), cert. denied, — U.S. -, 112 S.Ct. 910, 116 L.Ed.2d 810 (1992), cert. denied, — U.S. -, 112 S.Ct. 1194, 117 L.Ed.2d 435 (1992), and cert. denied, — U.S. -, 112 S.Ct. 1194, 117 L.Ed.2d 435 (1992).\nAdams has not demonstrated any instances of specific and compelling prejudice. The burden was on him to show that the jury could not keep separate the facts relating to him. Adams’ co-conspirators were waiting on the ground for the return of his flight, and the evidence of Adams’ aborted smuggling flight was intertwined with the criminal actions of his co-defendants. The district court was careful to give cautionary instructions concerning multiple conspiracies, and instructed the jury that it should consider the case of each defendant separately and individually and could acquit some defendants and convict others. We conclude that the district court did not abuse its discretion in denying Adams’ severance motion.\n2. COHRON\nCohron presents a different severance argument. He argues that the refusal to sever his trial was error because specific and compelling prejudice flowed from his inability to obtain testimony from his co-defendant Jones, who was the only source of rebuttal for some of the testimony against Cohron. Some of the conspirators testified at trial that Cohron aided in the construction of an airstrip on the property of Jones. Cohron moved for a severance before and after trial, and after trial offered an affidavit from Jones averring that the airstrip was in existence prior to the time at which the others had testified it was constructed, and averring that Cohron had nothing to do with its construction. Had his case been severed, Cohron supposedly could have subpoenaed Jones’ testimony; his inability to do that allegedly resulted in an unfair and prejudicial trial. We have held that:\nTo obtain a severance on the ground that a codefendant will testify favorably, a defendant must show: “(1) a bona fide need for the testimony; (2) the substance of the desired testimony; (3) the exculpatory nature and effect of the desired testimony; and (4) that the codefendant would indeed have testified at a separate trial.” Points one and three are interrelated in that there can be no bona fide need for testimony which is not materially helpful to the defendant’s theory of defense. If the defendant satisfies those four threshold requirements, then the trial court must: “(1) examine the significance of the testimony in relation to the defendant’s theory of the ease; (2) assess the extent of prejudice caused by the absence of the testimony; (3) consider judicial administration and economy; and (4) give weight to the timeliness of the motion.”\nUnited States v. Funt, 896 F.2d 1288, 1297 (11th Cir.1990) (citations omitted); accord, United States v. Cross, 928 F.2d 1030, 1037 (11th Cir.), cert. denied, — U.S. -, 112 S.Ct. 594, 116 L.Ed.2d 618 (1991), and cert. denied, — U.S. -, 112 S.Ct. 941, 117 L.Ed.2d 112 (1992); United States v. Machado, 804 F.2d 1537, 1544 (11th Cir.1986).\nWe need not inquire into the first three threshold requirements, because Cohron clearly did not meet the fourth one. He did not establish that Jones would have testified at Cohron’s separate trial had the case been severed. Jones did not testify at the joint trial, electing instead to exercise his Fifth Amendment privilege against self-incrimination. There is nothing to indicate that after he was convicted Jones would have foregone his privilege not to testify in a separate trial for Cohron. See United States v. Mathews, 997 F.2d 848, 850-51 n. 4 (11th Cir.1993) (“A defendant who has been convicted does not necessarily lose the Fifth Amendment right against self-incrimination as it concerns facts and circumstances surrounding the crime.”). The affidavit from Jones which Cohron proffered does not state that Jones would have testified for Cohron in a separate trial.\nEven if Cohron had satisfied that and the other three threshold requirements, he would still lose under the second set of inquiries. The significance of the possible testimony to his defense and the extent of prejudice flowing from his inability to present that testimony are lessened by the multitude and magnitude of evidence used to convict Cohron. Moreover, the cost in judicial resources of a retrial in such a complex conspiracy case as this would be great. See Cross, 928 F.2d at 1038. The district court did not abuse its discretion in denying Cohron’s severance motion.\nE. DRUG QUANTITIES FOR SENTENCING\nAdams and Davis claim that the district court erroneously determined their base offense level for sentencing under the Sentencing Guidelines by counting against them excessive quantities of marijuana. The Sentencing Guidelines in effect at the time of the sentencing of these defendants describe the conduct on which a base offense level is determined, as “all acts and omissions committed or aided and abetted by the defendant, or for which the defendant would be otherwise accountable_” U.S.S.G. § lB1.3(a)(l) (Nov. 1990). The commentary to that section explains that:\nIn the case of criminal activity undertaken in concert with others, ... the conduct for which the defendant “would be otherwise accountable” also includes conduct of others in furtherance of the execution of the jointly-undertaken criminal activity that was reasonably foreseeable by the defendant. Because a count may be broadly worded and include the conduct of many participants over a substantial period of time, the scope of the jointly-undertaken criminal activity, and hence the relevant conduct, is not necessarily the same for every participant.\nU.S.S.G. § 1B1.3, comment, (n. 1) (Nov. 1990). Conspirators are responsible for sentencing purposes for the reasonably foreseeable acts of co-conspirators taken in furtherance of the conspiracy, “but not acts in the conspiracy that were not within the scope of the defendant’s agreement.” United States v. Andrews, 953 F.2d 1312, 1319 (11th Cir.), cert. denied, — U.S. -, 112 S.Ct. 3007, 120 L.Ed.2d 882, cert. denied, — U.S. -, 112 S.Ct. 3008, 120 L.Ed.2d 882, and cert. denied, — U.S. -, 112 S.Ct. 3048, 120 L.Ed.2d 915 (1992). A trial court’s determination of the quantity of drugs for sentencing purposes is a question of fact subject to clearly erroneous review. United States v. Robinson, 935 F.2d 201, 205 (11th Cir.1991), cert. denied, — U.S. —, 112 S.Ct. 885, 116 L.Ed.2d 789 (1992). “[Djistrict courts are required to make factual determinations at sentencing only by a preponderance of the evidence.” United States v. Louis, 967 F.2d 1550, 1553 (11th Cir.1992); Andrews, 953 F.2d at 1319. We will review the contentions of the defendants with these principles in mind.\n1. DAVIS\nDavis argues that the greatest quantity of marijuana he could be charged with is about 2000 kilograms, for a base offense level of 32. The district court held Davis responsible for an amount of marijuana greater than 3000 kilograms, which resulted in a base offense level of 34. Evidence at trial showed Davis was deeply implicated in the overall scheme. Therefore, it was not clearly erroneous for the sentencing court to find that he could have reasonably foreseen a much greater amount of marijuana being imported and distributed than the already large amount to which he was directly connected.\n2. ADAMS\nThe issue involving Adams presents a closer question. The district court determined that statutory mandatory minimum sentencing applied to Counts 3 and 4, and the court utilized the Sentencing Guidelines only for Counts 1 and 2, the conspiracy counts. Adams’ argument concerns only the district court’s application of the Guidelines, and so is applicable only to Counts 1 and 2.\nAdams conceded that the 1200 pounds, or approximately 550 kilograms, of marijuana that would have been transported if the flight to Belize had gone as planned was attributable to him. That would have given him a base offense level of 28. The district court held that the facts would not justify attributing to Adams the amount of marijuana involved in the entire conspiracy. In rejecting a presentence investigation (PSI) recommendation that Adams be held responsible for the entire conspiratorial amount, the court stated:\nWell, I’m troubled by that as well because there’s no evidence that Mr. Adams ever touched a single bit of marijuana for which he’s being held accountable. The only evidence is that he flew on a plane that intended to pick up twelve hundred pounds and did not pick up any and that was the extent of his participation.\nI’ve held in other cases it was reasonably foreseeable in this type of operation that more than one flight would be involved. Now, the question of how many flights really depends upon the individual and how that individual was recruited and what they did and how much knowledge they could reasonably be held accountable for under those circumstances....\nR18-8, 9, 10. The court’s account of the evidence and its reasoning in rejecting the PSI recommendation were correct. Its rationale about when to hold a defendant liable for additional flights is also appropriate.\nThe problem in this case, however, is that in addition to counting against Adams the 1200 pounds of marijuana he had planned to import on the flight he took, the district court also attributed to Adams a hypothetical second load that Adams never attempted to transport. The court said:\nAnd giving, you know, giving the assumption that more than one flight would have been involved, if you double that you’re still no more than level thirty, I’m sure, and level thirty takes you to a thousand kilograms, which would be twenty-two hundred pounds plus. I’ll give him the benefit of the doubt and establish that it was only foreseeable that he would have been involved with less than a thousand kilograms, which is a level thirty. I think that’s entirely consistent with the evidence.\nR18-11. There was no evidence that Adams intended to be involved with another flight or that it was foreseeable to him that there would be another flight. The evidence concerning Adams connected him only with the one aborted smuggling trip, a trip in which the plans were to transport 1200 pounds of marijuana. A sentencing court may not speculate on the extent of a defendant’s involvement in a conspiracy; instead, such a finding must be supported by a preponderance of the evidence, just as any other fact-finding during sentencing. Because there was no evidence that Adams had any connection with any of the conspirators other than Runkel and no evidence that Adams was aware of or agreed to participate in a conspiracy involving more than one smuggling trip, the district court’s finding that another flight was reasonably foreseeable to Adams is clearly erroneous. Although it is possible that Adams might have participated in another flight, such a prediction must be supported by a preponderance of the evidence before it can be used to increase a sentence.\nF. SUFFICIENCY OF THE EVIDENCE TO CONVICT COHRON\nCohron argues that the evidence presented at trial is insufficient to support his conviction on any of the four counts. His arguments rely on the five year statute of limitations period for these offenses, 18 U.S.C. § 3282. Cohron argues that evidence of actions occurring more than five years prior to the indictment should not have been considered by the jury because prosecution for those actions is barred by the statute of limitations. Cohron contends that once evidence of transactions occurring outside the five-year limitations period is excluded, there was insufficient evidence to prove that he imported as much marijuana as the indictment charged. The indictment charged he imported 1000 kilograms or more of marijuana. Cohron concedes for purposes of this argument that the evidence of transactions within the limitations period inculpated him in two transactions, but he claims the evidence indisputably proves that less than 1000 kilograms of marijuana could have been imported in those two transactions that were within the limitations period. Therefore, contends Cohron, the Government failed to prove by evidence of transactions within the limitations period an averment of each count of the indictment — that the quantity of marijuana involved was 1000 kilograms or more. We will first address his argument as it applies to the two conspiracy counts and then as it relates to the two substantive counts.\n1. Conspiracy Convictions\nCohron’s argument as it relates to his convictions on the two conspiracy counts is meritless, because the statute of limitations does not begin to run on a conspiracy until that conspiracy has ended. United States v. Benson, 846 F.2d 1338, 1340 (11th Cir.1988); United States v. Finestone, 816 F.2d 583, 589 (11th Cir.), cert. denied, 484 U.S. 948, 108 S.Ct. 338, 98 L.Ed.2d 365 (1987); United States v. LeQuire, 943 F.2d 1554, 1565 (11th Cir.1991), cert. denied, — U.S. -, 112 S.Ct. 3037, 120 L.Ed.2d 906 (1992). A conspiracy is considered a discrete crime for statute of limitations purposes. For a conspiracy prosecution to be barred by the statute of limitations, the time between the conspiracy’s end, or the defendant’s affirmative withdrawal, and the indictment must be longer than the statutory limitations period. If this is not the ease, the conspiracy prosecution may proceed, and evidence of any acts in furtherance of the conspiracy are admissible even if they occurred longer than the statutory period before the indictment. United States v. Gonzalez, 921 F.2d 1530, 1548 (11th Cir.) (predicate acts for RICO conspiracy occurring outside limitations period could support conviction if conspiracy continued into limitations period), cert. denied, — U.S. -, 112 S.Ct. 96, 116 L.Ed.2d 68, and cert. denied, — U.S. -, 112 S.Ct. 178, 116 L.Ed.2d 140 (1991); United States v. Butler, 792 F.2d 1528, 1532 (11th Cir.) (same for 18 U.S.C. § 1382 statute of limitations), cert. denied, 479 U.S. 933, 107 S.Ct. 407, 93 L.Ed.2d 359 (1986). Cohron does not claim that the conspiracy ceased operations outside the statutory period, nor does he claim to have withdrawn outside that period. Therefore, all acts committed in furtherance of the conspiracy during the entire life of the conspiracy were properly admitted against him at trial. The evidence was sufficient to support Cohron’s conspiracy convictions.\n2. Substantive Offense Convictions\nTo attack his substantive convictions Coh-ron relies on the interplay between the statute of limitations and the court’s Pinkerton instruction to the jury. His argument is that the jury’s general guilty verdict that he was involved with 1000 kilograms or more of marijuana must be grounded on one of two bases: the jury may have impermissibly considered Cohron’s actions before the statutory period, or it may have permissibly relied on the actions of Cohron’s co-conspirators for which he is liable under Pinkerton v. United States, 328 U.S. 640, 66 S.Ct. 1180, 90 L.Ed. 1489 (1946). Cohron contends that because it cannot be established whether the jury’s verdict was actually based on a permissible basis, or on an impermissible one, we must set it aside. See Yates v. United States, 354 U.S. 298, 77 S.Ct. 1064, 1 L.Ed.2d 1356 (1957); but see Griffin v. United States, — U.S. -, 112 S.Ct. 466, 116 L.Ed.2d 371 (1991) (criticizing Yates).\nCohron’s argument fails because an essential premise of it is that the Government had to prove at trial that the quantity of marijuana he was involved in was 1000 or more kilograms. Case law in this Circuit establishes that the quantity of drugs is not an element of controlled substance offenses. United States v. Cross, 916 F.2d 622, 623 (11th Cir.1990) (A controlled substance violation may occur “without regard to the nature and quantity of the controlled substance.”), cert. denied, 499 U.S. 929, 111 S.Ct. 1331, 113 L.Ed.2d 263 (1991); United States v. Perez, 960 F.2d 1569, 1574-75 (11th Cir.1992), (“only definitional elements of the offense [need] appear in the indictment,” and not quantity), cert. denied, — U.S. -, 113 S.Ct. 1421, 122 L.Ed.2d 790 (1993). It is nonetheless true that the indictment did allege 1000 kilograms of marijuana or more. So, the question is whether failure to prove a quantity of controlled substances alleged in the indictment, which is not an element of the offense, is a material variance requiring reversal. Our cases say no. United States v. Hanson, 835 F.2d 815, 817 (11th Cir.1988) (no reversal where 1000 grams cocaine alleged and 861 grams claimed to have been proved); United States v. Ard, 731 F.2d 718, 725 (11th Cir.1984) (no reversal where 1000 pounds marijuana alleged in indictment and single sale of less than that quantity claimed to have been proved); United States v. Sheikh, 654 F.2d 1057, 1066-67 (5th Cir. Unit A Sep. 1981) (no reversal where 4.4 pounds heroin alleged in indictment and 14 grams claimed to have been proved), cert. denied, 455 U.S. 991, 102 S.Ct. 1617, 71 L.Ed.2d 852 (1982); United States v. Juarez, 573 F.2d 267, 278 (5th Cir.) (no reversal where 5 ounces heroin alleged in indictment and 23.63 grams claimed to have been proved), cert. denied, 439 U.S. 915, 99 S.Ct. 289, 58 L.Ed.2d 262 (1978). Even if the evidence of transactions occurring within the statute of limitations period proved less than the 1000 kilograms alleged in the indictment, the Government was not required to prove that amount. Therefore, Cohron is not entitled to a reversal of his conviction on the substantive counts, just as he is not entitled to a reversal on the conspiracy counts, either.\nG. MANDATORY MINIMUM SENTENCING\nCohron received mandatory minimum sentences for his conviction on Count 3, importing 1000 or more kilograms of marijuana, and on Count 4, possessing with intent to distribute 1000 or more kilograms of marijuana.\nCohron contends that application of the mandatory minimum sentence provisions to him violated ex post facto principles. The mandatory minimum sentence provisions were enacted on October 27, 1986. Cohron argues that evidence of acts occurring before that date was considered by the district court in its finding that Cohron was involved with 1000 kilograms or more of marijuana.\nThe district court was aware that its consideration of Cohron’s substantive importation and possession acts occurring before the enactment of the mandatory minimum provisions might result in an ex post facto violation. The court nonetheless applied the mandatory minimum provisions, because it reasoned that the evidence established that even after the enactment of those provisions Cohron was involved with 1000 or more kilograms of marijuana. Unlike the problem with ascertaining the basis of a jury’s general verdict, here we have a district court explaining the basis for the result it reached. We need not be concerned, therefore, with whether evidence of actions occurring before enactment of the mandatory minimum provisions might have been considered by the court; we know it was not. All that is left for us to determine is whether the district court’s conclusion is clearly erroneous.\nA sentencing court’s factual determinations must be supported by a preponderance of the evidence. United States v. Louis, 967 F.2d 1550, 1553 (11th Cir.1992); United States v. Andrews, 953 F.2d 1312, 1319 (11th Cir.), cert. denied, — U.S. -, 112 S.Ct. 3007, 120 L.Ed.2d 882, cert. denied, — U.S. -, 112 S.Ct. 3008, 120 L.Ed.2d 882 and cert. denied, — U.S. -, 112 S.Ct. 3048, 120 L.Ed.2d 915 (1992). Evidence considered by the court need not be in admissible form. United States v. Gonzalez, 661 F.2d 488, 495 (5th Cir. Unit B Nov. 1981); see also United States v. Lynch, 934 F.2d 1226, 1234-35 (11th Cir.1991), cert. denied, — U.S. -, 112 S.Ct. 885, 116 L.Ed.2d 788 (1992); United States v. Ignancio Munio, 909 F.2d 436, 438-39 & n. 3 (11th Cir.1990), cert. denied, 499 U.S. 938, 111 S.Ct. 1393, 113 L.Ed.2d 449 (1991). There was evidence at trial of transactions occurring after October 27, 1986 which involved more than 1000 kilograms of marijuana. Cohron claims that the evidence did not implicate him in enough of those transactions to hold him responsible for 1000 kilograms. The district court could properly consider the actions of Cohron’s co-conspirators in arriving at an amount for which Cohron was responsible. We, therefore, hold that the district court’s conclusion that Cohron was involved with 1000 kilograms of marijuana in transactions occurring after October 27, 1986 is not clearly erroneous. Cohron’s claim that it was error to apply the mandatory minimum provisions to his convictions on the substantive counts is without merit.\nH. WITNESSES IN PRISON CLOTHES\nDefendants Jones and Davis claim that they suffered reversible prejudice because some of their co-conspirators appearing in court as witnesses against them wore prison uniforms and the Government prosecutors commented on that attire. The Government called five co-conspirators as witnesses and noted to each one that he wore prison clothing and then asked if he was incarcerated. That was all the prosecutors said about the clothing of the witnesses. Estelle v. Williams, 425 U.S. 501, 96 S.Ct. 1691, 48 L.Ed.2d 126 (1976), forbids a defendant from being forced, over his objection, to wear prison garb at his trial, but these defendants were not. This Court’s predecessor, considering a habeas petition, held that no prejudice flowed from an accused’s co-defendant being brought into the courtroom for identification wearing a prison uniform. Cook v. Beto, 425 F.2d 1066, 1067 (5th Cir.), cert. denied, 400 U.S. 944, 91 S.Ct. 248, 27 L.Ed.2d 249 (1970); see also Johnson v. Spalding, 510 F.Supp. 164 (E.D.Wash.1981) (in habeas petition, no prejudice flowed from witnesses testifying in prison clothing), aff'd, 669 F.2d 589 (9th Cir.), cert. denied, 459 U.S. 942, 103 S.Ct. 254, 74 L.Ed.2d 198 (1982). The inference to be drawn from prison clothing is that the witnesses were in prison, a fact that is not inadmissible. No error was committed.\nI. MULTIPLE CONSPIRACIES\nJones and Davis argue a material variance in that they were indicted for a single conspiracy and contend that the evidence showed multiple conspiracies. They argue that this variance from the indictment is fatal to their convictions. The question of whether the evidence establishes a single conspiracy is a factfinding for the jury and, even if multiple conspiracies arguably exist, there will be no variance if, viewing the evidence in the light most favorable to the Government, a reasonable trier of fact could have found beyond a reasonable doubt the existence of a single conspiracy. United States v. Reed, 980 F.2d 1568, 1581 (11th Cir.), cert. denied, — U.S. -, 113 S.Ct. 3063, 125 L.Ed.2d 745 (1993); United States v. Prince, 883 F.2d 953, 959 (11th Cir.1989). We consider the following factors in assessing whether the jury could have found a single conspiracy: “(1) whether a common goal existed, (2) the nature of the scheme underlying the crimes charged, and (3) the overlap of participants.” Reed, 980 F.2d at 1582; accord Prince, 883 F.2d at 959.\nThe jury in this case was properly instructed on the possibility of multiple conspiracies, and there was sufficient evidence to prove a single conspiracy. There was clearly a common goal, the importation of marijuana from Belize. The nature of the criminal scheme stayed remarkably constant throughout the progress of the conspiracy. Because the scheme involved a large operation, there were quite a few participants, but there was also substantial overlap among them. Some participants were involved in all of the transactions. Thus, consideration of the three factors demonstrates that the appellants were properly convicted of a single conspiracy.\nIV. CONCLUSION\nWe conclude that the convictions of all of the defendants are due to be AFFIRMED. The sentences given to each defendant are also AFFIRMED, with the exception of Adams’ sentences on Counts 1 and 2. The sentences for Adams on those counts are VACATED and his case is REMANDED to the district court so that it may resentenee Adams in accordance with this opinion.\n. Some other issues are raised but warrant no extended discussion. Defendants Jones and Davis did not raise at trial their argument that the district court should not have allowed testimony concerning the convictions of their co-conspirators. We find no plain error in the district court’s admission of that testimony. The district court’s refusal to allow Cohron to introduce convictions more than ten years old for impeachment purposes was not an abuse of discretion. The district court did not abuse its discretion by admitting into evidence firearms seized from one of the conspirators. Finally, the objection by Jones and Davis to the district court’s supplemental Pinkerton instruction is without merit.\n. Forgery of certificates, false marking of aircraft, and other aircraft registration violations\n(1) Description of violations\n(H) It shall be unlawful for any person — to knowingly and willfully display or cause to be displayed on any aircraft any marks which are false or misleading as to the nationality or registration of the aircraft. 49 U.S.C.App. § 1472(b)(1)(H).\n(2) Penalties\nAny person who commits a violation of paragraph (1) shall be, upon conviction, subject to—\n(B) a fine of not more than $25,000 or imprisonment for a term of not more than 5 years, or both, if such violation was in connection with the act of transportation by aircraft of a controlled substance or of the aiding or facilitating of a controlled substance offense where such act is punishable by death or imprisonment for a term exceeding 1 year under a State or Federal law or is provided in connection with any act which is punishable by death or imprisonment for a term exceeding 1 year under a State or Federal law relating to a controlled substance (other than a law relating to simple possession of a controlled substance).\n49 U.S.C.App. § 1472(b)(2)(B).\n. A superseding indictment filed in the Southern District of Florida on September 13, 1988 charged that\nOTTO J. RUNKEL and JAMES A. ADAMS,\ndid knowingly and willfully display and cause to be displayed on an aircraft, that is, a twin-engine Piper Navajo registered with the Federal Aviation Administration under number N333GT, marks that were false and misleading as to the nationality and registration of the aircraft, with the intent to commit crimes punishable by imprisonment for a term exceeding one year under federal laws relating to a controlled substance, that is, the importation of marijuana, a Schedule I controlled substance, in violation of Title 21, United States Code, Section 952(a), and Title 18, United States Code, Section 2, and conspiracy to import marijuana, a Schedule I controlled substance, in violation of Title 21, United States Code, Section 963.\nAll in violation of Title 49, United States Code Appendix, Section 1472(b)(2)(A), and Title 18, United States Code, Section 2.\n. Count 2, conspiracy to possess with intent to distribute, and Count 4, possession with intent to distribute, are different because that activity was not mentioned in the Southern District airplane markings indictment. Neither Adams nor Runk-el contends that his conviction on those two counts is barred by double jeopardy principles.\n. The foregoing reasoning applies equally to Cohron’s convictions on the conspiracy counts, and is an alternative ground for rejecting Coh-ron's sufficiency of the evidence argument as to them.\n. The mandatory minimum sentence provisions were not applied to Cohron’s convictions under Counts 1 and 2. Instead, the Sentencing Guidelines, which took effect in November of 1987, were applied to those counts.\nThe sentences imposed under the Guidelines were proper because a statutory change which takes effect during an ongoing conspiracy subjects conspiratorial acts occurring before the statutory change to the new provision. United States v. Nixon, 918 F.2d 895, 906 (11th Cir.1990); United States v. Pippin, 903 F.2d 1478, 1482 (11th Cir.1990); United States v. Wells Fargo Armored Service Corp., 587 F.2d 782, 782 (5th Cir.1979). Because the conspiracy did not cease to operate, and Cohron did not withdraw, before the new sentencing provisions became effective, all of Cohron's conspiratorial acts were properly considered in sentencing him under the Sentencing Guidelines.\n.The Anti-Drug Abuse Act of 1986, Pub.L. No. 99-570, 100 Stat. 3207 (1986), took effect on October 27, 1986. The law amended 21 U.S.C. § 841 to require minimum 10 year sentences for offenders convicted of possessing 1000 kilograms or more of marijuana. Pub.L. No. 99-570, § 1002, 100 Stat. 3207-2 (1986) (codified as amended at 21 U.S.C. § 841(b)(l)(A)(vii)). The same bill also amended 21 U.S.C. § 960 to require minimum 10 year sentences for offenders convicted of importing into this country 1000 kilograms or more of marijuana. Pub.L. No. 99-570, § 1302, 100 Stat. 3702-15 (1986) (codified as amended at 21 U.S.C. § 960(b)(1)(G)).\n. Brief of Davis and Jones at 16 (Liberty County load occurring sometime after April 1987), id. at 18 (Compass Lake load), id. at 19 & 21 (Santa Rosa County loads), id. at 20 (Hunting Club load), id. at 20 (Belize Crash), id. at 24 (Mexico Crash), and id. at 25 (Pipeline load).", "type": "majority", "author": "CARNES, Circuit Judge:"}], "attorneys": ["Stephen E. Sutherland, Pensacola, FL, for Otto J. Runkel.", "Lyndia F. Padgett, U.S. Atty., Randall J. Hensel, Asst. U.S. Atty., Pensacola, FL, for U.S.", "Ronald W. Johnson, Pensacola, FL, for Buddy Davis.", "Joseph L. Hammons, Pensacola, FL, for Philip Cohron.", "' Robert A. Harper, Tallahassee, FL, for Joe Wayne Jones.", "Morris D. Berman, Charles Giesen, Giesen & Berman, S.C., Madison, WI, for James A. Adams."], "corrections": "", "head_matter": "UNITED STATES of America, Plaintiff-Appellee, v. James A. ADAMS, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Otto J. RUNKEL, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Buddy DAVIS a/k/a Indian; Philip Cohron; Joe Wayne Jones; and James A. Adams, Defendants-Appellants.\nNos. 91-3356, 91-3680 and 91-3691.\nUnited States Court of Appeals, Eleventh Circuit.\nSept. 22, 1993.\nStephen E. Sutherland, Pensacola, FL, for Otto J. Runkel.\nLyndia F. Padgett, U.S. Atty., Randall J. Hensel, Asst. U.S. Atty., Pensacola, FL, for U.S.\nRonald W. Johnson, Pensacola, FL, for Buddy Davis.\nJoseph L. Hammons, Pensacola, FL, for Philip Cohron.\n' Robert A. Harper, Tallahassee, FL, for Joe Wayne Jones.\nMorris D. Berman, Charles Giesen, Giesen & Berman, S.C., Madison, WI, for James A. Adams.\nBefore TJOFLAT, Chief Judge, CARNES, Circuit Judge, and BRIGHT , Senior Circuit Judge.\nHonorable Myron H. Bright, Senior U.S. Circuit Judge for the Eighth Circuit, sitting by designation."} | TJOFLAT | CARNES | BRIGHT | 1 | 1 | 1 | 0 | 0 | 0 | 1 F.3d 1566 | [
{
"content": "You are an expert legal coding assistant trained to classify U.S. federal Courts of Appeals\ncases using an adaptation of the Supreme Court Database (SCDB_2023_01) codebook. You follow the coding procedure\nin the codebook step by step and use the precise definitions of terms presented in the code... |
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